The case of the day is Sillam v. Labaton Sucharow LLP (S.D.N.Y. 2024). Sillam was a French businessman. According to his complaint, he and Descroubres, who was predecessor in interest to Sillam’s fellow plaintiff, Saulnier, had a fee-splitting agreement with Labaton Sucharow. Sillam was to get 15% of Labanon’s earnings from clients that Sillam referred to the firm. Descroubres and then Saulnier were French lawyers who acted as intermediaries, receiving payment from Labaton and forwarding it to Sillam. Sillam claimed that the purpose of this complication was to avoid the ethical rule against splitting fees with “non-lawyers” (a ridiculous word, but I suppose the right one here).

Over the course of the deal, there was a lawsuit among the parties in France, which led to a settlement under which Labaton had to make sworn written statements for a period of five years about whether the firm had done any work for any client covered by the settlement. The idea was to allow Sillam and Saulnier to determine if they were owed money. A lawyer, Keller, provided affidavits for each year stating that Labaton had not done represented the relevant clients. Sillam’s complaint alleged that those affidavits were false.

After the five years ended, Labaton and Sillam entered into a final settlement agreement, under which the parties exchanged releases and Labaton paid Sillam the odd sum of $99,999. Sillam and Saulnier argued in their new lawsuit that if they had known that the affidavits were false, they would not have entered into the final settlement agreement. The court denied Labaton’s motion to dismiss the complaint, which alleged fraudulent inducement, and the case moved into discovery.

Labaton noticed Sillam’s and Saulnier’s depositions, which were to be taken in New York. Sillam and Saulnier moved for a protective order requiring the depositions to be taken in France on the grounds that they were “elderly” and “reluctant to travel out of fear of infection with COVID-19” in 2022 and 2023. The magistrate judge granted their motion, though the judge in today’s decision made it clear he thought that decision was wrong:

If this application had been made to me, I would have ordered Plaintiffs to show up in New York for their depositions or risk dismissal of the lawsuit they chose to bring here. When one avails himself of the jurisdiction of an American court, there is absolutely no excuse for not showing up in the United States for discovery governed solely by our rules, which – like it or not – are considerably more liberal than those in European countries, or when taken pursuant to the Hague [Evidence] Convention.

The magistrate judge’s order was contingent on Sillam and Saulnier signing declaration promising not to “file or pursue any type of legal proceeding in France, including but not limited to any type of criminal proceeding or criminal complaint, against Defendants, Defendants’ counsel, or any persons affiliated with them, relating directly or indirectly to the conduct of the deposition or this action.” I assume the reason the magistrate judge imposed this condition was that Sillam had already “commenced at least four civil and criminal proceedings in France, against Labaton, Keller, Sucharow, other Labaton partners, and the lawyers who have represented them in the United States and in France,” which were duplicative of the US lawsuit, which the French courts or prosecutors had dismissed, and which, in one case, had led to a € 115,000 sanction.

Immediately prior to his deposition, Sillam brought two criminal actions against Labaton and its American and French lawyers in France, alleging “violation of privilege, possession of stolen goods and defamation.” The French prosecutor dismissed the case, but Sillam refiled it. The apparent excuse was that Sillam’s lawyer advised him that the word or, in “relating to their depositions or this lawsuit,” meant in.

The magistrate judge ordered Sillam to show cause why he should not be sanctioned and then imposed sanctions of $146,280 and held that the justification offered was “frivolous.” The judge affirmed that decision and ordered that no further discovery should be taken in France.

Sillam then failed to pay the sanction by the time ordered. He had not sought relief from the order on the grounds that he lacked the ability to pay, nor had he objected to the magistrate judge’s order within time time permitted for an objection. Sillam had appealed the magistrate judge’s order directly to the second Circuit, but that appeal seems jurisdictionally doomed, as no appeal lies from a non-dispositive order of a magistrate judge. Nor had Sillam sought a stay.

The judge concluded that dismissal of the action was “certainly deserved,” but she decided to give Sillam “one more chance—but only to pay the sanction in full, not to protest it or to plead that he is unable to pay it (the time for making those arguments, and supporting them with evidence, is past).” She specified in minute detail the date and time and manner by which the payment had to be received, and she held that if Labaton’s lawyer apprises the court one minute after the deadline “that the money—every penny of it—is not in hand,” then the case would be dismissed with prejudice.

It’s hard to know what to make of a case like this, except to say that it would have been better if the magistrate judge had required the plaintiffs, who sued in New York, to travel to New York to testify at depositions.