Walker v. Health International Corp. , 845 F.3d 1148 ( 2017 )

United States Court of Appeals
for the Federal Circuit
______________________
ANDRE WALKER,
Plaintiff-Appellant
v.
HEALTH INTERNATIONAL CORPORATION, A
FLORIDA CORPORATION, HSN INC., A
DELAWARE CORPORATION, HSN INTERACTIVE
LLC, A DELAWARE CORPORATION,
Defendants-Appellees
______________________
2015-1676
______________________
Appeal from the United States District Court for the
District of Colorado in No. 1:12-cv-03256-WJM-KLM,
Judge William J. Martínez.
______________________
Decided: January 6, 2017
______________________
RAMON PIZARRO, Law Office of Ramon L. Pizarro,
Denver, CO, argued for plaintiff-appellant.
DANIEL P. DIETRICH, Burr & Forman LLP, Tampa,
FL, argued for defendants-appellees. Also represented by
RYAN MARK CORBETT.
______________________
Before REYNA, HUGHES, and STOLL, Circuit Judges.
2 WALKER v. HEALTH INT’L CORP.
REYNA, Circuit Judge.
Andre Walker appeals from the final judgment of the
United States District Court for the District of Colorado
awarding sanctions for Walker’s vexatious actions in
continuing to litigate after the parties settled all claims.
ECF No. 192 1 (Apr. 27, 2015 final judgment awarding
attorneys’ fees as sanctions). 2 Defendants Health Inter-
national Corporation, HSN Inc., and HSN Interactive
LLC (collectively, “HSN”) claim that Walker’s appeal is
itself frivolous and move for an award of damages and
double costs under Federal Rule of Appellate Procedure
38. App. Dkt. 57. We affirm the district court’s judgment.
Additionally, we find Walker’s appeal to be frivolous, both
as filed and as argued, and grant HSN’s motion for sanc-
tions.
BACKGROUND
District Court Proceedings
Andre Walker filed suit against various defendants on
December 14, 2012 alleging infringement of U.S. Patent
No. 7,090,627. Through discovery and motions, the case
evolved until only HSN remained in the case.
On May 6, 2014, Walker and HSN, both represented
by counsel, engaged in mediation. That same day, they
entered into a hand-written Mediated Settlement Agree-
1 Citations to “ECF No.” are to the district court
docket and citations to “App. Dkt.” are to the docket on
appeal.
2 The district court dismissed the case on the merits
prior to awarding sanctions. See Walker v. Health Int’l
Corp., No. 12-CV-3256-WJM-KLM, 2014 WL 3819487 (D.
Colo. Aug. 4, 2014), ECF No. 180, reconsideration denied,
2015 WL 514912 (Feb. 6, 2015), ECF No. 187.
WALKER v. HEALTH INT’L CORP. 3
ment (“Agreement”). The Agreement required that HSN
pay $200,000 to Walker within thirty days. Following
payment of the $200,000, Walker became obligated to
deliver a release to HSN and “by joint stipulation the
parties to this agreement shall dismiss all claims between
them with prejudice.” J.A. 27.
On May 9, HSN filed a Motion to Stay Deadlines
based on the Agreement “that resolves all claims asserted
between the parties” and requested that all case deadlines
be postponed for thirty days in order to effectuate the
settlement. ECF No. 140. Walker opposed the motion,
stating that HSN’s allegation that the Agreement re-
solved all claims was “simply incorrect.” ECF No. 141.
He acknowledged “significant progress” but claimed that
“there are significant issues that remain to be resolved,
and which may require the filing of an amended com-
plaint.” Id.
The district court denied HSN’s motion “given the ap-
parent disagreement among the parties as to whether a
final resolution of all claims has been achieved.” ECF No.
142. On May 12, HSN sought reconsideration of the
denial of its motion by filing, under seal, the Agreement
and a memorandum arguing that all claims were resolved
under the terms of the Agreement. ECF Nos. 144–146.
A series of related motions and oppositions were filed
over the next four weeks. 3 On May 13, Walker moved to
amend and file a Third Amended Complaint, which HSN
opposed. ECF Nos. 147, 152. On May 16, HSN filed a
Motion to Extend Deadlines, explaining that, “[p]ursuant
to the Agreement, all claims asserted between the parties
in this matter were resolved.” ECF No. 153. That same
3 This narrative does not include all filings and or-
ders, a list of which is available in the district court
docket. See J.A. 417–437.
4 WALKER v. HEALTH INT’L CORP.
day, Walker filed a Motion for Order to Set Markman
Hearing. ECF No. 154. On May 22, Walker opposed the
filing of the Agreement. ECF No. 158. On May 29, HSN
filed a Motion to Enforce Mediated Settlement Agree-
ment. ECF No. 163. As an exhibit to its Motion to En-
force, HSN attached correspondence from Walker’s coun-
counsel acknowledging that the case was settled, but
requesting additional discovery. Email from David Fur-
tado to Daniel Dietrich (May 19, 2014), ECF No. 163-1 (“I
am aware we have settled this matter. In order to com-
plete the settlement my client wishes to receive a cd of the
data the the [sic] sales figures [provided at the mediation]
were created using.”). Both the HSN May 14 Opposition
to the request to amend and the May 29 Motion to En-
force included conclusory requests for attorneys’ fees and
costs. ECF Nos. 152, 163.
On June 2, 2014, prior to receiving any payment from
HSN, Walker executed and delivered a general release of
all claims against HSN. HSN’s counsel forwarded pay-
ment of the $200,000 on the same day. See Walker’s
Request for Reconsideration 9, ECF No. 183 (indicating
that payment was forwarded June 2, 2014). On June 6,
Walker filed an Opposition to the Motion to Enforce and
then, on June 13, filed a motion requesting that attorneys’
fees be denied and the case be dismissed with the district
court retaining jurisdiction over the Agreement. ECF
Nos. 164, 165. On June 16, HSN filed a formal Motion for
Sanctions based on Walker’s “meritless filings [that]
forced [HSN] to continue to litigate this matter and waste
resources on a matter that has been fully resolved” and
moved for dismissal with the district court retaining
jurisdiction over its request for attorneys’ fees. ECF
Nos. 166–168. Walker filed an Opposition to HSN’s
Motion for Sanctions on June 30. ECF No. 176. The
district court referred the parties to a Magistrate Judge
for a status conference on the numerous pending motions.
ECF No. 169. At a July 2 status conference, both parties
WALKER v. HEALTH INT’L CORP. 5
agreed the case should be dismissed, but disagreed about
whether, and over what, the district court retained juris-
diction. ECF No. 177.
On August 4, 2014, the district court dismissed all
claims and found “that Plaintiff’s actions have unneces-
sarily multiplied the proceedings at a time when the
underlying claims have admittedly been resolved. These
actions [were] not supported by any justifiable litigation
strategy, particularly given Plaintiff’s current position
that the case should be dismissed.” Walker, 2014 WL
3819487, at *3. The court awarded HSN “reasonable
attorneys’ fees and costs resulting from Plaintiff’s vexa-
tious actions after the filing of the Notice of Settlement
(ECF No. 140)” and ordered HSN to file documentation
supporting its claim for damages. Id. The court denied
the remaining nine motions as moot. Id.
On August 14, Walker sought reconsideration of the
district court’s grant of dismissal and, on August 22, HSN
filed an Affidavit of Fees. ECF Nos. 183, 184. The dis-
trict court denied the motion for reconsideration on Feb-
ruary 6, 2015. ECF No. 187. Only thereafter, on
February 16, did Walker file an Objection to the claimed
fees, which HSN moved to strike as untimely. The dis-
trict court agreed with HSN and struck Walker’s Objec-
tion. ECF Nos. 188–190.
On April 27, 2015, the district court entered final
judgment awarding HSN $20,511.50 in attorneys’ fees
because Walker’s “litigation conduct after entering into
the Agreement was vexatious and had unnecessarily
multiplied the proceedings.” ECF Nos. 191–192.
On May 14, Walker filed a Statement purporting to
“clarify issues for appeal.” ECF No. 193. On May 21, he
filed a Motion to Stay Execution of Judgment and for
Waiver of Bond. ECF No. 195. On October 5, the district
court granted Walker’s Motion to Stay but denied his
request for a bond waiver. ECF No. 203.
6 WALKER v. HEALTH INT’L CORP.
Walker appeals. We have jurisdiction under 28
U.S.C. § 1295(a)(1).
Proceedings on Appeal
Walker appeals the district court’s April 27, 2015
Judgment Awarding Attorneys’ Fees in which the district
court awarded HSN $20,511.50 in attorneys’ fees plus
costs. ECF No. 192.
The parties briefed this appeal throughout the latter
half of 2015. On December 7, 2015, HSN filed a Motion
for Sanctions, requesting attorneys’ fees and double costs
pursuant to Federal Rule of Appellate Procedure 38,
which Walker opposed. App. Dkts. 57–58. Oral argu-
ments were heard on April 4, 2016. At the conclusion of
oral arguments, we ordered Walker to show cause within
thirty days why we should not issue sanctions. Oral Arg.
Tr. at 23:15, http://oralarguments.cafc.uscourts.gov/
default.aspx?fl=2015-1676.mp3.
The next day, we ordered HSN to file documentation
supporting damages and granted Walker leave to object.
App. Dkt. 72. On April 25, 2016, HSN filed documenta-
tion supporting its request of $48,482.50 in attorneys’ fees
and $3,319.38 in double costs. App. Dkt. 73. On May 9,
2016, Walker filed a Notice Regarding Objections that
stated in full, “Appellant has paid the full amount re-
quested. Accordingly any objection is moot.” App. Dkt.
74. However, the parties have not indicated that they
settled the dispute regarding sanctions on appeal or the
underlying sanctions granted by the district court.
DISCUSSION
I
The Supreme Court has recognized the federal courts’
inherent, equitable power to “award attorneys’ fees when
the interests of justice so require.” Hall v. Cole, 412 U.S.
1, 5 (1973). Such an award is within the court’s discretion
WALKER v. HEALTH INT’L CORP. 7
when a party “has acted in bad faith, vexatiously, wanton-
ly, or for oppressive reasons.” Id. (quotation marks and
citations omitted).
In reviewing a district court’s fee award, we apply the
law of the regional circuit, in this case the Tenth Circuit.
See, e.g., Pickholtz v. Rainbow Techs., Inc., 284 F.3d 1365,
1371 (Fed. Cir. 2002). In the Tenth Circuit, a district
court may equitably award attorney’s fees when “the
opponent in litigation has acted in bad faith, vexatiously,
wantonly, or for oppressive reasons.” Ryan v. Hatfield,
578 F.2d 275, 277 (10th Cir. 1978) (quotation marks and
citation omitted). “[T]he trial court has discretion and
will be reversed only in circumstances which do not show
a reasonable ground for the conclusion that vexatiousness
existed.” Id.
The court’s authority to award attorneys’ fees and
costs as sanctions under Federal Rule of Appellate Proce-
dure 38 is linked to the merits of, and the party’s conduct
during, the appeal. Rule 38 provides that “[i]f a court of
appeals determines that an appeal is frivolous, it may,
after a separately filed motion or notice from the court
and reasonable opportunity to respond, award just dam-
ages and single or double costs to the appellee.” We
recognize two related ways that an appeal can be frivolous
under Rule 38. First, an appeal is frivolous as filed when
“the judgment by the tribunal below was so plainly correct
and the legal authority contrary to appellant’s position so
clear that there really is no appealable issue.” State
Indus., Inc. v. Mor-Flo Indus., Inc., 948 F.2d 1573, 1578
(Fed. Cir. 1991) (quoting Finch v. Hughes Aircraft Co.,
926 F.2d 1574, 1579–80 (Fed. Cir. 1991)). Second, an
appeal is frivolous as argued when “the appellant’s mis-
conduct in arguing the appeal” justifies such a holding.
Id. (quoting Romala Corp. v. United States, 927 F.2d
1219, 1222 (Fed. Cir. 1991)). Such misconduct can in-
clude manufacturing arguments “by distorting the record,
by disregarding or mischaracterizing the clear authority
8 WALKER v. HEALTH INT’L CORP.
against its position, and by attempting to draw illogical
deductions from the facts and the law.” Id. at 1579.
II
District Court Proceedings
Walker first argues that the district court erred in
awarding fees without “findings of subjective bad faith”
and therefore must be reversed “due to the lack of factual
support for the [district] court’s conclusions.” Walker Br.
11. This argument mischaracterizes clear authority.
Federal courts may award damages under their equitable
powers when litigants have acted “in bad faith, vexatious-
ly, wantonly, or for oppressive reasons.” Hall, 412 U.S. at
5 (emphasis added). The district court made detailed
findings that Walker’s actions after the settlement were
“vexatious” and sufficient for awarding fees. Walker, 2014
WL 3819487, at *3. We find ample support in the record
for the district court’s conclusion of vexatiousness. Pri-
marily, the Agreement unambiguously resolved “all
claims” and clearly dismissed the suit with prejudice upon
HSN’s payment of $200,000. The district court correctly
concluded that there remained no legitimate reason to
continue litigation once the parties entered into a com-
prehensive settlement of all claims.
Walker next argues that the district court lacked au-
thority to strike his Objection to the award of attorneys’
fees as untimely because “motions, briefs, memoranda,
objections or affidavits may not be attacked by a motion to
strike.” Walker Br. 14–15 (citing 2-12 Moore’s Federal
Practice - Civil § 12.37 (2015)). Even if Rule 12(f) motions
are not appropriate means to attack filings other than
pleadings, which we need not resolve, it does not logically
follow that the district court lacked authority to deny
Walker’s Objection.
Walker’s Objection failed to challenge the reasonable-
ness of the fees claimed; instead, it improperly re-raised
WALKER v. HEALTH INT’L CORP. 9
the same arguments raised in his Response to the sanc-
tions motion and his Motion for Reconsideration. Com-
pare ECF No. 176, at 4 (“The Agreement recognizes that
at least two additional issues needed to be resolved by the
parties.”) and ECF No. 183, at 2 (“[T]he Agreement recog-
nized that . . . an additional release was still required.”),
with ECF No. 188 at 7 (“Plaintiff maintains that it . . .
wanted that all of the requirements listed in the [Agree-
ment] be completed.”). The district court had already
considered and rejected these arguments, so it had au-
thority to strike the Objection as “redundant.”
D.C.COLO.LCivR 7.1(i). 4 Further, because the district
court already had considered the same arguments, its
decision not to hear them again was not a denial of due
process and did not otherwise affect Walker’s “substantial
rights.” 28 U.S.C. § 2111; see also Grannis v. Ordean, 234
U.S. 385, 394 (1914) (“The fundamental requisite of due
process of law is the opportunity to be heard.”); Servants
of Paraclete v. Does, 204 F.3d 1005, 1012 (10th Cir. 2000)
(motions for reconsideration are “not appropriate to
revisit issues already addressed or advance arguments
that could have been raised in prior briefing”). Walker
fails to persuade us that even if such error occurred, the
result might have been different. See SmithKline Diag-
nostics, Inc. v. Helena Labs. Corp., 859 F.2d 878, 892 (Fed.
Cir. 1988) (“On appeal it is [Appellant’s] burden to show
not only that the district court erred, but also to persuade
this court that had such error not occurred the result
might have been different.”). Walker’s Objection was
merely an attempt to re-argue positions. The district
court correctly rejected them, and reversible error cannot
4 The district court had authority to simply deny
Walker’s Objection as untimely because it was filed more
than 21 days after HSN filed its Affidavit of Fees. See
ECF No. 188 (February 16, 2015); ECF No. 184 (August
22, 2014); D.C.COLO.LCivR 7.1(d).
10 WALKER v. HEALTH INT’L CORP.
flow from a district court’s determination not to rehear
meritless arguments.
Walker’s third argument is that the district court
lacked jurisdiction because the case should have been
dismissed either because of the Agreement or once the
parties agreed at the status conference that the case
should be dismissed. Walker Br. 16 (citing Smith v.
Phillips, 881 F.2d 902, 904 (10th Cir. 1989) (“A voluntary
dismissal by stipulation under [Fed. R. Civ. P.] 41(a)(1)(ii)
is of right, cannot be conditioned by the court, and does
not call for the exercise of any discretion on the part of the
court.”)). 5 Under Federal Rule of Civil Procedure 41, “the
plaintiff may dismiss an action without a court order by
filing . . . a stipulation of dismissal signed by all parties
who have appeared.” Fed. R. Civ. P. 41(a)(1)(A)(ii). In
this case, joint stipulation of dismissal was not filed, and
contrary to Walker’s position, see Walker Br. 15, the
Agreement does not itself stipulate to dismissal, but
instead explicitly calls for the parties to file a separate
joint stipulation after a condition precedent is met. Here,
the $200,000 was paid for the release. J.A. 27. In any
event, after the merits of a case are dismissed, a district
court retains jurisdiction over whether to grant sanctions.
See, e.g., Griffen v. Oklahoma City, 3 F.3d 336, 338, 340
(10th Cir. 1993) (remanding for consideration of a sanc-
tions motion filed after final judgment had been entered
on the merits of all claims).
Proceedings on Appeal
On appeal, Walker argues that the award of fees was
improper because he was the “prevailing party” in the
5 This position is contrary to Mr. Walker’s position
before the district court that it “should retain jurisdiction
over the case for the purpose of enforcing the settlement
agreement.” J.A. 60.
WALKER v. HEALTH INT’L CORP. 11
lawsuit by compelling a “voluntary change” in HSN’s
conduct. Walker Br. 12. In support, Walker cites Buck-
hannon Board & Care Home, Inc. v. West Virginia De-
partment of Health & Human Resources, 532 U.S. 598,
601 (2001). But Buckhannon states the opposite of Walk-
er’s position. There, the Court explicitly rejected the so-
called “catalyst theory” of attorney fee recovery Walker
invokes here. 532 U.S. at 610 (“[W]e hold that the ‘cata-
lyst theory’ is not a permissible basis for the award of
attorney’s fees under the [Fair Housing Amendments
Act].”). Even after HSN pointed out Walker’s mischarac-
terization of clear authority, he continued to press this
frivolous argument and reiterated it at oral argument.
See Reply Br. 23.
Walker also raises new arguments in his Reply
amounting to baseless accusations against opposing
counsel. Walker argues that HSN’s counsel violated
Colorado Rule of Professional Conduct 1.3 by failing to
immediately notify him that HSN had tendered the
settlement payment to its counsel. Reply Br. 22. Walker
failed to raise this argument in his opening brief, so it is
waived. See Becton Dickinson & Co. v. C.R. Bard, Inc.,
922 F.2d 792, 800 (Fed. Cir. 1990) (“[A]n issue not raised
by an appellant in its opening brief . . . is waived.”). But
we address the argument to illustrate Walker’s bent to
mischaracterize clear authority and to draw illogical
conclusions from the law and facts.
Rule 1.3 unambiguously requires attorneys to protect
their own clients’ interests. It provides that “[a] lawyer
shall act with reasonable diligence and promptness in
representing a client.” Colo. R. of Prof’l Conduct (2014)
(emphasis added). Walker argues that the rule exists to
protect him, and that opposing counsel’s delay in tender-
ing payment “was in fact vexatious” because “unreasona-
ble delay can cause a client needless anxiety and
undermine confidence in the lawyer’s trustworthiness.”
Reply Br. 22 (quoting Rule 1.3 cmt. [3]). Rule 1.3’s text
12 WALKER v. HEALTH INT’L CORP.
and appended comments are antithetical to Walker’s
position. See, e.g., Colo. R. of Prof’l Conduct R. 1.3 cmt. [1]
(“[A] lawyer may have authority to exercise professional
discretion in determining the means by which a matter
should be pursued.”). HSN’s counsel satisfied the man-
dates of Rule 1.3 by forwarding payment within the 30-
day period provided for in the Agreement, thereby dili-
gently protecting HSN’s “interests” and HSN’s “legal
position.” Id. cmt. [3]. Walker’s implausible reading is
contrary to the Rule’s explicit language and leads to
illogical conclusions. As such, the positions taken by
Walker on appeal in the briefs and at oral argument were
frivolous.
III
This court has long disdained the filing of frivolous
appeals. “The filing of and proceeding with clearly frivo-
lous appeals constitutes an unnecessary and unjustifiable
burden on already overcrowded courts, diminishes the
opportunity for careful, unpressured consideration of
nonfrivolous appeals, and delays access to the courts of
persons with truly deserving causes.” Asberry v. U.S.
Postal Serv., 692 F.2d 1378, 1382 (Fed. Cir. 1982). Frivo-
lous appeals waste both the public resources supplied to
this court and the resources of prevailing litigants that
must defend such frivolous actions.
This appeal was frivolous as filed. The record lacks
any support for Walker’s attempts to frustrate the com-
prehensive settlement by prolonging litigation. In the
absence of such support, the district court’s conclusion
that Walker’s actions were vexatious provides a reasona-
ble basis for the award of attorneys’ fees. See Finch, 926
F.2d at 1580; Ryan, 578 F.2d at 277.
Walker’s numerous mischaracterizations of clear au-
thority in arguing the appeal also makes this case frivo-
lous as argued. See Mor-Flo Indus., 948 F.2d at 1579.
Particularly troubling are Walker’s baseless assertions of
WALKER v. HEALTH INT’L CORP. 13
misconduct against his opposing counsel and continued
misrepresentation of clear, binding Supreme Court prece-
dent even after the distortion was pointed out by opposing
counsel. The continued misrepresentation standing alone
is a very serious matter that could warrant sanctions. Id.
at 1580.
We do not treat such misconduct lightly for good rea-
son. “Where a party blindly disregards long established
authority and raises arguments with no factual founda-
tion, . . . the judicial process has not been used, but
abused, and sanctions under Rule 38 are warranted.”
Octocom Sys., Inc. v. Hous. Comput. Servs., Inc., 918 F.2d
937, 943 (Fed. Cir. 1990). Attempts to mislead the court
in a frivolous appeal further compound the wasted re-
sources because the court and opposition are forced to
devote extra resources to sorting through half-truths and
misused legal authority in an appeal that never should
have been filed in the first place. “Sanctions are awarded
to compensate the victimized party for the burden of
continued litigation in what long ago [was] a settled
matter, as well as to discourage frivolous appeals which
unnecessarily clog our docket.” Mor-Flo Indus., 948 F.2d
at 1582.
In keeping with this court’s longstanding policy of en-
forcing Rule 38 vigorously, we exercise our discretion to
impose sanctions in the full amount of HSN’s request. See
Practice Note to Fed. R. App. P. 38 in Fed. Cir. Rules. We
find that the unopposed fees and costs HSN requests are
reasonable. See Mor-Flo Indus., 948 F.2d at 1582 (“Judg-
es have experience in determining what are reasonable
hours and reasonable fees for the work lawyers perform
and may rely on that experience to set an award.”).
Because of Walker’s misconduct in arguing the appeal,
“we consider the attorney who wrote and signed the briefs
to be equally responsible.” Id. We therefore hold Walk-
er’s counsel jointly and severally liable for the damages
we assess.
14 WALKER v. HEALTH INT’L CORP.
IV
The judgment of the district court is affirmed. Addi-
tionally, because there is no reasonable basis for reversal
and Walker’s arguments repeatedly distort controlling
law, we grant HSN’s motion for sanctions. Damages are
awarded to HSN for its attorneys’ fees and double costs in
the amount of $51,801.88.
AFFIRMED
COSTS
Costs to HSN.