Commercial Litigation and Arbitration

Sanctions — Reasonable Attorneys’ Fees

The Seventh Circuit left no doubt that the District Judge was correct to impose monetary sanctions in Kathrein v. Monar, 2007 U.S. App. LEXIS 5596 (7th Cir. March 6, 2007) (an opinion which begins: ‛For a fourth time [plaintiff]Michael Lee Kathrein asks us to get involved in matters arising from the juvenile antics he has inflicted upon his ex-wife's current husband, [defendant] Michael Monar“). The question was how much should the award be. The Seventh Circuit had no problem with the hourly rate, but reversed an award of $62,000 for responding to the plaintiff’s complaint because it considered that the defense counsel spent too much time on the papers — 191 hours to prepare 7 filings. That Court is now basing decisions on a pre-set schedule of hours that may compensably be spent on papers directed at disposing of sanctionable pleadings. The Kathrein Court observed that, in Szopa v. United States, 460 F.3d 884, 886 (7th Cir. 2006), it had held that ‛57.5 hours, or $ 8,000, to defend a frivolous suit (albeit on appeal) is unreasonable,“ and that ‛13.7 hours, or $ 4,354, to prepare a single filing is ‘too high,’ see Budget Rent-A-Car Sys., Inc., 428 F.3d at 718.“ It therefore concluded that: ‛If 13.7 hours is too much for one filing then 191 hours is too much for seven.“

Of course, almost any time is too much time to spend on papers if you know that the Court is going to agree with you. But you don’t know that when you receive the adversary’s filings, and generally neither does the Court until you have demonstrated that they are ill-motivated or frivolous. Clearly, the Court is correct in its analysis that excessive lawyering should not be rewarded. Query, however, whether a pre-set schedule of hours is the right approach to address it. In general, limiting the size of attorneys' fees awards that may be imposed to oppose and deter frivolous filings can be expected operate to undercut deterrence. It is true, though, that even if attorneys' fees are limited, nothing prevents the Court from imposing other sanctions, such as a fine.

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