Judge sanctions attorney for 'frivolous-plus' argument
7/3/2012
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NEW YORK, July 3 (Reuters) - A federal judge in Brooklyn has slapped a defense attorney with a $500 sanction for making an argument "totally unsupported by case law or common sense," in a case involving the divorce of a former stock promoter convicted of conspiring to commit securities fraud.
U.S. District Judge Nicholas Garaufis said in an opinion on Monday that criminal defense attorney Alan Futerfas had advanced a "straw man" argument that the court had been divested of authority to enforce subpoenas because of two pending appeals challenging the subpoena application.
"Not only was the divestiture argument utterly frivolous, but the court finds that Futerfas knew the argument was baseless and raised it anyway for improper reasons," Garaufis wrote.
Futerfas said he expected to appeal. He also denied making a frivolous argument, noting his 24-year legal career and the support for his argument from co-counsel on the case.
"I regret the court would think that I would make an argument in bad faith," Futerfas said. "This is a very contentious case, and that may have played a role."
The underlying case involved a 2011 application filed in Brooklyn federal court to compel discovery for divorce proceedings in the Cayman Islands. The divorce was filed by Debbie Gushlak against her estranged husband, Myron Gushlak, who is serving a 6-year prison term after pleading guilty in 2010 to conspiracy to commit securities fraud and money laundering.
On April 30, the court ordered Futerfas, who represents Myron Gushlak, to show cause why he should not be sanctioned for arguing that the court had no authority to use its contempt power to enforce the subpoenas that were part of the 2011 application. The subpoenas, known as Section 1782 subpoenas, are used by U.S. district courts under 28 U.S. Code Section 1728 to compel discovery in foreign proceedings.
'NOT SUFFICIENT'
In the ruling, Garaufis noted the tricky task of defining subjective bad faith for the purpose of imposing sanctions under Section 11(c)(3) of the Federal Rules of Civil Procedure. On one hand, to require a bold-faced lie would be too high a bar, the judge wrote; on the other, mere negligence would be enough for sanctions.
Instead, Garaufis made up his own term -- "frivolous-plus" -- to explain his rationale.
"(I)t is not sufficient to find that a legal argument is frivolous," Garaufis wrote. "There must be either direct or circumstantial evidence that counsel knew that the argument was without merit."
The case is In re Application of Debbie Gushlak, in the U.S. District Court for the Eastern District of New York, No. 11-218.
For Debbie Gushlak: Gerald Lefcourt.
For Myron Gushlak: Alan Futerfas, Brian Rosner and Natalie Napierala.
(Reporting by Jessica Dye)
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