Commercial Litigation and Arbitration

Delay of 4 Months before Serving Rule 11 Motion and 13 Months before Filing Is Not Undue, If Safe Harbor Honored — Calculating Non-Specific Attorneys’ Fees by Percentage of Frivolous Counts

From Golden v. Helen Sigman & Assocs., Ltd., 2010 U.S. App. LEXIS 13585 (7th Cir. July 2, 2010):

Sigman and Thomas delayed filing their Rule 11 motions for approximately a year after they filed their motions to dismiss. Golden submits that this lassitude should have led to a dismissal of the request. Sigman and Thomas counter that Golden forfeited this argument by failing to raise the issue of timeliness until his motion to reconsider the district court's order granting Rule 11 sanctions. *** We agree with Sigman and Thomas that Golden failed to preserve this line of argument. Nor is Golden's misstep excusable. The question is not a pure issue of law; rather it depends centrally on the facts, some of which are contestable. Cf. Matter of Reese, 91 F.3d 37, 39 (7th Cir. 1996) (acknowledging that forfeiture may be forgiven for pure legal questions). Moreover, it does not appear as though the district court ever addressed the timeliness of Sigman's and Thomas's motions. Cf. Alicia-Hernandez v. The Catholic Bishop of Chicago, 320 F.3d 698, 701 (7th Cir. 2003) (concluding that party had not forfeited argument when the district court gave full consideration to the issue in question).

Even if Golden had not forfeited his timeliness challenge, the question whether to grant sanctions would have been one for the district court's discretion. The district court would not have been compelled to accept Golden's characterization of the delay as a full year. Indeed, that assertion turns out to be weak upon closer examination. In order to come up with a year, one needs to rely on the date when Golden's original complaint was filed, in January 2005. But he amended that complaint twice, adding claims against Thomas and altering the claims he had brought against Sigman. The district court would therefore have been well within its rights to look at the time between the date when the defendants filed their respective motions to dismiss (May 20, 2005, for Thomas and July 5, 2005, for Sigman) and the date of the Rule 11 motions. Viewed that way, it appears that Thomas waited only four months to serve her Rule 11 motion and 13 months to file it, while Sigman delayed service for just two months and filed 11 months later. Both Rule 11 motions were filed with the court well before the district court entered final judgment in 2008.

The district court did not abuse its discretion in tolerating this delay. Not only did Sigman and Thomas file their motions before final judgment, they both complied with Rule 11's "safe-harbor provision" by serving Golden with their motions before the case was dismissed. See FED. R. CIV. P. 11(c)(2); cf. FED. R. CIV. P. 11 1993 Advisory Committee's Notes (tying the need to file Rule 11 motion before the conclusion of the case to respect for the safe-harbor provision). Golden had ample opportunity to withdraw his offending pleadings, as he was served more than a month before the district court dismissed the complaint. Moreover, Golden's claim of prejudicial delay rings hollow given that he had threatened earlier to seek sanctions against Sigman for her premature service of a Rule 11 motion. ***

Finally, Golden contests the manner in which the district court calculated the attorneys' fees and expenses it ordered Golden to pay. Since the district court sanctioned Golden for only some of the theories he advanced, it was required to apportion the attorneys' fees awarded so as to avoid penalizing Golden for others that fell above the Rule 11 bar. *** This is not always an easy task. Thus, "where 'the [movant's] claims of relief . . . involve a common core of facts or [are] based on related legal theories,' so that 'much of counsel's time will be devoted generally to the litigation as a whole, making it difficult to divide the hours expended on a claim-by-claim basis, . . . the district court should focus on the significance of the overall relief obtained by the [movant] in relation to the hours reasonably expended on the litigation.' " *** Given the fact-intensive nature of this inquiry, district courts enjoy a great deal of discretion in formulating and applying a fee calculation methodology. ***

In this case, the district court employed a simple "count-counting" methodology to compute the amount of attorneys' fees and expenses. Under this approach, it examined the attorneys' billing statements and included hours billed for work related to sanctioned claims and excluded time spent defending against nonsanctioned counts. The remaining billing entries did not specify whether the work was devoted to sanctioned or nonsanctioned counts. For these fees, the district court divided the total dollar amount by the number of claims brought against an individual defendant and then multiplied the resulting figure by the number of counts for which Golden was sanctioned. ***

Golden criticizes the district court's "count-counting" methodology on the grounds that it bore too weak a relation to the time records and resulted in an unreasonably large award — seven-eighths of the total bill — even though the six state-law claims were dismissed with little effort. The district court, however, was not compelled to accept Golden's evaluation of the records. For example, the court may have thought that Golden was exaggerating the ease with which the state-law claims were thrown out; Sigman devoted considerable attention in her filings to the question of absolute immunity and the Rooker-Feldman doctrine. It also could have reasonably rejected Golden's contention that the "count-counting" approach was improper because his claims did not revolve around a "common core of facts." *** Viewed more generally, Golden's claims arose out of a related series of events arising out of Sigman's involvement with the child custody proceedings in state court.

Golden also argues that Sigman's counsel should not have received $3,095 for litigating the Rule 11 motion and the fee petition. In attacking the total spent on the Rule 11 motion, however, the most that Golden can show is that this court once found that $4,354 was too much for the preparation of a motion for sanctions. See Budget Rent-A-Car System, Inc. v. Consolidated Equity LLC, 428 F.3d 717, 718 (7th Cir. 2005). Nothing in the Budget opinion, however, was intended to set $4,354 as an outer limit for fees; these matters depend heavily on the particular circumstances of each case. The district court's decision here lay well within the bounds of its discretion, especially given the lengthy and often frivolous filings Golden submitted.

Share this article:


Recent Posts