Chandler v. Berlin

CHRISTOPHER CHANDLER Plaintiff, v. DONALD BERLIN, et al., Defendants.

Case No. 18-cv-02136 (APM)

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

September 18, 2020

MEMORANDUM OPINION AND ORDER

Before the court are two motions for sanctions filed by Defendants Donald M. Berlin and certain of his businesses against Plaintiff Christopher Chandler and his counsel. The first seeks sanctions pursuant to Federal Rule of Civil Procedure 11 on the ground that "the complaint in this case was filed 'for [an] improper purpose, such as to harass, cause unnecessary delay, or needlessly increase the cost of litigation.'" Defs.' Mem. of P. & A. in Supp. of Their Mot. for Sanctions Under Fed. R. Civ. P. 11, ECF No. 39-1 [hereinafter Defs.' Rule 11 Mot.], at 1 (alterations in original) (quoting Fed. R. Civ. P. 11(b)(1)). The second seeks sanctions pursuant to 28 U.S.C. § 1927 and this court's inherent authority on similar grounds, and the additional ground that Plaintiff's counsel allegedly misled the court. See Defs.' Mem. of P. & A. in Supp. of Their Mot. for Sanctions Pursuant to 28 U.S.C. § 1927 & This Court's Inherent Authority, ECF No. 40-1 [hereinafter Defs.' 1927 Mot.], at 1. For the reasons that follow, the court denies both motions.

I. Background

A. Factual Background

Defendant Donald Berlin is a private investigator who, in February 2003, prepared what Plaintiff terms a "Pitch" for a client, Robert Eringer. See Mem. Op. & Order, ECF No. 24. [hereinafter First Mem. Op.], at 1. According to Plaintiff, the Pitch contains a host of false assertions, accusing Plaintiff and his brother of engaging in various criminal activities, such as money laundering and having ties to organized crime in Russia and Russian intelligence. Id. More than a decade later, in November 2017, after Plaintiff had become active in the public debate around "Brexit," Eringer sent a portion of the Pitch to members of the British media, who began running articles about Plaintiff containing these allegations. Id. at 3. Sometime later, Plaintiff learned that Berlin was behind the Pitch. See Decl. of Christopher Chandler, ECF No. 22-2, ¶ 10.

This revelation prompted Plaintiff to send a prelitigation demand letter and a draft copy of a complaint to Defendants demanding that Berlin (1) sign a letter stating that he was the "source of the false accusations of money laundering, organized crime, and Russian espionage that have been made about Christopher Chandler in recent months"; (2) schedule an interview with Plaintiff's counsel; (3) "agree to provide an affidavit concerning these matters," and (4) notify counsel of any inquiries relating to the matter. See Defs.' Rule 11 Mot., Ex. 3, ECF No. 39-4 [hereinafter Demand Letter]. Plaintiff's counsel stated in the letter that if Berlin failed to comply within 48 hours:

[W]e will sue you and [Berlin's businesses, Investigative Consultants, Inc. ("ICI")] in federal court by filing the attached complaint . . . . And, we will take all appropriate steps and leverage our contacts in the media to mitigate the harm you have unfairly caused to our client's reputation with your false accusations, to put your prior clients on notice regarding ICI's fraudulent business model, and to prevent you from defrauding others with fake reports in the future.

Id. The "attached complaint" included various allegations involving Berlin's purported criminal activity and associations, his writing capabilities, and his wife's attitudes toward Berlin, in addition to allegations surrounding Berlin's alleged defamatory statements. See generally Order, ECF No. 14 [hereinafter Rule 12 Order].

Berlin refused to sign the retraction letter on the ground that it required him to refute allegations made by Eringer, which were beyond the scope of his knowledge. See Reply in Supp. of Defs.' Rule 11 Mot. & Defs.' 1927 Mot., ECF No. 44 [hereinafter Defs.' Reply], at 9-10. But he offered an alternative declaration confirming that the public databases he used to produce the Pitch had "inherent deficits," and that the information should not have been relied on "except where confirmed by secondary sources." Id., Ex. 2, ECF 44-2, ¶ 5. That counteroffer was evidently unsatisfactory to Plaintiff, and this litigation commenced.

B. Procedural Background

In September 2018, Plaintiff filed this suit against Defendants, asserting two counts of libel per se. See generally Redacted Compl. & Demand for Jury Trial, ECF No. 20 [hereinafter Redacted Compl.]. Plaintiff asserted that Defendants were liable for the harm caused by their publication of the allegedly defamatory material in 2003, as well as the republication of that material in 2017. See id. ¶¶ 60-88. Shortly after Plaintiff initiated the lawsuit, the court struck various "immaterial, impertinent, [and] scandalous" allegations in his Complaint pursuant to Federal Rule of Civil Procedure 12(f), finding that the stricken passages sought "to cast Berlin in a sinister and pernicious light," "create a caricature of Berlin as devious and deceitful," and to "gratuitously take a swipe at Berlin's spouse." Rule 12 Order at 2-4.

After an initial round of briefing, the court granted summary judgment to Defendants regarding the 2017 republication claim, holding that Berlin could not have reasonably foreseen the republication at the time he published the Pitch in 2003. First Mem. Op. at 9. The court did not enter summary judgment as to the initial 2003 publication because a genuine question of material fact remained regarding whether the Plaintiff's claim was time-barred. See id. at 10-11. Following limited discovery on that issue, the court found that Plaintiff's claim as to the initial 2003 publication was time-barred and entered summary judgment in Defendants' favor on that issue. See Mem. Op., ECF No. 37 [hereinafter Second Mem. Op.]. Defendants' two motions for sanctions followed thereafter.

II. Discussion

A. Defendants' Rule 11 Motion

"By presenting to the court a pleading, written motion, or other paper," an attorney or unrepresented party "certifies that" the filing "is not being presented for any improper purpose," and that "the claims, defenses, and other legal contentions are warranted." Fed. R. Civ. P. 11(b). "If . . . the court determines that Rule 11(b) has been violated, the court may impose an appropriate sanction" for the violation. Fed. R. Civ. P. 11(c). "[T]he central purpose of Rule 11 is to deter baseless filings." Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 393 (1990). "Courts do not impose Rule 11 sanctions lightly; such sanctions are an extreme punishment for filing pleadings that frustrate judicial proceedings, or that are filed to harass another party." In re Carvalho, 598 B.R. 356, 363 (D.D.C. 2019) (cleaned up).

Defendants assert that the Complaint was filed for the improper purpose of "blackmail[ing] the Defendants into, inter alia, signing a false statement proclaiming Mr. Berlin knew that Plaintiff was not guilty of money laundering, espionage, and other misdeeds." Defs.' Rule 11 Mot. at 1-2. Defendants identify four points that they say evince this improper purpose. First, they point to the prelitigation demand letter, which they say constitutes "criminal blackmail" and demonstrates that "Plaintiff and his lawyers' purpose was to use this Court as leverage, with their inflammatory complaint as a fulcrum, to further their scheme of intimidation and character assassination against Mr. Berlin." See id. at 3-4, 9. Second, they contend that Plaintiff's service of that letter on Berlin's spouse, Kimberley Berlin, at her place of business is "additional evidence that Plaintiff and his counsel were not seeking a lawful resolution of their claims but rather hoped to scare both Mr. Berlin and his wife into accepting a resolution on Plaintiff's terms." Id. at 5-6, 9. Third, they argue that because this court "struck [inappropriate] allegations pursuant to Rule 12(f), they are sanctionable under Rule 11(b)(1)'s prohibition of filings for an improper purpose." Id. at 5-6, 8-9. And fourth, they contend that "Plaintiff's filing of a non-meritorious complaint evidences that some purpose other than recovering on a deserving claim was at the heart of this action." Id. at 9-10. The court considers each argument in reverse order.

1. Plaintiff's Non-Meritorious Complaint.

Defendants argue that "the Complaint's lack of merit . . . demonstrates Plaintiff['s] improper purpose" in bringing this action. Id. at 9 (cleaned up). Not so. In particular with respect to the 2003 publication of the Pitch, the parties vigorously debated whether the District of Columbia's discovery rule tolled the statute of limitations regarding the 2003 publication, and Plaintiff advanced colorable (though ultimately unsuccessful) arguments to this effect. See Second Mem. Op. at 6-15. Plaintiff's contentions, which he has taken on appeal, see Not. of Appeal, ECF No. 42, were a far cry from frivolous. Indeed, Defendants do not even argue as much. See Defs.' Rule 11 Mot. at 10 ("[W]e do not seek sanctions under Rule 11(b)(2) or (3) for unsupported factual or legal claims . . . ."). Simply prevailing in an action is no basis to impute improper motives for the filing of a complaint.

2. Allegations Struck Pursuant to Rule 12(f).

Next, Defendant argues that "[b]ecause the Court struck [the allegations] pursuant to Rule 12(f), they are sanctionable under Rule 11(b)(1)'s prohibition of filings for an improper purpose." Id. at 9. However, Rule 11's safe harbor provision requires that the non-movant be given notice and 21 days to withdraw the challenged filing before a sanctions motion may be filed, and the motion "must not be filed" if the challenged paper is withdrawn or "appropriately corrected" within that timeframe. See Fed. R. Civ. P. 11(c)(2). Defendants did not serve their motion on Plaintiff until November 2, 2018, well after the court struck the allegations pursuant to Rule 12. See Defs.' Rule 11 Mot. at 1 n.1; Rule 12 Order....