Efron v. UBS Financial Services Incorporated of Puerto Rico ( 2024 )

United States Court of Appeals
For the First Circuit
No. 21-1858
DAVID EFRON,
Plaintiff, Appellant,
v.
UBS FINANCIAL SERVICES INCORPORATED OF PUERTO RICO; UBS
FINANCIAL SERVICES INC.; LUZ NEREIDA COLÓN; ENEIDA RODRÍGUEZ;
HECTOR SUEIRO-ALVAREZ,
Defendants, Appellees.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
[Hon. William G. Young, U.S. District Judge]
Before
Barron, Chief Judge,
Lipez and Montecalvo, Circuit Judges.
Alfredo Fernández-Martínez, with whom Delgado & Fernández,
LLC was on brief, for appellant David Efron.
Amy Mason Saharia, with whom Christopher N. Manning, Michael
R. Fishman, and Williams & Connolly LLP were on brief, for
appellees UBS Financial Services Incorporated of Puerto Rico, UBS
Financial Services Inc., Luz Nereida Colón, Eneida Rodríguez, and
Hector Sueiro-Alvarez.
March 20, 2024
 Of the District of Massachusetts, sitting by designation.
MONTECALVO, Circuit Judge. Plaintiff-appellant David
Efron ("Efron") sought to bring a Racketeer Influenced and Corrupt
Organizations Act ("RICO") claim and various Puerto Rico law claims
against defendant-appellees UBS Financial Services Incorporated of
Puerto Rico, UBS Financial Services Inc., Luz Nereida Colón
("Colón"), Eneida Rodríguez, and Hector Sueiro-Alvarez,1 alleging
that they illegally disclosed his private bank account information
to his ex-wife, Madeleine Candelario Del Moral ("Candelario").
Efron contends that UBS's disclosure triggered extensive
litigation over Candelario's entitlement to Efron's assets housed
at UBS and eventually led to UBS seeking millions in
indemnification from Efron. UBS moved to dismiss the complaint,
and the district court both denied Efron leave to file a second-
amended complaint on futility grounds and dismissed the case.
Efron now appeals the district court's dismissal of the case, its
ruling limiting his pre-dismissal discovery to two depositions,
and its denial of his motion for leave to amend. Meanwhile, UBS
has moved for sanctions against Efron for filing what it contends
is a frivolous appeal.
For the reasons explained below, the district court did
not abuse its discretion in limiting Efron to deposing only two
1 For consistency and to avoid confusion, we refer to
defendant-appellees collectively as "UBS" and specifically
identify individual defendant-appellees where necessary.
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UBS employees before requiring him to file a proposed second-
amended complaint. We also agree with the district court that
permitting Efron to amend his complaint would be futile. We
therefore affirm the district court's dismissal of Efron's RICO
claim. Lastly, while Efron's grounds for appeal were weak, we
decline to take the drastic measure of imposing sanctions.
I. Background
On appeal from the district court's dismissal of Efron's
claims, "[w]e take all facts pled, as well as all reasonable
inferences to be drawn therefrom, in the light most favorable to"
Efron. Butler v. Deutsche Bank Tr. Co. Ams., 748 F.3d 28, 32 (1st
Cir. 2014).
In 1999, Efron and Candelario filed for divorce in the
Puerto Rico Court of First Instance ("CFI"). The divorce was
finalized on June 4, 2001,2 but Candelario's ability to obtain
Efron's assets following the divorce has been the subject of
complex and still-ongoing litigation. As part of the CFI's divorce
judgment, Efron was required to pay Candelario $50,000 per month
beginning on June 4, 2001.
2 At points in his briefing and proposed second-amended
complaint, Efron states that his divorce was finalized in May 2001.
The exact date of the divorce is not relevant here. But we note
this inconsistency and rely on June 4, 2001 as the date the divorce
was finalized because Candelario's subpoena to UBS requested
Efron's financial documents pre-dating June 4, 2001.
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In 2005, Candelario sued Efron in the CFI alleging that
he had not made any monthly payments in accordance with the divorce
judgment. During discovery in Candelario's lawsuit, the CFI barred
Candelario from requesting documents related to Efron's assets
obtained after the divorce was finalized. Specifically, the CFI
ruled that Candelario could not seek third-party discovery on
Efron's financial assets "subsequent to the date of the divorce."
Of particular relevance here, in 2002, Efron opened
three investment accounts with UBS after the divorce was finalized.
Accordingly, the CFI's limiting order should have precluded
Candelario from learning of these three post-divorce UBS accounts.
In August 2005, Candelario's attorneys subpoenaed UBS for
documents related to Efron's UBS accounts. And pursuant to the
CFI's limiting order, the subpoena requested only information up
to June 4, 2001. Despite this limitation, however, UBS produced
documents post-dating June 4, 2001, including information on
Efron's three UBS accounts opened in 2002.
Efron alleges that UBS disclosed a total of 324 documents
that exceeded the scope of the subpoena and violated the CFI's
limiting order. Furthermore, Efron maintains that he informed UBS
of the CFI's limiting order before Candelario issued her subpoena;
UBS never sought his consent before responding to the subpoena;
UBS intentionally excluded his UBS financial advisor, Miguel Coll
del Río ("Coll"), from conversations regarding disclosure of
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Efron's account information to Candelario; and UBS employees later
attempted to cover up the overproduction when Efron confronted
them. Efron also contends that as part of UBS's cover-up scheme,
UBS lied to Coll about the overproduction because it knew Coll
would reveal the misconduct to Efron if he knew the truth.
Upon learning that Efron had opened accounts at UBS post-
divorce, Candelario obtained an attachment order from the CFI for
Efron's UBS assets. In August 2007, the CFI issued an Order on
the Sale of Assets ("the Order"), requiring UBS to freeze Efron's
three accounts and instructing it "to immediately sell and
liquidate the bonds, shares and securities in its custody" from
those accounts. After liquidation, UBS was ordered to write a
check for $4,160,522.61 to Candelario. The Order further "exempted
[UBS] from any loss [Efron] may suffer as a consequence of the
sale" of his UBS assets and forbade Efron from "alienating,
selling, transferring or pledging the assets that are in the
custody of UBS."
Candelario did not receive the money from UBS as
contemplated by the Order. In 2008, Candelario sued UBS in federal
district court in Puerto Rico, alleging that, rather than abiding
by the Order, UBS "negligently released the restraints imposed on
Efron's accounts by [the Order], allowing Efron to transfer
millions of dollars in assets elsewhere and evade her collection
efforts." As this court noted in Efron's prior appeal related to
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Candelario's 2008 suit against UBS, at one point, Efron's UBS
accounts "had more than $11,000,000." In re Efron, 746 F.3d 30,
33 (1st Cir. 2014). But Candelario maintained that UBS wrongfully
"treated [the Order] as void," which permitted Efron to disburse
his UBS assets, leaving "insufficient funds remaining to satisfy
Candelario's demands." Id. In 2016, the district court entered
judgment in favor of Candelario, awarding her $4,725,629 against
UBS. UBS later settled with Candelario for $4,450,000, an
agreement that Efron insists was "carefully planned" as "part of
a scheme to . . . make Efron liable" for UBS's wrongdoing.
In January 2017, UBS sought indemnification from Efron
for its settlement with Candelario by initiating arbitration
against him with the Financial Industry Regulatory Authority
("FINRA"). The FINRA arbitrators initially issued a $9,721,050.65
award to UBS after Efron failed to appear for arbitration. But in
2020, a Florida appeals court reversed the decision because the
FINRA arbitrators rejected Efron's request for a postponement to
obtain new counsel without justification and thus improperly
denied him an adequate opportunity for representation at the
arbitration hearing. In a Rule 28(j) letter filed on October 24,
2023, UBS noted that, over Efron's objections, a federal district
court in Florida recently confirmed the FINRA arbitrators' revised
award of $6,480,854.80 to UBS.
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Efron filed this lawsuit against UBS on June 13, 2019,
but he amended his complaint before service in December 2019.
Efron raised a RICO claim and various Puerto Rico law claims
stemming from UBS's overproduction of documents to Candelario.
UBS moved to dismiss Efron's first-amended complaint on February
28, 2020. After UBS's motion to dismiss was filed, the parties
disputed the extent to which Efron should have been permitted to
engage in pre-dismissal discovery in responding to UBS's motion
and preparing to file a second-amended complaint. Efron sought to
compel the depositions of eleven UBS agents, while UBS opposed
Efron's motion to compel and moved to stay discovery pending
resolution of the motion to dismiss. The district court indicated
its intent to rule on the discovery issue at the motion to dismiss
hearing if the parties could not reach an agreement.
At the motion to dismiss hearing, the court found Efron's
RICO allegations to be "simply inadequate," such that the court
felt it was "bending over backwards to give [Efron] every chance
to file a viable cause of action." Because the court considered
even four or five depositions to be "hardly limited" discovery, it
permitted Efron to take only two depositions of the UBS employees
Efron considered "most important."
In support of his proposed second-amended complaint,
Efron deposed Coll (his UBS financial advisor) and Eneida Rodríguez
(a UBS employee involved in the Candelario document disclosure).
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After deposing Coll and Rodríguez, Efron moved for leave to file
a second-amended complaint on July 19, 2021. Efron prefaced his
proposed second-amended complaint by stating that "more discovery
will be needed to prove all of the allegations." Nonetheless, he
maintained that he had "enough information now to comply with the
RICO specificity requirements."
The district court denied Efron's motion for leave to
amend in a text-only order stating that amendment would be "futile"
as "the proposed second[-]amended complaint fails to state a cause
of action for violations of the RICO statute." And by declining
to exercise supplemental jurisdiction over Efron's Puerto Rico law
claims, the court dismissed Efron's case in its entirety.3 On
September 29, 2021, the district court entered an order dismissing
Efron's case. Efron filed a timely notice of appeal on October 8,
2021.
Concurrently with filing its response brief on appeal,
UBS moved for sanctions against Efron, alleging that the present
appeal is frivolous and UBS is entitled to fees and costs for
defending against it. UBS's sanctions motion has since been fully
briefed and reserved for decision by this panel.
3 On appeal, Efron challenges only the dismissal of his
RICO claim.
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II. Discussion
A. The District Court's Limitation of Efron's Pre-Dismissal
Discovery
We begin by assessing the district court's decision to
limit Efron's pre-dismissal discovery to two depositions. A
district court's order limiting discovery is reviewed for abuse of
discretion. U.S. ex rel. Duxbury v. Ortho Biotech Prods., L.P.,
719 F.3d 31, 37 (1st Cir. 2013). This court "will intervene in
such matters only upon a clear showing of manifest injustice, that
is, where the lower court's discovery order was plainly wrong and
resulted in substantial prejudice to the aggrieved party." Mack
v. Great Atl. & Pac. Tea Co., 871 F.2d 179, 186 (1st Cir. 1989).
Efron argues that the district court "arbitrarily
denied" his request to take eleven depositions before filing a
proposed second-amended complaint. And he insists that the two
depositions to which he was limited did not constitute sufficient
pre-dismissal discovery as contemplated by this court's decision
in New England Data Services, Inc. v. Becher, 829 F.2d 286 (1st
Cir. 1987).
In Becher, we held that, where allegations supporting a
RICO claim do not satisfy the particularity requirements of Federal
Rule of Civil Procedure 9(b), a court should not "automatic[ally]"
dismiss the claim. 829 F.2d at 290. Instead, if the complaint
raises "specific allegations . . . [that] make it likely that the
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defendant used interstate mail or telecommunications facilities"
and the court finds "specific information as to use [of interstate
mail or telecommunications] is likely in the exclusive control of
the defendant," the court "should make a second determination as
to whether the claim as presented warrants the allowance of
discovery." Id. Put simply, Becher discovery assists the
plaintiff in accessing information to allow them "to plead the
time, place and contents of communications between the defendants"
with sufficient particularity. Id. at 291.
This court later emphasized that "Becher discovery (with
concomitant leave to amend) 'is neither automatic, nor of right,
for every plaintiff.'" Cordero-Hernández v. Hernández-
Ballesteros, 449 F.3d 240, 244 (1st Cir. 2006) (quoting Ahmed v.
Rosenblatt, 118 F.3d 886, 890 (1st Cir. 1997)). For example, in
North Bridge Associates, Inc. v. Boldt, 274 F.3d 38 (1st Cir.
2001), we upheld the district court's denial of Becher discovery
by concluding that "[t]his is not a case to which the generosity
of our approach in Becher is applicable." Id. at 44. The North
Bridge court concluded that the plaintiffs failed to raise specific
allegations of interstate communications and their complaint
ultimately lacked "the substance of a RICO claim." Id.; see also
Douglas v. Hirshon, 63 F.4th 49, 59-60 (1st Cir. 2023) (affirming
denial of Becher discovery where the plaintiff's complaint failed
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to allege RICO claims with sufficient particularity under Rule
9(b) and the "ordinary plausibility standard").
Even assuming that Efron was entitled to Becher
discovery, he has not presented us with any cases suggesting that
limiting his pre-dismissal discovery to two depositions was an
abuse of discretion. Pursuant to Federal Rule of Civil Procedure
30(a)(2), during the course of ordinary discovery, Efron would
have needed to seek leave of court to take eleven total depositions
and provide sufficient justification for exceeding discovery
limits. Yet nothing in the record demonstrates that Efron
adequately supported his request for such extensive pre-dismissal
discovery, nor has he articulated why he needed additional
discovery on appeal.
And in filing his proposed second-amended complaint,
Efron attested that he had obtained "enough information . . . to
comply with the RICO specificity requirements." This admission,
along with the fact that he never sought leave for additional
discovery before filing the proposed second-amended complaint,
gravely undermines or entirely waives Efron's position on appeal
that taking two depositions was insufficient. See United States
v. Mayendía-Blanco, 905 F.3d 26, 32 (1st Cir. 2018) (deeming an
argument waived when a party intentionally relinquishes or
abandons it). Therefore, Efron plainly fails to show that the
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district court abused its discretion in limiting his pre-dismissal
discovery.
B. The District Court's Denial of Efron's Motion for Leave
to Amend
We now turn to whether the district court properly denied
Efron's motion for leave to amend and dismissed his case.4 This
court's review of "the district court's dismissal of [Efron's]
claims is de novo, and the denial of leave to amend further is
reviewed for abuse of discretion." Pruell v. Caritas Christi, 678
F.3d 10, 12 (1st Cir. 2012) (citations omitted).
If the district court's judgment is supported by an
"adequate reason for the denial," we defer to the decision.
Aponte-Torres v. Univ. of P.R., 445 F.3d 50, 58 (1st Cir. 2006).
As relevant here, a district court may properly deny leave to amend
when it "would be an exercise in futility." Id.To assess whether a proposed amended complaint
withstands a Rule 12(b)(6) motion (and thus whether leave to amend
was futile), this court "must accept as true all well-pleaded facts
'indulging all reasonable inferences in [Appellant's] favor.'"
4 Efron's appeal also nominally challenges the district
court's dismissal of his first-amended complaint, but all of
Efron's contentions in his opening brief relate exclusively to his
challenge to the district court's denial of his motion for leave
to amend. Thus, any argument that Efron's first-amended complaint
sufficed to state a claim and should not have been dismissed is
waived for lack of development. See United States v. Zannino, 895
F.2d 1, 17 (1st Cir. 1990).
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Fantini v. Salem State Coll., 557 F.3d 22, 26 (1st Cir. 2009)
(alteration in original) (quoting Nisselson v. Lernout, 469 F.3d
143, 150 (1st Cir. 2006)). Of critical importance here, a
complaint raising RICO claims predicated on mail and wire fraud
must satisfy Rule 9(b)'s particularity requirements. Becher, 829
F.2d at 290. Specifically, Rule 9(b) mandates that "the complaint
'must state the time, place and content of the alleged mail and
wire communications perpetrating that fraud.'" Douglas, 63 F.4th
at 55 n.7 (quoting Ahmed, 118 F.3d at 889).
To raise a civil RICO claim, "a plaintiff must allege 'a
violation of section 1962' and an injury 'by reason of' that
violation." Lerner v. Colman, 26 F.4th 71, 77 (1st Cir. 2022)
(quoting 18 U.S.C. § 1964(c)). Efron's RICO claim is premised on
a violation of 18 U.S.C. § 1962(c), which requires showing that
"any person employed by or associated with any enterprise engaged
in, or the activities of which affect, interstate or foreign
commerce, to conduct or participate, directly or indirectly, in
the conduct of such enterprise's affairs through a pattern of
racketeering activity." 18 U.S.C. § 1962(c). Efron also alleges
a conspiracy to violate RICO under 18 U.S.C. § 1962(d).
Accordingly, the four key elements of a RICO claim (which also
constitute the underlying substantive offense for a RICO
conspiracy claim) are: "(1) conduct (2) of an enterprise (3)
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through a pattern (4) of racketeering activity." Sedima, S.P.R.L.
v. Imrex Co., 473 U.S. 479, 496 (1985).
Efron insists that the district court abused its
discretion in denying his motion for leave to file a second-amended
complaint for futility. UBS argues that Efron's RICO allegations
were deficient in three main ways: (1) failure to allege a RICO
enterprise; (2) failure to allege predicate acts of mail or wire
fraud; and (3) failure to allege a pattern of racketeering
activity. Any one of these is independently fatal to Efron's RICO
claim. As discussed below, we find that Efron's failure to
plausibly allege predicate acts of mail or wire fraud warrants
affirmance of the district court's denial of leave to amend for
futility.
Even assuming Efron had plausibly alleged a RICO
enterprise in the second-amended complaint, he cannot satisfy
RICO's predicate acts element. Efron's proposed second-amended
complaint relies on mail or wire fraud as the predicate
racketeering acts for his RICO claim. See 18 U.S.C. § 1961(1).
To establish mail or wire fraud, Efron was required to show that
UBS "engaged in a scheme to defraud with the specific intent to
defraud and that [it] used the United States mails and/or the
interstate wires in furtherance of the scheme." McEvoy Travel
Bureau, Inc. v. Heritage Travel, Inc., 904 F.2d 786, 790 (1st Cir.
1990). In particular, "the scheme must be intended to deceive
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another, by means of false or fraudulent pretenses,
representations, promises, or other deceptive conduct." Id. at
791 (emphasis added).
Construing the proposed second-amended complaint in the
light most favorable to Efron, the three primary predicate acts of
mail or wire fraud he alleges are: (1) UBS's overproduction of
Efron's account information in response to Candelario's subpoena;
(2) UBS's alleged cover-up of the overproduction; and (3) UBS's
subsequent FINRA litigation seeking indemnification from Efron
after it settled with Candelario.
As to UBS's overproduction of documents, Efron fails to
plausibly demonstrate how this conduct -- which may constitute
negligence, breach of contract, or breach of fiduciary duty -- can
be construed as mail or wire fraud. A "breach of a fiduciary duty,
standing alone, does not constitute mail fraud." United States v.
Greenleaf, 692 F.2d 182, 188 (1st Cir. 1982). "Nor does a breach
of contract in itself constitute a scheme to defraud." McEvoy
Travel Bureau, Inc., 904 F.2d at 791; see also Arzuaga-Collazo v.
Oriental Fed. Sav. Bank, 913 F.2d 5, 6 (1st Cir. 1990) ("This
complaint reads as if it is charging a breach of contract or a
violation of a consumer protection law, not racketeering.").
Relatedly, Efron ignores the fact that the falsity of a
statement alone is inadequate to demonstrate fraudulent intent.
Efron is correct that the alleged wire communication between UBS
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agents regarding the scope of documents necessary to respond to
Candelario's subpoena was inaccurate because it failed to include
the CFI's restriction on documents post-dating June 4, 2001. But
Efron does not plausibly establish that UBS's communications were
made with the intent to defraud him. Rule 9(b) "requires not only
specifying the false statements and by whom they were made but
also identifying the basis for inferring scienter." N. Am. Cath.
Educ. Programming Found., Inc. v. Cardinale, 567 F.3d 8, 13 (1st
Cir. 2009). Besides conclusory allegations as to UBS's fraudulent
intent in disclosing the documents to Candelario, Efron's proposed
second-amended complaint does not credibly suggest that UBS acted
with specific intent to deceive. Cf. Mendez Internet Mgmt. Servs.,
Inc. v. Banco Santander de P.R., 621 F.3d 10, 15 (1st Cir. 2010)
(rejecting the plaintiff's attempt to establish predicate acts
through mail or wire fraud because "[e]ven if the [defendants]
were implicitly misrepresenting their motive . . . , it is not the
falsity of their excuse that causes [the plaintiff] damage").
Similarly, Efron's allegations regarding UBS's purported
cover-up following its overproduction do not satisfy the
particularity or plausibility standards. While the record
reflects that a few communications were made via email, satisfying
Rule 9(b)'s requirement for pleading the communications' time,
place, and contents, Efron has not plausibly alleged how those
statements were fraudulent. Indeed, in these internal email
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communications, the individual defendant-appellees and other UBS
employees appear to be conceding that they made the overproduction.
Additionally, the statements that could most arguably be
construed to have been intentionally deceptive were not pled with
particularity nor do they satisfy the basic elements of mail or
wire fraud. For example, the proposed second-amended complaint
refers to statements that Sueiro-Alvarez and Colón made to Coll
falsely denying the overproduction. But Efron alleged that several
of these communications were made in-person, meaning they cannot
constitute mail or wire fraud acts. See Giuliano v. Fulton, 399
F.3d 381, 388 (1st Cir. 2005) (explaining that, because "[m]any of
the specific allegations of fraud do not implicate the mail or the
wires," the plaintiff could not rely on such allegations to
establish "a RICO predicate act"); Fleet Credit Corp. v. Sion, 893
F.2d 441, 445 (1st Cir. 1990) ("[A]cts of common law fraud that do
not implicate the mails (or the wires) do not constitute
'racketeering activity' under the definition found within the RICO
statute."). As for the rest of the communications, Efron's
allegations suffer from a host of other issues, including failure
to specify the manner in which they were made, conclusory
statements regarding fraudulent intent, and neglecting Rule 9(b)'s
requirement for details as to time and place. See Ahmed, 118 F.3d
at 889; cf. Efron v. Embassy Suites (P.R.), Inc., 223 F.3d 12, 16
n.4 (1st Cir. 2000) (noting, in another RICO case that Efron
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brought before this court, the district court's refusal to consider
"seven faxes because Efron failed to allege that they had been
transmitted interstate").
Efron's reliance on UBS's FINRA litigation as a
predicate act of mail or wire fraud fares no better. As with the
cover-up theory, Efron's conclusory allegations that UBS
nefariously plotted against him do not plausibly demonstrate that
UBS initiated the FINRA litigation with intent to defraud. In
fact, inferring fraudulent intent with respect to any of these
alleged predicate acts would require giving legitimacy to Efron's
theory that, by disclosing his financial information to Candelario
in 2005, UBS knew that it would be able to recover against him
nearly two decades later. But as discussed above, Efron's proposed
second-amended complaint provides no basis for accepting such a
far-fetched scheme as plausible. See Hayduk v. Lanna, 775 F.2d
441, 444 (1st Cir. 1985) ("[M]ere allegations of fraud, corruption
or conspiracy, averments to conditions of mind, or referrals to
plans and schemes are too conclusional to satisfy the particularity
requirement, no matter how many times such accusations are
repeated.").
The district court was within its discretion to conclude
that permitting the amendment would be futile because, even after
taking pre-dismissal depositions, Efron still could not plead
fraud with sufficient particularity. See Giuliano, 399 F.3d at
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388 ("We will not imply or read into the amended complaint the
mail or wire connection where it is not alleged specifically.").
Therefore, the district court appropriately concluded that Efron's
inability to allege viable predicate acts rendered amendment
futile.
Efron's "[f]ailure to plead predicate acts adequately is
enough to sink his RICO claim." Ahmed, 118 F.3d at 889.
Consequently, without a viable underlying RICO claim, accepting
the proposed second-amended complaint's RICO conspiracy claim
would also have been futile. See Efron, 223 F.3d at 21 ("[I]f the
pleadings do not state a substantive RICO claim upon which relief
may be granted, then the conspiracy claim also fails.").
C. UBS's Motion for Sanctions
UBS has moved for sanctions against Efron for filing
what it considers to be a frivolous appeal. Pursuant to Federal
Rule of Appellate Procedure 38, if this court "determines that an
appeal is frivolous, it may, after a separately filed motion . . .
and reasonable opportunity to respond, award just damages and
single or double costs to the appellee." "In order to find that
an appeal is frivolous, we need not find that it was brought in
bad faith or that it was motivated by malice." E.H. Ashley & Co.
v. Wells Fargo Alarm Servs., 907 F.2d 1274, 1280 (1st Cir. 1990).
Instead, "it is enough that the appellants and their attorney
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should have been aware that the appeal had no chance of success."
Id.In its sanctions motion, UBS insists that Efron's
briefing failed to comply with Federal Rule of Appellate Procedure
28, his arguments are meritless, and he filed the appeal "for the
improper purpose of harassing and imposing litigation costs upon
UBS."
In a prior case involving Efron's attempted intervention
in Candelario's lawsuit against UBS, this court declined to impose
sanctions against Efron but warned that he "came perilously close"
to committing sanctionable conduct. In re Efron, 746 F.3d at 38.
We noted that his case was "manifestly weak," while emphasizing
that "'weak' is not synonymous with 'frivolous.'" Id. We further
described that the "case-specific nature" of the issues presented
"counsel[ed] against saying that Efron 'had no legitimate ground
for pursuing this appeal.'" Id. (quoting E.H. Ashley & Co., 907
F.2d at 1280).
Here, Efron's case was similarly weak, but contrary to
UBS's contentions, it involved case-specific issues that were not
so squarely resolved in his prior appeal on a different RICO claim
(Efron v. Embassy Suites (P.R.), Inc., 223 F.3d 12 (1st Cir.
2000)). And while UBS was burdened by litigating this appeal and
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its troubled history with Efron is clear from the record, its
allegations of malintent fall short.5
As such, we decline to impose sanctions against Efron.
But once again, we conclude that he has come dangerously close to
crossing the line. And we reiterate that, where an appeal is
genuinely frivolous and "appellant's brief added a significant
burden on appellee's counsel and the court," we have not hesitated
to sanction the appellant. Commonwealth Elec. Co. v. Woods Hole,
754 F.2d 46, 49 (1st Cir. 1985). Efron is therefore admonished to
avoid coming "perilously close" to being sanctioned for a third
time.
III. Conclusion
For the foregoing reasons, we affirm the district
court's ruling limiting Efron's pre-dismissal discovery and its
order denying Efron leave to file a second-amended complaint and
dismissing his case, and we deny UBS's motion for sanctions.
5 UBS also points to numerous other cases where Efron, as
a litigant or counsel, has had RICO claims dismissed or been
sanctioned for various misconduct. But UBS offers no authority to
support using Efron's conduct in other cases as the basis for
sanctions here.
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