Leslie ATKINS, individually and d/b/a Leslie Atkins Communications, Plaintiff, v. Benson J. FISCHER, et al., Defendants, 232 F.R.D. 116

MEMORANDUM OPINION KOLLAR-KOTELLY, District Judge. Plaintiff Leslie Atkins, d/b/a Leslie Atkins Communications, Inc., brought this action against Defendants Benson J. Fischer, the Fischer Organization, Inc., and the Fischer Brewing Company, Inc. (collectively, “Defendants”), alleging copyright infringement in the commercial use of six-pack carrier and bottle designs for a product called “Redneck Beer” in violation of the Copyright Act of 1973, 17 U.S.C. § 102, and

Section 43(

a) of the Lanham Act, 15 U.S.C. § 1125(a). Currently before the Court is Plaintiffs Motion for Finding that Defendants and Their Prior Counsel, Stanley Goldschmidt, Esquire, Attempted to Perpetrate a Fraud Against This Court and For an Award of Appropriate Sanctions, the separate Oppositions filed by Defendants and Mr. Goldschmidt, and Plaintiffs Combined Reply. Also pending before the Court is Mr. Goldschmidt’s Motion for Sanctions Against Plaintiff for Violation of Federal Rule of Civil Procedure 11, and Plaintiffs subsequent Opposition.

Upon a searching examination of the parties’ respective filings, all attached exhibits, the relevant case law, and the entire record herein, the Court shall grant-in-part and deny-in-part Plaintiffs motion and shall deny Mr. Goldschmidt’s motion for sanctions. Given the present posture of the case, the Court shall set a status conference in order to set out the scheduling groundwork for the upcoming trial on the merits in the above-captioned action. I: BACKGROUND A.

Procedural History Plaintiff Leslie Atkins, d/b/a Leslie Atkins Communications, Inc., has for over twenty years, offered clients a wide range of public relations, advertising, and marketing services. Defendant Benson J. Fischer, an entrepreneur planning to produce a novelty beer, dubbed “Redneck Beer,” hired Plaintiff during September of 1993 to design a bottle label and a six-pack carrier for his anticipated beer. Under the first stage of the relevant agreement, Plaintiff delivered to Defendant Fischer a preliminary illustration of a beer bottle label featuring a blue jean pocket and a red bandana.

The second phase of the agreement, which required Plaintiff to produce the same label and carrier in “camera-ready” final form, was never completed, and the agreement was terminated. Between August 1995 and June 1996, Redneck Beer was proudly sold in fine stores in thirty-four (34) states across the United States using a bottle label and carrier designed by a third-party which also featured a denim pocket and a red bandana. Contending that the subsequent design infringed upon her copyrighted work, Plaintiff filed her Complaint in this action in March 1998.

After the close of discovery, pursuant to a Memorandum Opinion and Order dated November 30, 2001, this Court denied Plaintiffs motion for

summary judgment and sua sponte granted

summary judgment for Defendants. See Atkins v. Fischer, Civ. No. 98-800, at 33-34 (D.D.C. Nov. 30, 2001) (order granting

summary judgment to Defendants). The Court concluded that

(1) Defendants had an implied nonexclusive license to use Plaintiffs work in the commercial production of Redneck Beer; and (2) the six-pack carrier design actually used by Defendants in the sale of Redneck Beer was not substantially similar to Plaintiffs preliminary designs. Id. In addition, the Court dismissed Plaintiffs Lanham Act claim. Id. Upon appeal, the D.C.

Circuit determined that (1) an issue of material fact existed as to whether Defendants had an implied license to use Plaintiffs marketing design for production, and (2) an issue of material fact also existed as to whether Plaintiffs marketing copy and the actual production copy of the six-pack carrier were “substantially similar.” See Atkins v. Fischer, 331 F.3d 988, 993-995 (D.C.Cir.2003). Given these substantial issues of material fact, the D.C. Circuit reversed this Court’s November 30, 2001 ruling and remanded the case to this Court for further consideration. Id. at 995.

While trial in this case appeared imminent after the decision by the Court of Appeals, Defendants immediately filed a motion to stay litigation pending resolution of bankruptcy proceedings. On November 18, 2003, this Court granted Defendants’ motion to stay as it related to Defendant Benson Fischer. On April 19, 2004, Defendants informed the Court that Defendant Fischer had consented to relief from the automatic bankruptcy stay and that this case would now move forward. On June 18, 2004, Plaintiff filed her current Motion for Sanctions.

The Court then held a status conference with the parties on June 30, 2004, wherein the Court was informed that this case could not proceed to trial until the Motion for Sanctions was resolved. However, an expedient resolution of Plaintiffs motion was thwarted by Defendants’ Motion for an Order Directing Plaintiffs Counsel to Allow Access to Discovery Documents — a motion filed by Defendants’ new counsel, who had determined that a “substantial amount of discovery related materials” were missing from the files handed over to them by Defendants’ previous attorneys. See Defs.’ Mot. for Order to Allow Access at. 2.

Defendants sought to have Plaintiff provide them with access to her copies of the missing documents, which Defendants would then copy at their own expense; however, these requests were rebuffed by Plaintiffs counsel. Id. at 3. Importantly, while Defendants acknowledged that the missing documents “are not of plaintiffs making,” they stressed that they could not mount a proper defense of Plaintiffs Motion for Sanctions without the documents — many of which could only be obtained from Plaintiff. Id. at 4.

In order to resolve this dilemma, the Court issued a Memorandum Opinion and Order on August 17, 2004, which focused on the fact that “Defendants cannot respond to Plaintiffs motion, or defend themselves in a potential future trial, without the full record in this case.” Atkins v. Fischer, Civ. No. 98-800, at 3 (D.D.C. Aug. 17, 2004) (order requiring Plaintiffs counsel to provide Defendants access to those documents Defendants could not obtain through any other source).

Noting the burden on Plaintiff — whose “attorney works in a small office with few resources to handle Defendants’ request” — the Court ordered that “Defendants shall be permitted access to Plaintiffs files to obtain only those documents that they do not have in their own files and that cannot be obtained from other sources.” Id.

In return for this privilege, the Court ordered “that Defendants be required to compensate Plaintiffs counsel not only for the costs of copying documents, but also for the time that Plaintiffs counsel’s representatives must expend in order to locate and prepare the documents for Defendants.” Id. at 4. Finally, the Court directed that “Plaintiff shall estimate how much it will cost to complete this project and provide this estimate to Defendants prior to beginning work on the project. Plaintiff shall endeavor to minimize the expense of this undertaking by utilizing low-level staff where possible.” Id.

Despite the Court’s even-handed, clear bargain, progress in this process immediately broke down. Plaintiff filed a Motion for Clarification of the Court’s Order on September 7, 2004, in which she announced that her counsel would copy all identified documents “except for documents produced by the Fischer defendants themselves in this case— almost all of which Defendants now claim are ‘missing,’” Pl.’s Mem. in Support of Her Mot. for Clarification at 2. Plaintiff further asserted that Mr. Fischer (on behalf of Defendants), Mr. Stanley Goldschmit, Esq., former counsel to Defendants, and Mr.

Richard Schimel, Esq., successor counsel, must each “file affidavits attesting that they do not have the Fischer and Fischer Companies’ documents that were supplied in discovery and after conducting a diligent search to include agents and their representatives, they have been unable to locate the same.” Id. at 1. Asserting that Plaintiff was unilaterally altering this Court’s August 17, 2004 Order and imposing additional requirements, Defendants immediately objected to Plaintiffs actions and threatened a motion for sanctions on their own.

The Court was then forced to resolve this dispute through another Memorandum Opinion and Order, dated December 1, 2004. In this Order, the Court required that Plaintiff provide Defendants access to or copies of all materials requested by Defendants which are outlined in the Status Report filed on September 15, 2004. No affidavits are required from Defendant[s], though Defendant[s][are] under a continuing ethical obligation to inform Plaintiff if any of these materials requested are actually within their possession.

Plaintiff must give Defendants access to or copies of these materials by no later than Thursday, December 23, 2004, or [her] pending Motion for Finding that Defendants and Their Prior Counsel, Stanley Goldschmidt, Esquire, Attempted to Perpetrate a Fraud Against this Court and for Appropriate Sanctions will be denied by the Court. The previous scheme created by the Court’s August 17, 2004, Opinion and Order, which provided compensation for Plaintiffs counsel and staff for preparing the documents and copying them, will remain in place. Atkins v. Fischer, Civ. No. 98-800, at 13-14 (D.D.C.

Dec. 1, 2004) (order denying Plaintiffs Motion for Clarification) (emphasis in original). The Court’s December 1, 2004 Opinion and Order, which constituted a global resolution of all pending production-related disputes, apparently had the intended impact, as separate Status Reports filed by both Plaintiff and Defendants on January 6th and 7th, 2005, indicated that Defendants were ultimately provided the necessary requested materials. The Court then entered a briefing

schedule to complete the briefing of Plaintiffs Motion for Sanctions; Defendants filed their Opposition on February 7, 2005, while Plaintiff filed her Reply on February 21, 2005. At the same time that the production-related disputes were reaching a simmering point in this case, Defendants former counsel, Mr. Stanley H. Goldschmidt, Esq., filed a cross-motion for sanctions against Plaintiff on August 31, 2004, and Plaintiff filed an Opposition to that motion on September 13, 2004. The Court stayed consideration of that motion until it could resolve Plaintiffs Motion for Sanctions concurrently.

Given that Plaintiff’s Motion for Sanctions is now fully briefed, nearly one (1) year after it was initially filed, the Court can resolve both fully briefed sanctions-related motions. B. Factual Context of the Sanctions-Based Motions Plaintiff’s Motion for Sanctions, now fully ripe, asserts that “there is compelling reason to believe that Plaintiff Benson Fischer (‘Fischer’) and his former attorney, Stanley Goldschmidt, Esq., attempted to perpetrate a fraud upon this Court by fabricating evidence and hiding material evidence during discovery which, among other things, would have precluded this Court’s grant of

summary judgment.” Pl.’s Mot. for Sanctions at 1. According to Plaintiff, absent Defendants’ fraud, “Plaintiffs appeal would have been unnecessary.” Id. As such, Plaintiff contends that “[a]n award of appropriate sanctions to include entry of default judgment, an award of substantial attorneys’ fees, and referral of Mr. Fischer’s conduct to the United States Attorney’s Office is in order.” Id. Plaintiff’s argument for the draconian sanction of default judgment rests upon four (4) major contentions. 1.

History of Misconduct in Contemporaneous, Related Litigations First, Plaintiff cites to the “history of misconduct” by Mr. Fischer and his former attorney, Mr. Goldschmidt, “in other contemporaneous litigation.” Id. at 4. Plaintiff points to two different cases, coetaneous to this case, in which Messrs. Fischer and Goldschmidt were sanctioned for misconduct:

(1) Fischer Brewing Co. v. Flax, Superior Court of the District of Columbia, Civ. No. 678-97, aff'd, Fischer v. Estate of Howard L. Flax, 816 A.2d 1 (2003); and

(2) In re Fischer, United States Bankruptcy Court of the District of Maryland, Case No. 03-13704-DK. Id. at 4, 9. The Fischer v. Flax litigation dealt with a breach of contract lawsuit by Mr. Fischer against

(1) Mr. Howard Flax, who signed an agreement with Mr. Fischer providing for a substantial finder’s fee if Mr. Flax was able to locate financing for the Fischer Brewing Company and Redneck Beer, and (2) the law firm representing Mr. Flax, Paley Rothman. Id. at 4-5. During the Fischer v. Flax litigation, Superior Court Judge Steffen W. Graae, after a bench trial on the “bad faith litigation” counterclaim, sanctioned Mr. Fischer for almost $930,000.00 in attorney’s fees and costs for bad faith litigation and $40,000.00 in punitive damages. Pl.’s Reply at 1-2. Judge Graae concluded that Mr.

Fischer’s suit “rests on false allegations, fraudulent documentation, and a stubborn refusal to acknowledge wrongdoing, the suit represents the grossest kind of abuse of the legal process.” Id. at 2; Pl.’s Mot. for Sanctions, Ex. 3 (May 3, 2000 Opinion and Order) at 23. Specifically, Judge Graae found that “the evidence is clear and convincing that Mr. Fischer knowingly constructed a fraudulent suit against Flax and [his] lawyers,” Pl.’s Mot. for Sanctions, Ex. 3 (May 3, 2000 Opinion and Order) at 21. Judge Graae also focused on the fact that Mr.

Fischer’s actions “raise[d] questions about efforts he may have made to manipulate witnesses and lawyers in this case,” id. at 19-20. Finally, in his separate award of punitive damages against Mr. Fischer, Judge Graae found that “[i]t is obvious that an oath to tell the truth means little or nothing to Mr. Fischer and that he is still intent on manipulating the legal process.” Pl.’s Mot. for Sanctions, Ex. 5 (Dec. 18, 2000 Order and Judgment). Judge Graae also awarded Rule 11 sanctions against Mr. Goldschmidt, who represented Mr. Fischer in Fischer v. Flax, and his co-counsel, Mr.

Arthur Kahn, Esq., in the sum of $50,000.00. Pl.’s Mot. for Sanctions, Ex. 6 (Dec. 2, 2003 Opinion and Order). Judge Graae concluded that Mr. “Goldschmidt and Mr. Kahn served as nothing more than mouthpieces for the threats Mr. Fischer made.... Goldschmidt’s and Mr. Kahn’s pleadings may have satisfied Mr. Fischer’s thirst for vengeance, but they did not meet the legal or factual standards contemplated by Rule 11.” Id. at 11. Judge Graae went on to find that “the Court considers the professional conduct of Goldschmidt and Mr. Kahn to be well beyond the pale.

These two experienced lawyers knew, or had to know, they did not have sufficient evidence to make a case for tortious interference by Mr. Mark and his law firm, Paley Roth-man. ... The Court can only characterize their conduct as willful and badly motivated.” Id. at 13-14. Plaintiff, in addition to focusing on Judge Graae’s sanctioning of Mr. Goldschmidt in Fischer v. Flax, also focuses on the fact that Mr.

Goldschmidt — in attempting to defend himself in that action — claimed that he suffered from “a state of mental intoxication and loss of impulse control and judgment,” Pl.’s Mot. for Sanctions, Ex. 7 (Statement from Mr. Goldschmidt’s medical doctor), due to “clinical depression and drug induced intoxication,” Pl.’s Mot. for Sanctions at 7. Plaintiff emphasizes that “[i]t is of interest that Goldschmidt claims that he suffered from clinical depression and drug induced intoxication through the Fischer litigation— which was also the period of time that the instant litigation was pending before this Court.” Id. at 8.

Plaintiff further stresses that Mr. Goldschmidt, along with Mr. Fischer, was sanctioned once again for another $30,000.00 after being found in contempt by the Circuit Court for Montgomery County, Maryland, for stonewalling collection-related discovery during post-judgment collection efforts instigated by Paley Rothman. Pl.’s Mot. for Sanctions at 11-12; Pl.’s Reply at 3. Following collection efforts, Mr. Fischer filed for personal bankruptcy pursuant to

Chapter 7 of the Bankruptcy Code. See In re Fischer, United States Bankruptcy Court for the District of Maryland, Case No. 03-13704-DK. Plaintiff contends that in his bankruptcy case, Mr. “Fischer has engaged in the same pattern of behavior that he displayed in the Fischer v. Flax litigation” by refusing “to appear for depositions when ordered” and presenting “evidence in the Bankruptcy Court which he likely fabricated after the fact.” Pl.’s Mot. for Sanctions at 9. For instance, in an Order dated March 12, 2004, Bankruptcy Judge Keir granted sanctions to Plaintiff, a creditor in Mr.

Fischer’s bankruptcy case, for Mr. Fischer’s refusal to comply with a Court order directing a FRBP 2004 examination; Judge Keir’s Order also provided for sanctions against Mr. Fischer’s bankruptcy attorney, Mr. Richard Rosenblatt. See Pl.’s Mot. for Sanctions, Ex. 12 (3/10/04 Tr. of Bankruptcy Court Hearing). Plaintiff contends that the conduct of Messrs. Fischer and Goldschmidt in litigation contemporaneous to this case must be considered relevant by this Court in the resolution of Plaintiffs present Motion for Sanctions. Essentially, Plaintiff argues that Mr.

Fischer and his lawyers, including former counsel Mr. Goldschmidt, have exhibited a pattern of misconduct that “constitutes chronic abuse of the legal standard.” Pl.’s Reply at 10. Plaintiff describes the behavior by Defendants and their counsel as “extraordinary by any standard” wherein “fabricating documents, lying under oath, and using the legal system to further personal vendettas is Fischer[’s] modus operandi.” Pl.’s Mot. for Sanctions at 12. Plaintiff posits that it would “blink[ ] reality for this Court to ignore the extreme misconduct,” Pl.’s Reply at 8, as it is quite likely that Mr. Fischer and Mr.

Goldschmidt exhibited a similar pattern of behavior in this case. 2. Withholding of Discovery in This Case Second, Plaintiff cites to the alleged discovery abuses by Defendants and their former counsel, Mr. Goldschmidt, in suppressing material evidence in this case. Pl.’s Mot. for Sanctions at 13; Pl.’s Reply at 11.

Plaintiff focuses on three (3) alleged instances of suppression of key evidence: (1) the production of false gross revenues incurred during the sale of Redneck Beer, which significantly underestimate the total sales of Redneck Beer, Pl.’s Mot. for Sanctions at 13 & n. 10; (2) the apparent withholding by Mr. Fischer and Mr.

Goldschmidt of documents showing that the Atkins’ Logo was used in t-shirts produced and sold under license and the actual samples of the t-shirts themselves, id. at 13-20; and (3) the intentional suppression of the “missing” documents in this case, subject to this Court’s discovery-related production orders requiring Plaintiff to share certain documents with Defendants’ new counsel, Pl.’s Reply at 11-13.

Plaintiff alleges that income tax-related documents produced by Defendants in this case stated that from 1995 through 1996 (the period during which the Fischer Brewing Company sold Redneck Beer), total sales amounted to roughly $1.5 million. Pl.’s Mot. for Sanctions at 13. However, Plaintiff points to two different Washington Post articles which apparently contradict this figure. Id. at 13, n. 10. In the first article, Plaintiff asserts that Mr. Fischer claims that over 375,000 cases of Redneck Beer were sold; at $9.05 per case, Plaintiff estimates that such sales would have produced revenues of $3.4 million.

In the second article, it is reported that Fischer Brewing “sold almost 15 million bottles” of Redneck Beer; Plaintiff estimates that at $9.05 per case, gross revenues would have been approximately $5.7 million. Id. As such, Plaintiff implies that Mr. Fischer and his former counsel, Mr. Goldschmidt, must be hiding the true revenues related to Redneck Beer. Id. However, Plaintiff spends most of her argument on the allegation that Mr. Fischer and Mr.

Goldschmidt withheld key evidence that Atkins’ Logo was used in t-shirts produced and sold under license pursuant to a November 15, 1995 agreement between the Fischer Brewing Company and Cambridge Sportswear, Inc. Id. at 13-20. In this agreement, Cambridge Sportswear provided the Fischer Brewing Company a $100,000.00 initial royalty fee in order to possess the exclusive license to produce Redneck Beer-branded clothing and wearing apparel. Id. at 14. According to Plaintiff, during Plaintiffs examination of Mr. Fischer in the In re Fischer bankruptcy ease, Mr.

Fischer maintained that this contract was “to license the name Redneck beer. Specifically the name, nothing else.” Id. at 14 (citing 1/19/04 Fischer Dep. at 41). Indeed, Plaintiff contends that “[a]t no time did Fischer or Goldschmidt ever produce T-shirts or other clothing made by Cambridge under license in discovery in this case.” Id. However, in the Fischer v. Flax litigation, Mr. Fischer produced a copy of a business plan which had been Bates stamped LFB000369-LFB000579. Id. at 16.

Unlike the business plan produced in Flax, the business plan produced by Defendants in this case “lacked the Cambridge T-shirt photographs confirming Cambridge’s reproduction on the T-shirts of the Atkins logo. Also lacking were photos of a model with Redneck beer, a promotional photo which included and made use of the Atkins Logos.” Id. at 17. Plaintiff contends the omissions from the business plan were deliberate, despite the protestations of Mr. Fischer and Mr. Goldschmidt, because such information would have precluded this Court’s November 30, 2001 grant of

summary judgment under an implied non-exclusive license theory. Id. at 17-18. Specifically, according to Plaintiff, Fischer’s licensing to Cambridge Sportswear of Redneck Beer trademarked goods, including the Atkins Logos for use on wearing apparel would not be within any implied nonexclusive license to use the Atkins Logos for commercial production and distribution of beer. And, under no circumstances could Fischer grant an exclusive license to Cambridge. An implied license (which is all that Fischer could have had), at best, is nonexclusive.

Fischer could not grant an exclusive license that he himself did not have. Id. at 18 (emphasis in original). As such, given the importance of this complete business plan and “the remarkable history of prevarication” laid out by Plaintiff, Plaintiff asserts that “Fischer and Goldschmidt cannot be heard to say that the failure to produce key documents (and apparel samples) that were clearly in their possession was a simple oversight.” Id. at 20. Finally, Plaintiff argues that Mr. Fischer and Mr. Goldschmidt are continuing to hide documents related to this litigation. Pl.’s Reply at 11-13.

Specifically, Plaintiff contends that it is the practice of Messrs. Fischer and Goldschmidt “to claim that they do not have documents and to not produce documents,” id. at 11, and that practice has exhibited itself with respect to the very documents subject to this Court’s production-related orders of August 17, 2004 and Decernber 1, 2004. According to Plaintiff, in a hearing held before the Bankruptcy Court on October 20, 2004, Mr. Fischer stated to the court that Mr.

Goldschmidt retains one hundred (100) to two hundred (200) boxes of his business files, and indicated through counsel that he has tried unsuccessfully to obtain the documents from Mr. Goldschmidt. Id. at 12 (citing PL’s Reply, Ex. B (Oct. 20, 2004 Bankruptcy Court Tr. at 70-71)). Plaintiff speculates that these boxes contain even more material than was copied by Defendants’ successor counsel in this case from Plaintiffs files pursuant to the Court’s Orders, and suggests that Mr.

Goldschmidt— who has been held in contempt in Montgomery County, Maryland, for failing to produce documents — has failed to produce these documents in order to cover up his own misconduct. Id. at 11-12 & n. 15. Plaintiff concludes by stating that “[w]e have absolutely no doubt that the allegedly missing Fischer documents can be found (or recreated from) the 200 boxes and that Messrs. Fischer and Goldschmidt have, yet again, played games with this Court and with everyone else in this case.” Id. at 13. 3.

Fischer’s Alleged Fabrication of a Fake Mock-Up Bottle Third, Plaintiff asserts that evidence has come to light that indicates Mr. Fischer fabricated a mock-up, or prototype, bottle of Redneck Beer featuring the original concept of a red bandana and denim pocket in an attempt to support his claims that he — and not Plaintiff — is entitled to the copyright of the relevant design. Pl.’s Mot. for Sanctions at 20. During the earlier round of dispositive motions, Defendants had alleged that Mr.

Fischer, prior to meeting Plaintiff, had constructed a mock-up Redneck Beer bottle, using a Budweiser beer bottle, in order to demonstrate his concept of how the ultimate design should look; Defendants also argued that Mr. Fischer had also created some preliminary sketches highlighting his design ideas. See Atkins v. Fischer, Civ. No. 98-800, at 11-12 (D.D.C. Nov. 30, 2001). The Court rejected Defendants’ argument, given Mr.

Fischer’s vague and inconclusive testimony regarding whether he actually showed Plaintiff the alleged mock-up bottle and sketches, and given the unequivocal testimony by both Plaintiff and Mr. Thomas Gaadt (the artist hired by Plaintiff to sketch the Atkins designs) that they never saw the mock-up bottle. Id. Despite the fact that the Court rejected Defendants’ mock-up bottle claim as a matter of law, Plaintiff continues to focus on the importance of the mock-up bottle — which has long been the subject of major discovery disputes.

Essentially, Plaintiff maintains that the mock-up bottle was created after the fact by Mr. Fischer in order to evade Plaintiffs claims. To support this argument, Plaintiff contends: (1) contrary to Mr.

Fischer’s deposition testimony, see 4/3/00 Fischer Dep. at 388, the mock-up bottle — as confirmed by Anheuser Busch Company through an analysis of a picture of the mock-up bottle — was not a Budweiser beer bottle at all, as the mock-up bottle was of a clear color, see Pl.’s Mot. for Sanctions at 23-24 (citing 7/28/00 Dep. of Mark Elliott, Senior Manager in the Packaging Technology Group for Anheuser Busch); (2) the refusal by Plaintiffs former counsel, Mr.

Goldschmidt, to hand over the actual bottle for further testing leads to an inference that Defendants were aware that the bottle was created ex post facto, and sought to hide that fact, id. at 24-25; (3) virtually all testimony in this case indicates that no one was shown the mock-up bottle by Mr. Fischer, contrary to his assertions, id. at 22 (citing to the fact that only Mr. Harvey Berkman and Mr. Steve Solomon testified that they ever saw the mock-up bottle, and arguing that their testimony was vague), PL’s Reply at 25-28; and

(4) Plaintiffs review of standard bottle markings in the United States, assisted by an expert witness with experience in the glass industry (Mr. C. Phillip Ross), indicates that the numbers engrossed on the mock-up bottle — “96 and a symbol that looks like a B and then the number 9934 and then the number 2,” PL’s Reply at 29 — has led her to “believe that the symbol ’96’ on the mock-up bottle refers to the year of manufacture of that bottle,” id., ensuring that the mock-up was created long after Mr. Fischer held discussions with Plaintiff regarding design plans.

Plaintiff contends that the “fabricated” mock-up bottle had a significant impact on this litigation. According to Plaintiff, “[t]he vast majority of discovery conducted by the Plaintiff from 1999 until 2001 was the result of the concocted Mock-up Bottle defense.” Pl.’s Mot. for Sanctions at 26. Moreover, Mr. “Fischer’s lies and fabrication converted a straightforward copyright infringement case into a case where a major issue in discovery was whose copyright it is.” Id. Plaintiff avers that this kind of behavior by Mr. Fischer is similar to his actions taken in the Fischer v.

Flax litigation, and that default judgment is the required sanction for such malfeasance. Id.; Pl.’s Reply at 30. 4. Defendants’ Counterclaims Were Filed in Bad Faith and Without a Legal or Factual Basis Fourth, and finally, similar to the Fischer v. Flax litigation, wherein Judge Graae expressly found that Mr. Fischer’s claims against Mr. Flax were without legal or factual basis or proper investigation, Plaintiff contends that Defendants’ counterclaims in this case were filed without legal or factual basis. See Pl.’s Mot. for Sanctions at 26-27.

Defendants filed four (4) counterclaims in this case: (1) breach of contract; (2) tortious interference with business relations; (3) infringement of trademark; and (4) infringement of the trademark. See generally Defs.’ Ans. Defendants’ counterclaims were filed over seven years ago and Plaintiffs previous counsel never filed a Motion for Rule 11 Sanctions at that time. After Defendants’ filed their counterclaims, Plaintiff brought a Motion to Dismiss those claims; this Court granted Plaintiffs motion as to Counterclaim I (breach of contract),-but denied the motion as to the remaining counterclaims.

The remaining three (3) counterclaims were ultimately dismissed by Defendants’ stipulation on September 26, 2000. Despite these facts, Plaintiff maintains that “[t]he counterclaims were utterly lacking in specific detail,” Pl.’s Mot. for Sanctions at 27, that they were without any factual basis, id. at 29, and that they were filed simply to “prolong[ ] the litigation and mak[e] it much more costly than it needed to be,” id. at 31.

In sum, Plaintiff notes that “[t]he point of all of this is to demonstrate to the Court that Fischer (and his former counsel, Goldschmidt), on an ongoing basis made false and fraudulent assertions, have acted in reckless disregard of the truth and/or have used litigation as a weapon.” Id. at 33. According to Plaintiff, “[cjourts need to take firm action with litigants such as this. Our rule of law cannot function if the Fischers and Goldschmidts of this world are permitted to do whatever they want.” Id.

As such, Plaintiff argues that Defendants’ misconduct calls for default judgment, as well as “an appropriate award of actual and punitive damages in an amount sufficient to deter [Mr. Fischer] and others similarly situated from attempting] to perpetrate this kind of fraud.” Id. at 39. Moreover, Plaintiff suggests that a referral of this matter to the United States Attorney’s Office for review and/or initiation of criminal contempt proceedings is appropriate. Id. at 39-40. In response, Defendants’ former counsel, Mr. Stanley H.

Goldschmidt, Esq., has brought a Motion for Rule 11 Sanctions against Plaintiff and her counsel. See Goldschmidt’s Mot. for Sanctions at 1-2. Mr. Goldschmidt’s curt motion simply refers to the applicable Rule 11 standards and then references his Opposition to Plaintiffs Motion for Sanctions. Id. Mr. Goldschmidt’s Opposition essentially accuses Plaintiffs counsel, Mr. Carlos M. Recio, of filing Plaintiffs Motion for Sanctions with distortions, half-truths, and outright lies to such an extent that “Mr. Recio has overstepped the boundaries of his immunity.” Goldschmidt’s Opp’n at 13. According to Mr.

Goldschmidt, “[t]he Motion filed by Mr. Recio represents lawyering at its worst. Not only is there not an ounce of substance, civility or refinement contained in the Motion, but Mr. Recio totally misleads this Court, by failing to include appropriate exhibits and withholding other information, which would have mandated against his filing of the Motion.” Id. at 12. Mr. Goldschmidt further objects to Plaintiffs use of Goldschmidt’s “encountered difficulties in another case” and Plaintiffs use of his recent medical troubles to portray him “as a psychotic basket case with a drug addiction.” Id. As such, Mr.

Goldschmidt requests that this Court not only reject Plaintiffs motion, but impose the requisite sanctions to thwart the “prevarications” of Plaintiffs counsel. Id. II; LEGAL STANDARDS Plaintiff requests that the Court sanction Defendants and their former counsel, Mr. Stanley H. Goldschmidt, Esq., pursuant to the “numerous overlapping sources of this Court’s sanction’s authority: the Federal Rules of Civil Procedure, 28 U.S.C. § 1927, and this Court’s inherent authority.” Pl.’s Mot. for Sanctions at 33.

Plaintiff contends that “because of the attempted perpetration of fraud on this Court,” “judgment by default should be entered” in favor of Plaintiff “and attorney’s fees awarded.” Id. at 34. While Defendants simply attempt to refute Plaintiffs allegations in their filing, Mr. Goldschmidt has brought his own Motion for Sanctions against Plaintiff pursuant to Federal Rule of Civil Procedure 11(b). See Goldschmidt’s Mot. for Sanctions at 1-2; Goldschmidt’s Opp’n at 12-13.

As such, before the Court can discuss the content of the cross-motions for sanctions, the Court first must set out the relevant legal standards underlying the Court’s ability to sanction a litigant or counsel in an action. A. Rule 11 Rule 11 of the Federal Rules of Civil Procedure provides that all pleadings, motions or other papers filed with the Court shall be signed by an attorney. Fed.R.Civ.P. 11.

The signature affixed pursuant to Rule 11 certifies that the pleading or motion “is not being presented for any improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of litigation,” that “the claims, defenses, and other legal contentions therein are warranted by existing law or by a nonfrivolous argument for the extension, modification, or reversal of existing law or the establishment of new law,” and that “the allegations and other factual contentions have evidentiary support or, if specifically so identified, are likely to have evidentiary support after a reasonable opportunity for further investigation or discovery.” Id.

Where a pleading or motion is signed in violation of the Rule, the court may sanction the party or signatory attorney appropriately. Id. The “central purpose of Rule 11 is to deter baseless filings in district court and thus ... streamline the administration and procedure of the federal courts.” Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 393, 110 S.Ct. 2447, 110 L.Ed.2d 359 (1990). Since the 1993 amendments, the language of Rule 11 indicates that the imposition of sanctions is left to the discretion of the district court judge. See Rafferty v.

NYNEX Corp., 60 F.3d 844, 852 n. 12 (D.C.Cir.1995); Fed.R.Civ.P. 11(c) (noting that when the rule has been violated, a court may impose an appropriate sanction); see also 5A Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1336 (2d ed. Supp.2000) (commenting that the scope of the Advisory Committee’s list of factors to consider when deciding whether or not to impose a sanction suggests that “the district court is given the widest possible latitude under the new” version of Rule 11).

As possible sanctions pursuant to Rule 11, the court has an arsenal of options at its disposal, “such as striking the offending paper; issuing an admonition, reprimand, or censure; requiring participation in seminars or other educational programs; ordering a fine payable to the court; [or] referring the matter to disciplinary authorities.” See Fed.R.Civ.P. 11 advisory committee’s note (1993). B. Rule 37(b)

(2) Rule 37(b)(2) of the Federal Rules of Civil Procedure permits a court to issue such orders “as are just” to sanction a party who fails to obey an order to provide or permit discovery, including a discovery order under Rule 26, governing discovery generally, and Rule 35, governing orders for independent physical or mental examinations. See Fed.R.Civ.P. 37(b)(1).

Such sanctions may include taking certain facts as established, prohibiting the introduction of certain evidence, striking pleadings or parts thereof, staying further proceedings until the order is obeyed, or dismissing the action or proceeding or any part thereof and/or rendering a judgment by default against the disobedient party. See Fed.R.Civ.P. 37(b)(2); Bonds v. Dist. of Columbia, 93 F.3d 801, 807-08 (D.C.Cir.1996), cert. denied, 520 U.S. 1274, 117 S.Ct. 2453, 138 L.Ed.2d 211 (1997); Shepherd v. Am. Broadcasting Cos., 62 F.3d 1469, 1474 (D.C.Cir.1995).

The possible sanctions set out in Rule 37(b)(2) are not mutually exclusive; the court may impose several of the specified sanctions at the same time. See 8A Charles Alan Wright, Arthur R. Miller, & Richard L. Marcus, Federal Practice and Procedure §§ 2284, 2289 (2d. ed.1994). The imposition of the number and type of sanctions employed under Rule 37(b)(2) is left to the discretion of the trial judge. See id. § 2284 (“With a rule as flexible as Rule 37, inevitably a broad discretion must be given the trial judge with regard to sanctions.”).

However, the Court is limited in its ability to sanction parties pursuant to Federal Rule of Civil Procedure 37(b)(2). The D.C. Circuit has held that “ ‘[a] production order is generally needed to trigger Rule 37(b).’ ” Shepherd, 62 F.3d at 1470 (quoting Attn’y Gen. v. The Irish People, Inc., 684 F.2d 928, 951 n. 129 (D.C.Cir.1982), cert. denied, 459 U.S. 1172, 103 S.Ct. 817, 74 L.Ed.2d 1015 (1983)); see also Jamie S.

Gorelick, Stephen Marzen & Lawrence Solum, Destruction of Evidence § 3.4, at 74 & n. 23 (1989 & Supp.1995) (“[fjederal court decisions ... unanimously agree that sanctions pursuant to Rule 37 may not be awarded absent violation of a court order”). As such, in order to sanction a party pursuant to Rule 37(b)(2), the Court must identify a specific discovery order that was actually violated. C. 28 U.S.C. § 1927 The court may also impose sanctions pursuant to 28 U.S.C. § 1927.

The statute provides that: [a]ny attorney or other person admitted to conduct cases in any court of the United States or any Territory thereof who so multiplies the proceedings in any case unreasonably and vexatiously may be required by the court to satisfy personally the excess costs, expenses, and attorneys’ fees reasonably incurred because of such conduct. 28 U.S.C. § 1927. The purpose of

Section 1927 is to allow the Court “to assess attorney’s fees against an attorney who frustrates the progress of judicial proceedings.” United States v. Wallace, 964 F.2d 1214, 1218 (D.C.Cir.1992). Before imposing sanctions on an attorney, the court must evaluate whether the attorney’s conduct was “at least reckless[.]” Id. at 1217. “[UJnintended, inadvertent, and negligent acts[, however] will not support an imposition of sanctions under

section 1927.” Id. at 1219 (quoting Cruz v. Savage, 896 F.2d 626, 631 (1st Cir.1990)). For an action to be considered reckless misconduct, there must be a “ ‘conscious choice of a course of action, either with knowledge of the serious danger to others involved in it or with knowledge of facts which would disclose this danger to any reasonable man.’ ” Id. at 1220 (quoting Restatement (Second) of Torts § 500 cmt. g (1964)). A showing by the moving party that the counsel in question acted recklessly or deliberately “in the face of a known risk” is required. Healey v.

Labgold, 231 F.Supp.2d 64, 68 (D.D.C.2002) (citing Wallace, 964 F.2d at 1219). Once the moving party has met its burden, the court may then award sanctions under 28 U.S.C. § 1927. A variety of courts have noted, however, that “[t]he power to assess costs against an attorney under § 1927 ... is a power that must strictly be construed and utilized only in instances evidencing a ‘serious and standard disregard for the orderly process of justice.’ ” Dreiling v. Peugeot Motors of Am., Inc., 768 F.2d 1159, 1165 (10th Cir.1985) (quoting Kiefel v.

Las Vegas Hacienda, Inc., 404 F.2d 1163, 1167 (7th Cir.1968) and citing United States v. Ross, 535 F.2d 346, 349 (6th Cir.1976)). D. The Court’s Inherent Power When the Federal Rules of Civil Procedure do not provide courts with sufficient authority to protect the integrity of the judicial system and prevent abuses of the judicial process, courts have the inherent power to impose sanctions for abusive litigation practices undertaken in bad faith. See Shepherd, 62 F.3d at 1472; Young v. Office of the U.S.

Senate Sergeant at Arms, 217 F.R.D. 61, 65 (D.D.C.2003). “These powers are ‘governed not by rale or statute but by the control necessarily vested in courts to manage their own affairs so as to achieve the orderly and expeditious disposition of cases.’ ” Chambers v. NASCO, Inc., 501 U.S. 32, 43, 111 S.Ct. 2123, 115 L.Ed.2d 27 (1991) (quoting Link v. Wabash R.R. Co., 370 U.S. 626, 630-31, 82 S.Ct. 1386, 8 L.Ed.2d 734 (1962)).

However, “[b]ecause of their very potency, inherent powers must be exercised with restraint and discretion.” Id. at 44, 111 S.Ct. 2123, 501 U.S. 32, 111 S.Ct. 2123, 115 L.Ed.2d 27 (citing Roadway Express, Inc. v. Piper, 447 U.S. 752, 764, 100 S.Ct. 2455, 65 L.Ed.2d 488 (1980)). “The inherent power encompasses the power to sanction attorney or party misconduct, and includes the power to enter a default judgment.” Shepherd, 62 F.3d at 1475 (citations omitted).

Pursuant to the Court’s inherent power, the Court may also enter a variety of sanctions, including fines, awards of attorneys’ fees and expenses, contempt citations, disqualifications or suspensions of counsel, and drawing adverse evidentiary inferences or precluding the admission of evidence. Id. (citing Gregory P. Joseph, Sanctions: The Federal Law of Litigation Abuse § 28(A) (2d ed.1994)). E.

Imposition of a Default or Dismissal as a Sanction for Misconduct While the Court does possess the power to dismiss a plaintiffs complaint or enter default judgment against a defendant as a sanction for previous malfeasance, default judgment — the central request of Plaintiffs present motion — is a very severe sanction that is contrary to the “judicial system’s strong presumption in favor of adjudications on the merits.” Shepherd, 62 F.3d at 1475. Default judgment is a “drastic step, normally to be taken only after unfruitful resort to lesser sanctions.” Id. at 1478 (citations omitted).

Moreover, the sins of an attorney should not be visited upon an innocent client. See Shea v. Donohoe Constr. Co., 795 F.2d 1071, 1077-78 (D.C.Cir.1986). Indeed, where “the client’s only fault is his poor choice of counsel,” default judgment is a “disproportionate sanction” and an attempt should first be made to sanction the attorney. Id. at 1077.

Importantly, a district court may use its power to enter a sanction as severe as dismissal or default judgment only if it finds, first, that there is clear and convincing evidence that the fraudulent or bad faith misconduct actually occurred, and second, that a lesser sanction “would not sufficiently punish and deter the abusive conduct while allowing a full and fair trial on the merits.” Shepherd, 62 F.3d at 1472 (default judgment reversed because the district court failed to make these two findings); Young, 217 F.R.D. at 65.

Moreover, a “district court must not only find the misconduct by clear and convincing evidence, but must also provide a specific, reasoned explanation for rejecting lesser sanctions.” Id. at 1480; cf. Outley v. City of New York, 837 F.2d 587, 591 (2d Cir.1988) (“Before the extreme sanction of preclusion may be used by the district court, a judge should inquire more fully into the actual difficulties which the violation causes, and must consider less drastic responses.”). The D.C.

Circuit has provided further guidance on the limits of the sanction of dismissal or default judgment by articulating three (3) possible — although not mandatory — justifications for dismissal as a sanction for misconduct, regardless of whether the court bases its decision on the Federal Rules of Civil Procedure or its inherent power. See Webb v. Dist. of Columbia, 146 F.3d 964, 971 (D.C.Cir.1998).

Under Webb, such sanctions are justified when: (1) the other party has been “so prejudiced by the misconduct that it would be unfair to require [the party] to proceed further in the ease”; (2) the party’s misconduct has put “an intolerable burden” on the court by requiring the court to modify its own docket and operations in order to accommodate the delay; or (3) the court finds it necessary “to sanction conduct that is disrespectful to the court and to deter similar misconduct in the future.” Id.; see also Butera v.

Dist. of Columbia, 235 F.3d 637, 661 (D.C.Cir.2001). “A sanction pursuant to any of these considerations must be based upon findings supported by the record.” Id. (citing Bonds, 93 F.3d at 809). Given these stringent standards, it is clear that “default judgment must be a ‘sanction of last resort.’ ” Id. (quoting Shea, 795 F.2d at 1075). Ill: DISCUSSION The Court shall begin its examination of the pending motions by first analyzing Plaintiffs Motion for Sanctions against Defendants and their former attorney, Mr. Stanley H. Goldschmidt, Esq.; the Court will then scrutinize the contentions in Mr.

Goldschmidt’s Rule 11 Motion for Sanctions against Plaintiff. A. Plaintiffs Motion for Sanctions Against Defendants and Mr. Goldschmidt As noted previously, supra

Section 1(B)(1)-(4), Plaintiff asserts that default judgment against Defendants, and additional sanctions against Defendants and their former attorney in this litigation, Mr. Goldschmidt, are warranted due to four (4) important considerations: (1) the history of misconduct exhibited by Defendants and Mr. Goldschmidt as their counsel in separate litigations contemporaneous to this case; (2) the illegitimate withholding of discovery in the present case by Defendants and their counsel;

(3) Defendant Fischer’s alleged fabrication of the mock-up bottle of Redneck Beer, which constituted a fraud on this court, delayed discovery, and compelled this Court to erroneously grant Defendants’ motion for

summary judgment under an implied license theory; and (4) the fact that Defendants’ counterclaims filed in this case were without legal or factual basis. The Court shall review each of Plaintiffs contentions in turn. 1. History of Misconduct in Separate, Contemporaneous Litigations As detailed by the Court in the Background

section of this Memorandum Opinion, Plaintiffs Motion for Sanctions and Plaintiffs Reply are replete with references to the misconduct — both proven and alleged — of Defendants and their former counsel, Mr. Goldschmidt, in two separate litigations that occurred contemporaneous with the first phase of this action:

(1) Fischer Brewing Co. v. Flax, Superior Court of the District of Columbia, Civ. No. 678-97, aff'd, Fischer v. Estate of Howard L. Flax, 816 A.2d 1 (2003); and

(2) In re Fischer, United States Bankruptcy Court of the District of Maryland, Case No. 03-13704-DK. See Pl.’s Mot. for Sanctions at 4, 9. Essentially, Plaintiff contends that the misconduct by Defendants and their counsel in previous litigations is particularly relevant to the present Motion for Sanctions, as it highlights the pattern and practice — or modus operandi — of Defendants and Mr. Goldschmidt in that they intentionally raise groundless claims, stonewall legitimate discovery requests, evade court orders, harass their opponents, and exhibit no regard for honest practice under the Federal Rules.

See, e.g., id. at 4-12; Pl.’s Reply at 1-10. It has long been held that in considering the implementation of sanctions against a party or a counsel to a litigation, a district court may consider all the circumstances surrounding the alleged violation. See Link, 370 U.S. at 635, 82 S.Ct. 1386. “The totality of circumstances can include events which did not occur in the case proper but occurred in other cases and are, by their nature, relevant to the pending controversy.” Thibeault v. Square D Co., 960 F.2d 239, 246 (1st Cir.1992) (citing Moody v.

Miller, 864 F.2d 1178, 1181 (5th Cir.1989) (per curium) (in imposing sanctions, district court could properly consider plaintiffs “past history with the federal courts”)); see also Johnson v. Comm’r of Internal Revenue, 289 F.3d 452, 456-57 (7th Cir.2002) (Posner, J.) (“The Tax Court was not required to ignore [the attorney’s] bad conduct in other cases; indeed, it would have been remiss not to consider it.”) (citing cases); Hissom v. New York City Dep’t of Housing, Civ. No. 86-2340, 1987 WL 45807, at *7 (S.D.N.Y.

Dec.22, 1987) (“in order to further the purpose of deterrence, the court should take into account whether the persons subject to sanctions have abused the judicial system in the past”). In making a sanctions determination, “a court should consider whether the attorney’s conduct was repetitious as opposed to isolated, willful as opposed to negligent, and whether the attorney has a history of similar conduct in other cases.” MAI Photo News Agency, Inc. v. Am. Broadcasting Co., Civ. No. 97-8908, 2001 WL 180020, *7, 2001 U.S. Dist. LEXIS 1680, at *19-*20 (S.D.N.Y. Feb. 22, 2001).

Importantly, even “dogged good-faith persistence in bad conduct becomes sanctionable once an attorney learns or should have learned that it is sanctionable.” Johnson, 289 F.3d at 457 (citations omitted). Defendants and their former counsel, Mr. Goldschmidt, attempt to convince the Court to ignore Plaintiffs recitations of their prior misdeeds for two (2) key reasons.

First, they claim that Plaintiffs “recital of these matters contains a myriad of inaccuracies, misrepresentations and half truths and misuses discrete facts out of context.” Defs.’ Opp’n at 2; see also Goldschmidt Opp’n at 12 (contending that Plaintiffs citations “were obviously interposed by Mr. Recio in an attempt to ‘poison the well’ with the Court since ... his arguments with respect to the ‘substance’ of his Motion are replete with falsehoods, and Mr. Recio apparently believed these issues could provide him with ‘cover’ to camouflage his prevarications”). However, neither Defendants nor Mr.

Goldschmidt detail precisely which of Plaintiffs laundry list of past violations in other cases are “unsubstantiated accusations,” and neither party offers any explanation for the findings of previous courts in regard to their behavior. See Defs.’ Opp’n at 1-2; Goldschmidt Opp’n at 11-12. Second, Defendants and Mr.

Goldschmidt both claim that the matters raised by Plaintiff “are extraneous and irrelevant to the issues at hand.” Goldschmidt Opp’n at 12; see also Defs.’ Opp’n at 2 (“More important, the Flax and Fischer bankruptcy cases are unrelated to the instant litigation, have no bearing on the instant case and would be inadmissible as evidence.” (citing Lanham v. Whitfield, 805 F.2d 970, 972 (11th Cir.1986) (affirming trial court’s barring of evidence of other litigation involving defendant on grounds that it would cause substantial prejudice))). However, the assertion by Defendants and Mr.

Goldschmidt that previous sanctions and misconduct in related cases are entirely irrelevant is not only undermined by the great weight of case law, but also by the Federal Rules of Civil Procedure themselves.

For instance, the 1993 Advisory Committee Notes to Rule 11 provide that: Whether the improper conduct was willful, or negligent; whether it was part of a pattern of activity, or an isolated event; whether it infected the entire pleading, or only one particular count or defense; whether the person has engaged in similar conduct in other litigation; whether it was intended to injure; what effect it had on the litigation process in time or expense; whether the responsible party is trained in the law; what amount, given the financial resources of the responsible person, is needed to deter that person from repetition in the same case; what amount is needed to deter similar activity by other litigants: all of these may in a particular case be proper considerations.

Fed.R.Civ.P. 11 advisory committee’s note (1993) (emphasis added). Accordingly, a court is certainly free to consider the conduct of a party or counsel in another litigation when examining possible sanctionable activity in the instant action. However, contrary to the extraordinary emphasis placed on the prior misconduct of Defendants’ and Mr. Goldschmidt in other contemporaneous cases by Plaintiff, the usefulness of prior misconduct outside the present litigation is limited. As the First Circuit noted: We emphasize that this is but one of many factors to be considered in passing upon the question of sanctions.

We also note that, in the case at hand, there is nothing to indicate that the judge’s decision to preclude the evidence turned on this point. Indeed, wholly apart from counsel’s track record, preclusion was a supportable remedy for late supplementation on the record before the district court. Thibeault, 960 F.2d at 246 n. 6. As such, the Court shall not consider Defendants’ and Mr. Goldschmidt’s history of misconduct, borne out in numerous sanctions-related decisions across many courts, as solely determinative of its decision in this case. Simply, Plaintiff must prove that Defendants and Mr.

Goldschmidt contravened this Court’s Orders, the Federal Rules, and acknowledged standards of practice in this case in order to support her Motion for Sanctions. The established history of misconduct in contemporaneous litigation shall influence the Court in two respects, however: (1) the Court shall analyze the conduct of Defendants and Mr. Goldschmidt with additional, more searching scrutiny, and compare their explanations against the evidence in this fulsome record; and (2) should the Court conclude that Defendants and Mr.

Goldschmidt have violated established norms of practice to a sanctionable degree, their past pattern of misconduct shall influence the type and extent of sanctions ordered. 2. Alleged Withholding of Discovery in the Present Case Plaintiff’s Motion for Sanctions focuses next on three (3) alleged instances of suppression of key evidence by Defendants and their former counsel, Mr.

Goldschmidt, in this case: (1) the production of false gross revenues incurred during the sale of Redneck Beer, which significantly underestimated the total sales of Redneck Beer, Pl.’s Mot. for Sanctions at 13 & n. 10; (2) the apparent withholding by Mr. Fischer and Mr. Goldschmidt of the fact that the Atkins’ Logo was used in t-shirts produced and sold under license, id. at 13-20; and (3) the “missing” documents in this case, subject to this Court’s discovery-related production orders requiring Plaintiff to share certain documents with Defendants’ new counsel, Pl.’s Reply at 11-13.

The Court shall review each allegation regarding the illegitimate suppression of evidence in turn. i. Production of False Gross Revenues In Plaintiffs Motion for Sanctions, Plaintiff, in a lengthy footnote, implies that the income tax returns filed by Defendants as part of discovery in this case — relevant for purposes of damages — significantly understate the total gross revenues garnered by the Fischer Brewing Company through the sale of Redneck Beer. See Pl.’s Mot. for Sanctions at 13 & n. 10.

In support of this inference, Plaintiff relies on two separate Washington Post articles, from 1997 and 2000, respectively, in which she claims that “Fischer reported to the Washington Post that he had sales of well over 375,000 cases of Red Neck beer between March 1995 and March 1996” and that Defendants ultimately “sold almost 15 million bottles of Red Neck Beer.” Id. at n. 10. Using these figures, Plaintiff estimates that sales of Redneck Beer should have earned Defendants between $3.4 — 5.7 million in gross revenues. Id.

Linking this disparity to the past conduct of Defendants in other litigations, Plaintiff suggests that Defendants falsified their federal income tax returns. Id. Three central problems exist with Plaintiffs insinuations, each of which decisively undermines her assertion of falsification. First, Plaintiff distorts the true content and context of the two aforementioned Washington Post articles. In a January 23, 1997 article, the Washington Post reported that Mr. Fischer “created and began bottling Redneck Beer — an American-style brew of which he has sold almost 15 million bottles”; however, the

article was primarily concerned with Mr. Fischer’s failed acquisition of the national Palm Restaurant chain — the

article made no further mention of Redneck Beer, and provided no source for its figures. See Margaret Webb Pressler, Palms Down on $70 Million; Offer to Buy Falls “Significantly” Short of Tempting Pricey Chain, Wash. Post, Jan. 23, 1997, at El. The second

article cited to by Plaintiff, published on January 17, 2000, is an extensive discussion of the downfall of the Fischer Brewing Company and Redneck Beer. See Margaret Webb Pressler, The Beer Baron Signs Off On a Dream, Wash. Post, Jan. 17, 2000, {“The Beer Baron”) at F10. However, rather than noting that Fischer Brewing Company “had sales of well over 375,000 cases of Red Neck Beer,” as Plaintiff claims, see Pl.’s Mot. for Sanctions at 13 n. 10, the

article simply reports that “Redneck sold extremely well, and by March, Fischer had sent 375,000 eases of beer to distributors in 34 states,” The Beer Baron at F10 (emphasis added). There is certainly an important distinction between goods shipped to vendors and goods ultimately sold. Plaintiffs conflation of these two very different concepts, and her failure to recognize that one cannot infer gross revenues from items shipped, undermines her claim based on these news articles that Defendants falsified their income for the purposes of their federal income taxes and discovery in this case.

Second, during discovery in this ease, Defendants produced over nine hundred (900) pages of financial statements and tax documents pertaining to the Fischer Brewing Company. These documents include complete federal tax returns for the years 1995 and 1996, year-to-date general ledgers, accountants’ compilation reports of revenues, expenses, assets, and liabilities, as well as supporting documentation for these reports. See Defs.’ Opp’n, Ex. A (Aff. of Pete V. Albanis, counsel for Mr. Fischer) at 1-2.

These federal tax returns and year-to-date general ledgers were audited by the accounting firm of Reiberger, Pollekoff & Kozak. See Defs.’ Opp’n, Ex. B (Aff. of Bruce Pollekoff) at 1. In response to Magistrate Judge Kay’s May 1, 2000 Order in this ease, Mr. Fischer even produced an affidavit from the Fischer Brewing Company’s accountant, Mr. Bruce Pollekoff, stating that there was no commingling of funds between the Fischer Organization, Inc., and the Fischer Brewing Company. Id. at 1-2.

Plaintiffs motion finds no fault with any of this substantial documentation; indeed, instead of showing internal conflicts within Defendants’ financial disclosures, Plaintiff relies solely upon a misreading of an unreliable, outside source to impugn Defendants’ tax returns. Given the efforts of Defendants in producing detailed financial information and providing evidence supporting the veracity of that production, Plaintiffs baseless assertions cannot be sustained.

Third, Plaintiff fails to recognize that newspaper articles constitute inadmissible hearsay, and cannot be admitted into evidence to support the truth of the matter asserted. “Evidence constituting hearsay is normally inadmissible because it lacks sufficient guarantees of reliability.” Hutira v.

Islamic Republic of Iran, 211 F.Supp.2d 115, 123 (D.D.C.2002) (citing Arthur Best, Evidence: Examples and Explanations at 61 (2d Ed.) (noting that “the reliability problems of out-of-court statements are thought to be so great that common law decisions and the Federal Rules of Evidence take the position that a rule of exclusion will produce the fairest results overall”)).

Courts have routinely concluded that “ ‘[unsupported newspaper articles usually provide no evidence of the reporter’s perception, memory or sincerity and, therefore, lack circumstantial guarantees of trustworthiness.’ ” Id. (quoting Eisenstadt v. Allen, 113 F.3d 120, 1997 WL 211313 (9th Cir.1997) (“newspaper articles clearly fall within the definition of hearsay ... and, thus, are inadmissible”) and citing United States v. Harris, 271 F.3d 690, 696 (7th Cir.2001) (noting that “daily newspapers are not reliable evidentiary sources”)).

As such, courts within this Circuit have consistently barred newspaper articles from introduction as evidence due to the fact that they constitute inadmissible hearsay. See, e.g., Metro. Council of NAACP Branches v. Fed. Communications Comm’n, 46 F.3d 1154, 1165 (D.C.Cir.1995) (“We seriously question whether a New York Times

article is admissible evidence of the truthfulness of its contents.”); United States v. Pollard, 161 F.Supp.2d 1, 6 (D.D.C.2001) (barring admission of newspaper articles as insufficient proof of a party’s claim). Given that Plaintiffs accusation of tax fraud rests solely upon inadmissible hearsay that cannot stand as evidence of the truth of the matter asserted, Plaintiffs argument is without foundation and does not warrant the Court’s further consideration. ii. Alleged Withholding of Cambridge Apparel Material Plaintiffs Motion for Sanctions next accuses Mr. Fischer and Mr.

Goldschmidt of intentionally withholding the most complete iteration of the Fischer Brewing Company Business Plan, which would have revealed the fact that Defendants licensed the exclusive right to manufacture Redneck Beer apparel containing the Atkins Logo to Cambridge Sportswear, Inc., and which included attached photographs of sample clothing attire bearing the Redneck Beer name and logo. See Pl.’s Mot for Sanctions at 13-20.

Plaintiff notes that this material was clearly subject to her First Request for the Production of Documents and Things, which specifically demanded “Original copies of all REDNECK BEER PRODUCTS or other things bearing the REDNECK BEER ILLUSTRATIONS or the name REDNECK BEER.” Id. at 14 (citing Pl.’s First Request for Does, at 6, Request No. 3). Plaintiff further objects to the fact that Defendants did not provide her samples of the resulting sportswear apparel, despite the broad nature of her document request and despite the fact that such samples apparently existed.

See id. at 14-15 (noting that in a deposition in the Flax litigation, Mr. Fischer testified that “clothing was produced, and I have some samples”). Plaintiff first became aware of the existence of a deal between the Fischer Brewing Company and Cambridge Sportswear when Defendants produced one iteration of a Redneck Beer-related Business Plan created by Mr. Fischer in order to gain investors in his enterprise. See id. at 15-17; see also Pl.’s Mot. for Sanctions, Ex. 19 (Business Plan produced in this case). Plaintiff did not investigate this deal further because she apparently relied on Mr.

Fischer’s claim that “Cambridge Sportswear simply produced Redneck branded sportswear, but not sportswear using the Atkins logos she designed,” Pl.’s Reply at 14, and his promise that Defendants had produced all documents in this case, Pl.’s Mot. for Sanctions at 17. Moreover, Plaintiff was provided no photographs of the apparel during discovery. Id. According to Plaintiff, because the material provided “did not include any depiction of the Redneck Branding wearing apparel showing use of the Atkins logos,” Pl.’s Reply at 14, she did not consider the Cambridge Sportswear agreement to be a key issue in this case.

In the Spring of 2004, however, Plaintiff discovered that a more complete Business Plan not produced in this litigation did reveal the licensing of the Atkins Logo to Cambridge Sportswear. Pl.’s Reply at 20 n. 25; Pl.’s Mot. for Sanctions at 16-17 & Ex. 20 (Business Plan not produced in this case). Plaintiff, armed with this new information, now asserts that the complete Cambridge Sportswear information is a major issue, and — based on Defendants’ past behavior and the context of the document production — that information was intentionally withheld. See Pl.’s Mot. for Sanctions at 12-20.

Plaintiff contends that this intentional withholding of discovery had two major impacts on this litigation: (1) it needlessly, and substantially, increased the discovery-related costs of this litigation, see id. at 17-18; and (2) it led this Court to conclude erroneously that Defendants had been granted a nonexclusive license to use the Atkins Logo, whereas knowledge of an exclusive license regarding that Logo would have precluded

summary judgment, see id. at 18-20. According to Plaintiff, because of Defendants’ malfeasance, Plaintiff was forced to undertake a costly — although ultimately successful — appeal. Plaintiff contends that this wrongful suppression of material evidence would have continued in this case had Plaintiff not had an opportunity in the Spring of 2004 to review documents produced in the related Fischer v. Flax litigation in the Superior Court of the District of Columbia, wherein she discovered the existence of a more detailed Business Plan. See id. at 16-17; Pl.’s Reply at 20 n. 25.

Given the intricate factual background of this argument, and the parties’ cross-accusations as to this matter, the Court shall carefully review, on a step-by-step basis, the context of Plaintiffs contention that Defendants and their former counsel, Mr. Goldschmidt, intentionally withheld this information. First, it is uncontested that during the deposition process in this case, Mr. Fischer testified that the Fischer Brewing Company produced several versions of a Redneck Beer-related business plan in order to attract investors; according to Mr.

Fischer, the Business Plan “was prepared, 1995, modified several times throughout the period of six months.” Defs.’ Opp’n, Ex. E (3/20/00 Fischer Dep. at 1180:16-17). Second, it is also uncontested that both the version of the Business Plan produced during discovery in this case (Plaintiffs Exhibit 19 to her Motion for Sanctions) and the version not produced during discovery in this case (Plaintiffs Exhibit 20 to her Motion for Sanctions) were originally produced in the Fischer v. Flax litigation in the Superior Court for the District of Columbia that occurred contemporaneously to this action.

Pl.’s Reply at 14; Defs.’ Opp’n at 6-7. However, these documents were produced in the Fischer v. Flax litigation by a third-party defendant in that case, Laidlaw & Co., and not by Defendants here. See Defs.’ Opp’n, Ex. E (3/20/00 Fischer Dep.) at 1181 (during Mr. Fischer’s deposition in this case, Mr. Goldschmidt interjects and notes that the Business Plan introduced as an exhibit by Plaintiff originally came from Laidlaw’s files, as indicated by the LBF prefix on the Bates stamp); Defs.’ Opp’n at 6-7; Goldschmidt Opp’n at 6; Pl.’s Mot. for Sanctions at 16 n. 11.

The Business Plan produced in this case is roughly 193 pages long, see Pl.’s Mot. for Sanctions, Ex. 19, while the Business Plan not produced in this ease is roughly 199 pages in length and attaches photographs of the resulting Redneck Beer-related apparel, id., Ex. 20. Given that it is also uncontested that Defendants never produced the 199-page Business Plan in this case (Exhibit 20), the Court must look at what information it currently has before it in order to determine whether Defendants’ failure to produce that document was negligent or intentional.

Three considerations compel the Court to conclude that Defendants’ non-production of the 199-page Business Plan was ultimately the result of negligence on their part. First, the relevant timeline does not support Plaintiffs assertion that Defendants withheld the most complete Business Plan iteration because they had knowledge that its contents would prevent a ruling in their favor under an implied license theory. Simply, this case was first filed in March 1998, and discovery began in earnest on or before February 1999.

Defendants, however, did not think to add an affirmative defense of “implied license” until December 29, 2000, when they finally entered a Motion to Amend their Answer to Plaintiffs Complaint in order to assert such a claim. See Defs.’ Mot. to Amend Answ. On February 15, 2001, this Court entered an order granting Defendants’ motion, but forcing Defendants to pay for all costs related to the reopening of discovery surrounding their “implied license” claim. See Atkins v. Fischer, Civ. No. 98-800 (D.D.C. Feb. 15, 2001) (order granting Defendants’ Motion to Amend but ordering sanctions); Atkins v. Fischer, Civ.

No. 98-800 (D.D.C. May 11, 2001) (order denying Plaintiffs Motion to Strike Defendant’s “implied license” defense); Atkins v. Fischer, Civ. No. 98-800 (D.D.C. Feb. 7, 2002) (order modifying the previous sanctions order). Therefore, it cannot be said that Defendants had a grand plan to emerge victorious on an “implied license” argument from the very start of this litigation; rather, such an argument was only first put forward roughly three (3) years after the instigation of this case and after the close of all discovery.

Given the late hour of the “implied license” defense and the fact that they had to pay for reopened discovery, it is highly unlikely that

(1) Defendants realized that the additional material in the 199-page plan could have endangered that defense, and then (2) purposefully sought to suppress that information for three years in advance in order to assure the success of that late defense. Instead, all evidence points to the fact that Defendants only thought of the “implied license” defense at the last minute and, having already produced a Business Plan, were negligent in not providing a later iteration despite their continuing duty to produce it.

Second, Defendants’ disclosures belie Plaintiffs accusation that they intentionally suppressed the fact that the Cambridge Sportswear agreement might have implicated the Atkins Logos. Multiple documents produced by Defendants in this case clearly put Plaintiff on notice that the apparel agreement implicated Redneck Beer logos and designs. For instance, the 193-page Business Plan actually produced in this litigation clearly indicates in the “Marketing”

section that: The Company has made an agreement with Cambridge Manufacturing Company, Inc. located in Appomattox, Virginia to manufacture various outerwear apparel, including but not limited to, T shirts, sweatshirts, hats, gloves, sweaters, pants, coats, jackets, socks, vests, scarfs, dresses, and boxer shorts. Cambridge Manufacturing currently sells various products to JC Pennys, Kmart, WalMart, and various other retailers. With over 100 representatives in the field, Cambridge feels that the REDNECK logo will have mass appeal. Cambridge will be providing various outerwear to the Company’s distributors.

PL’s Mot. for Sanctions, Ex. 19 (Business Plan provided in this case) at 38 (LBF006239; D001223) (emphasis added). Therefore, while the Business Plan provided in this litigation might not have been the most complete version, it did reveal two key details: (1) the Cambridge agreement implicated the Redneck logo, not simply the “Redneck Beer” name, and therefore might have concerned the use of the logo Plaintiff designed for Defendants; and (2) actual outerwear bearing such logo(

s) was available and discoverable, if not from Defendants then from Cambridge. Moreover, Defendants — in this litigation— also produced numerous correspondence from Mr. Fischer to Courtland Manufacturing Co. indicating that the various apparel graphics were not up to par. See Defs.’ Opp’n, Ex. G (3/18/1996 Letter from Mr. Fischer to Mr. Fred H.

Lawson, Jr., of Courtland Manufacturing) at 1 (“This weekend I was in the Sports Authority store and noticed a very large variety of t-shirts that had much better graphics and designs than does the Redneck t-shirts you are currently producing.”); id. at 2 (2/20/1996 Letter from Mr. Fischer to Mr.

Lawson) (“I noticed on ... the white T-shirt with the Redneck logo ... ”; “With regard to the bandana ... ”; suggesting that the baseball jacket should be “similar to the red and black hat with the logo ‘Redneck’ embroidered on the front”; noting that “On this design, I do not beleive [sic] a red bandana would be applicable”; expressing hope that “your new artist can come up with more creative ideas”); id. at 3 (1/31/96 Letter from Mr. Fischer to Mr. Lawson) (indicating that “the design on the T-shirt was acceptable” but “the graphics did not have enough ‘punch’ ”).

The Court points to these disclosures, present in the materials produced by Defendants during discovery in this case, not to suggest that Plaintiff somehow failed in a duty to root out material hinted at but not produced by Defendants as required. Rather, the Court focuses on this information to emphasize that it is highly unlikely that a guilty party — intent on suppressing evidence relating to logos that might implicate Plaintiffs design and threaten an “implied license” defense — would produce so much material revealing the use of Redneck Beer logos and graphics in officially-licensed apparel.

Simply, a perceptive litigant could have used the information actually produced by Defendants to defeat Defendants’ “implied license” argument in a manner similar to the one suggested by Plaintiff in her Motion for Sanctions. See PL’s Mot. for Sanctions at 18-20. While the additional information in the 199-page Business Plan and the attached photographs of the apparel would have aided that effort, the success of the attack on the “implied license” defense would not have been wholly dependent on it.

As such, given the sheer wealth of disclosures made by Defendants relating to the use of Redneck Beer-related logos and graphics in the production of apparel, the Court concludes that it is more likely than not that Defendants’ non-production of the slightly-longer version of the Business Plan was less deliberate than negligent. Third, and finally, Defendants were experiencing a change in lead counsel during the early portion of their response to Defendants’ First Request for Production of Documents and Things.

While this changeover certainly does not excuse the failure to produce the 199-page version of the Business Plan, it does help to explain why its nondisclosure might have occurred, and why that nondisclosure might have been the result of negligence. While Mr. Goldschmidt did file an appearance on behalf of Defendants in this case on March 5, 1998,

(1) M. Miller Baker, Esq., and the law firm of Carr Good-son Warner entered their appearance on behalf of the Fischer Organization, Inc., on June 1, 1998, see Docket Entry # 16; and

(2) Mr. Thomas Patrick Ryan, Esq., and the law firm of McCarthy, Wilson & Ethridge entered their appearance o behalf of The Fischer Brewing Company on July 17, 1998, see Docket Entry #27. Messrs. Bakes and Ryan entered the suit as primary counsel on behalf of Defendants after their insurance company determined that coverage would be provided, while Mr. Goldschmidt remained in the case solely for the purpose of prosecuting the Counterclaims — which were not covered by the insurance company. See Goldschmidt Opp’n at 4. Messrs.

Miller and Ryan remained the primary attorneys for Defendants in this case until May 1999, when they withdrew their appearances and Mr. Goldschmidt became lead counsel. See id. (citing Docket Entries #38 & #39). The Responses to Plaintiffs First Request for Production— which would have covered the various iterations of the Business Plan — were prepared, signed, and sent off by Messrs. Miller and Ryan on March 29, 1999, and April 4, 1999, i.e., before Mr. Goldschmidt began as lead counsel in this case. See Goldschmidt Opp’n, Exs. 4 & 5.

Plaintiff is correct to point out that the 193-page Business Plan actually produced by Defendants in this ease (Exhibit 19 to Plaintiffs Motion for Sanctions) was originally produced by Laidlaw & Co. in the Flax litigation; as such, Mr. Goldschmidt — attorney for Mr. Fischer in that litigation — necessarily had to transmit that document to Messrs. Miller and Ryan, who then provided it to Plaintiff as part of discovery. It is therefore unexplained as to why Mr.

Goldschmidt turned over the 193-page Business Plan from the Flax litigation for discovery in this case, but not the 199-page Business Plan (Plaintiffs Exhibit 20). Moreover, once Mr. Goldschmidt assumed the lead counsel position in this case, he certainly had a duty pursuant to Federal Rule of Civil Procedure 26(e)(2) to continue to supplement all disclosures, responses, and documentary evidence in discovery. See Klonoski v. Mahlab, 156 F.3d 255, 268 (1st Cir.1998) (Rule 26 “imposes a broad requirement on parties to update their earlier disclosures and discovery responses”); 8 Charles Alan Wright, Arthur R.

Miller, & Richard L. Marcus, Federal Practice and Procedure § 2049.1 (2d. ed.1994). Given these considerations, the Court considers the changeover in counsel and the possible confusion resulting from that transition to be a mitigating factor in the nondisclosure of the 199-page Business Plan. While such a transition certainly does not excuse the ultimate negligent failure by Defendants and their counsel to produce the document, the changeover does help to explain how a mistake might have taken place.

In sum, the Court concludes that Plaintiff has not introduced sufficient evidence — let alone the kind of “clear and convincing evidence” required for default judgment, see Shepherd, 62 F.3d at 1472 — to establish that Defendants and their former counsel, Mr. Goldschmidt, intentionally withheld and suppressed the 199-page Business Plan, which contained a more detailed discussion of the Cambridge Sportswear apparel deal involving Redneck Beer logos and some sample photographs.

Rather, the Court concludes that the nondisclosure was likely the result of inexcusable negligence, given (1) the timeline of discovery and Defendants’ late introduction of the “implied license” affirmative defense; (2) the substantial disclosures present in the materials actually produced by Defendants that indicated the Cambridge deal involved the use of logos and that showed Mr. Fischer’s displeasure with the use of graphics and logos on that apparel; and (3) the changeover in counsel during the discovery process, which might well have complicated and confused the production process.

The Court further concludes that Defendants’ lack of production of the 199-page Business Plan and the sample photographs does not sustain Plaintiffs claim that she was unduly prejudiced at the motion’s stage in this litigation. Rather, the Court finds that, based on the materials produced by Defendants in this litigation, substantial support for Plaintiffs response to Defendants’ implied license defense — as identified in her current Motion for Sanctions — was available to Plaintiff at that time.

Moreover, given the fact that Plaintiff now has the complete 199-page Business Plan and sample photographs, Plaintiff will not be prejudiced when the trial in this ease occurs. Plaintiffs ultimate lack of prejudice, however, does not excuse Defendants’ negligent lack of production. As discussed in further detail in this Memorandum Opinion, infra

Section 111(A)(5), the Court refuses to condone such a failing in Defendants’ discovery obligations; accordingly, employing its discretion and acting pursuant to its inherent powers, the Court shall impose a fine of $5,000.00 upon Defendants and their former counsel Mr. Goldschmidt, to which both Defendants and Mr. Goldschmidt are jointly and severally hable. iii. Allegation that Defendants Are Still Withholding Information Finally, in an argument raised in her Reply but not her Motion for Sanctions, Plaintiff accuses Mr. Goldschmidt specifically of continuing to withhold documents. See Pl.’s Reply at 11-13.

Plaintiff contends that the documents missing from Defendants’ possession, and subject to this Court’s production-related orders of August 17, 2004 and December 1, 2004, are currently in Mr. Goldschmidt’s possession. Id. To substantiate this claim, Plaintiff cites to an October 20, 2004 hearing in Mr

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