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Royce v. Needle

United States District Court, N.D. Illinois, Eastern Division

September 19, 2016

MERLE L. ROYCE, Plaintiff,
MICHAEL R. NEEDLE, P.C., et al., Defendants.


          Milton I. Shadur Senior United States District Judge

         It was apparent from the very beginning of this action that this multiparty multi-issue lawsuit would pose a good many complexities. But unfortunately it quickly developed that those anticipated complexities were increased exponentially, in large part because of the pattern of obstructionism engaged in by one of the participants, Philadelphia lawyer Michael Needle ("Needle").[1]

         Matters came to a head last Thursday, September 15, when a previously scheduled status hearing intended to address some, and to schedule others, of the substantial group of contested motions that had been presented during the past few months (over and above other motions that this Court had resolved during the same time frame) had been frustrated by Needle's having preferred -- not for the first time -- to pursue his own agenda in generating work product on suit-related matters, rather than complying with the court-ordered timetable that would have given other counsel and this Court the intended opportunity to review his input in advance of the hearing. This opinion is intended to memorialize, in more ordered form, the oral rulings that this Court made during the lengthy September 15 status hearing.

         Before that path is undertaken, however, an important background explanation is in order. As already indicated in n.1, many of the problems that have been created here stem from the fact that Needle and Needle, P.C. are two legal entities. As is his right, Needle has chosen to operate his law business through the P.C., of which he is the sole member and its president, rather than as a sole practitioner. That should have been a constructive factor here, because both Needle and plaintiff Merle Royce ("Royce, " who conducts his law practice as an individual) will necessarily will be major witnesses in phases of this litigation, and such considerations as the lawyer-witness rule and potential conflicts of interest[2] really require each to be represented by counsel rather than self-represented. Royce has had counsel representing him from the beginning of this case, and so did Needle P.C. initially -- but as will be explained later, when the original counsel for Needle P.C. withdrew because of irreconcilable differences with Needle, and when that firm's successor counsel also withdrew after an extremely brief tenure, Needle individually failed to fill the resulting gap for several months earlier this year, effectively shutting down the ability of the lawsuit to proceed in a realistic manner.

         Now to the task of recounting the several pending motions and how this Court was compelled to deal with them in the difficult situation fueled by Needle's latest obstructionist tactic. Because there is no particularly logical sequence for treating the several motions, they will simply be taken up in the order that this Court's notes and the transcript of the September 15 proceedings suggest.

         Royce's motion to impose certain sanctions against Needle individually has the oldest docket number (Dkt. No. 288). Because Royce's counsel views other aspects of Needle's conduct as also calling for an award of attorney fees (see Dkt. No. 387), Needle has now been granted until September 29 to file a response to the new motion, so that his previously filed Dkt. No. 346 response and the new filing will speak to the entire issue.

         Next, Royce's Dkt. Nos. 365 and 367 motions (both filed back on July 22, 2016) respectively seek to strike certain affirmative defenses and to dismiss certain counts of the counterclaim included in Needle P.C.'s most recent pleading, one that Needle and his P.C. refer to as the Second Amended Answer, Affirmative Defenses and Counterclaims (see Dkt. No. 382, which Needle represents to be an unredacted refiling of the pleading filed back on October 16, 2015 as Dkt. No. 179). Dkt. Nos. 365 and 367 are the principal motions to which this Court and the movants should have received responses by September 7 (the date set by this Court's July 29 order), in ample time for a thoughtful review before the September 15 status hearing.

         Instead Needle waited until the September 7 due date to move for an extension of time to respond to those motions (Dkt. No. 385), then amended even that motion on September 12 (Dkt. No. 389). Under the circumstances this Court was of course compelled to grant the Needle P.C. Dkt. No. 389 motion orally at the September 15 hearing and was consequently required to grant Royce's counsel until October 11 to reply to Needle P.C.'s belated responses (Dkt. Nos. 392 and 396), each of which was filed on September 13, with copies not having been delivered to this Court's chambers until September 14 -- literally the day before the hearing that had been set in late July.[3]

         Before this opinion returns to the remaining matters of substance, just a few words might be said about another motion that was included in the docket printout that this Court had obtained in preparation for the September 15 session: Dkt. No. 370, in which counsel for the Amari Group (comprising 15 of the 16 plaintiffs in the underlying RICO litigation) asked to correct the record of the July 7, 2016 status hearing during which that counsel had made a mistake in one of his oral statements. To the astonishment of this Court, Needle -- who it will be remembered professed to be too busy to comply with the court-set timetable for his responses --found some time to prepare and file a written objection to that motion because he argued that counsel's oral acknowledgement of the error (part of the transcript, which is not of itself a component of the written record in the case) would suffice, so that the moving counsel's motion was allegedly ill-considered. Only when this Court remarked on the lack of useful purpose served by further cluttering up the written record with such a response did Needle recede by orally withdrawing his previously-filed response (Dkt. No. 383).

         To return to matters of far greater moment in this litigation, just two days before the September 15 hearing Royce's counsel, obviously frustrated by Needle's conduct in the case --particularly the freeze caused by his several-month failure to obtain counsel for Needle P.C. until this Court most reluctantly granted him leave to do so personally pro hac vice (despite the fact that doing so created obvious problems, some of which have already been adverted to in this opinion) -- filed a well-thought-out and well-presented "Motion To Compel Needle P.C. To Obtain New Counsel and To Report in Writing on Efforts To Obtain New Counsel" (Dkt. No. 394).

         It would serve no useful purpose for this Court to repeat the powerful and entirely accurate presentation in that motion, which this opinion simply adopts. Instead it is worth repeating the brief oral statement that this Court made near the beginning of the September 15 status hearing, a statement that decried the imposition of monetary sanctions as an unsatisfactory device for altering lawyer conduct in the respects needed here:

Imposition of sanctions is far from my goal in the litigation process. As with the distinction that is well-known to exist between civil and criminal contempt, I have always hoped that if sanctions have to be imposed, the consequence would be to induce a change in conduct rather than serving as punishment for past conduct.

         Here the nature of Needle's irresponsible behavior cannot be permitted to paralyze this litigation and thus to keep it from reaching the merits as to all the parties to this litigation, including Needle and his P.C., who stand to receive the major part of the $1.4 million that this Court's earlier rulings have held to be the lawyers' share of the $4.2 million settlement of the underlying litigation. In that respect it is most troubling that when this Court was called on earlier to assess a substantial financial burden on Needle through the payment of attorneys' fees incurred because of improper conduct on his part, that imposition has regrettably had no impact on his continued obstructionist ...

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