H.A.L. NY Holdings, LLC v. Joseph Guinan, Jr. ( 2020 )

In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 19-1942
H.A.L. NY HOLDINGS, LLC,
Plaintiff-Appellant,
v.
JOSEPH MICHAEL GUINAN, JR.,
Defendant-Appellee.
____________________
Appeal from the United States District Court for the
Northern District of Illinois, Eastern Division.
No. 1:18-cv-07615 — Robert W. Gettleman, Judge.
____________________
ARGUED JANUARY 23, 2020 — DECIDED MAY 5, 2020
____________________
Before ROVNER, HAMILTON, and SCUDDER, Circuit Judges.
HAMILTON, Circuit Judge. Plaintiff H.A.L. NY Holdings,
LLC is in the business of trading securities. It set up a broker-
age account with Advantage Futures, LLC in Chicago.
H.A.L.’s trading losses led Advantage to issue margin calls,
which H.A.L. failed to meet. Advantage then liquidated
H.A.L.’s account, leaving a negative balance of more than
$75,000. When H.A.L. failed to pay, Advantage sued in fed-
2 No. 19-1942
eral court in Chicago. H.A.L. responded with an offer of judg-
ment under Federal Rule of Civil Procedure 68 for the entire
amount in dispute, plus attorney fees and costs. Advantage
accepted and judgment was entered.
One might expect that to have been the end of the story.
But H.A.L. did not actually pay the judgment it had offered.
Instead, H.A.L. filed this new lawsuit against the CEO of Ad-
vantage claiming damages of more than $25 million arising
from the same transactions. The Advantage CEO invoked the
defense of res judicata based on the prior judgment. The dis-
trict court agreed and dismissed this case. H.A.L. has ap-
pealed.
We affirm. Several features of this appeal also convince us
that this is one of those unusual cases where we should
impose sanctions under Federal Rule of Appellate Procedure
38. H.A.L. admits that its solitary argument to the district
court was wrong and offers in its place an entirely new
argument on appeal. Both are meritless. And after telling the
district court that state law is irrelevant, H.A.L. now insists
that if we do not reverse, only certification to the state
supreme court can resolve this case. This appeal is an exercise
in unacceptable gamesmanship, without a reasonable and
good-faith basis. Hence the Rule 38 sanctions.
I. Factual and Procedural Background
We state the facts as alleged in the complaint in this case
and, to the extent not inconsistent with them, as alleged in the
complaint and as revealed by the docket in the prior case, both
proper subjects of judicial notice on a motion to dismiss. Wat-
kins v. United States, 854 F.3d 947, 950 (7th Cir. 2017) (prior
complaint); Fletcher v. Menard Corr. Ctr., 623 F.3d 1171, 1173
No. 19-1942 3
(7th Cir. 2010) (prior case docket). Plaintiff H.A.L. NY Hold-
ings, LLC is a New York company whose business is trading
stock index futures and options. In September 2015, H.A.L.
set up a brokerage account to trade through Advantage Fu-
tures, LLC, an Illinois company and registered futures com-
mission merchant. Defendant Joseph Michael Guinan, Jr., is
Advantage’s chairman and chief executive.
H.A.L. suffered trading losses and failed to respond
promptly to margin calls by Advantage. Advantage then liq-
uidated H.A.L.’s trading positions, which left H.A.L. with a
negative account balance of $75,375.26. In September 2017
Advantage sued H.A.L. in the Northern District of Illinois for
that amount. The district court had jurisdiction of the case un-
der 28 U.S.C. § 1332. On November 14, 2017 H.A.L. made an
offer of judgment under Federal Rule of Civil Procedure 68
for the full amount of the claim plus prejudgment interest, at-
torney fees, and costs. Advantage accepted the offer one week
later, and the district court entered the judgment in Ad-
vantage’s favor. The parties agreed at oral argument before
this court that the judgment had not been paid as of January
23, 2020.
A few months after entry of judgment in Illinois, on March
14, 2018, H.A.L. filed this lawsuit, not against Advantage but
against CEO Guinan, in the Southern District of New York,
alleging that he breached common law and federal statutory
duties, causing the demise of H.A.L’s account with Ad-
vantage to the tune of $25,500,000 in damages. The district
court had jurisdiction of the case under 28 U.S.C. §§ 1331 and
1367. On Guinan’s motion, the case was transferred to the
Northern District of Illinois under 28 U.S.C. § 1404(a).
4 No. 19-1942
Guinan moved to dismiss for failure to state a claim under
Federal Rule of Civil Procedure 12(b)(6), arguing that the
prior Rule 68 judgment between Advantage and H.A.L. was
res judicata barring the new suit by H.A.L. against Guinan.
The district court agreed, granted Guinan’s motion, and en-
tered final judgment in his favor. H.A.L. has appealed.
II. Analysis
On the merits, the question is whether the prior Rule 68
judgment should be given res judicata effect to bar H.A.L.’s
claims in this lawsuit. H.A.L.’s opening brief is dedicated
chiefly to arguing that Illinois law on this point either favors
it or is so uncertain that, if we do not reverse, we should at
least certify a question of state law to the Illinois Supreme
Court under Circuit Rule 52. Guinan opposes certification and
seeks sanctions under Federal Rule of Appellate Procedure 38
for taking a frivolous appeal.
A. Standard of Review
We review de novo the district court’s dismissal of the ac-
tion for failure to state a claim. Benson v. Fannie May Confec-
tions Brands, Inc., 944 F.3d 639, 644 (7th Cir. 2019). The atten-
tive reader will have noted that the district court did not ac-
tually rule H.A.L.’s complaint failed to state a claim; it
reached the quite different conclusion that the lawsuit is
barred by the affirmative defense of res judicata. “Federal law
distinguishes between the two, and so too should the careful
litigator.” Amy St. Eve & Michael A. Zuckerman, The Forgotten
Pleading, 7 Fed. Cts. L. Rev. 152, 160 (2013). Strictly speaking,
the correct vehicle for determining an affirmative defense on
the pleadings is an answer and a motion for judgment on the
pleadings under Rule 12(c). Benson, 944 F.3d at 645, and the
No. 19-1942 5
cases cited. Observing the distinction is necessary to allocate
correctly the burdens of pleading and proof, and can thus be
critical to the proper application of the Rule 12 standards.
In this particular case, however, the factual foundation for
the res judicata defense can be found in the records of the first
district court case, the contents of which are subject to judicial
notice. The choice between Rule 12(b)(6) and Rule 12(c) has
no practical effect here, and our review is plenary either way.
See Doe v. GTE Corp., 347 F.3d 655, 657 (7th Cir. 2003).
B. The Rule 68 Judgment
On the merits, the general rule is that the res judicata effect
of a federal judgment is a matter of federal common law. Sem-
tek Int’l Inc. v. Lockheed Martin Corp., 531 U.S. 497, 507–08
(2001). As in this case, though, when the prior federal judg-
ment was rendered as an exercise of a federal court’s diversity
jurisdiction over state-law claims, federal common law refers
to the res judicata (claim preclusion) law of the state in which
the rendering court sits, unless applying that law would be
“incompatible with federal interests.” Id. at 508–09. This rule
is not dictated by the Rules of Decision Act, 28 U.S.C. § 1652,
so that Erie Railroad Co. v. Tompkins, 304 U.S. 64 (1938), does
not apply by its terms. Semtek shares Erie’s concerns, however,
see 531 U.S. at 504, 508–09, so we turn to Erie for guidance in
determining state law.
We apply state law “as it either has been determined by
the highest court of the state or as it would be by that court if
the present case were before it now.” Allstate Ins. Co. v.
Menards, Inc., 285 F.3d 630, 637 (7th Cir. 2002). Contrary to
H.A.L.’s arguments, we do not try to apply what we perceive
to be a regional law within a state, such as might arise if a state
6 No. 19-1942
has intermediate courts with geographic divisions that have
disagreed on the relevant content of state law. See id. at 634,
636.
The prior Rule 68 judgment was rendered in the Northern
District of Illinois, so Semtek directs us to Illinois claim preclu-
sion law. In Illinois, the defense of res judicata or claim pre-
clusion requires proof of three elements: “(1) there was a final
judgment on the merits rendered by a court of competent ju-
risdiction; (2) there was an identity of cause of action; and (3)
there was an identity of parties or their privies.” Rein v. David
A. Noyes & Co., 665 N.E.2d 1199, 1204 (Ill. 1996). The defense
precludes not only relitigation of “what was actually decided
in the original action,” but also litigation of any “matters
which could have been decided in that suit.” Id. In this case,
the second and third elements are admitted. H.A.L. chal-
lenges the first element, arguing that Illinois would not regard
a Rule 68 judgment as “a final judgment on the merits” eligi-
ble for claim-preclusive effect.
Illinois is one of the few American jurisdictions without a
general offer-of-judgment rule analogous to Federal Rule of
Civil Procedure 68. See 735 Ill. Comp. Stat. 5/2-101 to 2-2301
(code of civil procedure); Laura T. Kidwell, State Offer of Judg-
ment Rule—Construction, Operation, and Effect of Acceptance and
Resulting Judgment, 120 A.L.R. 5th 559 (2004 & supp. 2012).
That does not matter. Illinois courts are familiar with consent
judgments more generally. See, e.g., U.S. Bank N.A. v. Johnson,
55 N.E.3d 742, 746 (Ill. App. 2016). That’s what a Rule 68 judg-
ment is. See, e.g., Downey v. State Farm Fire & Cas. Co., 266 F.3d
675, 682–83 (7th Cir. 2001). The special feature of Rule 68—its
wager of costs after an unaccepted offer in subsection 68(d)—
is not material to the res judicata effect of an accepted offer.
No. 19-1942 7
And we have held repeatedly that Illinois gives consent judg-
ments claim-preclusive effect if preclusion otherwise applies.
For example, in 4901 Corp. v. Town of Cicero, 220 F.3d 522, 529–
30 (7th Cir. 2000), we affirmed dismissal of a new challenge to
a town’s ordinance because the parties had settled an earlier
dispute with the equivalent of a consent decree: an Illinois
state-court judgment that incorporated the terms of the par-
ties’ agreement. As the district court correctly concluded, that
is the end of H.A.L.’s case.
C. H.A.L.’s Counterarguments
H.A.L.’s contrary arguments on appeal were “foreor-
dained to lose.” Jaworski v. Master Hand Contractors, Inc., 882
F.3d 686, 691 (7th Cir. 2018). First, H.A.L. never breathed a
whisper of Illinois law in the district court. Instead, H.A.L.’s
brief on the preclusion issue ignored Semtek and insisted that
state law was irrelevant. On appeal, though, H.A.L. has
shifted to an entirely new theory, based entirely on Illinois
law. That entirely new theory was of course waived, and
H.A.L. and its lawyer should have known that before pursu-
ing this theory on appeal. Now on appeal, H.A.L. concedes
that its arguments in the district court were “wrong.” It does
not argue that Illinois law actually supports it. It argues in-
stead that we should either apply what it says is the law of the
Illinois Appellate Court’s First District or certify the question
of state law to the Illinois Supreme Court. Clearer cases of
waiver “in the truest sense” are hard to find. G & S Holdings
LLC v. Cont’l Cas. Co., 697 F.3d 534, 538 (7th Cir. 2012).
Second, putting aside the fatal waiver, even on its own
terms H.A.L.’s position in the district court was wrong on the
merits of federal law, without reference to state law. H.A.L.
argued that federal law would not allow giving res judicata
8 No. 19-1942
effect to Rule 68 judgments. Federal law holds just the oppo-
site. E.g., Arizona v. California, 530 U.S. 392, 414 (2000) (“con-
sent judgments ordinarily support claim preclusion”); United
States v. International Bldg. Co., 345 U.S. 502, 506 (1953) (“Cer-
tainly the [consent] judgments entered are res judicata of the
tax claims”); La Preferida, Inc. v. Cerveceria Modelo, S.A. de C.V.,
914 F.2d 900, 906 (7th Cir. 1990) (“consent judgments ordinar-
ily support claim preclusion”); Martino v. McDonald’s Sys.,
Inc., 598 F.2d 1079, 1083 (7th Cir. 1979) (“The conclusion of the
earlier … lawsuit with a consent judgment does not prevent
the earlier judgment from having a res judicata effect.”); Beloit
Culligan Soft Water Serv., Inc. v. Culligan, Inc., 274 F.2d 29, 35
(7th Cir. 1959) (“A consent judgment operates as a res judi-
cata.”); see also United States v. Fisher, 864 F.2d 434, 439 (7th
Cir. 1988) (“A consent decree is res judicata”).
H.A.L. argued that the prior Rule 68 judgment was not a
“final judgment on the merits” because it contained no admis-
sion of liability. This was and is a non-starter. See International
Bldg. Co., 345 U.S. at 506 (“Certainly the [consent] judgments
entered are res judicata of the tax claims … , whether or not
the basis of the agreements on which they rest reached the
merits.”). “The rule that a defendant’s judgment acts as a bar
to a second action on the same claim is based largely on the
ground that fairness to the defendant, and sound judicial ad-
ministration, require that at some point litigation over the par-
ticular controversy come to an end.” Restatement (Second) of
Judgments § 19 cmt. a (Am. Law Inst. 1982). What difference
could it make for this purpose that the plaintiff previously in-
sisted it did nothing wrong while agreeing in the same breath
to pay money on pain of contempt against defendant’s claim
of wrongdoing? See Fletcher v. City of Fort Wayne, 162 F.3d 975,
No. 19-1942 9
977 (7th Cir. 1998). Patent law recognizes a narrow and care-
fully limited exception, holding that admissions of liability
are required to give certain consent judgments preclusive ef-
fect. See American Equip. Corp. v. Wikomi Mfg. Co., 630 F.3d 544,
546 (7th Cir. 1980) (for reasons specific to patent law: “Res ju-
dicata effect will not be accorded to consent decrees contain-
ing only a concession of the validity of the patent without an
… acknowledgment of its infringement.”). As best we can tell,
that exception is limited to consent judgments regarding pa-
tent validity, and H.A.L. did not even try to rely on it in the
district court.
Third, waiver notwithstanding, H.A.L.’s position on ap-
peal is foreclosed as a matter of controlling circuit law apply-
ing Illinois claim-preclusion law. H.A.L.’s opening brief cited
neither 4901 Corporation nor our other precedents on the pre-
clusive effect accorded by Illinois to “equivalent” compromise
judgments. See 4901 Corp., 220 F.3d at 529–30; see also Arlin-
Golf, LLC v. Village of Arlington Heights, 631 F.3d 818 (7th Cir.
2011) (voluntary dismissal with prejudice pursuant to settle-
ment agreement was res judicata under Illinois law); Majeske
v. Fraternal Order of Police, Local Lodge No. 7, 94 F.3d 307, 312–
14 (7th Cir. 1996) (judgment incorporating settlement agree-
ment, “rather than being the result of full litigation on the
merits,” was res judicata under Illinois law); Torres v. Re-
barchak, 814 F.2d 1219, 1223 (7th Cir. 1987) (under Illinois law,
“res judicata applies even if the dismissal was the result of a
settlement or compromise between the parties”) (cited once
without discussion by H.A.L.). The precedential force of these
decisions is not impaired by a handful of Illinois Appellate
Court opinions arguably stating the law differently. Reiser v.
Residential Funding Corp., 380 F.3d 1027, 1029 (7th Cir. 2004).
10 No. 19-1942
Our task is to apply the law of Illinois, not the law of a par-
ticular geographic district of the intermediate appellate court.
Allstate Ins. Co., 285 F.3d at 636. H.A.L. offers no reason to be-
lieve that the Illinois Supreme Court would disavow the
weight of Illinois authority, which we have read uniformly to
allow claim preclusion by consent judgment, only to adopt
the law of an embattled minority of sister jurisdictions. See
Sheldon R. Shapiro, Modern Views of State Courts as to Whether
Consent Judgment Is Entitled to Res Judicata or Collateral Estoppel
Effect, 91 A.L.R. 3d 1170, § 3[a] (1979 & supp. 2019) (Illinois,
forty-one other states, and District of Columbia allow claim
preclusion by consent judgment). H.A.L.’s opening brief cites
two precedential opinions from the Illinois Appellate Court’s
First District, which H.A.L. reads as going its way. Defendant
Guinan cites twelve precedential opinions going the other
way, from all four districts of the Appellate Court issued over
a thirty-five year period.
Empirically the “split” is thus largely illusory. It is wholly
so when we trace the First District foundations for H.A.L.’s
new appellate argument in Kandalepas v. Economou, 645
N.E.2d 543 (Ill. App. 1994), and Caporale v. Shannon Plumbing
Co., 314 N.E.2d 540 (Ill. App. 1974). Kandelepas is commonly
quoted to the effect that “an agreed order is not a judicial de-
termination of the parties’ rights” but “a recordation of the
agreement between the parties.” 645 N.E.2d at 548.1 A federal
court is most certainly not “a recorder of contracts” but “an
1 Kandalepas took this language from a case applying the uncontrover-
sial and here irrelevant rule that “an agreed order generally is not subject
to appellate review.” In re Haber, 425 N.E.2d 1007, 1009 (Ill. App. 1981).
See, e.g., Downey v. State Farm Fire & Cas. Co., 266 F.3d 675, 682–83 (7th Cir.
2001).
No. 19-1942 11
organ of government” charged with the exercise of federal
power. Local No. 93, Int’l Ass’n of Firefighters v. City of Cleveland,
478 U.S. 501, 525 (1986). Refusing preclusion on this theory
thus might well be “incompatible with federal interests.” See
Semtek, 531 U.S. at 509. In any event the quoted statement is
obiter dictum. The holding of Kandalepas was that that a first
agreed order (entered in 1987) was not res judicata as to a
third order (entered in 1991) where a second agreed order (en-
tered in 1988) had been vacated because decided by coin-flip
and the first had been abandoned by the parties and the court
in favor of the second after a motion to vacate the first was
filed but never ruled on. 645 N.E.2d at 545, 548. Given that
unusual situation, whatever Kandalepas stands for, it is not
that consent judgments cannot be res judicata.
Caporale also does not help H.A.L. The case held that a de-
fendant had waived its argument that a prior stipulated dis-
missal was res judicata by participating in subsequent litiga-
tion through a contested judgment. 314 N.E.2d at 542. In the
alternative, a stipulated dismissal “as a matter of administra-
tive convenience” (the two suits had been consolidated before
the first was dismissed, id. at 541) estopped the defendant
from raising the defense. Id. at 542. That Caporale does not
hold that consent judgments cannot be res judicata is clear
from the opinion of the concurring judge, who thought they
could not be. See id. (Hallett, J., concurring). We see nothing
in Kandalepas, Caporale, or the cases citing them that would
persuade the Illinois Supreme Court to reject the weight of
contrary authority from its own decisions, many other Illinois
appellate decisions, and courts in other jurisdictions.
12 No. 19-1942
III. Motion to Certify
As for H.A.L.’s motion to certify an issue of law to the Illi-
nois Supreme Court under Circuit Rule 52, the “most im-
portant consideration” in deciding whether to certify is
“whether the reviewing court finds itself genuinely uncertain
about a question of state law that is vital to a correct disposi-
tion of the case.” State Farm Mut. Auto. Ins. Co. v. Pate, 275 F.3d
666, 671 (7th Cir. 2001). For the reasons just explained, we are
not genuinely uncertain about Illinois law on this point. The
motion to certify is denied.
IV. Motion for Sanctions
There remains only defendant Guinan’s motion for sanc-
tions under Federal Rule of Appellate Procedure 38, which
permits an award of “just damages and single or double costs
to the appellee” in a frivolous appeal. “We have found ap-
peals frivolous where the appellants simply failed to put to-
gether a coherent argument that came to grips with the appli-
cable law, the relevant facts, and the district courts’ reason-
ing.” Harris N.A. v. Hershey, 711 F.3d 794, 802 (7th Cir. 2013),
citing, e.g., Williams v. U.S. Postal Service, 873 F.2d 1069, 1075
(7th Cir. 1989) (imposing Rule 38 sanctions where appellant
failed to cite relevant cases or address district court’s reason-
ing); Rosenburg v. Lincoln American Life Ins. Co., 883 F.2d 1328,
1339–40 (7th Cir. 1989) (imposing Rule 38 sanctions on life in-
surance company that refused to pay death benefit and then
appealed adverse jury verdict without coming to grips with
applicable law and relevant evidence); see also Greviskes v.
Universities Research Ass’n, Inc., 417 F.3d 752, 760 (7th Cir.
2005) (ordering appellant to show cause why Rule 38 sanc-
tions should not be imposed where arguments on appeal
were “almost incomprehensible and entirely nonsensical,”
No. 19-1942 13
and there was “simply no legal foundation” for claims). This
is the meaning of our admonitions against “rehash[ing] posi-
tions the district court properly rejected.” Jaworski v. Master
Hand Contractors, Inc., 882 F.3d 686, 691 (7th Cir. 2018). What
is sanctionable is not merely repeating a losing argument.
That is necessary to avoid waiver. What is sanctionable is do-
ing so while “fail[ing] to present any arguable reason why the
district court erred” in rejecting the argument the first time.
Bugg v. Int’l Union of Allied Indus. Workers of Am., Local 507, 674
F.2d 595, 600 (7th Cir. 1982).
H.A.L.’s appeal fits this bill. Its sole argument to the
district court—that federal law applied and Rule 68
judgments could not support res judicata—was doomed.
First, it was built on the admittedly flawed premise that state
law was irrelevant. Second, it was doomed on its own terms
by unanimous federal precedent. On appeal H.A.L. has
conceded that its sole argument to the district court was
“wrong,” which effectively concedes that its appeal cannot
succeed. Most of its opening brief argued that Illinois law on
claim preclusion was unsettled. The brief did not address our
precedents applying that law, nor did it attempt to apply our
well-settled predictive approach to determining its content as
a matter of first principles. Finally, H.A.L.’s only substantive
argument against claim preclusion is contained in three pages
of its opening brief that repeated its position (no admission of
liability equals no preclusion) without even addressing the
controlling authority that the district court cited and
followed. Failing to engage with a district court’s central
reasons and authority is usually a reliable sign of a doomed
appeal. E.g., Hackett v. City of South Bend, — F.3d —, — (7th
Cir. 2020); Webster v. CDI Indiana, LLC, 917 F.3d 574, 578 (7th
Cir. 2019); Klein v. O’Brien, 884 F.3d 754, 757 (7th Cir. 2018)
14 No. 19-1942
(“ an appellate brief that does not even try to engage the
reasons the appellant lost has no prospect of success”);
Gonzalez-Servin v. Ford Motor Co., 662 F.3d 931, 934 (7th Cir.
2011) (“ostrich-like tactic of pretending that potentially
dispositive authority against a litigant’s contention does not
exist is as unprofessional as it is pointless,” quoting Mannheim
Video, Inc. v. County of Cook, 884 F.2d 1043, 1047 (7th Cir. 1989),
quoting in turn Hill v. Norfolk & Western Ry., 814 F.2d 1192,
1198 (7th Cir. 1987) (imposing sanctions under Rule 38)). And
saving an attack on the district court’s reasons for an
appellant’s reply brief does not salvage an otherwise frivolous
appeal; the reply brief is an opportunity to reply, not to say
what should have been said in the opening brief. Parrillo v.
Commercial Union Ins. Co., 85 F.3d 1245, 1250 (7th Cir. 1996).
This appeal was objectively frivolous from beginning to end.
“When an appeal is frivolous, Rule 38 sanctions are not
mandatory but are left to the sound discretion of the court of
appeals to decide whether sanctions are appropriate.” Harris,
711 F.3d at 802. “Typically the courts have looked for some
indication of the appellant’s bad faith suggesting that the ap-
peal was prosecuted with no reasonable expectation of alter-
ing the district court’s judgment and for purposes of delay or
harassment or out of sheer obstinacy.” Reid v. United States,
715 F.2d 1148, 1155 (7th Cir. 1983), citing Ruderer v. Fines, 614
F.2d 1128, 1132 (7th Cir. 1980), and Roadway Express, Inc. v.
Piper, 447 U.S. 752, 766 (1980) (discussing scope of bad faith).
This appeal fits that description, for several reasons.
After having made a Rule 68 offer of judgment that was
accepted, H.A.L.’s unsuccessful attempt to litigate its case on
its home turf, its continuing failure to pay the judgment it
offered to Advantage, its appellate abandonment of its
No. 19-1942 15
district-court theory, and the last-ditch quality of its motion
to certify together smack of gamesmanship and delay well
worth deterring. See Harris, 711 F.3d at 801 (“Rule 38 has both
a compensatory and a deterrent purpose.”); Smith v. Blue
Cross & Blue Shield United of Wis., 959 F.2d 655, 661 (7th Cir.
1992) (sanctions appropriate where appeal taken for purpose
of delay). It appears highly doubtful H.A.L. ever intended to
pay the judgment it offered. Instead, it launched this new
case, originally in a new venue, seeking a fresh start with
massive damage claims against which Advantage’s prior
judgment would offer only a tiny discount. At the very least,
we are convinced that H.A.L. has pursued this appeal as part
of an effort to keep this doomed case on life-support as long
as possible as a bargaining chip with Advantage.
We close by emphasizing again that this court’s doors are
always open to “disagreements brought to us in good faith,”
Harris, 711 F.3d at 801, including good-faith arguments for
modifying or reversing existing law. See Fed. R. Civ. P.
11(b)(2); Reiser v. Residential Funding Corp., 380 F.3d 1027,
1029–30 (7th Cir. 2004) (“This is not to say that decisions of
intermediate state courts never could induce us to look afresh
at issues of state law; a decision demonstrating that our initial
resolution rested on some obvious error would do the trick.”);
Sparks v. N.L.R.B., 835 F.2d 705, 707 (7th Cir. 1987) (Fed. R. Civ.
P. 11 informs Fed. R. App. P. 38). Where, an appellant has ig-
nored controlling precedent and occasionally misrepresented
it (for example, H.A.L. claimed “The Seventh Circuit and the
Northern District of Illinois have applied both of Illinois’ ap-
proaches to res judicata” when we have done no such thing),
we may impose sanctions for deterrent and compensatory
purposes without fear of chilling good-faith arguments in the
future.
16 No. 19-1942
The judgment of the district court is AFFIRMED. Plaintiff
H.A.L.’s motion to certify a question of law to the Illinois Su-
preme Court is DENIED. Defendant Guinan’s motion for
sanctions is GRANTED. Guinan may submit an affidavit and
supporting documentation within 21 days after the issuance
of this opinion specifying his damages incurred in defending
this appeal. H.A.L. may file a response within 21 days after
Guinan’s submission is docketed.