One I lost: Guggenheim Capital vs. Little Old Man

David Birnbaum Guggenheim

It’s an appeal that I lost, the one on behalf of David Birnbaum, who was ordered by a court not to use his family name, Guggenheim …

Yes, it’s complicated, unless you don’t answer the complaint.  Why not answer?  That’s complicated too.  I wasn’t there at the time, believe me.

But the case got a lot of notoriety a few years ago, with the papers breathlessly accepting the allegations of the complaint as if they were proven facts.  It was even more exciting when the defendants were rounded up and charged with all kinds of things.  Less publicity attended the fact that the charges against my client, David Birnbaum were all dropped.  (For all the melodramatic allegations, even the two other defendants, who were in fact the affirmative actors in the scheme, were let off without doing any time.)

The charges were not dropped, however, until mere weeks after a multi-million-dollar default for “trademark counterfeiting” — yes, counterfeiting, for he used stationery with the name “David Birnbaum” on it, and isn’t GUGGENHEIM a registered trademark of Guggenhein Capital? — was entered against David Birnbaum, an impoverished, elderly scholar  and refugee from Nazi Germany who utilized, as Europeans used to, the name of his mother, Nili Guggenheim, along with that of his father.

Yes, he is a Guggenheim.  Of THE Guggenheims.  Not the bank — the family.  The famous financier family.  That one.

But Mr. Birnbaum did not litigate the point regarding his justifiable use of his name, or even priority of use; at least not adequately.  If you read the procedural history set out in the appellate brief, you will see that, for better or for worse, he never knew what hit him.  And while he was trying to figure it out, they — someone — got him arrested on trumped up charges.  The government emptied out his apartment, took his computer, and called the papers about their big catch.  (They didn’t call the papers when the charges were dropped.  And, as usual, the tabloids that ran with the fantastic, lurid story didn’t follow up, didn’t care to follow up and see what happened.  If the cops say it happened, it probably did, right?)

The ground for the default was failure to, among other things, cooperate in discovery — despite the fact that this non-cooperation was upon the advice of his court-appointed criminal counsel, because of Fifth Amendment concerns.  Despite the fact that even the court acknowledged that he never took a dime from anyone or cost Guggenheim Capital a nickel (well — more on that below).  And despite the fact that he was unrepresented by counsel when the default motion was made and entered.

I was not involved in the case until after the default judgment.  I wrote about the appeal here. I hoped the Circuit would find the unique concatenation of circumstances worth lifting the default so the man could defend himself, and not be forbidden by law from using, for any purposes whatsoever, his family name.  Notwithstanding that the record below was poor, there was, I felt, enough there for what appeared to be an injustice to be righted.

A couple of weeks ago,  the Second Circuit (Judge Chin) informed me that it felt differently.

Generally of course it is good practice not to start up with the Circuit Court of Appeals.  (At least not unless it’s really far away from you.)  But when a reporter asked me for a comment, I did write one up, so why shouldn’t I use it here too?  It’s like this:

We are disappointed in the outcome because it did not seem that the Circuit every really considered the overall situation the defendant was in when the default was entered as a whole, rather than analyzing the various issues atomically.  On each topic — such as the non-issuance of a stay given pending criminal charges, Mr. Birnbaum’s lack of counsel when the default was entered, the remarkably short period between the motion for default judgment and the granting of the motion, the failure of the court to give an explicit warning to an unrepresented party as to the consequences of default, its failure to even consider alternative sanctions, and the advice of criminal counsel to limit participation in the civil case — the Court of Appeals relied on well-established precedent awarding great deference to the District Court.

The opinion, however, did not seem to wrestle with the question of whether justice was done in the unprecedented situation on appeal, i.e., where all these factors were present at the same time.  Nor was the Circuit court, evidently, troubled by the suggestion from the facts that the criminal case was procured solely to provide the plaintiff, a major investment back, with a substantial advantage in litigation against a penurious and lawyerless party, and was abandoned when the default judgment was awarded.

We recognized when we took on the case that the record on appeal presented major challenges.   We had hoped, however, that the overall picture of unfairness and procedural irregularity would merit a decision to give the defendant, now freed of the threat to his liberty occasioned by the meritless criminal claims against him, a legitimate chance to defend himself substantively against the plaintiff’s outrageous claims.  Unfortunately, the Second Circuit did not provide that opportunity.

That’s all he wrote!  Well… not all.  Here are two other parts of the story, for what it’s worth:  The facts the Circuit didn’t (or wouldn’t) consider are largely found here.  And the “politics of the law” part, about the phenomenal amount of money spent by Guggenheim Capital on lawyers, probably over a million bucks by now, to achieve this glorious victory, is found here.  Both of these link to submissions in the public record.

I have a lot more I could say, but I’ve said in the papers. The Circuit ultimately was fine with how this went down. So who are we to say?

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Author:Ron Coleman

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