Kumaran v. National Futures Association

Background

The order addressed a motion by Plaintiff Nefertiti Risk Capital Management, LLC (NRCM) against non-party Randy Kleinman, whom the opinion identifies as NRCM’s former counsel. NRCM sought records, including work product and Westlaw search history generated between June 2022 and Kleinman’s termination on December 19, 2023. NRCM also sought costs and expenses.

Kleinman stated that he was willing to cooperate reasonably with requests from his former client and wanted to fulfill any remaining obligations. In reply, NRCM said it was unclear whether Kleinman possessed any work product.

Motion to Compel

The court denied NRCM’s motion to compel without prejudice. It found that the record did not clearly identify which records NRCM sought that Kleinman was not already willing to provide.

The court ordered NRCM’s counsel and Kleinman to meet and discuss the motion by April 30, 2024. NRCM was required to identify precisely what it wanted from Kleinman. If Kleinman refused to turn over any work product, including legal research, NRCM could renew its motion by May 7, 2024.

Motion for Costs and Expenses

The court denied NRCM’s motion for costs and expenses. NRCM relied on 28 U.S.C. § 1927, a statute allowing courts to require an attorney or other admitted person to pay excess costs caused by unreasonably and vexatiously multiplying court proceedings.

The court stated that the statute is designed for an adverse party to seek monetary sanctions against an attorney. NRCM had not provided precedent supporting its use by a former client to recover costs from its own former law firm, outside the malpractice context. The court nevertheless assumed for purposes of analysis that § 1927 sanctions might be available to NRCM.

The court held that sanctions were not justified. NRCM did not provide facts suggesting that Kleinman refused to turn over work product for an improper purpose, and Kleinman’s response indicated that he was acting in good faith to resolve the dispute. The court also found no basis to reimburse fees connected to an earlier sanctions motion that NRCM did not renew, or expenses related to an anticipated need to amend NRCM’s pleading. The court described that latter request as speculative and noted that NRCM had not shown Kleinman filed the pleading to unreasonably or vexatiously multiply the proceedings.

Disposition

Judge Stewart D. Aaron denied without prejudice NRCM’s motion to compel and denied NRCM’s motion for costs and expenses. The order did not state that either denial was with or without prejudice except as expressly specified for the motion to compel.