Bass, Berry & Sims attorney Chris Lazarini examined a case involving a party’s request for relief from an sanction order. The court denied the request, finding that relief under FRCP is an extraordinary remedy and the party seeking relief must show a meritorious claim at trial and because of the fraud, misrepresentation, or misconduct of the adverse party was prevented from fully and fairly presenting the case.

Chris provided the analysis for Securities Online Litigation Alert (SOLA). The full text of the analysis is below and used with permission from the publication. If you would like to receive additional content from the SOLA, please visit the SOLA website to sign up for the newsletter.

Jackson County Bank vs. DuSablon, No. 1:18-cv-01346 (S.D. Ind., 12/26/19)

*Broker’s request for relief from prior sanction order under FRCP 60(b) rejected.

**Relief under FRCP 60(b) is extraordinary remedy and party seeking relief must show he had a meritorious claim at trial and because of the fraud, misrepresentation, or misconduct of the adverse party was prevented from fully and fairly presenting his case.

This matter arises from Plaintiff’s effort to hold Defendant to a non-compete agreement. Defendant is a former bank employee and registered representative of Invest, who left Plaintiff when it opted to change broker-dealers and allegedly solicited his clients to transfer their accounts to him at his new firm in violation of his employment agreement with Plaintiff. We earlier reported on Defendant’s unsuccessful effort to remove Plaintiff’s case to federal court. Finding no “objectively reasonable” basis for removal where Plaintiff brought state law claims only, the Court remanded and granted Plaintiff’s motion for $9,035 in costs and fees. On appeal, the Seventh Circuit found it lacked jurisdiction to review the remand order, upheld the sanctions award (the only part of the Court’s order over which it had jurisdiction), and ordered Defendant to pay over $18,000 in costs and fees Plaintiff incurred in defending the appeal. See SOLA Ref. No. 2019-14-03.

“Not easily persuaded of his errors,” Defendant asked the Court for relief from its $9,035 sanction order, claiming Plaintiff violated the Indiana Trial Rules of Civil Procedure (the “Rules”) by not attaching two contracts to its state court complaint. One contract was a Subscriber Agreement between Invest and Plaintiff; the other was Defendant’s “employment agreement” with Invest. Defendant argued these contracts implicated the federal securities laws and, once produced, would reveal he had an “objectively reasonable” basis for seeking removal. The Court finds the motion lacks support, contains no legal analysis, is primarily an attack on Plaintiff and its counsel, and misrepresents the Indiana Trial Rules.

The Court notes Plaintiff attached to its complaint the contract between Plaintiff and Defendant; the only contract whose terms it sought to enforce. Because the other contracts were not contracts supporting Plaintiff’s claims, the Court explains, Plaintiff had no duty to attach them. Perhaps hoping to dissuade Defendant from filing additional motions, the Court also states the contracts were timely produced under the Rules; tells Defendant his removal efforts would have failed even if he had the contracts in the prior remand proceedings, because a defense raising a federal question in response to a complaint based solely on state law claims is not a basis for removal; and finds the motion untimely. “Simply put,” the Court concludes, “his arguments do not hold water, in that they fail to establish a basis for federal question jurisdiction under well-established principles of law.”

(C. Lazarini: Defendant fared no better in the preliminary stages of the state court proceeding. There, a preliminary injunction was granted and later converted to a permanent, one-year injunction after the court found Defendant in contempt for violating the preliminary injunction. A $5,700 judgment was also entered against Defendant for discovery abuse. That judgment was upheld on interlocutory appeal. See SOLA Ref. No. 2019-39-05.)