FILED: NEW YORK COUNTY CLERK 01/26/ :16 PM INDEX NO /2016 NYSCEF DOC. NO. 73 RECEIVED NYSCEF: 01/26/2017 EXHIBIT C
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1 FILED NEW YORK COUNTY CLERK 01/26/ PM INDEX NO /2016 NYSCEF DOC. NO. 73 RECEIVED NYSCEF 01/26/2017 EXHIBIT C
2 Case 114-cv VEC Document 176 Filed 01/24/17 Page 1 of 4 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK USDC SDNY DOCUMENT ELECTRONICALLY FILED DOC # DATE FILED 1/24/ X SECURITIES AND EXCHANGE COMMISSION, Plaintiff, -against- LAWRENCE E. PENN, III, ET AL., Defendants, -and- A BIG HOUSE FILM AND PHOTOGRAPHY STUDIO, LLC, Relief Defendant X VALERIE CAPRONI, United States District Judge 14-CV-0581 (VEC) ORDER Defendant Lawrence E. Penn, III ( Penn ) has filed an Application for the Court to Request Counsel. For the following reasons, Defendant s application is DENIED. LEGAL STANDARD The in forma pauperis statute provides that the courts may request an attorney to represent any person unable to afford counsel. 28 U.S.C. 1915(e)(1). Unlike in criminal cases, in civil cases, there is no requirement that courts supply indigent litigants with counsel. Hodge v. Police Officers, 802 F.2d 58, 60 (2d Cir. 1986). Instead, the courts have broad discretion when deciding whether to grant an indigent litigant s request for pro bono representation. Id. Even if a court does believe that a litigant should have a free lawyer, under the in forma pauperis statute, a court has no authority to appoint counsel, but instead, may only request that an attorney volunteer to represent a litigant. Mallard v. U.S. Dist. Court for the S. Dist. of Iowa, 490 U.S. 296, (1989). Moreover, courts do not have funds to pay
3 Case 114-cv VEC Document 176 Filed 01/24/17 Page 2 of 4 2 counsel in civil matters. Courts must therefore grant applications for pro bono counsel sparingly, and with reference to public benefit, in order to preserve the precious commodity of volunteerlawyer time for those litigants whose causes are truly deserving. Cooper v. A. Sargenti Co., Inc., 877 F.2d 170, (2d Cir. 1989). In Hodge, the Second Circuit set forth the factors a court should consider in deciding whether to grant an indigent litigant s request for pro bono counsel. 802 F.2d at Of course, the litigant must first demonstrate that he or she is indigent, for example, by successfully applying for leave to proceed in forma pauperis. The court must then consider whether the litigant s claim seems likely to be of substance a requirement that must be taken seriously. Id. at If these threshold requirements are met, the court must next consider such factors as the indigent s ability to investigate the crucial facts, whether conflicting evidence implicating the need for cross-examination will be the major proof presented to the fact finder, the indigent s ability to present the case, the complexity of the legal issues[,] and any special reason in that case why appointment of counsel would be more likely to lead to a just determination. Id.; see also Cooper, 877 F.2d at 172 (listing factors courts should consider, including litigant s efforts to obtain counsel). In considering these factors, district courts should neither apply bright-line rules nor automatically deny the request for counsel until the application has survived a dispositive motion. See Hendricks v. Coughlin, 114 F.3d 390, (2d Cir. 1997). Rather, each application must be decided on its own facts. See Hodge, 802 F.2d at 61. DISCUSSION On January 13, 2017, Defendant filed an incomplete Application to Proceed in Forma Pauperis (IFP), Application for the Court to Request Counsel, and an Application to Appeal in Forma Pauperis. Dkts. 172, 173. For purposes of this matter, the Court deems integrated
4 Case 114-cv VEC Document 176 Filed 01/24/17 Page 3 of 4 3 Defendant s application to proceed in forma pauperis on appeal and application to proceed in forma pauperis in this matter and GRANTS Defendant s application to proceed in forma pauperis in this action. See 28 U.S.C. 1915(a)(1). Defendant therefore qualifies as indigent. The Securities and Exchange Commission s ( SEC ) complaint alleges violations of the securities laws, namely Section 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. 78j(b), and Rule 10b-5(a) and (c) thereunder, 17 C.F.R b-5; and Sections 204, 206(1), 206(2), and 207 of the Investment Advisers Act of 1940 (the 40 Act ), 15 U.S.C. 80b-4, 80b-6(1), 80b-6(2), and 80b-7, and Rule thereunder, 17 C.F.R Defendant counter-claimed for various common law torts and a violation of 42 U.S.C Dkt The SEC moved for judgment on the pleadings, or, in the alternative, summary judgment on July 1, By Order dated December 21, 2016, the Court converted the SEC s motion for judgment on the pleadings to a motion for summary judgment, granted that motion in its entirety, and dismissed without prejudice Penn s counterclaims. See Dkt. 168 at 2, 16. The Court s Order did not resolve the SEC s claims against the Defendant under Sections 204 and 207 of the 40 Act or Rule promulgated thereunder. Nonetheless, the Court directed the parties to brief the issue of remedies in light of the Court s decision. Id. at 16. The SEC has since informed the Court that it is currently weighing the voluntary dismissal of its claim under Section 207. Dkt Because the remaining legal issues in this proceeding are likely to be limited to the question of remedies, the Court finds that Defendant s remaining defenses are not likely to be of substance. Hodge, 802 F.2d The Court similarly finds that the other Hodge factors weigh against granting Defendant s application. This proceeding follows a parallel criminal proceeding in New York State Supreme Court. The crucial facts are already established, as
5 Case 114-cv VEC Document 176 Filed 01/24/17 Page 4 of 4 4 discussed in the Court s earlier Order. See Dkt. 168 at 2-5. Nor is there likely to be any discovery or cross-examination that might necessitate the skill of an experienced and professional advocate. The complexity of the remaining legal issues is also likely to be limited. In this case, representation would not lead to a quicker and more just result by sharpening the issues and shaping examination. Hodge, 802 F.2d at 61. CONCLUSION For the foregoing reasons, Plaintiff s Application for the Court to Request Counsel is DENIED WITHOUT PREJUDICE. In the event that the SEC chooses to go forward on its claims under Sections 204 and 207 and Rule 204-2, or substantial further briefing becomes necessary, Defendant may at that time renew his application for the Court to request counsel. The Court certifies under 28 U.S.C. 1915(a)(3) that any appeal from this Order would not be taken in good faith and therefore IFP status is denied for the purpose of an appeal. See Coppedge v. United States, 369 U.S. 438, (1962). SO ORDERED. Dated January 24, 2017 New York, NY _ VALERIE CAPRONI United States District Judge
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