Stive, Samuel S. v. United States ( 2004 )

In the
United States Court of Appeals
For the Seventh Circuit
____________
No. 03-2151
SAMUEL S. STIVE,
Plaintiff-Appellee,
v.
UNITED STATES OF AMERICA,
Defendant-Appellant.
____________
Appeal from the United States District Court for the
Northern District of Illinois, Eastern Division.
No. 00 C 369—James B. Zagel, Judge.
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ARGUED FEBRUARY 24, 2004—DECIDED APRIL 28, 2004
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Before POSNER, RIPPLE, and EVANS, Circuit Judges.
POSNER, Circuit Judge. Samuel Stive brought suit against
the United States under the Federal Tort Claims Act for
battery by two police officers employed by the Department
of Veterans Affairs at a VA hospital in Illinois. Applying
Illinois law, which requires in a suit for battery against law
enforcement officers that the plaintiff prove that the officers
acted willfully and wantonly, the district judge ruled after
a bench trial (the only kind available in a suit under the Act)
that Stive had proved his case. The judge awarded him
$87,000 in damages and later some $49,000 in attorneys’
2 No. 03-2151
fees. It is only from the award of attorneys’ fees that the
government appeals, complaining primarily about the
standard that the judge used. Echoing the substantive
standard applicable to the battery claim, the judge had ruled
that the government to be liable for payment of the plain-
tiff’s attorneys’ fees need only have acted “wantonly” in
resisting the suit, which he defined as “causelessly, without
restraint, and in reckless disregard of the rights of others.”
The Equal Access to Justice Act, so far as applicable to this
case, makes the United States liable for attorneys’ fees “to
the same extent that any other party would be liable under
the common law.” 28 U.S.C. § 2412(b). The federal common
law of attorneys’ fee awards is the “American rule,” under
which each party to a lawsuit bears his own expenses of suit
unless “the losing party ‘has acted in bad faith, vexatiously,
wantonly, or for oppressive reasons.’ ” Muslin v.
Frelinghuysen Livestock Managers, Inc., 777 F.2d 1230, 1235
(7th Cir. 1985) (quoting F.D. Rich Co. v. United States ex rel.
Industrial Lumber Co., 417 U.S. 116, 129 (1974)). The govern-
ment doesn’t like “wantonly” and points to language in
other opinions which suggests that deliberate misconduct
must be shown. For example, the Supreme Court has said
that “the narrow exceptions to the American Rule effectively
limit a court’s inherent power to impose attorney’s fees as
a sanction to cases in which a litigant has engaged in bad-
faith conduct or willful disobedience of a court’s orders.”
Chambers v. NASCO, Inc., 501 U.S. 32, 47 (1991); see also id.at 46 n. 10 (“purpose . . . to harass or to cause unnecessary
delay or needless increase in the cost of litigation”); Maynard
v. Nygren, 332 F.3d 462, 470 (7th Cir. 2003) (“willful disobe-
dience or bad faith”); Miller Brewing Co. v. Brewery Workers
Local Union No. 9, AFL-CIO, 739 F.2d 1159, 1167 (7th Cir.
1984) (“suit or defense . . . brought in bad faith—brought to
harass rather than to win”); Badillo v. Central Steel & Wire
No. 03-2151 3
Co., 717 F.2d 1160, 1165 (7th Cir. 1983) (“subjective bad
faith”); Pedraza v. United Guaranty Corp., 313 F.3d 1323, 1336
(11th Cir. 2002) (ditto).
There is less to this apparent tension in the case law than
meets the eye. Chambers itself used the identical formula,
“wantonly” and all, that our court in Muslin had quoted
from an earlier Supreme Court opinion. 501 U.S. at 45-46.
Indeed, it is the canonical formula for the bad-faith excep-
tion to the American rule. E.g., First Bank of Marietta v.
Hartford Underwriters Ins. Co., 307 F.3d 501, 512 (6th Cir.
2002); Dubois v. U.S. Dept. of Agriculture, 270 F.3d 77, 80 (1st
Cir. 2001); Primus Automotive Financial Services, Inc. v.
Batarse, 115 F.3d 644, 648 (9th Cir. 1997); Smith v. Detroit
Federation of Teachers, Local 231, 829 F.2d 1370, 1375 (6th
Cir. 1987); Sterling Energy, Ltd. v. Friendly National Bank,
744 F.2d 1433, 1435 (10th Cir. 1984). And when one looks
carefully at Judge Zagel’s definition of “wantonly,” one sees
that the key term is “reckless disregard” and one is re-
minded that recklessness is frequently in the law a near
synonym for intentionality, e.g., In re TCI Ltd., 769 F.2d 441,
445 (7th Cir. 1985) (“our court has long treated reckless and
intentional conduct as similar”); cf. Farmer v. Brennan, 511
U.S. 825, 835-47 (1994). Recklessly making a frivolous claim
is treated as bad faith within the meaning of the American
rule in B.K.B. v. Maui Police Dept., 276 F.3d 1091, 1108 (9th
Cir. 2002); Fink v. Gomez, 239 F.3d 989, 993-94 (9th Cir. 2001),
and Primus Automotive Financial Services, Inc. v. Batarse,
supra, 115 F.3d at 648-49.
Whatever the precise standard for an award of attorneys’
fees under the American rule, it is not close to being sa-
tisfied in this case. A defendant normally has a right to
defend, rather than having to keel over just because a suit
has been filed against him. There are utterly frivolous
defenses, as we know from tax-protester cases, but the de-
4 No. 03-2151
fense in this case was not frivolous. Nor was it improperly
motivated. But to see this we must review the facts.
The two officers had noticed the plaintiff and (it turned
out) his son in a car parked in an area closed to visitors near
a building that had been the site of recent thefts. The police
recognized the son as the subject of an arrest warrant that
was to be executed when he was discharged from the
hospital. One of the officers saw what appeared to be an
open wine cooler in the car, which is illegal. The plaintiff
was ordered out of the car, patted down, and handcuffed
(because of a suspicious, though as it turned out innocent,
bulge in his pocket), but then let go, and he was never
charged with any offense. But somehow in the encounter his
shoulder was seriously injured. He said that one of
the officers had pushed his face against the car and then
grabbed his arm and twisted his arm and shoulder, but all
the officers would admit was that in the process of hand-
cuffing him one of them had applied an arm lock to him
because he was resisting. Unbeknownst to the officers, the
plaintiff, who was 72 years old when the incident occurred,
had a damaged rotator cuff in his shoulder, which while
asymptomatic was vulnerable to being seriously injured by
an application of even slight force. The district judge found,
however, and the finding is not challenged, that the officer
punched the plaintiff in the shoulder, telling him that it
would be sore for several days. There was no excuse for his
doing that, and so the battery was indeed “wanton” under
Illinois law (“a person engages in willful and wanton
conduct when he ignores known or plainly observable
dangerous conditions and does something that will natur-
ally and probably result in injury to another,” Carter v.
Chicago Police Officers, 165 F.3d 1071, 1080-81 (7th Cir. 1998);
Medina v. City of Chicago, 606 N.E.2d 490, 496 (Ill. App.
1992)), as distinct from the kind of technical battery that
occurs when a person intentionally slaps another but thinks,
No. 03-2151 5
though he is unreasonably mistaken, that his victim con-
sented to the slap. Restatement (Second) of Torts § 892 com-
ment c and illustration 4 (1979); see also Larson v. Great West
Casualty Co., 482 N.W.2d 170, 173-74 (Iowa App. 1992).
But was the government “wanton” in defending against the
plaintiff’s claim of wanton battery? Given the preexisting
condition of Stive’s shoulder, the severity of his injury was
not inconsistent with the officers’ version of what had
happened. So, had the judge believed the officers, he would
have concluded that the battery had not been “wan-
ton”—indeed, that it had not been improper in any sense,
but instead had been a reasonable exertion of force in the
circumstances. Officers are privileged to use reasonable
force to make an arrest, and it is not argued that the officers
were unreasonable in wanting to handcuff the plaintiff
before checking out the suspicious bulge. The fact that a
witness’s testimony is rejected does not brand as frivolous
the claim or defense of the party who called him. And these
officers were witnesses, not defendants; the government is
the defendant. (The officers had been joined as defendants
originally, but were later dropped from the case and the fee
award does not run against them.) The lawyers who de-
fended the government didn’t know that the officers were
lying. It is true that the plaintiff’s testimony was corrobo-
rated, and the officers’ undermined, by the pattern of Stive’s
bruises, but the bruises might have been the result of a
struggle in which the officers’ conduct, though rougher than
they acknowledged on the stand, had not risen to the level
of wanton infliction of injury.
So the decision to defend the suit rather than throw in the
towel was not frivolous and the claim for an award of at-
torneys’ fees should therefore not have gotten even to first
base. But we reject the government’s alternative argument
that even if the judge had been justified in awarding at-
6 No. 03-2151
torneys’ fees, the award would have had to be capped at 25
percent of the damages awarded, which would have
reduced the fee award from $49,000 to less than $22,000. The
argument relies on 28 U.S.C. § 2678, which provides that no
attorney in a suit under the Federal Tort Claims Act shall be
paid a fee that exceeds 25 percent of the judgment or
settlement for his client. It is unlikely that the statute
has anything to do with attorneys’ fee shifting, if only
because such fee shifting, especially from defendant to
plaintiff rather than vice versa, is rare in suits governed by
the American rule, as suits under the tort claims act are.
Rather, the statute (which has counterparts in other federal
laws creating entitlements to sue, see Gisbrecht v. Barnhart,
535 U.S. 789, 802-03 and n. 12 (2002)) is for the protection of
plaintiffs from being gouged by their lawyers. S. Rep. No.
89-1327, 89th Cong., 2d Sess. 1-2, 6, 7 (1966); Joe v. United
States, 772 F.2d 1535, 1536-37 (11th Cir. 1985) (per curiam);
Irvin M. Gottlieb, “The Federal Tort Claims Act—A Statu-
tory Interpretation,” 35 Geo. L.J. 1, 60-62 (1946). So, since
attorneys’ fees when awarded are awarded to the party, not
his lawyer, Venegas v. Mitchell, 495 U.S. 82, 86-88 (1990);
Evans v. Jeff D., 475 U.S. 717, 730-32 (1986); Shula v. Lawent,
359 F.3d 489, 492 (7th Cir. 2004); Central States, Southeast &
Southwest Areas Pension Fund v. Central Cartage Co., 76 F.3d
114, 116 (7th Cir. 1996)—28 U.S.C. § 2412(b) is explicit that
the award of attorneys’ fees is to the “prevailing
party”—were the statute applicable it would merely
regulate the division of the total award, damages plus
attorneys’ fees, between lawyer and client; it would not
limit the government’s liability.
A further consideration is that an award of attorneys’ fees
based on misconduct (however it is defined, exactly), which
is the only basis on which fees can be awarded against the
government in tort claims suits, is a sanction that bears little
relation to the size of the judgment; and we cannot think of
No. 03-2151 7
any reason, therefore, why Congress would have required
that the sanction be capped at a percentage of the judgment.
It can indeed be argued that the sanction, rather than being
proportionate to the judgment, should be a diminishing
percentage of it, as we suggested recently in Assessment
Technologies of WI, LLC v. WIREdata, Inc., 361 F.3d 434, 436-
37 (7th Cir. 2004). The larger the judgment, the more the
plaintiff has left over after paying his lawyer’s contingent
fee. If the judgment is likely to be very small, the prospect
of having to share it with the lawyer may discourage the
client from suing by reducing his expected net benefit of
suit to a trivial level, enabling the government to discourage
meritorious small suits by adopting a policy of fighting
every suit no matter how small the stakes and how weak the
government’s defense. Fee shifting would have little efficacy
in discouraging such improper conduct if the fee were
limited to 25 percent of the judgment, however tiny.
Compare our discussion in Mathias v. Accor Economy
Lodging, Inc., 347 F.3d 672, 676-77 (7th Cir. 2003), of why
punitive damages should, if they are to achieve their
deterrent purpose, be a higher percentage of compensatory
damages when the latter are small than when they are large.
And note that when attorneys’ fees are shifted under the
American rule the rationale for doing so “is, of course,
punitive.” Chambers v. NASCO, Inc., supra, 501 U.S. at 53,
(quoting Hall v. Cole, 412 U.S. 1, 5 (1973)); see also Guevara
v. Maritime Overseas Corp., 59 F.3d 1496, 1502 (5th Cir. 1995);
Brown v. Sullivan, 916 F.2d 492, 495 (9th Cir. 1990); United
States v. 2,116 Boxes of Boned Beef, 726 F.2d 1481, 1488 (10th
Cir. 1984). This is another reason for doubting that in setting
the 25 percent limit Congress had fee shifting in view.
In this case, however, we conclude that the award of any
amount of attorneys’ fees was unreasonable and must
therefore be
REVERSED.
8 No. 03-2151
A true Copy:
Teste:
_____________________________
Clerk of the United States Court of
Appeals for the Seventh Circuit
USCA-02-C-0072—4-28-04