By Jeff Birren, Senior Writer
These pages have chronicled the never-ending dispute between Major League Baseball and DNA Sports Performance Lab, Inc., and its owner, Neiman Nix. DNA Sports makes a substance that that contains the banned substance IGH-1. One story discussed DNA Sports’ latest unsuccessful civil case against MLB and the MLBPA, (“Sports Performance Labs Underperforms in Court Battle with MLB” (9-25-2021)). November continued the saga, with “District Court Sanctions DNA Sports Performance Lab” (11-20-20). The U.S. District Court had just hammered DNA Sports with substantial attorneys’ fees for filing a frivolous case, one of many lawsuits DNA Sports initiated as it fought to keep its product available to athletes. The story continues.
November: MLB Seeks an Injunction
Nix had sued MLB in various courts, including New York Federal Court. In the fall of 2020, MLB sought “a permanent” to enjoin Nix and DNA Sports “from litigating” the Florida State Court case, (Nix et al v. Office of the Commissioner of Baseball, d/b/a Major League Baseball, et al,) S.D. N.Y., Case No. 17-1241(RJS) at 1, (11-4-20)). The Court noted the parties “extensive history of litigation, which includes numerous suits in both Florida and New York.” MLB sought the injunction under the All Writs Act, 28 U.S.C. §2283, to prevent Nix from relitigating decided issues.
The Court determined that a prior case “did not actually decide” the pending claim (Id. at 3). Rather, the underlying court had dismissed the case with prejudice but this “does not mean the claim was actually decided for purposes” of the relitigation exception of the All Writs Act. Although the “Court’s 2017 dismissal may have res judicata implications, it does not allow the Court to issue an injunction” (Id.). The Court recognized “Defendants’ frustration with Plaintiffs’ vexatious litigation” but that “cannot justify” their motion for an injunction (Id. at 4).
December: New York State Court
December brought another opinion. Nix and DNA Sports had also sued MLB in New York State Court, alleging, inter alia claims for tortious interference and defamation. They asserted that MLB had hacked their PayPal account, and brought interference claims based on the “alleged hacking of their social media accounts” (Nix v. MLB, NY Slip Op 07505, at 2, (12-15-20)). This Court was not impressed. The “tortious interference claims are precluded by the dismissal of the 2014 action asserting those claims in a Florida state court” and “the subsequent dismissal of their federal action the Southern District of New York based on the same claims.”
The plaintiffs’ “defamation claims were also appropriately dismissed.” The statements that plaintiffs “admit[ted] to selling products purportedly containing at least one banned performance-enhancing substance (IGF-1) was true, and the truth of the statement provides a complete defense to the defamation claims.” Finally, the Court ruled that “plaintiffs’ motion for reargument was intended to prolong the resolution of the action and/or harass defendants, considering the circumstances under which it was made, and is therefore sanctionable” (Id.). The prior ruling dismissing the case and awarding sanctions was affirmed.
February: The Shortest Month Brings Two More Losses
The California Federal Court noted that DNA Sports and Nix had failed “to pay an award of fees, post a bond, or move for a stay.” The defendants sought an order to show cause regarding civil contempt. DNA Sports and Nix’s counsel had “moved to withdraw.” The Court held DNA Sports and Nix in civil contempt and ruled the defendants’ “prior motion for attorney’s fees” would now also be “against Attorney Reich” (DNA Sports Performance Labs, Inc., and Neiman Nix v. MLB et all, U.S. N.D. Cal., Case No. C 20-00564WHA, (“DNA Sports”) Omnibus Order re Sealing, Civil Contempt, and Attorney’s Fees, (2-4-21)).
Nix and DNA Sports had been ordered to turn over financial information as a possible basis for paying off the previous awards. Some of that information had been withheld, and the plaintiffs sought an order sealing the information. Most of that was denied by the Court (Id. at 2). Next came the issue of contempt of court. Nix and DNA Sports had also been ordered to pay MLB and the MLBPA $237,446.25 in attorney’s fees, and that was due on November 20, 2020. “The date has passed. Plaintiffs have paid nothing. Absent justification, contempt is warranted.” They could have appealed and requested a stay, but they did not. Rather, they “now argue their incapacity to pass the award” but this came after the “payment deadline had passed” (Id. at 3).
The Court determined that “plaintiffs have manufactured their poverty.” Nix’s “attorneys have taken at least several hundred thousand dollars in legal fees over the past several years” according to Nix’s deposition. Moreover, they took the proceeds of the sale of Nix’s cars and DNA Sports’ equipment liquidation. “Paying one’s own attorney’s fees rather than court-ordered fees is a choice. On those grounds alone, plaintiffs’ current incapacity to pay the ordered fees is self-induced” (Id. at 4). Nix and DNA Sports were therefore held in contempt.
The same logic applied to counsel. Reich had “been handsomely paid and has secreted away funds” so the order extended joint liability for those funds to Reich (Id. at 5). He had “not been forthright with the Court in advancing plaintiffs’ incapacity defense “and as an officer of the court he owed “a duty of candor” (Id. at 6). Reich had also “continued to enable these frivolous lawsuits” while he “took potentially hundreds of thousands in legal fees from a man living in his truck and on charity to prosecute a case which counsel should have known would result in a significant adverse fees award” (Id. at 7). Reich’s motion to withdraw was held in abeyance until an appearance by Nix’s new counsel.
February also brought the hearing in MLB’s motion for judgment on the pleadings in Nix’s Florida State Court case. The hearing was on February 11, and twelve days later the Court granted the motion to dismiss. It found that “the pleadings are closed at this time” and relied “on everything that is contained wholly within the pleadings.” In June 2014 Nix “learned of the attacking and alleged conduct in which his digital account and digital information was hacked.” Judge FuIt stated that Nix had a four-year statute of limitations that began on June 14, 2014, and Nix filed the case in January 2019. MLB was thus “entitled to judgment on the pleadings on the affirmative defense of statute of limitations” (Nix et al v. The Office of the Commissioner of Baseball et al, (“Nix et al’), In the Circuit Court of the Eleventh Judicial Circuit in and for the Miami-Dade County, Florida, Case No. 2019-002611-CA-01, Section CA08, Order on Defendants’ Motion for Judgment on the Pleadings at 1/2 (2-23-21)).
March: Reich Files for Reconsideration of the February 2021 Federal Court Order
Four weeks later Reich moved for reconsideration of the order that imposed liability on him for the October 27, 2020, fee award and held “in abeyance his motion to withdraw” (DNA Sports, Order Denying Reconsideration, at 1 (3-1-21)). Reich was seeking to withdraw “from what he considers his forced representation” of Nix and DNA Sports. He had focused on the “acknowledged conflict” but if granted, the withdrawal would leave “Nix alone to his self-destructive device, DNA Sports Performance Labs subject to default, and both unrepresented in the face of civil-contempt sanctions.” Moreover, it remained unclear if Nix and DNA Sports “have retained counsel on appeal.” “Attorney Reich brought plaintiffs to this dance and the equities favor his limited representation to our proximate conclusion.”
Furthermore, Reich’s “conflict does not excuse his right of candor.” He had “breached that duty by advancing without clarification or correction, plaintiffs’ baseless incapacity defense.” Reich had “incurred no liability for his conduct after October 27 (2020)”. That “order found that “Attorney Reich breached Rule 11, but held the matter ‘in abeyance to see the extent to which he engages in ongoing harassment.’’’ The order did not “impose immediate sanctions” but “offered grace in return for good conduct. When Attorney Reich failed his part, the February 4 order imposed the earlierliability” (Id. at 2).
Four days later, the Florida State Court entered an order stating that Nix’s case was “Dismissed After Hearing” (Nix et al, Final Disposition at 1, (3-5-21)). Once again Nix filed a motion for reconsideration (Nix et al, Filing #122882910, (3-10-21)). The motion had over two pages of “Procedural History” and told the Court that it “did not adhere” to the proper legal standard (Id. at 5); “erroneously relied on inapposite case law (Id. at 7); and “improperly extrapolated facts from exhibits to support its ruling” (Id. at 9). The Court dispensed with oral argument. It “reviewed said motion in Chambers” and denied his motion (Nix et al, Order Denying Plaintiff’s Motion for Reconsideration, Filing #123163830 (3-16-21))
April: The Ninth Circuit Is Heard From
Nix and DNA Sports did not yet have counsel in the federal case appeal. Not surprisingly, he was unable to meet that Court’s schedule, and filed an opposed motion to extend the time to file the appellate brief. That was granted. They must file their opening brief by July 19, 2021. The “answering brief is due August 18, 2021” and the “optional reply brief is due within 21 days after service of the answering brief.” The Circuit denied the Appellees “opposed motion” to “dismiss for failure to prosecute” (DNA Sports, Case No. 20-17283, Order (4-12-21)). That same day, Nix and DNA Sports filed a Notice of Appeal in the Florida State Court case, (Nix et al, Filing #124754484 (4-12-21)).
June: Attorney Reich is Released
Reich made another motion to withdraw as counsel. Judge Alsup granted it at a “Further Case Management Conference” in June 2021. However, the Court “retains jurisdiction over Mr. Reich for the purpose of enforcing its sanctions order.” The Court ordered Reich “to pay $1,000 per month pursuant to that order.” If he “faithfully observes such payment for one year, the Court will consider vacating its order” as to Reich. The Court also ordered Nix “to file a declaration laying out his assets and liabilities as well as his income and expenses, in reasonable detail” (DNA Sports, Minute Entry, Doc. No. 114, (6-11-21)).
Nix filed the declaration. He stated that since Reich “has been removed by court order I am left without counsel to file this statement” (DNA Sports, Doc. No. 115, Declaration of Plaintiff Nieman Nix at 1, (6-24-21)). His personal checking account had a balance of $192, his business account had $283. Those were his sole accounts and he had less than $500 in cash. He claimed that the “MLB Defendants currently owe me and my company (DNA Sports) over $161,000, as they have failed to comply with a Court order” in the Florida case (Id. at 3). He gave a fair amount of detail concerning the discovery dispute but failed to mention that Court had dismissed his case with prejudice in February.
July: The San Francisco Federal Court Orders Another Hearing
Judge Alsup ordered a “Continuing Motion Hearing” for Sanctions and for an Order Requiring Plaintiff to Order Transcripts.” That will be via a conference line on 7-22-21 (DNA Sports, Clerk’s Notice (7-1-21)).
Conclusion
Nix is now on the clock for his appeals of his California federal case and his Florida case. He must prepare two appellate briefs and participate in Judge Alsop’s conference call hearing in July. This is far from over, but his costs are formidable. Heads must be constantly shaking at MLB.
