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U.S. Commodity Futures Trading Commission v. Reisinger

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

September 18, 2019




         More than three years ago a jury returned a verdict for the U.S. Commodity Futures Trading Commission (“CFTC”) and against defendant Grace Elizabeth Reisinger ("Reisinger") in this enforcement action. Verdict, ECF No. 171. Reisinger moves the court to reconsider and amend the court's findings made in the September 19, 2017, memorandum opinion and order (“slip op.” or “September 2017 opinion”) resolving the parties' post-trial motions. For the following reasons, the court grants the motion to reconsider in part and denies it in part.

         I. Background

         In addition to Reisinger, the CFTC named ROF Consulting, LLC (“ROF”) as a defendant. The complaint charged the defendants with violating the anti-fraud and commodity pool operator registration and exemption provisions of the Commodity Exchange Act ("Act") and associated Regulations. The facts have been discussed in detail in the court's prior opinions in this case and will not be covered again here except as necessary to resolve the pending motion.

         ROF defaulted before trial. The court entered a permanent injunction barring it from future violations of the Act and of the Regulations, from acting in any capacity that requires registration with the CFTC, and from trading any commodity interests on its own or others' behalf. ECF No. 102. The CFTC and Reisinger agreed to submit questions of liability to a jury but reserve remedies for the court. After a week-long trial, a jury returned a verdict for the CFTC on September 13, 2016. ECF No. 171.

         Next came post-trial motions. Reisinger moved for entry of judgment notwithstanding the verdict or for a new trial ("motion for new trial, " ECF No. 200). The CFTC moved for an order requiring Reisinger, inter alia, to disgorge her ill-gotten gains, pay restitution, pay a civil monetary penalty, and impose a trading prohibition. Those motions were resolved in the opinion issued September 19, 2017. ECF No. 230. The court denied Reisinger’s motion and granted the CFTC’s motion in part. See CFTC v. Reisinger, 2017 WL 4164197, at *12 (N.D. Ill. Sept. 19, 2017).

         The court directed the CFTC to submit a proposed form of judgment by a certain date, id. at *13, which it did. On the assumption that the CFTC had circulated the proposed judgment and that there was therefore no objection to the judgment’s form, the court entered the judgment in substantially the same form proposed by the CFTC shortly thereafter. ECF No. 231. The assumption that the CFTC had circulated the judgment was apparently incorrect. Reisinger filed a motion to alter or amend the judgment under Federal Rule of Civil Procedure 59(e) and to amend findings of fact under Rule 52(b). She contended that the judgment contained numerous errors, awarded more relief than the CFTC sought (or at least was litigated before judgment), and was based on erroneous legal and factual conclusions made in the September 2017 opinion.

         This court vacated the judgment by order entered September 25, 2018 ("September 2018 order"). ECF No. 245. The court did not resolve all of the parties' arguments. See Id . at 2–6. The court explained that it was "clear from the briefing that the judgment awards relief on matters that were not substantively litigated and on which the court made no findings before judgment." Id. at 2. The order cited the example of Reisinger and ROF's joint and several liability for disgorgement and monetary penalties, which was not litigated pre-judgment. Id. at 2–3. "Nor did the parties litigate in any meaningful way the appropriateness of awarding pre-judgment interest on some or all of the sums awarded." Id. at 4. The court also found that the judgment included enforcement language that could be read as prejudging questions the court expressly reserved in the September 2017 opinion. Id. at 4. Finally, the parties agreed that in the September 2017 opinion the "court mischaracterized the settlement [in CFTC v. New World Holdings, LLC, No. 10-cv-4557, available in this record at ECF No. 215-2 Ex. B] as applicable to Reisinger when it applied to ROF." Id. at 5. The September 2018 order stated that the New World Holdings "analysis undergirded the court’s award of injunctive relief and its analysis of the sufficiency of the evidence to support the fraud claims." Id. (citing Reisinger, 2017 WL 4164197, at *11). After considering these issues and errors cumulatively, the court vacated the judgment, explaining that:

Those are not all of the issues briefed in the pending motions. The state of the briefing leaves the court with a herculean task if it is to even determine whether some of Reisinger’s arguments truly rehash issues argued and resolved in the September 2017 opinion and decided by the jury. The court would have to sift through the prior briefs, the opinion, and the mountain of trial transcripts. That is not the court’s job. All issues raised in the present briefing remain open to the parties in future proceedings (subject to the usual reconsideration standards, of course), and the parties better cite the briefs, the trial transcripts, and the record precisely in the future.
. . .
With the judgment vacated, Reisinger will have 28 days in which to move for reconsideration or to set aside findings under Rule 52(b). Any such motion should cite the record precisely and in detail, and a motion that fails to do that and present the issues fully will be summarily stricken. The court expects the parties to circulate a proposed judgment when it comes time to enter one and litigate issues of form before its entry.

Id. at 5–6. Reisinger then filed the motion to reconsider and to amend findings presently before the court.

         II. Reconsideration Standard

         Reisinger cites Federal Rules of Civil Procedure 59(e) (motion for new trial) and 52(b) (setting aside court-made findings of fact) in her opening motion. Mot. Reconsider 1, ECF No. 246; see also Mem. Supp. Mot. Reconsider 1, ECF No. 247. However, Reisinger "acknowledges" in her reply that "the applicable legal standard for Reisinger’s motion is that it must be based on manifest errors of fact or law." ECF No. 254 at 2. Reisinger and the CFTC therefore agree that the standard for an interlocutory motion for reconsideration governs.

         “Motions for reconsideration serve a limited function: to correct manifest errors of law or fact or to present newly discovered evidence.” Caisse Nationale de Credit Agricole v. CBI Indus., Inc., 90 F.3d 1264, 1270 (7th Cir. 1996) (quoting Keene Corp. v. Int'l Fid. Ins. Co., 561 F.Supp. 656, 665 (N.D. Ill. 1982)). Because “‘manifest error’ is not demonstrated by the disappointment of the losing party, ” Oto v. Metro. Life Ins. Co., 224 F.3d 601, 606 (7th Cir. 2000) (quoting Sedrak v. Callahan, 987 F.Supp. 1063, 1069 (N.D. Ill. 1997)), a motion for reconsideration cannot be used for “rehashing previously rejected arguments or arguing matters that could have been heard during the pendency of the previous motion, ” Ahmed v. Ashcroft, 388 F.3d 247, 249 (7th Cir. 2004) (quoting Caisse Nationale de Credit Agricole, 90 F.3d at 1270) (internal quotation marks omitted). Consequently, “[t]he repetition of previous arguments is not sufficient to prevail” on a motion to reconsider, id (quoting United States v. $23, 000 in U.S. Currency, 356 F.3d 157, 165 n.9 (1st Cir. 2004)), unless the court misunderstood the argument in the first place, see Bank of Waunakee v. Rochester Cheese Sales, Inc., 906 F.2d 1185, 1191–92 (7th Cir. 1990) (quoting Above the Belt, Inc. v. Mel Bohannan Roofing, Inc., 99 F.R.D. 99, 101 (E.D. Va. 1983) (holding that a motion to reconsider lies where “the Court has patently misunderstood a party, or has made a decision outside the adversarial issues presented to the Court by the parties, or has made an error not of reasoning but of apprehension”)). The party seeking reconsideration bears the burden of explaining why the court should change its mind. Ahmed, 388 F.3d at 249.

         III. Analysis

         Reisinger identifies six allegedly erroneous factual findings in the September 2017 opinion. See Mem. Supp. Mot. Reconsider 3ā€“8, ECF No. 247. These errors, she argues, should cause the court to: (1) vacate the disgorgement award against Reisinger; (2) reduce her amount of civil monetary penalties to approximately $25, 000; (3) vacate the injunction barring Reisinger from trading futures; (4) enter judgment notwithstanding the verdict dismissing the fraud claims in Counts Iā€“ III of the complaint; (5) find that the CFTC is not entitled to pre-judgment interest; and (6) find that Reisinger should not be held jointly and severally liable for ROF's ...

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