William Leighton v. Paramount Pictures Corporation, Barney Balaban, Edwin Weisl and Paul E. Manheim, 340 F.2d 859, 2d Cir. (1965)
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Scribd Government DocsWilliam Leighton v. Paramount Pictures Corporation, Barney Balaban, Edwin Weisl and Paul E. Manheim, 340 F.2d 859, 2d Cir. (1965)
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Scribd Government Docs340 F.
2d 859
William LEIGHTON, Plaintiff-Appellant,
v.
PARAMOUNT PICTURES CORPORATION, Barney
Balaban, Edwin Weisl and Paul E. Manheim, DefendantsAppellees.
No. 14.
Docket 28831.
United States Court of Appeals Second Circuit.
Argued September 24, 1964.
Decided January 12, 1965.
William Leighton, plaintiff-appellant, pro se.
Leonard Kaufman, New York City, for defendant-appellee, Paramount
Pictures Corp.
Whitney North Seymour, Jr., New York City (Simpson, Thacher &
Bartlett, New York City), for defendants-appellees, Barney Balaban,
Edwin L. Weisl and Paul E. Manheim.
Before MOORE, SMITH and KAUFMAN, Circuit Judges.
MOORE, Circuit Judge:
On October 8, 1963, Leighton (appellant) began a shareholder's derivative
action by filing a vague and conclusory complaint which appeared to charge
that the individual defendants, directors of Paramount Pictures Corporation,
wasted corporate assets and plundered the corporate treasury. Leighton
requested that various sums paid by Paramount be recovered from the
individual defendants, that a receiver be appointed for Paramount, that various
contracts to which Paramount was a party be cancelled, and that an injunction
be issued against further payments by it without the permission of the
stockholders. Jurisdiction was based on the Securities and Exchange Act of
1934, 15 U.S.C. 78aa, and "the postal statutes." 28 U.S.C. 1339.
Leighton argues that a variety of errors was committed in the decisions on the
various aspects of this litigation as it proceeded in the trial courts. Assuming
arguendo that certain of the orders appealed from were appealable under the
"collateral order" doctrine of Cohen v. Beneficial Industrial Loan Corp., 337
U.S. 541, 69 S.Ct. 1221, 93 L.Ed. 1528 (1949), we find no merit in any of
Leighton's contentions.
On December 23, 1963, Judge Croake ordered Leighton to post $2,000 as
security for expenses pursuant to Rule 2, Civil Rules for the Southern and
Eastern Districts.1 This order also stayed "all proceedings on the part of the
plaintiff" until security was posted but "without prejudice" to Leighton's right to
file a motion to vacate the stay.
Rule 2 clearly empowered the District Court to compel security for costs in this
derivative suit. This Rule does not attempt, contrary to the direction of
Fed.R.Civ.P. 83, to avoid the procedural requirements incident to temporary
injunctions issued under Fed.R. Civ.P. 65, but serves only to implement a
limited grant of judicial control over the administration of a lawsuit. A
temporary injunction, on the other hand, preserves the entire status quo between
the parties and often serves as the equivalent of an adjudication of the merits.
Nor did the imposition of the stay and security requirement before the parties
joined issue constitute an abuse of judicial discretion. Security may be required
and the order enforced even where a plaintiff's claim has some merit. Leslie
One-Stop in Pennsylvania, Inc. v. Audiofidelity, Inc., 33 F.R.D. 16 (S.D.N. Y.
1963). Leighton's status as a pro se litigant in no way of itself impugns the
character of this litigation but under Rule 2 a court may take all the pertinent
circumstances into account including the conduct of the litigants and the
background and purpose of the litigation. Miller v. Town of Suffield, 249 F.2d
16 (2d Cir. 1957), cert. denied 356 U.S. 978, 78 S.Ct. 1143, 2 L.Ed.2d 1151
(1958). Here Leighton was an habitual pro se litigant whose claims were often
conclusory and lacking in legal merit. The amount of security required is
relatively modest and Leighton has failed to show that he would be financially
unable to post the required amount. The security requirement and stay thus
represent reasonable measures designed to further the effective administration
of this suit and do not unduly prejudice Leighton in the pursuit of his claim.
Farmer v. Arabian American Oil Co., 285 F.2d 720 (2d Cir.), cert. denied, 364
U.S. 824, (1960); Rockaway Pix Theater, Inc. v. Continental Distrib. Inc., 7
Fed.Rules Serv.2d 83.611, Case 2 (E.D.N.Y.1963).
On March 2, 1964, Leighton was held in contempt of the stay by Judge
Sugarman. 63 Civ.2924, S.D.N.Y. This contempt citation grew out of a motion
made by Leighton on January 22, 1964, to strike all defenses "filed in this
action by the defendants up to and including" January 7th because of the
alleged misconduct of the individual defendants' counsel in permitting an
attorney not admitted to the Bar of the District Court to participate in the
preparation of their briefs. On the merits this contention is insubstantial since
counsel could have been admitted pro hac vice, since his participation in the
case beyond his research function seems to have been minimal and since the
motion ignores the continuous participation in the case of the corporate
defendant's counsel. In any event, as Judge Sugarman observed, Leighton
disobeyed the express mandate of the stay by his motion because the relief
requested went far beyond a mere vacatur of the security and stay order of
December 23, 1963. It is axiomatic that a court order must be obeyed, even
assuming its invalidity, until it is properly set aside. United States v. United
Mine Workers of America, 330 U.S. 258, 289-295, 67 S.Ct. 677, 91 L.Ed. 884
(1947).
7
The remainder of Leighton's arguments have been considered but do not require
discussion.
Affirmed.
Notes:
1
"Rule 2 Security for Costs.
"The court, on motion or on its own initiative, may order any party to file an
original bond for costs or additional security for costs in such an amount and so
conditioned as it may designate. For failure to comply with the order the court
may make such orders in regard to noncompliance as are just, and among
others the following: an order striking out pleadings or staying further
proceedings until the bond is filed or dismissing the action or rendering a
judgment by default against the non-complying party."
