Securities and Exchange Commission v. Penn

Background

Ian Douglas Orr appeared as counsel for Camelot Acquisitions Secondary Opportunities Management LLC and Camelot Group International, LLC, referred to in the order as the Camelot Entities. The court entered a scheduling order requiring the Camelot Entities to respond by June 4, 2019, to the Securities and Exchange Commission’s motion for summary judgment. No response was filed by that deadline.

The court later ordered Orr to explain whether he continued to represent the Camelot Entities, why he had not responded to the Commission’s motion, and why he had not objected to Lawrence E. Penn, a layperson, attempting to file papers for the entities. Orr did not timely respond to that order. The court then ordered him to show cause—meaning to explain why sanctions should not be imposed—for failing to respond to the order, failing to respond to the Commission’s motion, failing to communicate with opposing counsel, failing to object to Penn’s efforts to represent the entities, and failing to file a timely motion to withdraw.

Orr stated that Penn, the sole member of the Camelot Entities, had terminated Orr’s representation on June 5, 2019. Orr said he believed Penn would notify the court and the Commission. Orr also stated that he did not file a motion to withdraw because he believed the termination made one unnecessary. The court previously imposed $500 in sanctions payable to the court and $500 payable to the Commission under Federal Rule of Civil Procedure 16(f), 28 U.S.C. § 1927, and the court’s inherent powers. Orr paid those sanctions and then moved for reconsideration.

Motion for Reconsideration

The court treated Orr’s filing as a motion for reconsideration under Federal Rule of Civil Procedure 59(e) and Local Civil Rule 6.3. Reconsideration is subject to a strict standard and generally requires the moving party to identify controlling decisions or information that the court overlooked. The court explained that reconsideration is not a vehicle for presenting new theories, obtaining a rehearing, or relitigating issues already decided.

The court found that Orr did not identify overlooked information. Instead, he made new arguments opposing the sanctions, although he had opportunities to present those arguments before the sanctions order. The court therefore concluded that the motion was an improper attempt to relitigate the prior sanctions dispute.

Court’s Additional Merits Analysis

The court stated that the motion would also be denied even if it were procedurally proper. Orr argued that the Camelot Entities’ decision not to oppose the Commission’s summary-judgment motion explained why no filing was made. The court held that the scheduling order required a response, not necessarily an opposition brief. Orr could have filed a timely letter stating that the entities had decided not to oppose the motion.

The court found that Orr’s failure to make such a filing caused delay and confusion, including extensions of the response deadline and Penn’s attempts to represent the Camelot Entities himself. The court also found that Orr failed to comply fully with the June 14 order and the order to show cause, failed to address some of the required issues, and did not properly seek withdrawal under Local Civil Rule 1.4. That rule requires an attorney of record to obtain a court order before being relieved or withdrawing.

The court further stated that Penn, as an unlicensed layperson, could not represent the Camelot Entities, which are artificial entities, even if he was their principal. The court concluded that Orr knowingly abandoned his responsibilities as an officer of the court, caused unnecessary delay and expense, and wasted judicial time. It noted that Orr’s explanations about the reason for his failure to respond had changed and did not adequately account for his conduct.

Disposition

Judge Valerie Caproni denied Orr’s motion for reconsideration. The order left the previously imposed monetary sanctions in place and directed the Clerk of Court to mail Orr a copy of the order.