Selecting a named plaintiff in a putative class action can be one of the most important, but overlooked, decisions that a plaintiff’s counsel makes. Picking the wrong plaintiff can lead to delay, dismissal of claims, denial of class certification in some circumstances, and motions for sanctions. The high-profile putative class action against Mark Cuban, the “Shark Tank” multimillionaire entrepreneur and owner of the Dallas Mavericks NBA team, illustrates all of these dangers.
A high-profile group of plaintiffs’ lawyers, including David Boies, filed the case, Robertson v. Cuban, in the U.S. District Court for the Southern District of Florida. They allege their clients relied on Cuban’s endorsement of the Voyager cryptocurrency platform in October 2021 when creating their Voyager accounts and investing their funds. Voyager filed for bankruptcy protection in July 2022, losing hundreds of millions in investors’ funds. The plaintiffs allege the platform illegally sold unregistered securities through the Voyager platform.
The initial complaint included two Florida plaintiffs, Rachel Gold and Pierce Robertson, who both alleged that they heard Cuban’s endorsement of the Voyager platform and relied on it to invest in cryptocurrency through Voyager. Two months later, the plaintiffs filed an amended complaint. In April 2023, they attempted to file a second amended complaint to add additional class representatives from Florida.
The defense opposed the motion to amend and filed a motion for sanctions under 28 U.S.C. § 1927. Under that statute, a court may require an attorney “who so multiples the proceedings in any case unreasonably and vexatiously … to satisfy personally the excess costs, expenses, and attorneys’ fees reasonably incurred because of such conduct.”
Cuban’s counsel argues that the court should personally sanction one of the plaintiffs’ counsel — but not the plaintiffs themselves — for “patently false assertions in the complaint and other filings.”
The motion claims that Gold falsely represented herself as a Voyager account holder when instead she opened an account in her husband’s name. This fact impacts Gold’s standing and her ability to bring a claim because, under Florida law, only purchasers may bring unregistered securities claims.
Additionally, the motion argues that Robertson falsely alleged that he relied on Cuban’s endorsement of Voyager when opening his account in the summer of 2021. Voyager first approached Cuban in August 2021, and Cuban made his first public statement endorsing Voyager on October 27, 2021. The motion claims Robertson may have fabricated his reliance claims since Cuban’s affiliation with Voyager became public after Robertson opened his account. Cuban’s counsel argues that plaintiffs’ counsel knew or should have known about these fatal flaws before filing the complaint.
The motion argues that the plaintiffs’ claims are especially frivolous because, without these two plaintiffs, the case would have no connection to Florida and could not have been filed in Miami.
In response, plaintiffs’ counsel argues that Gold and Robertson’s allegations are true because Gold opened, funded, and managed the account at issue, and Robertson relied on a video of Cuban discussing Voyager in April 2021 when opening his account. The response also points out that the second amended complaint includes three new plaintiffs from Florida.
The response also discusses how Cuban’s threats for sanctions are not a new tactic, how filing a complaint or amended complaint does not violate section 1927, and how they have been working efficiently to move this litigation forward. It claims the defense is actually the one delaying litigation by marking “every single document and every page of [Cuban’s] sworn deposition with either a ‘confidential’ or ‘highly confidential’ designation” to conceal the facts of the case from the public.
The sanctions motion only seeks fees against plaintiffs’ counsel Adam Moskowitz. But, interestingly, the motion does not seek fees — or even mention — the putative class’s other counsel from the Boies Schiller law firm, including David Bois, former American Bar Association president Stephen Zack, or Boies partner Ursula Ungaro, who served as a federal district judge in Miami until 2021.
Ultimately, Ungaro’s former colleague, U.S. District Judge Roy Altman, will rule on the motion in the upcoming months. If Judge Altman grants the section 1927 sanctions motion, Cuban may be awarded reasonable attorneys’ fees and litigation costs — potentially spearheading the case’s dismissal.
This article was co-authored by Carlton Fields summer associate Annick Runyon.
