No. 10-11202
and Consolidated Cases
In the
United States Court of Appeals
for the Fifth Circuit
No. 10-11202
NETSPHERE, INC. Et Al,
Plaintiffs
v.
JEFFREY BARON,
Defendant-Appellant
v.
ONDOVA LIMITED COMPANY,
Defendant-Appellee
Appeal of Ex Parte Order Appointing Receiver
Where No Claims were Pled in the Property Seized
––––––––––––––––––––––––––––––––––––––––––––
Cons. w/ No. 11-10113
NETSPHERE INC., Et Al, Plaintiffs
v.
JEFFREY BARON, Et Al, Defendants
v.
QUANTEC L.L.C.; NOVO POINT L.L.C.,
Appellants
v.
PETER S. VOGEL,
Appellee
From the United States District Court
Northern District of Texas, Dallas Division
Civil Action No. 3-09CV0988-F
JEFFREY BARON’S RESPONSE TO
RECEIVER’S PETITION FOR REHEARING EN BANC
Case: 10-11202 Document: 00512139034 Page: 1 Date Filed: 02/07/2013
––––––––––––––––––––––––––––––––––––––––––––
Cons. w/ No. 11-10289
NETSPHERE, INC., ET AL, Plaintiffs
v.
JEFFREY BARON, Defendant- Appellant
v.
DANIEL J SHERMAN, Appellee
––––––––––––––––––––––––––––––––––––––––––––
Cons. w/ No. 11-10290
NETSPHERE, INC. ET AL, Plaintiffs
v.
JEFFREY BARON, ET AL, Defendants
QUANTEC L.L.C.; NOVO POINT L.L.C., Non-Party Appellants
v.
PETER S. VOGEL, Appellee
––––––––––––––––––––––––––––––––––––––––––––
Cons. w/ No. 11-10390
NETSPHERE, INC. ET AL, Plaintiffs
v.
JEFFREY BARON, Defendant – Appellant
QUANTEC L.L.C.; NOVO POINT L.L.C., Appellants
v.
ONDOVA LIMITED COMPANY, Defendant – Appellee
v.
PETER S. VOGEL, Appellee
––––––––––––––––––––––––––––––––––––––––––––
Cons. w/ No. 11-10501
NETSPHERE, INC. ET AL, Plaintiffs
v.
JEFFREY BARON, Defendant – Appellant
QUANTEC L.L.C.; NOVO POINT L.L.C., Appellants
CARRINGTON, COLEMAN, SLOMAN & BLUMENTHAL, L.L.P., Appellant
v.
PETER S. VOGEL; DANIEL J. SHERMAN, Appellees
––––––––––––––––––––––––––––––––––––––––––––
Case: 10-11202 Document: 00512139034 Page: 2 Date Filed: 02/07/2013
Cons. w/ No. 12-10003
NETSPHERE, INC. ET AL, Plaintiffs
v.
JEFFREY BARON, Defendant – Appellant
QUANTEC L.L.C.; NOVO POINT L.L.C., Appellants
GARY SCHEPPS, Appellant
v.
PETER S. VOGEL, Appellee
––––––––––––––––––––––––––––––––––––––––––––
Cons. w/ No. 12-10444
In re: NOVO POINT LLC, Petitioner
––––––––––––––––––––––––––––––––––––––––––––
Cons. w/ No. 12-10489
NETSPHERE, INC. ET AL, Plaintiffs
v.
JEFFREY BARON, Defendant – Appellant
QUANTEC L.L.C.; NOVO POINT L.L.C., Appellants
v.
PETER S. VOGEL; DANIEL J. SHERMAN , Appellees
––––––––––––––––––––––––––––––––––––––––––––
Cons. w/ No. 12-10657
NETSPHERE, INC. ET AL, Plaintiffs
v.
JEFFREY BARON, Defendant – Appellant
QUANTEC L.L.C.; NOVO POINT L.L.C., Appellants
v.
PETER S. VOGEL; DANIEL J. SHERMAN , Appellees
Case: 10-11202 Document: 00512139034 Page: 3 Date Filed: 02/07/2013
Respectfully submitted,
/s/ Gary N. Schepps
Gary N. Schepps
Texas State Bar No. 00791608
5430 LBJ Freeway, Suite 1200
Dallas, Texas 75240
(972) 200-0000 - Telephone
(972) 200-0535 - Facsimile
Email: legal@schepps.net
FOR JEFFREY BARON
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-1-
TABLE OF CONTENTS
TABLE OF CONTENTS ................................................................................................1
TABLE OF AUTHORITIES ..........................................................................................2
INTRODUCTION ...........................................................................................................5
ARGUMENT FOR PARTIAL REHEARING EN BANC...........................................5
ARGUMENT AGAINST REHEARING THE ENTIRE APPEAL ............................7
LEGAL ANALYSIS OF VOGEL’S REHEARING REQUEST................................13
CONCLUSION & PRAYER ........................................................................................19
CERTIFICATE OF SERVICE.....................................................................................20
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TABLE OF AUTHORITIES
FEDERAL CASES
Allen v. Wright,
468 U.S. 737, 750 (1984)......................................................................................19
Atlantic Trust Co. v. Chapman,
208 U.S. 360, 373-374 (1908) ..........................................................................6, 12
Booth v. Clark,
58 US 322, 331 (1855).......................................................................................... 12
Boyd v. United States,
116 U.S. 746 (1886).............................................................................................. 19
Coastal Corp. v. Texas Eastern Corp.,
869 F.2d 817, 820 (5th Cir. 1989) .......................................................................... 9
Cochrane v. WF Potts Son & Co.,
47 F.2d 1026, 1028 (5th Cir. 1931) ......................................................5, 13, 14, 15
De Beers Consol. Mines, Ltd. v. United States,
325 U.S. 212, 219 (1945)......................................................................................17
Desarrollo, SA v. Alliance Bond Fund, Inc.,
527 U.S. 308 (1999).............................................................................................. 16
Fall v. Eastin,
215 U.S. 1, 11 (1909).............................................................................................. 7
Gordon v. Washington,
295 U.S. 30, 36 (1935)....................................................................................16, 18
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Griffin v. Lee,
621 F.3d 380, 388 (5th Cir. 2010) ........................................................................15
In re First South Sav. Ass'n,
820 F.2d 700, 708 (5th Cir. 1987) ........................................................................10
In re Fredeman Litigation,
843 F.2d 821 (5th Cir. 1988) ................................................................................17
ITT Community Development Corp. v. Barton,
569 F.2d 1351, 1359 (5th Cir. 1978) ....................................................................17
Lion Bonding & Surety Co. v. Karatz,
262 U.S. 640, 642 (1923)........................................................................................6
Mansfield, C. & LMR Co. v. Swan,
111 U.S. 379, 382 (1884) .........................................................................................6
Mayor v. Cooper,
73 U.S. 247, 250-251 (1868) ..................................................................................6
Newton v. Consolidated Gas Co. of NY,
258 U.S. 165, 177 (1922)......................................................................................10
Ownbey v. Morgan,
256 U.S. 94, 109 (1921)........................................................................................15
Palmer v. Texas,
212 U.S. 118 (1909) .................................................................................................. 6
Reynolds v. Stockton,
140 U.S. 254, 268 (1891)......................................................................................13
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Rhode Island v. Massachusetts,
37 U.S. 657, 718 (1838)..........................................................................................6
Tucker v. Baker,
214 F.2d 627, 631 (5th Cir. 1954) ........................................................................18
U.S. Catholic Conference v. Abortion Rights Mobilization, Inc.,
487 U.S. 72, 77 (1988)..........................................................................................19
Wayne Gas Co. v. Owens Co.,
300 U.S. 131, 136-7 (1937) ..................................................................................10
Weinberger v. Romero-Barcelo,
456 U.S. 305, 313 (1982)......................................................................................18
Welch v. Texas Dept. of Highways,
483 U.S. 468, 478-9 (1987) ..................................................................................15
WF Potts Son & Co. v. Cochrane,
59 F. 2d 375, 377 (5th Cir. 1932) ........................................................................... 6
FEDERAL STATUTES
18 U.S.C. § 401 ....................................................................................................... 21
28 U. S. C. § 1651 ................................................................................................... 20
FEDERAL RULES
Fed.R.Civ.P. 82 ....................................................................................................... 17
FRAP 8 .................................................................................................................... 13
FRAP 8(a)................................................................................................................ 10
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INTRODUCTION
This appeal presents a question of exceptional importance and raises a
fundamental question as to the relationship between the public and the federal courts:
May a federal court confiscate property that it lacks the authority to seize in order to
pay for the unauthorized seizure ?
The Panel has invested a substantial effort in considering the consolidated
appeals. The Panel has worked through some 1,800 pages of briefing
and three
hours of oral argument. The Panel’s opinion correctly lays out the authoritative
law and controlling precedent with respect to the federal court’s lack of jurisdiction
and authority to impose a receivership over property that is not the subject of an
underlying claim or controversy. Still, there is a narrow, focused question of law that
is of exceptional importance worthy of a partial
rehearing en banc, as follows:
Whether a court without jurisdiction and authority to place property into
receivership has the power to make any charge upon, or disposition of, the
assets. The Panel’s decision on this one point conflicts with the controlling
precedent of the United States Supreme Court.
ARGUMENT FOR PARTIAL REHEARING EN BANC
Where the court lacks jurisdiction to impose a receivership over property, it
does not acquire jurisdiction over that property through the receivership. E.g.,
Cochrane v. WF Potts Son & Co., 47 F.2d 1026, 1028 (5th Cir. 1931). The Supreme
Court has ruled that without jurisdiction over the property, the district court is
“without power to make any charge upon, or disposition of, the assets”. Lion
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Bonding & Surety Co. v. Karatz, 262 U.S. 640, 642 (1923).
1
In reaching the opposite result, the Panel’s decision erroneously relies on the
Supreme Court’s holding in Palmer v. Texas, 212 U.S. 118 (1909). The Supreme Court
has dispositively ruled that the holding of Palmer does not apply
where the trial court
lacks the jurisdiction to impose the receivership. Lion Bonding, 262 U.S. at 642.
The Panel’s decision also erroneously looks to WF Potts Son & Co. v.
Cochrane, 59 F. 2d 375, 377 (5th Cir. 1932) for guidance in a case where the court
lacks jurisdiction over the receivership res. The WF Potts appeal did not involve a
challenge to the disposition of receivership assets. In WF Potts that issue was
waived. Id. at 378. Rather, the issue in WF Potts was the recovery from the plaintiff
for damages caused by the imposition of the receivership. Id.
The Supreme Court has ruled that “If there were no jurisdiction, there was no
power to do anything but to strike the case from the docket”. Mayor v. Cooper, 73
U.S. 247, 250-251 (1868). The Supreme Court has held that this rule, springing from
the nature and limits of the judicial power of the United States, is inflexible and
without exception. Mansfield, C. & LMR Co. v. Swan, 111 U.S. 379, 382 (1884). The
rule is mandatory and fundamental to American Jurisprudence. E.g., Rhode Island v.
Massachusetts, 37 U.S. 657, 718 (1838) (jurisdiction is required to exercise any
judicial power). As a matter of controlling precedent, a court not having jurisdiction
1
The Supreme Court also expressed this rule in Atlantic Trust Co. v. Chapman, 208 U.S. 360,
373-374 (1908), recognizing that “If he [the receiver] has taken property into his custody under
an irregular, unauthorized appointment ... As to such property his appointment as receiver was
unauthorized and conferred upon him no right to charge it with any expenses.” Id.
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of the res, cannot affect it by its decree. Fall v. Eastin, 215 U.S. 1, 11 (1909).
Actions taken by a court beyond its authority are not mere error but, pursuant
to the binding precedent of the Supreme Court, are absolutely void. E.g., Windsor v.
McVeigh, 93 U.S. 274, 282-283 (1876) (“would not be merely erroneous they would
be absolutely void; because the court in rendering them would transcend the limits of
its authority”).
2
The Supreme Court similarly ruled in De Beers Consol. Mines, Ltd.
v. United States, 325 U.S. 212, 217 (1945) that when a court has no judicial power to
do what it purports to do “its action is not mere error but usurpation of power.”
ARGUMENT AGAINST REHEARING THE ENTIRE APPEAL
THE FACTS: WHAT DID JEFF BARON DO?
Vogel’s argument serves up large piles of hyperbolic rhetoric. However,
when examined for specifics
, the record does not support any of Vogel’s assertions
of wrongdoing by Baron.
3
The District Court, however, believed Vogel’s rhetoric
and found
, for example, that Baron changed bankruptcy counsel so frequently that
he threatened to bring the Bankruptcy Court’s “entire docket” to a standstill.
SR. v16 p1276. When the specifics
are examined, Vogel’s unsupported rhetoric is
exposed– for example, in two years Baron changed bankruptcy counsel only three
times.
4
2
For example, “The decree of a court of equity upon oral allegations, without written pleadings,
would be an idle act, of no force beyond that of an advisory proceeding of the Chancellor. And
the reason is, that the courts are not authorized to exert their power in that way.” Windsor at 283.
3
Vogel’s argument presents a creative writing exercise entirely disconnected from the record. The
‘factual’ and procedural statements in every sentence (save four) of Vogel’s argument find no
support in the record and offer a fancifully, howbeit creative, fictionalized accounting.
4
Keiffer was Ondova’s bankruptcy counsel. Baron’s district court counsel demanded that Keiffer
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Because the District Court’s findings were based on Vogel’s rhetoric, those
findings, appearing of record in the District Court’s orders– such as that Baron
threatened the bankruptcy court’s docket by changing counsel so frequently– are
simply not reliable. SR. v16 p1276. Yet, those erroneous findings were the express
basis of the District Court’s decision to impose the ex parte receivership order seizing
all
of Baron’s assets and property rights. Id. Notably, the findings were all made
without the benefit of what would be traditionally considered “Due Process of Law”.
No trial was ever held. No judgment was ever entered against Mr. Baron.
Instead, Baron was ‘tried and convicted’ of whatever supposed misconduct in an ex
parte, private off-the-record hearing held in chambers. R. 3924; SR. v5 p321; SR.
v11 p83. At the ex parte hearing, the District Judge ordered the seizure of all
of
Baron’s assets, all his money, credit cards, and all
of his property exempt or
otherwise. R.1604-6;
SR. v5 p321, v11 p82-83 (order signed at 1:15pm).
Jeff Baron’s documents and records were seized and Vogel, as the District
Court’s receiver, then fired Jeff’s “AV” rated trial counsel. R. 3890-2. Jeff was
ordered
under threat of contempt not to retain any counsel to defend himself. SR. v8
p1213. The only attorney willing to help was an appellate counsel, Schepps, who
worked unpaid in a limited role on Baron’s appeal, with the assistance at one hearing
of another unpaid appeal lawyer, Barrett. R. 1712-3, 2718-9, 4395,4397.
be let go, SR. v18 p185, and so he was replaced by (1) Pronske. R. 1157. In September 2010
Baron hired (2) Ferguson, a new lawyer he hoped could facilitate the immediate closing of the
bankruptcy. Ferguson was unable to help and (3) Thomas was hired. Doc 1126-1 at 17-18, Two
other lawyers appeared briefly for Baron on specific issues, Jones and Broome, neither was hired
as bankruptcy counsel. All changes of counsel were with express Court approval.
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Baron appealed the receivership order and filed a FRAP 8(a) (Vacate or Stay)
motion that the District Court ordered would be “limited to the appeal of the Order
Appointing Receiver”. R. 3557. The District Court conducted the FRAP 8 hearing
after denying
Baron access to (1) his own documents and evidence, (2) a trial
attorney and hired counsel, (3) notice of the ‘charges’ against him, and (4) an
opportunity to conduct discovery. R. 1575-1577, 3556-3557, 3565-3566, 3891-3892.
Under those conditions, and weeks after being divested of jurisdiction over the
matter by Baron’s appeal, the District Court converted the FRAP 8 motion for relief
on appeal into a ‘hearing’ where Jeff faced defending himself against surprise
allegations of newly alleged wrongdoing– not raised in any motion– such as fraud.
At the hearing, Jeff Baron came forward to testify in his own behalf, with the help of
Barrett, an unpaid appellate lawyer who tried to help. R. 4395,4397. Barrett had no
experience in the federal court and found the matter beyond his competence,
informing the Court, “I’m frankly not equipped to handle it, to be honest with
you, Judge”. R.4603. After Jeff Baron took the stand, but before he testified, the
Judge intimidated Barrett by declaring that his mind was already made up, and he
was not going to believe Jeff. R. 4605:9-18. Barrett immediately directed Jeff not to
testify. R.4606:8. The Judge instructed Jeff to comply with Barrett’s directive, and
Jeff complied. R. 4608:10-13. That was the only ‘hearing’ Jeff Baron received.
5
5
The FRAP 8 (Vacate or Stay) hearing was held in January, 2011, weeks after the District Court
had been divested of jurisdiction by Baron’s appeal on December 2, 2010. R. 1699. E.g., Coastal
Corp. v. Texas Eastern Corp., 869 F.2d 817, 820 (5th Cir. 1989)(district court cannot generally
accept new evidence or arguments to support order while the validity of the order is on appeal).
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No record exists of the ex parte hearing at which the District Court imposed
the receivership. This Honorable Court should carefully examine the issue of
specifically
what Jeff Baron did that would justify granting a district court the
jurisdiction and authority to confiscate
his property to pay the fee for seizing it.
Here, Baron was turned from being financially independent into someone stripped of
his bank accounts and thrown into involuntary bankruptcy proceedings. That is the
effect of the Panel’s decision, even if not the intention.
THE FACTS: THE LAWSUIT FULLY & FINALLY SETTLED.
Contrary to Vogel’s rhetoric, the proceedings were not brought to a grinding
halt because of a disgruntled litigant’s vexatious, fraudulent, pornographic, cyber-
squating, etc. conduct. The proceedings were brought to a grinding halt by a court
approved ‘global settlement agreement’ that settled all claims and controversies
between all parties. R. 2225, 2234, 2262-83. Thus, the district court case came to an
end in August, 2010 when all parties entered into a stipulated dismissal with
prejudice of all claims. R. 2346.
The ‘fraud’ involved has been that of Vogel and Sherman, who used an ex
parte hearing to mislead the District Judge into believing that Baron had violated the
Baron’s motion was expressly filed under Fed.R.App.P. 8(a) and ordered heard as a motion
seeking appellate relief, and is, accordingly, non-appealable. E.g., In re First South Sav. Ass’n,
820 F.2d 700, 708 (5th Cir. 1987)(“district court’s decision to deny a stay pending appeal was not
a final order”). Baron sought not a dissolution of the receivership, but a stay or equitable
vacation under Wayne Gas Co. v. Owens Co., 300 U.S. 131, 136-7 (1937) (court may vacate a
decree granting equitable relief “after an appeal has been perfected and after the time for appeal
has expired” but “before rights have vested on the faith of its action.”) to “preserve the status
quo” pending appeal. Newton v. Consolidated Gas Co. of NY, 258 U.S. 165, 177 (1922).
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District Court’s order to mediate fee disputes with former attorneys and had breached
his settlement obligations to Sherman, the chapter 11 trustee of Ondova.
After painstakingly working through two thousand pages of briefing, and
three hours of oral argument, the Panel correctly found that Vogel and Sherman’s
core representations were simply not supported by the record. Contrary to the
Vogel’s rhetoric, the property seized by the District Court had nothing to do with the
underlying lawsuit. When challenged by the Panel in oral argument, no order could
be identified that Baron violated.
After the oral argument in this appeal had been held, Jeff Baron was allowed–
for the first time– a paid advocate to challenge Sherman under oath on the witness
stand. Under cross-examination, the rhetoric sold to this Honorable Court in
Sherman and Vogel’s appellate briefings completely collapsed.
First, Sherman admitted that there had
been an ex parte hearing to impose the
receivership and he participated. Doc 1126-1 at 81. Thus, the receivership was not
imposed “instanter”, as erroneously represented by Vogel in his petition for
rehearing (at page 4) and as erroneously suggested in the District Court’s findings in
denying Mr. Baron his FRAP 8 (stay or vacate) motion on February 4, 2011. SR v2
p343-4.
Second, contrary to the repeated false representations Sherman and Vogel
made to the District Court and this Honorable Court that Baron had caused the
mediation to fail by disobedience to the court’s mediation order, Sherman testified
that Vogel reported to him it was the attorney claimants who caused the mediation
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fail by refusing to mediate. Doc 1126-1 at 23.
Third, Sherman testified that Baron had not violated, in any way, any
obligation due Sherman under the global settlement agreement. Doc 1126-1 at 56.
In other words, when finally confronted under oath
, Sherman admitted that the
rhetoric he and Vogel used to obtain and justify the receivership was false.
VOGEL’S UNSUPPORTABLE ARGUMENT
Vogel’s
6
argument that Baron was vexatious, and delayed court proceedings is
equally without merit. There is nothing in the record that demonstrates that Baron
vexed any party or delayed any proceedings.
7
Vogel’s argument that Baron violated
court orders is unfounded– at oral argument, no order could be identified that Baron
even allegedly violated.
Vogel’s final argument that Mr. Baron didn’t pay his lawyers is meritless– the
attorneys did not file pleadings in the district court and no trial was held to adjudicate
any of the alleged claims. Moreover, the claims are non-diverse state law actions
falling well outside of the jurisdiction of the federal court. See Griffin v. Lee, 621
F.3d 380, 388 (5th Cir. 2010).
6
Vogel’s standing to petition for rehearing is unclear. By law, the receiver is “the creature of the
court”, Atlantic Trust, 208 U.S. at 371, charged with being “an indifferent person between
parties”. Booth v. Clark, 58 US 322, 331 (1855). Vogel, however, using Jeff Baron’s money, has
become a highly paid advocate for his own position. Notably while Vogel has used millions in
receivership assets to pay for legal representation in this appeal, Jeff Baron has been prohibited
from having the assistance of any paid appellate counsel.
7
For example, Vogel argues that Baron took Ondova Bankrupt to avoid a contempt hearing. The
record, however, shows that prior to
filing the Ondova bankruptcy, Baron was notified that the
contempt hearing would not be held. SR. v18 p329; R. 919.
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LEGAL ANALYSIS OF VOGEL’S REHEARING REQUEST
Vogel’s petition for rehearing raises three core legal issues.
The first issue involves this Honorable Court’s holding in Cochrane v. W.F.
Potts Son & Co., 47 F.2d 1026, 1029 (5th Cir. 1931) and the limits of a federal
court’s subject matter jurisdiction, as follows:
Reynolds
The federal court is not empowered to seek out matters that in the court’s
sense of equity need intervention by the court. Rather, as a matter of the protection
of the liberty of the citizens, the federal court’s authority is limited to the resolutions
of claims and controversies brought before the court for resolution. Reynolds v.
Stockton, 140 U.S. 254, 268 (1891). In Reynolds, the Supreme Court ruled that
“Persons by becoming suitors do not place themselves for all purposes under the
control of the court, and it is only over these particular interests, which they choose
to draw in question, that a power of judicial decision arises.” Id.
The Supreme Court laid down a fundamental rule of limited subject matter
jurisdiction and ruled that a court’s jurisdiction is “confined to the subject-matter set
forth and described in the petition.” Id. at 269. The Supreme Court’s ruling is clear–
the jurisdiction of the District Court is limited to the resolution of the claims asserted
in the pleadings. Id. at 265. In Reynolds, as this Honorable Court held in Cochrane,
the Supreme Court ruled that the district court’s exercise of judicial power was
invalid because “it is in no manner responsive to the issues tendered by the
pleadings. This idea underlies all litigation.” Reynolds at 265.
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Cochrane
The jurisdictional question in Cochrane is not, as Vogel erroneously argues,
that a state court later attempted to assert authority over the bond series. Rather, the
question addressed in Cochrane is the limit of a federal court’s jurisdiction to impose
a receivership over property that is not subject to a controversy at issue before the
Court. Cochrane, 47 F.2d at 1029.
In Cochrane, the plaintiff sued to protect against an alleged fraudulent scheme
involving the issuance of a series of bonds. Id. at 1027. In order to abate the fraud,
the plaintiff moved the court to take charge of the securities through a receivership.
Id. However, since no claim of lien or equitable right by the plaintiff was alleged in
any of the securities outside of a single series, “E”, the court appointed a receiver
over property to “which no person was before the court claiming to have any
interest”. Id. at 1028.
The appellant contended that the district court “never acquired jurisdiction
over, any of the securities belonging to series A, B, C, D, and F ... because as to such
series A, B, D, and F no claim of interest in or right to any of their subject-matter has
been asserted in this court”. Id. This Honorable Court agreed, and ruled that the
district court lacked subject matter jurisdiction over the assets because “the plaintiffs’
pleadings [did not] put their subject-matter at issue, or bring them within the ambit of
the court’s jurisdiction”. Id. at 1029. The Court noted that “while there were general
allegations of fraud and confusion in the matter of the affairs of the two companies,
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the plaintiffs’ pleadings limited their claim to the bond issue E and nothing was
alleged to set up any claim against or charge upon the other securities.” Id. at 1029.
“Departure from the doctrine of stare decisis demands special justification.”
E.g., Welch v. Texas Dept. of Highways, 483 U.S. 468, 478-9 (1987). The receiver,
however, has failed to explain why there is special justification for the reversal of the
long established precedent of this Honorable Court. The receiver argues, for
example, that the doctrine of quasi in rem jurisdiction somehow impacts the
Cochrane decision. Contrary to the receiver’s argument, the doctrine of quasi in rem
jurisdiction was developed well before this Court’s ruling in Cochrane.
8
Current Law: Griffin v. Lee
Unless a dispute “falls within the confines of the jurisdiction conferred by
Congress, such courts do not have authority to issue orders regarding its resolution.”
Griffin v. Lee, 621 F.3d at 388. Such jurisdiction goes to “the core of the court’s
power to act”. Id. The federal court’s jurisdiction does not include resolution of the
non-diverse state law attorney fee claims of a litigant’s former counsel. Id. at 382,
390. Critically, as this Honorable Court ruled in Griffin, “Federal courts are courts of
limited jurisdiction. They possess only that power authorized by the Constitution and
statute, which is not to be expanded by judicial decree.” Id. at 388.
The second issue involves the bounds of a federal court’s equity jurisdiction,
and thus the bounds of its All Writs, and inherent power. Vogel’s argument seeks
8
A decade before Cochrane, the distinction between quiasi in rem proceedigns and in personam
actions was already considered “ancient” Ownbey v. Morgan, 256 U.S. 94, 109 (1921).
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reconsideration of a fundamental question that was dispositively ruled on by the
Supreme Court in Grupo Mexicano de Desarrollo, SA v. Alliance Bond Fund, Inc.,
527 U.S. 308 (1999). In Grupo Mexicano, Justice Ginsburg argued for a “dynamic
equity jurisprudence” to extend the equity jurisdiction of the federal courts beyond
the uses “‘traditionally accorded by courts of equity’ at the time the Constitution was
adopted.” Id. at 336-7. Justice Ginsburg argued for an “adaptable” federal equitable
power” that extended “beyond the contemplation of the 18th-century Chancellor”. Id.
That “adaptable” power was dispositively rejected
by the Supreme Court,
which ruled that “This expansive view of equity must be rejected”. Id. at 321.
Justice Scalia, writing for the Court, explained that “equity is flexible; but in the
federal system, at least, that flexibility is confined within the broad boundaries of
traditional equitable relief. To accord a type of relief that has never been available
before ... [is] not of flexibility but of omnipotence.” Id. at 322.
Citing Gordon v. Washington, 295 U.S. 30, 36 (1935), the Supreme Court
ruled in Grupo Mexicano that “the equity jurisdiction of the federal courts is the
jurisdiction in equity exercised by the High Court of Chancery in England at
the time of the adoption of the Constitution and the enactment of the original
Judiciary Act, 1789”. Id. at 318. Accordingly, the Supreme Court held the bounds
of a court’s equity jurisdiction was “whether the relief respondents requested here
was traditionally accorded by courts of equity.” Id. at 319.
As held in the panel’s decision, the relief Vogel seeks was not that
traditionally accorded by courts of equity, and is in fact, without precedent in the
Case: 10-11202 Document: 00512139034 Page: 20 Date Filed: 02/07/2013
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history of American Jurisprudence. Vogel’s argument seeks to side-step the bounds
of equity jurisdiction by reference to the All Writs Act, and a courts inherent
authority. However, as this Honorable Court has ruled, “Both the All Writs Act and
the inherent powers doctrine provide a federal court with various common law equity
devices”. ITT Community Development Corp. v. Barton, 569 F.2d 1351, 1359 (5th
Cir. 1978)(“The inherent powers doctrine ... is rooted in the notion that a federal
court, sitting in equity, possesses all of the common law equity tools of a Chancery
Court”); Grupo Mexicano at 326 fn 8 (“All Writs Act, 28 U.S.C. § 1651, ... we have
said that the power conferred by the predecessor of that provision is defined by ‘what
is the usage, and what are the principles of equity applicable in such a case.’ De
Beers Consol. Mines, Ltd. v. United States, 325 U.S. 212, 219 (1945)”).
Accordingly, neither the All Writs Act nor the inherent powers doctrine
authorize more or greater authority than a court’s equity powers. Id.; and see, In re
Fredeman Litigation, 843 F.2d 821 (5th Cir. 1988)(“The disposition of these assets
was not an issue in the underlying lawsuit, but the district court premised the
injunction on ‘its inherent power to protect — through equity — the future utility of
a potential judgment for damages.’ Because the district court lacked power to enter
such an injunction under general equitable principles ... we vacate”).
The third issue involves the bounds of a federal court’s receivership
jurisdiction specifically. Litigants can sometimes be frustrating, and as much as a
judge would like to order a litigant’s family pet, or family bible seized by a receiver
and held under threat of destruction as a means to controlling the behavior of a
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litigant,
9
such power was not exercised by the High Court of Chancery in 1789, and
has never been allowed the federal courts. Rather, in a free society, the Court issues
orders and injunctions to compel behavior– a tradition with several hundred years of
history. Weinberger v. Romero-Barcelo, 456 U.S. 305, 313 (1982). Compliance is
coerced when necessary, by fines and imprisonment. 18 U.S.C. § 401.
The Supreme Court has dispositively ruled that “there is no occasion for a
court of equity to appoint a receiver of property of which it is asked to make no
further disposition. The English chancery court from the beginning declined to
exercise its jurisdiction for that purpose.” Gordon v. Washington, 295 U.S. 30, 37
(1935). Thus, “a federal court of equity will not appoint a receiver where the
appointment is not ancillary to some form of final relief which is appropriate for
equity to give.” Id. at 38.
Accordingly, this Honorable Court has ruled that “Where a final decree
involving the disposition of property is appropriately asked, the court, in its
discretion, may appoint a receiver to preserve and protect the property pending its
final disposition. ... There is no occasion for a court of equity to appoint a
receiver of property of which it is asked to make no further disposition.” Tucker
v. Baker, 214 F.2d 627, 631 (5th Cir. 1954).
9
The district court below seized all of Mr. Baron’s property, paperwork, and possessions, and
ordered Mr. Baron to turn over his cell phones and not to engage in any economic transactions.
Contrary to Vogel’s “creative” argument, neither Baron nor his counsel was ever held in
contempt of any order nor sanctioned for any wrongdoing (in this, or any other litigation).
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CONCLUSION & PRAYER
The Supreme Court began the seminal case of Boyd v. United States, 116 U.S.
746 (1886) with a quote from the 1765 English case of Entick v. Carrington, as
follows: “The great end for which men entered into society was to secure their
property. That right is preserved sacred and incommunicable”. Unless a partial
rehearing is granted, Circuit law will now allow the confiscation
of property found
beyond the authority of the Court to seize.
The Supreme Court has held that “[It rests] on the central principle of a free
society that courts have finite bounds of authority ... which exist to protect citizens
from the very wrong asserted here, the excessive use of judicial power. The courts,
no less than the political branches of the government, must respect the limits of their
authority”. U.S. Catholic Conference v. Abortion Rights Mobilization, Inc., 487 U.S.
72, 77 (1988).
The limitation of a court’s authority to the boundaries of authorized
controversies pled before the court is “founded in concern about the proper – and
properly limited – role of the courts in a democratic society”. Allen v. Wright, 468
U.S. 737, 750 (1984). It is the first line of defense in the protection of liberty against
unauthorized intrusion. Id. Unless a partial rehearing is granted, the ruling of this
Honorable Court removes that line of defense to the protection of liberty. The
Panel’s decision acknowledges that the District Court exceeded the boundaries of its
authority, but allows it to do so, and thereby fails to protect the public
from the
very wrong complained of— the excessive use of judicial power.
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The issues at stake are of exceptional importance. Partial rehearing en banc in
this case is important to preserving a free society and protecting the citizens of this
Circuit from well intentioned but excessive use of judicial power by the federal
courts. Accordingly, Jeffrey Baron prays that a partial
rehearing en banc be granted
to address the issue.
Respectfully submitted,
/s/ Gary N. Schepps
Gary N. Schepps
Texas State Bar No. 00791608
5430 LBJ Freeway, Suite 1200
Dallas, Texas 75240
(972) 200-0000 - Telephone
(972) 200-0535 - Facsimile
Email: legal@schepps.net
COUNSEL FOR JEFFREY BARON
CERTIFICATE OF SERVICE
This is to certify that this brief was served this day on all parties who receive
notification through the Court’s electronic filing system.
CERTIFIED BY: /s/ Gary N. Schepps
Gary N. Schepps
COUNSEL FOR APPELLANT JEFFREY BARON
Case: 10-11202 Document: 00512139034 Page: 24 Date Filed: 02/07/2013
