Bernal v. All American Investment Realty, Inc.

• Decision Date: 23 March 2007
• Docket Number: No. 05-60956-CIV.,05-60956-CIV.
• Citation: 479 F.Supp.2d 1291
• Parties: Diana M. BERNAL, Plaintiff, v. ALL AMERICAN INVESTMENT REALTY, INC., All American Mortgage Bank, Inc., LTDS Petroleum, Inc., LTDAS Petroleum, Inc., Labelle Petroleum, Inc., and Tariq Hussain, Defendants.
• Court: U.S. District Court — Southern District of Florida

479 F.Supp.2d 1291

Diana M. BERNAL, Plaintiff, v. ALL AMERICAN INVESTMENT REALTY, INC., All American Mortgage Bank, Inc., LTDS Petroleum, Inc., LTDAS Petroleum, Inc., Labelle Petroleum, Inc., and Tariq Hussain, Defendants.

No. 05-60956-CIV.

United States District Court, S.D. Florida.

March 23, 2007.

COPYRIGHT MATERIAL OMITTED

Dion J. Cassata, Cassata & Hanson PL, Fort Lauderdale, FL, John Jay Hanson, Cassata & Hanson PL, Hallandale Beach, FL, for Plaintiff.

Stuart A. Rosenfeldt, Michael Anthony Pancier, Rothstein Rosenfeldt Adler, Fort Lauderdale, FL, Chris Kleppin, Glasser Boreth Ceasar & Kleppin, Plantation, FL, for Defendants.

ORDER (1) AFFIRMING REPORT AND RECOMMENDATION ON PLAINTIFF'S MOTIONS FOR SANCTIONS; AND (2) MODIFYING THE RECOMMENDED REMEDIES

SEITZ, District Judge.

THIS MATTER is before the Court on the Report and Recommendation on Plaintiff's Motions for Sanctions [DE-108], issued by United States Magistrate Judge Chris M. McAliley. Magistrate Judge McAliley's Report covers two motions: (1) Plaintiffs Motion to Strike Defendants' Answer and Affirmative Defenses as Sanctions and Enter a Finding of Liability With Trial to be Held on the Issue of Damages [DE-48]; and (2) Plaintiffs Motion for Attorneys' Fees and Costs Pursuant to 28 U.S.C. § 1927, Federal Rules of Civil Procedure 26(g), 37(a), (b), and (c), and the Court's Inherent Powers [DE-82]. Also before the Court is a request by nonparty Chris Kleppin, former counsel to the five entity Defendants and individual Defendant Tariq Hussain, for a hearing regarding his objections to Magistrate Judge McAliley's Report [DE-121].

The Court has undertaken a de novo review of the record, including a careful review of the transcripts of all hearings before Magistrate Judge McAliley¹ and all filed objections to the Report. The Court shall affirm and adopt all of Magistrate Judge McAliley's factual findings, as they reflect a neutral summation of the facts that the record more than amply supports. Magistrate Judge McAliley's legal conclusions are consistent with a correct application of the law to those facts; however, the Court shall slightly modify her recommended remedies.

The Court shall impose monetary sanctions on both Kleppin and Hussain, and shall refer Kleppin to The Florida Bar, the. District of Columbia Bar, and the Bar of the Commonwealth of Massachusetts, as well as this District's Ad Hoc Committee on Attorney Admissions, Peer Review and Attorney Grievance. This case shall proceed to trial with the jury being instructed as to two facts: (i) Defendant Hussain and the five entity Defendants are employers subject to the FLSA; and (ii) Hussain employed Plaintiff to work for him and the five entity Defendants. At trial, the Court shall also instruct the jury as to Hussain's spoliation of evidence and procurement of false evidence, which they may consider in assessing his credibility. The Court may also instruct the jury as to Defendants' record-keeping obligations, based on Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680, 683-84, 66 S.Ct. 1187, 90 L.Ed. 1515 (1946). Finally, the Court overrules both non-party Chris Kleppin's and Defendants' objections to the Report, as explained below, with the exception of Defendants' objection to the entry of final default judgment against them.

I. NON-PARTY CHRIS KLEPPIN

A. Request for New Evidentiary Hearing as to Credibility

Kleppin's request for another evidentiary hearing is denied, as the basis for Judge McAliley's not crediting his testimony² is patent from the hearing transcripts. Magistrate Judge McAliley spent five hearings, consisting of many hours, assessing Kleppin's credibility, which included evaluating (1) his opportunity to observe accurately the events about which he testified; (2) his directness (or lack thereof) in answering her questions; (3) his lack of recall of recent, noteworthy events; (4) the contradictions between his testimony and other evidence; and (5) his self-interest in placing himself in the best light possible during court proceedings. (For examples of Kleppin's testimony which support the lack of credibility finding, see Jan. 12, 2006 Tr. 27-28, 82-88, 102-03, 108-112; Jan. 19, 2006 Tr. 5-18, 44-64, 78-81, 84.)³

It is evident from the transcripts that Kleppin did not answer questions directly, consistently had an excuse for his actions, and repeatedly (even conveniently) could not remember details about important, recent facts. Instead of answering Magistrate Judge McAliley's questions about his own actions, Kleppin tried to divert her attention by launching into details concerning the Plaintiffs allegedly dishonest actions. Further, Kleppin's answers to questions concerning his legal skills and knowledge of legal rules showed that he has little regard for the Federal Rules of Civil Procedure — either he does not choose to follow the rules, or he is simply so incompetent that he does not know which rules to follow, what they mean, or when to follow them. Given the fact that he was on the law review of his accredited law school, it is difficult to accept the latter option.

Kleppin's testimony reflects his plan to pursue his view of this case at all costs — without the restraint that comes from independent judgment and professional detachment. Because the Court is adopting Magistrate Judge McAliley's well-supported credibility findings, there is no legal basis for another evidentiary hearing to repeat the testimony he has already given. Kleppin had ample opportunity to provide truthful testimony to the Court. Therefore, Magistrate Judge McAliley's determination that he was not credible, will not be disturbed.

B. Objections to Report

1. Kleppin's "mind-set".

Kleppin's subjective state of mind is not an issue in Magistrate Judge McAliley's Report. Magistrate Judge McAliley applied an objective standard in assessing Kleppin's conduct in that she considered how a reasonable attorney under the circumstances would have acted. Based on the totality of the circumstances, she concluded that no reasonable attorney in Kleppin's situation would have behaved the way he did, and that in fact, Kleppin had grossly deviated from reasonable conduct. This Court affirms that conclusion.

It is disappointing that Kleppin's attorney has chosen to argue that Kleppin's "missteps" in this case "were the product of inexperience and naivete...." (Kleppin Objs. at 2.) By his own admission to this Court in a proceeding in another case, Kleppin graduated from law school in 1996, and has served as lead trial counsel in six trials in federal court and approximately three trials in state court.⁴ He is a named partner in his law firm, and a review of this District's docket reveals that he has been involved in at least 90 cases in the District. Further, in seeking $400,000 in attorneys' fees in an overtime case pending in this District, Kleppin signed a sworn affidavit in which he attested that his $375 hourly rate was "commensurate with his knowledge and experience." (Kleppin Aff⁵ ¶ 5.) Kleppin's expert witness in that case, attorney Peter T. Maverick, attested to Kleppin's "excellent legal work" and to his charged rate being commensurate with his experience. (Maverick Decl.⁶ 9.) Kleppin cannot herald his experience and legal skills when it suits him (in trying to recover attorneys' fees), only to turn around and claim naivete and inexperience to avoid a sanction for fees.

2. Kleppin's facilitation/encouragement of Defendant Hussain's discovery violations.

Despite Kleppin's protestations to the contrary, the record supports this factual finding. At the January 12, 2006 hearing, Hussain stated that, if a discovery request was not clear to him, he would simply deny the request. Notably, at his deposition, Hussain testified that he denied requests he believed he should not have to answer, because of his view that the lawsuit was "bogus." He admitted at the January 12th hearing that he never reviewed any documents in his possession in order to answer discovery requests, prior to Magistrate Judge McAliley's December 6, 2005 Order compelling discovery. Also, many of Hussain's discovery responses proved false.

Kleppin shared his client's view that the lawsuit was "bogus," and thus, facilitated and encouraged his client's behavior by failing properly to oversee his client's discovery efforts. Of particular note, Kleppin signed Hussain's false responses denying that his companies had ever made use of the interstate mail and telephone systems and nationally chartered banks. As Magistrate Judge .McAliley pointed out, common sense dictates that any company similar to those Hussain owns and operates, no matter how small, would receive or place an out-of-state phone call, receive or send mail out of state, or make a deposit in a nationally chartered bank. That Kleppin did not challenge Hussain's denial of these inquiries is so unreasonable that it constitutes encouragement of the client's obstructive behavior.

Moreover, Kleppin admitted that he had never once visited his client's office. He never knew what documents, if any, his client had reviewed in order to answer discovery requests. Kleppin's understanding was that Hussain had been "looking for some things," but he could not say what "things" Hussain had found. At the January 12th hearing, Kleppin attempted to justify Hussain's behavior, by explaining that he [Kleppin] did not know how specific discovery responses had to be. The likelihood that Kleppin had no familiarity with the rules, given his experience in federal court which included having to pass a test on the rules for admission to the Bar of this Court, is so implausible that the only reasonable conclusion is that he lied to Magistrate. Judge McAliley. Kleppin's conduct was a willful abuse of the discovery process.

3. Kleppin's role with respect to the Khan affidavit.

To persuade this Court that it should either overlook or deem as appropriate Kleppin's actions with respect to the...