SEC v. Cuban: Attorney’s Fees Battle Continues

Mark Cuban (“Cuban”) continues to attempt to recover attorney’s fees under § 2412(b) or the inherent power of the court by asserting the Securities and Exchange Commission (“SEC”) filed a lawsuit in bad faith.   The Blog previously posted on the briefs filed in support and opposition of this bad faith suit regarding awarding attorney’s fees.  The SEC has not questioned the court’s ability to award fees based on § 2412(b) or under its inherent power, but maintained it filed the lawsuit on a factual basis.

On December 14, 2009, without ruling on the merits of Cuban’s claim, the court granted a period of discovery.  However, the court warned the litigants that this was not to be a “fishing expedition,” and the grounds on which Cuban relied in his Motion should be the presumptive limits of discovery.

After this discovery period, which included many extensions and an unsuccessful conference, both Cuban and the SEC filed briefs on March 29^th that stated the other side had asserted privileges in withholding documents. In his brief, Cuban argued the SEC has only produced 199 documents and cited privilege over 602 items in “an obvious attempt to shield its misconduct and frustrate the Court’s Order.” On the other hand, the SEC asked the Court to compel Cuban “to provide full, accurate and complete answers and produce, or identify as privileged with appropriate factual and legal basis, all responsive documents.”

The U.S. District Court, Northern District of Texas is expected to make a ruling on this issue in the near future.

The primary materials for this post can be found on the DU Corporate Governance Website.