Berwick Grain Co v. IL Dept Agriculture ( 2000 )

In the
United States Court of Appeals
For the Seventh Circuit
No. 98-3394
Berwick Grain Company, Inc.,
and David McCrery, Jr.,
Plaintiffs-Appellants,
v.
Illinois Department of Agriculture,
Rebecca Doyle, Thomas E. Jennings, et al.,
Defendants-Appellees.
No. 99-3880
Berwick Grain Company, Inc.,
and David McCrery, Jr.,
Plaintiffs-Appellants,
v.
Illinois Department of Agriculture,
Rebecca Doyle, Thomas E. Jennings, et al.,
Defendants-Appellees.
Appeal of: John H. Bisbee.
Appeals from the United States District Court
for the Central District of Illinois.
No. 91-C-4105--Michael M. Mihm, Judge.
Submitted May 5, 2000--Decided June 27, 2000
Before Posner, Chief Judge, and Flaum and
Evans, Circuit Judges.
Per Curiam. For a third time we are
compelled to take up matters arising from
a 1991 civil rights lawsuit that Berwick
Grain Company, Inc. and its president
brought against several employees of the
Illinois Department of Agriculture. In
1997, we affirmed the grant of summary
judgment for the defendants, Berwick
Grain Co., Inc. v. Illinois Dep’t. of
Agric., 116 F.3d 231 (7th Cir. 1997), and
last year we affirmed the district
court’s denial of a motion by plaintiffs
to reopen the action, Berwick Grain Co.,
Inc. v. Illinois Dep’t. of Agric., 189
F.3d 556 (7th Cir. 1999) ("Berwick II").
Before us now are lingering sanctions
issues precipitated by the plaintiffs’
failed attempt to revive their suit. We
affirm the district court’s award of
sanctions against plaintiffs’ counsel and
impose further sanctions of our own.
The pending matters are holdovers from
Berwick II. Underlying that appeal was
the plaintiffs’ long-delayed motion,
premised on Federal Rule of Civil
Procedure 60(b), to set aside summary
judgment and revive a case then approach
ing seven years old. The defendants
deemed the Rule 60(b) motion frivolous
and, when it was denied, asked the
district court to impose sanctions under
Federal Rule of Civil Procedure 11. That
motion was heard by the district court
after the plaintiffs already had filed an
appeal from the denial of Rule 60(b)
relief, and so even though the judge
announced in open court his intention to
sanction plaintiffs’ counsel, John H.
Bisbee, the court acceded to Mr. Bisbee’s
request that a formal ruling be withheld
until after we decided Berwick II. Our
mandate in that appeal, case no. 98-3394,
issued on September 20, 1999, and nine
days later the district court entered its
written Rule 11 order sanctioning Mr.
Bisbee with a $5,550 penalty. Mr. Bisbee
has appealed, and we have docketed this
latest appeal as case no. 99-3880.
Meanwhile, before our mandate issued in
Berwick II, the defendants moved for
sanctions under Federal Rule of Appellate
Procedure 38, and we elected to carry
that motion along with Mr. Bisbee’s
appeal of the Rule 11 sanctions. The Rule
11 appeal is now before us, and having
briefed it the defendants also seek Rule
38 sanctions in this newest case.
We start with the order sanctioning Mr.
Bisbee under Rule 11. The district court,
relying on Rule 11(b)(2) and (c), ordered
Mr. Bisbee personally to pay the Attorney
General of Illinois, who represents the
defendants, $5,550, an amount the court
found to be the reasonable value of
defense counsel’s time devoted to the
district court litigation spawned by the
plaintiffs’ Rule 60(b) motion. In this
appeal Mr. Bisbee takes no issue with
either the amount of the penalty or the
decision to levy it against him
personally. He instead insists that he
engaged in no sanctionable conduct. Rule
11, though, plainly authorizes a district
court to sanction a lawyer who without
reasonable inquiry tenders a submission
that includes legal contentions not
warranted "by existing law or by a
nonfrivolous argument for the extension,
modification, or reversal of existing law
or the establishment of new law." Fed. R.
Civ. P. 11(b)(2), (c); see Retired
Chicago Police Ass’n v. Firemen’s Annuity
and Benefit Fund, 145 F.3d 929, 934 (7th
Cir. 1998); Anderson v. County of
Montgomery, 111 F.3d 494, 501 (7th Cir.
1997). Frivolous or legally unreasonable
arguments, then, may incur penalty,
Independent Lift Truck Builders Union v.
NACCO Materials Handling Group, Inc., 202
F.3d 965, 968-69 (7th Cir. 2000); Fries
v. Helsper, 146 F.3d 452, 458 (7th Cir.),
cert. denied, 525 U.S. 930 (1998), and
for Rule 11 purposes a frivolous argument
is simply one that is "baseless or made
without a reasonable and competent
inquiry," Independent Lift Truck Builders
Union, 202 F.3d at 969 (quotation marks
and citation omitted). Here the district
court labeled as frivolous the Rule 60(b)
motion that Mr. Bisbee filed on behalf of
the plaintiffs, and even were we not
constrained to defer to the court’s
assessment, see Cooter & Gell v. Hartmarx
Corp., 496 U.S. 384, 405 (1990); Kennedy
v. National Juvenile Detention Ass’n, 187
F.3d 690, 696 (7th Cir. 1999), cert.
denied, 120 S. Ct. 1169 (2000), its
sanctions order simply makes explicit
what is readily apparent from our Berwick
II opinion.
Nothing in Mr. Bisbee’s brief persuades
us differently. In exercising its
discretion under Rule 11, the district
court focused on its earlier conclusion--
one we have already affirmed--that the
plaintiffs’ Rule 60(b) motion was beyond
the court’s power to grant because Mr.
Bisbee filed it too late. Mr. Bisbee
insists he harbored an "objectively
reasonable" belief that the clock was
still running when he filed the motion,
but we settled this question in Berwick
II. All along the plaintiffs have
insisted that our 1997 opinion in their
first appeal disturbed the adverse
summary judgment and triggered a new one-
year period under Rule 60(b)(1), but we
explicitly noted in Berwick II that Mr.
Bisbee had not identified any authority
suggesting that our outright affirmance
of the summary judgment did anything of
the sort. Berwick II, 189 F.3d at 560.
Mr. Bisbee offers by way of excuse that
he looked for support but found none. He
found none because "reasonable and
competent inquiry," see Independent Lift
Truck Builders Union, 202 F.3d at 969,
would have led him to conclude there was
none. The very point of Rule 11 is to
lend incentive for litigants "to stop,
think and investigate more carefully
before serving and filing papers," see
Cooter & Gell, 496 U.S. at 398 (quotation
marks and citation omitted), but when his
quest proved futile Mr. Bisbee,
disregarding the rule, filed anyway.
Having done so, he has no basis to
complain about the district court’s
decision to sanction him.
We now turn to the question of Rule 38
sanctions. When an appeal rehashes
positions that the district court
properly rejected, A-Abart Elec. Supply,
Inc. v. Emerson Elec. Co., 956 F.2d 1399,
1406-07 (7th Cir. 1992), or when it
presents arguments that are lacking in
substance and "foreordained" to lose,
Mars Steel Corp. v. Continental Bank
N.A., 880 F.2d 928, 938 (7th Cir. 1989)
(en banc), the appeal is frivolous.
Pursuing a frivolous appeal invites
sanctions, including "just damages," see
Fed. R. App. P. 38; Jansen v. Aaron
Process Equip. Co., 207 F.3d 1001, 1005
(7th Cir. 2000); Mars Steel Corp., 880
F.2d at 938, which we may impose in our
considered discretion, in re Generes, 69
F.3d 821, 828 (7th Cir. 1995); Colosi v.
Electri-Flex Co., 965 F.2d 500, 504 (7th
Cir. 1992). How we exercise that
discretion may turn on our perception of
whether an appellant acted in bad faith.
See, e.g., Lorentzen v. Anderson Pest
Control, 64 F.3d 327, 331 (7th Cir.
1995); Depoister v. Mary M. Holloway
Foundation, 36 F.3d 582, 588 (7th Cir.
1994). However, we have defined our power
to sanction by an objective test. See
LINC Finance Corp. v. Onwuteaka, 129 F.3d
917, 924 (7th Cir. 1997); Mars Steel
Corp., 880 F.2d at 938 (stating that the
Rule 38 standard "depends on the work
product: neither the lawyer’s state of
mind nor the preparation behind the
appeal matter").
We conclude that sanctions are
appropriate in these cases. Before Mr.
Bisbee filed either appeal, it should
have been obvious to him that both are
frivolous. Berwick II is patently so. As
we intimated last August when we
addressed the merits, the plaintiffs
could not possibly have believed in good
faith that we would overturn the
rejection of a Rule 60(b) motion which,
even apart from its lateness, did nothing
to rectify the evidentiary failings that
obliged us to affirm the grant of summary
judgment in the first place. See Berwick
II, 189 F.3d at 560-61. Pressing to
reinstate a lawsuit that cannot be
sustained if revived epitomizes bad
faith, and pursuing the same frivolous
matter on appeal after its rejection with
the promise that Rule 11 sanctions will
follow leads to precisely the "shameful
waste of judicial manpower" that we have
sanctioned in the past and will again
here. See Rennie v. Dalton, 3 F.3d 1100,
1111 (7th Cir. 1993) (quotation marks and
citations omitted).
Likewise, Mr. Bisbee’s Rule 11 appeal
typifies "the kind of obstinacy that Rule
38 does not countenance." Listle v.
Milwaukee County, 138 F.3d 1155, 1160
(7th Cir. 1998). We have come this far
only because--in his words--Mr. Bisbee
"cannot affect a false air of contrition"
and accept the district court’s finding
that his stated belief in the timeliness
of the Rule 60(b) motion was objectively
unreasonable. We owe substantial
deference to district courts in Rule 11
matters, and when sanctions are
challenged without any "reasonable
prospect of meeting the difficult
standard of abuse of discretion," see
Cooter & Gell, 496 U.S. at 408, the
appeal is necessarily frivolous.
Moreover, Mr. Bisbee concedes that we may
affirm a sanctions award on any basis
supported by the record. Finance Inv. Co.
(Bermuda) v. Geberit AG, 165 F.3d 526,
530 (7th Cir. 1998). Thus, this Rule 11
appeal is particularly frivolous because
whether or not Mr. Bisbee thought the
plaintiffs’ Rule 60(b) motion was timely
he could not have reasonably believed
that it was filed in good faith given its
complete lack of substantive merit.
Again, we said as much in Berwick II, 189
F.3d at 560-61, and since a frivolous
appeal challenging sanctions "is the
capstone of litigation that is hollow in
every particular," Greening v. Moran, 953
F.2d 301, 307 (7th Cir. 1992), a Rule 38
award is appropriate.
Still, we refuse the defendants’
invitation to add another $13,000 to what
the district court already has ordered.
Proponents of sanctions shoulder an
obligation to mitigate the harm from
frivolous appeals, see Colosi, 965 F.2d
at 504-05; Brooks v. Allison Div. of Gen.
Motors Corp., 874 F.2d 489, 490 (7th Cir.
1992), and so we are puzzled by appellate
counsel’s bill for the 75 hours he spent
defending a Rule 60(b) judgment and Rule
11 sanctions award that his predecessor
won in district court expending only 47
hours (a figure the district judge
believed excessive and reduced to 36
hours). Particularly as to the Rule 11
appeal, where we might naturally be
inclined toward assessing damages because
of Rule 38’s role in encouraging
recipients of Rule 11 sanctions to defend
their awards against frivolous but
expensive appeals, see in re Generes, 69
F.3d at 828; Kale v. Obuchowski, 985 F.2d
360, 362 (7th Cir. 1993); Greening, 953
F.2d at 306-07, we question the
reasonableness of the defendants’ demand
for attorney’s fees incurred in preparing
a brief and Rule 38 motion that took
three months to reach us yet in the main
are lifted from like submissions in
Berwick II.
Compounding the costs associated with
frivolous appeals risks loss or reduction
of Rule 38 sanctions, see Kale, 985 F.2d
at 364; Brooks, 874 F.2d at 490. However,
because we do not wish to reward these
frivolous appeals, we will pare rather
than eliminate the defendants’ damages.
We therefore grant the motions for Rule
38 sanctions but in lieu of attorney’s
fees order Mr. Bisbee to pay a $1,000
sanction in each appeal. See Listle, 138
F.3d at 1160; Perry v. Pogemiller, 16
F.3d 138, 140 (7th Cir. 1993). Like the
district court, we assess these sanctions
against Mr. Bisbee, not the plaintiffs
who were misled about the futility of
Berwick II and, of course, have no stake
in the Rule 11 appeal. See Rennie, 3 F.3d
at 1111; Hartz v. Friedman, 919 F.2d 469,
475 (7th Cir. 1990); Mestayer v.
Wisconsin Physicians Serv. Ins. Corp.,
905 F.2d 1077, 1080-81 (7th Cir. 1990).
And lest the plaintiffs or Mr. Bisbee
misconstrue our exercise of restraint, we
hasten to add that this litigation is
over.
In appeal no. 99-3880 the judgment of
the district court imposing Rule 11
sanctions against attorney John H. Bisbee
is AFFIRMED. In each appeal the
defendants’ motion for Rule 38 sanctions
is GRANTED in part. Within 14 days Mr.
Bisbee shall remit to the Attorney
General of Illinois $2,000 in total
damages, consisting of $1,000 in appeal
no. 98-3394 and $1,000 in appeal no. 99-
3880. Damages are awarded against Mr.
Bisbee personally and shall not be
reimbursed by the plaintiffs. In both
appeals all other pending motions are
DENIED.