Sanctions: “There Is a Significant Difference between Making a Weak Argument with Little Chance of Success and Making a Frivolous Argument with No Chance of Success”—Good Quote—Argument Not Sanctioned Below Sanctioned on Appeal
Cooney v. Casady, 2013 U.S. App. LEXIS 17255 (7th Cir. Aug. 19, 2013):
This case arises out of Deborah O. Cooney's administrative appeal of the Illinois Department of Children and Family Services' (DCFS) indicated finding against her of mental injury and substantial risk of harm to her children. Cooney claims that Rhonda Casady and Andrew Sosnowski, counsel for DCFS in that administrative appeal, conspired with Lesley Magnabosco who was hired by DCFS to transcribe the administrative appeal hearing to deprive Cooney of her due process rights by altering the transcripts of those proceedings. Cooney appeals the district court's grant of summary judgment to the defendants, and the defendants appeal the denial of their petition for attorneys' fees and costs under 42 U.S.C. § 1988 and Federal Rule of Civil Procedure 11. They also seek an award of their costs and attorneys' fees under Federal Rule of Appellate Procedure 38. We affirm the district court's judgments and order Cooney to show cause why an award under Rule 38 should not be entered against her.***
B. The District Court Did Not Abuse Its Discretion in Denying Defendants' Request for Fees, Costs, and Sanctions
The defendants petitioned for attorneys' fees under § 1988 and Rule 11 sanctions. Section 1988 provides that in § 1983 actions "the court, in its discretion, may allow the prevailing party ... a reasonable attorney's fee as part of the costs." 42 U.S.C. § 1988(b). The statute commits the decision whether to award attorneys' fees to the district court's sound judgment. Khan v. Gallitano, 180 F.3d 829, 837 (7th Cir. 1999). We review the denial of fees in this context for abuse of discretion, although we review legal questions de novo. Id.
Prevailing defendants [under § 1988] may be awarded attorneys' fees only if the plaintiff's "claim was frivolous, unreasonable, or groundless, or if the plaintiff continued to litigate after it clearly became so." Christianburg Garment Co. v. EEOC, 434 U.S. 412, 422 (1978); see also Hughes v. Rowe, 449 U.S. 5, 14-15 (1980) (per curiam) (applying Christianburg under § 1988). The plaintiff's action must be groundless or without foundation (i.e., meritless), but "[t]he fact that a plaintiff may ultimately lose his case is not in itself a sufficient justification for the assessment of fees." Hughes, 449 U.S. at 14. "There is a significant difference between making a weak argument with little chance of success ... and making a frivolous argument with no chance of success," and "it is only the latter that permits defendants to recover attorney's fees" under § 1988. Khan, 180 F.3d at 837.
When considering the defendants' petition for fees, the district court articulated the proper legal rules and concluded that, although it "was an extremely close call," Cooney's claim was not frivolous but simply meritless. Orlando-Cooney, 2011 WL 995817, at *2. The court acknowledged that the only evidence she had was the apparent discrepancies between the transcripts, but it found that she "did engage in some, albeit limited, investigation into this matter by engaging in a word-for-word comparison of the two transcripts." Id. The court also rejected the defendants' view that Cooney continued to litigate after the case became frivolous once discovery was complete, again finding that it was "a very close call." Id.
The defendants raise several arguments challenging the district court's conclusion but they have conflated their § 1988 attorneys' fees analysis with their Rule 11 sanctions analysis (as they did in the district court). Nonetheless, it appears that they identify the following as support for an award of fees: (1) Cooney's reliance on a comparison of the transcripts itself shows she could not reasonably believe a conspiracy had occurred because parts of the Fishman transcripts were more damaging to her than the Magnabosco transcripts--i.e., the suit is frivolous; (2) Cooney did not act pro se but instead had ghost counsels' help throughout; and (3) Cooney has a history of filing frivolous suits against participants in the state custody and DCFS proceedings.
Cooney responds that she had adequate circumstantial evidence of a conspiracy, but just not enough to preclude summary judgment, which she contests on appeal, see supra. However, as discussed, the only "evidence" that she had to prove her claim was the inconsistencies between the transcripts. Yet the district court determined that Cooney's complaint was not frivolous. It also found that the defendants offered nothing other than their own say-so to show that Cooney filed the case to harass and harm them. Under similar circumstances we have affirmed the denial of the defendants' fee petition. In Springer v. Durflinger, 518 F.3d 479 (7th Cir. 2008), parents who were disgruntled with a high school softball coach filed a § 1983 suit, alleging baseless First Amendment retaliation claims against a school district. Id. at 480. Even though the parents "proffer[ed] no evidence whatsoever" of retaliation, id. at 483, we affirmed the denial of the defendants' fee petition:
The district court specifically noted that the complaint was neither frivolous, nor brought in bad faith. If we were in the district court's position, considering the facts in the first instance, we may well have come to a different conclusion regarding an award of attorneys' fees. It may have been error--considering the deficiency of evidence--to allow this case to proceed to the discovery phase in the first place. But given that the parents did make it to discovery, they cannot be faulted for trying, but ultimately failing, to gather sufficient evidence of retaliation.
Id. at 486.
Here, as in Springer, the district court found that Cooney's complaint was not frivolous and that the defendants had no evidence of bad faith, and thus allowed the case to proceed to discovery and summary judgment. If we were to decide the fee issue in the first instance, we might have reached a different conclusion than the district court. (Indeed, had the district court decided to award attorneys' fees, we doubt that decision would have been an abuse of discretion.) But the district court's decision should be accorded appropriate deference. The district court presided over the case for a period of time from the pleading stages and pretrial discovery up to summary judgment and beyond. Its intimate involvement with the case and parties positioned it well to make a thoughtful exercise of discretion regarding the defendants' request for fees (and sanctions). And Cooney should not be faulted for proceeding with her case once she was given the chance to do so with the denial of the motions to dismiss. Cf. Nisenbaum v. Milwaukee Cnty., 333 F.3d 804, 809 (7th Cir. 2003) ("[Defendant] prevailed at trial, and the magistrate judge's decision that a trial was essential precludes any shifting of trial costs back to [plaintiff].").***
As for Rule 11 sanctions, the purpose of Rule 11 is to deter baseless filings in the district court. Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 393 (1990). The rule is not a fee-shifting measure--it provides only that a court may impose an "appropriate sanction" for a violation of Rule 11(b). Fed. R. Civ. P. 11(c)(1); see Bus. Guides, Inc. v. Chromatic Commc'ns Enters., Inc., 498 U.S. 533, 553 (1991) (former version of Rule 11). The decision to grant or deny a motion for Rule 11 sanctions is within the sound judgment of the district court and will be disturbed only where the court abuses its discretion. Mars Steel Corp. v. Cont'l Bank N.A., 880 F.2d 928, 933 (7th Cir. 1989). For the same reasons we affirmed the district court's denial of fees under § 1988, we affirm its decision to decline Rule 11 sanctions. Moreover, the defendants fail to identify the specific pleadings or filings that they contend violated Rule 11(b). This provides another reason to affirm the district court's exercise of discretion in this case.
C. Rule 38 Sanctions
However, the defendants' request for Rule 38 sanctions is a different matter. "If 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 damages and single or double costs to the appellee." Fed. R. App. P. 38. "Under Rule 38, we must first determine if the appeal is frivolous, and if we find it is, we have discretion to award sanctions or decline to do so." Smeigh v. Johns Manville, Inc., 643 F.3d 554, 565 (7th Cir. 2011) (citation omitted). "An appeal is frivolous when the result is obvious or when the appellant's argument is wholly without merit." Id. (quotation and citation omitted). "When an appeal rehashes positions that the district court properly rejected, or when it presents arguments that are lacking in substance and 'foreordained' to lose, the appeal is frivolous." Berwick Grain Co. v. Ill. Dep't of Agric., 217 F.3d 502, 505 (7th Cir. 2000) (citations omitted).
Cooney's appeal is just such an appeal. She merely reargues the arguments that the district court properly rejected. And she does so despite the district court's clear warning that her complaint teetered on the line separating the frivolous from the meritless. Although Springer may preclude a finding that the district court abused its discretion here, it provides ample support for an award of sanctions under Rule 38. There, after affirming the district court's denial of fees and costs, we said:
[W]e are not at all sympathetic to the [plaintiffs'] appeal. They have never been able to point to one shred of evidence demonstrating retaliation. To insist that there is a genuine issue of material fact in this case is beyond the pale, and an appeal arguing as much is frivolous. ... Appeals such as this not only bring the courts into disrepute but also divert scarce judicial time from other litigants who have serious claims or defenses.
Springer, 518 F.3d at 486 (quotation, citation, and alteration omitted).
Like the plaintiffs in Springer, Cooney "may have caught one break from the district court, but we are not inclined to give [her] another one." Id. She has no evidence of a conspiracy. We reiterate that had the district court decided to make an award of attorneys' fees to the defendants under § 1988, we would not be inclined to find an abuse of discretion given the record in this case.
Cooney asserts that Fed. R. App. P. 38 sanctions are inappropriate because the standard of review is de novo. A similar argument was rejected in Smeigh, where the plaintiff's arguments had been properly rejected by the district court yet the plaintiff asserted the same arguments on appeal (nearly verbatim):
Smeigh's counsel responded at oral argument that our review is de novo and he can raise the same arguments to this court as below and isn't permitted to raise new arguments. Although true, he certainly could have explained why the district court's decision was erroneous--for example, he could have explained how Smeigh can succeed without asserting vicarious liability--or, if he has no explanation, he could have decided not to appeal his conversion claim.
643 F.3d at 566. The court ultimately declined to impose monetary sanctions because, unlike Cooney's appeal, Smeigh's case was "too close to the line": "Smeigh raised a non-frivolous argument (retaliatory discharge) on appeal, and JM had to expend only minimal effort in responding to Smeigh's frivolous conversion claim." Id.
Rule 38 requires that the party seeking sanctions file a separate motion or that the court give notice and an opportunity to respond. Fed. R. App. P. 38. The defendants did not file a separate motion; rather, they merely raised the issue in their brief. The Advisory Committee Note accompanying Rule 38 states: "A statement inserted in a party's brief that the party moves for sanctions is not sufficient notice. ... Only a motion, the purpose of which is to request sanctions, is sufficient. If there is no such motion, notice must come from the court." Id., advisory committee's note (1994 amendments). We do so here: We order Cooney to show cause, within 15 days after the conclusion of this appeal, as to why she should not be required under Rule 38 of the Federal Rules of Appellate Procedure to pay the defendants' costs and reasonable attorneys' fees on appeal.
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