Kleeberg v. Eber
- Lewis Kaplan
- 1:16-cv-09517
- U.S. District Court · Southern District of New York
- 10
In Kleeberg v. Eber, Judge Parker denied sanctions against John Herbert, finding no clear evidence of bad faith or fraud.
The plaintiffs’ request for sanctions against John Herbert was denied; the opinion did not impose sanctions on him.
What happened
In Kleeberg v. Eber, the plaintiffs asked the court to sanction John Herbert, an attorney for Wendy Eber and the Estate of Lester Eber. They argued that Herbert had forged or helped facilitate a backdated document concerning EBWLC preferred stock.
Herbert said he drafted the documents in 2017 and later provided unsigned versions from his files to the Eber defendants’ litigation counsel. The plaintiffs did not provide proof that Herbert forged Wendy Eber’s signature, submitted a signed document to the court, or acted in bad faith. They sought $14,875 in attorneys’ fees but did not provide contemporaneous time records.
Judge Katharine H. Parker denied the sanctions motion. She held that the plaintiffs had not provided the clear evidence required to show that Herbert’s conduct was entirely without a reasonable basis, undertaken in bad faith, or amounted to fraud on the court.
The detailed version
- Kleeberg v. Eber · No. 1:16-cv-09517
- Lewis Kaplan
- Oct. 23, 2023
Background
The underlying case involved a dispute over the Eber family liquor distribution business and a trust holding interests in related companies. After a bench trial, Judge Lewis A. Kaplan ruled for the plaintiffs and entered a final judgment providing equitable relief, including declaring certain transactions void and requiring property to be transferred for the benefit of the trust and its beneficiaries.
The sanctions motion concerned 750 shares of EBWLC Class B Junior Preferred Stock that had been issued to Lester Eber. Judge Kaplan had found that the transactions involving those shares were void because they involved self-dealing and lacked persuasive evidence of informed consent by the co-trustees or trust beneficiaries. The final judgment stated that the shares were cancelled and deemed to have had no value.
Sanctions Motion
The plaintiffs moved under 28 U.S.C. § 1927 and the court’s inherent power to sanction John Herbert, who represented Wendy Eber and the Estate of Lester Eber. Herbert had drafted documents in 2017 relating to the creation and sale of the EBWLC shares. He later searched his files during the litigation and provided unsigned versions to Underberg & Kessler, the firm representing the Eber defendants through summary judgment. Herbert stated that he could not locate electronic or signed versions of the documents.
The plaintiffs argued that signed versions later produced through Wendy Eber were fraudulent and backdated. They asserted that Herbert had facilitated a fraud and requested $14,875 for attorneys’ time spent addressing the documents. The opinion states that the plaintiffs did not provide contemporaneous time records.
Legal Standard
Section 1927 permits sanctions against an attorney who unreasonably and vexatiously multiplies court proceedings. The court explained that sanctions require clear evidence that the challenged claims or conduct had no reasonable basis and were pursued in bad faith for an improper purpose, such as harassment or delay.
The court’s inherent power likewise permits sanctions for bad-faith conduct and fraud on the court. Fraud on the court requires an intentional scheme calculated to interfere with the court’s ability to decide a case impartially. The court emphasized that this inherent authority must be used carefully and that the person facing sanctions must receive notice and an opportunity to be heard.
Court’s Analysis
The court concluded that the sanctions request was without merit. The plaintiffs identified no case imposing sanctions on an attorney who merely drafted a document and did not submit a signed version to the court or make arguments relying on that signed version. They also offered no proof that Herbert forged Wendy Eber’s signature and conceded that point in their reply brief.
The court found that the plaintiffs’ argument focused on the late production of the signed documents and speculated that the delay made them suspicious. But Herbert was not responsible for discovery, and he stated that he did not possess signed versions in his files. The court determined that the plaintiffs provided no factual basis to find that Herbert acted in bad faith or perpetuated a fraud on the court. It also found that their brief did not adequately apply the required sanctions standard to the facts.
Disposition
The court denied the plaintiffs’ motion for sanctions at ECF No. 467.
Read the full 10-page opinion on CourtListener, the free public archive maintained by the Free Law Project.