Merced Rojas v. Town of Cicero , 775 F.3d 906 ( 2015 )

In the
United States Court of Appeals
For the Seventh Circuit
____________________
No.  14-­‐‑1446
MERCED  ROJAS,
Plaintiff-­‐‑Appellee,
v.
TOWN  OF  CICERO,  ILLINOIS,  and  LARRY  DOMINICK,
Defendants-­‐‑Appellants.
____________________
Appeal  from  the  United  States  District  Court  for  the
Northern  District  of  Illinois,  Eastern  Division.
No.  08  C  5913  —  Thomas  M.  Durkin,  Judge.
____________________
ARGUED  DECEMBER  10,  2014  —  DECIDED  JANUARY  5,  2015
____________________
Before  EASTERBROOK,  SYKES,  and  HAMILTON,  Circuit  Judg-­‐‑
es.
EASTERBROOK,   Circuit   Judge.   Merced   Rojas   contended   in
this  suit  under  42  U.S.C.  §1983  that  the  Town  of  Cicero  vio-­‐‑
lated   the   First   Amendment   by   firing   him   because   he   sup-­‐‑
ported   a   political   opponent   of   Larry   Dominick,   the   Town’s
president.   After   an   eight-­‐‑day   trial,   a   jury   found   in   Rojas’s
favor  and  awarded  him  $650,000  in  damages.
2   No.  14-­‐‑1446
The   victory   was   short-­‐‑lived.   District   Judge   Holderman
granted  defendants’  motion  for  a  new  trial,  concluding  that
Dana   L.   Kurtz,   Rojas’s   lawyer,   had   engaged   in   serious   mis-­‐‑
conduct   during   the   trial.   2011   U.S.   Dist.   LEXIS   147867   (N.D.
Ill.  Dec.  22,  2011).  Judge  Holderman  found  that  Kurtz  made
statements  designed  to  mislead  the  jury,  elicited  hearsay  re-­‐‑
sponses  that  she  knew  would  prejudice  the  defendants  even
though  the  judge  was  bound  to  strike  the  testimony  (which
he   did),   argued   with   the   judge   in   a   way   that   informed   the
jury   about   evidence   that   the   court   had   excluded,   and   un-­‐‑
dermined  the  credibility  of  an  important  defense  witness  by
asking  him  questions  that  presented  him  in  a  bad  light,  even
though   Kurtz   lacked   a   good-­‐‑faith   basis   for   believing   the
questions  proper.
Before   the   second   trial   could   occur,   the   case   was   reas-­‐‑
signed   to   District   Judge   Durkin.   With   his   encouragement,
the   parties   settled.   The   resolution   provides   Rojas   with
$212,500   as   compensation   for   the   discharge   and   Kurtz   with
fees  of  $287,500.  (The  settlement  states  that  the  amounts  are
confidential,   but   counsel   for   both   sides   have   consented   to
their   disclosure.)   Both   amounts   are   significantly   less   than
Rojas  and  Kurtz  would  have  received,  had  the  jury’s  verdict
stood.   Judge   Durkin   estimated   that   Kurtz   would   have   ob-­‐‑
tained  an  award  under  42  U.S.C.  §1988  at  least  as  high  as  the
$650,000  in  damages,  if  not  higher.
The   settlement   did   not   resolve   the   defendants’   motions
for   sanctions   under   28   U.S.C.   §1927   and   Fed.   R.   Civ.   P.
26(g)(3).   Section   1927   authorizes   sanctions   against   lawyers
who  needlessly  multiply  the  proceedings,  as  Kurtz  had  done
by  improper  conduct  that  led  to  many  post-­‐‑verdict  motions
and  the  need  to  prepare  for  a  second  trial.  The  motion  under
No.  14-­‐‑1446   3
Rule   26(g)(3)   was   based   on   conduct   different   from   Kurtz’s
behavior   in   court.   After   Judge   Holderman   set   aside   the   ju-­‐‑
ry’s   verdict,   defense   counsel   learned   that   Rojas   had   filed   a
bankruptcy   petition   six   months   after   this   suit   began.   Kurtz
did  not  reveal  this  during  discovery.  (Apparently  Rojas  kept
it  a  secret  from  Kurtz  for  a  while,  but  after  she  learned  of  the
bankruptcy  she  still  did  not  tell  defendants.)  The  bankruptcy
petition  could  have  affected  whether  Rojas  is  a  proper  plain-­‐‑
tiff.   Perhaps   the   legal   claim   passed   to   the   trustee   in   bank-­‐‑
ruptcy  for  the  benefit  of  his  creditors—and  the  fact  that  Ro-­‐‑
jas  valued  the  suit  on  his  schedule  of  assets  at  much  less  than
he   asked   the   jury   to   award   (indeed,   much   less   than   he   de-­‐‑
manded  in  settlement)  could  have  provided  the  defense  with
a  talking  point  at  the  trial  or  retrial.
Judge   Durkin   denied   the   motion   for   sanctions.   Section
1927   gives   a   judge   discretion   whether   to   award   sanctions,
and   Judge   Durkin   exercised   that   discretion   against   an
award.  He  thought  that  both  Rojas  and  Kurtz  had  lost  a  lot
of   money   (about   $400,000   apiece)   when   the   settlement   re-­‐‑
placed   the   jury’s   verdict.   That   is   sanction   enough,   he   con-­‐‑
cluded.   As   for   concealing   the   bankruptcy,   the   judge   wrote
that   a   “district   court   in   its   discretion   may   impose   sanctions
for   discovery   violations”   and   that   the   same   considerations
that  led  to  a  denial  of  relief  under  §1927  also  justify  a  discre-­‐‑
tionary  denial  under  Rule  26.
The  denial  of  the  §1927  motion  was  not  an  abuse  of  dis-­‐‑
cretion.  Judge  Durkin  thought  that  Kurtz  was  out  of  pocket
as  a  result  of  her  misconduct,  and  this  seems  likely,  though
she   may   not   have   lost   as   much   as   the   judge   supposed.   The
right   comparison   is   not   between   the   verdict   and   the   settle-­‐‑
ment,  but  between  that  settlement  and  what  the  verdict  (and
4   No.  14-­‐‑1446
corresponding  fees)  would  have  been  in  the  absence  of  mis-­‐‑
conduct.   If   a   zealous   advocate   who   stayed   within   ethical
bounds   would   have   produced   a   verdict   of,   say,   $300,000,
then  both  Rojas  and  Kurtz  lost  much  less  than  Judge  Durkin
supposed.  If,  indeed,  a  properly  conducted  trial  would  have
led   to   a   verdict   under   $212,500,   or   to   a   verdict   for   the   de-­‐‑
fense,   then   Kurtz   has   gained   from   her   misconduct.   But   the
fact  that  defendants  were  willing  to  pay  $500,000  (compensa-­‐‑
tion  plus  fees)  to  avoid  a  second  trial  implies  that  Rojas  had
good   chances   of   a   substantial   recovery   at   a   properly   con-­‐‑
ducted   proceeding.   And   we   recognize   that   the   Town’s   op-­‐‑
tion   to   obtain   a   second   trial   was   itself   costly   to   Kurtz;   the
Town  would  not  have  asked  for  this  relief  if  it  expected  Ro-­‐‑
jas   and   Kurtz   to   do   better   the   second   time.   Evaluating   a
counterfactual—what   verdict   Rojas   would   have   received
had   the   trial   been   conducted   properly—is   a   daunting   task,
and  any  answer  is  contestable.  Since  the  district  court  would
have  had  discretion  to  find  that  Judge  Holderman’s  opinion,
which   impugned   Kurtz’s   reputation,   was   a   sufficient   re-­‐‑
sponse  even  if  she  did  not  suffer  a  monetary  loss,  we  think  it
best  to  respect  the  court’s  conclusion  under  §1927.
Rule  26(g)(3)  is  a  different  matter.  Judge  Durkin  believed
that  it,  like  §1927,  affords  a  district  court  the  discretion  to  let
a   delict   pass   without   sanctions.   It   does   not.   Lawyers   must
certify   that   they   have   fulfilled   their   discovery   obligations.
Rule   26(g)(3)   provides   (emphasis   added):   “If   a   certification
violates   this   rule   without   substantial   justification,   the   court,
on  motion  or  on  its  own,  must  impose  an  appropriate  sanc-­‐‑
tion  on  the  signer,  the  party  on  whose  behalf  the  signer  was
acting,  or  both.  The  sanction  may  include  an  order  to  pay  the
reasonable  expenses,  including  attorney’s  fees,  caused  by  the
violation.”   Rule   26(g)(3)   gives   the   judge   discretion   over   the
No.  14-­‐‑1446   5
nature  of  the  sanction  but  not  whether  to  impose  one.  Kurtz
has   not   contested   Judge   Durkin’s   conclusion   that   her   con-­‐‑
duct  violates  Rule  26(g)(1),  so  some  sanction  is  mandatory.
Defendants  maintain  that  only  money  (measured  by  their
attorneys’  fees)  will  do.  That  is  not  what  the  Rule  says,  how-­‐‑
ever.  The  sanction  “may”  include  attorneys’  fees,  but  that  is
not  essential.  All  that  is  required  is  a  sanction  “appropriate”
under  the  circumstances.
Identifying   the   “appropriate”   sanction   is   a   task   for   the
district  court.  It  could  be  money,  but  it  also  could  be  a  formal
(and  public)  reprimand  or  censure.  The  discovery  problem  is
unrelated  to  the  reason  Judge  Holderman  granted  a  new  tri-­‐‑
al,  and  to  the  reputational  effect  of  Judge  Holderman’s  opin-­‐‑
ion,  so  Judge  Durkin’s  reasons  for  not  sanctioning  Kurtz  un-­‐‑
der  §1927  do  not  carry  over  to  Rule  26(g)(3).
Judge   Durkin   also   should   consider   Kurtz’s   disciplinary
history,   which   is   substantial.   See,   e.g.,   Gross   v.   Cicero,   619
F.3d   697,   701–02   (7th   Cir.   2010)   (striking   the   statement   of
facts  from  Kurtz’s  brief  for  failing  to  cite  the  record);  Gross  v.
Cicero,  528  F.3d  498,  500–01  (7th  Cir.  2008)  (fining  Kurtz  be-­‐‑
cause   she   failed   to   file   an   opening   brief   for   more   than   17
months   after   filing   the   notice   of   appeal);   Matula   v.   Des
Plaines,   2013   U.S.   Dist.   LEXIS   146017   (N.D.   Ill.   Oct.   8,   2013)
(fining   plaintiff’s   counsel—Kurtz   and   one   other   lawyer—
$100  for  missing  the  deadline  for  delivering  a  paper  copy  of
the  complaint  to  the  assigned  district  judge);  Lujano  v.  Cicero,
2011  U.S.  Dist.  LEXIS  148913  (N.D.  Ill.  Dec.  23,  2011)  (impos-­‐‑
ing  sanctions  on  Kurtz’s  client  for  delaying  the  production  of
certain   documents   for   several   years);   AG   Equipment   Co.   v.
AIG  Life  Insurance  Co.,  2008  U.S.  Dist.  LEXIS  99915  (N.D.  Okla.
Dec.  10,  2008)  (fining  Kurtz  $250  for  discovery  abuses);  Gross
6   No.  14-­‐‑1446
v.  Cicero,  2005  U.S.  Dist.  LEXIS  23088  at  *6–7  (N.D.  Ill.  Sept.  20,
2005)  (prohibiting  Kurtz’s  client  from  introducing  expert  tes-­‐‑
timony  as  a  sanction  for  her  delay  during  discovery);  Crohan
v.  Orland  Park,  2004  U.S.  Dist.  LEXIS  5006  at  *4,  6–8  (N.D.  Ill.
Mar.   24,   2004)   (same)   (“circumstances   in   this   case   indicate
that   Plaintiff’s   counsel   has   engaged   in   gamesmanship”).
Kurtz’s   unwillingness   to   conform   her   conduct   to   require-­‐‑
ments   laid   down   by   judicial   orders   or   rules   of   procedure   is
unlikely  to  change  unless  courts  respond  firmly.
The  decision  is  affirmed  with  respect  to  the  motion  under
§1927   and   vacated   with   respect   to   the   motion   under   Rule
26(g)(3).   The   case   is   remanded   for   proceedings   consistent
with  this  opinion.