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July 2011

Dallas Office Closes the Book on a Novel-Length Federal Complaint

Dallas attorney Steve Lawson successfully obtained plaintiffs' dismissal of Gordon & Rees's client from a 200-page federal securities-fraud complaint filed against numerous defendants in the Northern District of Texas.  Gordon & Rees's client was an attorney for one of the main alleged wrongdoers.  The complaint was unusual not only for its length, but also for its style: One of the two pro se plaintiffs had some legal training and the result was an all-but-incomprehensible complaint which, for all its logorrhea, did manage to allege some questionable transactions. 
 
Gordon & Rees's factual review suggested that the firm's client lacked material involvement in the claimed wrongdoing.  While Elizabeth and Steve began preparing responsive motions to dismiss on jurisdictional grounds and for a more definite statement, they also drafted a Rule 11 demand on plaintiffs to dismiss the client pursuant to Rule 41, and followed up with a repeated demand enclosing a form Rule 41 notice of dismissal. 
 
There was an interesting subtheme to the Rule 11 demand.  In the course of reviewing the seven volumes of exhibits plaintiffs filed with their complaint and the client's files, it appeared to the Gordon & Rees Dallas team that the complained-of transaction was not with the self-styled pro se "lead attorney," but with his New-Mexico-registered film production company, a valid and existing LLC that went almost unmentioned in the complaint.  Thus, among the responsive motions being prepared was a Rule 19 motion to substitute the LLC as the real party in interest which, if granted, would have had the effect of knocking the would-be barrister out of the case entirely: New Mexico LLCs may only bring suits in their own name, and business organizations may not appear pro se in federal court under 28 U.S.C. sec. 1654.  Gordon & Rees's Rule 11 letter did not directly threaten a Rule 19 motion, but it prominently featured the LLC's name as the real investor in the case, which may well have suggested to plaintiffs that their misleading strategy to appear pro se had been discovered.
 
Two days before the client's responsive filings were due, the Dallas team received notice that plaintiffs had filed the Rule 41 notice, whereupon the entire book-length complaint against Gordon & Rees's client was closed -- with no payment to the plaintiffs. 

Steven Lawson



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