Donald Hamm v. TBC Corporation

[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FILED
FOR THE ELEVENTH CIRCUIT U.S. COURT OF APPEALS
________________________ ELEVENTH CIRCUIT
AUGUST 25, 2009
No. 09-11221 THOMAS K. KAHN
Non-Argument Calendar CLERK
________________________
D. C. Docket No. 07-80829-CV-KLR
DONALD HAMM,
ELLIOT COOK,
RONALD SIMMS,
MARK WAGNER,
MARTHA HARRIS,
TIMOTHY BRIDGES,
DAVID BERMUDEZ,
EDWARD GEIGER, III,
CURTIS CORTIJO,
CHARLES DEPOTTER,
ROBERT ELLISON,
PHILLIP PENDELL,
CHARLES MCNABB,
JAMES MACDONALD,
individually and on behalf persons similarly
situated,
SHAVITZ LAW GROUP, P.A.,
Plaintiffs-Appellants,
ALL PLAINTIFFS, JOE MAHAR, et al.,
Plaintiffs,
versus
TBC CORPORATION,
a Delaware corporation,
TIRE KINGDOM, INC.,
a Florida corporation,
Defendants-Appellees.
________________________
Appeal from the United States District Court
for the Southern District of Florida
_________________________
(August 25, 2009)
Before BLACK, BARKETT and KRAVITCH, Circuit Judges.
PER CURIAM:
This case stems from a lawsuit brought by six named plaintiffs, on behalf of
themselves and others similarly situated, against TBC Corporation and Tire
Kingdom, Inc. (collectively “Tire Kingdom”). During the case, the district court
sanctioned Shavitz Law Group (“SLG”), counsel for the current and putative opt-in
plaintiffs, for impermissibly soliciting clients. SLG appeals this imposition of
sanctions, arguing that they are disproportionately broad and excessive. We
disagree and therefore affirm the district court’s sanctions order.
I. Facts
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This case was brought by six employees of Tire Kingdom as a proposed
collective action, seeking overtime compensation allegedly owed to the plaintiffs
under the Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 201, et. seq. Forty-six
other plaintiffs opted-in the suit. A few months after the case was filed, Tire
Kingdom filed a motion seeking court-imposed sanctions against SLG for direct
solicitation of putative class members, in violation of Southern District of Florida
Local Rule 11.1.C and Florida Rule of Professional Conduct 4-7.4(a). In the
motion, Tire Kingdom alleged that SLG impermissibly solicited at least three then
current Tire Kingdom employees – Christopher Johnson, Nicholas Kilgore, and
Shane Cook – in an attempt to convince them to join the pending lawsuit and have
SLG represent them.
SLG conceded that the firm’s administrative assistant, Tayara Oliveira,
contacted Kilgore and Cook; the firm denied, however, that Oliveira solicited them
as clients. Instead, the firm maintained that Oliveria contacted Kilgore and Cook
in order to conduct a due diligence investigation, as required by Rule 11 of the
Federal Rules of Civil Procedure, before having its client, Matthew Bitner, opt into
the lawsuit. The firm did not explain whether or why it contacted Johnson.
The district court heard oral argument on Tire Kingdom’s sanctions motion
and then referred the matter to a magistrate judge for an evidentiary hearing.
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Kilgore, Cook, Johnson, and Christopher Blum, Kilgore and Cook’s manager at the
time of the solicitation calls, testified for Tire Kingdom. Kilgore and Cook, both
employees of a Tire Kingdom subsidiary located in Kansas City, Missouri, testified
that they received telephone calls on December 15, 2007 from a woman identifying
herself as an employee of a law firm. She told Kilgore and Cook that she received
their telephone numbers from Bitner and wanted to know if they would be
interested in joining a lawsuit against Tire Kingdom. Johnson testified that he
received a similar call on December 7, 2007, during which time he was an
employee of a Tire Kingdom subsidiary in Shawnee Mission, Missouri, and that
once he told the caller that he was not interested in joining the lawsuit, she asked if
he knew anyone else who had lost wages. Telephone records confirmed that
Kilgore, Cook, and Johnson received telephone calls from SLG on the dates in
question. Johnson testified that he did not know Bitner and that the caller did not
ask any questions about Bitner. Blum testified that he received a telephone call
from Kilgore on December 15, 2007, stating that Bitner was suing Tire Kingdom.
Blum stated that other employees in his store informed him that they had received
calls regarding the same issue that was reported by Kilgore.
Oliveira and Gregg Shavitz, the firm’s sole partner, testified for SLG.
Shavitz testified that employees received extensive training and that administrative
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assistants were frequently reminded not to solicit. Shavitz, however, admitted that
the firm did not have a written policy on solicitation and that Oliveira was not
given a script to work from when calling Johnson, Kilgore, or Cook. Oliveira
testified that she received a typed list of names and telephone numbers, which
included those of Cook and Kilgore, from Bitner. She admitted calling Cook and
Kilgore on December 15, 2007, but stated that she only did so to get information
about SLG’s clients’ claims, and not to entice them to join the case as plaintiffs.
Following the hearing, the magistrate judge issued a report and
recommendation, finding that SLG solicited Kilgore, Cook, and Johnson to join the
lawsuit against Tire Kingdom. The magistrate judge found Kilgore, Cook, and
Johnson credible and concluded that SLG’s motive for the solicitations was
pecuniary gain. The magistrate judge also found that SLG failed to train Oliveira
regarding solicitation of clients.
The magistrate judge recommended the following sanctions against SLG:
1) that Shavitz Law Group be barred from representing any
individual, including any current opt-in plaintiff, who did not work
with any of the named plaintiffs in this action . . . ;
2) that Shavitz Law Group be barred from collecting any fees or costs
for work performed in representing any individual, including any
current opt-in plaintiff, who did not work with any of the named
plaintiffs in this action . . . ;
3) that Shavitz Law Group be ordered to formulate and implement a
formal written policy on solicitation to inform and govern the conduct
of all SLG attorney and non-attorney staff;
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4) that a copy of this Report and Recommendation and any Order adopting it be
forwarded to the Florida Bar for possible future action; and
5) that Shavitz Law Group be ordered to reimburse Defendants for all
reasonable fees and costs incurred in bringing and prosecuting
Defendants’ Motion for Sanctions.
SLG filed objections to the magistrate judge’s proposed sanctions 1, 2, and
5. The district court rejected SLG’s objections and adopted the report and
recommendation in its entirety.
SLG appeals, arguing that the district court’s sanctions are
disproportionately broad and excessive in light of the brevity of the calls, the lack
of evidence that the firm ratified Oliveira’s solicitation of clients, and the First
Amendment issues at stake.
II. Discussion
A. Standard of Review
A court’s decision to impose sanctions is reviewed for an abuse of
discretion. Harris v. Chapman, 97 F.3d 499, 506 (11th Cir. 1996).
B. Sanctions 1 and 2
In its briefs to this court, SLG does not purport to challenge the magistrate
judge’s findings of fact, but rather only argues that sanctions 1 and 2 are
disproportionately harsh and broad because the solicitation was conducted by a
non-attorney and there is no evidence of attorney knowledge or ratification of the
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solicitation. Also, SLG argues that the calls were of short duration and there is no
evidence that individuals were solicited to join the lawsuit. SLG also asserts that
sanction 1 is disproportionately harsh in light of SLG’s First Amendment interests.
In sum, SLG concedes that imposition of some sanctions was appropriate, but
argues that sanctions 1, 2, and 5 are too far-reaching. SLG contends that a more
appropriate sanction would permit the representation and collection of fees from
plaintiffs that might opt-in in the future.1
“[A] federal court has the power to control admission to its bar and to
discipline attorneys who appear before it.” Chambers v. NASCO, Inc., 501 U.S.
32, 43 (1991). A court’s decision as to “whether a party or lawyer’s actions merit
imposition of sanctions is heavily dependent on the court’s firsthand knowledge,
experience, and observation.” Harris, 97 F.3d at 506. The Rules Regulating the
Florida Bar (“Florida Rules”) contain an anti-solicitation provision which
mandates that “a lawyer shall not solicit professional employment from a
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SLG also argues that five current opt-in plaintiffs that were not co-workers of the
named plaintiffs should be exempted from the order. In its objection to the magistrate judge’s
report and recommendation, however, SLG expressly stated that it “do[es] not object to all
recommendations.” It went on to explain that it “agreed to withdraw from representation of all
[current] opt-in plaintiffs except for those who worked with the named plaintiffs.” Thus, SLG
has waived the right to challenge the portion of the district court’s order that prohibits the
representation of any current opt-in plaintiffs that were not co-workers of the named plaintiffs
because SLG invited the alleged error. See Birmingham Steel Corp. v. Tenn. Valley Auth., 353
F.3d 1331, 1341 n.5 (11th Cir. 2003) (invited error precludes review). We therefore limit our
review to the sanctions prohibiting representation and collection of fees for future opt-in
plaintiffs.
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prospective client with whom the lawyer has no family or prior professional
relationship, in person or otherwise, when a significant motive for the lawyer’s
doing so is the lawyer’s pecuniary gain.” R. Reg. Fla. Bar 4-7.4(a). The Southern
District of Florida Local Rules (“Local Rules”) subject attorneys to discipline for
violating the Local Rules or Florida Rules. S.D. Fla. L. R. 11.1.C. Such
disciplinary measures may include disbarment, monetary sanctions, or “any other
sanction the Court may deem appropriate.” S.D. Fla. R. I.B.
First, it is appropriate to discuss the scope of the sanctions imposed. SLG
interprets the district court’s order as a categorical prohibition from SLG ever
representing any plaintiff in any case against any defendant, unless the plaintiff is
one of the six named plaintiffs in the instant case or was first a co-worker of one
of the named plaintiffs. Although the language in the district court’s order is
imprecise, we find SLG’s interpretation of the sanctions unreasonable. The district
court expressly identified the purposes of the sanctions as “ensuring that counsel
acts ethically in this litigation and . . . sanctioning The Shavitz Law Group for
unethically soliciting clients.” Hamm v. TBC Corp., 597 F. Supp. 2d 1338, 1340
(S.D. Fla. 2009) (emphasis added). There is no evidence indicating the district
court intended for these sanctions to apply to future cases, or that the misconduct in
this case would impact suits against defendants other than Tire Kingdom. We thus
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conclude that the district court’s sanctions order only limits SLG’s ability to
represent opt-in plaintiffs in the instant case.
Once this misconception is removed, we conclude that sanctions 1 and 2 are
not disproportionately broad or excessive. The named plaintiffs in this action are
from Florida, Georgia, North Carolina, and Pennsylvania. There was no evidence
before the magistrate judge as to how the opt-in plaintiffs, which included
individuals from Texas, Louisiana, Alabama, Ohio, Maryland, Missouri,
Massachusetts, and Illinois, learned about the suit and selected SLG as counsel.
Under these circumstances, it was impossible for the magistrate judge to know
which, if any, of these clients had also been solicited by SLG. Thus, the magistrate
judge recommended narrowly tailored sanctions to permit SLG to continue to
represent the named plaintiffs and co-workers of the named plaintiffs (presumably
because they most likely learned about SLG and the lawsuit from the named
plaintiffs), but prohibited SLG from representing opt-in plaintiffs from other
stores. These were reasonable and limited sanctions that balanced the danger that
current and future opt-in clients were impermissibly solicited against SLG’s
interest in representing lawfully-obtained clients.2
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The magistrate judge expressly found that SLG failed to train Oliveira and that the firm
solicited the clients for the purpose of pecuniary gain. We find it irrelevant that SLG claims that
the solicitation was by a non-attorney, there was no evidence of attorney knowledge or
ratification, and there were only three instances of solicitation. SLG’s interpretation of the facts,
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We similarly conclude that SLG’s First Amendment argument is meritless.
SLG argues that the sanctions in this case are too broad because under Gulf Oil Co.
v. Bernard, 452 U.S. 89 (1981), sanctions must be tailored to specific findings,
rather than the “mere possibility of abuses.” SLG argues that because the sanctions
prohibit the representation of opt-in plaintiffs that may not have been solicited, the
sanctions are impermissibly broad and abridge SLG’s ability to represent
legitimately-obtained clients.
We conclude that the district court’s order does not violate Gulf Oil. That
case dealt with a broad sanction – a “complete ban on all communications
concerning the class action between parties or their counsel and any actual or
potential class member who was not a formal party, without the prior approval of
the court.” Id. at 94-95. The lower court in Gulf Oil did not hear any evidence,
make any findings of fact, and did not write an explanatory opinion to justify this
sweeping ban. Id. at 93-96. The Supreme Court found it troubling that there was
no record for appellate review, and concluded that in light of the litigants’ and
attorneys’ First Amendment interests, “an order limiting communications between
parties and potential class members should be based on a clear record and specific
findings that reflect a weighing of the need for a limitation and the potential
even if correct, does not necessitate the conclusion that the district court abused its discretion.
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interference with the rights of the parties.” Id. at 101.
In the instant case, an evidentiary hearing was held, the report and
recommendation contained detailed factual findings, and the magistrate judge
discussed the Gulf Oil opinion when determining the appropriate form of
sanctions. Under these circumstances, the district court did not abuse its discretion
by prohibiting SLG from representing or collecting fees from opt-in plaintiffs,
other than those that were co-workers of the named plaintiffs.
C. Sanction 5
Finally, SLG challenges the portion of the district court’s order requiring
SLG to pay all reasonable fees and costs incurred by Tire Kingdom in bringing and
prosecuting its motion for sanctions. SLG provides no reasoning in support of this
position, aside from re-stating its arguments about the lack of attorney ratification
and that “such an over-broad remedy is severe.” Federal Rule of Civil Procedure
11(c)(2) expressly permits a court to “award to the prevailing party [in a motion for
sanctions] the reasonable expenses, including attorney’s fees, incurred for the
motion.” Fed. R. Civ. P. 11(c)(2). Under the facts of this case, we do not consider
the district court’s imposition of this modest and statutorily-authorized sanction to
amount to an abuse of discretion.
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III. Conclusion
For the reasons set forth, we conclude that the district court did not abuse its
discretion in imposing the aforementioned sanctions against SLG.
AFFIRMED.
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