(The opinions expressed here are those of the author, a

columnist for Reuters.)

By Alison Frankel

Oct 15 (Reuters) - A Manhattan federal judge may have

thought he'd heard the last of a securities class action by

dogecoin investors who accused Elon Musk and Tesla of rigging

the price of the cryptocurrency when he tossed investors' fourth

amended complaint in late August.

Oh how wrong he was.

Lawyers for Musk and the dogecoin investors' class, who have

traded vicious barbs throughout the litigation, have now filed

cross-motions for post-dismissal sanctions.

Musk and Tesla contend that after filing a series of

frivolous "whack-a-mole" complaints, dogecoin plaintiffs' lawyer

Evan Spencer tried to extract a settlement by obliquely offering

to drop investors' appeal in exchange for $5 million.

Spencer, in turn, insists that his complaints were all filed

in good faith and were backed by "numerous scientific studies."

He moreover asserts that Musk's outside lawyers from Quinn

Emanuel Urquhart & Sullivan must be sanctioned and disqualified

for improperly disclosing his confidential settlement order and

trying to shut down his appeal.

U.S. District Judge Alvin Hellerstein of Manhattan

previously denied sanctions motions by both sides in this

made-for-headlines case. The judge ruled in December that

investors had "presented non-frivolous and good-faith issues to

litigate," but that Spencer hadn't offered hard evidence to back

his claim that Quinn Emanuel improperly leaked information about

the case to news outlets.

Hellerstein's December order nonetheless left the door open

for renewed sanctions motions. So, of course, both sides took

him up on the offer.

Neither Spencer nor Musk lawyers from Quinn Emanuel

responded to my email queries on the latest sanctions spat.

Tesla lawyer Allison Huebert also did not respond.

In case you've somehow managed to avoid hearing about the

dogecoin litigation before this story, dogecoin investors

alleged that Musk and Tesla engaged in a scheme to boost the

price of dogecoin through Twitter posts and "publicity stunts,"

including Musk's appearance on Saturday Night Live. One

iteration of the class complaint claimed that Musk engaged in

insider trading when he allegedly sold $124 million in dogecoin.

Musk and Tesla have said throughout more than two years of

litigation that there is no proof they even owned two crypto

wallets that allegedly engaged in suspicious dogecoin trading -

or, for that matter, that either Musk or Tesla ever sold

dogecoin.

Hellerstein allowed the dogecoin investor class to refine

their theories in four amended complaints but finally dismissed

the case with prejudice on Aug. 29. The two-page dismissal

ruling concluded that Musk's allegedly deceptive comments about

dogecoin were nothing more than puffery that no reasonable

investor could have relied upon. Hellerstein also said it was

"not possible to understand" investors' allegations of a

pump-and-dump insider-trading scheme.

Plaintiffs' lawyer Spencer filed a notice of appeal on Sept.

19.

But a few days later, on Sept. 25, according to an exhibit

attached to Musk's motion for sanction, Spencer emailed Quinn

Emanuel to say that "multiple top class action firms" had

expressed interest in taking over the case if it was revived by

the 2nd U.S. Circuit Court of Appeals. Spencer said in the email

that his 130 or so dogecoin investor clients had lost about $5

million but that his expert witness estimated classwide losses

to be on the order of $5 billion.

His appeal, Spencer said, could therefore "turn a $5 million

case into a $5 billion case."

Quinn Emanuel said in its Sept. 27 sanctions motion that it

regarded Spencer's email as an attempt "to extort a quick

handout" after a prolonged "harassment campaign."

Under the Private Securities Litigation Reform Act, defense

lawyers argued, Spencer is liable for litigating unfounded

claims with the improper purpose of extracting a settlement.

Quinn Emanuel asked Hellerstein to sock Spencer for $750,000 -

its legal fees for defending the allegedly frivolous case.

Spencer's Oct. 10 opposition brief pointed out that

Hellerstein already said, in his December order refusing to

grant Musk's previous motion for sanctions, that investors'

claims were brought in good faith. Spencer conceded that his

pleadings may have been "imperfect," but argued that each

complaint, including the fourth amended complaint, was

well-founded on studies showing Musk's heavy influence on

dogecoin trading.

Spencer vehemently objected to Quinn Emanuel's description

of his settlement proposal as "extortionate," arguing that there

was nothing unethical or inappropriate about offering to settle

the case for an amount that would make his clients whole.

On the same day that he filed his opposition to Quinn's

motion for sanctions against him, Spencer docketed his own

sanctions motion, accusing Quinn Emanuel of improperly

disclosing his settlement offer in the hope of pressuring him to

drop his appeal. Spencer also said Musk's lawyers had

"fraudulently inflated their legal bills" as part of that

pressure campaign.

He asked Hellerstein to disqualify the firm, seal the

confidential settlement offer and award him and his clients

$375,000.

On Monday, Quinn Emanuel filed a letter asking Hellerstein

temporarily to seal the Spencer email it previously filed as an

exhibit to its sanctions motion. The firm said Spencer had not

previously designated the settlement proposal as private or

confidential. As of Tuesday afternoon, the judge had not acted

on the request.

Quinn also asked for an extension until Oct. 25 to respond

to Spencer's sanctions motion. Hellerstein, in other words,

won't see the end of this case for a while.

Read more:

Elon Musk, Tesla win dismissal of lawsuit claiming they

rigged dogecoin

Musk, Tesla go on attack against Dogecoin plaintiffs

lawyer

Dogecoin plaintiffs lawyers move to oust Musk, Tesla counsel

after 'leaked' sanctions letter