Adlife Marketing & Communicati v. Karns Prime and Fancy Food Ltd

• Court: Court of Appeals for the Third Circuit
• Decided: January 13, 2023
• Docket: 21-2074
• Status: Unpublished

Opinion

NOT PRECEDENTIAL UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT _____________

No. 21-2074 _____________

ADLIFE MARKETING & COMMUNICATIONS COMPANY, INC., Appellant

v.

KARNS PRIME AND FANCY FOOD, LTD; AD POST GRAPHICS MEDIA MARKETING, INC.

FRY COMMUNICATIONS, INC. ______________

APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF PENNSYLVANIA (D.C. No. 1:19-CV-01638) District Judge: Honorable Yvette Kane ______________

Submitted Under Third Circuit L.A.R. 34.1(a) November 15, 2022 ______________

Before: HARDIMAN, RESTREPO, and PORTER, Circuit Judges. (Filed: January 13, 2023) ______________

OPINION* ______________

* This disposition is not an opinion of the full Court and, pursuant to I.O.P. 5.7, does not constitute binding precedent. RESTREPO, Circuit Judge.

Appellant Adlife Marketing & Communications Company, Inc. challenges the

District Court’s dismissal of its copyright infringement action against Appellee Karns

Prime & Fancy Food, Ltd. for failure to prosecute pursuant to Fed. R. Civ. P. 41(b). For

the reasons that follow, we will affirm the District Court’s dismissal of the case and its

denial of Adlife’s motion for reconsideration.

I.

We presume the parties’ familiarity with the case and set out only the facts needed

for the discussion below. Adlife Marketing & Communications Company, Inc.

(“Adlife”) is an advertising agency that services wholesale and retail food sales

customers, through which it has amassed a large library of photographs of fresh and

prepared foods. According to Adlife, these images are frequently the subject of online

infringement, such that it has on staff a full-time paralegal charged with monitoring its

many infringement actions. Between 2016 and 2021, Adlife retained Attorney Richard P.

Liebowitz (“Liebowitz”) and his firm, Liebowitz Law Firm, PLLC, (“LLF”) to pursue

infringement claims in over 40 cases, including this one.

Adlife & Liebowitz’s Relationship. Liebowitz’s reputation for sanctionable

conduct before tribunals around the country is well documented.1 We will not dwell on it

1 The Southern District of New York compiled Liebowitz’s prolific litigation record into a lengthy appendix in 2020. Usherson v. Bandshell Artist Mgmt., No. 19-CV-6368 (JMF), 2020 WL 3483661, at *22 (S.D.N.Y. June 26, 2020). There have been additional decisions condemning his behavior in the years since, most notably, Liebowitz v. Bandshell Artist Mgmt., 6 F.4th 267, 272 (2d Cir. 2021).

2 beyond noting that his deeply problematic tactics and business model are a clear

outgrowth of a copyright system that too often leaves creators little recourse when their

work is infringed.

Regardless, Adlife repeatedly chose Liebowitz as their advocate. In 2020, a court

noted “Adlife’s continued use of an attorney who has little respect or knowledge of local

procedures, violates court orders, lies under oath, and is continuously sanctioned for

frivolous lawsuits,” citing cases where Liebowitz represented Adlife dating back to 2018.

Adlife Mktg. & Communs. Co. v. Buckingham Bros., LLC, No. 5:19-CV-0796, 2020 WL

4795287, at *26 n.10 (N.D.N.Y. Aug. 18, 2020) (discussing instances where Liebowitz,

representing Adlife, was accused of copyright trolling, failing to properly serve process,

register with court, and document a settlement, as well as his pattern of voluntarily

dismissing actions once clear that Adlife’s case lacked merit).2

The Instant Copyright Litigation. On September 23, 2019, Adlife through

Liebowitz filed suit against supermarket chain Karns, for allegedly infringing on 36 of

Adlife’s images in mailing advertisements.3 There were problems from the start.

Liebowitz was not licensed to practice in the Middle District of Pennsylvania, and despite

2 This relationship extended beyond LLF’s mere representation of Adlife; Liebowitz also used the CEO of Adlife, Joel Albrizio, as an expert witness in another of LLF’s actions— a case which also notably ended in sanctions being levied against Liebowitz. Bechler v. MVP Grp. Int’l, Inc., No. 16 8837, 2021 WL 848024, at *1 n.3 (S.D.N.Y. Mar. 5, 2021). 3 Karns notes that they had hired Fry Communications (“Fry”) to assist with the advertising, and that Fry provided the images of food products used in the mailings. Adlife did not sue Fry, only Karns. In February 2020, Karns filed a third-party joinder complaint against Fry in the instant action.

3 being notified that he would need to apply for special admission upon filing the

Complaint, he failed to do so. Adlife then failed to produce any, even the most basic

discovery—including copyright applications or registrations for the allegedly infringed

photos—until 12:01 a.m. the day after the close of fact discovery, August 4, 2020.

Karns moved for summary judgment on August 19, 2020. On August 24, the

Court held a post-discovery status conference, during which it stayed the proceedings

indefinitely, pending entry of an appearance by qualified counsel for Adlife. The case

had been stayed for two months when Karns sought involuntary dismissal under Fed. R.

Civ. P. 41(b), and LLF finally filed a petition for special admission alongside new local

counsel, as well as its opposition to Karns’ motion to dismiss, on November 12, 2020.

On November 15, 2020, Liebowitz emailed Adlife’s CEO, Joel Albrizio, alerting

him to Karns’ motion to dismiss, but opining that it was unlikely to succeed because the

Court had never set a date by which LLF had to secure local counsel. Adlife claims this

was their first indication that there were issues with the case. Adlife subsequently

terminated Liebowitz and LLF, and hired current counsel, SRipLAW.

On November 24, Adlife’s current counsel entered an appearance, and the Court

lifted its stay, finding that Adlife had finally secured qualified counsel. Current counsel

subsequently sought to file a supplemental response to Karns’ motion to dismiss but

failed to timely file a brief in support of that motion, and the Court deemed it withdrawn

under M.D. Pa. L.R. 7.5. On February 23, 2021, the District Court granted Karns’

motion to dismiss, with prejudice.

4 Adlife’s Motion to Reconsider & Claims of Ignorance. Adlife then

unsuccessfully moved to reconsider, filing several declarations disclaiming any

awareness of Liebowitz’s antics until November 2020. Adlife pled ignorance, despite

that on July 27, 2020, Liebowitz was ordered to serve a sanction order incurred against

him in Usherson v. Bandshell Artist Mgmt.—another case where Liebowitz represented a

client against copyright infringement—on all of LLF’s current clients within 30 days and

file it on the record in each of LLF’s cases. No. 19-CV-6368 (JMF), 2020 WL 3483661,

at *22 (S.D.N.Y. June 26, 2020). Liebowitz filed the sanction order on the docket in this

case, but Adlife claimed on reconsideration that Liebowitz never directly served the order

on them, and they did not know about it. Even more damning, however, in mid-August

2020, another of Adlife’s attorneys forwarded to Albrizio an article detailing Liebowitz’s

misconduct in another case where he was representing them, Adlife v. Buckingham Bros.,

LLC, which resulted in a $1,000 fine for Liebowitz. 2020 WL 4795287, at *11. Albrizio

emailed Liebowitz to ask about the decision, and according to a declaration filed along

with Adlife’s motion for reconsideration, was apparently satisfied with Liebowitz’s

explanation: that the judge was corrupt. The District Court denied the motion for

reconsideration, and Adlife timely appealed.

II.

The District Court had jurisdiction pursuant to 28 U.S.C. §§ 1331 and 1338(a).

We have jurisdiction under 28 U.S.C. § 1291. We review challenges to both involuntary

dismissal, Hildebrand v. Allegheny Cnty., 923 F.3d 128, 132 (3d Cir. 2019), and a district

court’s denial of reconsideration, Jang v. Bos. Sci. Scimed, Inc., 729 F.3d 357, 367 (3d

5 Cir. 2013), for abuse of discretion. There is no “magic formula” for discerning whether a

District Court abused its discretion in granting a motion for involuntary dismissal.

Hildebrand, 923 F.3d at 132 (citation omitted). That said, the decision to dismiss “must

be given great deference by this Court—a court which has had no direct contact with the

litigants and whose orders, calendar, docket and authority have not been violated or

disrupted.” Mindek v. Rigatti, 964 F.2d 1369, 1373 (3d Cir. 1992).

III.

Appellants assert that the District Court abused its discretion when it (1) dismissed

Adlife’s case for failure to prosecute without notice or a hearing, and (2) subsequently

denied Adlife’s motion to reconsider. We review these claims in turn.

A. Dismissal for Failure to Prosecute under Rule 41

This Court evaluates Fed. R. Civ. P. 41 involuntary dismissal with prejudice under

a six-factor test, set forth in Poulis v. State Farm Fire & Cas. Co., 747 F.2d 863, 868 (3d

Cir. 1984). These factors are: (1) the extent of the party’s personal responsibility; (2) the

prejudice to the adversary caused by the failure to meet scheduling orders and respond to

discovery; (3) a history of dilatoriness; (4) whether the conduct of the party or the

attorney was willful or in bad faith; (5) the effectiveness of sanctions other than

dismissal; and (6) the meritoriousness of the claim or defense. Id. No single factor is

dispositive, nor need all factors be satisfied to warrant dismissal. Hildebrand, 923 F.3d at

132. While dismissal with prejudice is an “extreme” sanction, Nat’l Hockey League v.

Metro. Hockey Club, Inc., 427 U.S. 639, 643 (1976) (per curiam), it is one “rightfully in

the district courts’ toolbox,” Hildebrand, 923 F.3d at 132, and this Court “has not

6 hesitated to affirm the district court’s imposition of sanctions, including dismissals in

appropriate cases.” Poulis, 747 F.2d at 867 n.1. Below, the District Court found that all

of the Poulis factors favored dismissal except for the sixth—meritoriousness of the

claim—which it concluded was neutral. We agree.

As to the first Poulis factor, Adlife argues on appeal that they were entitled to

notice and a hearing to show that they were ignorant of Liebowitz’s misconduct, under

Dunbar v. Triangle Lumber & Supply Co., 816 F.2d 126, 129 (3d Cir. 1987) (remanding

for notice and hearing, as district court made no finding with record support that party

facing dismissal bore some responsibility for actions of her counsel). However, Dunbar

proceedings are not required “[w]here a client had or should have had independent

knowledge of the delinquency that was the grounds for dismissal.” Adams v. Trs. of the

N.J. Brewery Emps.’ Pension Tr. Fund, 29 F.3d 863, 870 (3d Cir. 1994). Given the depth

of Adlife’s relationship with Liebowitz over dozens of cases they litigated together, and

that Adlife retains a full-time paralegal to monitor their cases, it is inconceivable that

Adlife was “in the dark” about Liebowitz’s reputation until November 2020. Appellants’

Br. at 6–14. This claim is especially incredible given that Adlife conceded notice in

August 2020 of the Buckingham Bros. decision through an online article. Both the

decision and the article described Liebowitz’s history of malfeasance—and in particular

his deceitfulness—in sufficient detail that it would be unreasonable to shrug off, without

further inquiry, as judicial corruption alone. 2020 WL 4795287, at *9 n.7 (noting

Liebowitz’s demonstrated “lack of credibility through a variety of types of misconduct

7 beyond what he exhibits in this case” and discussing egregious examples, including the

Usherson decision, of which Adlife also disclaimed notice).

Notice and a hearing are also unnecessary where the party files an opposition to

the motion to dismiss, as was the case here. In re Asbestos Prod. Liab. Litig. (No. VI),

718 F.3d 236, 247 (3d Cir. 2013). Adlife counters that their new counsel was unfairly

prevented from supplementing their opposition, through which they sought to further

distance themselves from Liebowitz. However, any such supplement would have been

futile, as the District Court fairly concluded that dismissal would have been appropriate

without finding Adlife responsible for the issues with the case.4 The Court did not abuse

its discretion in handling the first Poulis factor.

On the second factor, prejudice, we agree that Liebowitz’s distracting antics and

delays throughout the case (beyond simply missing the close of discovery by one minute)

impeded Karns’ ability to prepare a full and complete defense, and this factor favors

dismissal. Ware v. Rodale Press, Inc., 322 F.3d 218, 222 (3d Cir. 2003) (affirming

district court’s finding that “while ‘prejudice’ for the purpose of Poulis analysis does not

4 As such, we need not consider Adlife’s argument that they should have been exempt from the Middle District of Pennsylvania’s local rules when they failed to timely file a brief along with their motion to supplement their response to Karns’ motion to dismiss and the District Court accordingly considered their motion withdrawn under M.D. Pa. L.R. 7.5. We will note, however, that this case is distinct from Cohen v. Bd. of Trs. of the Univ. of the D.C. in that Adlife’s withdrawn motion was not their sole response to a dispositive motion, under which strict application of the local rule could conceivably conflict with the Federal Rules, for example, by altering the burden of persuasion. 819 F.3d 476, 481 (D.C. Cir. 2016). Here, Adlife had already unsuccessfully responded to Karns’ motion to dismiss. Adlife then failed to properly request a second bite at the apple, and the District Court did not err in applying its local rules to reject that request. 8 mean ‘irremediable harm,’ the burden imposed by impeding a party’s ability to prepare

effectively a full and complete trial strategy is sufficiently prejudicial”).

As to Poulis factors three through five—history of dilatoriness, bad faith, and the

effectiveness of other sanctions—Adlife primarily asserts on appeal that the District

Court wrongly blamed them instead of Liebowitz. However, the Poulis test already

accounts for a party’s personal responsibility with its first factor; Appellants’ reasoning

would cause the first factor to improperly override the other five factors of the test.

Poulis, 747 F.2d at 868 (finding party’s lack of responsibility for counsel’s conduct not

dispositive to involuntary dismissal and reviewing other factors).

Further, although Adlife argues that this is not the most extreme case of abuse

when viewed in a vacuum, it is appropriate for courts to consider the broader context of a

party or attorney’s conduct in other cases when deciding on a particular sanction.

Lightning Lube, Inc. v. Witco Corp., 4 F.3d 1153, 1179 n.15 (3d Cir. 1993) (weighing

counsel’s “improper conduct” in other cases when deciding whether to sanction him);

Doering v. Union Cnty. Bd. of Chosen Freeholders, 857 F.2d 191, 197 (3d Cir. 1988)

(citing other considerations when awarding sanctions, such as “the public interest in

encouraging particular suits” or “the attorney’s history of filing frivolous actions or

alternatively, his or her good reputation”); accord Doyle v. Murray, 938 F.2d 33, 35 (4th

Cir. 1991) (explaining that, in contemplating sanctions, consideration of counsel’s actions

in prior cases may be appropriate to “hold clients to some measure of responsibility both

for selecting competent attorneys and, more important, for supervising their conduct”);

Dawson v. Lennon, 797 F.2d 934, 936 (11th Cir. 1986) (“The clear pattern of attempts to

9 deceive the courts . . . in this and other cases justifies the district court’s imposition of the

severe sanction of dismissal with prejudice.”); Johnson v. Comm’r, 289 F.3d 452, 456–57

(7th Cir. 2002) (“The Tax Court was not required to ignore Izen’s bad conduct in other

cases; indeed it would have been remiss not to consider it.”).

From this perspective, beyond his failure to seek admission and discovery delays,

Liebowitz’s overall history of dilatoriness, his repeated exercises of bad faith, and the

clear ineffectiveness of alternative sanctions in prior actions—even looking only to cases

where he represented Adlife—further supports the District Court’s decision to find these

factors favored dismissal. With five of the six Poulis factors clearly weighing in Karns’

favor,5 the District Court did not abuse its discretion in dismissing Adlife’s case with

prejudice.

B. Denial of Adlife’s Motion to Reconsider

A motion for reconsideration may be granted where a party can show “(1) an

intervening change in the controlling law; (2) the availability of new evidence . . . or (3)

the need to correct a clear error of law or fact or to prevent manifest injustice.” See

Max’s Seafood Café v. Quinteros, 176 F.3d 669, 677 (3d Cir. 1999). Adlife asserts that

the District Court’s refusal to entertain their motion for reconsideration was an abuse of

discretion based on the third prong. On appeal, they restate their claims that they were

innocent victims of Liebowitz’s grift and assert that the District Court should have

5 We also see no error in the District Court’s determination that the sixth factor— meritoriousness of the claims—was neutral, given that Adlife’s pleadings provided no information about losses or when the allegedly infringed images were registered, and the Court could therefore not make a determination either way. 10 considered “Adlife’s plea through [their] new lawyers after Liebowitz was terminated.”

Appellants’ Br. at 45.

However, as the District Court explained in denying Adlife’s request for

reconsideration, “the declarations and arguments presented in support of [Adlife’s

reconsideration] motion could have been raised prior to the entry of judgment in this

action,” and noted that Adlife’s new counsel indeed “sought leave to file a supplemental

brief in opposition to Defendant’s motion to dismiss presenting similar arguments but

failed to comply with the local rules of this Court with respect to that filing.” JA22; see

also Drysdale v. Woerth, 153 F. Supp. 2d 678, 683 (E.D. Pa. 2001), aff’d, 53 F. App’x

226 (3d Cir. 2002) (refusing on motion for reconsideration to “rethink through facts []

already thoroughly considered” or “sift through new evidence that, although in existence

at the time of trial, was never admitted”). Further, we reiterate our agreement with the

District Court that dismissal would have been warranted under Poulis even if Adlife were

found not responsible for Liebowitz’s conduct. We find no abuse of discretion in the

District Court’s denial of reconsideration.

IV.

For the foregoing reasons, we will affirm the judgments of the District Court.