Alberto Martinez v. City of Chicago ( 2016 )

In the
United States Court of Appeals
For the Seventh Circuit
____________________
Nos. 15-2752, 15-3410
ALBERTO MARTINEZ, et al.,
Plaintiffs-Appellees,
v.
CITY OF CHICAGO, et al.,
Defendants,
and
MARY E. MCCLELLAN,
Respondent-Appellant.
____________________
IN RE: MARY E. MCCLELLAN,
Petitioner.
____________________
Appeals from the United States District Court for the
Northern District of Illinois, Eastern Division.
No. 09 C 5938 — John F. Grady, Elaine E. Bucklo, Judges.
____________________
ARGUED MARCH 30, 2016 — DECIDED MAY 23, 2016
____________________
2 Nos. 15-2752, 15-3410
Before WOOD, Chief Judge, and POSNER and ROVNER, Cir-
cuit Judges.
POSNER, Circuit Judge. The principal question presented
by this appeal is whether an order by a district court impos-
ing a sanction on a lawyer for misconduct in a case before
the court can ever be appealed if the sanction lacks a mone-
tary component.
As part of a lawsuit charging the City of Chicago and
others with malicious prosecution and other torts, the plain-
tiffs sought by subpoena to discover documents lodged in
the Cook County State’s Attorney’s Office. The lawyers rep-
resenting the Office, who included Mary McClellan, the ap-
pellant, told the plaintiffs’ lawyers that the files they were
looking for no longer existed. A year later, however, when
Judge Grady, the presiding judge, ordered the Office to al-
low the plaintiffs’ lawyers to inspect 181 boxes of documents
stored in a warehouse, the lawyers quickly found the docu-
ments they’d asked for—and moved the district court to
sanction McClellan and her colleagues for obstructing the
plaintiffs’ discovery by insisting that the documents the
plaintiffs needed no longer existed.
Some months after the tort suit ended in the plaintiffs’
acceptance of an offer of judgment, the judge granted the
motion for sanctions and ordered McClellan and the State’s
Attorney’s Office to pay, as sanctions for what the judge
concluded was indeed seriously obstructive conduct in dis-
covery, the fees and costs that their misconduct had imposed
on the plaintiffs. It fell to Judge Bucklo, who took over the
case when Judge Grady retired in 2015, to calculate the dol-
lar amount of the sanctions. She ordered McClellan and the
Nos. 15-2752, 15-3410 3
State’s Attorney’s Office to pay the plaintiffs a total of
$35,522.94 in fees and costs.
Judge Grady had based his finding of attorney miscon-
duct on both 28 U.S.C. § 1927 and the inherent authority of a
federal court to punish attorney misconduct in a case before
it. In the baroque language beloved of legislatures and
courts, the statute provides that “any attorney … in any
court of the United States … who so multiplies the proceed-
ings in any case unreasonably and vexatiously may be re-
quired by the court to satisfy personally the excess costs, ex-
penses, and attorneys’ fees reasonably incurred because of
such conduct.” Federal judges can also sanction attorneys
appearing before them for actions taken “in bad faith, vexa-
tiously, wantonly, or for oppressive reasons.” Chambers v.
NASCO Inc., 501 U.S. 32, 45–46 (1991). Bad faith includes
“recklessly making a frivolous claim.” Mach v. Will County
Sheriff, 580 F.3d 495, 501 (7th Cir. 2009); see also Egan v.
Pineda, 808 F.3d 1180 (7th Cir. 2015). The judge could also
have invoked in support of his ruling Fed. R. Civ. P.
37(a)(5)(A), which authorizes the award of attorneys’ fees
incurred as a result of discovery abuse.
The judge explained (record citations omitted) that
ASA [assistant state’s attorney] McClellan recklessly
adhered to the position that the documents the plaintiffs
sought did not exist. … [T]he CCSAO [Cook County
State’s Attorney’s Office, McClellan’s employer] initially
took the position that, except for a few “special” cases, it
destroys all misdemeanor case files immediately after trial.
ASA McClellan first introduced [a] distinction between
“jury” and “non-jury” misdemeanors in February 2013.
The fact that McClellan did not acknowledge that the
CCSAO had changed its position created unnecessary con-
4 Nos. 15-2752, 15-3410
fusion. On the other hand, at that point in the proceedings,
it appears that both McClellan and Fallon [another assis-
tant state’s attorney] were in the dark about the CCSAO’s
actual policy. … In response to [a] subpoena, the CCSAO
disclosed for the first time that there were 31 boxes of mis-
demeanor files from the relevant year (2009), and 180 box-
es of misdemeanor files, total. McClellan confidently stated
at the April 3, 2013 hearing on the CCSAO’s motion to
quash that these boxes did not contain materials for mis-
demeanor offenses concluded by bench trials. The most
generous inference that we can draw from McClellan’s
statement is that she did not speak with the custodian of
those boxes before making this statement. If she had, she
would have learned that they contained materials from
misdemeanor bench trials. This is reckless conduct. She al-
so recklessly overstated the amount of time and resources
it would take to inspect the files, leading the court to order
an unnecessary intermediate step to determine whether
the plaintiffs’ proposed inspection was feasible. [She said]
“the amount of resources it’s going to take to pull 180 box-
es and have them available to counsel is extraordinary.”
[Told by Jared Kosoglad, the plaintiffs’ lawyer, that the in-
spection could be completed in an hour or two,] McClellan
insisted that it could not be done in that amount of time
and raised other argumentative objections. She continued
to obstruct discovery at the inspection itself by refusing …
requests for reasonable accommodations. The court over-
ruled McClellan’s objections and, consistent with Mr. Ko-
soglad’s estimate, he and his colleagues found the docu-
ments within a matter of minutes.
The CCSAO produced 1,000 responsive documents in
April and May 2013, contrary to McClellan’s assurances
that the documents the plaintiffs sought did not exist.
McClellan asserted a questionable privilege claim with re-
spect to a subset of the relevant documents, which she
Nos. 15-2752, 15-3410 5
withdrew after plaintiffs moved to compel their produc-
tion. Given the history of the case to that point, the plain-
tiffs’ subpoena seeking to inspect the original file was emi-
nently reasonable. Nevertheless, McClellan continued to
raise bogus objections, which the court overruled. The
plaintiffs finally received all the documents that they were
seeking on July 26, 2013, mercifully ending the CCSAO’s
participation in this case. In sum, we conclude that McClel-
lan’s conduct was reckless and undertaken in bad faith [a
wordy formula for sanctionable conduct].
McClellan appealed to us, but before the appeal was
heard the entire $35,522.94 in money sanctions was paid by
the Cook County State’s Attorney’s Office, leaving McClel-
lan owing nothing. She didn’t drop her appeal, however,
doubtless because if Judge Grady’s sanctions order stands it
will have a number of adverse consequences for her profes-
sionally, such as requiring her—should she ever move for
admission to the bar of another court—to acknowledge hav-
ing been censured in a judicial order and ordered to contrib-
ute to the monetary sanctions that the judge imposed. See,
e.g., U.S. District Court for the Northern District of Illinois,
Petition for Admission to the General Bar (Jan. 2016). Or, should
she be asked by judges, potential clients, or potential em-
ployers whether her professional conduct had ever been the
subject of an investigation, she would have to answer (un-
less she lied, which could get her into worse trouble) that she
had indeed been investigated for professional misconduct—
for Judge Grady’s order triggered an investigation of her by
the Attorney Registration and Disciplinary Commission of
the Illinois Supreme Court, though as far as we know no dis-
ciplinary action has been taken against her by the ARDC.
6 Nos. 15-2752, 15-3410
In short, because a finding of attorney misconduct in a
sanctions order can seriously impair an attorney’s profes-
sional standing, reputation, and earning possibilities, such
an order can’t be brushed off as easily as a gnat. It is not just
a slap on the wrist, or an angry remark by a judge in the
course of a trial or other hearing. It is a judicial order, in this
case issued by a respected and experienced federal judge
(really two respected and experienced federal judges, as the
money sanction imposed by Judge Bucklo, together with her
critical comments supportive of Judge Grady’s, amplified
the gravity of Judge Grady’s order).
As a result of the Cook County State’s Attorney’s Office
having paid the entire sanctions judgment, McClellan has no
standing to challenge the monetary sanction. But the sanc-
tions order contains detailed findings of professional mis-
conduct by her, findings likely to inflict a significant reputa-
tional injury having adverse financial consequences for her.
Such an injury, inflicted in a formal judicial order, can be se-
rious enough to make the order appealable. Were the order
false, it would be akin to a defamatory accusation.
We are mindful of the holding in Bolte v. Home Ins. Co.,
744 F.2d 572, 573 (7th Cir. 1984), that “critical comments by a
district judge” are not appealable orders. But the district
judge in that case had imposed no sanction. He had merely
made a comment criticizing two lawyers en passant while
ruling on another motion. The case settled before a hearing
on sanctions was held, and no sanctions order was issued.
That case is thus unlike this one, in which a sanctions order
was issued that imposed not only a financial obligation on
McClellan, one of the targets of the order though spared by
Nos. 15-2752, 15-3410 7
pure luck from having to pay anything, but also what is like-
ly to prove a serious blot on her professional escutcheon.
Subsequently, however, another panel of this court cited
Bolte for the proposition that “an attorney may not appeal
from an order that finds misconduct but does not result in
monetary liability, despite the potential reputational effects.”
Clark Equipment Co. v. Lift Parts Mfg. Co., 972 F.2d 817, 820
(7th Cir. 1992). Bolte had not said that, however; and the
court in Clark, qualifying the passage we just quoted, went
on to say that “someday [the lawyer in question] may be
able to show concrete harm to his reputation from the bare
existence of [the district judge’s] unpublished opinions;
should that contingency occur, mandamus might be an ap-
propriate remedy.” Id. Again Bolte is cited, and indeed it had
suggested that mandamus might be an appropriate remedy
if a judge made harshly critical comments about a lawyer in
a case that the judge was presiding over. 744 F.2d at 573. But
there was no sanctions order in Bolte—and in Clark the panel
vacated the sanctions order entered by the district judge as
moot because the attorney’s client agreed to pay the sanc-
tions as part of a settlement, though the panel did not vacate
the written opinion reprimanding the attorney.
The opinion in Clark explains that
a court’s interest in having the rules of procedure obeyed
never disappears. But that interest is not sufficient to keep
a compensatory award alive for appeal after the parties
have settled. A district court may sanction abusive behav-
ior directly by imposing a punitive fine made payable to the
court or by imposing non-monetary sanctions. These sanctions
cannot be settled by the parties. Alternatively, however, the
court may sanction the offending party by forcing him to
compensate his opponent for the trouble he has caused.
8 Nos. 15-2752, 15-3410
This second enforcement mechanism may be analogized to
tort remedies, which also regulate behavior by compensat-
ing injured parties. Society at large has an interest in en-
forcing negligence rules, yet we allow tort plaintiffs to bar-
gain away that interest by settling. So too the beneficiary of
a compensatory sanction may bargain away the court's in-
terest in seeing its rules enforced. Id. at 819 (emphases
added, citation omitted).
Consistent with this passage, the orders entered by Judg-
es Grady and Bucklo in the present case contain both mone-
tary and nonmonetary sanctions, the latter consisting of the
findings of misconduct in Judge Grady’s order, findings en-
dorsed by Judge Bucklo. If we are right in analogizing such
an order (if unjustified) to a defamatory accusation, there
can be no basis for relegating the target of the order to his (in
this case her) remedy of mandamus, which has a higher bar
to success than an appeal. As pointed out in Keach v. County
of Schenectady, 593 F.3d 218, 224–26 (2d Cir. 2010), eight fed-
eral courts of appeals have held that significant nonmone-
tary sanctions imposed by a federal judge on a lawyer ap-
pearing before him are appealable, at least if imposed by
formal order as in the present case. The suggestion in Clark
that misconduct that doesn’t result in “monetary liability”
can’t support an appeal is contrary to the decisions of those
courts unless we say that McClellan (like Voorman, the
counterpart to McClellan in the Clark case) was subjected to
“monetary liability” in being ordered to pay part of the fine
levied by Judge Bucklo, though a miraculous intervention
(the agreement of McClellan’s codefendant, the Cook Coun-
ty State’s Attorney, to pay the entire fine) cancelled the lia-
bility (Voorman too was saved financially by a settlement
that vacated the judgment against him). By virtue of that in-
Nos. 15-2752, 15-3410 9
tervention McClellan paid no financial sanction, and there-
fore under Clark would have been remitted to mandamus.
But that places Clark in considerable tension not only with
Bolte but also with Insurance Benefit Administrators, Inc. v.
Martin, 871 F.2d 1354, 1359 (7th Cir. 1989), where we said
that “a finding that a sanction is warranted does not neces-
sarily require a monetary assessment,” meaning that mone-
tary liability is not a sine qua non of a sanction order, and we
have seen that such an order can impose injury even if it
does not impose a financial cost on the person sanctioned.
This is a possibility to which the Clark decision does not
avert.
It’s true that although Judge Grady expressed strong crit-
icism of lawyer McClellan, the only sanctions order that he
had decided to issue (though it was not quantified until the
order issued by his successor, Judge Bucklo) was an order to
pay, which when he issued it would have been expected to
impose at least part of the expense on McClellan. We can
imagine an argument that as in Bolte all we have here is a
critical comment by the judge, and that a mere comment
can’t be the subject of an appeal. It would indeed be odd to
think that any time a judge criticized a lawyer, whether in
open court or in a written order, the lawyer could treat the
criticism as an appealable ruling. But there is a difference be-
tween a critical comment unjoined to a sanctions order and a
critical comment that appears in and offers justification for a
formal such order. The accusation of misconduct by McClel-
lan is not an add-on to the order issued by Judge Grady but
the justification for it. One of the sanctions that this court oc-
casionally imposes, usually after a rule to show cause has
been issued, is a formal censure or reprimand of a lawyer.
Such a sanction, if imposed on an Illinois lawyer, must be
10 Nos. 15-2752, 15-3410
reported to the Attorney Registration and Disciplinary
Commission (or its equivalent in other states), and can result
in the suspension of the lawyer’s law license, or worse.
The order in this case is best understood as a dual mon-
ey-professional-ethics order, the two types of sanction being
intertwined in it. Had it not been for McClellan’s profession-
al misconduct, the monetary penalty imposed in the order
would have been smaller than it was. It was the absence of a
sanctions order in Bolte that made the criticism of the lawyer
a mere critical comment rather than a disciplinary ruling.
Only Clark seems to insist that without a monetary penalty a
sanction order cannot be appealed no matter how heavy a
weight it places on the sanctioned person, though the order
may be reviewable if mandamus is sought.
McClellan points out that a court may not impose sanc-
tions based on conduct not specified in the parties’ motions
unless it first “provides the attorney with notice regarding
the sanctionable conduct and an opportunity to be heard.”
The Jolly Group, Ltd. v. Medline Industries, Inc., 435 F.3d 717,
720 (7th Cir. 2006). “A general notice that the court is con-
templating sanctions is insufficient; rather, the offending
party must be on notice of the specific conduct for which she
is potentially subject to sanctions.” Johnson v. Cherry, 422
F.3d 540, 551–52 (7th Cir. 2005). McClellan denies that the
plaintiff’s motion provided her with sufficient notice. That is
simply incorrect.
There is a further complication, however. In contesting
Judge Grady’s accusation of professional misconduct,
McClellan has no adversary. She’s not trying to take any-
thing away from anyone; she just wants her name cleared.
It’s true that the plaintiffs have filed a brief opposing
Nos. 15-2752, 15-3410 11
McClellan and defending Judge Grady’s order (Judge Buck-
lo’s monetization of the order is not challenged). But what is
the plaintiffs’ standing to participate in the appeal? They
have nothing to gain from McClellan’s professional reputa-
tion taking a whack, nothing to lose should she be exonerat-
ed. Nor have they cross-appealed, seeking further sanctions
against her. Maybe they have some ongoing or anticipated
further struggles with the Cook County State’s Attorney’s
Office, but they do not say so and anyway McClellan is no
longer employed there.
The absence of an appellee with standing need not, how-
ever, and in this case does not, preclude an appeal. McClel-
lan has suffered an injury that would be rectified were we to
reverse. She therefore has standing to appeal. It might have
been better had we, as in a case involving a contempt of the
district court, designated the judge (Judge Bucklo now, be-
cause of Judge Grady’s retirement) as a respondent and
therefore elicited a response to McClellan’s argument for re-
versal. But this omission was not fatal, or even consequen-
tial, given that Judge Grady had set forth the grounds of his
harsh judgment of McClellan in lucid detail and that Judge
Bucklo has signified her agreement with that judgment, thus
leaving us well positioned to compare the reasons for the
sanction with the arguments in McClellan’s briefs, and to
decide as in any appeal whether to affirm or reverse.
One possible final obstacle to the prompt resolution of
this surprisingly complicated case remains to be considered.
With Judge Grady out and Judge Bucklo in, one can imagine
her deciding that her monetization of the sanctions order—
the $35,000 plus—was punishment enough and maybe she
should lighten the verbal sanctions on McClellan. Indeed
12 Nos. 15-2752, 15-3410
McClellan urged her to alter Judge Grady’s ruling. Judge
Bucklo refused, however, noting her agreement with Judge
Grady’s order.
McClellan contends finally that Judge Grady lacked ju-
risdiction to impose any sanctions on her because the plain-
tiffs accepted the defendants’ offer of judgment after the fil-
ing of the motion for sanctions but before the judge ruled on
it. Though a district court retains jurisdiction to impose sanc-
tions after the proceeding in which the sanctionable conduct
occurred has ended, Cooter & Gell v. Hartmarx Corp., 496 U.S.
384, 395–96 (1990), McClellan contends that the plaintiffs
bargained away their right to the monetary sanction because
the litigants agreed that the defendants would pay reasona-
ble attorneys’ fees and costs. But that was separate from the
sanctions motion filed against McClellan and her colleagues,
who were not parties to the litigation. Moreover, the sanc-
tions order serves not only as a means of collecting money
from a malefactor to compensate the plaintiffs but also of
punishing (and in turn deterring) wrongdoing by attaching a
price tag to it.
The significance of the order, as far as McClellan is con-
cerned, is not the price tag but the sharp criticisms of her in
the order, and those criticisms were apt and accurate. The
plaintiffs had been strung along by McClellan and others at
the State’s Attorney’s Office for more than a year, having
been incorrectly informed that the Office had not retained
the plaintiffs’ criminal case files. McClellan had repeatedly
denied that the files existed, without knowing whether they
did or did not exist and without conducting a reasonable in-
quiry into the matter. She had even threatened the plaintiffs’
counsel that she would seek sanctions against him if he con-
Nos. 15-2752, 15-3410 13
tinued to request the documents in the face of her denial of
their existence. She also tried to prevent him from searching
for the files himself. And when the files were finally located
she delayed turning them over by advancing a meritless
claim of privilege. It took multiple court orders and more
than a year of effort for the plaintiffs to obtain all the docu-
ments to which they were entitled. The district court did not
abuse its discretion in sanctioning her.
In sum, we deny the plaintiffs’ motion to dismiss the
appeal for lack of jurisdiction, and likewise McClellan’s peti-
tion for a writ of mandamus, which seeks the same relief as
her appeal, just under a different rubric; and we affirm the
orders issued by the two judges. But because of the tension
between, on the one hand, our analysis and the decisions on
which it rests (decisions from eight circuits, as noted in the
Second Circuit’s decision in Keach, cited earlier), and on the
other hand our decision in the Clark case—which we hereby
overrule to the extent that it deems a formal, but non-
monetary, sanction not appealable—we have circulated our
opinion in advance of publication to all the judges of the
court in regular active service, pursuant to Seventh Circuit
Rule 40(e), for a determination of whether a majority of the
judges want to rehear the case en banc. None of the judges
voted to hear it en banc. The judgment is
AFFIRMED.