Rossbach v. Montefiore Medical Center

21-2084-cv
Rossbach et al. v. Montefiore Medical Center et al.

                                                       In the
                  United States Court of Appeals
                                   For the Second Circuit
                                                       ________

                                             AUGUST TERM 2022

                                      ARGUED: JANUARY 19, 2023
                                      DECIDED: AUGUST 28, 2023

                                                      No. 21-2084

                                            ANDREA ROSSBACH,
                                             Plaintiff-Appellant,

                DEREK SMITH LAW GROUP, PLLC, DANIEL ALTARAS,
                                 Appellants,

                                                          v.

       MONTEFIORE MEDICAL CENTER, NORMAN MORALES, PATRICIA
                           VEINTIMILLA,
                       Defendants-Appellees.
                            ________

                     Appeal from the United States District Court
                       for the Southern District of New York.
                                      ________



                                                          1
Before: WALKER, RAGGI, and PARK, Circuit Judges.
                            ________

      Plaintiff-Appellant Andrea Rossbach sued her employer,
Defendant-Appellee Montefiore Medical Center, and two of its
employees, Defendants-Appellees Norman Morales and Patricia
Veintimilla, asserting claims of sexual harassment during, and
retaliatory discharge from, her employment.

      The principal evidence in support of Rossbach’s sexual
harassment claims was a series of sexually suggestive text messages
that she alleged were from Morales. Following the district court’s
(Cote, J.) grant of partial summary judgment in their favor,
Defendants-Appellees moved to dismiss Rossbach’s remaining
claims and sought sanctions against Rossbach and her counsel,
Appellant Daniel Altaras and his firm, Appellant Derek Smith Law
Group, PLLC (“DSLG”), contending that these text messages were a
forgery. Following the submission of forensic expert reports, an
evidentiary hearing, and briefing on the motion, the district court
found by clear and convincing evidence that Rossbach had fabricated
the text messages, falsely testified about their production, and
spoliated evidence in an attempt to conceal her wrongdoing. The
district court also found that Altaras had facilitated Rossbach’s
misconduct.   The district court dismissed Rossbach’s remaining
claims with prejudice pursuant to its inherent power and Federal Rule
of Civil Procedure 37(e), and, under its inherent power and 28 U.S.C.




                                 2
§ 1927, imposed a monetary sanction of attorneys’ fees, costs, and
expenses incurred by Defendants-Appellees against Appellants.

      On appeal, Appellants challenge various aspects of the district
court’s conduct prior to, during, and following the evidentiary
hearing, its dismissal of the action and imposition of a monetary
sanction, and the amount of that sanction. These arguments are
meritless, except for one: We hold that in sanctioning Rossbach’s
counsel the district court applied the incorrect legal standard.
Accordingly, we VACATE the portion of the district court’s judgment
imposing a sanction on Altaras and DSLG and REMAND for further
proceedings consistent with this Opinion. We AFFIRM the judgment
of the district court in all other respects.

                                 ________

                    DANIEL J. ALTARAS, Derek Smith Law Group,
                    PLLC, New York, NY, for Plaintiff-Appellant Andrea
                    Rossbach and Appellants Derek Smith Law Group,
                    PLLC and Daniel Altaras.

                    JEAN L. SCHMIDT (Joseph E. Field, on the brief)
                    Littler Mendelson, P.C., New York, NY, for
                    Defendants-Appellees Montefiore Medical Center,
                    Norman Morales, and Patricia Veintimilla.

                                    ________




                                     3
JOHN M. WALKER, JR., Circuit Judge:

       Plaintiff-Appellant Andrea Rossbach sued her employer,
Defendant-Appellee Montefiore Medical Center, and two of its
employees, Defendants-Appellees Norman Morales and Patricia
Veintimilla, 1 asserting claims of sexual harassment during, and
retaliatory discharge from, her employment.

       The principal evidence in support of Rossbach’s sexual
harassment claims was a series of sexually suggestive text messages
that she alleged were from Morales. Following the district court’s
(Cote, J.) grant of partial summary judgment in their favor,
Montefiore moved to dismiss Rossbach’s remaining claims and
sought sanctions against Rossbach and her counsel, Appellant Daniel
Altaras and his firm, Appellant Derek Smith Law Group, PLLC
(“DSLG”), 2 contending that these text messages were a forgery.
Following the submission of forensic expert reports, an evidentiary
hearing, and briefing on the motion, the district court found by clear
and convincing evidence that Rossbach had fabricated the text
messages, falsely testified about their production, and spoliated
evidence in an attempt to conceal her wrongdoing. The district court
also found that Altaras had facilitated Rossbach’s misconduct. The
district court dismissed Rossbach’s remaining claims with prejudice
pursuant to its inherent power and Federal Rule of Civil Procedure
37(e), and, under its inherent power and 

, imposed a



       1This Opinion refers to Defendants-Appellees collectively as “Montefiore.”
       2 Where issues pertain to all Appellants, this Opinion refers to Rossbach
and her counsel collectively as “Appellants.”


                                       4
monetary sanction of attorneys’ fees, costs, and expenses incurred by
Montefiore against Appellants.

      On appeal, Appellants challenge various aspects of the district
court’s conduct prior to, during, and following the evidentiary
hearing, its dismissal of the action and imposition of a monetary
sanction, and the amount of that sanction. These arguments are
meritless, except for one: We hold that in sanctioning Rossbach’s
counsel the district court applied the incorrect legal standard.
Accordingly, we VACATE the portion of the district court’s judgment
imposing a sanction on Altaras and DSLG and REMAND for further
proceedings consistent with this Opinion. We AFFIRM the judgment
of the district court in all other respects.

                              BACKGROUND

      Rossbach, a registered nurse, was employed from 2014 to 2018
in the emergency department of the children’s hospital at Montefiore
Medical Center. Following her January 2018 discharge for violating
the hospital’s drug and alcohol policy, Rossbach filed this lawsuit,
raising federal, state, and local gender discrimination, hostile work
environment, retaliation, and tort claims against the hospital and two
of its employees. Broadly, Rossbach alleged that she was sexually
harassed by Morales, her supervisor, and that when she objected to
Morales’s conduct, Morales and Veintimilla retaliated against her,
culminating in her firing.

      Following the completion of discovery, Montefiore moved for
summary judgment on several of Rossbach’s claims, primarily those
related to her termination. The district court granted that motion in


                                     5
part. Rossbach v. Montefiore Med. Ctr., No. 19CV5758 (DLC), 

 (S.D.N.Y. Mar. 11, 2021) (Rossbach I). It denied summary
judgment, however, as to many of Rossbach’s claims relating to
Morales’s alleged sexual harassment.

      Four days after the district court issued its summary judgment
opinion and order, Montefiore moved to dismiss Rossbach’s
remaining claims and sought sanctions against Rossbach and her
counsel.   Montefiore alleged that Rossbach forged the principal
evidence of her sexual harassment claims: an image of a series of three
sexually suggestive text messages sent from Morales to Rossbach.
Montefiore contended that Rossbach committed perjury by falsely
testifying at her deposition regarding the document’s origin, and that
she spoliated evidence by failing to preserve text messages in their
original format and by disposing of the cell phone she claimed to have
used to photograph the messages. Montefiore also sought sanctions
against Altaras and DSLG, arguing that, as Rossbach’s counsel,




                                  6
Altaras should have realized that the document was a forgery and
taken remedial measures.

      The document at issue was originally produced by Rossbach as
a PDF file in May 2020. It is reproduced below:




      At her October 2020 deposition, Rossbach testified that the
device on which she received the depicted text messages was an
iPhone 5 that, at the time of her receipt of the messages in 2017, had
“severe screen cracks” and an “ink bleed.” App’x 330, 332. Rossbach
testified that this damage prevented her from taking a screenshot


                                  7
directly on the iPhone 5, and that she instead took a photograph of
the messages with a new iPhone X purchased in late 2017. Rossbach
also testified that she gave the iPhone 5 and its passcode to Altaras for
production to Montefiore. Rossbach repeated this passcode at her
deposition, after she was informed that Montefiore’s discovery
vendor could not unlock the phone with that same passcode.

      Following Rossbach’s deposition, Montefiore requested the
original file of the text message document and Rossbach produced the
image in JPEG format. Montefiore engaged a forensic expert to
examine the file. The expert concluded that the document was a
forgery based on the document’s inconsistency with Rossbach’s
testimony    and    nonconformity      with   iPhone     text   message
characteristics. At a February 11, 2021 meeting, Montefiore presented
its expert’s preliminary findings of fabrication to Altaras and gave
notice of its intent to move for dismissal and sanctions unless
Rossbach voluntarily dismissed the action.

      Rossbach refused to dismiss the action and maintained that the
text message document was authentic.          On March 19, 2021, in
opposition to Montefiore’s request for leave to move for dismissal and
sanctions, Rossbach filed a declaration purporting to clarify her
explanation of the events surrounding the document’s production.
She swore that she reviewed her iPhone 5 in March 2020, at which
time the screen was not cracked, but instead was malfunctioning and
flickering. She claimed that she used her iPhone X to photograph the
text messages “in a moment while the screen was not flickering” to




                                   8
send them to Altaras. 3 

. She stated that she later gave her
iPhone 5 to Altaras but that it could not be unlocked because,
sometime after she took the photograph of the text messages, someone
dropped the phone, resulting in the cracked screen and ink bleed that
she had previously testified existed at the time she took the
photograph. Rossbach asserted that the iPhone X she used to take the
photograph also began to malfunction, and that she traded it in for a
new phone.

       The district court ordered the parties to submit expert reports
and scheduled an evidentiary hearing. In the interim, Rossbach cross-
moved for sanctions against Montefiore, arguing that Montefiore
misrepresented that Morales’s cell phones had been “forensically
reviewed” during discovery and requesting that the district court
order a forensic examination of the devices. 

. The district
court ordered that Rossbach’s cross-motion for sanctions would be
addressed at the evidentiary hearing.

       On April 22, 2021, the district court held the evidentiary
hearing on the issue of Rossbach’s alleged fabrication. The district
court accepted the experts’ reports as direct testimony and allowed
cross-examination on their contents. Rossbach also testified. At the
conclusion of the hearing, the district court read into the record its
findings that, by clear and convincing evidence, Rossbach had
fabricated the document at issue, given false testimony about its



       3In later testimony at the evidentiary hearing, Rossbach stated that she
stopped the iPhone 5 from flickering by placing her finger on the screen to take
the photograph. She conceded that the image does not depict her finger.


                                       9
production, and spoliated evidence in an effort to conceal the
fabrication. The district court granted Montefiore leave to move to
dismiss the remainder of the case and for sanctions. The district court
proposed two briefing timelines on the motion: (1) an expedited
schedule, and (2) an extended schedule to permit the parties to engage
in settlement discussions.          Altaras, with the agreement of
Montefiore’s counsel, selected the latter. 4

      At the conclusion of the evidentiary hearing, the district court
denied Rossbach’s motion for sanctions against Montefiore. The
district court found that the dispute about the examination of
Morales’s     cell   phones      centered      on    an    inconsequential
misunderstanding of the word “forensic,” that, consistent with his
discovery obligations, Morales’s devices had been properly searched,
and that Rossbach “d[id] not articulate any reason why [a true
forensic] examination would be necessary.” 5 

.

      On August 5, 2021, upon complete briefing, the district court
issued an opinion and order granting Montefiore’s motion to dismiss
and for sanctions. Rossbach v. Montefiore Med. Ctr., No. 19CV5758
(DLC), 

 (S.D.N.Y. Aug. 5, 2021) (Rossbach II). The
district court reiterated its earlier findings of fact, upon which it based
its determination that the text message document—“[t]he primary
piece of documentary evidence supporting Rossbach’s allegation that


      4  The district court subsequently denied Rossbach’s request for an
extension of time to oppose Montefiore’s motion to dismiss and for sanctions,
noting that she had already been afforded an extended briefing schedule.
       5  The district court subsequently denied Rossbach’s motion for
reconsideration of this denial.


                                     10
she was sexually harassed by Morales”—was fabricated. 

.
First, the district court found that the characteristics of the document
were inconsistent with Rossbach’s account of its creation. The district
court cited, as conflicting and incredible, Rossbach’s testimony about
a cracked screen versus a flickering screen with an ink bleed, and the
fact that the image of the text messages—which Rossbach represented
to be a photograph of her iPhone 5’s screen—did not depict any of
these defects.    Second, the district court accepted Montefiore’s
expert’s testimony that the purportedly original file did not have the
metadata associated with a photograph taken on an iPhone X.
Moreover, analysis of the image “indicate[d] that it [was] not a
photograph at all.” 

. Third, the district court found, based on
the same expert’s testimony, that the document did not depict text
messages as they would appear on an iPhone 5 (or, in fact, any
iPhone), due to differences in the appearance of icons and contact
information, font size and style, and emoji design.

       The district court also concluded that Rossbach committed
perjury by falsely testifying about the document’s origin at her
deposition, in her March 2021 declaration, and at the evidentiary
hearing. The district court also determined that Rossbach spoliated
evidence by refusing to provide the correct passcode for her iPhone 5
and by disposing of her iPhone X during the pendency of the
litigation.

       Based on these findings, the district court dismissed Rossbach’s
remaining claims with prejudice and imposed a monetary sanction
jointly and severally on Rossbach, Altaras, and DSLG consisting of




                                  11
Montefiore’s attorneys’ fees, costs, and expenses associated with
addressing Rossbach’s fabrication.

      The district court found that, under its inherent power and
Federal Rule of Civil Procedure 37(e), a case-terminating sanction was
authorized and warranted. The district court explained that Rossbach
had committed a fraud on the court by “willfully and in bad faith
fabricat[ing] evidence in this action and attempt[ing] to mislead the
[c]ourt regarding her actions.” 

. The district court found that,
“[g]iven the severity and willfulness of her conduct, dismissal with
prejudice [wa]s the only appropriate sanction” because “[a] lesser
sanction . . . would be insufficient to remedy the impact of this
misconduct or to deter future misconduct.” 

. Moreover,
trying the case “would be a pointless waste of judicial resources,”
because the jury would learn that Rossbach fabricated the limited
documentary evidence of her sexual harassment claims.                 

Alternatively, the district court found that dismissal was proper
under Rule 37(e), based on Rossbach’s knowing and intentional
spoliation of electronically stored information.

      The district court imposed a monetary sanction on Rossbach
pursuant to its inherent power, noting that her conduct “caused the
defendants to incur the significant expense of investigating her
actions and litigating” its motion for sanctions. 

. The district
court found that a sanction of Montefiore’s attorneys’ fees, costs, and
expenses associated with addressing Rossbach’s fabrication was
warranted to “restore the prejudiced parties to the same position they
would have been in” absent her misconduct. 

 (internal quotation




                                   12
and alteration marks omitted) (quoting West v. Goodyear Tire & Rubber
Co., 

 (2d Cir. 1999)).

      The district court imposed the same monetary sanction on
Altaras and DSLG under its inherent power and 

. The
district court stated that Altaras “negligently or recklessly failed to
perform his responsibilities as an officer of the court” and violated the
New York Rules of Professional Conduct. 

 (internal quotation
marks omitted) (quoting Wilder v. GL Bus Lines, 

 (2d
Cir. 2001) (per curiam)).      The district court noted that, when
confronted with evidence of Rossbach’s fabrication at several points
during the litigation, Altaras failed to conduct a reasonable
investigation to ensure that by pressing Rossbach’s arguments he was
not facilitating the use of false evidence or suborning perjury. It also
found that Altaras allowed his client to spoliate evidence by failing to
adequately advise Rossbach to preserve her iPhones and their data.
Last, the district court found that Altaras “unreasonably and
vexatiously multiplied proceedings,” supporting a sanction pursuant
to 

, including by filing Rossbach’s false March 2021
declaration, submitting a largely non-responsive expert report,
standing by Rossbach’s complaint even after her fabrication became
obvious, and filing a “frivolous” cross-motion for sanctions against




                                   13
Montefiore. 

. The district court set a briefing schedule for
calculating the fee award. 6

       On October 22, 2021, the district court fixed the monetary
award at $157,026.27. Rossbach v. Montefiore Med. Ctr., No. 19CV5758
(DLC), 

, at *3 (S.D.N.Y. Oct. 22, 2021) (Rossbach IV).
The district court found this award necessary to compensate
Montefiore for its “reasonable” attorneys’ fees, costs, and expenses
that “were integrally connected with the conduct necessitating the
imposition of sanctions,” namely, Rossbach’s fabrication and
Altaras’s misconduct. 

. The district court excluded from its
award fees associated with Montefiore’s response to Rossbach’s
cross-motion for sanctions.

                                  DISCUSSION

       On appeal, Appellants challenge the district court’s conduct
prior to, during, and following the evidentiary hearing, its dismissal
of Rossbach’s remaining claims, and its imposition of a monetary
sanction. For the reasons that follow, we find all of these arguments
to be without merit, save one: We hold that the district court erred by




       6 During the briefing period on Montefiore’s fee application, Rossbach filed
the instant appeal and moved to stay the district court proceedings pending
appeal. The district court denied this motion. Rossbach v. Montefiore Med. Ctr., No.
19CV5758 (DLC), 

, at *1 (S.D.N.Y. Aug. 26, 2021) (Rossbach III).
Rossbach then filed a motion for an extension of time to submit her opposition to
Montefiore’s fee application. The district court denied this motion, too.
Appellants filed an amended notice of appeal after the district court fixed the
monetary sanction against them.


                                        14
applying the incorrect legal standard in imposing sanctions against
Altaras and DSLG.

I.    “Forensic” Examination of Morales’s Cell Phones

      Rossbach appeals the district court’s denial of her motion for
sanctions against Montefiore related to the examination of Morales’s
cell phones. Rossbach primarily contends that the district court erred
by denying her motion without giving her an opportunity for oral
argument.

      “We review the district court’s denial of sanctions for abuse of
discretion.” Kim v. Kimm, 

 (2d Cir. 2018). A district
court need not conduct an evidentiary hearing or hold oral argument
on a sanctions motion “when there is no disputed question of fact or
when sanctions are based entirely on an established record.” Schlaifer
Nance & Co. v. Est. of Warhol, 

, 335 (2d Cir. 1999). In her
motion, Rossbach argued that Montefiore “knowingly and willfully
lied” to Altaras about how Morales’s cell phones had been examined.
App’x 36. But the record is clear that at the time the parties initially
corresponded about a “forensic” examination of Morales’s cell
phones, they mutually intended the simple gathering and searching
of data, including all text messages. This routine discovery was
properly carried out. As the district court noted, Rossbach did not
explain the necessity of a more intensive examination of Morales’s
devices, given that she did not challenge the integrity of documents
Morales produced in discovery. The district court did not abuse its
discretion in denying Rossbach’s motion for sanctions.




                                  15
II.   Admission and Exclusion of Evidence, Findings of Fact, and
      Credibility Determinations at the Evidentiary Hearing

      Rossbach raises several issues related to the district court’s
admission and exclusion of evidence, credibility determinations, and
factual findings at the evidentiary hearing.

      First, Rossbach argues that the district court should not have
considered Montefiore’s expert evidence going to the text message
document’s authenticity in deciding whether to allow Montefiore’s
motion to dismiss and for sanctions, because the district court’s
deadline to complete expert discovery had passed. This court reviews
discovery scheduling matters for abuse of discretion. Grochowski v.
Phoenix Constr., 

, 86 (2d Cir. 2003). The district court did
not abuse its discretion in permitting Montefiore to submit its forensic
expert evidence. As the district court explained, the discovery was
not untimely at all because it did not concern a matter covered by the
standard discovery schedule (which went to the merits), but rather
“an inquiry as to whether sanctionable conduct has occurred in this
litigation.” App’x 404.

      Second, Rossbach argues that the district court erred at the
evidentiary hearing by excluding certain demonstrative exhibits and
striking certain expert testimony. The court reviews a district court’s
evidentiary rulings for abuse of discretion, “and a ruling on the
admissibility of expert testimony is to be sustained unless manifestly
erroneous.” Lore v. City of Syracuse, 

 (2d Cir. 2012)
(internal quotation marks omitted). Moreover, we will reverse “only
if an erroneous [evidentiary] ruling affected a party’s substantial



                                  16
rights.” Marcic v. Reinauer Transp. Cos., 

, 124 (2d Cir.
2005).

         The district court disallowed exhibits and associated testimony
that had not been exchanged with Montefiore in advance and that
raised new material not addressed in Rossbach’s expert report. 7 The
district court acted within its discretion in controlling the admission
of evidence in this manner to avoid surprise or “trial by ambush.”
Ginns v. Towle, 

 (2d Cir. 1966). As the district court
noted, the proper mechanism by which Rossbach could have
expanded on her expert’s testimony was through an application
requesting oral direct examination or permission to submit a
supplemental or reply expert report. In any event, Rossbach has not
explained how the exclusion of this evidence “affected [her]
substantial rights.” Marcic, 397 F.3d at 124. She contends only that
the omitted evidence was “highly relevant to the alleged fabrication,”
Appellants’ Br. 19, but not that it would have altered the district
court’s conclusion.      Her failure to do so is fatal to her claim of
reversible error. See Manley v. AmBase Corp., 

 (2d Cir.
2003) (exclusion of evidence affects substantial rights only if the
proponent demonstrates a “likelihood that the error affected the
outcome” of the proceeding (internal quotation marks omitted)).

         Third, Rossbach argues that the district court’s findings of fact
at the conclusion of the evidentiary hearing, which it repeated in its
sanctions opinion and order ultimately dismissing the case, violated



         The district court had previously ordered that the experts’ reports would
         7

constitute their direct testimony.


                                       17
her Seventh Amendment right to a jury trial. But a motion for
sanctions does not automatically require an evidentiary hearing at all.
Schlaifer, 194 F.3d at 335–36. When one is held, however, it is plain
that “[a]n evidentiary hearing serves as a forum” for the district court
to find facts. 

.

        Rossbach conflates her entitlement to a jury trial on her claims
with the question of whether she engaged in sanctionable conduct by
committing a fraud on the court and failing to comply with her
discovery obligations. Answering the latter is an exercise of the
district court’s equitable power, for which “a party is generally not
entitled to a jury determination on the question.” Broadnax v. City of
New Haven, 

 (2d Cir. 2005) (emphasis omitted); see
also Chambers v. NASCO, Inc., 

 (1991) (“[A] court has the
power to conduct an independent investigation in order to determine
whether it has been the victim of fraud.”). Indeed, several other
circuits have held that a dismissal sanction based on fabricated
evidence or Rule 37 does not require a jury trial. 8 We now join those


        8 See KCI USA, Inc. v. Healthcare Essentials, Inc., 

, 936–37 (6th
Cir. 2020) (“we have held that dismissal as a sanction does not violate the right to
a jury trial”); REP MCR Realty, L.L.C. v. Lynch, 

 (N.D. Ill.
2005) (“document fabrication[,] . . . multiple instances of perjury and the provision
of wil[l]fully false testimony in federal court [are acts] for which precedent teaches
dismissal without prejudice short of trial is appropriate”), aff’d, 

(7th Cir. 2006); Pope v. Fed. Exp. Corp., 

 (8th Cir. 1992) (where key
evidence in support of sexual harassment claim was manufactured, “there [wa]s
no jury issue” and district court properly dismissed pursuant to its inherent power
for abuse of judicial process); Morgan v. Mass. Gen. Hosp., 

 (1st Cir.
1990) (a party who “willfully violate[s] procedural rules and orders of the district
court” is not “entitled to have his case heard on the merits”); Wyle v. R.J. Reynolds
Indus., Inc., 

, 592 (9th Cir. 1983) (“[A] Rule 37 dismissal does not violate


                                          18
circuits and hold that a motion for sanctions, when premised on a
party’s fraud on the court or discovery misconduct under Rule 37,
does not implicate the Seventh Amendment’s jury trial guarantee.
Resolving such a motion, including by imposing a case-terminating
sanction, is solely within the purview of the district court as trier of
fact. That is so even if, as Rossbach argues here, “issues raised [in the
motion for sanctions] go to the merits of the case.” Wyle v. R.J.
Reynolds Indus., Inc., 

, 592 (9th Cir. 1983). Here, the district
court’s findings of fact at the evidentiary hearing, and dismissal of the
remainder of Rossbach’s case based upon them, did not violate
Rossbach’s right to a jury trial.

       Relatedly, Rossbach argues that the district court erred in
making credibility determinations at the evidentiary hearing, again
impermissibly usurping the role of the jury. As we note above, one
of the district court’s roles in resolving a motion for sanctions is to act
as factfinder, a necessary corollary of which is to gauge witness
credibility.   “[A]ssess[ing] . . . the credibility of witnesses” at a
sanctions hearing “is peculiarly within the province of the . . . .
[d]istrict [c]ourt.” Mackler Prods., Inc. v. Cohen, 

, 145 (2d
Cir. 2000) (internal quotation marks omitted) (quoting Healey v.
Chelsea Res., Ltd., 

 (2d Cir. 1991); accord Liebowitz v.
Bandshell Artist Mgmt., 

 (2d Cir. 2021) (district court’s
credibility determinations at sanctions hearing are accorded
“particularly strong deference” (internal quotation marks omitted));



the right to a jury trial where a party fails to comply with court-ordered
discovery,” nor does a district court’s decision “to hold hearings to decide upon
sanctions,” even if “in effect determining the merits of the case.”).


                                       19
Wyle, 709 F.2d at 592 (“In the course of such hearings, a court will
make inferences and credibility determinations from evidence
received.”). It was not error for the district court to assess credibility
at the evidentiary hearing.

III.   Perjury and Spoliation Findings

       Appellants argue that the district court erred in its fact findings
that Rossbach testified falsely and that she and Altaras spoliated
evidence. We accept a district court’s factual findings in support of
its imposition of sanctions unless they are clearly erroneous. West,

.

       “A witness commits perjury if he gives false testimony
concerning a material matter with the willful intent to provide false
testimony, as distinguished from incorrect testimony resulting from
confusion, mistake, or faulty memory.” United States v. Monteleone,

 (2d Cir. 2001). Rossbach contends that the district
court improperly based its perjury finding on inconsistencies between
(1) her deposition and (2) her declaration and testimony at the
evidentiary hearing, which she claims were not willfully false but an
attempt to “merely clarif[y] her deposition testimony.” Appellants’
Br. 43. However, the district court’s finding that Rossbach “has not
given truthful testimony about how the image of the text messages
was produced,” App’x 405, was based on more than these
inconsistencies. The district court cited the overall incredibility of
Rossbach’s testimony regarding the origin of the text message
document, supported by evidence that the image was not a
photograph taken on an iPhone X (or a photograph at all) and that the



                                   20
depicted messages were inconsistent with text messages as they
would appear on an iPhone 5 (or any iPhone). Consequently, the
district court’s finding that Rossbach willfully testified falsely on a
material matter was not clearly erroneous.

      A party spoliates evidence if (1) “the party having control over
the evidence had an obligation to preserve it at the time it was
destroyed”; (2) “the records were destroyed with a culpable state of
mind”; and (3) “the destroyed evidence was relevant to the party’s
claim or defense such that a reasonable trier of fact could find that it
would support that claim or defense.” Chin v. Port Auth. of N.Y. &
N.J., 

 (2d Cir. 2012). The district court found that
Rossbach spoliated evidence by depriving Montefiore of access to
electronically stored information on her iPhones. Specifically, she
refused to provide the correct passcode to her iPhone 5 and disposed
of her iPhone X during the litigation. The district court also found
that Altaras facilitated this spoliation by not obtaining the correct
passcode from Rossbach and by failing to take sufficient steps to
ensure that her iPhones and their data were preserved. Appellants
argue that Rossbach’s conduct—allegedly dropping her iPhone 5
such that it could not be opened with any passcode, and trading in
her iPhone X when it could not be repaired—does not establish the
requisite intent to deprive Montefiore of material evidence necessary
for a spoliation finding.

      Even if the district court were to have credited Rossbach’s
testimony about the misfortunes that befell her iPhones (which it did
not, finding, for example, that Rossbach intentionally withheld her
correct passcode), the “culpable state of mind” for a spoliation claim


                                  21
need not be intentional or willful, and may be found where the
spoliation occurred due to negligence. See Residential Funding Corp. v.
DeGeorge Fin. Corp., 

 (2d Cir. 2002). At the least,
Rossbach’s failure to preserve her iPhones and their data, and
Altaras’s failure to ensure that his client did so, demonstrated a
disregard of their discovery obligations. Thus, the district court’s
spoliation finding was not clearly erroneous.

IV.   Notice and Opportunity to Be Heard

      Appellants also argue that they were not afforded notice and
an opportunity to be heard prior to the imposition of sanctions. This
argument was not preserved in the district court. See Rossbach II, 

, at *6 n.9 (“Rossbach and her counsel have been afforded
adequate notice and opportunity to be heard in this case, and do not
contend otherwise.”). This court generally “will not consider an issue
raised for the first time on appeal.” Readco, Inc. v. Marine Midland
Bank, 

 (2d Cir. 1996) (internal quotation marks
omitted). Although we may, in our discretion, “consider waived
arguments where necessary to avoid a manifest injustice,” we rarely
do so “where those arguments were available to the parties below and
they proffer no reason for their failure to raise” them. In re Nortel
Networks Corp. Secs. Litig., 

 (2d Cir. 2008) (per curiam)
(internal quotation and alteration marks omitted). No manifest
injustice would result, as the argument could have been raised below
and is plainly without merit.

      Briefly, Altaras argues that he was not on notice that filing a
“frivolous” cross-motion for sanctions against Montefiore, Rossbach II,



                                   22


, at *9, could serve as a basis for sanctions. Although
“only conduct explicitly referred to in the instrument providing
notice is sanctionable,” Schlaifer, 194 F.3d at 334, Altaras’s assertion is
belied by the record: Montefiore’s opening brief in support of its
motion for sanctions singled out Rossbach’s “motion to sanction
Defendants” as one way in which DSLG had been complicit in the
multiplication of proceedings that warranted sanctions under 

. App’x 258. Because the cross-motion for sanctions was
just one of many ways in which Altaras multiplied proceedings, even
if the district court had declined to consider the frivolous cross-
motion, it would not alter the result. 9

       We likewise reject Appellants’ contention that the district court
erred by failing to hold oral argument on Montefiore’s sanctions
motion. The district court in fact allowed the parties to make closing
statements at the evidentiary hearing, and in any event, where a
sanctions decision is “based on well-known facts contained in the
existing record,” “the opportunity to submit written briefs may be
sufficient to provide an opportunity to be heard.” Schlaifer, 194 F.3d
at 335.

       We also easily reject Appellants’ contention that criminal
procedural protections were warranted because the district court’s fee
award was punitive, rather than compensatory. See Appellants’ Br.
31 (citing Virginia Props., LLC v. T-Mobile Ne. LLC, 

, 114


       9 The same can be said of the district court’s citation to another case in
which DSLG was sanctioned, which in any event was not error. See Liebowitz, 6
F.4th at 292–93 (considering attorney’s repeated misconduct as a basis for
sanctions).


                                       23
(2d Cir. 2017) (“Sanctions . . . that are punitive rather than
compensatory . . . may not be imposed without procedural guarantees
applicable in criminal cases.” (internal quotation marks omitted))).
The district court awarded Montefiore only its attorneys’ fees, costs,
and expenses associated with Rossbach’s misconduct. Appellants do
not suggest, and it is not the case that, any component of this
compensatory award could be construed as a punitive sanction under
the factors our case law considers. See Mackler, 225 F.3d at 142.

V.    Dismissal and Monetary Sanction Against Rossbach

      Rossbach argues that the district court erred in several respects
in imposing sanctions against her. This court “review[s] all aspects of
a [d]istrict [c]ourt’s decision to impose sanctions for abuse of
discretion.” Schlaifer, 194 F.3d at 333. We are mindful, however, that
because a “district court [imposing sanctions] is accuser, fact finder
and sentencing judge all in one, our review is more exacting than
under the ordinary abuse-of-discretion standard.” Wolters Kluwer Fin.
Servs., Inc. v. Scivantage, 

, 113–14 (2d Cir. 2009) (internal
quotation marks and citation omitted). In particular, “we require a
high degree of specificity in the factual findings of lower courts upon
which sanctions for bad faith are based.” Virginia Props., 

 (internal quotation marks omitted).

      As to Rossbach, the district court imposed a case-terminating
sanction under its inherent power and, in the alternative, under
Federal Rule of Civil Procedure 37(e), and a monetary sanction under
its inherent power. A federal court may “exercise its inherent power
to sanction a party or an attorney who has acted in bad faith,



                                   24
vexatiously, wantonly, or for oppressive reasons.”            Ransmeier v.
Mariani, 

 (2d Cir. 2013) (internal quotation marks
omitted). A “primary aspect” of the discretion that attends a federal
court’s inherent power “is the ability to fashion an appropriate
sanction for conduct which abuses the judicial process. . . . [O]utright
dismissal of a lawsuit . . . is a particularly severe sanction, yet is within
the court’s discretion.”     Chambers, 501 U.S. at 44–45.        Rule 37(e)
provides that if a party fails to preserve electronically stored
information, the district court may, “upon finding that the party acted
with the intent to deprive another party of the information’s use in
the litigation . . . dismiss the action or enter a default judgment.” Fed.
R. Civ. P. 37(e).

       With respect to the case-terminating sanction, Rossbach argues
that the district court abused its discretion by failing to consider lesser
sanctions prior to dismissing the case. “[A] district court [is required
to] at least consider lesser remedial measures before imposing” the
sanction of dismissal. Shepherd v. Annucci, 

 (2d Cir.
2019). Here, the district court expressly considered lesser sanctions,
stating that “[a] lesser sanction—such as a monetary sanction, the
exclusion of evidence, or an appropriate instruction to the jury at
trial—would be insufficient to remedy the impact of [Rossbach’s]
misconduct or to deter future misconduct.” Rossbach II, 

, at *7. Rossbach argues that the district court “failed to
meaningfully consider why any lesser sanction would be insufficient.”
Appellants’ Br. 47 (emphasis added). Not so. The district court
explained that permitting the case to proceed to trial would be a futile
waste of judicial resources, given that no reasonable juror who



                                     25
learned “of Rossbach’s campaign of willful fabrication and
deception” would credit her testimony or evidence. Rossbach II, 

, at *7.

      Rossbach next argues that the district court abused its
discretion in imposing sanctions against her because, in Rossbach’s
view, the evidence did not support the conclusion that she acted in
bad faith. “[T]he sanction of dismissal with prejudice . . . should be
used . . . only upon a finding of willfulness, bad faith, or reasonably
serious fault.” Mitchell v. Lyons Pro. Servs., Inc., 

 (2d
Cir. 2013) (internal quotation marks and citations omitted). Likewise,
our “case law is clear that a district court may not impose attorney’s
fees as a sanction without first making an explicit finding that the
sanctioned party, whether a party or a party’s counsel, acted in bad
faith in engaging in the sanctionable conduct.” Wilson v. Citigroup,
N.A., 

 (2d Cir. 2012) (per curiam).

      The district court expressly found that Rossbach “willfully and
in bad faith fabricated evidence in this action and attempted to
mislead” the district court. Rossbach II, 

, at *6.
Rossbach argues that this conclusion was improper because it was
“predicated on factual findings that are still the subject of dispute
between the Parties and their respective forensic experts.”
Appellants’ Br. 40. But the dispute has been resolved, albeit not in
Rossbach’s favor. The district court acted within its discretion in
admitting and weighing evidence, assessing witness credibility,
making factual findings, and ruling against Rossbach.           See, e.g.,
Schlaifer, 194 F.3d at 335–36; Liebowitz, 

; cf. Mackler, 225




                                   26
F.3d at 145. The district court did not abuse its discretion in imposing
a case-terminating and monetary sanction against Rossbach.

VI.   Monetary Sanction Against Altaras and DSLG

      Altaras and DSLG argue that the district court erred because it
did not make the requisite finding of Altaras’s “bad faith” to impose
a sanction on them.        As with the district court’s imposition of
sanctions against Rossbach, we review for abuse of discretion,
Schlaifer, 194 F.3d at 333, mindful of the greater specificity in factual
findings required to support sanctions based on bad faith, see Virginia
Props., 

.

      The district court imposed on Altaras and DSLG the same
monetary sanction of Montefiore’s attorneys’ fees, costs, and expenses
that it imposed on Rossbach, under its inherent power and 

. A federal court may “exercise its inherent power to sanction .
. . an attorney who has acted in bad faith, vexatiously, wantonly, or
for oppressive reasons.” Ransmeier, 

 (internal quotation
marks omitted). Section 1927 provides that “[a]ny attorney or other
person admitted to conduct cases in any court of the United States . .
. 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.” 

. A law firm may be
sanctioned for the acts of its attorneys under both the district court’s




                                   27
inherent power and § 1927. Enmon v. Prospect Cap. Corp., 

,
147–48 (2d Cir. 2012).

      When a district court invokes its inherent power to impose a
sanction of attorneys’ fees or to punish actions by an attorney that are
taken on behalf of a client, “the district court must make an explicit
finding of bad faith.” United States v. Seltzer, 

, 41–42 (2d
Cir. 2000). The imposition of sanctions pursuant to § 1927 similarly
requires a finding of bad faith. Oliveri v. Thompson, 

(2d Cir. 1986); Sakon v. Andreo, 

 (2d Cir. 1997).

      We have recognized an exception to the bad faith requirement
when an attorney’s misconduct is not related to the representation of
a client, but rather to his or her independent professional
responsibility as an attorney. See Seltzer, 227 F.3d at 41–42; Wilder, 

. In such circumstances, “the district court need not find
bad faith before imposing a sanction,” Seltzer, 

, but
instead may impose sanctions if it finds that the attorney “negligently
or recklessly failed to perform his responsibilities as an officer of the
court,” Wilder, 

. See In re Pennie & Edmonds LLP, 

 (2d Cir. 2003) (noting the different standards for sanctions
tied to an attorney’s dual roles, with citation to Seltzer and Wilder). As
Seltzer recognized, however, a sanction of attorneys’ fees—whether
premised on a lawyer’s representational or non-representational
conduct—must always be supported by a finding of bad faith. Wilson,

 (citing Seltzer, 227 F.3d at 41–42).

      In Rossbach II, the sanctions opinion and order, the district court
set out the correct legal standard, noting that the imposition of



                                    28
sanctions under both its inherent power and § 1927 must be
supported by a finding of bad faith. However, in applying the law,
the district court did not make the required “explicit finding of bad
faith” to impose the sanction it did against Altaras and DSLG. Seltzer,

; Wilson, 

.

      First, the monetary sanction imposed on Altaras and DSLG
consisted of Montefiore’s attorneys’ fees, costs, and expenses
associated with addressing Rossbach’s misconduct.           As we have
explained, an explicit finding of bad faith is always required prior to
the imposition of an attorneys’ fees sanction, and here the district
court’s failure to so find while imposing such a sanction exceeded its
discretion. Wilson, 

; see Seltzer, 227 F.3d at 41–42.

      Second, Altaras’s misconduct recounted by the district court in
support of the sanction was representational, which independently
necessitates an explicit finding of bad faith. The cited misconduct
pertained to the investigation and prosecution of Rossbach’s claims,
the monitoring of Rossbach’s discovery obligations and testimony,
the submission of evidence, and the filing of motions. These actions
were “integrally related to [Altaras’s] role as an advocate for his . . .
client,” Seltzer, 

, and not to his independent professional
responsibility as an officer of the court. Cf., e.g., Palmer v. Simon’s
Agency, Inc., 

, 839 (2d Cir. 2020) (summary order)
(non-representational conduct may include, for example, compliance
with local rules, such as timely submission of motion papers). Yet
instead of finding bad faith as is required for representational
conduct, the district court applied Wilder’s standard for non-
representational conduct, finding that Altaras “negligently or


                                   29
recklessly failed to perform his responsibilities as an officer of the
court,” including by disobeying the New York Rules of Professional
Conduct. Rossbach II, 

, at *8 (quoting Wilder, 

). As is the case with an attorneys’ fee sanction, a district court’s
failure to make an explicit finding of a lawyer’s bad faith prior to
imposing any sanction for representational conduct is a legal error
that constitutes an abuse of discretion. See Seltzer, 227 F.3d at 41–42.

      We have acknowledged that an attorney’s “bad faith may be
inferred where the action is completely without merit.” In re 60 E.
80th St. Equities, Inc., 

 (2d Cir. 2000). We note that the
district court here stated, in summarizing the law, that “[w]hen an
attorney continues to defend a complaint even after learning of facts
rendering the complaint ‘fatally flawed,’ he has engaged in bad faith
conduct.”    Rossbach II, 

, at *6 (alteration marks
omitted) (quoting Liebowitz, 

). The district court later
explained, as one factor supporting its sanction, that “even after
[Altaras] should have realized that Rossbach’s complaint was based
on her false allegations, he stood by” it. Id. at *9. Taking these
statements together, the district court may have implicitly found
Altaras’s conduct to have been undertaken in bad faith. An implicit
finding, however, is not enough.

      The district court erred by imposing these sanctions without an
explicit finding of Altaras’s bad faith. Our concern with this omission
is compounded by the explicit finding that the district court did make:
that Altaras’s misconduct met Wilder’s lesser “negligent[] or
reckless[]” standard for nonrepresentational conduct and that Altaras
“still fails to understand the nature of his obligations as an officer of


                                    30
the court.” Rossbach II, 

, at *8–*9 (quoting Wilder, 

).

      We therefore hold that the district court erred by failing to
expressly make the finding of bad faith required to support the
sanction it imposed against Altaras and DSLG and, accordingly,
vacate and remand for application of the correct legal standard. On
remand, the able district court may assess in its discretion whether
Altaras’s misconduct—including his insistence on defending a
complaint founded on obviously fabricated evidence, or other
actions—amounted to bad faith.

VII. Attorneys’ Fee Calculation

      Appellants argue that the district court erred in awarding
Montefiore      “unreasonable        and   excessive”   attorneys’   fees.
Appellants’ Br. 52. “We review a district court’s award for attorney’s
fees, expenses, and costs for abuse of discretion,” and “[g]iven the
district court’s inherent institutional advantages in this area, our
review . . . is highly deferential.” Lilly v. City of New York, 

 (2d Cir. 2019). We are also mindful that the goal of a fee
award “is to do rough justice, not to achieve auditing perfection.” Fox
v. Vice, 

 (2011).

      Appellants contest the number of hours billed by Montefiore’s
counsel as “highly suspect” and dispute entire categories of fees and
costs awarded by the district court, such as those incurred prior to
and including the evidentiary hearing and in the preparation of
Montefiore’s fee application. Appellants’ Br. 53. The district court
reviewed Montefiore’s fee application and determined that the


                                      31
majority of the requested fees “were integrally connected with the
conduct necessitating the imposition of sanctions and [that] the hours
expended on those tasks were reasonable.” Rossbach IV, 

, at *2. Contrary to the thrust of Appellants’ argument, a
district court need not conduct an “item-by-item” analysis of a fee
application, Lunday v. City of Albany, 

 (2d Cir. 1994)
(per curiam), and vague time entries or block billing may be
permissible so long as the district court is able “to conduct a
meaningful review of the hours requested,” Restivo v. Hessemann, 

 (2d Cir. 2017). It is apparent that the district court here
conducted a sufficiently detailed review. Indeed, the district court
struck a category of fees requested by Montefiore as unrelated to its
motion for sanctions.

       Nor was it an abuse of discretion for the district court to include
in its calculation Montefiore’s time spent in preparing its fee
application.     “Reasonable attorneys’ fees for preparing the fee
application are compensable.” 

. Those fees were reasonably
“associated with addressing Rossbach’s fabrication,” as the district
court specified in its sanctions opinion and order. 10 Rossbach II, 

, at *8. Under this court’s “highly deferential” review, the


       10 The same is true of fees incurred by Montefiore prior to and during the
evidentiary hearing. The district court found that Altaras’s opposition to such
fees, along with Appellants’ blanket opposition to the monetary sanction, was
untimely and should have been raised in a motion for reconsideration of the
sanctions opinion and order, instead of in opposition to Montefiore’s fee
application. Appellants argue that this constitutes an abuse of discretion because
“there is no ‘motion for reconsideration’ in the Federal Rules of Civil Procedure,”
Appellants’ Br. 57, but ignore the operation of Local Rule 6.3, which so provides.
S.D.N.Y. L. Civ. R. 6.3.


                                       32
district court did not abuse its discretion in calculating Montefiore’s
fee award. Lilly, 

.

VIII. Motions for Extensions of Time, Reconsideration, and Stay
      Pending Appeal

      Finally, Rossbach variously challenges the district court’s
denial of her motions for extensions of time, reconsideration of the
denial of her motion for sanctions against Montefiore, and a stay of
the district court proceedings pending the present appeal. We have
carefully reviewed all of these arguments and find that the district
court did not abuse its discretion in denying the specified motions.

                             CONCLUSION

       For the foregoing reasons, we VACATE the portion of the
district court’s judgment imposing sanctions on Altaras and DSLG
and REMAND for further proceedings consistent with this Opinion.
We AFFIRM the judgment of the district court in all other respects.




                                     33