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Swan Global Investments, LLC v. Young

United States District Court, D. Colorado

May 17, 2019




         This matter is before the Court upon the February 26, 2019 Order Discharging Order to Show Cause, Order Imposing Sanctions on Plaintiff, and Recommendation by United States Magistrate Judge N. Reid Neureiter that this Court deny Defendant's Motion to Dismiss Pursuant to Fed.R.Civ.P. 41(b). (Doc. # 44.) Defendant Thomas Richard Young filed an Objection (Doc. # 52) to the magistrate judge's Orders and Recommendation on March 12, 2019, and Plaintiff Swan Global Investments, LLC filed a Response (Doc. # 60) on March 26, 2019. For the reasons that follow, the Court overrules Defendant's Objection, affirms and adopts the Recommendation, and denies Defendant's Motion to Dismiss Pursuant to Fed.R.Civ.P. 41(b) (Doc. # 25).

         I. BACKGROUND

         Magistrate Judge Neureiter's Recommendation details the factual and procedural background of this case. (Doc. # 44 at 1-11.) The Recommendation is incorporated herein by reference. See 28 U.S.C. § 636(b)(1)(B); Fed.R.Civ.P. 72(b). Accordingly, the factual background of this dispute will be reiterated only to the extent necessary to address Plaintiff's Objection.

         Plaintiff initiated the instant action in Colorado state court on November 16, 2018, and filed its first Amended Complaint on November 26, 2018. (Doc. ## 1-1, 1-2.) On December 4, 2018, Defendant removed the case to federal court. (Doc. # 1.) On December 14, 2018, Leslie E. Fourton filed a Notice of Entry Appearance (Doc. # 14) as Plaintiff's General Counsel. On December 30, 2019, Mr. Fourton filed two documents (Doc. ## 19, 20), which formed the basis of Defendant's Motion to Dismiss Pursuant to Fed.R.Civ.P. 41(b) (Doc. # 25) and, ultimately, Defendant's Objection to Magistrate Judge Neureiter's Orders and Recommendation (Doc. # 52).

         One of the December 30 filings was an amended complaint. (Doc. # 20.) The parties had previously conferred regarding Plaintiff's intention to file an amended complaint, and defense counsel “consented to the additional amendment . . . with the understanding and belief from [Plaintiff's] counsel that the forthcoming amendments would narrow the complaint and address the numerous deficiencies identified during the conferral between counsel.” (Doc. # 25 at 2.) However, the amended complaint was twice as long as its predecessor and included the same causes of action. (Id.)

         The other December 30 filing was a Motion to Withdraw as Counsel, which indicated that Plaintiff was “eliminating the General Counsel position in its entirety as of December 31, 2018.” (Id. at 1.) Mr. Fourton reiterated that statement at a hearing[1] before Magistrate Judge Wang on January 9, 2019, and a representative from Plaintiff's organization who was in attendance did not state anything to the contrary. (Doc. # 36 at 2-3.) However, in an unrelated matter, Defendant learned that James Candelaria had become Plaintiff's General Counsel effective January 1, 2019. (Doc. # 25 at 3.) By email dated January 11, 2019, Mr. Candelaria stated:

I am not representing [Plaintiff] in the [instant case] nor can I because I am a U.S. District Court Magistrate in the District of Colorado. The Federal Court knows that I work for [Plaintiff]. It is true that I am in-house counsel for [Plaintiff] (part-time) and will represent [Plaintiff] on matters. However, since I have a conflict [Plaintiff] is having to search for and hire outside counsel.

         (Doc. # 25-1 at 1.) Mr. Candelaria's signature block in the email indicates that he is “General Counsel” for Plaintiff. (Id.)

         After Mr. Candelaria's role in Plaintiff's organization became apparent, Magistrate Judge Wang recused herself from this case due to her professional relationship with Mr. Candelaria. (Doc. # 26 at 1.) The case was reassigned to this Court, and this Court designated Magistrate Judge Neureiter to conduct non-dispositive proceedings. (Doc. ## 28, 29.) Accordingly, this Court referred the following matters to Magistrate Judge Neureiter on January 16, 2019:

• Mr. Fourton's first and second Motion to Withdraw as Counsel (Doc. ## 19, 28);
• Defendant's Unopposed Motion for an Extension of Time to Respond to Plaintiff's Third Amended Complaint (Doc. # 24); and
• Defendant's Motion to Dismiss Pursuant to Fed.R.Civ.P. 41(b) (Doc. # 25).

(Doc. # 30.)

         Subsequently, Magistrate Judge Neureiter held a motions hearing on February 6, 2019, at which Plaintiff failed to appear. The Courtroom Minutes reflect that the magistrate judge “will issue a recommendation regarding granting [Defendant's] Motion to Dismiss Pursuant to Fed.R.Civ.P. 41(b) . . . . The Court tentatively decides to recommend that this case be dismissed.” (Doc. # 37 at 2.) On February 12, 2019, the magistrate judge issued an Order to Plaintiff Swan Global to Show Cause Why This Case Should Not Be Dismissed with Prejudice Pursuant to Fed.R.Civ.P. 41(b). (Doc. # 38.) Specifically, the Order directed Plaintiff 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.

(Id. at 1.)

         On February 20, 2019, Thomas F. Quinn filed an Entry of Appearance as counsel for Plaintiff (Doc. # 39) and a Response to Order to Show Cause (Doc. # 41). On February 22, 2019, Defendant filed a Reply to Plaintiff's Response to Order to Show Cause. (Doc. # 42.) On February 25, 2019, Magistrate Judge Neureiter held a hearing on the ...

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