United States District Court, D. Colorado
ORDER DISCHARGING ORDER TO SHOW CAUSE (DKT. #38),
ORDER IMPOSING SANCTIONS ON PLAINTIFF, AND RECOMMENDATION
DENYING DEFENDANT'S MOTION TO DISMISS PURSUANT TO FED. R.
CIV. P. 41(B) (DKT. #25)
N.
Reid Neureiter United States Magistrate Judge
Entered
by Magistrate Judge N. Reid Neureiter This matter came before
the Court on February 25, 2019 for a hearing on an Order to
Show Cause as to why the case should not be dismissed with
prejudice for Plaintiff's various failures, including
failure to appear at hearings and failure to respond to a
motion to dismiss. Also before the Court is Defendant Thomas
Richard Young's (“Mr. Young”) Motion to
Dismiss Pursuant to Fed.R.Civ.P. 41(b). (Dkt. #25.) The Court
attempted to have a hearing on February 6, 2019 regarding the
Motion to Dismiss, but Plaintiff's counsel did not appear
until late into the hearing (after the Swan Global
Investment's offices were contacted by the Court's
staff), leading to the issuance of the Order to Show Cause.
Plaintiff
Swan Global was ordered to show cause why this matter should
not be dismissed with prejudice as a sanction for (1) making
misrepresentations or material omissions to opposing counsel
and the Court; (2) failing to file a “short and
plain” statement of the case, and failing to make it
either shorter or plainer in multiple amendments; (3) failing
to respond in a timely manner to Defendant's Motion to
Dismiss; (4) failing to have replacement counsel timely enter
an appearance to replace counsel who has twice sought to
withdraw from the case, even after being ordered to do so by
the Court; and (5) failing to appear at the February 6, 2019
motions hearing.
The
Court heard argument from the Parties, including from Swan
Global via its new counsel, Thomas F. Quinn, who formally
entered his appearance on February 20, 2019. (Dkt. #39.)
Having reviewed the filings and responses, the Court ORDERS
as follows:
1. The Order to Show Cause is DISCHARGED.
2. Plaintiff Swan Global is ORDERED to pay
sanctions in the form of attorneys' fees as described in
more detail below.
3. The Court RECOMMENDS that Defendant's
Motion to Dismiss with prejudice pursuant to Rule 41(b) be
DENIED, in large part because an alternative
sanction in the form of attorneys' fees is sufficient to
compensate Defendant for the prejudice done and to discourage
future inappropriate conduct.
4. Plaintiff Swan Global is ORDERED to file
a further amended complaint (which shall be a “short
and plain statement” of Plaintiff's claim) within
seven business days from the date of this Order.
5. The Parties are ORDERED to
jointly contact the Court's chambers,
303-335-2403, within seven business days
from the date of this Order, to set a date for a scheduling
conference.
I.
Procedural History of the Case
The
case was originally filed in the District Court for La Plata
County, Colorado on November 16, 2018. Defendant Young
removed the case to federal court on December 4, 2018. (Dkt.
#1.)
Swan
Global is a Durango, Colorado-based company providing
investment management services. Defendant Young lives in
Illinois. The Complaint alleges that Mr. Young was an
independent contractor for Swan Global from 2013 until
January 31, 2016, when he was terminated for alleged breach
of contract, fraud, and non-performance. Using 182
paragraphs, the original twenty-four-page Complaint alleged
seventeen claims for relief against Mr. Young, including
everything from breach of contract, to theft of confidential
information in violation of Colorado statute, to intentional
interference with contractual relations, to fraud, conspiracy
and conversion. (Dkt #1-1.)
On
November 26, 2018, while the case was still in La Plata
County District Court, Swan Global filed an Amended
Complaint. (Dkt. #4.) The twenty-five-page Amended Complaint
upped the number of paragraphs to one hundred ninety-nine and
the number of counts to twenty-three. Added were claims for,
among other things, civil theft and injunctive relief.
The
removed case was assigned to Magistrate Judge Nina Wang on
December 6, 2018. Judge Wang issued an order setting a
scheduling conference for February 11, 2019, and ordered the
parties to complete and file the Consent/Nonconsent Form by
January 28, 2019. (Dkt. #11.)
Attorney
Leslie Fourton, Jr. entered an appearance in this matter on
behalf of Swan Global on December 14, 2018. (Dkt. #14.) Mr.
Fourton was the attorney who had signed and filed the
original and amended Complaints on Swan Global's behalf.
On
December 30, 2018, Mr. Fourton filed two versions of a Third
Amended Complaint, Dkt. #18 - later withdrawn - and Dkt. #20.
The not-withdrawn Third Amended Complaint (Dkt. #20) added
another sixty-nine paragraphs and another eighteen pages to
the complaint, taking the document to forty-three pages in
length. On its face, the Third Amended Complaint is not a
“short and plain statement of the claim showing that
the pleader is entitled to relief.” Fed.R.Civ.P.
8(a)(2).
On the
same date, December 30, 2018, Mr. Fourton also filed a Motion
to Withdraw as Counsel. (Dkt. #19.) Mr. Fourton explained in
his motion to withdraw that Swan Global was eliminating his
position as General Counsel: “[Swan Global] is
eliminating the General Counsel position in its entirety as
of December 31, 2018. Therefore, it is necessary to withdraw
as counsel for Plaintiff/claimant in this matter.”
(Dkt. #19 at 1.) The December 30, 2018 withdrawal motion did
not comply with our Local Rules in that it did not give an
appropriate warning to the client. See
D.C.COLO.LAttyR 5(b) (“Where the client of the
withdrawing attorney is a corporation, partnership, or other
legal entity, the notice shall state that such entity may not
appear without counsel admitted to the bar of this court, and
that absent prompt appearance of substitute counsel,
pleadings and papers may be stricken, and default judgment or
other sanctions may be imposed against the entity.”)
On
January 2, 2019, Judge Wang issued a minute order noting that
withdrawal by Mr. Fourton would leave Swan Global without
representation, and setting a hearing for January 9, 2019.
(Dkt. #21.) Judge Wang ordered “that Plaintiff's
counsel and a representative from Plaintiff must appear in
person.” (Dkt. #21.)
Judge
Wang held a hearing on January 9, 2019. (Dkt. #22.) Contrary
to Judge Wang's order, neither Mr. Fourton nor a
representative of Swan Global appeared in person. Instead,
Mr. Fourton and Robert Swan appeared by ...