S.E.C. v. BILZERIAN Civil Action No. 89-1854 (RCL).
729 F.Supp.2d 9 (2010)
SECURITIES AND EXCHANGE COMMISSION, Plaintiff, v. Paul A. BILZERIAN, et al., Defendants.
United States District Court, District of Columbia.
November 1, 2010.
Kathleen A. Ford , Securities & Exchange Commission, San Francisco, CA, Sara Z. Moghadam , DLA Piper LLP, Washington, DC, for Plaintiff.
Paul A. Bilzerian , Tampa, FL, pro se.
Ernest B. Haire , Tampa, FL, pro se.
MEMORANDUM OPINION ON CONTEMPT
ROYCE C. LAMBERTH, Chief Judge.
This matter now comes before the Court on David Eric Hammer's ("Hammer") Verified Consent Motion  to Vacate Contempt Memorandum Order and Opinion [1091, 1092] with Respect to David E. Hammer, Esquire ("First Motion to Vacate") and his Verified Consent Motion  to Vacate Contempt Memorandum Order and Opinion [986, 987] with Respect to David E. Hammer, Esquire ("Second Motion to Vacate"). Having considered Hammer's Motions to Vacate, Paul A. Bilzerian's ("Bilzerian") Response , Hammer's Reply , the relevant law, and the record in this case, the Court will deny the motions as set forth below.
A detailed background of this case, which is now more than twenty years old, can be found in the Court's May 11, 2009, Memorandum Opinion . SEC v. Bilzerian, 613 F.Supp.2d 66, 68-69 (D.D.C. 2009). The facts relevant to the issue now before the Court are as follows.
Bilzerian was convicted of securities fraud and conspiracy to defraud the United States in 1989. United States v. Bilzerian, 926 F.2d 1285 (2d Cir.1991) (affirming conviction). The SEC then filed a civil suit against him in the summer of 1989 and obtained a judgment for approximately $62 million. SEC v. Bilzerian, 29 F.3d 689 (D.C.Cir.1994) (affirming judgment). In 1993, Judge Harris of this Court ordered Bilzerian to disgorge $62 million in ill-gotten gains. SEC v. Bilzerian, 814 F.Supp. 116 (D.D.C.1993) (ordering disgorgement of $33 million in profits), aff'd 29 F.3d 689 (D.C.Cir.1994); SEC v. Bilzerian, 1993 WL 542584 (D.D.C.1993) (ordering disgorgement of $29 million in prejudgment interest).
Rather than follow those orders, though, Bilzerian and his agents abused the judicial system in a concerted effort to interfere with this Court's attempts to establish the sources and amounts of his assets. To put an end to their frivolous lawsuits, which made progress in this case all but impossible, this Court issued the following injunction:
Order 2, July 19, 2001, ECF No. 416.
That Order, however, did not stem the tide. On May 11, 2009, this Court held Bilzerian and Hammer (who acted on Bilzerian's
The Court ordered Hammer to purge his contempt "by ceasing his representation of Bilzerian in any capacity in any litigation matters and withdrawing as counsel, if listed as counsel of record, in any of the above cases." Id. at 2. The Court also ordered Hammer to file a sworn statement that he had complied with the order within ten days of the date it was filed. Id. Instead, he waited fifteen days to file a sworn statement that said, among other things, that "he has never represented Paul Bilzerian." Statement of Compliance, May 26, 2009, ECF No. 993.
That outright lie was paradigmatic of Hammer's habit of misleading courts. Mem. Order and Op. 11, August 12, 2009, 641 F.Supp.2d 16 (D.D.C.2009), ECF No. 1053. He told Judge Paskay of the Bankruptcy Court for the Middle District of Florida that the show cause proceedings in this Court had already concluded, when in fact they were still under advisement. Paskay Order 12, ECF No. 980. Judge Paskay found that Hammer's "blatant disregard" of the Court's order was "typical and additional proof of Mr. Hammer's litigious nature...." Id. In a separate matter, Judge Paskay characterized Hammer's conduct as "obstructive, defiant and inappropriate" and his suit as an "unethical use of the legal system." See Docket 19, ECF No. 1029. Judge Paskay is not the only judge who has found it necessary to reprimand Hammer, though. Judge Martha J. Cook, in the Thirteenth Circuit, Hillsborough County, Florida, has labeled Bilzerian and Hammer's conduct "egregious," "sanctionable," and "clearly unethical." Cook's Order 10, 12, ECF No. 951. She went on to say that Hammer had participated in "sandbagging, disrupting discovery, and walking down a road that would get him in a lot of trouble." In light of all this, she was "inclined to order him to attend peer review or some sort of remedial training." Id. at 9-12.
Then, on August 12, 2009, this Court granted Haire's [998, 999] and Todd Hodges' ("Hodges")  Motions to Show Cause. Order to Show Cause 1, August 12, 2009, ECF No. 1055. The Court ordered Hammer, Bilzerian, and others to show cause, in a writing to be filed with
On July 13, 2010, this Court held Hammer in civil contempt for the second time for violating its 2001 Order. Mem. Op., 729 F.Supp.2d at 2-3, 2010 WL 2771844 at *1 ("2010 order"). The Court once again ordered him to purge his contempt—this time by ceasing his representation of Terri L. Steffen ("Steffen") and the Puma Foundation ("Puma"). Order 3, July 13, 2010, ECF No. 1091. The Court further ordered Hammer to file a sworn statement on or before July 23, 2010, affirming that he had complied with those conditions. Id.
On July 15, 2010, nearly an entire year since entry of the August 12, 2009, Show Cause Order, Hammer let the Court know for the first time that he had withdrawn from the Steffen and Puma lawsuits. Decl. of Compliance 2 and Ex. A & Ex. B, July 15, 2010, ECF No. 1093. As it turns out, he had withdrawn from both lawsuits a few days before the Court entered its 2010 Order. In light of the timing of his withdrawals and other remedial actions he has taken since, Hammer's current motions urge the Court to vacate its Orders holding him in contempt.
III. LEGAL STANDARD
Although the Federal Rules of Civil Procedure do not specifically provide for motions for reconsideration, courts generally analyze them under the standards for a motion to alter or amend judgment under Rule 59(e) or a motion for relief from a judgment or order under Rule 60(b). Ellipso, Inc. v. Mann, 583 F.Supp.2d 1, 3 (D.D.C.2008) (Lamberth, C.J.) (quoting Lightfoot v. District of Columbia, 355 F.Supp.2d 414, 420-21 (D.D.C.2005)). If a person files a motion for reconsideration within twenty-eight days of the judgment or order of which he complains, courts consider it a Rule 59(e) motion; otherwise, they treat it as a Rule 60(b) motion. See id. (referring to the ten-day deadline that was in place prior to the 2009 amendments to the Federal Rules of Civil Procedure, which changed the deadline to twenty-eight days).
But those Rules only apply to motions for reconsideration of final orders. Fed.R.Civ.P. 59(e) & 60(b); U.S. v. BCCI Holdings (Luxembourg), S.A., 994 F.Supp. 18, 21 (D.D.C.1998) (citing Derrington-Bey v. District of Columbia Dep't of Corrs., 39 F.3d 1224, 1225-26 (D.C.Cir.1994)). Generally speaking, civil contempt orders are interlocutory. Doyle v. London Guar. & Accident Co., 204 U.S. 599, 603, 27 S.Ct. 313, 51 L.Ed. 641 (1907) ("[W]e deem it settled that an order punishing for contempt, made in the progress of the case, when not in the nature of an order in a criminal proceeding, is regarded as interlocutory, and to be reviewed only upon appeal from a final decree in the case.");
Hammer's Motions, however, fall under an exception to that general rule. Court orders holding non-parties like Hammer in civil contempt are considered final and immediately appealable. United States Catholic Conference v. Abortion Rights Mobilization, Inc., 487 U.S. 72, 76, 108 S.Ct. 2268, 101 L.Ed.2d 69 (1988) ("The right of a nonparty to appeal an adjudication of contempt cannot be questioned. The order finding a nonparty witness in contempt is appealable notwithstanding the absence of a final judgment in the underlying action."); OSRecovery, Inc. v. One Groupe Int'l, Inc., 462 F.3d 87, 89 (2d Cir.2006); U.S. ex rel. Pogue v. Diabetes Treatment Centers of Am., Inc., 444 F.3d 462, 474 n. 7 (6th Cir.2006); United States v. Dowell, 257 F.3d 694, 698 (7th Cir.2001); In re Woosley, 855 F.2d 687, 688 (10th Cir.1988); United States v. Accetturo, 842 F.2d 1408, 1412 (3d Cir.1988); In re Fish & Neave, 519 F.2d 116 (8th Cir.1975); Estate of Domingo v. Republic of Philippines, 808 F.2d 1349, 1350 (9th Cir.1987); Sanders v. Monsanto Co., 574 F.2d 198, 199 (5th Cir.1978). This exception is necessary because non-parties would be unable to appeal from a final judgment on the merits. David v. Hooker, Ltd., 560 F.2d 412, 415-16 (9th Cir.1977); see also 11A Charles Alan Wright, Arthur R. Miller, Mary Kay Kane, Richard L. Marcus, Federal Practice and Procedure § 2960 (2d ed.1996).
Satisfied that Rules 59(e) and 60(b) apply to Hammer's Motions, the Court now turns to the relevant legal standards under each Rule.
A. Legal Standard Under Rule 59(e)
Rule 59(e) allows a district court to correct its own mistakes in the period immediately following the entry of a mistaken order. White v. N.H. Dep't of Empl't Sec., 455 U.S. 445, 450, 102 S.Ct. 1162, 71 L.Ed.2d 325 (1982). Though a court has considerable discretion in granting Rule 59(e) motions, it only needs to do so when it finds that there has been an intervening change of controlling law, that new evidence is available, or that granting the motion is necessary to correct a clear error or to prevent a manifest injustice. Firestone v. Firestone, 76 F.3d 1205, 1208 (D.C.Cir.1996) (per curiam). Moreover,
B. Legal Standard Under Rule 60(b)
In its discretion, a court may relieve a party from an otherwise final order for any one of the following six reasons:
Just as timing determines whether Rule 59(e) applies to a motion for reconsideration, it also affects the interplay and availability of the various subsections of Rule 60(b). Someone proceeding under one of the first three subsections of Rule 60(b) must file his motion within one year after entry of the judgment at issue. Fed. R.Civ.P. 60(c)(1). A person relying on one of the three remaining subsections may file his Rule 60(b) motion within a "reasonable time." Id. Furthermore, he cannot rely on the 60(b)(6) catchall provision to circumvent the 60(c)(1) limitations on 60(b)(1)-(3). As the D.C. Circuit stated in Williamsburg Wax Museum, Inc. v. Historic Figures, Inc., 810 F.2d 243, 249 (D.C.Cir.1987):
Any other interpretation of 60(b)(6) would render the limitations on motions under 60(b)(1)-(3) meaningless. See id. ("[I]t is generally accepted that cases falling under Rule 60(b)(1) cannot be brought within the more generous Rule 60(b)(6) in order to escape the former's one year time limitation."). With these provisions and the legal rules that govern the interplay between them in mind, the Court now turns to the specific arguments in Hammer's Motions.
A. Hammer's First Motion to Vacate
Hammer makes three arguments in favor of his Motion to vacate the 2010 Order holding him in contempt. First, he argues that the fact that he had withdrawn from the Steffen and Puma lawsuits prior to the Court's entry of its 2010 Order is newly available evidence justifying relief under Rule 59(e). Second, he argues that the Court's failure to consider that same evidence is a Rule 60(b)(1) mistake that requires vacation of the Court's 2010 Order. Finally Hammer contends that, under Rule 60(b)(5), it is no longer equitable for the 2010 Order to apply to him prospectively in light of the hardship it has caused him and the fact that he has distanced himself from Bilzerian and taken remedial
i. Hammer's 59(e) Newly Available Evidence Argument Fails.
Hammer says that the fact that he had withdrawn from Steffen and Puma lawsuits prior to the Court's entry of the 2010 Order is newly available evidence that justifies relief under Rule 59(e). First Mot. to Vacate 4-5, August 9, 2010, ECF No. 1099. As discussed above, Rule 59(e) allows a court to correct its own mistake in the period immediately after entry of an order. Newly available evidence can provide justification for such a correction. Firestone, 76 F.3d at 1208. Rule 59(e) does not, however, afford Hammer an opportunity to raise new arguments that he could have raised before the Court entered its 2010 Order, nor is it a chance for him to correct poor strategic choices. The evidence Hammer alludes to is not newly available; it is simply newly received. Hammer had actual notice of the 2001 Order; he was held in contempt for violating it before; and he was ordered to show cause by September 11, 2009, as to why he should not be held in contempt for violating it again. Despite all of this, Hammer waited nearly a year from the date that he was ordered to show cause to withdraw from these lawsuits. Hammer has no excuse for participating in these lawsuits at all, much less for dragging his heels for nearly a year before withdrawing from them. Accordingly, he has only himself to blame—not this Court—for the fact that notice of his eventual withdrawals arrived two days after the Court entered its 2010 Order. This is not newly available evidence that justifies granting a Rule 59(e) motion.
Moreover, even if Hammer had withdrawn from these lawsuits within a reasonable time, this Court still would have held him in contempt for violating the 2001 Order. This Court's 2010 Order had multiple objectives. Among them were to hold Hammer in contempt for violating the Court's 2001 Order, to order Hammer to purge his contempt by ceasing any representation of Steffen or Puma, and to order Hammer to file a sworn statement with this Court that he had complied with those conditions on or before July 23, 2010. To his credit, Hammer's July 15, 2010, Declaration of Compliance does indeed show that he had complied with the last two objectives of the 2010 Order even before this Court issued it, but those withdrawals do not—and they could not—bring him into compliance with the Court's 2001 Order. It makes absolutely no difference when Hammer withdrew from the cases; by pursuing them at all without seeking this Court's permission, he violated the 2001 Order and was rightly held in contempt for it.
Hammer makes an additional argument that requires the Court's attention. He points out that in its May 11, 2009, Memorandum Opinion, this Court stated the following:
Id. at 76. Hammer argues that "[j]ust as Jack Rabbit limo Service, Inc. and Robert Bleakley were no longer in violation of this Court's orders on May 11, 2009, Hammer was no longer in violation of this Court's orders on July 13, 2010. Therefore, the Contempt Order and Contempt Memorandum Opinion should be vacated with respect to Hammer." First Mot. to Vacate 5, August 9, 2010, ECF No. 1099. This argument fails for several reasons.
First, the reasoning this Court applied in its refusal to hold Robert Bleakley in contempt does not apply to Hammer. For a court's injunction to bind a person, that person must have actual notice of the order. Fed.R.Civ.P. 65(d)(2). Moreover, this Court's 2001 Order independently states that it only binds those who have actual notice of it. Order 2, July 19, 2001, ECF No. 416. As this Court pointed out in its May 11, 2009, Memorandum Opinion, Bleakley did not have actual notice of the Court's 2001 Order at the time of his involvement in violative litigation. Mem. Op., 613 F.Supp.2d at 76-77. By the time he did receive notice of the Order on July 3, 2008, he had already withdrawn from the violative litigation. Id. Unlike Bleakley, Hammer clearly had actual notice of the 2001 Order. The fact that this Court has held Hammer in contempt for violating the same Order before is proof enough of that. Id. at 72-74. Because Hammer had notice of the Court's 2001 order and Bleakley did not, the Court's reasoning regarding Bleakley does not apply to Hammer.
The Court now turns to Hammer's argument regarding Jack Rabbit Limo Services, Inc. ("Jack Rabbit"). Although Jack Rabbit had actual notice of the 2001 Order, the Court is still not persuaded that its reasoning there applies to Hammer. As will be explained below, while holding Jack Rabbit in contempt could serve no coercive purpose, holding Hammer in contempt here serves a coercive purpose of primary importance.
Jack Rabbit was nothing more than a disguise Bilzerian and Hammer assumed in their ongoing mission to disrupt the judicial process. In a written opinion disposing of the Jack Rabbit litigation, Judge Cook stated that Jack Rabbit was Bilzerian's company and that Hammer represented him in litigation. See Docket 9, ECF No. 951. This Court had already held Bilzerian and Hammer—apart from their Jack Rabbit facade—in contempt in the same Order. Order 1-2, May 11, 2009, ECF No. 986. Thus, holding Jack Rabbit in contempt when it was really just a thinly veiled front for Bilzerian and Hammer, could serve no further coercive purpose.
Holding Hammer in civil contempt here, on the other hand, serves a coercive purpose of primary importance. The Court's 2001 Order was not aimed at stopping any single lawsuit. Rather, it was meant to put an end to Bilzerian, Hammer, and others' persistent and determined efforts to gum up the judicial works in this case by filing one frivolous lawsuit after another designed to thwart the receivership's progress. Their relative success in that endeavor explains—in large part—why this litigation has plodded along at a snail's
Finally, beyond all of this is the extraordinary nature of Rule 59(e)—a rarely used and disfavored remedy. Hammer's newly available evidence argument, even if accepted despite all of the problems explained above, simply does not present an extraordinary circumstance worthy of a Rule 59(e) order.
ii. Hammer's and 60(b)(1) Mistake Argument Also Fails.
Hammer makes essentially the same argument under Rule 60(b)(1), except instead of contending that his withdrawals from the Puma and Steffen litigation are newly available evidence, he contends that the Court's failure to consider those withdrawals was a 60(b)(1) mistake. This argument also falls short. First, it is unclear whether Hammer contends that the 60(b)(1) mistake of which he complains is the Court's or his own. Mindful of Rule 59(e)'s "clear and narrow aim," to "mak[e] clear that the district court possesses power to correct its own mistakes," this Court already decided above that it did not need to reconsider the 2010 Order in light of Hammer's alleged newly available evidence due to some mistake on its own part. As such, and because Rule 60(b) is slightly more restrictive than Rule 59(e), the Court will not readdress that argument now under Rule 60(b)(1). Thus, the only question before the Court under 60(b)(1) is whether reconsideration of the 2010 Order is necessary in light of Hammer's mistake of not submitting the evidence of his withdrawals from the Steffen and Puma litigation sooner. It is not.
To succeed under Rule 60(b)(1), Hammer must show that he was justified in
Moreover, even if Hammer had a decent justification for failing to avoid his mistake, the Court does not find this to be the sort of extraordinary circumstance that warrants using the disfavored and rarely used 60(b)(1) remedy. As discussed above, the Court's decision would be the same with or without that evidence.
iii. Hammer's 60(b)(5) Hardship Argument Also Fails.
Hammer also argues, this time under Rule 60(b)(5), that it is no longer equitable for the 2010 Contempt Order to apply to him prospectively in light of the hardship it has caused him and the fact that he has distanced himself from Bilzerian and taken remedial measures to "bring Bilzerian to Justice." First Mot. to Vacate 1, August 9, 2010, ECF No. 1099. Rule 60(b)(5) allows a court to relieve a person from a final order if "applying it prospectively is no longer equitable." Fed. R.Civ.P. 60(b)(5). The Court does not doubt that its Contempt Order has made Hammer's life more difficult, but that is not enough to merit vacation. Courts should only grant Rule 60(b) motions in extraordinary circumstances. If hardship incidental to being held in civil contempt qualified as an extraordinary circumstance, it is hard to imagine how a court could coerce compliance with its own orders— especially against someone as steadfastly unwilling to comply as Hammer. In fact, the only extraordinary aspect of this circumstance is Hammer's consistent disregard of this Court's orders, not the entirely natural and foreseeable hardship he now endures as a result.
The fact that Hammer has distanced himself from Bilzerian and helped to "bring Bilzerian to justice" does not change the Court's decision. Hammer could have taken these actions long ago. Instead, he waited until this Court held him in contempt twice for violating the same Order before he finally decided to undertake them. This is not the sort of extraordinary circumstance that requires granting a Rule 60(b) motion.
B. Hammer's Motion to Vacate the Court's May 11, 2009, Order
The Court need not consider either of the arguments Hammer raises in his Second Motion to Vacate because one of them is time barred and the other has already been considered at length above and rejected.
Hammer's argument that his behavior since the Court's May 11, 2009, Order is newly discovered evidence that justifies relief under Rule 60(b)(2) is time-barred. Rule 60(c)(1) requires that motions seeking
The Court already considered and rejected Hammer's argument that Rule 60(b)(5) requires vacation of its 2010 Order. Its reasoning there applies with equal force to his request that the Court vacate its May 11, 2009, Order. Accordingly, the court rejects Hammer's argument that 60(b)(5) requires vacation of its May 11, 2009, Order.
The Court notes that the Florida Bar has suspended Hammer. It is true that Hammer, dispossessed of his Bar license, is a much less serious threat to this Court's 2001 Order. Still, the Court is convinced that its 2010 Order must remain in place despite Hammer's suspension. It is possible that Hammer could be licensed by another Bar or re-admitted to the Florida Bar, in which case, he would again pose an immediate threat to the Court's 2001 order.
For the reasons set forth above, the Court will DENY Hammer's motions [1099, 1100] to vacate. A separate Order will issue this date.
- No Cases Found