Commercial Litigation and Arbitration

No Sanctions Imposed for Plaintiff’s Filing and Prosecuting Suit in Face of Potentially Meritorious Affirmative Defense of Res Judicata

C.H. Robinson Worldwide, Inc. v. Lobrano, 2012 U.S. App. LEXIS 20592 (8th Cir. Oct. 3, 2012):

Lobrano unsuccessfully moved for sanctions and attorney's fees under Federal Rule of Civil Procedure 11 and 28 U.S.C. § 1927. On appeal, Lobrano maintains that sanctions and attorney's fees were appropriate in this case because C.H. Robinson ignored well-settled principles of res judicata.

On prior occasions we have deemed it necessary to impose sanctions on an offending party for failing to properly consider res judicata principles. For example, in Professional Management Associates, Inc. v. KPMG LLP, we reversed and remanded for the imposition of sanctions where a plaintiff attempted to re-litigate the same claims involving the same parties as a previous action. 345 F.3d 1030, 1032-33 (8th Cir. 2003) (per curiam). The plaintiff even admitted that the complaint in the second suit was simply a copy of a proposed amended complaint in the first suit, which had been denied. Id. at 1032. Because res judicata law was "well-settled" under the circumstances, and "a reasonable inquiry into the lawsuit's basis show[ed] res judicata bar[red] the action," we concluded sanctions should have been imposed. Id. at 1032.

Lobrano also draws our attention to Willhite v. Collins, 459 F.3d 866 (8th Cir. 2006), to show sanctions are appropriate in this case. In Willhite, a party ignored prior, unsuccessful state court actions and commenced action in federal district court, raising similar claims. Id. at 868. The district court sanctioned the offending attorney, finding that the attorney was "remiss in either neglecting to consider, or entirely disregarding, the doctrines of res judicata and collateral estoppel" and "no competent lawyer could reasonably believe there was a colorable or legally-supportable claim." Id. at 870. Under the circumstances, we concluded that a sanction was appropriate in light of the attorney's bad faith conduct. Id.

In the instant case, we are mindful of the piecemeal litigation C.H. Robinson created by maintaining the Minnesota action after the Louisiana judgment, but we defer to the district court on "fact-intensive, close calls" concerning sanctions. Clark v. United Parcel Serv., Inc., 460 F.3d 1004, 1010 (8th Cir. 2006) (quotation omitted). C.H. Robinson initiated the Minnesota action before final judgment had been rendered in the Louisiana action, attempting to halt the proceedings in Louisiana. Once final judgment had been rendered in the Louisiana action, C.H. Robinson amended its complaint in the Minnesota action apparently attempting to avoid raising claims precluded by the Louisiana judgment. This conduct differs from that in KPMG, where the offending party used the identical complaint in the second action that had been the basis of the first judgment. And Willhite illustrates a far more obvious and egregious disregard of res judicata, where an attorney "and his clients had subjected the defendants to repeated litigation over matters that ha[d] been finally adjudicated"--commencing a fifth lawsuit on the same subject matter. 459 F.3d at 868 n.1, 870 (internal quotation omitted). Moreover, contrary to Lobrano's urging, we do not think principles of res judicata were so well-settled under the present circumstances so as to demand the imposition of sanctions. Therefore, applying our deferential standard, "the [d]istrict [c]ourt's decision to deny sanctions is not so far out of bounds as to justify our coming to a different conclusion at the appellate level." O'Connell v. Champion Int'l Corp., 812 F.2d 393, 395 (8th Cir. 1987).

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