278 F.

3d 175

In re PRUDENTIAL INSURANCE COMPANY AMERICA

SALES PRACTICE LITIGATION AGENT ACTIONS,
Michael P. Malakoff, Esquire, and Malakoff, Doyle & Finberg,
P.C., Appellants.
No. 99-5960.

United States Court of Appeals, Third Circuit.

Argued December 5, 2000.
January 24, 2002.

COPYRIGHT MATERIAL OMITTED COPYRIGHT MATERIAL

OMITTED David J. Armstrong (Argued), Dickie, McCamey & Chilcote,
P.C., Michael P. Malakoff, Malakoff Doyle & Finberg, P.C., Pittsburgh,
PA, Counsel for Appellants.
Allyn Z. Lite (Argued), Bruce D. Greenberg, Lite DePalma Greenberg &
Rivas, LLC, Newark, NJ, Melvyn I. Weiss, Barry A. Weprin, Brad N.
Friedman, Milberg Weiss Bershad Hynes & Lerach LLP, Reid L.
Ashinoff, Sonnenschein, Nath & Rosenthal, New York, NY, Michael B.
Hyman, Deborah S. Bussert, Ellyn M. Lansing, Much Shelist Freed
Denenberg Ament Bell & Rubenstein, P.C., Chicago, IL, Counsel for
Appellees.
Brian S. Wolfman, Public Citizen Litigation Group, Washington, D.C.,
Counsel for Amicus-Appellant, Public Citizen, Inc.
Before: McKEE, ROSENN, and CUDAHY,* Circuit Judges.
OPINION OF THE COURT
McKEE, Circuit Judge.

This appeal arises from numerous state and federal class actions that the
Judicial Panel on Multi-district Litigation consolidated for disposition in the
United States District Court for the District of New Jersey. This massive,
national class action involved the claims of over eight million policy holders of

Prudential Life Insurance Company who were represented by many lawyers,

including the appellant, Michael P. Malakoff and his law firm, Malakoff, Doyle
and Finberg. The class action eventually reached a settlement. However, on the
eve of settlement, Lead Counsel for the plaintiffs asked the court to sanction
Malakoff based upon his conduct during the course of the litigation.
2

After issuing a rule to show cause on the motion for sanctions, the District
Court referred the matter to a magistrate judge who issued a Report and
Recommendation ("R and R") recommending rather severe disciplinary and
monetary sanctions. The Chief Judge of the District Court then assigned Judge
Walls to review the R and R. Judge Walls approved the R and R with
modifications and directed the magistrate judge to recalculate the monetary
sanctions according to the precise costs and expenses resulting from the
sanctionable conduct. See In re The Prudential Insurance Co., 63 F.Supp.2d
516 (D.N.J.1999). This appeal followed imposition of the modified sanctions.
For the reasons that follow, we will affirm in part and reverse in part.

3I. Background.
4

In 1995, Michael P. Malakoff, a Pennsylvania attorney experienced in class

action litigation, brought two statewide class actions against Prudential
Insurance Company of America in Ohio and West Virginia state courts on
behalf of Prudential policy holders in those states. Prudential removed those
class actions to federal district court and Malakoff's subsequent motions to
remand were denied. The Judicial Panel on Multi-District Litigation centralized
those and other class actions that had been brought on behalf of Prudential
policy holders before Judge Alfred M. Wolin of the United States District Court
for the District of New Jersey. The centralization order also appointed the law
firms of Milberg, Weiss, Bershad, Hynes & Lerach of New York City and
Much, Shelist, Freed, Denenberg, Ament, Bell & Rubenstein, P.C. of Chicago
as Lead Counsel in the national consolidated action. From the outset, Lead
Counsel and Malakoff disagreed as to whether the actions should be litigated in
statewide classes or as a national class. Malakoff argued that the two state class
actions in which he was counsel should be litigated separately from the national
class asserted by Lead Counsel.

The consolidated cases, from which Malakoff had successfully excluded his
clients, were settled on a nationwide basis in late 1996, and Malakoff retained
objector status in the nationwide action. On December 2, 1996, Malakoff filed
an "emergency" motion to recuse Judge Wolin. A few days later, Lead Counsel
filed a cross-motion for sanctions predicated primarily on Malakoff's recusal
motion. Judge Wolin referred the sanctions motion to then Magistrate Judge

Joel A. Pisano. Following Malakoff's voluminous objections to the proposed

settlement, Lead Counsel supplemented their cross-motion for sanctions with
citations to numerous other instances of Malakoff's alleged sanctionable
conduct.
6

As proponent of the statewide claims for Ohio and West Virginia, Malakoff
raised many objections to the proposed national class settlement, and to Lead
Counsel's request for $90 million in attorneys' fees. In March, 1997, Malakoff
filed his own motion to sanction Lead Counsel under 28 U.S.C. 1927. Shortly
thereafter, Malakoff filed an additional motion for sanctions, this time relying
upon Fed. R. Civ. Proc. 11, but alleging the same conduct that formed the basis
of his 1927 motion. See A-2818, 3485. On March 17, 1997, Judge Wolin, in
an exhaustive and carefully drafted opinion, approved the settlement. In re
Prudential Sales Practice Litig., 962 F.Supp. 450 (D.N.J.1997). Shortly
thereafter, the District Court issued an order and opinion awarding attorneys'
fees to Lead Counsel. 962 F.Supp. 572 (D.N.J.1997).

We affirmed Judge Wolin's approval of the settlement on appeal, but vacated

the attorneys' fee award and remanded for further consideration. See In Re
Prudential Sales Practice Litig., 148 F.3d 283 (3d Cir.1998). On remand, Lead
Counsel moved for an interim fee award which Malakoff opposed. Lead
Counsel also moved for sanctions against Malakoff based upon statements
Malakoff made in his opposition documents. However, that request for
sanctions was withdrawn within the "safe harbor" period. 1 See A-3192, 3485.
Nonetheless, a week later Malakoff filed yet another motion against Lead
Counsel under 28 U.S.C. 1927. That motion was based on the sanctions that
Lead Counsel had requested under Rule 11 even though that motion had been
withdrawn. See A-3485(23).

Following the United States Supreme Court's denial of a petition for certiorari
from our decision affirming the settlement,2 Judge Wolin referred all motions
for sanctions to Magistrate Judge Pisano. Judge Pisano issued an R and R
recommending that sanctions be imposed against Malakoff. The sanctions
included a compensatory payment of $100,000 to Lead Counsel under 28
U.S.C. 1927, and a non-monetary requirement that Malakoff attach a copy of
that R and R as well as a certification that he had paid the attorneys fees
ordered therein, to all future motions for pro hac vice admission in the United
States District Court for the District of New Jersey. See A-3485A(35).

Malakoff objected to the R and R. Judge Wolin recused himself, and the Chief
Judge of the District Court assigned Malakoff's objections to Judge William H.
Walls of the United States District Court for the District of New Jersey. Judge

Walls substantially adopted Judge Pisano's report and rejected Malakoff's

objection; however, Judge Walls remanded the recommendation for
compensatory payment to Lead Counsel of $100,000 to Judge Pisano. The
remand was for a determination of the precise amount of excess fees and
expenses lead counsel incurred as a result of Malakoff's sanctionable conduct.
Judge Walls also reduced the time that Malakoff would have to attach the R
and R and the aforementioned certification of compliance to subsequent
motions for pro hac vice admission to five years from the date of the first
motion for pro hac vice admission. On remand, Malakoff and Lead Counsel
agreed that the compensatory sanction award be reduced to $50,000 if we
uphold the sanctions on appeal. That modification was approved, and Malakoff
filed this appeal.
10

We are only concerned with the propriety of the sanctions imposed by the
District Court against Malakoff following the protracted and hard-fought
consolidated class action proceedings. Malakoff contends that his conduct did
not warrant monetary or disciplinary sanctions, and that sanctions were
imposed without adequate notice or "opportunity to be heard."3 Issues
pertaining to the adequacy of Malakoff's "opportunity to be heard," are
questions of law subject to plenary review. In Re Tutu Wells Contamination
Litig., 120 F.3d 368, 383 (3d Cir.1997). However, we review whether the facts
warrant the imposition of monetary and disciplinary sanctions for an abuse of
discretion. Accordingly, we will only reverse the District Court if the sanctions
resulted from an unsupported finding of fact, an errant conclusion of law, or an
improper application of law to fact. See In re: Orthopedic Bone Screw Prods.
Litig., 193 F.3d 781, 795 (3d Cir.1999).

11

The District Court imposed sanctions pursuant to 28 U.S.C. 1927, as well as

its inherent power to control the course of litigation. Although we will discuss
the legal principles underlying these sanctions in more detail below, it will be
helpful to preliminarily set forth the underlying legal principles for imposing
sanctions. We will then examine Malakoff's conduct to determine if the
sanctions were appropriate here.

12

In Hackman v. Valley Fair, 932 F.2d 239 (3rd Cir.1991) we noted that:

13

a finding of willful bad faith on the part of the offending lawyer is a

prerequisite... [for imposing sanctions under 28 U.S.C. 1927]. Bad faith is a
factual determination reviewable under the clearly erroneous standard. Once a
finding of bad faith is made, the appropriateness of sanctions is a matter
entrusted to the discretion of the district court.

14
15

932 F.2d at 242.

Similarly, an award of fees and costs pursuant to the court's inherent authority
to control litigation will usually require a finding of bad faith.4 In Chambers v.
NASCO, Inc., 501 U.S. 32, 45-46, 111 S.Ct. 2123, 115 L.Ed.2d 27 (1991) the
Supreme Court stated that a court has the inherent authority to impose sanctions
when an attorney has acted "in bad faith, vexatiously, wantonly, or for
oppressive reasons." We also review an award of sanctions pursuant to the
court's inherent powers for an abuse of discretion. "[S]uch an abuse occurs
when the court's decision rests upon a clearly erroneous finding of fact, an
errant conclusion of law or an improper application of law to fact." In Re:
Orthopedic Bone Screw Products Liability Litig., 193 F.3d 781, 795 (3rd
Cir.1999) (internal quotation marks omitted).

II. Malakoff's Conduct.

16
17

Judge Walls rested the 1927 sanctions upon the following conduct: (1)
Malakoff's motion to recuse Judge Wolin; (2) Malakoff's criticism of the fee
examiner; (3) Malakoff's releasing recusal motion papers to the press; (4)
affidavits Malakoff filed in March of 1997; (5) Malakoff's demand for a
"keyword" search of discovery documents provided by Prudential as well as a
demand that Class Counsel provide him with charts summarizing evidence to
be used at the fairness hearing; and (6) sanctions motions Malakoff filed under
Rule 11 and 1927. We will examine each of these in turn.

(1). The Motion to Recuse.

18
19

Malakoff filed a motion to recuse as an emergency motion on December 2,

1996. He alleged that Judge Wolin had improper ex parte communications with
various people involved in the nationwide litigation, that Judge Wolin
obstructed reasonable access to documents related to the fairness of the
settlement and that Judge Wolin had shown partiality towards Prudential and
towards the fairness of the settlement. App. at 833-859.

20

Malakoff rested the motion primarily upon the charge that Judge Wolin had
improper ex parte meetings with Prudential's President and counsel on August
12, 1996 at a settlement conference, and an October 16, 1996, on the record
conference with certain state insurance regulators. Finally, Malakoff alleged
that Judge Wolin had improperly attempted to influence a state court trial judge
in a Pennsylvania state court case.

21

Prudential and Class Counsel opposed the recusal motion. Judge Wolin set an

21

Prudential and Class Counsel opposed the recusal motion. Judge Wolin set an
expedited schedule for responses and scheduled a hearing on the motion for
December 13, 1996. However, when Prudential and Class Counsel voiced their
opposition, Malakoff demanded a delay of twenty days to reply. The District
Court denied that request and held the hearing as scheduled. Judge Wolin
denied the recusal motion after that hearing and argument on the motion.
Malakoff then petitioned for a writ of mandamus which we denied. His
mandamus papers reiterated the same arguments that we had rejected on appeal
from the approval of the class settlement and fairness hearing. See 148 F.3d at
342-34.

22

In sanctioning Malakoff under 1927, Judge Walls rejected Malakoff's

contention that the recusal motion had a colorable basis in fact and was not filed
in bad faith. Rather, Judge Walls concluded that "Malakoff intentionally filed
an unreasonable recusal motion." 63 F.Supp.2d at 520. In his appeal to us,
Malakoff has dropped most of the charges he had previously based his recusal
motion on, including his charge that Judge Wolin had improper ex parte
settlement communications with Prudential's President and counsel.5 Instead,
he asserts that the following three bases for recusal demonstrate that his motion
for recusal had a colorable basis and was not filed in bad faith.

23

First, Malakoff alleges that Judge Wolin attempted to intervene on Prudential's

behalf in a Pennsylvania state court case called Rutt v. Prudential. According to
Malakoff, in a hearing in that case before the state court trial judge, Prudential's
counsel, Hirshman, argued for the disqualification of a lawyer named Miller
who represented the Rutts. According to Malakoff, Hirshman told the state trial
judge that Judge Wolin had information for the court regarding Miller and that
Judge Wolin "is receptive to a discussion with Your Honor by telephone about
his views." Malakoff's Br. at 13. Malakoff alleges that Hirshman told the state
judge that Judge Wolin had "information to share" and suggested that the state
judge call Judge Wolin. Id. at 13-14. The state court trial judge purportedly
declined Hirshman's invitation, saying that it would be "highly improper" for
him to contact Judge Wolin. Id. at 14. According to Malakoff, the whole
purpose of this contact with the state judge was delaying the trial of the Rutt
case until after the nationwide settlement was approved.

24

At the recusal hearing, Judge Wolin stated that he would have spoken to the
state judge "as a matter of courtesy," however, he categorically denied knowing
the state judge ever attempting to contact him, or even caring about the
outcome of the Rutt case. App. at 891-92. Nothing on this record contradicts
Judge Wolin's assertion. To the contrary, Malakoff's own brief now belies his
charge that Judge Wolin attempted to intervene, and affirms that what actually
happened was "that Prudential attorneys urged [the state trial judge] to contact

Judge Wolin." Malakoff's Br. at 38. Therefore, Malakoff's charge was not
based on anything Judge Wolin said or did. Rather, it was based upon
something Prudential's counsel tried to get the state trial court judge to do.
When Malakoff leveled this allegation of bias in his merits appeal we stated: "
[t]here is no basis for believing the District Court was attempting to influence
the state court proceedings in Rutt ... [and Malakoff's claims to the contrary] are
clearly without merit." 148 F.3d at 345.
25

Malakoff also alleged that Judge Wolin ought to be recused because the judge
had an improper ex parte communication with David Gross. Gross' client was a
former Prudential employee named David Fastenberg, and Fastenberg had been
accused of destroying documents relevant to the Prudential litigation. Malakoff
based this allegation of Judge Wolin's impropriety upon a statement Judge
Wolin made at an October 16, 1996 hearing. During the course of that hearing,
Judge Wolin stated that "Fastenberg's own lawyers say there was no document
destruction." Malakoff's Br. at 15. Malakoff alleged that this purportedly
improper communication on a matter concerning destruction of material and
disputed documents, demonstrates Judge Wolin's favoring of Prudential.

26

However, Prudential had fired Fastenberg for allegedly allowing the

destruction of documents in offices he supervised, and Fastenberg responded by
suing Prudential for wrongful termination. The alleged document destruction
was a matter of public record. Moreover, Fastenberg's termination and his suit
against Prudential had been widely reported in the press. Judge Wolin
explained to Malakoff at the recusal hearing that he learned of Fastenberg's
denial in the press and through a letter written to him by Lead Counsel for
Prudential in a related case. Nothing on this record contradicts that. There was
no improper communication by Judge Wolin with Fastenberg's lawyer. In fact,
there was no communication at all.

27

Furthermore, Malakoff should have readily dismissed any suggestion that Judge
Wolin favored Prudential when Judge Wolin directed Class Counsel to conduct
an accelerated investigation of document destruction allegations. On January 6,
1997 Judge Wolin fined Prudential $1,000,000 for destroying documents. In re
Prudential Ins. Co. of America Sales Practices Litig., 169 F.R.D. 598
(D.N.J.1997). Yet, Malakoff persists in this accusation to this very day.,

28

Malakoff's third reason for insisting that his recusal motion had a colorable
basis and was not filed in bad faith is his charge that Judge Wolin had an
October 16, 1996 on the record conference with state insurance regulators
during which Judge Wolin indicated that he favored a national settlement of the
policyholders' claims against Prudential. In Malakoff's view, the court's

indication that it favored a settlement showed that it was partial to Prudential

and could not, therefore, be an impartial, objective reviewer of the settlement.
Malakoff rests this claim upon the following statement of Judge Wolin at the
October 16 hearing:
29

I'd like to be on the same page with you, realizing that we all have the same
constituency. When I say `constituency,' I'm talking about the claimants, the
10.7 million people who are policyholders of Prudential.... Because I think that
our goals have to be the same: we want to eliminate confusion, we want to
make sure that claimants are ... remediated properly.

30

Malakoff's Br. at 41. Judge Wolin also referred to the proposed settlement as
"my settlement" and said "although I wasn't in all of the negotiations, I wasn't
just a pretty face." Id. at 42. However, nothing suggests that these remarks have
the significance that Malakoff attempts to attach to them. Moreover, Malakoff
does not bother to mention that Judge Wolin was careful to add the following
caveat at the end of the October conference:

31

No one should leave here today thinking that Judge Wolin's silence, Judge
Wolin's nod, a smile at a particular time, means that he will approve this
settlement. I don't have the slightest idea. I don't know who the objectors are, I
haven't heard any evidence.

32

App. at 603. Moreover, we have already rejected the "spin" Malakoff's recusal
motion sought to put on those statements. Malakoff made the same argument
regarding these remarks on appeal from the fairness hearing. We stated that the
"allegation [of impropriety] has no merit." 148 F.3d at 344.

(2). Criticism of the Fee Examiner.

33
34

On November 6, 1996, the District Court appointed Stephen M. Greenberg,

Esq., as a Fee Examiner to "review the application for attorneys' fees and
expenses" for Class Counsel. App. at 677. According to Prudential, that
appointment was made after consultation with Class Counsel and Prudential
and after those counsel had met with Greenberg. Malakoff received a copy of
the Order appointing Greenberg and on November 15, 1996, Malakoff wrote a
letter to Greenberg introducing himself. Significantly, Malakoff did not object
to the fact or the manner of Greenberg's appointment in that letter.

35

However, two months later, Malakoff filed an emergency motion seeking to

have Greenberg's appointment vacated. Malakoff alleged that Greenberg's

appointment had been ex parte and in violation of Fed.R.Civ.P. 53(d)(1),

because the first meeting of the parties and their attorneys was not held within
20 days of the order appointing the examiner.6 Judge Wolin denied Malakoff's
motion to vacate Greenberg's appointment. The judge found that Malakoff had
waived his right to object by (1) not objecting at the time Greenberg was
appointed; (2) writing to Greenberg nine days after Greenberg was appointed
proposing that they collaborate in efforts to obtain materials related to the
application for attorneys' fees; (3) waiting two months before seeking to vacate
Greenberg's appointment, and (4) failing to provide any reason for waiting
those two months. App. at 2501(4). Judge Wolin also found that Malakoff's
Rule 53 objections were "hyper-technical" since "Greenberg met with the
parties five days prior to the date of the November order and 27 days after the
date of the November order." Id. at 2501(1)-2504(14)(a).
36

In his "sanctions opinion," Judge Walls concluded that Malakoff had no basis
for trying to vacate Greenberg's appointment because Malakoff had initially
approved Greenberg's appointment. 63 F.Supp.2d at 521. Moreover, Judge
Walls agreed that Malakoff's Rule 53 argument was "hyper-technical." Id.

(3). Release of Motion to Recuse to the Press.

37
38

Judge Walls accepted Magistrate Judge Pisano's consideration of Malakoff's

failure to provide Judge Wolin with courtesy copies of motion papers in
imposing sanctions. Judge Walls noted that:

39

Magistrate Judge Pisano indicates that Mr. Malakoff repeatedly failed to send
courtesy copies of motion papers to Judge Wolin's chambers. This deficiency
was specifically addressed by Judge Wolin in Mr. Malakoff's December 13,
1996 motion to recuse.

40

In re: The Prudential Insurance Co., 63 F.Supp.2d at 522.

41

Malakoff submits that Judge Walls found that his failure to provide courtesy
copies of his various motions to Judge Wolin was sanctionable conduct. He
contends he did not provide courtesy copies because, until that time, he had
always filed his motions in accordance with local rules and Judge Wolin never
had objected to that practice. Under local rules, the clerk of court forwards
filings to the assigned judge. According to Malakoff, it was only at the end of
the recusal hearing that Judge Wolin chastised him for not providing the
courtesy copies of filings. Malakoff asserts that Judge Walls was therefore
wrong in finding that his failure to provide courtesy copies was sanctionable.

42

However, Judge Walls did not consider Malakoff's general failure to provide
courtesy copies to Judge Wolin in imposing sanctions. Rather, Judge Walls
considered Malakoff's release of his recusal motion to the press without first
providing a copy to Judge Wolin.

43

At the recusal hearing, Judge Wolin expressly found that "copies of the
Malakoff motion were submitted or leaked to the press in advance of their
receipt by the Court. At least three major newspapers sought comment from
this Court as to applications, the existence of which the Court was unaware."
App. at 1492. Malakoff claims that several days after he filed the motion to
recuse, he was contacted by the press and provided copies to them. Thus,
because he complied with the rules of court and because the press initiated the
contact, he insists that this conduct was not sanctionable. But, Judge Walls
found otherwise. He concluded: "as an experienced attorney, [Malakoff] should
have realized that the clerk's office would not deliver courtesy copies to
chambers immediately. [Malakoff's] failure to accord Judge Wolin the same
respect as the media was `unacceptable' and indicates that he acted in bad
faith." 63 F.Supp.2d at 522.

(4). The March 1997 Affidavits.

44
45

In December of 1996, Judge Wolin held a hearing to address accusations that

Prudential had destroyed documents related to the class action. Malakoff was
not in court that day, but maintains that an associate in his firm was.
Nonetheless, on January 13, 1997, Malakoff filed his "Tenth Affidavit,"
alleging that an improper ex parte communication occurred on December 30,
1996 between Judge Wolin, Karen Suter, Deputy Attorney General for the New
Jersey Department of Banking, and Anita Kartalopolous, Deputy Commissioner
for that Department. Subsequent to the filing of Malakoff's "Tenth Affidavit,"
Suter and Kartalopolous filed affidavits denying any improper ex parte
discussion with Judge Wolin. In fact, in those affidavits, both women said they
asked the courtroom clerk if there was an attorney conference room where they
could make a phone call to the Banking Commissioner. According to those
sworn affidavits, a courtroom deputy told them none was available. However,
Judge Wolin overheard that conversation and offered the use of one of the
phones in his library conference room. That was the extent of their conversation
with Judge Wolin.

46

However, despite the affidavits from Suter and Kartalopolous, Malakoff filed a
"Corrected Tenth Affidavit," on February 17, 1997, which was identical to the
"Tenth Affidavit" except that it changed, without explanation, the date of the
alleged ex parte communication from December 30th to December 16. Then,

on March 14, 1997, Malakoff filed his "Twenty Third Affidavit," in which he
once again alleged that an improper ex parte discussion occurred on December
16, between Judge Wolin, Suter and Kartalopolous. Three days later, Malakoff
filed his "Twenty Fourth Affidavit," in which he repeatedly accused Judge
Wolin of catering to the interests of Prudential and Class Counsel.
47

Judge Walls found that the 23rd and 24th affidavits merely restated already
rejected arguments, attempted to explain Malakoff's reasons for filing motions
that had already been denied, and repeated allegations of Judge Wolin's
impropriety that Malakoff had made in his recusal motion. Judge Walls also
found that the 24th affidavit was not filed in connection with any new or
pending motion. Consequently, Judge Walls concluded that Malakoff filed the
23rd and 24th affidavits for the sole purpose of embarrassing Judge Wolin. 63
F.Supp.2d at 522.

(5). Discovery Matters.

48
49

Judge Walls considered two instances of Malakoff's conduct over discovery

materials in sanctioning Malakoff.

50

The first involved Malakoff's demand for a "keyword" search of documents

produced during discovery. On October 28, 1996, Class Counsel and Prudential
received Judge Wolin's order conditionally approving the settlement of the
consolidated class action. Judge Wolin made available to all policyholders who
signed a Stipulation of Confidentiality "deposition transcripts and attached
exhibits as well as ... all other documents generated in this lawsuit."

51

According to Class Counsel, over 1,000,000 pages of documents, 160 computer

diskettes, 500 audio and video tapes, hundreds of interviews with current and
former Prudential employees, twenty depositions, plus all of the documents that
Prudential had produced to the Multi-State Task Force was then available.
Numerous lawyers for policyholders apparently reviewed the documents in
three document depositories around the country that Class Counsel had
established for that purpose. According to Class Counsel, Malakoff indicated in
early November 1996 that he intended to review the documents and Class
Counsel sent him copies of their own indices to the documents to assist with
that review. However, Malakoff did not review the materials. Rather, he
demanded additional discovery despite not having reviewed the discovery
material already available. On December 30, 1996, after Malakoff complained
about not being able to review the documents, Judge Wolin suggested that he
go to Class Counsel's offices in New York for document review. Malakoff
maintains that he asked Judge Wolin to direct Class Counsel to allow him

(Malakoff) to use the class keyword search facility because only a few of the
many documents were relevant to Malakoff's objections. Judge Wolin denied
that request as unfair, and Malakoff sent an associate to Class Counsel's office.
However, the associate only demanded that Class Counsel conduct keyword
searches for him. He did not review any discovery material.
52

The second set of circumstances involving discovery that Judge Walls

considered concerned Malakoff's demand for "charts" summarizing evidence.
On January 28, 1997, Judge Wolin entered an order permitting Class Counsel
to use demonstrative evidence at the fairness hearing, and requiring Class
Counsel to provide an adequate opportunity for any interested party to inspect
the demonstrative evidence at Class Counsel's New York office. Judge Wolin's
order specified, however, that the "opportunity for such inspection does not
create any obligation [on Class Counsel] to provide any copies of such
demonstrative evidence to any person inspecting the same."

53

Malakoff asserts that it was not feasible for him to review this demonstrative
evidence in New York, and he therefore requested that Prudential and Class
Counsel fax copies of the charts to him. According to Malakoff, Prudential
complied with his request, but Class Counsel refused and demanded that he go
to New York to review the charts. Rather than doing that, Malakoff filed yet
another "emergency" motion on February 19, 1997. Judge Wolin denied that
motion finding, among other things, that Malakoff had not shown why
compliance with the previous order allowing inspection was not feasible. Judge
Wolin was also concerned that Malakoff waited until the eleventh hour to raise
the issue (the fairness hearing was set for February 24, 1997).

54

Judge Walls considered these actions and wrote:

55

Mr. Malakoff's actions demonstrate a failure on his part to abide with the
discovery process agreed to by counsel and the Court in this action. That no
other attorney objected to the process or sought specific concessions from the
court or opposing counsel demonstrates that the procedure was
unobjectionable. Mr. Malakoff's resistance to the discovery process and his
attempts to exempt himself therefrom unreasonably multiplied the
straightforward discovery process and delayed the ultimate settlement of the
case.

56

63 F.Supp.2d at 522.

(6). Filing Rule 11 and 1927 Sanctions Motions.

57

58

As noted, when Malakoff filed his recusal motion, Class Counsel cross-moved
for sanctions against Malakoff under 1927, and then, on the same day as the
fairness hearing, supplemented their cross-motion for sanctions. In response,
Malakoff filed his own motion for sanctions against Class Counsel under
1927, and shortly thereafter, he served a motion for sanctions against Class
Counsel under Fed.R.Civ.P. 11 based upon Class Counsel's sanctions motion.

59

Malakoff's 1927 motion consisted entirely of his defenses to Class Counsel's

sanctions motion. In his R and R, Magistrate Judge Pisano concluded that
Malakoff's 1927 motion "fails mightily to show why the court should
sanction Class Counsel." R & R at 31. Magistrate Judge Pisano also concluded
that Malakoff's Rule 11 motion was absolutely identical to his 1927 sanctions
motion. Judge Walls held that both motions were only defenses to Class
Counsel's 1927 motion and did "not advance a coherent legal argument as to
why [Class Counsel] should be sanctioned." 63 F.Supp.2d at 523. Inasmuch as
Malakoff conceded that the legal standards for 1927 and Rule 11 are
different, Judge Walls concluded that these duplicitous motions demonstrated
that Malakoff had abused the sanctions process.7 Id. Judge Walls concluded
that Malakoff's "identical motions were baseless and filed in bad faith." Id.

III. Sanctions Under 18 U.S.C. 1927.

60
61

As noted above, the monetary sanctions here were imposed pursuant to 28

U.S.C. 1927. Section 1927 provides:

62

Any attorney or other person admitted to conduct cases in any court of the
United States or any Territory thereof who so multiplies the proceedings in any
case unreasonably and vexatiously may be required by the court to satisfy
personally the excess costs, expenses, and attorneys' fees reasonably incurred
because of such conduct.

63

28 U.S.C. 1927. "Although a trial court has broad discretion in managing

litigation before it, the principal purpose of imposing sanctions under 28 U.S.C.
1927 is the deterrence of intentional and unnecessary delay in the
proceedings." Zuk v. Eastern Pennsylvania Psychiatric Institute, 103 F.3d 294,
297 (3d Cir.1996) (citation and internal quotations omitted).

64

As is evident from the text of the statute, 1927 requires a court to find an
attorney has (1) multiplied proceedings; (2) in an unreasonable and vexatious
manner; (3) thereby increasing the cost of the proceedings; and (4) doing so in
bad faith or by intentional misconduct. Williams v. Giant Eagle Markets, Inc.

883 F.2d 1184, 1191 (3rd Cir.1989). "[B]efore a court can order the imposition
of attorneys' fees under 1927, it must find willful bad faith on the part of the
offending attorney." Zuk, 103 F.3d at 297. "Indications of this bad faith are
findings that the claims advanced were meritless, that counsel knew or should
have known this, and that the motive for filing the suit was for an improper
purpose such as harassment." Smith v. Detroit Fed'n of Teachers Local 231, Am.
Fed. of Teachers, AFL-CIO, 829 F.2d 1370, 1375 (6th Cir.1987). Inasmuch as
1927 addresses the impact conduct has on the proceedings, sanctions that are
imposed under 1927 must only impose costs and expenses that result from the
particular misconduct. Martin v. Brown, 63 F.3d 1252, 1264 (3d Cir.1995).
Moreover, these costs and expenses are limited to those that could be taxed
under 28 U.S.C. 1920. Id.
IV. Sanctions Pursuant to the Court's Inherent Power.
65
66

In addition to the monetary sanctions imposed under 1927, the District Court
also imposed disciplinary sanctions. These sanctions required Malakoff to
certify that he had paid the monetary fine, and attach a copy of the R and R to
all applications for admission pro hac vice for five years from the date of the
first such application. This sanction was imposed under the court's inherent
power. Moreover, the sanctioning order also provided that, if Malakoff were to
be sanctioned again within the five year period, the five year limitation would
disappear and he would thereafter be required to submit the proof of payment,
together with a copy of the R and R, with every application for pro hac vice
admission to the District Court for as long as he practiced law. In re Prudential
Ins. Co. of Am. Sales Prac. Litig., 63 F.Supp. 2d 516, 525 (D.N.J.1999).

67

"It has long been understood that certain implied powers must necessarily result
to our Courts of justice from the nature of their institution, powers which
cannot be dispensed with in a Court, because they are necessary to the exercise
of all others." Fellheimer, Eichen & Braverman, P. C., v. Charter
Technologies, Inc., 57 F.3d 1215, 1224 (quoting Chambers v. NASCO, Inc., 501
U.S. 32, 43, 111 S.Ct. 2123, 115 L.Ed.2d 27 (1991)(internal brackets and
citations omitted)). "Among the implied and incidental powers of a federal
court is the power to discipline attorneys who appear before it." Id. (quoting
Chambers, at 43, 111 S.Ct. 2123).

68

Circumstances that may justify sanctions pursuant to a court's inherent power

include

69

cases where a party has acted in bad faith, vexatiously, wantonly, or for
oppressive reasons.... The imposition of sanctions in this instance transcends a

court's equitable power concerning relations between the parties and reaches a
court's inherent power to police itself, thus serving the dual purpose of
vindicating judicial authority without resort to the more drastic sanctions
available for contempt of court and making the prevailing party whole for
expenses caused by his opponent's obstinacy. Id.
70

(quoting Chambers, at 45-46, 111 S.Ct. 2123).

71

A court may resort to its inherent power to impose sanctions even if much of
the misconduct at issue is also sanctionable under statute or rules of court.
Chambers, at 45, 111 S.Ct. 2123. However, "[b]ecause of their very potency,
inherent powers must be exercised with restraint and caution." Chambers, at 44,
111 S.Ct. 2123; see also Eash v. Riggins Trucking, Inc., 757 F.2d 557, 562 (3d
Cir.1985)(en banc). Although a court retains the inherent right to sanction when
rules of court or statutes also provide a vehicle for sanctioning misconduct,
resort to these inherent powers is not preferred when other remedies are
available. Moreover, the analysis in Chambers "leads to the conclusion that if
statutory or rules-based sanctions are entirely adequate, they should be
invoked, rather than the inherent power." Gregory P. Joseph, Sanctions: The
Federal Law of Litigation Abuse, 428 (3rd ed.1999) (hereinafter Sanctions
Treatise). Therefore, "[g]enerally, a court's inherent power should be reserved
for those cases in which the conduct of a party or an attorney is egregious and
no other basis for sanctions exists." Martin v. Brown, 63 F.3d at 1265.

V. The Court did not Abuse its Discretion in Imposing Sanctions Under 1927
72
73

As we stated at the outset, sanctions under 1927 or the court's inherent power
may not be made in the absence of a finding of bad faith. However, that finding
need not be explicit. An implicit finding of bad faith will support sanctions just
as well so long as it is not an abuse of discretion, not based upon clearly
erroneous factual findings, and not based upon an error of law. Baker Industries
at 209.

74

Here, Judge Walls did not make an express finding of bad faith. Nor did Judge
Walls rely upon any of the above-specified conduct in particular. Rather, he
based his finding of the requisite bad faith and vexatious conduct on the totality
of the campaign Malakoff waged during the course of this litigation, not upon
any single maneuver. The District Court assessed that conduct in its totality in
imposing sanctions and affirming the findings of the Magistrate Judge. In his R
and R, the Magistrate Judge explained:

75

[w]hen viewed individually, each single instance of misbehavior by Mr.

75

[w]hen viewed individually, each single instance of misbehavior by Mr.

Malakoff might not warrant the sanctions arrived at by the court. But
considered as a whole, his transgressions evidence a pattern of obfuscation and
mean spiritedness. Thankfully, it is not often that the Court encounters such
behavior, and the undersigned is completely satisfied that, under disciplinary
rubric, Mr. Malakoff's conduct warrants stern sanctions.

76

R & R at 25 (emphasis added). Moreover, the District Court specifically cited

this finding in affirming the sanctions. See In Re Prudential 63 F.Supp.2d at
521 ("The Magistrate Judge concluded that Mr. Malakoff `abused the
privileges of practicing before this Court. His behavior since his arrival on the
scene in this litigation has been deplorable. Examples of this conduct are
numerous and ... [not] a one-time lapse in judgment.' The Court thus found that
`considered as a whole, his transgressions evidence a pattern of obfuscation and
mean spiritedness.'").

77

Judge Walls noted that Malakoff "began bombard[ing] the Court with paper
soon after the transfers." In Re Prudential Insurance Co., 63 F. Supp 2d at 518.
This record readily discloses implicit findings of bad faith, and those findings
were not clearly erroneous.

78

The district court's finding of willfulness on [Malakoff's] part, as a finding of

fact, is subject to reversal only if clearly erroneous. This standard requires us to
pay deference to the district court's interpretation of the factual record before it.
Once such a finding is made, the appropriateness of assessing attorneys' fees
against counsel under section 1927 is a matter for the district court's discretion.

79

Baker Industries, 764 F.2d at 209-10 (citations omitted). Accordingly, we do

not second-guess the District Court that was managing the front lines of this
massive class action unless its findings were clearly erroneous or its exercise of
discretion arbitrary or unjustified.

80

The course of conduct here allows for only one conclusion, and it is the one
reached by the Magistrate Judge and District Court. We can not conclude that
the District Court's finding that Malakoff litigated in a vexatious manner and in
bad faith was clearly erroneous. He multiplied the proceedings at nearly every
turn, and increased the cost of this litigation accordingly. His baseless recusal
motion required responses by Class Counsel and a hearing by Judge Wolin. His
emergency motion to vacate the fee examiner's appointment, an appointment
that he originally approved, also necessitated responses by Class Counsel and
required Judge Wolin to write a thirteen page opinion in support of his order
denying the motion. His demand for a key word search (after he failed to make

any efforts to review the documents available at Class Counsel's New York
Office) meant that Judge Wolin had to address that demand at a case
management conference held to discuss the proposed settlement hearing.
Malakoff's emergency motion demanding that Class Counsel fax charts
summarizing the evidence to be used at the fairness hearing once again
necessitated responses by Class Counsel and once again meant that Judge
Wolin had to write an opinion and order denying that motion. His filing of two
identical sanctions motions, despite the fact that they were filed under different
provisions having different standards of proof, necessitated responses by Class
Counsel and an examination and analysis by Magistrate Judge Pisano. Finally,
even though his March 1997 affidavit may not have required the use of judicial
resources, the subjects of those affidavits, viz., New Jersey Deputy Attorney
General Suter and New Jersey Deputy Insurance Commissioner Kartalopolous,
felt compelled to respond to the erroneous allegations Malakoff made in the
affidavit of improper ex parte discussions with Judge Wolin.
81

The sanctions that were imposed were a direct result of that vexatious conduct
and not an abuse of discretion. The only real question with regard to those
sanctions is whether Malakoff was properly afforded due process before the
sanctions was imposed. Although we believe Malakoff was afforded due
process as to the additional costs and fees taxed against him under 1927, we
are troubled by the absence of particularized notice of sanctions imposed under
the court's inherent powers.

VI. Due Process Requirements.

82
83

"The Due Process Clause of the Fifth Amendment requires a federal court to
provide notice and an opportunity to be heard before sanctions are imposed on
a[n] ... attorney." Martin v. Brown, at 1262. We have held that "particularized
notice is required to comport with due process." Fellheimer, at 1225.
"Generally speaking, particularized notice will usually require notice of the
precise sanctioning tool that the court intends to employ." Id. An opportunity to
be heard is "especially important" where a lawyer or firm's "reputation is at
stake," because sanctions "act as a symbolic statement about the quality and
integrity of an attorney's worka statement which may have a tangible effect
upon the attorney's career." Id. at 1227.

84

Here, Malakoff did receive notice in the form of the motion for sanctions that
Lead Counsel filed on December 10, 1996. Moreover, on December 10, 1996,
plaintiff's liaison counsel, co-lead counsel and executive counsel gave Malakoff
written notice that on December 13, 1996, they would cross-move before Judge
Wolin for an order pursuant to 28 U.S.C. 1927 to impose sanctions. However,

that notice informed Malakoff that sanctions would be sought

85

"upon the firm of Malakoff, Doyle & Finley, P.C., for unreasonably and
vexatiously multiplying the proceedings in this matter, and seeking payment by
Malakoff, Doyle & Finley, P.C. of the excess costs, expenses and attorneys'
fees reasonably incurred to respond to the application of Kittle and Krell to
disqualify the judge in this matter."

86

The notice only referred to sanctions under 28 U.S.C. 1927, and made no
mention of sanctioning Malakoff under the court's inherent powers. The
supporting affidavits of attorney Allyn Z. Lite and Brad N. Friedman also
referred only to sanctions under 28 U.S.C. 1927 without any reference to the
court sanctioning Malakoff under its inherent powers.

87

In upholding the Magistrate Judge's determination that Malakoff had not been
denied due process, Judge Walls cited to page 24 of the R and R. See 63 F.
Supp 2d at 523. There, the Magistrate judge stated:

88

In the sanctions matters currently before the Court, all parties were given ample
notice of what behavior was in dispute. Each side's motion papers and affidavits
set forth in detail why it believes actions taken by the other party's attorneys
should result in sanctions. Furthermore, the questions posed at oral argument
afforded to the parties an inkling of the Court's concerns about what behavior
might be objectionable. Finally, each party was able to listen at oral argument
to the concerns voiced by the other. Surely, each side was on particularized
notice of what behavior and actions were at issue.

89

Class Counsel and Mr. Malakoff were also given at least four opportunities to
be heard. First, both sides presented legal arguments in their numerous and
lengthy briefs and memoranda accompanying the various sanctions motions.
Second, Mr. Malakoff and Class Counsel both sent to the Court letter
memoranda accompanying their submissions regarding the sanctions record.
Third, at oral argument, each side was given time for a presentation to the
Court, and additional time for rebuttal. Finally, at the end of oral argument, the
Court advised the parties that it would entertain one final letter memorandum
from each side, so long as each was no longer than five pages. Both took
advantage of all four of these opportunities to present arguments to the Court.
Certainly, the parties have been given meaningful and numerous opportunities
to be heard.

90

R & R. at 23-24. We agree as to the statutory sanctions.

91

This record clearly establishes that the sanctions that were imposed under
1927 satisfied due process requirements.8 However, as we suggest above, we
are troubled by the propriety of the non-monetary sanctions imposed pursuant
to the court's inherent powers.

VII. Sanctions Under the Court's Inherent Powers and Conditions on Pro Hac Vice
Admission.
92

Malakoff does not challenge the court's authority to impose the aforementioned
conditions on his applications for pro hac vice admission in the District Court
of New Jersey. He does, however, argue that he was denied notice and an
opportunity to be heard as to those sanctions. He claims that he first became
aware that the Magistrate Judge was considering requiring him to attach this
"scarlet letter" (our term, not Malakoff's) to his pro hac vice applications only
upon reading the July 15, 1999, R and R. Class Counsel argues to the contrary
and insists that Malakoff had ample notice. According to Class Counsel, the
issue was raised by Class Counsel at oral argument during the sanctions
hearing and again in their post-argument brief.

93

The Magistrate Judge found that Malakoff was given four opportunities to be
heard on the sanctions that were being considered. See R & R at 24. Judge
Walls found that Malakoff received particularized notice in the original 1927
sanctions motion filed in December of 1996. He also found that "[a] survey of
the competing sanctions motions filed over the course of the Prudential
litigation further indicates that Mr. Malakoff was on notice to the particular
factors that he had to address if he were to avoid sanctions." 63 F.Supp.2d at
524 (internal quotations omitted).

94

However, the sanction pertaining to pro hac vice admissions is substantially

more severe than the sanction imposed under 1927 because it more directly
impacts Malakoff's ability to practice. It is also at least arguably more
damaging to his reputation and that of his firm.9 Moreover, although Malakoff
was clearly on notice that the court was empowered to make him pay for the
increase in cost resulting from his vexatious conduct and that Lead Counsel
would request those costs, it is not as clear that Malakoff had notice that the
court was considering requiring him to attach his scarlet letter to his pro hace
vice admissions in the District of New Jersey.

95

The Magistrate Judge explained this sanction as follows:

96

In addition to the monetary sanction for his S 1927 violations, Mr. Malakoff

should be required to answer to the Court for his conduct. One would have
hoped for an apology but none was offered. And having read his numerous
submissions, having observed his demeanor at oral argument, and having
evaluated his concept of professional responsibility, the Court is not satisfied
that even a forced apology would have any impact on Mr. Malakoff.
97

Therefore, and pursuant to its inherent power, the Court recommends that, prior
to Mr. Malakoff's applying for pro hac vice admission in any subsequent
litigation in this district, he be required to attach to the motion papers
supporting his admission (1) a certification that he has paid the monetary
sanction ordered herein, and (2) a copy of this R and R.

98

R & R at 35.

99

We do not believe that the notice Malakoff received in connection with the
motion for sanctions under 1927 afforded the kind of "particularized" notice
and opportunity to defend against this unique sanction that due process
requires.

100 In concluding that Malakoff did not have adequate notice of this sanction we
are particularly mindful of the impact that such a sanction would no doubt have
on Malakoff's ability to practice his trade. Although the sanction is not a
suspension from practice per se, it certainly raises similar concerns, and those
concerns ought to inform the particularity of notice that must be given to allow
Malakoff to properly defend against such a sanction. See In re: Tutu Wells, 120
F.3d at 381 n. 10. ("Any suspension from practice [and to a lesser degree,
severe disciplinary impediments pertaining to admission to practice], even in a
jurisdiction in which an attorney does not regularly practice, would leave an
indelible and deleterious imprint on the attorney's career, reputation, and future
opportunities."). We do not believe that the notice afforded Malakoff was
sufficient to allow the court to impose the non-monetary sanctions that were
imposed under the court's inherent power. Accordingly, that order will be
reversed.
CONCLUSION
101 For the reasons set forth above, the order of the District Court will be affirmed
insofar as it imposes sanctions under 18 U.S.C. 1927 requiring Malakoff to
pay the increase in costs and fees resulting from his conduct. However, the
order is reversed insofar as it imposes conditions on his pro hac vice
applications under the court's inherent powers.

102 In affirming these sanctions we merely conclude that, inasmuch as the district
court's finding of bad faith was not clearly erroneous, we do not think that the
monetary sanctions were an abuse of discretion. However, nothing we say is
intended to detract from the important role of objectors' counsel that Judge
Rosenn so eloquently notes in his concurring/dissenting opinion. See
Concurring/dissenting Op. at 202. Nor do we in any way intend to suggest that
forceful advocacy ought to invite sanctions in the absence of bad faith, and
vexatious conduct that unduly increases the costs and burdens of litigation.

Notes:
*

The Honorable Richard Cudahy, Senior Circuit Judge of the United States
Court of Appeals for the Seventh Circuit, sitting by designation

For a discussion of the 21 day "safe harbor" provision contained in

Fed.R.Civ.P. 11 seeZuk v. Eastern Pennsylvania Psychiatric Institute, 103 F.3d
294 (3rd Cir.1996).

525 U.S. 1114, 119 S.Ct. 890, 142 L.Ed. 2d 789 (1999)

Malakoff argues that he was denied the opportunity to be heard in opposition to

the sanctions motion because of the District Court's denial of his discovery
requests regarding submissions made after he filed his recusal motion. We have
previously held that Malakoff was not entitled to more discovery.
SeePrudential Sales Practices Litig., 148 F.3d at 343-45.

We state that a finding of bad faith is "usually" required under the court's
inherent powers because we noted inRepublic of Philippines v. Westinghouse
Electric Corp., 43 F.3d 65, 74 n. 11 that such sanctions do not always require a
showing of bad faith. Thus, in Martin v. Brown, we were careful to note that "
[u]sually the inherent power that a district court retains to sanction attorneys
also requires a finding of bad faith." 63 F.3d 1252 at 1265 (emphasis added).
We need not dwell on when, if at all, a court may impose such sanctions
without first finding bad faith because, as we discuss below, the district court
here implicitly made such a finding, and that finding was not clearly erroneous.

The District Court correctly noted, "the Manual for Complex Litigation
acknowledges that federal judges may meet separately with parties for
confidential settlement conferences. Finally, the Code of Judicial Conduct for
United States Judges permits separate conversations with parties with the
consent of counsel who are authorized to object. This Court concludes that any
reasonable attorney would have understood that Judge Wolin could permissibly

engage in ex parte communication in a complex class action such asIn re

Prudential." 63 F.Supp.2d at 520.
The district court found that Malakoff waived entitlement to notice of, and
opportunity to object to, such meetings because he had consented to ex parte
communications relating to settlement long before he filed the recusal motion.
Id.
6

Fed.R.Civ.P. 53(d)(1) requires the fee examiner to conduct a "first meeting of

the parties or their attorneys to be held within 20 days after the order
[appointing the examiner] and notify the parties or their attorneys." Malakoff
says that when he requested that the district court enforce Rule 53 and direct
the fee examiner to hold the meeting, the district court replied, "It's not a perfect
world, is it Mr. Malakoff?"

For example, S 1927 sanctions are applicable only to an attorney and requires a
finding of bad faithWilliams v. Giant Eagle Markets, Inc., 883 F.2d 1184, 1191
(3d Cir.1989). Rule 11 authorizes sanctions against a signer of a pleading, etc.
presented for an improper purpose and requires only a showing of objectively
unreasonable conduct. Fellheimer, Eichen & Braverman v. Charter
Technologies, Inc., 57 F.3d 1215, 1225 (3d Cir.1995).

Malakoff argues that the District Court deprived him of due process by refusing
discovery regarding record submissions after he filed his recusal motions. He
argues that those submissions were used to deny the recusal motion and to
justify the award of sanctions against him. Yet, Malakoff chose to demarcate
his recusal motion as an "emergency" motion. In denying discovery, the court
merely treated Malakoff's motion like the emergency he himself declared it to
be, and afforded it the immediate attention Malakoff's assertion of "emergency"
demanded. He now seeks to use the court's prompt handling of his "emergency"
to argue that the court denied him due process by not granting a month long
continuance to take discovery to establish that the emergency he had alleged did
in fact exist
Malakoff's claim of denial of due process as to his "emergency" motion thus
reduces to a claim that without discovery he was denied an opportunity to
develop a full and complete sanction record. Malakoff's Br. at 54. However, he
never explains why this is so, and we doubt that any explanation is possible
given the District Court's finding of bad faith.

There is, no doubt, more than a grain of truth in Shakespeare's familiar

pronouncement: "he that filches from me my good name ... makes me poor
indeed ...". Othello; Act 3, Scene 3

103 ROSENN, Circuit Judge, concurring and dissenting:

104 I concur and join in Part VII of the majority's decision that the judgment of the
District Court be reversed with respect to the sanctions imposed under the
court's inherent power. Because the evidence does not show that Malakoff's
actions vexatiously and unreasonably prolonged the litigation in violation of 28
U.S.C. 1927 and there is no evidence of or findings that he acted in wilful bad
faith, the sanctions under that statute also should be reversed. I therefore
respectfully dissent from the imposition of any sanctions.
I.
105 Because of the many lawyers involved and their adversarial interests, the
underlying case was destined to sail on stormy waters. Despite some tensions
and occasional aberrations in civility, but with considerable judicial patience
and skill, the case had reached a point for settlement consideration.
Regrettably, as later resulting proceedings revealed, because of a lack of precise
information and a misreading of the sense and scope of some of the ex parte
conferences, Malakoff filed a motion for Judge Wolin's recusal. Until that
moment, no motion, complaints, or judicial warnings had been even addressed
to Malakoff. His motion triggered sanction proceedings which are now the
aftermath of lengthy underlying litigation which has long been settled,
appealed, and closed.
106 Malakoff substantively challenges the monetary sanctions on the ground that he
always acted in this litigation in good faith and did not multiply the proceedings
unreasonably and vexatiously. As a lawyer at the bar for approximately thirty
years, experienced in class action practice and never previously sanctioned,1 he
contends that the motions he filed were reasonably warranted. Even the
Magistrate Judge (MJ) in assessing the sanction, stated that "[w]hen viewed
individually, each single instance of misbehavior by Mr. Malakoff might not
warrant the sanction arrived at by the Court. But considered as a whole, his
transgressions evidence a pattern of obfuscation and mean spiritedness." (Maj.
Op. at 189). This sweeping statement, however, is not supported by a single
finding of fact and does not support the conclusion that Malakoff multiplied the
proceedings vexatiously and acted wilfully in bad faith. Obfuscation and mean
spiritedness, even if true, are indeed not commendable, but they do not amount
to a violation of 1927.
107 The District Court correctly stated that the purpose of 1927 is to deter
intentional and unnecessary delay and that in imposing sanctions, a court must
find: "(1) a multiplication of the proceedings by an attorney; (2) by conduct

that can be characterized as unreasonable and vexatious; with a(3) resulting

increase in the cost of proceedings; and (4) bad faith or intentional misconduct."
In re Prudential, 63 F.Supp.2d 516, 520 (D.N.J.1999). There is no evidence
whatsoever that Malakoff filed the motion to recuse Judge Wolin for the
purpose of intentionally or unnecessarily delaying the proceedings. Malakoff
argued to the MJ that his motion to recuse, which prompted Lead Counsel's
first motion for sanctions, was not filed in bad faith and in fact had a colorable
basis. Judge Walls concluded that any reasonable attorney would have
understood that Judge Wolin could permissibly engage in ex parte
communication in a complex class action such as In re Prudential. Id. The
Court also rejected Malakoff's contention that even if ex parte communication
was permissible, he was entitled to notice of the meetings and an opportunity to
object. The Court reasoned that Malakoff had consented to the Court's ex parte
communication pertaining to settlement long before his recusal motion, and the
alleged communications between counsel and the court involved settlement of
the nationwide class action in which Malakoff's clients did not wish to be
involved. Id.
108 Initially, it should be noted that a review of Malakoff's December 3, 1996,
recusal motion reveals that his objection was not directed to communication
between Judge Wolin and Lead Counsel. His concern was that the judge met ex
parte with Prudential's Chairman, Arthur F. Ryan, and that he met with Select
Insurance Regulators about the proposed settlement without advance notice to
Kettle/Krell, Malakoff's clients. Malakoff also believed that those meetings
went beyond the scope of his original consent. Malakoff also complained, inter
alia, about the Court's failure to allow discovery pertaining to the fairness of
the proposed settlement.2
109 Malakoff may have misconceived the extent of the District Court's authority
and its justifiable necessity in meeting with officers of Prudential in
effectuating this complex settlement. Malakoff also may not have shown good
judgment in his motion to recuse, but mistake of judgment is not uncommon
among lawyers or even judges. A mistake of judgment does not per se
constitute wilful bad faith. Baker Indus. Inc. v. Cerberus Ltd., 764 F.2d 204,
209 (3d Cir.1985). Judge Walls made no specific finding that Malakoff filed
the motion in bad faith but only concurred in the MJ's "conclusions" rejecting
Malakoff's contention that the motion was objectively reasonable and filed in
good faith. In re Prudential, 63 F.Supp.2d at 521. Understandably, Judge Walls
only referred to the MJ's conclusions because the MJ, too, made no fact finding
of bad faith with respect to Malakoff's recusal motion.
110 In addition to the foregoing reasons, Malakoff's motion for recusal was based

on three additional grounds. A fair and balanced reading of these grounds,

however, renders questionable at best any finding of intent to delay,
vexatiousness, or bad faith. To sanction an attorney for questionably egregious
conduct unfairly burdens legitimate, zealous advocacy, especially in a massive
national class action, which in itself is sui juris and requires, as in this case,
innovative and resourceful procedures.
111 In the Pennsylvania proceedings in Rutt v. Prudential, Prudential's attorney
informed the state judge that Judge Wolin was "receptive to a discussion" with
the state judge regarding potential ethical improprieties regarding Rutt's
counsel. Malakoff reasonably may have believed that Prudential's suggestion to
contact Judge Wolin implicated Judge Wolin in an improper plan to aid
Prudential in delaying state court trials like Rutt until the class action settled.
Malakoff believed that evidence produced at the state court in Rutt and other
state cases could "be crucial in evaluating the fairness of the proposed
settlement" in the federal court. Although later developments revealed that
Malakoff erred on this basis for recusal, such an error is not a violation of
1927. An attorney who reasonably believed in the merits of a motion when filed
should not be sanctioned. To do so subjects every litigating lawyer whose
motion is denied the risk of sanctions.
112 Malakoff also based his recusal motion on alleged ex parte contacts between
Judge Wolin and David Gross, Esquire, counsel for a former Prudential
employee named David Fastenburg who was accused of destroying material
Prudential documents. During an October 21, 1996, hearing, Judge Wolin
appeared to refer to a personal conversation with Mr. Gross by stating, "I know
Mr. Fastenburg's lawyer... [a]nd Mr. Gross vehemently denies on behalf of Mr.
Fastenburg that any document was ever destroyed by Mr. Fastenburg." The
Judge's comments come in connection with charges (later proven) that
Prudential had destroyed material documents. Prudential fired Fastenburg for
allowing the destruction of documents in the office he supervised. In response,
Fastenburg sued for wrongful termination. In re Prudential, 148 F.3d 283, 343
(3d Cir.1998). Although it became clear to some by mid-December, 1996, that
Judge Wolin had a legitimate basis for his October statement3 and that he had
not engaged in improper ex parte communications with Mr. Gross, Malakoff
already had filed his recusal motion on December 3, 1996, well before his
belief was challenged.
113 Malakoff believed that Judge Wolin had engaged in improper ex parte
communications because the legitimate sources of information cited by Judge
Wolin never mentioned a "vehement" denial by Mr. Gross, and Judge Wolin
never denied speaking privately to Mr. Gross.4 Hence, while five years later it

is clear that Malakoff's perception concerning Gross was misplaced, it was not
unreasonable or made in bad faith. Again, there is no evidence that Malakoff's
interpretation of these proceedings intentionally or vexatiously extended or
delayed the proceedings.
114 Lastly, Malakoff claims he based his recusal motion on the District Court's
comments at the October 16, 1996, conference with state insurance regulators.
Malakoff cites statements made by the Judge that this was "my settlement," that
all of those present must "hang together" so that they could accomplish what
they wanted to accomplish for their respective interests, and the Judge's
comment that "although I wasn't in all the negotiations, I wasn't just a pretty
face." In the underlying appeal of the settlement on the merits, the Court
reviewed the claims that these statements of Judge Wolin demonstrated his bias
in favor of the settlement. In re Prudential, 148 F.3d at 340-45. Moreover, the
Court of Appeals stated that the District Court made it clear at the same
conference that it had not yet made any decision regarding the proposed
settlement or the proposed settlement class.
115 Whether the foregoing incident offered a colorable basis for a motion to recuse
may be arguable, but there is nothing about it that warrants the imposition of
sanctions under 1927. Malakoff only needed a single reasonable, nonvexatious, non-bad faith basis for his recusal motion. Malakoff had several
colorable bases for the motion. Focusing on the District Court's opinion
imposing sanctions, there is an absence of specific findings of intentional
misconduct, of bad faith or of any delay or extension of the proceedings. The
record reasonably supports the conclusion that Malakoff had a colorable basis
for his recusal motion. Moreover, in this high profile class action, Malakoff's
motion probably served a very useful public purpose in removing any misperception of the impartiality of the court on the part of any of the policy
holders, including Malakoff's clients and the many others who filed objections
to the fairness of the proposed settlement. There is no evidence that the recusal
motion justified sanctions under 1927 and no findings of wilful bad faith to
support it. Punishment under this statute is "sparingly applied" and requires "a
detailed finding that the proceedings were both `unreasonable and vexatious.'"
FDIC v. Calhoun, 34 F.3d 1291, 1297 (5th Cir.1994). In this case, there is an
absence of detailed findings and an absence of a "sparing" application of
punishment.
116 In reviewing the District Court's opinion, it is sometimes difficult to distinguish
between sanctions imposed under 1927 and those imposed under the inherent
power of the court. The distinction is crucial, because we hold that the
disciplinary conduct sanctions under the court's inherent powers violated due

process. Sanctions under 1927 are compensatory in nature and are intended to
compensate opposing counsel for vexatious and unreasonable conduct that
unnecessarily delayed or extended the litigation. Yet, in considering
"Additional Bases for Sanctions" under 1927, the District Court stated that
the MJ "concluded that Mr. Malakoff abused the privilege of practicing before
this Court. His behavior since his arrival on the scene in this litigation has been
deplorable." In re Prudential, 63 F.Supp.2d at 521. This sweeping assessment
of the attorney's conduct, even if it were unchallenged, does not support a
violation of the statute. This unsupported, conclusory statement reflects a
mindset of the inherent power of the court that colored the District Court's
judgment with respect to the motion for sanctions under 1927.
117 The majority points to the rejection of Malakoff's argument on the recusal
motion on the appeal to this court from the fairness hearings. This court
rejected the argument but it never suggested or stated that the motion for
recusal was made in bad faith or may have otherwise violated 1927.
II.
118 Among the subsequent tag-along allegations filed by Lead Counsel to bolster
their 1927 cross-motion for sanctions was Malakoff's criticism of the fee
examiner. This Court considered the issues on the appeal of the underlying
litigation and reiterated Judge Wolin's conclusions that Malakoff had
"misunderstood the fee examiner's role" and had advanced "hypertechnical
arguments" in support of his motion for disqualification. Judge Walls, in
reviewing the imposition of sanctions, concluded that Malakoff "may have
been entitled to object to Mr. Greenberg's ultimate conclusion." In fact, the
objection resulted in a remand by the Court of Appeals for further consideration
of attorneys' fees. Judge Walls, however, concluded that Malakoff had no basis
for objecting to the appointment. However, such an objection in no way
violated 1927; Judge Walls made no finding that it did, and neither did the
MJ. There is no evidence that the objection unreasonably prolonged the
litigation or that it was made in bad faith. In light of this Court's remand to the
District Court for further consideration of the attorneys' fees, the objection
arguably had merit. Whether it did or not is insignificant at this point; what is
significant is that there is no evidence that the objection unreasonably
multiplied the litigation in violation of 1927.
119 Judge Walls then turned to the MJ's observations that Malakoff had failed to
provide Judge Wolin with courtesy copies of his motions before releasing them
to the media. Malakoff responded that he was advised for the first time in Judge
Wolin's December 1996 hearing of the judge's desire for courtesy copies; up

until that point, Malakoff had filed pursuant to the local rules and provided
copies to the media only upon filing. Judge Walls concluded that even if the
Court were to accept Malakoff's response that he never released copies of his
motions to the press before their filing, he "should have known that the media
would contact Judge Wolin's chambers upon receipt of any motion papers. As
an experienced attorney, he should have realized that the clerk's office would
not deliver courtesy copies to chambers immediately." Id. at 521-522. Judge
Walls asserted that Malakoff's failure to accord Judge Wolin the same respect
as the media was unacceptable "and indicates that he acted in bad faith." Id. at
522.
120 The failure, however, to provide copies of the motion papers to the Court may
have been arguably thoughtless or even discourteous, but clearly not a violation
of 1927. The Court did not find that the failure to supply copies of Malakoff's
motions to Judge Wolin at the time of filing multiplied or prolonged the
litigation. It could not have done so. In no way did this conduct delay the
litigation or add to the burden of Lead Counsel as to warrant compensatory
sanctions under 1927. Neither the District Court nor the MJ could or did
make such a finding.
121 The District Court then examined Malakoff's 23rd and 24th affidavits, both
filed within three days of each other and subsequent to Malakoff's motion for
recusal. Malakoff claimed that the affidavits were warranted. He argued that
the 24th affidavit was intended to supplement and correct the legal and factual
bases for motions then pending before the District Court. The District Court,
however, concluded that the affidavits merely restated arguments previously
rejected, and repeated allegations of impropriety on the part of the trial judge
initially presented in Malakoff's recusal motion. Quoting the MJ, Judge Walls
found that they "evidence[d] no purpose other than to embarrass the Court." Id.
This is an arguable conclusion. However, there is no evidence that they
violated 1927 and the court made no findings that they multiplied the
proceedings and were filed in bad faith. 5
122 As for Malakoff's problems with the discovery process, the MJ in his Report
and Recommendation pointed to two incidents which he concluded caused
"colossal time delays and monumental obstacles to the orderly settlement of
this action." These two incidents consisted of: (1) a reluctance to review the
thousands of documents in the proceedings and instead requesting a keyword
search of precedential documents in New York; and (2) a disregard of Judge
Wolin's order to parties seeking to present evidence at a fairness hearing to
examine the evidence at the movant's offices. The MJ found that Malakoff
demanded charts summarizing the evidence. Malakoff, in his defense, argues

that he only requested a "keyword" search when he saw the enormous volume
of material at the document depository, amounting to hundreds of thousands of
documents. As for the charts, Malakoff argues that he moved to compel their
production only after Lead Counsel refused his request that they fax them at
Malakoff's expense. Judge Walls concluded that this conduct "unreasonably
multiplied the straightforward discovery process and delayed the ultimate
settlement of the case." In re Prudential, 63 F.Supp.2d at 522.
123 Judge Walls relies on the MJ's conclusions as to the effect of these two
incidents. Neither he nor the MJ explain, however, how an effort on the part of
a lawyer to simplify and expedite the discovery process by requesting a
"keyword" search and a chart of the enormous mountain of documents
multiplied or prolonged the proceedings. It is incomprehensible that a request
for a "keyword" search of precedential documents intentionally multiplied,
delayed, or extended the litigation. No explanation is given how it did do so.
The "keyword" search was denied. Had it been granted, it would have
expedited discovery rather than delayed it or the settlement. Similarly, it is not
understandable why the request for charts summarizing the evidence or for the
"keyword" search resulted in "colossal time delays and monumental obstacles"
in the settlement of the litigation. Id. Again, no finding or explanation is given.
The requests may have been presumptuous, but they could not have violated
1927. By no stretch of the imagination could such requests have unreasonably
"multiplied the straightforward discovery process and delayed the ultimate
settlement of the case," as the Court concluded. Id. In fact, until Lead Counsel
endeavored to reinforce their motion for sanctions with their tag-along filings,
no one had ever complained of Malakoff's conduct during discovery and no one
had ever invoked Rule 11 for sanctions. The supplementary motion is a belated
and unreasonable effort to support the motion for 1927 sanctions, and there is
no finding that these two requests were made in wilful bad faith.
124 Finally, we review the action of the District Court with respect to Malakoff's
Rule 11 and 1927 motions. Judge Walls noted in his opinion that the MJ had
examined the two motions and had concluded that they were identical, only
refuted Lead Counsel's December 1999 cross-motion, did not present an
affirmative ground for sanctions, and improperly side-stepped Rule 11's
twenty-one day safe harbor provisions. Id. at 523. The District Court saw no
merit to Malakoff's objections to these conclusions, although it acknowledged
that Malakoff was entitled to pursue his 1927 motion. The Court did not,
however, believe that Malakoff was "entitled to cut-and-paste his Rule 11
motion and transform it into a 1927 motion." Id. The District Court ultimately
concluded that the two motions were identical, baseless, and filed in bad faith.

125 On appeal, Malakoff contends that he was entitled to seek both 1927 and Rule
11 sanctions for the same conduct, and was entitled to pursue the 1927
sanctions, regardless of whether Lead Counsel took advantage of Rule 11's safe
harbor in withdrawing the offending documents. He argues that the legal
standard for 1927 sanctions is different and far more stringent than for Rule
11 sanctions. He asserts that 1927 sanctions are warranted against a party
who unreasonably and vexatiously multiplied the proceedings and that a
finding of bad faith is necessary. On the other hand, Rule 11 sanctions require a
more lenient standard of proof, no requirement of bad faith, and aims at a party
who has made unsupported or frivolous arguments in the filings. He reasonably
believed that the two motions satisfied the requisite standards because they
alleged:
126 Liaison and Lead Counsel's motion [for sanctions], supporting briefs, affidavits
and other papers referred to herein were filed unreasonably and vexatiously in
order to multiply the proceedings. Further, these motions and other papers were
frivolous. Finally, these papers were filed solely to intimidate Michael P.
Malakoff who is objecting to the settlement procedures used, the settlement,
and the request for $90 million in attorneys' fees.
127 (A-2617).
128 Malakoff concedes that the motions are largely identical because they are
based on the same conduct. This, he argues, does not necessarily render them
improper. The standards and purposes of each differ. He also denies that his
motions only refute the cross-motion of Lead Counsel. On the contrary, he
argues his motions explicitly state that Lead Counsel's motion for sanctions
was filed frivolously in bad faith for an improper purpose, and unreasonably
and vexatiously multiplied the proceedings.
129 We do not need to decide whether the motions were identical, whether they
contained affirmative grounds for sanctions, or whether the 1927 motion was
for the purpose of side-stepping Rule 11's safe harbor provision. We must
determine whether the District Court erred when it "conclud[ed] that these
identical motions were baseless and filed in bad faith." Id. at 523. The District
Court made no findings in this respect; it merely announced its conclusion. Id.
We do not know from this conclusory statement whether the motions were
baseless in law or in fact, and have no explanation of how they violated
1927.6
130 In summarizing the sanctions imposed on Malakoff under 1927, the District

Court "adopt[ed] Magistrate Judge Pisano's conclusion that `it is clear that, after
viewing his entire course of conduct over more than three years before this
Court, Mr. Malakoff takes an impractical, hyper-technical, and unreasonable
approach to litigation.'" Id. The purpose of 1927, however, is not to alter the
style, personality, practicality, or even the judgment of a trial lawyer. It
empowers the punishment of a lawyer who, in wilful bad faith, unreasonably
and vexatiously multiplies the proceedings.
131 Significantly, the MJ recommended "that pursuant to 1927, Mr. Malakoff
should pay to Class Counsel the sum of $100,000 and this amount of money is
justifiably significant and will require Mr. Malakoff to suffer sacrifices in order
to pay." In formulating this harsh and draconian sanction, it is obvious from
reading the MJ's Report and Recommendation that he ignored the statute. The
statute does not empower a court to fine a lawyer for poor lawyering or even
misconduct. The statute provides for sanctions in the form of compensation for
provable loss of time and additional expenses incurred by the offended lawyer
as a result of the alleged unreasonable delaying action. The record here is
devoid of any evidence proving "the excess costs, expenses and attorney's fees"
reasonably incurred because of Malakoff.
132 The majority acknowledges that Judge Walls did not make express findings of
bad faith and did not rely upon any of "the above-specified conduct in
particular, [but] based his finding of the requisite bad faith and vexatious
conduct on the totality of the campaign Malakoff waged during the course of
this litigation." (Maj. op. at 189). Notwithstanding, it adopts the "conclusion"
reached by the MJ and the District Court. (Maj. op. at 190). However, Malakoff
and his clients were captives of the order consolidating their state cases in the
New Jersey federal court.7 Malakoff respectfully and professionally satisfied
the procedures and tools for objection provided by statute and the rules of
court. Falling back on the "totality of the campaign" in lieu of specific findings
of wilful bad faith and evidence of excess costs and time incurred by Lead
Counsel is not, in my opinion, an acceptable basis for sanctions under a penal
statute and ignores the "detailed finding" required under FDIC v. Calhoun,
supra at 197.
133 It appears clear that the MJ was influenced by his mindset on the inherent
power of the court. This is shown by his statement just prior to the MJ's
determination to impose monetary sanctions pertaining to Malakoff's behavior.
Yet, the MJ acknowledges that "[w]hen viewed individually, each single
instance of misbehavior by Mr. Malakoff might not warrant the sanction arrived
at by the Court." (Maj. op. at 189) Also significant, Lead Counsel never
introduced evidence of increased costs and time to support their cross-motion

for sanctions. Moreover, this court has stated that before a court can order the
imposition of attorneys' fees under 1927, it must find bad faith on the part of
the offending attorney that is wilful. Zuk v. EPPI of the Med. Coll. of Pa., 103
F.3d 294, 297 (quoting Williams v. Giant Eagle Mkt., 883 F.2d, 1184, 1191 (3d
Cir.1989)). There are no such findings and no basis for them.
III.
134 Finally, I think a reviewing court should carefully note the role of an objecting
lawyer, especially in as complex and massive class action as was this. Malakoff
opposed a large battery of lawyers intent on reaching a settlement and the
payment of huge fees. Class actions are unique, each is different, and here
many state and federal actions were consolidated for disposition. An objecting
lawyer should not be expected to be a quiescent, listless participant in the
proceedings without expressing contrary view or theories; the lawyer should
have reasonable leeway for expression and argument.8 In another class action,
this Court recently noted some of the uncertainties and difficulties that beset the
court in litigation where most of the parties are not personally represented. We
stated that there is a recognition
135 that in the class action context there is no way for "the class" to select, retain, or
monitor its lawyers in the way that an individual client would, and because of
doubts that a typical lead plaintiff ... is a terribly good agent for the class.
136 In re Cendant Corp. Litig., 264 F.3d 201, 282 (3d Cir.2001).
137 Because of the conflicting interests between Lead Counsel and this extremely
large class over fees to be derived from the settlement, there is a high degree of
professional responsibility that they owe a largely absent class who depend on
lawyers they never saw or retained. The degree of responsibility is further
enhanced in this case because the class consists of ordinary policy holders and
not sophisticated institutions or investors. Therefore, a lawyer with objector
status plays a highly important role for the class and the court because he or she
raises challenges free from the burden of conflicting baggage that Class
Counsel carries. The objecting lawyer independently can monitor the proposed
settlement, costs, and fees for Class Counsel and, thus, aid the court in arriving
at a fair and just settlement for the members of the class who individually are
largely unrepresented.
138 When objecting counsel raises pertinent questions concerning the conduct of
Lead Counsel, the terms of the proposed settlement, and the costs and fees to

be paid from the settlement fund, he or she not only renders a service to the
class, but also aids the court. The record reasonably supports the conclusion
that Malakoff's objector status had the wholesome effect of providing a careful
scrutiny of the fairness of a gigantic settlement affecting millions of
policyholders nationwide. He indisputably enhanced the amount of the
settlement, and secured a reconsideration of class counsel fees.
139 After all, Class Counsel has very little communication with the members of the
class and knows little about them individually. The members of the class play
little or no role in the selection of lead or liaison counsel. Defendants' counsel
and Class Counsel reach a point where they are cooperating in an effort to
consummate the settlements. Even the court at this point may be inclined to
favor settlement of a huge, complex action, and the general atmosphere
becomes largely cooperative.
140 Under such circumstances, the motions and arguments of an objecting lawyer
understandably may be discordant and disagreeable, but not necessarily
unreasonable. The objections may be worthy and, at least useful because, as the
distinguished historian, Allan Nevins, wrote many years ago, from the conflict
of ideas comes crystallization of thought. Objections serve a highly useful
vehicle for the members of the class and the public generally; they require
consideration by the court and its disposition of them usually provides
reassurance that the settlement and the fees approved are fair and just.
141 Thus, I believe that as counsel for objecting plaintiffs, Malakoff played a useful
and even constructive role in this litigation. He may have been overzealous and
tenacious, but Lead Counsel, as experienced, seasoned class action lawyers, are
no shrinking violets. They do not complain that Malakoff was deceptive or
mendacious. On the other hand, his services, acknowledged by Lead Counsel,
enhanced the class settlement by $50 million, and he succeeded in having this
Court on appeal remand for further consideration the $90 million fee provided
by the settlement.
142 For the reasons set forth above, I would also reverse the imposition of the
severe sanctions imposed on Malakoff under 1927.

Notes:
1

Malakoff claims that he practiced law for thirty years and has a substantial
professional interest in class action procedures. He asserts that he was a

member of this Court's 1985 Task Force on Court Awarded Attorneys' Fees,
and, as a founding member and board member of the National Association of
Consumer Advocates, he contributed to the Standards and Guidelines for
Litigating and Settling Class ActionsSee 176 F.R.D. 375 (1987). He also states
that he is a frequent contributor to and faculty member of the Practising Law
Institute, the National Consumer Law Center, and that his legal rating in
Martindale-Hubbell is AV.
2

Malakoff was not the only person to object to the fairness of the proposed
settlement. The docket entries show that there were many others, including the
Insurance Commissioner for the Commonwealth of Massachusetts, the Texas
Department of Insurance, the Commissioner of Insurance for California, and
the state of Florida. Malakoff, however, was the only one who filed a motion
for Judge Wolin to recuse

Mr. Gross's denial was reported in some newspapers

Malakoff alleged improperex parte communications, and those

communications, if true, would have been a valid basis for recusal regardless of
the District Court's further orders against Prudential.

The majority offers no explanation how the affidavits multiplied the litigation
and why they justify compensatory compensation to Lead Counsel as sanctions
under 1927. Class Counsel, including Lead Counsel, already were awarded
fees in the sum of $45 million by the District Court, conditional on another $45
million in the event 330,000 claims were filed by June 1, 1997In re Prudential,
148 F.3d at 332.

Judge Walls held that both motions were only defenses to Lead Counsel's
1927 motion and advanced no coherent legal argument as to why they should
be sanctioned; that by submitting identical papers on the two sanctioned
motions Malakoff abused the sanctions processId. The motions are different in
that Rule 11 does not require a finding of bad faith. Even though they may have
been filed as a defense to Lead Counsel's motion for sanctions, it is arguable
that this constituted an abuse of the sanctions process. Moreover, there is no
evidence or finding that they prolonged the proceedings and were made in
violation of the Statute.

Prudential's conduct had been under investigation for several years. Malakoff
filed suit in behalf of his clients in two state courts. Malakoff did not appear in
the New Jersey District Court until after the Judicial Panel on Multidistrict
Litigation centralized all the cases before Judge Wolin on August 3, 1995

Malakoff concedes that he was a zealous advocate but denies that he acted in

bad faith. Amicus Curiae Public Citizen Litigation Group argues that objectors
like Malakoff play a vital but difficult role in class action settlements. Public
Citizen argues that objectors should be encouraged, not chilled, because of the
beneficial role they play. Objectors and their counsel pursue legitimate and
important goals by seeking to block or significantly improve class settlements.
"Objecting is often the only way to protect some class members' interests, even
if class members have the opportunity to opt out of the class." Amicus Br. at
10-11