author: WEINSTEIN, Chief Judge:

text:
    UNITED STATES of America, v. Anthony COLOMBO, et al., Defendants.
    No. 85 Crim. 244 (HB).
    United States District Court, E.D. New York.
    Aug. 28, 1985.

      Raymond J. Dearie, U.S. Atty., Eastern Dist. of New York, Edward A. McDonald, Atty.-in-Charge, U.S. Dept. of Justice,. Organized Crime Strike Force, Eastern Dist. of New York, Michael A. Guadagno, Asst. Atty.-in-Charge, Brooklyn, N.Y. (Donald S. Sullivan, Sp. Asst., U.S. Atty., Brooklyn, N.Y., of counsel), for U.S.
    siotnick & Cutler, P.C., New York City garry jvan siotnick, Bruce Cutler and Jm G. 0kun, New York City, for defend-an^-s
   MEMORANDUM and ORDER on BAIL

WEINSTEIN, Chief Judge:

Defendant Anthony Colombo was indicted along with twenty-four codefendants in an indictment charging sixteen crimes. The government seeks to reverse a magistrate’s decision to release him on bail pending trial. Important statutory and constitutional issues of apparent first instance are raised by this application.

The government originally sought detention on grounds of guarantee of appearance and protection against further crimes. Its reliance is now wholly on its perceived need to protect the public pending trial.

At the conclusion of a detention hearing on April 29, 1985 the Magistrate held that pretrial incarceration was required. References that follow are to the transcript of the April 29 hearing:

I’m ordering detention____ First of all, there is a presumption which arises out of [the] narcotics elements of the conspiracy that the defendant represents a threat to the safety of the community. True, the existence of the presumption does not divest the Government of its requirement to prove by clear and convincing evidence the facts that give rise to the risk to the public. I feel that the Government notwithstanding its inordinate reliance on Mr. Ferraro [chief witness against defendant] has achieved this test. Mr. Ferraro’s narrative is corroborated in many details.
I am satisfied that Mr. Ferraro’s testimony might very well be believed by a jury. And [if] it were to be believed, there is an overwhelming array of testimony that satisfies me that the defendant presents a threat to the safety of the public, or consistent pattern of orchestrating a series of violent criminal operations.
******
... I’m reasonably convinced, if the defendant were in custody, his visitors would be limited, and he would not have the freedom of operation to threaten the public in a federal detention facility that he would have if he were at large.

Tr. pp. 81-83.

The Magistrate then expressed concern that the trial of the defendant might not commence within a reasonable period which he deemed to be 90 days. He invited an application for reconsideration should the defendant still be in custody solely because of the detention order 90 days from the day of his arrest. Tr. p. 84.

On July 19, 1985, more than 90 days following the defendant’s arrest, the trial had not commenced. When the defendant returned to the Magistrate for reconsideration of the order of detention the Government challenged the Magistrate’s jurisdiction to reconsider the order. The Magistrate’s response to that challenge was that he would hear the application to reconsider if Judge Bramwell, to whom the case was assigned for all purposes, approved. Tr. of proceedings before Judge Bramwell on July 19, 1985 at p. 4. Judge Bramwell referred the parties back to the Magistrate

for him to hear whatever he wishes to hear concerning the bail application and to make whatever decision he feels is consistent in the best interests of all concerned. I refer you back to him. You could go back to him and if he wishes to hear further argument I’ll permit; and I authorize him to hear whatever Mr. Cutler [defense counsel] has to say as to Mr. Colombo and make ... findings____

Id. at 7-8.

The Magistrate held a hearing on August 7, 1985. At the outset he made it clear that if the application for reconsideration were predicated upon the Speedy Trial Act, 18 U.S.C. §§ 3161 et seq., it would be denied. (References that follow are to the transcript of proceedings before the Magistrate on August 7, 1985.) Tr. p. 3. The Magistrate ruled that his reconsideration would be confined to

whether or not new evidence that was unavailable for my consideration at the earlier detention hearing attenuates the findings that I made that there is clear and convincing evidence that this defendant poses a threat to the community. That’s all I need concern myself with.

Tr. p. 8.

His original order was modified by the Magistrate for two reasons: the public was not being protected by the defendant’s incarceration because he could just as effectively direct the commission of acts of violence from his prison cell (Tr. pp. 39, 50), and absence of any direct evidence that the defendant “physically hit anybody, struck anybody, raped anybody, [or had] been in anybody else’s home in connection with any robbery.” Tr. pp. 46, 47. The Magistrate summarized his views as follows:

The only difference between my findings in April and my findings this afternoon [is] that inasmuch as this defendant did not himself participate in any violent act and that inasmuch as the defendant's] [ability] to orchestrate violent actions is only moderately attenuated by his incarceration, that the purpose of the act, the protection of the public is not served by this defendant’s incarceration. This is my only basis for changing my ruling.

Tr. pp. 54-55.

The Magistrate concluded the hearing by fixing bail in the amount of $500,000 to be secured by a deed to a home valued at $200,000 and by sureties with a collective net worth of an additional $200,000. This bail is sufficient to ensure availability for trial but it is not designed to protect the public against the possibility that defendant will commit crimes pending trial.

His modified order was stayed by the Magistrate pending the Government’s appeal to a district judge pursuant to 18 U.S.C. § 3145(a)(1). Because Judge Bramwell was on a scheduled vacation, the parties appeared on August 8, 1985 before Judge Glasser, the Miscellaneous Judge hearing all emergency matters during the month of August. After hearing argument, Judge Glasser recused himself on August 16. The case was then referred to me as the only other judge available. The matter was set down for an evidentiary hearing and argued before me on August 17 and August 19.

The parties agree that the determination by this Court may be made upon the April 29, 1985 detention hearing minutes before the Magistrate; the July 19, 1985 minutes of the proceedings before Judge Bramwell; the August 7, 1985 minutes of a hearing before the Magistrate; and transcripts of recorded telephone conversations on July 27, 1983, August 6, 1983 and August 10, 1983.

The Government argues that the Magistrate lacked jurisdiction to modify his order. It also contends that if he had jurisdiction, he abused his discretion.

Magistrate’s Jurisdiction

The Magistrate had jurisdiction to reconsider his order. By the explicit terms of 28 U.S.C. § 636(a)(2), the Magistrate is empowered to “issue orders pursuant to Section 3142 of Title 18 concerning release or detention of persons pending trial____” Authority to issue such orders can also be delegated to a Magistrate by a Judge pursuant to 28 U.S.C. § 636(b)(1)(A). In this instance the Magistrate had original jurisdiction as well as jurisdiction pursuant to the delegation by Judge Bramwell on July 19, 1985.

A judicial officer, whether Magistrate or Judge, has inherent power to reconsider his own order. Cf. United States v. Leon, 766 F.2d 77, 80 (2d Cir.1985) (appeal to district court judge after magistrate denied motion to reconsider magistrate’s decision to detain defendant without bail). Moreover, the Magistrate expressly reserved the right to reconsider in his original order. He had the right, as a matter of inherent power, to modify his order for any of the reasons stated in Rule 60(b) of the Federal Rules of Civil Procedure which applies by analogy to federal criminal proceedings. Cf. Rule 57(b) of the Rules of Criminal Procedure (if “no procedure is specifically provided” in the Rules of Criminal Procedure, the court may proceed in any lawful manner).

Method and Standard in Reviewing Magistrate’s Order

Section 3145 of the Bail Reform Act is silent as to the method and standard of review applicable in an appeal from a magistrate’s bail decision. Section 636(b)(1)(A) of title 28 provides for review of a magistrate’s determination on a matter referred by a district judge “where it has been shown that the magistrate’s order is clearly erroneous or contrary to law.” This would imply that there need not be a new evidentiary hearing by the district judge.

The Second Circuit requires that the district court make an “independent determination” in reviewing a magistrate’s detention or release order. United States v. Leon, 766 F.2d 77, 80 (2d Cir.1985). The Leon case does not decide whether there must be a new evidentiary hearing by the judge. Apparently the court may, in its discretion, rely on the record before the magistrate or take additional evidence. Compare, United States v. Delker, 757 F.2d 1390, 1394-95 (3d Cir.1985) (no error for district court to conduct independent evidentiary hearing), with United States v. Hazime, 762 F.2d 34, 36 (6th Cir.1985) (“[although noting that a clearly erroneous standard for review of the magistrate’s decision was probably correct, the District Court held a de novo hearing on the detention order”).

It remains unclear whether the “independent determination” mandated by Leon and Delker requires a second full evidentiary hearing by the district court should the defendant or the government seek one. That issue is not decisive in the instant case because the parties stipulated that the record before the magistrate was the evidence to be considered by the district court.

Requiring two evidentiary hearings—the first before the magistrate and the second before the district court—would impose an undue burden on the court. Our individual calendar system is already threatened by the recent influx of RICO and other complex criminal indictments. The need to clear judges’ calendars of as much motion practice as possible so that there is time for conducting trials suggests that only the magistrate should conduct the bail application evidentiary hearing unless, in an unuáual case, the district court judge, in the exercise of his or her discretion, reopens the matter for new evidence. The fact that the parties on appeal in the instant case relied upon the same record as was before the Magistrate simplifies the procedural issue.

Correctness of the Magistrate’s Order

The indictment charges this defendant with conspiracy to violate 21 U.S.C. §§ 841(a)(1) and 841(b)(1)(A) by forcibly stealing quantities of controlled substances, knowingly and intentionally possessing with intent to distribute those substances, 21 U.S.C. § 846 (count 2); possessing with intent to distribute a controlled substance, 21 U.S.C. §§ 812; 841(a)(1); 18 U.S.C. § 2 (counts 3 and 4); engaging in a continuing criminal enterprise, 21 U.S.C. § 848 (count 5); transporting in interstate commerce goods known to have been stolen, § 18 U.S.C. § 2314 (count 6); extortion, 18 U.S.C. §§ 1951 and 2 (counts 7 and 8); committing crimes of violence to further unlawful activity, 18 U.S.C. §§ 1952 and 2 (count 9); and conspiring to obstruct, delay and affect commerce by robbery, 18 U.S.C. § 1951 (counts 10 and 11).

The Bail Reform Act of 1984 became effective on October 12, 1984. See 18 U.S.C. §§ 3141 et seq. It provides that if a judicial officer finds probable cause to believe that the accused committed an offense for which a maximum term of imprisonment of ten years or more is prescribed in the Controlled Substances Act, 21 U.S.C. § 801 et seq., a rebuttable presumption is created that no condition or combination of conditions other than detention will reasonably assure the safety of any other person and the community. 18 U.S.C. § 3142(e). The factors to be considered by the judicial officer in making a release or detention determination are (1) the nature and circumstances of the offense charged, including whether the offense is a crime of violence or involves a narcotic drug; (2) the weight of the evidence against the person; (3) the history and characteristics of the person; and (4) the nature and seriousness of the danger to any person or the community that would be posed by release. 18 U.S.C. § 3142(g).

The length of time the defendant will be incarcerated before trial is not a factor listed in the statute. It cannot, however, be ignored without running afoul of constitutional due process and bail provisions.

In issuing the original detention order the Magistrate found that the charges contained in the indictment were supported by probable cause. The narcotics-related charges gave rise to the presumption that no condition or combination of conditions would reasonably assure the safety of any other person and the community. Cf. United States v. Jessup, 757 F.2d 378, 380 (1st Cir.1985) (refusing to pass upon constitutionality of Act’s dangerousness ground for detention); United States v. Leon, 766 F.2d 77, 78 (2d Cir.1985) (detention approved without addressing constitutionality of rebuttable presumption because witnesses had been threatened by defendant).

Under the Act the proposition to be established is that there are no conditions of release that will “reasonably assure” that defendant will not engage in criminal activities pending trial. Senate Comm. on the Judiciary, S.Rep. No. 98-225, 98th Cong., 1st Sess. 19, U.S.Code Cong. & Admin. News 1984, pp. 3182, 3202. In establishing this presumption against bail Congress noted that “It is well known that drug trafficking is carried on to an unusual degree by persons engaged in continuing patterns of criminal activity. Persons charged with major drug felonies ... pose a significant risk of pretrial recidivism.” Id. at 20, U.S. Code Cong. & Admin.News 1984, at p. 3203.

The presumption shifts only the burden of coming forward, not the burden of persuasion. United States v. Jessup, 757 F.2d 378, 381-82 (1st Cir.1985); cf. Fed.R.Evid., R. 301 (shifting burden of coming forward in civil cases). The Congressional policy embodied in Rule 301 of the Federal Rules of Evidence applies a fortiori in a criminal case since the presumption operates to a defendant’s disadvantage.

This defendant made no proffer to rebut the presumption, apart from the fact that he was in poor health, had removed far from the scenes of his alleged criminal conduct to his home in Orange County with his family, and had never been found guilty of a crime. This evidence, while slight, met the defendant’s burden of coming forward. Under the circumstances, considering all the evidence, however, it was appropriate for the magistrate to have found that the Government sustained its burden of persuasion as to probable cause and danger to the community.

The crimes which are not narcotics-related and for which the Government has also established probable cause are “crimes of violence” as that term is defined in 18 U.S.C. § 16. The only evidence proffered by the defendant at the August 7th reconsideration hearing related to problems of proof as to one of the crimes with which the defendant is not charged, but with which he was alleged to have had some connection, and inconsistencies in testimony of a principal government witness, one Ferraro. That proffer—not in any way relating to the narcotics charges or to a number of crimes of violence with which the defendant is charged—does not undermine the Magistrate’s original findings favoring the government.

Nevertheless, upon an independent review of the record before the Magistrate, I concur with his finding that the Government failed to establish by clear and convincing evidence—the standard of proof which I assume he was required to apply— that detention is necessary. Were I to be-guided by the standard of 28 U.S.C. § 636(b)(1)(A), I would find on the record before the Magistrate that his order of release is neither clearly erroneous nor contrary to law.

My reasons for ordering release differ somewhat from the Magistrate’s. He held that the defendant could conduct criminal activity from jail just as easily as he could from outside and so should be released. I respectfully disagree with this conclusion.

The statute does not require that the defendant himself commit acts of physical violence as a condition precedent to a detention order. Nor does the statute suggest that if a defendant has the ability to endanger the community vicariously from a prison cell though orders to his underlings detention is inappropriate. Leaders of criminal gangs who direct the commission of violent crimes by others can be detained prior to trial under the circumstances prescribed in the Act. A warden is in a position to inhibit criminal activities in jail by criminal overlords.

While the statute permits incarceration under these circumstances, it is unnecessary when bail conditions may be devised that will assure the public’s safety. Such conditions appropriate to the instant defendant are set forth at the end of this memorandum.

Delay in Trial

A substantial additional basis for my decision to confirm the Magistrate’s decision to release the defendant is that the necessary delay in bringing the case to trial will require him to be incarcerated from 13 months to two years before a trial can be completed. Such a long period of preventive detention without a finding of guilt, based solely on possible danger to the public, is “anathema to American ideals of due process.” R.B. McNamara, Constitutional Limits on Criminal Procedure 135 (1982); see also, e.g., Verrilli, The Eighth Amendment and the Right to Bail: Historical Perspectives, 82 Colum.L.Rev. 328, 359 (1982) (“eighth amendment right to bail precludes preventive detention”).

In this case the government asks in effect that the defendant be sentenced to a long term of imprisonment on the theory that he is guilty as charged, without affording him the due process of law available at trial. Cf. Schall v. Martin, 467 U.S. 253, 104 S.Ct. 2403, 2413, 81 L.Ed.2d 207 (1984) (upholding constitutionality of New York statute allowing preventive detention of juveniles in part because “the detention is strictly limited in time,” with a maximum detention of 17 days). It should be recalled that the much criticized District of Columbia Court Reform and Criminal Procedure Act of 1970, which contained the first federal pretrial detention procedures in non-capital cases, permitted preventive detention for sixty days only. See, e.g., Borman, The Selling of Preventive Detention 1970, 65 Nw.U.L.Rev. 879, 880 (1971) (“offends values which are at the very heart of our criminal justice system”); Tribe, An Ounce of Detention: Preventive Justice in the World of John Mitchell, 56 Va.L.Rev. 371, 377 (1970) (“sharp break from our legal traditions”); Hickey, Preventive Detention and the Crime of Being Dangerous, 58 Geo.L.J. 287, 316 (1969) (“Draconian,” “highly undesirable”).

Assuming for .the purpose of this case that some form of preventive detention is constitutional, the fact that in a complex case trial may not begin for many months must be considered if the statute is to withstand constitutional attack. The narrow parameters of the Speedy Trial Act, while not decisive, suggest the strong congressional policy in favor of a speedy trial for the incarcerated. That Act should be read together with the statutory bail provisions and the Constitution in arriving at a sound statutory construction.

Pretrial detention of those believed to be dangerous was the product of relatively recent administration policy. Compare, Mitchell, Bail Reform and the Constitutionality of Pretrial Detention, 55 Va.L.Rev. 1223 (1969) with Ervin, Jr., The Legislative Role in Bail Reform, 35 Geo.Wash.L.Rev. 429, 444-46 (1967). Attorney General John N. Mitchell, a chief proponent of the plan, justified it on the assumption that the period of detention would be no longer than 60 days. Mitchell, supra, at 1223, 1233, 1239.

Two arguments can be made against considering the probable length of the period of detention in determining whether an accused can be detained prior to trial because of his dangerousness. First, it may be argued that defendants have been held for long periods before trial on the traditional grounds of danger of flight and indictment on a capital charge. The answer to this point is that old abuses do not justify entirely new abuses. Whatever basis there may be for this traditional practice cannot excuse pretrial detention on a basis so contrary to our criminal jurisprudence as using defects in character to predict violence. Our criminal law has generally set its face against the inference prior to conviction of bad man therefore bad act. Cf. Federal Rule of Evidence 404. Moreover, Congress in meeting its constitutional responsibilities has attempted to reduce pretrial incarceration even on traditional grounds. This policy is reflected in the Speedy Trial Act and the Bail Reform Act. See, e.g., Ervin, Jr., The Legislative Role in Bail Reform, 35 Geo.Wash.L.Rev. 429 (1967); 18 U.S.C. §§ 3041 et seq., 18 U.S.C. §§ 3161 et seq.

The second argument against implying a time limit in any provision permitting pretrial detention based on dangerousness is that the Speedy Trial Act itself provides adequate guarantees against delay. See 18 U.S.C. §§ 3161 et seq.; Fed.R.Crim.Proc., Rule 50(b). In light of modern criminal practice in a large urban setting, this argument is not persuasive. There are so many exclusions that delays for months or even years are possible. See 18 U.S. § 3161(h) (listing nine different grounds); see also standard Eastern District form order of Excludable Delay (listing thirty reasons plus sub-reasons).

The problem is illustrated by the instant case. The indictment was filed April 22, 1985. The government has not yet responded to motions made by defendants. After the motions have been argued on the scheduled return date of September 23, the already overburdened trial judge who has many criminal cases and hundreds of civil eases on his docket will need time to decide them. Further motions are likely. Setting a trial date will be extremely difficult because the trial schedules of twenty-five busy attorneys and the judge need to be considered, particularly since it is predicted the trial will take some four months. The attorneys involved are in demand in other federal and state courts. A hard-nosed unrelenting attitude by the trial judge that attorneys must be retained who will be available when he is ready does serious damage to the right to counsel of defendant’s choice. Severances are possible but they exacerbate the situation because instead of tying up the trial judge for four months, he becomes unavailable for other trials for a much longer period.

In this kind of complex case, it is thus unrealistic to rely—as the Court of Appeals, the Department of Justice and Congress appear to have done—wholly on the Speedy Trial Act to protect against long pretrial incarceration. In United States v. Leon, 766 F.2d 77 (2d Cir.1985), an appeal from a detention order, the court when informed that no trial date had yet been set relied upon the priority required for detention cases and the right to a trial within seventy days “subject to certain periods of ex-cludable delay.” Id. at 78 n. 1. The Senate Report on the Comprehensive Crime Control Act of 1983 noted:

One element of the District of Columbia Code Provision not carried forward ... is the 60 day limitation which ... specifically requires that priority be given to a case in which the defendant is detained, and also requires that his trial must, in any event, occur within 90 days, subject to certain periods of excludable delay____ These current limitations [in the Speedy Trial Act] are sufficient to assure that a person is not detained pending trial for an extended period of time.

Report of the Committee on the Judiciary, United States Senate on S.1762, Comprehensive Crime Control Act of 1983, Sen. Rep. No. 98-225, 98th Cong., 1st Sess., at 22 n. 63. See also United States Dept. of Justice, Handbook on the Comprehensive Crime Control Act of 1984 at 17 (Dec. 1984) (“because the federal pretrial detention provisions are circumscribed by the Speedy Trial Act, the defendant will be afforded, within a limited period of time, a trial at which all necessary procedural protections will be provided”).

Congress will undoubtedly need to make some technical corrections in the Comprehensive Crime Control Act of 1984. Perhaps it may also wish at the same time to reconsider the relation between pretrial detention and the Speedy Trial Act in complex cases. One suggestion is that a catchall phrase such as “interests of justice” be added to the factors the judicial officer considers when setting bail.

No one would argue that those accused of criminal conduct should be treated more leniently if they engage in complex crimes and extensive patterns of criminality involving many associates. Nevertheless, the court must, it is submitted, consider the time a defendant will probably be incarcerated in determining whether he should be detained before trial. Dangerousness, procedural devices such as severance, priorities in trial of detention cases, conditions of bail and other relevant factors in addition to probable length of pretrial incarceration have to be weighed. The largest discretion must be afforded the magistrate and district judge to consider all relevant factors, including the period of possible incarceration. As Attorney General Mitchell pointed out in his justification of pretrial detention, due process “requirements are those of reasonableness—the restraints imposed on the liberty of an accused must be reasonable when balanced against society’s acknowledged interest in preventing commission of further crimes while the defendant is awaiting trial.” Mitchell, Bail Reform and the Constitutionality of Pretrial Detention, 55 Va.L.Rev. 1223, 1234-35 (1969).

The government may move to sever or to expedite the trial if it wishes to incarcerate before trial. It has done neither in this case. The prospective delay in trial is largely attributable to its choice of such a complex indictment with joinder of so many parties and crimes. The defendant should not be forced to pay the price of this prosecutorial decision by forfeiture of his freedom.

The Magistrate’s order is affirmed. Mr. Colombo is ordered released.

Additional Bail Conditions to Protect Public

In the exercise of my general powers to fix and modify bail, I order additional conditions of release to protect the community. See 18 U.S.C. § 3142(a)(2)(c). Mr. Anthony Colombo shall not associate or communicate with any other named defendant prior to trial except as his lawyer certifies is necessary to prepare a defense. He may not appear at the Eldoro Catering Company, his formgr place of employment and the alleged center of criminal activities. He may not commit any crime. He may not directly or indirectly threaten a witness or cause harm to anyone named in the indictment or to any other person. He must report by telephone on Mondays and Fridays to Pretrial Services. He must surrender his passport. He may not leave Orange County except to attend court or consult his attorney. He must post the bond required by the Magistrate.

Absent a stay, the defendant who is ordered released from custody should be free pending appeal. See 18 U.S.C. §§ 3141(c); 3145(c); 3731. In this ease the serious questions of law presented, plus the fact that the defendant is now in custody, warrant continuance of the status quo pending a decision on a further stay by the Court of Appeals or other action by the judge in charge of the case. Accordingly, the order of release is stayed until 12:00 noon on August 29 to permit the government to seek a further stay from the Court of Appeals.

SO ORDERED.


source: Caselaw Access Project

author: SHADUR, District Judge.

license: Public Domain

text:
    The NORTHERN TRUST COMPANY, Plaintiff, v. L.A. MULLER, Defendant.
    No. 84 C 1073.
    United States District Court, N.D. Illinois, E.D.
    Aug. 28, 1985.
    Howard J. Roin, Mayer, Brown & Platt, Chicago, Ill., for plaintiff.
    Thomas W. Waters, Morrissey & Kay, Oak Brook, Ill., for defendant.
   MEMORANDUM OPINION AND ORDER

SHADUR, District Judge.

This Court’s April 25, 1985 memorandum opinion and order (the “Opinion”) suggested the possible liability of the lawyers for L.A. Muller (“Muller”), under either or both of Fed.R.Civ.P. (“Rule”) 11 and 28 U.S.C. § 1927 (“Section 1927”), for a portion of the attorneys’ fees and expenses incurred by Northern Trust Company (“Northern”) in this action. In response Northern petitioned for its fees and expenses (in part against Muller and in part against the lawyers), and one of Muller’s lawyers—Thomas Wilson Waters (“Waters”)—replied.

This Court has previously deferred its ruling on the motion because it was aware our Court of Appeals had in the works one or more cases posing the question of the proper interpretation of Rule 11 as amended in 1983. Now the Court of Appeals has spoken in Rodgers v. Lincoln Towing, Inc., 771 F.2d 194, 204-05 (7th Cir.1985) and just last week in Frazier v. Cast, 771 F.2d 259, 263 (7th Cir.1985), both times confirming the same reading of Rule 11 earlier suggested by this Court in the Opinion and elsewhere. Accordingly the issue is ripe for decision.

Northern’s petition has been modest. It distinguishes carefully among its counsel’s various services:

1. Muller but not his lawyers is sought to be made responsible for $2,703 attributable to preparation of the Complaint.
2. Miscellaneous expenses of $1,305.75 (including a skip tracer hired because Muller was evading service) are also sought to be attributed to Muller and not to his lawyers.
3. Northern’s summary judgment motion, forced to be pursued because of the baseless (and bootless) arguments advanced by Muller and his lawyers and rejected in the Opinion, cost Northern $6,633.05. That expense is asked to be charged against Muller and his lawyers jointly and severally.

Waters responds in several respects. None is persuasive.

First Waters observes accurately that Rule 11 by its terms applies only to him as the signer of the offending documents, not to the firm of Morrissey and Kay. This Court need not decide whether, under the realities of law firm practice, any room exists for reading Rule 11 more expansively than its individualized language, so as to extend liability to the firm as well as to the individual signer. If no such room exists, any recovery from Morrissey and Kay must look to the provisions of Section 1927 (which has been applied by the courts to impose liability on all counsel for a litigant).

On that score our Court of Appeals has also recently departed from its prior strict reading of Section 1927, applying to counsel’s conduct an objective test rather than one of purely subjective bad faith. As In re TCI, Limited, 769 F.2d 441, 445 (7th Cir.1985) put it (citations omitted):

“Bad faith” sounds like a subjective inquiry, and this is probably why Judge Hertz looked for evidence of “malice” on White’s part. Despite its sound, however, “bad faith” has an objective meaning as well as a subjective one---- A lawyer has a duty, which the recent amendment to Rule 11 emphasizes, to limit litigation to contentions “well grounded in fact and ... warranted by existing law or a good faith argument for the extension, modification, or reversal of existing law.” Fed.R.Civ.P. 11. If a lawyer pursues a path that a reasonably careful attorney would have known, after appropriate inquiry, to be unsound, the conduct is objectively unreasonable and vexatious. To put this a little differently, a lawyer engages in bad faith by acting recklessly or with indifference to the law, as well as by acting in the teeth of what he knows to be the law. Our court has long treated reckless and intentional conduct as similar,____ A lawyer’s reckless indifference to the law may impose substantial costs on the adverse party. Section 1927 permits a court to insist that the attorney bear the costs of his own lack of care.

Precisely the same principles apply to “acting recklessly or with indifference to” the facts, which are equally implicated in the handling of litigation and which are always a particular focus of a Rule 56 motion. Frazier, announcing a like principle as to Rule 11, was dealing entirely with the factual basis for counsel’s argument.

All the circumstances here strongly call Section 1927, as so read, into play. Indeed in many ways Section 1927 fits counsel’s conduct better than Rule 11. Northern's Petition at 4 is accurate in stating:

Prior to Northern’s attorneys’ initiation of any work on summary judgment, this Court suggested to Muller’s counsel during the several status hearings that Muller’s arguments were groundless. Muller’s attorneys nevertheless persisted in defending the action on patently frivolous grounds. As a result, Northern was forced to go to the expense of obtaining summary judgment.

That reflects lawyers’ conduct that “so multiplies the proceedings ... unreasonably and vexatiously” as to be subjected to personal responsibility under Section 1927.

Though Waters asserts reasons for putting Northern to its proof under Rule 56, not one of those items need have taken more than a few minutes' conversation between counsel—each acting in good faith to resolve the issue of Muller’s unquestioned liability. Instead Muller’s counsel forced Northern to the time-consuming and expensive summary judgment route. Waters’ current arguments are cut from the same cloth as those found without merit—or worse—in the Opinion.

Accordingly this Court orders payment of the following amounts in addition to the full face amount of the Collateral Note:

1. $4,008.75 to be paid by Muller individually; and
2. $6,633.05 to be paid by Muller, Waters and Morrissey and Kay or any of them (such liability to be joint and several).

Those amounts are ordered to be paid forthwith. Northern may determine whether, for that purpose, it requires any separate judgment or other order in addition to this one.

      . Without question Muller himself is liable for all Northern's reasonable fees and expenses. What is at issue currently, then, is the possible joint and several liability of Muller’s lawyers.

      . At the time of the Opinion this Court had addressed Rule ll’s new "objective test of reasonableness” on several occasions (see, e.g., In re Ronco, 105 F.R.D. 493, 494-97 (N.D.Ill.1985), referred to in Opinion at 10). As Ronco, 105 F.R.D. at 497 had pointed out, the waters were muddied somewhat at that time by the mistaken quotation of revised (rather than original) Rule 11 in Suslick v. Rothschild Securities Corp., 741 F.2d 1000, 1003 n. 3 (7th Cir.1984), even though that case was dealing (id. at 1007) with conduct antedating the Rule 11 amendment, so that the Court of Appeals properly applied the old "bad faith” standard. Now Rodgers, at 205 and Frazier, at 265 n. 4 have specifically said Suslick does not apply to revised Rule 11. Frazier puts matters simply (citing this Court’s opinion in Pudlo v. Director, IRS, 587 F.Supp. 1010, 1011 (N.D.Ill. 1984)):
      The [Rule 11] standard is an objective one.

      . See Frazier, at 266 n. 6, where the Court of Appeals was not called on to decide that issue because the Cook County State’s Attorney did not seek to escape Rule 11 liability on the ground “the baseless argument was made by ... one of his assistants.”


author: KANE, District Judge.

text:
    Timothy DURAN and Minnie Duran, Plaintiffs, v. CLOVER CLUB FOODS COMPANY and Borden, Inc., Defendants.
    Civ. A. No. 85-K-727.
    United States District Court, D. Colorado.
    Aug. 29, 1985.

      John D. Coombe and Hugh Q. Gottschalk, Denver, Colo., for plaintiffs.
    Andrea I. Williams and John M. Roche, Denver, Colo., for defendants.
   MEMORANDUM OPINION AND ORDER

KANE, District Judge.

Plaintiffs Timothy and Minnie Duran own the La Famosa Restaurant in Greeley, Colorado. They also own a small factory adjacent to the restaurant which manufactures corn tortillas. Since May, 1950, the plaintiffs have been using the mark “La Famosa” to identify their corn tortilla products and restaurant services. The corn tortilla products are distributed throughout Colorado and parts of Wyoming and Nebraska. Plaintiffs registered the mark “La Famosa” as a trademark with the State of Colorado on January 6, 1984.

In 1982, defendant Borden, Inc. acquired the assets of defendant Clover Club Foods Company which is now a wholly-owned subsidiary of Borden. Clover Club’s assets include the trademark “La Famous”. Recently, defendants have begun to market a tortilla chip product under the name “La Famous” in plaintiffs’ market territory. After allegedly demanding that defendants cease all use of the name “La Famous”, plaintiffs brought this lawsuit. Plaintiffs allege that defendants’ acts constitute the use of a false designation of origin, or a false description of representation, in violation of § 43(a) of the Trademark Act of 1946, commonly known as the Lanham Act, 15 U.S.C. § 1125(a). Plaintiffs also assert various state law claims including: 1) trademark infringement, 2) unfair competition, 3) trademark disparagement, 4) violation of the Colorado Consumer Protection Act, Colo.Rev.Stat. §§ 6-1-101 et seq., 5) unlawful appropriation and exploitation of competitor’s effort, and 6) interference with prospective economic advantage and business opportunity.

This case is presently before me on defendants’ motions to dismiss three of plaintiffs’ state law claims.

I.

Defendants argue, first, that plaintiffs’ claims under the Colorado Consumer Protection Act should be dismissed pursuant to Fed.R.Civ.P. 12(b)(6) for failure to state claims upon which relief can be granted. Alternatively, defendants request dismissal of these claims under Fed.R.Civ.P. 9(b) for failure to allege circumstances constituting fraud with sufficient particularity.

For defendants to prevail on a Rule 12(b)(6) motion, it must appear “beyond doubt that the plaintiffjs] can prove no set of facts in support of [their] claim which would entitle [them] to relief.” Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 102, 2 L.Ed.2d 80 (1957); see also Mitchell v. King, 537 F.2d 385, 386 (10th Cir.1976). All facts, as distinguished from conclusory allegations, must be construed in favor of the plaintiff. See Swanson v. Bixler, 750 F.2d 810, 812 (10th Cir.1984); Gardner v. Toilet Goods Ass’n, 387 U.S. 167, 172, 87 S.Ct. 1526, 1529, 18 L.Ed.2d 704 (1967). So long as the plaintiff may offer evidence to support a legally recognized claim for relief, the motion to dismiss should be denied. Conley, 355 U.S. 41, 45-46, 78 S.Ct. 99, 101-02, 2 L.Ed.2d 80.

Plaintiffs allege in their complaint that defendants’ conduct constitutes the following deceptive trade practices in violation of the Colorado Consumer Protection Act:

1. Knowingly passing off goods or services as those of another, Colo.Rev.Stat. § 6-l-105(l)(a);
2. Knowingly making a false representation as to the source, sponsorship, approval or certification of goods or services, Colo.Rev.Stat. § 6—1—105(l)(b);
3. Using deceptive representations or designations of geographic origin in connection with goods or services, Colo.Rev. Stat. § 6-l-105(l)(d); and
4. Knowingly making false representations as to the sponsorship, approval, status, affiliation or connection of a person with goods or services, Colo.Rev.Stat. § 6-l-105(l)(e).

Plaintiffs have alleged facts in the complaint which, when construed in their favor, are sufficient to support claims with respect to those deceptive trade practices stated in Colo.Rev.Stat. § 6-l-105(l)(a), (b), and (e). Thus, dismissal of these claims would be improper under Rule 12(b)(6). However, plaintiffs themselves admit in their brief that the allegation of deceptive trade practice under Colo.Rev.Stat. § 6-1-105(l)(d) cannot be supported by the facts. Accordingly, this particular claim is dismissed under Rule 12(b)(6) for failure to state a claim upon which relief can be granted.

Alternatively, defendants move for dismissal of these claims under Rule 9(b). Rule 9(b) requires that “[i]n all averments of fraud ..., the circumstances constituting fraud ... shall be stated with partieularity.” Defendants assert that the Colorado Consumer Protection Act contains the same elements as fraud and thus, plaintiffs’ claims under the Act must be pleaded with particularity. Plaintiffs, on the other hand, contend that their claims under the Act are not for fraud and that the particularity requirement is inapplicable.

Neither the Colorado courts nor the federal courts in this circuit have addressed the issue of whether Rule 9(b) should apply to allegations of deceptive trade practices under the Colorado Consumer Protection Act. An examination of the Act reveals that claims under the Act are not precisely actions for fraud although the Act does require proof of many of the same elements as fraud. I am persuaded that allegations of deceptive trade practices under the Act are subject to Rule 9(b)’s requirement of particularity.

First, in the area of securities acts violations, particularly Rule 10b-5 actions, it has been held that allegations of such violations are subject to Rule 9(b) even though such claims are not precisely actions for fraud. See, e.g., Temple v. Haft, 73 F.R.D. 49, 52 (D.Del.1976). Second, the Colorado courts have stated that the Colorado Consumer Protection Act was intended to protect against consumer fraud. See Western Food Plan, Inc. v. District Court, 198 Colo. 251, 598 P.2d 1038 (1979); People ex rel. MacFarlane v. Alpert Corp., 660 P.2d 1295, 1297 (Colo.App.1982). For these reasons, I find that Rule 9(b)’s requirement of particularity applies to plaintiffs’ allegations of deceptive trade practices under the Colorado Consumer Protection Act.

While I agree with defendants’ claim that plaintiffs’ allegations under the Act are subject to Rule 9(b), I do not agree that plaintiffs have failed to plead these claims with sufficient particularity. Rule 9(b) “only requires identification of the circumstances constituting fraud....” Noland v. Gurley, 566 F.Supp. 210, 216 (D.Colo.1983); Trussell v. United Underwriters, Ltd., 228 F.Supp. 757, 774 (D.Colo.1964). Plaintiffs have alleged in their complaint sufficient facts to apprise defendants of the nature of the alleged deceptive trade practices. Thus, defendants’ motion to dismiss these claims under Rule 9(b) is denied.

II.

Second, defendants move, pursuant to Fed.R.Civ.P. 12(f), to strike plaintiffs’ claim for unlawful appropriation and exploitation of competitor’s effort. Defendants contend that this claim is redundant in that it duplicates plaintiff’s claims for trademark infringement and unfair competition. Plaintiffs respond that they may plead alternative remedies under Fed.R. Civ.P. 8(e)(2) and that courts and commentators have distinguished between traditional common law unfair competition and the misappropriation of a competitor’s effort.

I need not address these contentions, however, because defendants have failed to make any showing of prejudice if these allegations are not stricken. As I have stated before, “[i]t is fundamental that a motion to strike will be denied if no prejudice can result from the challenged allegations, ‘even though the matter literally is within the categories set forth in Rule 12(f).’ ” Rawson v. Sears Roebuck & Co., 585 F.Supp. 1393, 1397 (D.Colo.1984), quoting 5 Wright & Miller, Federal Practice and Procedure § 1382 at 810-12 (1969). Accordingly, defendants’ motion to strike plaintiffs’ claim for unlawful appropriation and exploitation of competitor’s effort is denied.

III.

Finally, defendants request dismissal of plaintiffs’ claim for tortious interference with prospective economic advantage and business opportunity pursuant to Fed. R. Civ.P. 12(b)(6). Defendants maintain that plaintiffs’ complaint fails to satisfy the specific allegations required of a tortious interference claim.

In Dolton v. Capitol Federal Sav. & Loan Ass’n, 642 P.2d 21, 23 (Colo.App. 1981), the Colorado Court of Appeals adopted Restatement (Second) of Torts § 766B in holding that the tort of interference with a prospective business advantage or contractual relation exists in Colorado. Section 766B provides that:

One who intentionally and improperly interferes with another’s prospective contractual relation (except a contract to marry) is subject to liability to the other for the pecuniary harm resulting from loss of the benefits of the relation, whether the interference consists of
(a) inducing or otherwise causing a third person not to enter into or continue the prospective relation or
(b) preventing the other from acquiring or continuing the prospective relation.

Comment b to § 766B clearly acknowledges that, historically, liability for intentional interference with prospective contractual relations has been imposed in situations such as in the instant case: “In another line of cases liability was imposed upon one who diverted another’s business by fraudulently palming off his own goods as those of another, or by infringing another’s trade mark or trade name.” Comment c further provides that:

The relations protected against intentional interference by the rule stated in this Section include any prospective contractual relations ... if the potential contract. would be of pecuniary value to the plaintiff. Included are interferences with the prospect of ... selling ... chattels ..., and any other relations leading to potentially profitable contracts.

Defendants erroneously contend in their brief that plaintiffs’ complaint fails to state this claim because plaintiffs have not alleged “some ongoing, specific relationship, verging on contract formation, which was prevented.” Such an allegation is not required by § 766B. Plaintiffs do allege in their complaint that defendants acted intentionally and unlawfully in marketing their tortilla products under a confusingly similar name. Plaintiffs further allege that this “confusion has caused and is presently causing loss of sales, damage and injury to plaintiffs.” These allegations, if supported by evidence at trial, would support plaintiffs’ legally recognized claim for intentional interference with prospective contractual relations. Under these circumstances, defendants’ motion to dismiss this claim must be denied. See Conley, 355 U.S. 41, 45-46, 78 S.Ct. 99, 101-02, 2 L.Ed.2d 80.

IT IS THEREFORE ORDERED THAT;

1. Defendants’ motion to dismiss plaintiffs’ claims under the Colorado Consumer act is GRANTED only as to plaintiffs’ allegation of deceptive trade practice under Colo.Rev.Stat. § 6-l-105(l)(d). Defendants’ motion to dismiss plaintiffs’ claims under Colo.Rev.Stat. § 6-l-105(l)(a), (b), and (e) is DENIED;

2. Defendants’ motion to strike plaintiffs’ claim for unlawful appropriation and exploitation of competitor’s effort is DENIED;

3. Defendants’ motion to dismiss plaintiffs’ claim for intentional interference with prospective contractual relations is DENIED; and

4. Defendants shall answer plaintiffs’ complaint with respect to those claims not dismissed within ten days of the date of this order.

      . Section 1125(a) forbids both false designations of origin and false descriptions:
      Any person who shall affix, or annex, or use in connection with any goods or services, or any containers for goods, a false designation of origin, or any false description or representation, including words or other symbols tending falsely to describe or represent the same, and shall cause such goods or services to enter into commerce, and any person who shall with knowledge of the -falsity of such designation or origin or description or representation cause or procure the same to be transported or used in commerce or deliver the same to any carrier to be transported or used, shall be liable to a civil action by any person doing business in the locality falsely indicated as that of origin or in the region in which said locality is situated, or by any person who believes that he is or is likely to be damaged by the use of any such false description or representation.