Samantha Siva Kumaran et al. v. National Futures Association et al.

S.D. New York

Samantha Siva Kumaran et al. v. National Futures Association et al.

DecidedJuly 16, 2024

Docket1:20-cv-03668

StatusUnknown

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Samantha Siva Kumaran et al. v. National Futures Association et al., (S.D.N.Y. 2024).

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ona DOCUMENT UNITED STATES DISTRICT COURT ELECTRONICALLY FILED SOUTHERN DISTRICT OF NEW YORK DOC #0 DATE FILED: 7/16/2024 Samantha Siva Kumaran et al., Plaintiffs, 1:20-cv-03668 (GHW) (SDA) -against- ORDER National Futures Association et al., Defendants.

STEWART D. AARON, United States Magistrate Judge: Pending before the Court are a motion by Defendant Thomas R. Kadlec (“Kadlec”), pursuant to Rule 11 of the Federal Rules of Civil Procedure, for sanctions against Plaintiff Samantha Siva Kumaran (“Kumaran”) (Kadlec 12/29/23 Mot., ECF No. 356), and a cross-motion by Kumaran, pursuant to Rule 11, for sanctions against Kadlec and his counsel. (Kumaran 4/4/24 Cross-Mot., ECF No. 398.) For the reasons set forth below, the motion and cross-motion are DENIED. LEGAL STANDARDS Rule 11 provides in relevant part: (a) Signature. Every pleading, written motion, and other paper must be signed by at least one attorney of record in the attorney’s name—or by a party personally if the party is unrepresented.... (b) Representations to the Court. By presenting to the court a pleading, written motion, or other paper—whether by signing, filing, submitting, or later advocating it—an attorney or unrepresented party certifies that to the best of the person’s knowledge, information, and belief, formed after an inquiry reasonable under the circumstances: (1) it is not being presented for any improper purpose, such as to harass, cause unnecessary delay, or needlessly increase the cost of litigation;

(2) the claims, defenses, and other legal contentions are warranted by existing law or by a nonfrivolous argument for extending, modifying, or reversing existing law or for establishing new law; (3) the factual contentions have evidentiary support or, if specifically so identified, will likely have evidentiary support after a reasonable opportunity for further investigation or discovery; and (4) the denials of factual contentions are warranted on the evidence or, if specifically so identified, are reasonably based on belief or a lack of information. (c) Sanctions. (1) In General. If, after notice and a reasonable opportunity to respond, the court determines that Rule 11(b) has been violated, the court may impose an appropriate sanction on any attorney, law firm, or party that violated the rule or is responsible for the violation. . . . (2) Motion for Sanctions. A motion for sanctions must be made separately from any other motion and must describe the specific conduct that allegedly violates Rule 11(b). The motion must be served under Rule 5, but it must not be filed or be presented to the court if the challenged paper, claim, defense, contention, or denial is withdrawn or appropriately corrected within 21 days after service or within another time the court sets. If warranted, the court may award to the prevailing party the reasonable expenses, including attorney’s fees, incurred for the motion. Fed. R. Civ. P. 11(a)-(c). The language of Rule 11(a) and (b) make clear that the Rule applies to “unrepresented” parties, that is, parties who are appearing pro se. See Fed. R. Civ. P. 11(a), (b). Thus, “[i]t is well established that Rule 11 applies to pro se litigants.” Smith v. Educ. People, Inc., 233 F.R.D. 137, 142 (S.D.N.Y. 2005) (citations omitted), aff’d, 2008 WL 749564 (2d Cir. Mar. 20, 2008). “However, pro se parties are afforded greater leniency in considering whether or not to impose Rule 11 sanctions[.]” Id.; see also Murawski v. Pataki, 514 F.Supp.2d 577, 590 (S.D.N.Y. Sep. 26, 2007) (“sanctions ‘should be imposed with caution.’”) (quoting Knipe v. Skinner, 19 F.3d 72, 78 (2d Cir. 1994)). Rule 11(c)(2) is referred to as the “safe harbor” provision, and “provid[es] an opportunity to withdraw or correct a challenged submission” within 21 days after service of the Rule 11 motion. See In re Pennie & Edmonds LLP, 323 F.3d 86, 89 (2d Cir. 2003). “The safe-harbor

provision is a strict procedural requirement.” Star Mark Mgmt., Inc. v. Koon Chun Hing Kee Soy & Sauce Factory, Ltd., 682 F.3d 170, 175 (2d Cir. 2012) (citing Perpetual Sec., Inc. v. Tang, 290 F.3d 132, 142 n. 4 (2d Cir. 2002)); see also Holmes v. Allstate Corp., No. 11-CV-01543 (LTS) (DF), 2012 WL 627238, at *14 (S.D.N.Y. Jan. 27, 2012), report and recommendation adopted, 2012 WL 626262 (S.D.N.Y. Feb. 27, 2012) (“The Rule 11 ‘safe harbor’ requirement is ‘strictly construed,’ . . . and has even been described as “jurisdictional in nature[.]” (citations omitted)).

DISCUSSION The Court first addresses Kumaran’s cross-motion for sanctions. Kumaran failed to serve her cross-motion before filing it; rather, she served what she referred to as a “Safe Harbor Notice,” dated February 21, 2024, but did not serve a copy of her cross-motion with her Notice. (See Kadlec 4/8/24 Mem., ECF No. 400, at 6.) Kadlec argues that the Court should deny Kumaran’s

cross-motion because she failed to comply with the procedural requirements of Rule 11. (Id. at 5.) The Court agrees. As here, “[a]n informal warning in the form of a letter without service of a separate Rule 11 motion is not sufficient to trigger the 21-day safe harbor period.” Star Mark, 682 F.3d at 175 (citation omitted). Due to her failure to meet the procedural requirements of Rule 11(c), Kumaran’s cross-motion is denied.1 See Castro v. Mitchell, 727 F. Supp. 2d 302, 307

1 When filing her cross-motion, Kumaran recognized that she had failed to comply with the safe-harbor provision of Rule 11 and argued based upon a decision from the Ninth Circuit that she was not required to do so. (See Kumaran 4/1/24 Cross-Mot. at 11 (citing Patelco Credit Union v. Sahni, 262 F.3d 897 (9th Cir. 2001)). In Patelco, the defendant moved for sanctions on the eve of trial and the plaintiff responded to the defendant’s motion and made its own request for sanctions, but did not comply with the safe (S.D.N.Y. 2010) (“Courts have held that even a letter detailing the nature of the conduct which purportedly violates Rule 11 and threatening to file a motion for sanctions cannot constitute notice under Rule 11.” (citing cases)).

In any event, even assuming arguendo that Kumaran’s cross-motion were not procedurally defective, it fails on the merits. The Court finds that none of the challenged statements made, or conduct engaged in, by Kadlec or his counsel are sanctionable under Rule 11 or otherwise. Indeed, one of the central premises of Kadlec’s motion for sanctions was that the Second Amended Complaint violated Rule 8 (see Kadlec 12/29/23 Mot. at 1, 4-5), and this Court and District Judge Woods agreed. (See 7/9/24 Mem. Op. & Order, ECF No. 438, at 3 (“As

Judge Aaron determined, the second amended complaint does not comply with Rule 8 . . ..”).) Turning next to Kadlec’s motion for sanctions, the Court finds that Kadlec also failed to meet the strict procedural requirements of Rule 11(c). The Second Amended Complaint that was filed on June 7, 2023 against Kadlec in this action was signed by both Kumaran and Randy Kleinman, Esq.

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