Northeast Data v. Microdata Corp. ( 1994 )

USCA1 Opinion

                                [Not for Publication]
                                [Not for Publication]

                            United States Court of Appeals
                            United States Court of Appeals
                                For the First Circuit
                                For the First Circuit
                                 ____________________

        No. 94-1266

                            NORTHEAST DATA SYSTEMS, INC.,

                                Plaintiff, Appellant,

                                          v.

                                MICRODATA CORPORATION,

                                 Defendant, Appellee.

                                 ____________________

                     APPEAL FROM THE UNITED STATES DISTRICT COURT

                          FOR THE DISTRICT OF MASSACHUSETTS

                   [Hon. Robert B. Collings, U.S. Magistrate Judge]

                                 ____________________

                                        Before

                            Cyr and Stahl, Circuit Judges,
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                             and Zobel,* District Judge.
                                         ______________

                                 ____________________

            Roger S. Davis with whom Cheri L. Hoff  and Davis, Rubin & Parker,
            ______________           _____________      ______________________
        P.A. were on brief for appellant.
        ____
            Frederick W. Rose  with whom Gianfranco  A. Pietrafesa and Cooper,
            _________________            _________________________     _______
        Rose & English were on brief for appellee.
        ______________

                                 ____________________


                                 ____________________

        _____________________
        *Of the District of Massachusetts, sitting by designation.



















                      Per  Curiam.    Plaintiff-appellant Northeast  Data
                      Per  Curiam.
                      ___________

            Systems appeals the district court's denial of its motion for

            sanctions   against   defendant-appellee  McDonnell   Douglas

            Computer Systems Company.  We affirm.

                                          I.
                                          I.
                                          __

                                  PRIOR PROCEEDINGS
                                  PRIOR PROCEEDINGS
                                  _________________

                      Plaintiff  originally commenced this action in 1983

            in  state  court against  Microdata Corporation.1   Defendant

            removed this action to  the United States District Court  for

            the  District of  Massachusetts where  plaintiff subsequently

            filed an amended complaint  charging defendant with breach of

            contract,  interference  with  contractual  and  advantageous

            relationships, deceit, breach of the implied covenant of good

            faith and fair  dealing, breach of fiduciary  duty, bad faith

            termination, antitrust law violations, and violation of Mass.

            Gen. L.  ch. 93A     11.   Defendant filed  an  answer and  a

            counterclaim containing,  inter alia, claims  for breach  and
                                      _____ ____

            tortious  breach of  the implied  covenant of good  faith and

            fair   dealing,   breach   of  fiduciary   duty,   bad  faith

            termination, antitrust  violations,  and violation  of  Mass.

            Gen. Laws ch. 93A   11.

                      Post  judgment, plaintiff  filed with  the district

            court  a motion seeking  sanctions against defendant pursuant

                                
            ____________________

            1.  Microdata Corporation  was acquired by  McDonnell Douglas
            Corporation in  1979 and renamed  McDonnell Douglas  Computer
            Systems Company during the pendency of this litigation. 

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            to  Fed. R.  Civ. P.  11 (1988),  28 U.S.C.    1927,  and the

            inherent  powers of the court.   In a  lengthy written order,

            the  magistrate  judge  denied  plaintiff's  motion  and this

            appeal was taken.

                                         II.
                                         II.
                                         ___

                                      DISCUSSION  
                                      DISCUSSION
                                      __________

                      Defendant concedes that the only issue on appeal is

            whether  the lower court  erred in  denying sanctions.   More

            specifically,  plaintiff  argues  that the  magistrate  judge

            erred  in  failing  to  find  that  defendant  1)  filed  its

            counterclaims solely for the purpose of delay and harassment;

            2) knew at the time of its filing, and subsequently, that the

            claims  lacked   merit;  and   3)  filed  false   answers  to

            interrogatories to mislead and obstruct plaintiff.  Plaintiff

            primarily  offers  as  evidence  the interrogatories  of  two

            individuals  who  defendant  claimed  had  knowledge  of  the

            factual  basis  for  its  counterclaims,  and  the subsequent

            deposition  testimony  of  these  same  two  witnesses  which

            plaintiff  claims show  that neither  actually  possessed any

            such  factual   knowledge.    Plaintiff  argues   that  these

            allegedly inconsistent statements prove that defendant failed

            to conduct  a sufficient  pre-filing inquiry with  respect to

            its   counterclaims  and  that   such  failure  should  merit

            sanctions.





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                      Because  all  of the  events animating  this appeal

            occurred  prior to  December  1, 1993,  the magistrate  judge

            relied  upon Fed.  R.  Civ. P.  11 (1988)  and  not the  1993

            amended  version.2   We review a  district court's  denial of

            sanctions  for abuse  of  discretion.   See Navarro-Ayala  v.
                                                    ___ _____________

            Nunez, 968  F.2d  1421,  1425  (1st Cir.  1992)  ("[A]  party
            _____

            protesting  an   order  in  respect  to   sanctions  bears  a

            formidable  burden in  attempting  to convince  the court  of

            appeals that the district judge erred in finding that Rule 11

            was, or was not, violated.").

                      In  his  order  denying  plaintiff's   motion,  the

            magistrate judge  observed that this same  argument served as

            the focal  point for plaintiff's March 1987  motion to strike

            the counterclaims and  for sanctions, a motion  denied by the

            court.   Before  reaching  the merits  of plaintiff's  second

            request  for  sanctions,  the  magistrate  judge  noted  that

            plaintiff  never filed  a motion  for reconsideration  of the

            first  denial.   He then  held that  "based upon  the factual

            recitation  incorporated in  the  affidavit  of  [defendant's

            counsel] as well as  a review of the complete  transcripts of

            the  [two] depositions,  it  cannot be  found that  Microdata

            answered  the  interrogatories  in  bad  faith, attempted  to

            mislead plaintiff or failed to conduct an adequate pre-filing

            investigation."  

                                
            ____________________

            2.  Neither party has challenged this decision on appeal.

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                      A comprehensive review  of the  lengthy history  of

            this  litigation and the careful and full review given by the

            magistrate judge of the latest request for sanctions not only

            satisfies us that there was no abuse of  discretion, manifest

            or otherwise,3 but that this appeal is frivolous.  

                                         III.
                                         III.
                                         ____

                                      CONCLUSION
                                      CONCLUSION
                                      __________

                      For the foregoing reasons,  we  affirm the district

            court's denial of sanctions. 

                      Affirmed.  Double costs.
                      Affirmed.  Double costs.
                      _________  _____________




















                                
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            3.  The magistrate judge also  separately reviewed and, after
            careful   consideration,   dismissed   each  of   plaintiff's
            additional  evidentiary  offers,  i.e.,  that   defendant  1)
            improperly   delayed  the  completion  of  a  deposition;  2)
            obstructed  defendant's  motion   for  summary  judgment;  3)
            frivolously reopened  discovery; and  4) failed to  prosecute
            its  counterclaims.   Because  we agree  with the  magistrate
            judge's  finding   that  none  of  these   allegations  merit
            sanctions  in   this  case,  we  need   not  regurgitate  his
            discussion here.

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