Counsel Concerns: Low Sanctions Are Upheld in Lawyer's Case Over Booking Discrimination Suit

The case is rooted in an underlying lawsuit filed nearly two decades ago in New York by black music promoters Leonard Rowe and Lee King against the William Morris Agency and several other booking and talent agencies. In that underlying litigation, the plaintiffs — who claimed that the white-owned and controlled defendant companies conspired to discriminate against black artists and fans in violation of federal civil rights and anti-trust laws — were represented by Gary and his firm. Some of the smaller promoters settled their claims, but the litigation continued against William Morris until it was dismissed on summary judgment in 2005. Rowe Entertainment Inc. v. William Morris Agency Inc., 98 Civ. 8272 (S.D.N.Y. 2005); aff'd 167 F.App'x 227 (2d Cir. 2005).

In 2015, Rowe and King and their promotion companies sued Gary, his firm and a half-dozen of its lawyers in Georgia's Northern District, including Sperando, who is now in private practice in Stuart, FL, where Gary's firm is also headquartered. The complaint accused the lawyers of taking bribes from the talent agency defendants to “sabotage” the case and asserted claims including racketeering, fraud and legal malpractice.

The defendants filed a collective motion to dismiss, while Sperando filed a separate dismissal motion and included a motion for sanctions — under Rule 11, 28 U.S.C. §1927, and the court's authority — against Rowe, King and their attorneys for filing frivolous claims. District Judge Totenberg ultimately dismissed the suit on jurisdictional grounds in 2016, a ruling that the Eleventh Circuit upheld in a separate opinion.

Judge Totenberg also declined to award Sperando sanctions, writing that the plaintiffs' claims were not “inherently frivolous, and the Court will not entertain a motion for sanctions by any of the defendants. There is no doubt that Plaintiffs, though belated and arguably misguided in their efforts here, were deeply impacted by their professional experiences and by the loss of their landmark case in which they believed they would prevail, in reliance on the representations of their counsel at the Gary Firm.”

Sperando appealed that ruling to the Eleventh Circuit as well, and the appeals court remanded the case in 2017, deciding that the district judge had failed to apply an “objective standard” in her order and “explain why the legal theories or factual allegations in the complaint were not objectively frivolous.”

On remand, Sperando argued that the plaintiffs' racketeering claims were “frivolous and an attempt to 'shakedown' the defendants for money.” She requested $2,255 for her costs defending herself against the frivolous claims and a fine of $562,000, “calculated by multiplying Sperando's hourly rate of $500 by the 1,124 hours she claims to have spent defending herself in this Court and on appeal.”

Sperando also sought “an admonishment by the court; 'a public apology by plaintiffs on every form of media on which they and their cohorts have disparaged Sperando'; and 'a public disavowal by Rowe and King of their cronies' blistering and baseless Internet rants'” against her.

Judge Totenberg granted the motion for sanctions, but only fined the plaintiffs and their lawyers $2,000, finding that Sperando had not shown that they “engaged in dilatory or vexatious litigation tactics after filing suit” and “did not act in bad faith in pursuing their claims.” The district court also ordered the defendants and their counsel to reimburse Sperando for the costs of traveling to attend the oral argument for her motion to dismiss the complaint and reprimanded the plaintiffs' counsel.

In affirming, the Eleventh Circuit panel of Judges Beverly Martin and Kevin Newsom and Senior Judge Frank Hull concluded the district judge had not abused her discretion: “In imposing these sanctions, the [district] court explained that Sperando's suggested fine of more than half a million dollars was 'unduly harsh and unreasonable,' and that Sperando had neither filed a timely Rule 54(d) bill of costs nor provided any details about expenses she incurred defending herself.”

The appellate opinion also noted the district judge was within her authority to impose only $2,000 in sanctions. “Sperando describes the $2,000 fine as 'meager,' 'arbitrarily chose[n]' and an insufficient deterrent,” the appeals court wrote. “The district court thought differently.”

Sperando declined to comment. Lead plaintiffs' attorney Edward Griffith of New York's Griffith Firm did not respond to inquiries.

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Greg Land is a Reporter for The Daily Report, an ALM Atlanta-based sibling publication of Entertainment Law & Finance.