Free Response to Order to Show Cause - District Court of Colorado - Colorado

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO Civil Action No. 04-cv-00860-WDM-PAC ROBERT ALWARD Plaintiff, v. VAIL RESORTS, INC., a Colorado corporation; VAIL CORPORATION, INC. D/B/A/ VAIL ASSOCIATES INC., a Colorado corporation; VR HOLDINGS, INC., a Colorado corporation; and WILLIAM JENSEN, individually and in his official capacity as Senior Vice President and Chief Operating Officer of Vail Resorts, Inc. Defendants. ______________________________________________________________________________ RESPONSE TO ORDER TO SHOW CAUSE ______________________________________________________________________________ Plaintiff's counsel, pursuant to the Court's Order dated July 15, 2005 hereby responds to the Order to Show Cause, dated April 27, 2005: PRELIMINARY STATEMENT Plaintiff's counsel objects to the imposition of sanctions under 28 U.S.C. § 1927 because: (1) The court's determination that sanctions are warranted is (a) not sufficiently specific, and may encompass the entire proceedings in this case to date; (b) based on misapprehensions of plaintiff's counsel's conduct in this litigation such that plaintiff's counsel cannot adequately be heard without effectively retrying the entire case; and (c) does not meet the standard for such sanctions; (2) The court unfairly seeks to sanction plaintiff's counsel for conduct in which defendants' counsel engaged, and has not been sanctioned;

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(3) The amount of attorney's fees submitted by the defendants is so significant and punitive that plaintiff must be afforded the same procedural protections as a criminal defendant, which the court has not provided; and (4) Plaintiff's counsel does not have the financial means to pay any amount of sanctions in excess of the amounts the court initially imposed (which amounts were later vacated for failure to provide adequate notice). FACTUAL BACKGROUND The Court's April 27, 2005 Order The Court's April 27, 2005 Order [179] does not clearly identify the basis for the sanctions.1 The Order incorporates the list of motions and issues contained in defendants' Exhibit H to Defendants' Brief Regarding Sanctions Against Plaintiff's Counsel [Docket #175], and specifies certain facts and issues beyond the scope of those motions. Thus, the scope of the Order may implicate the entire proceedings in this case to date, spanning more than 13 months and encompassing thousands of pages of pleadings, motions, correspondence, deposition and hearing transcripts, and other materials. As a practical matter, it is impossible for plaintiff's counsel to cull through all of these materials and prepare a complete and adequate response to all of the issues raised directly and indirectly in the Order, especially given the limited amount of time the court allowed for a response. Therefore, this response highlights the facts which militate against the imposition of sanctions, and incorporates by reference all of the pleadings and papers referenced herein, or by the court.

1

Although the court may impose sanctions under §1927 sua sponte, it bears noting that the defendants in this case has not requested sanctions against the plaintiff or his counsel.

2

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As a preliminary matter, plaintiff's counsel objects to the imposition of sanctions because the court has misapprehended the following facts, upon which it now relies as the basis for imposing sanctions on plaintiff's counsel: 1. That plaintiff seeks emotional distress damages See below, regarding Medical and Employment releases, and plaintiff's Complaint. 2. That plaintiff's counsel asserted that plaintiff's employment records were irrelevant and privileged. Plaintiff's counsel never asserted that the employment records were privileged or irrelevant, rather that all information related to mitigation had been produced in August 2004. See transcript of January 25, 2005 hearing [122], Docket #93, 126, 131, and the Court's Order dated June 1, 2005. 3. That plaintiff's counsel's objections to defendants' Request for Production No. 8 were untenable. See below, regarding Medical and Employment releases, and plaintiff's Complaint. See also transcript of January 25, 2005 hearing [122], Docket #93, 126, 131, and the Court's Order dated June 1, 2005. 4. That plaintiff's medical records were relevant to this action. See below, regarding Medical and Employment releases, and plaintiff's Complaint. See also transcript of January 25, 2005 hearing [122], Docket #93, 126, 131, and the Court's Order dated June 1, 2005. 5. That plaintiff's counsel's objections to the defendants' Request for Production No. 10, and the form of defendants' employment release were untenable.

3

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See below, regarding Medical and Employment releases, and plaintiff's Complaint. See also transcript of January 25, 2005 hearing [122], Docket #93, 126, 131, and the Court's Order dated June 1, 2005. 6. That the court allowed plaintiff to object to, or ruled on, the form of the employment release at the January 25, 2005 hearing. See below, regarding Medical and Employment releases. See also transcript of January 25, 2005 hearing [122], Docket #93, 126, 131, and the Court's Order dated June 1, 2005. 7. That plaintiff repeatedly sough information he did not request in written discovery with respect to the number of ski instructors. The omission of the words "full-time" from the specific request was inadvertent. However, at the November 23 hearing, plaintiff's counsel recalls discussing the scope of the "similarly situated" group of employees, and had the impression at that time that the court had ordered that information to be produced. Upon review of the transcript, plaintiff's counsel realized that the discussion was not as clear. However, the number of full-time ski instructors was information that could have been derived from defendants' complete responses to other of plaintiff's discovery requests (including Requests Nos. 3 and 4 of plaintiff's First Set of Discovery and Request no. 3 of the second set, which requested all personnel records, job codes, and payroll records for the relevant time period, and summaries of that information from the defendants' personnel databases). 8. That plaintiff's counsel continued to request the visa application documents after she had been given access to all the documents that were available. The court cites the December 2 and 6, 2004 minutes. The telephonic conferences that were the subject of these minutes concerned the defendants' production of personnel files, not the visa application files. Defendants produced the HR personnel files on December 2 and 3 only. The visa 4

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application files were to be produced within 30 days of the November 23 Order. However, defendants did not do so. As set forth in plaintiff's February 11 motion to compel, as of that date, defendants had not produced all of the visa application files, and had not produced copies of any of the documents plaintiff had flagged for production. Moreover, defendants have still not produced the personnel files maintained at the Beaver Creek and Vail ski schools. Defendants have never represented that there are no personnel files maintained at the ski schools. Nor can they without lying to the court (multiple witnesses have testified that these files exist, and contain information plaintiff sought in his discovery requests). They simply have not produced them. 9. Plaintiff's counsel's arguments under Rule 30(b)(6) were repetitive and unfounded. In response to plaintiff's Appeal, the court ruled that, contrary to the court's November 23 order, plaintiff's counsel was correct in arguing that Rule 30(b)(6) deposition counts as one deposition, regardless of the number of representatives defendants designate. See Order dated June 1, 2005. 10. Plaintiff's Fourth Motion to Compel sought complete deposition answers regarding the relationship between the defendant corporations, not just personnel matters. Plaintiff's counsel does not understand the basis of this assertion, or what the court means by this distinction. Plaintiff sought discovery regarding defendants' defenses in this action, and his claims. 11. That "the court spent considerable time with counsel scheduling depositions and extending the discovery deadline for defendants because Ms. Kazazian had no free time in January 2005, including weekends, other than the days she had already set for depositions in this case." As plaintiff's counsel stated during the December 15, 2004 telephonic hearing, plaintiff had been trying for more than three months to schedule depositions with defendants, in order to avoid a last-minute backlog before the January 28 discovery cutoff. Plaintiff tried 5

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to work out a schedule by September 7, 2005, but defendants would not cooperate. See, e.g., Supplement to Scheduling Order [42] and Response to Motion for Protective Order [59 and 62]. Plaintiff continued throughout October to confer with defendants to set a deposition schedule, still to no avail. In the beginning of November, plaintiff offered 16 dates in November and December for depositions. Defendants stonewalled. In fact, defendants' counsel said she did not have four dates in a two-month period to reserve for depositions. Only one deposition went forward during these two months. Moreover, defendants never indicated that they wanted to do any additional depositions until the December 15 telephone hearing, and could not identify the individuals until December 30. Though defendants subsequently noticed 5 depositions, they cancelled all but one. The court should not punish plaintiff's counsel for doing all that she could to schedule depositions before January 1, 2005. 12. That counsel thereafter filed several motions for clarifications, and for extensions of time after she unilaterally noticed some depositions for dates in February 2005, past plaintiff's January 28, 2005 discovery deadline. In light of defendants' counsel's refusal to confer or cooperate in scheduling depositions, it is a mischaracterization to say that plaintiff "unilaterally" noticed any deposition in this case, or that the court's orders regarding the discovery cutoff were clear. See responses to defendants' motions for protective orders [59], motion to clarify [102, 109], response to motion to quash [111], and plaintiff's supplement to scheduling order [42]. 13. Ms. Kazazian also moved to compel the deposition of Wendy Garcia in her Third Motion to Compel, filed February 11, 2005, after the court had ruled that Garcia would not be deposed because she was not identified by the court-ordered deadline of December 30, 2004. See Amended December 15, 2004 Minutes. 6

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As of February 11, 2005, when plaintiff's Fourth Motion to Compel was filed, the court had not yet ruled on Defendants' Motion to Quash. In addition, the court had not yet ruled on Plaintiff's motion to clarify the discovery cutoff and to amend the scheduling order to permit him to take the depositions scheduled for February 6-11, 2005 (filed 1/28/05, Docket #102). That order was dated February 17, 2005--six days later. As set forth in plaintiff's motion to clarify, the Order [84] stated that the "discovery cutoff" was extended to February 11, 2005, and did not specify that the cutoff was only extended for defendants, and not the plaintiff. Since the court also set the deadline for both parties to file discovery motions on the same day, plaintiff reasonably thought the discovery deadline was extended in the same way for all parties, and sought clarification from the court because defendants did not agree. 14. "Plaintiff's counsel never moved for an extension for the January 28, 2005 discovery deadline before the close of that deadline." In fact, plaintiff did timely move for an extension of the January 28, 2005 discovery cutoff. See Motion to Clarify and Modify Scheduling Order [Docket # 122]. This motion was timely under Fed.R.Civ.P. 6. 15. Plaintiff's counsel moreover: a. "ignored the court's admonition that emails do not meet the requirements of Local rule 7.1A." There is no evidence in the record to support that plaintiff ever believed email was the preferred method of communication, although Local Rule 7.1 does not support the court's position on this issue. As plaintiff's counsel has informed the court on numerous occasions, defendants' counsel flatly refused to confer or communicate with plaintiff's counsel by any other means. Plaintiff's counsel has consistently picked up the phone and 7

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called defendants' counsel to discuss various issues. Ms. Kuhlmann, however, simply would not take or return those calls. The court should have admonished Ms. Kuhlmann for this conduct. b. "constantly interrupted the court and opposing counsel and defied orders to stop interrupting and to sit down and cease further argument." Had the court allowed plaintiff and his counsel to respond (either at hearings or on motions) before rubber stamping the defendants' dishonest assertions and stonewalling, addressed the issues for which the hearings were set, and not attributed defendants' misconduct to plaintiff's counsel, this case would not involve the volume of pleadings and hearings. This is the only case in plaintiff's counsel's 13 years of litigation experience (in four different federal district courts and two state's courts) where the court and the opposition have joined forces to destroy plaintiff's counsel, instead of try the case on the merits in accordance with the court's rules. The result has been a miscarriage of justice. Plaintiff's counsel is sole counsel on another single employment case pending in this court. The scheduling conference in both these cases was held the same day (July 27, 2004), and the final pretrial conference is also scheduled for August 12, 2005. However, in the other case, there have been no discovery hearings, no sanctions, no appeals to the district court judge, no motions to compel filed by either side, two settlement conferences, and the volume of pleadings totals 56 entries--including a fully briefed motion for summary judgment. 16. Plaintiff's counsel attempted to mislead the court and disregarded court orders on disputed discovery matters. There is no basis in fact or on the record for this conclusion, and plaintiff's counsel strenuously objects to such statements, which malign her integrity and professional reputation in this community. For example, the court has repeatedly asserted that counsel argued that 8

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Rule 72 automatically stayed the court's orders, despite the clear record, which indicates plaintiff's counsel has never taken this position, and attempted to correct the court on this issue at the January 25, 2005 hearing. See transcript [122]. Personnel Records and Visa Applications On November 23, 2005, the court held a hearing on Plaintiff's Second Motion to Compel [Docket # 63].2 At that hearing, the court granted plaintiff's motion in part. Specifically, in response to plaintiff's first set of discovery requests, the Court ordered defendants to produce for inspection and copying: (1) the personnel files for all ski instructors hired for the 2002 to 2004 ski seasons (on December 2 and 3, 2004); and (2) the visa application files for all foreign ski instructors within 30 days. The written order, filed November 30, 2004, however, reversed these deadlines [Docket #76]. On December 2 and 3, defendants produced the personnel records maintained by Human Resources, but did not produce the personnel records kept at the Vail and Beaver Creek Ski Schools (the "ski school personnel files"), or the "visa application" documents. On December 3, 2004, counsel for the plaintiff's contacted the court regarding the defendants' failure to produce all personnel records. The Court reiterated her November 23 order that defendants' counsel were to produce all records, and warned them not to play games. The court also instructed plaintiff's counsel to address this issue after the records produced had been fully reviewed. [Docket #77]. The review was completed on December 6, 2004. Plaintiff's counsel has repeatedly asked defendants to produce the ski school personnel files. Despite the court's instructions on December

2

Plaintiff's First Motion to Compel, filed August 20, 2004 [Docket # 28] was granted at the hearing on September 24, 2004 [Docket # 49].

9

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2, Counsel for defendants maintains that they were only ordered to produce the HR personnel files. No ski school personnel files were ever produced in this action. As of December 23, 2004, Defendants had not made the visa applications available for inspection and copying. Plaintiff's counsel tried repeatedly to schedule the review of these documents, but defendants only offered to produce them on December 30--a date counsel for defendants was previously advised that plaintiff's counsel was unavailable. Defendants then took the position that based on the court's written order regarding the November 23 conference (served on December 2) [76], they were not required to produce these documents after December 3. Plaintiff attempted to confer with the defendants to resolve this discovery issue, as well as others. Plaintiff also moved the court for an extension of time to file discovery motions, which was then set for February 11, 2005. As a result, plaintiff was required to file a motion to compel with the court. Medical and Employment Records releases This issue arises out of the following requests for production, and plaintiff's responses (emphasis added): 8. If you are seeking damages or recovery for any physical, mental or emotional injuries or distress, for all medical or mental health care professionals from whom you have received care in the last five (5) years, please produce an executed Authorization to Release Medical Information in the HIPAA compliant form attached, for all records which relate to your treatment or consultation with each medical or mental health care professional or counselor. Response: Objection. Request No. 8 is not reasonably calculated to lead to the discovery of admissible evidence, is vague, overly broad, and calls for the production of documents which are private. 10. Please sign the attached Authorization to Release Employment Information for each employer since your Separation. Response: Objection. Request No. 10 is not reasonably calculated to lead to the discovery of admissible evidence, is vague, overly broad, and calls for the production of documents which are private.

10

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The defendants never filed a written motion to compel these releases. Instead, they raised the issue in their response to plaintiff's motion to compel and at the hearing on November 23, 2004--which the Court set to hear the plaintiff's second motion to compel. As the court has noted several times, a party may not bring a motion in its response. A motion must be brought separately. The discussion about medical records began with plaintiff's request for the knee tests and the worker's comp files. The court stated that the plaintiff had to provide a signed release to obtain those records. Defendants did not make this argument, but quickly adopted the court's position. Then the court stated that plaintiff had put his physical condition at issue, by raising a claim for worker's compensation retaliation. Again, defendants had not made this argument, and Request No. 8 does not call for the production of those records on that basis. The result of that discussion was that the court ordered plaintiff to produce the releases by November 30, but did not order a date certain by which defendants had to produce the knee tests and the worker's compensation file. See, Transcript of 11/23/05 hearing [123], at 112:6 to 126:14. In fact, defendants never did produce the knee tests, and produced the worker's compensation file without requiring plaintiff to provide a HIPAA release (the morning of the hearing on January 25, 2005). As shown above, defendants' request for medical releases was conditioned upon the plaintiff seeking emotional distress damages, which he never has. At the time, the court acknowledged that the complaint did not include such a claim, but found a different justification for ordering their production. Subsequently, the court based its rationale on the erroneous assumption that plaintiff seeks emotional distress damages in this action. Plaintiff has attempted to correct this misapprehension of fact, apparently to no avail. The Complaint does not seek emotional distress damages, and plaintiff has attempted to reiterate this fact to defendants and the

11

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court on several occasions. In fact, there is no basis in the record to support the court's statement that "plaintiff seeks emotional distress damages." (4/27/05 Order, p. 5). In addition, defendants failed to establish that they had not already obtained copies of these records directly from the providers before they served their discovery requests3 and also failed to demonstrate how the medical releases were relevant to plaintiff's claim for retaliation stemming from his open workers' compensation claim4. Instead, the court made those arguments for defendants. The court's ruling, which compelled the plaintiff to produce medical releases, was therefore contrary to Rule 37. Plaintiff maintains that the court's November 23, 2004 order compelling production of these releases was erroneous. Nonetheless, plaintiff made a good faith attempt to comply with the court's order, while simultaneously moving the court to redress this error. On January 11, 2005, Defendants moved to enforce the court's November 23 order regarding the medical releases, and moved, for the first time, to compel production of the employment records releases. [Docket #89]. Plaintiff's counsel has set forth some, but not all, of the facts regarding plaintiff's compliance with this order, and the basis for the defenses raised, in plaintiff's response to defendants' January 11, 2005 motion to compel [Docket # 93], at the hearing held on January 25, 2005 [Docket # 122], in his Motion for Reconsideration filed February 16, 2005 [Docket #126], in his Appeals of the November 23 Order [86] and the January 25, 2005 Order [Docket #131], and at the March 25, 2005 hearing on defendants' Second Motion to Compel (filed February 11, 2005). In the interests of judicial efficiency, plaintiff will refrain from again setting forth all of those facts

3

As of August 30, 2004, plaintiff's counsel was aware that Mr. Alward had seen Dr. Burris and Dr. Steadman only. Plaintiff was also informed that both of these doctors had sent copies of their records to defendants at the time services were rendered, through their workers' compensation administrator. In fact, the worker's compensation file did include these records. Thus, defendants request for releases should have been denied because it was made with the intent to harass the plaintiff and his counsel. 4 Defendants have asserted in their motion for summary judgment that there is no claim for worker's compensation retaliation for failure to hire.

12

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in this brief, and instead incorporates the referenced motions and pleadings, as well as the courts' Order dated June 1, 2005, as if fully set forth herein. In summary, plaintiff maintains that defendants failed to confer before bringing either motion to compel; plaintiff's objections were not without merit; defendants' motions were brought for an improper purpose and, notwithstanding the court's orders, lacked merit. Less than 30 minutes before the hearing began, defendants finally produced the workers' compensation claim file, which was responsive to plaintiff's first set of discovery requests, served in July 2004. At the hearing, defendants asserted--also for the first time--that plaintiff had failed to comply with the court's November 23 order because he did not provide releases for Dr. Viola and Dr. Kowalski (who were listed on documents contained in the worker's comp file--which plaintiff's counsel had never seen before the hearing). Defendants never discussed these alleged deficiencies with the plaintiff before filing the motion, or before the hearing. Their argument on this point was wholly without merit, and should be viewed as defendants intentionally misleading the court. In fact, these doctors never actually treated the plaintiff. The document that named Dr. Viola for a third party--apparently misfiled in the worker's comp file maintained by the defendants. Dr. Kowalski was mentioned in a letter drafted by defendants' workers comp administrator regarding an appointment that never happened. Had defendants complied with their duty to confer, this issue could have been resolved with a phone call. Instead, defendants wasted the court, and counsel's time. Again, plaintiff's counsel attempted to bring these facts to the court's attention at the hearing, but the court told her to sit down and did not consider them before ruling. Tr. 1/25/05 hearing [122], at 76:20-77:4; 89:1-15. The court's subsequent orders threatened to impose sanctions if plaintiff's counsel raised any of these issues at subsequent hearings. As a result, defendants' misrepresentations and failure to confer have resulted in a mess of their own making. 13

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Also, despite the plaintiff's showing that he had previously produced all information related to mitigation, and despite defendants' failure to establish that this request was not duplicative, the court ordered the plaintiff to produce employment releases. [107]. See also Transcript of Hearing on 1/25/05, [Docket #122]. However, the court did not address the scope of the employment release language, and did not permit plaintiff an opportunity to address that issue. Specifically, the court did not consider that the defendants' form employment record release sought medical information about the plaintiff. The court then imposed sanctions against plaintiff's counsel. Based on the fact that the court recognized plaintiff's privacy interest in his medical information, and had not addressed the specific language of the employment releases, plaintiff's counsel determined that form of the employment release was an open issue. After the hearing, plaintiff attempted to confer with the defendants about this issue--and the fact that the form release was outdated--to no avail. Since the court had prohibited the parties from telephoning the court to address such issues, plaintiff moved for reconsideration of the court's order, and asked the court to clarify or modify its ruling regarding the specific language of the employment release. [#126]5 Plaintiff also timely produced to defendants an employment records release, which excluded the request for medical information. After the hearing, defendants conceded that HIPAA did not require the releases to be notarized, and that faxed signatures were acceptable. On February 2, 2005--just two days before plaintiff (who was in Canada for the season) was supposed to produce executed releases-defendants provided a revised medical release. Plaintiff promptly executed the medical releases in

5

Incorporated herein by reference, along with the Plaintiff's Appeal of this decision [docket #131], and the court's order

14

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accordance with the court's order and produced them to defendants. The delay in obtaining the signed medical and employment releases was not due to plaintiff's counsel's misconduct. Yet, defendants again misled the court about these facts in their Second Motion to Compel, filed February 11, 2005 [118]. See Plaintiff's Response [130], incorporated herein by reference. Moreover, as set forth in plaintiff's response [130], defendants had misappropriated the release plaintiff provided on November 30, 2004 and addressed to Dr. Burris (only) to also obtain all of plaintiff's medical records at Vail Valley Medical Center from 1994 to the present, which they had received approximately two weeks before they filed their Second Motion. In addition, the court ultimately denied their request for plaintiff's tax returns, except for Plaintiff's Schedule Cs (which showed a lower amount of net income than the 1099s plaintiff produced in August 2004). See Courtroom Minutes dated 3/25/05. Thus, defendants' second motion to compel was without merit, and moreover could have been resolved without the court's intervention had defendants' counsel discussed what they were looking for and why with plaintiff's counsel before filing that motion. Depositions Plaintiff's arguments regarding the number of depositions he should be permitted to take, and attempts to correct the court's erroneous adoption of defendants' assertion that each of the Rule 30(b)(6) representatives counted as separate depositions were not frivolous. See Judge Miller's Order dated June 1, 2005. The court admonished plaintiff for deposition conduct it deemed inappropriate, but ignored defendants' clearly improper conduct at depositions. The court also improperly allowed

Defendants to instruct witnesses not to answer questions based on relevance. See Dabney, 73 F.3d 262, 266 (10th Cir. 1995) (it is inappropriate under Fed.R.Civ.P. 30(d)(1) for counsel to instruct a witness not to answer a question on the basis of relevance). Moreover, defendants again made 15

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affirmative misrepresentations to the court when they asserted that the delay in starting plaintiff's deposition (on August 31. 2004) was plaintiff's counsel's fault. In fact, Ms. Kuhlmann refused to adjust the seating at the table to permit plaintiff's counsel to sit by her client, and insisted on calling the court to resolve that issue, and refused to start the deposition until the court could be reached. Again, defendants' counsel's conduct and her subsequent misrepresentations of these events should have been sanctioned. Plaintiff's counsel cannot be singled out and sanctioned for her less egregious conduct. The court has improperly ignored defendants' stonewalling with respect to the scheduling of depositions, and has unfairly ignored the facts which warranted defendants to be sanctioned, and not the plaintiff's counsel. See Appeal of December 16 order [85], and pleadings referenced therein, incorporated herein by reference.6 See also point 11, supra, p. 8. Less than two weeks earlier, the court instructed the parties to call if necessary to resolve deposition scheduling issues. On December 16, 2004, when plaintiff's counsel took the court up on this offer, the court then sanctioned plaintiff's counsel $100 and prohibited the parties from contacting the court by telephone. [Docket # 84]. LEGAL ANALYSIS I. The Court Should Not Impose Sanctions Against Plaintiff's Counsel Pursuant to 28

U.S.C. §1927 Section 1927 provides: "Any attorney or other person admitted to conduct cases in any court of the United States or any Territory thereof who so multiplies the proceedings in any case unreasonably and vexatiously may be required by the court to satisfy personally the excess costs, expenses, and attorneys' fees reasonably incurred because of such conduct." 28 U.S.C. § 1927.
6

Plaintiff's counsel paid the $100 in sanctions, but on July 12, 2005, in response to plaintiff's Rule 72 Appeals, Judge Miller reversed these sanctions and remanded for further proceedings. By order dated July 15, 2005, plaintiff's counsel is to respond by July 22, 2005 to the Order to Show Cause regarding those sanctions.

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Sanctions may not be imposed under 28 U.S.C.S. § 1927 unless the attorney's conduct manifests an intentional or reckless disregard for his or her duties to the court. The standard to be applied is one of objective bad faith. Braley v. Campbell, 832 F.2d 1504, 1511-12 (10th Cir. 1987). Under this standard, sanctions are not appropriate unless: (1) an attorney attempts to mislead the court; (2) an attorney intentionally acts without a plausible basis; (3) the entire course of proceedings is unwarranted; or (4) certain discovery is substantially unjustified and interposed for the purposes of harassment, unnecessary delay, and to increase the costs of litigation. Ctr. for Legal Advocacy v. Earnest, 89 Fed. Appx. 192, 194 (10th Cir. 2004) (sanctions inappropriate in the absence of evidence that attorney misled the Court or acted without a plausible basis, that the entire course of proceedings was unwarranted, or that attorneys engaged in dilatory or vexatious tactics); Dreiling v. Peugeot Motors of America, Inc., 768 F.2d 1159, 1166 (10th Cir. 1985) (An attorney's actions are considered vexatious and unreasonable under 28 U.S.C.S. § 1927 if the attorney acted in bad faith). An award of attorneys' fees and costs for unreasonably and vexatiously multiplying the proceedings in any case is appropriate only where the attorney's actions are so completely without merit as to require the conclusion that they must have been undertaken for some improper purpose such as delay. Cayuga Indian Nation of New York v. Village of Union Springs, 293 F.Supp.2d 183, 199 (N.D.N.Y. 2003) (denying award of attorneys' fees). "Due to the penal nature of §1927 and to ensure that the statute does not dampen an attorney's zealous representation of his or her clients' interest, courts should impose sanctions under the statute `only in instances evidencing a serious and standard disregard for the orderly process of justice.'" Starlight International Inc., v. Herlihy, 186 F.R.D. 626, 650 (D.Kansas 1999)(citing Miera v. Dairyland Ins. Co., 143 F.3d 1337, 1342 (10th Cir. 1998)); Dreiling, at 1166

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(citing Kiefel v. Las Vegas Hacienda, Inc., 404 F.2d 1163, 1167 (7th Cir. 1968), cert. denied, 395 U.S. 908, 89 S. Ct. 1750, 23 L. Ed. 2d 221 (1969)). Accordingly, the imposition of sanctions under § 1927 necessarily implicates due process, and requires notice and an opportunity to be heard. Resolution Trust Corp. v. Dabney, 73 F.3d 262 (10th Cir. 1995). Notwithstanding the differences between imposition of sanctions on attorneys and adjudication of criminal contempt, the imposition of a sufficiently substantial punitive sanction requires that the person sanctioned receive the procedural protections appropriate to a criminal case. Mackler Productions, Inc. v. Cohen, 146 F.3d 126 (2nd Cir. 1998) (imposition of a $10,000 punitive sanction on an individual, as opposed to a corporation or collective entity, requires such protections). "When a court imposes sanctions under 28 U.S.C. § 1927 ... it must sufficiently express the basis for the sanctions imposed to identify the excess costs reasonably incurred by the party to whom they will be due." Braley, 832 F.2d at 1513. Specific findings allow the court to identify the costs arising from the objectionable conduct, afford the sanctioned party notice and an opportunity to respond, and permit an appellate court to review the district court's decision. Id. "Excess costs" recoverable under 28 U.S.C. § 1927 include only those enumerated in 28 U.S.C. § 1920, which lists the items that ordinarily may be taxed to a losing party. Roadway Express, Inc., v. Piper, 447 U.S. 752, 757-61, 100 S.Ct. 2455, 2459-62, 65 L.Ed.2d 488 (1980). Neither § 1927 nor § 1920 include wasted judicial time as an "excess cost." Therefore, sanctions under § 1927 cannot be based upon the court's time or upon wasted judicial resources. Dabney, 73 F.3d at 267 (citing Blue v. United States Dep't of Army, 914 F.2d 525, 548 (4th Cir.1990), cert. denied, 499 U.S. 959, 111 S.Ct. 1580, 113 L.Ed.2d 645 (1991)).

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A. Due Process has been irreconcilably violated As set forth above, the court's April 27, 2005 Order clearly states that the court has already decided to impose sanctions on plaintiff's counsel. The court's February 17, 2005 Order stated the same. In fact, the court already imposed sanctions on plaintiff's counsel on December 16, 2004, January 25, 2005, and February 16, 2005. These orders indicate that the court prejudged the issue eight months ago. The court's warnings, prior to the February 17, 2005 Order, however, did not satisfy the due process requirements of notice and opportunity to be heard, and did not relate to sanctions under Section 1927 or any other legitimate basis. Plaintiff's counsel was not afforded notice or the opportunity to be heard on the motions and conduct which the court cites as the subject of sanctions before the court had decided the issue, or at any time before sanctions were imposed. In addition, the amount of sanctions considered has increased exponentially over time ($100 in the December 2, 2004 order; $500 on January 25, 2005; $4000 in response to the February 16, 2005 order; and now more than $30,000 in response to the April 27, 2005 order). This sequence of events violates plaintiff's counsel's due process rights in a way that cannot be remedied through an order to show cause at this late date, which spans the entire pretrial proceedings in this case. Moreover, the court has precluded plaintiff from being heard on the motions upon which the court now relies as a basis for sanctions. Although it is well within the court's powers to decide motions without waiting for or considering a response from the non-movant, the court cannot now rely on such motions as the basis for sanctions without violating plaintiff's counsel's due process rights. The court cannot remedy this lack of notice and opportunity to be heard at this late date, without rehashing every step of this protracted litigation in an evidentiary hearing. As

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illustrated above, the court has misapprehended the facts in significant ways, and these misapprehensions cannot support the imposition of sanctions. In addition, the court's refusal to delay this briefing and the hearing on the sanctions issue by one week, until after plaintiff's responses to defendants' motions for summary judgment are due. This overlapping schedule has severely undercut plaintiff's counsel's ability to adequately respond to either issue, and to attend to the other matters on plaintiff's counsel's docket since May 23 (the date defendants submitted their fee affidavit). There simply is not enough time. The court has liberally granted defendants every extension of time they have requested, despite the fact that defendants have either made up the reasons they cited as "good cause" or simply had none. This Order to Show cause is tantamount to the court deciding a criminal sentence to be imposed without first having tried the defendant and determined guilt. As such, plaintiff's counsel's due process rights have been irreconcilably violated. Plaintiff's counsel objects to the imposition of sanctions because the April 27, 2005 Order does not clearly identify the basis for the sanctions imposed, and apparently determined that sanctions should be imposed without affording plaintiff the opportunity to be heard in advance of the court's determination. Because the scope of the Order is unclear, and may encompass pleadings and conduct for the entire pretrial proceedings in this case--going back more than a year--plaintiff's counsel's due process rights cannot be protected without an evidentiary hearing which rehashes the entire discovery process of this case. Plaintiff's counsel submits that the conduct of defense counsel and the court, not simply or even primarily her own, has resulted in the unnecessary multiplication and excessive costs of this litigation. Moreover, the Order does not provide for such a hearing, and plaintiff's counsel should have the right to be represented by an attorney, which plaintiff's counsel cannot afford.

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In addition, the court's refusal (as of its July 15, 2005 order) to postpone the sanctions briefings and hearing until after plaintiff's responses to defendants' three motions for summary judgment are due undercuts both the plaintiff's counsel's "opportunity to be heard" as well as plaintiff's responses to those motions. In light of the court's awareness of plaintiff's counsel's limited resources and simultaneous demands of other cases, Plaintiff's counsel simply was not afforded sufficient time to go through the thousands of pages of pleadings in this case required to adequately present her defense. Due process is not satisfied simply through an order to show cause. The "opportunity to be heard" must include an opportunity for plaintiff's counsel to prepare a defense and explain what the court has identified as questionable conduct. B. Plaintiff's Counsel's Conduct Is Not Sanctionable As stated on the record at the January 25, 2005 hearing, the court did not determine that plaintiff's counsel's conduct with respect to the employment and medical records releases rose to the level of bad faith. In fact, the court did not determine that plaintiff's counsel alone was the culpable party. In its April 27, 2005 Order, however, the court apparently primarily relies on that conduct as justification for sanctions. Similarly, the court did not determine that plaintiff's counsel acted in bad faith when it imposed sanctions on December 16, 2005, or at any other time the court admonished plaintiff's counsel, threatened to impose sanctions for "wasting the court's time", or on any of the four prior occasions when the court actually imposed monetary sanctions on plaintiff's counsel. Thus, as of February 17, 2005, the court did not, and could not reasonably, determine that plaintiff's counsel's conduct approached any of the requirements for imposing sanctions under Section 1927. The April 22 order recast these determinations months after the fact, apparently to support otherwise unsupportable sanctions, again without hearing plaintiff's counsel on these issues.

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As set forth in Plaintiff's Motion for Reconsideration of the February 17, 2005 Order [Docket #137], incorporated herein by reference, plaintiff had no choice but to file the motions which are the subject of that order, and the other motions in this case. First, plaintiff's counsel filed the Motion for Clarification in a good faith effort to clarify what appeared to be inconsistencies in the court's previous orders, and alternatively, to request the court to modify the discovery deadline to permit him to take the depositions of four witnesses, three of which the defendants had not disclosed until December 30, 2004. Counsel for Plaintiff has repeatedly made good faith efforts to schedule depositions in a timely manner in consultation with counsel for defendants. Instead of working cooperatively and reasonably, counsel for defendants stonewalled those efforts by refusing to confer about deposition dates, and then blocking scheduled depositions by filing motions for protective orders or to quash subpoena. By granting those motions despite defendants' failure to meet the required standards, the court has encouraged defendants to continue their abusive conduct, which has vexatiously multiplied these proceedings. Plaintiff was required to file each of the subject motions because (1) the court-imposed deadline for such motions conflicted with the status of discovery in this case; (2) the court's written orders were either unclear or contradicted her rulings from the bench; (3) defendants refused to confer or to resolve issues without the court's intervention; (4) the court had misapprehended the facts to the detriment of plaintiff's case; and/or (5) the Rules required plaintiff's counsel to make his record for appeal. In short, plaintiff's counsel acted in accordance with the rules of this court and her obligations to zealously represent her client. Such conduct must not be punished. The court's April 27 Order states that it finds "the facts are similar to those in Limerick v. Greenwald, 749 F.2d 97, 101 (1st Cir. 1984)." First, the case cited by the court is not controlling

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precedent in this court, and should not be given greater weight than the cases from this jurisdiction or from other circuit courts of appeal. Second, that case involved multiple appeals to the circuit court and post-judgment motions, and therefore is factually distinct from the instant case. Even so, the court in Limerick imposed sanctions because it found that "counsel continued to engage in practices in direct violation of applicable rules and to present arguments not relevant in any way to his clients' cases in their present posture." Id., at 101. The facts at issue here do not support such a finding. Here, plaintiff's counsel's conduct and arguments did not violate any applicable rules, nor did she present arguments that were wholly irrelevant to plaintiff's case. In fact, plaintiff was at least partially successful in his motions for reconsideration and Rule 72 appeals of the magistrate judge's orders. For example, as a result of these motions, the court's imposition of sanctions under all of the prior orders has been vacated. See February 17 and July 12 [227], 2005 Orders. In addition, the district court judge determined that plaintiff was correct in his arguments opposing the magistrate judges' limitations on the number of depositions plaintiff was allowed to take in total and pursuant to Rule 30(b)(6) (Order [194], p. 13), and that the plaintiff's objection to Request for Production No. 10 should have been sustained. Order [194], p. 11 (the employment release at issue is "broad in scope, and certainly the breadth is not supported by Defendants' rationale in their January 11, 2005 motion to compel--that all the information sought is relevant to plaintiff's mitigation efforts and damage claims."). Thus, plaintiff's motions and counsel's

conduct do not rise to the level of "repetitive, without a shred of rational basis, and seeking to resurrect matters long since finally concluded." Id., at 101. Thus, the rationale in Limerick, when applied to the instant case, also counsels against an award of attorneys' fees and costs. These

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distinctions negate a finding that the plaintiff's filings were frivolous and vexatious, which precludes the imposition of sanctions under Sections 1927. Even if the court determines that plaintiff's motions were inadequate or poorly drafted, sanctions are not appropriate under Section 1927. Shackelford v. Courtesy Ford, Inc., 96 F.Supp.2d 1140, 1144 (D.Colo. 2000) (inadvertence, incompetence, or unskillfulness do not warrant sanctions under §1927)(citing United States v. Wallace, 964 F.2d 1214, 1220 (D.C.Cir. 1992)). See, e.g., Loeffelbein v. Rare Medium Group, Inc., 221 F.R.D. 560 (D.Kan.2004) (Plaintiff's motion for reconsideration that did not meet standards for motion for relief from judgment did not warrant award of attorney fees and costs as sanction; conduct of plaintiffs' attorney did not rise to the level of serious disregard or indifference to the law); Gianna Enterprises v. Miss World (Jersey) Ltd., 551 F.Supp. 1348 (S.D.N.Y.1982) ("Inartful pleading and ignorance of legal requirements do not amount to intentional abuse of judicial process that is target of protective sanctions"). Rather, the attorney's conduct must rise to the level of a "serious and studied disregard for the orderly processes of justice." Dreiling, 768 F.2d at 1165 n. 16 (internal citation omitted); see also Knorr Brake Corp. v. Harbil, Inc., 738 F.2d 223, 227 (7th Cir. 1984) (attorney must intentionally act without a plausible basis, but the court "need not find that the attorney acted because of malice"). The facts do not support the imposition of sanctions under the standards set by these cases either. Plaintiff's counsel did not act in disregard for the orderly process of justice, without a plausible basis. These motions were all filed in a good faith effort to preserve plaintiff's rights, and to promote the efficient progress of this case. There simply is no evidence of bad faith or "a serious and studied disregard for the orderly processes of justice." Shackelford, at 1144 (citing Dreiling, 768 F.2d at 1165 n. 16).

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While it is true that Plaintiff's counsel has been practicing in this area of the law for several years, and has litigated countless cases in several federal district courts, she has never been involved in, or heard of, a case with a procedural history like this one--in which the court consistently refused to hear the plaintiff's arguments, opposing counsel absolutely refused to cooperate in any basic civilized way to schedule depositions or address issues without court intervention, and in which the court repeatedly made rulings that hindered plaintiff's ability to conduct discovery as contemplated and provided by the Rules, while simultaneously permitting defendants broad latitude to flout them. Thus, plaintiff's counsel has long been at a loss how to correct this situation. She repeatedly asked the court for an opportunity to correct misunderstandings and misapprehensions of fact, for discussions off the record, and for a meaningful settlement conference. The court has ignored or refused all of these requests. Plaintiff's counsel has also repeatedly implored defendants' counsel to engage in cooperative discussions and conferences, in keeping with the spirit and the letter of Local Rule 7.1A. Defendants' counsel has ignored or refused all of these requests as well. Plaintiff's counsel has, throughout discovery, sought the advice and guidance of other respected attorneys in this community, as well as the resources of the Bar, and was uniformly advised that the only avenue of redress was to make a record by filing motions for reconsideration and appealing certain orders pursuant to Rule 72. Plaintiff's counsel has no prior experience in such matters, but did research the issues and procedures to the best of her ability. While reluctant to do so, plaintiff's counsel believed that her professional duty to zealously represent her client, and basic principles of fairness and justice, as well as the court's own orders, required the pleadings and motions for which the court now seeks to impose sanctions. In light of these facts, the court must not impose sanctions under Section 1927 or the court's inherent powers. Such 25

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sanctions would have the improper effect of chilling the zealous advocacy that is a cornerstone of our legal system and professional duties. It would be an abuse of discretion to sanction plaintiff's counsel under these circumstances. II. Amount of Sanctions

For the reasons set forth above, the court should not impose sanctions on plaintiff's counsel for filing the motions which formed the basis of the February 17, 2005 Order, because these motions do not constitute misconduct or bad faith. In addition, even if the court did determine that sanctions were appropriate, the court must tailor those sanctions in accordance with the three factors that the Tenth Circuit requires the court to expressly consider in determining the proper sanction: (1) the reasonable expenses incurred as a result of the sanctionable misconduct; (2) the minimum amount necessary to deter future misconduct; and (3) the ability of the sanctioned party or attorney to pay the sanctions. White v. General Motors Corp., Inc., 908 F.2d 675, 684-85 (10th Cir. 1990), cert. denied 498 U.S. 1069, 111 S.Ct. 788, 112 L.Ed.2d 850 (1991). These factors "serve as limitations on the amount assessed." Id., at 684. A. The Reasonable Expenses Incurred As A Result Of The Sanctionable Misconduct Defendants filed a separate Affidavit of Fees, to which plaintiff will respond directly on the issue of the reasonableness of the expenses contained therein. In the interest of judicial economy, plaintiff's counsel incorporates that response as if fully set forth herein. In addition, as set forth above, plaintiff's counsel does not dispute that the expenses incurred by both parties are not reasonable. Unlike defendants, plaintiff is not paying his counsel for every hour of billable time she spends on this case. Plaintiff's counsel therefore has no incentive to overstaff or over litigate this case. Thus, plaintiff's counsel has not reaped the financial rewards of the unreasonable expenses of this litigation. As demonstrated by the bills defendants' counsel attached to their fee affidavit, the same cannot be said of defendants' counsel. 26

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However, plaintiff's counsel is not solely, or even primarily, to blame for these expenses. Any sanction amount should be offset by the value of the time plaintiff's counsel has lost which was attributable to defendants' improper conduct, plus the costs the plaintiff has incurred for depositions and hearing transcripts that would have otherwise been unnecessary. Plaintiff's counsel submits that such unnecessary costs incurred by, or on behalf of, the plaintiff began with defendants' refusal to accept service of the Complaint, and the court should permit plaintiff an opportunity to submit an affidavit of such fees and costs as well. 2. The Minimum Amount Necessary to Deter Future Misconduct The court's March 16 Order suggests that it believes a sanction imposed to deter future misconduct is appropriate. In accordance with the second factor, the court should not impose a sanction in excess of the minimum amount necessary to serve as a deterrent, and such an amount cannot exceed the reasonable expenses and costs incurred. Again, because plaintiff's counsel did not willfully violate any court order, act cavalierly or intend to mislead the court, engage in any misconduct, or act in bad faith by filing the subject motions, such sanctions are not appropriate. White, at 1427; see also Starlight International, at 650; C f . Leidel v. Ameripride Services, Inc. 291 F.Supp.2d 1241, 1252-53 (D.Kan.2003). Moreover, such a purpose is moot, given that the discovery phase of this case is completed, and by the time the hearing is held on July 28, 2005, summary judgment will have been fully briefed. Thus, as a practical matter, the only deterrent effect sanctions will have at this point is to cause plaintiff's counsel to quit the practice of law entirely and declare bankruptcy. The court cannot reasonably and properly impose sanctions pursuant to Section 1927 under these circumstances. Plus, counsel for plaintiff has already paid amounts in excess of a reasonable sanction. First, counsel for plaintiff has already paid $100 into the court for sanctions that were wrongfully imposed in the court's December 16 Order [Docket #97 and 84]. Second, plaintiff's counsel has 27

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spent approximately five days researching and writing this Brief. Because plaintiff's counsel is self-employed and does not receive any compensation for time she cannot bill to clients, this exercise has already imposed a sanction in the amount of $5,000 for the lost billable time--which far exceeds a reasonable amount to deter future misconduct under these circumstances. These entire proceedings have been a unique, and uniquely horrible, experience. Never before has plaintiff's counsel been involved in a case so protracted. Never before has plaintiff's counsel been subjected to the threat--much less the imposition--of sanctions, or even admonition by the court, for any conduct. To the contrary, in the rare instances where the court has imposed sanctions on any party, it has been the opposition. Nonetheless, by researching this issue, counsel for plaintiff has become further educated in these matters, so that such conduct may be avoided even more diligently in the future. No further monetary sanctions are necessary to serve as a deterrent against future misconduct. 3. The Ability of the Sanctioned Attorney to Pay the Sanctions Finally, the imposition of any monetary sanction in excess of the amounts plaintiff's counsel has already paid in cash or in kind would constitute an extreme financial hardship for plaintiff's counsel. In fact, the amount of attorneys' fees and costs defendants set forth in their affidavit exceeds plaintiff's counsel's combined income for 2003 and 2004, and also exceeds plaintiff's counsel's income to date for 2005. Plaintiff's counsel is not, and never has been, an employee of McClain Drexler LLC f/k/a McClain, Drexler & Matthews LLC (the "firm"). She is, and always has been, an independent contractor. She does not receive a salary. Her compensation consists only of a percentage of the fees collected for work billed to, and paid by, her clients. From that, she is responsible for all the expenses of running her practice. Although Section 1927 does not impose liability on the law firm, even if it did, such pass through liability would not apply in this instance. The terms of her "of Counsel" agreement with 28

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the firm includes an indemnification clause, which means that any award of sanctions would be paid by plaintiff's counsel personally, and not by the firm or any of its members. Plaintiff's counsel does not have any insurance to cover such a liability. The attorneys' fees and costs defendants submitted also amount to a disproportionately high percentage of plaintiff's counsel's net assets, exclusive of her primary residence. Because the evidence plaintiff's counsel intends to submit in defense of a sanctions award and to support of these representations is private and confidential, this information should not be disclosed to defendants, their counsel, or the public at this juncture. Thus, counsel asks the court to permit her to provide such financial information for in camera review at, or in advance of, the hearing scheduled for July 28, 2005, before any monetary sanctions are imposed. If the court desires such information in advance of the hearing, plaintiff's counsel requests permission to deliver the supporting information directly to the magistrate judge, instead of under seal to the court. CONCLUSION For the reasons stated above, plaintiff's counsel respectfully requests that the court exercise its discretion and judgment to decline to impose any further sanctions on plaintiff or his counsel. Dated this 19th day of July 2005. McCLAIN DREXLER, LLC By: /s/ Nina H. Kazazian Nina H. Kazazian Of Counsel 1700 Lincoln Street Suite 3850 Denver, Colorado 80203-4538 Telephone: (303) 860-8400 Email: [email protected] ATTORNEYS FOR PLAINTIFF 29

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CERTIFICATE OF SERVICE I hereby certify that on this 19th day of July 2005, I electronically filed the foregoing RESPONSE TO ORDER TO SHOW CAUSE with the Clerk of Court using the CM/ECF system, which will send notification of such filing to the defendants addressed to the following email address: Sherri Heckel Kuhlmann Christopher Ottele Holme Roberts & Owen LLP 1700 Lincoln Street, Suite 4100 Denver, CO 80203

/s/ Nina H. Kazazian

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