Sanctions — Circuit Split as to Whether § 1927 Requires Subjective, as Opposed to Objective, Bad Faith — Lack of Hearing OK Where Misconduct in Writing — No Notice That Counsel Was Target Harmless Where No Prejudice Shown on Appeal
Tate v. Ancell, 2014 U.S. App. LEXIS 963 (7th Cir. Jan. 17, 2014):
Edgar Tate sued the state agency for which he works along with one of the agency's private contractors, asserting that they joined forces in a conspiracy (thus far unsuccessful) to oust him from his job after he supported a coworker's charge of sexual harassment. He alleges that in furtherance of this conspiracy, the defendants subjected him to a series of disciplinary measures that constituted discrimination on the basis of his sleep disorder, in violation of the Americans with Disabilities Act of 1990, 42 U.S.C. §§ 12101, et seq. (the "ADA"), discrimination based on his national origin in violation of Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e-2(a)(1) ("Title VII), and retaliation for having opposed workplace sexual harassment, also in violation of Tile VII, § 2000e-3(a), as well as 42 U.S.C. §§ 1981 and 1983. The district court granted summary judgment in the defendants' favor on these and other claims not at issue in this appeal. In Appeal No. 11-3252, Tate contends that the district court overlooked evidence that supports his conspiracy theory and indicates that the defendants indeed did discriminate against him in a variety of ways. We disagree and affirm the district court's summary judgment ruling. Separately, in Appeal No. 12-2694, Tate's lawyer, Richard Fedder, has appealed the sanctions that the district court imposed against him pursuant to 28 U.S.C. § 1927 for unreasonably pursuing claims against Addus Healthcare, Inc. ("Addus"). Addus was the private contractor whose employees Tate alleges conspired with his employer to assemble a disciplinary record that would result in his dismissal; two of those employees are named as defendants in addition to Addus. We agree with the district court, however, that Tate's claims against Addus and its employees were frivolous. We therefore affirm the district court's order requiring Fedder to pay the Addus defendants' costs and fees. ***
In Appeal No. 12-2694, Tate's counsel, Richard Fedder, appeals the district court's ruling directing him to reimburse the Addus defendants for the $92,226.17 in costs and fees they incurred defending Tate's suit against them. The court imposed that obligation pursuant to 28 U.S.C. § 1927.
Fedder contends that the district court held him liable for the Addus defendants' costs and fees without notice and without an opportunity to respond, that his conduct in prosecuting the claims against the Addus defendants did not warrant sanctions under section 1927, and that the court erred in holding him liable for all of the Addus defendants' fees. Because the procedural history of the fee award has some bearing on Fedder's appeal, we shall set out the highlights of that history before reaching the merits of his arguments.
After the district court granted summary judgment to all defendants, the Addus defendants filed a motion seeking an award of costs, including attorneys' fees, pursuant to 42 U.S.C. §§ 1988(b), 2000e-5(k), and 12205, asserting that Tate's claims against them were meritless and that because they had prevailed in the litigation, they were entitled to their fees. See Roger Whitmore's Auto. Servs., Inc. v. Lake Cnty., Ill., 424 F.3d 659, 675 (7th Cir. 2005) (under section 1988, prevailing defendant entitled to fees only when plaintiff's suit was "frivolous, unreasonable, or groundless") (citing, inter alia, Christiansburg Garment Co. v. E.E.O.C., 434 U.S. 412, 421, 98 S. Ct. 694, 700, 54 L. Ed. 2d 648 (1978) (§ 2000e-5(k)), and Hughes v. Rowe, 449 U.S. 5, 14-15, 101 S. Ct. 173, 178-79, 66 L. Ed. 2d 163 (1980) (§ 1988)); Maynard v. Nygren, 332 F.3d 462, 471 (7th Cir. 2003) (§ 12205). During the over four months that the motion was pending before the court, Tate never filed a response. Ultimately, the court granted the motion on the authority of section 1988(b), reasoning that "the[ ] claims against the Addus defendants were frivolous and pursued without any factual or legal basis." Tate v. Ancell, 2012 U.S. Dist. LEXIS 17425, 2012 WL 462958, at *2 (S.D. Ill. Feb. 13, 2012). The court directed the Addus defendants to file a petition setting forth the costs and fees they had reasonably incurred in the litigation. Because section 1988 does not authorize the court to place the obligation to pay such an award on the plaintiff's counsel, Tate rather than Fedder would have borne the liability for the award. See Roadway Express, Inc. v. Piper, 447 U.S. 752, 761, 100 S. Ct. 2455, 2461, 65 L. Ed. 2d 488 (1980); Hamer v. Cnty. of Lake, 819 F.2d 1362, 1370 (7th Cir. 1987); see also Corneveaux v. CUNA Mut. Ins. Grp., 76 F.3d 1498, 1508-09 (10th Cir. 1996) (collecting cases re. sections 1988 and 2000e-5(k)).
Tate subsequently filed a motion asking the court to reconsider its ruling, arguing principally that his claims against the Addus defendants were not frivolous. R. 134. The Addus defendants filed a memorandum opposing the motion. R. 138. Tate, in turn, filed a reply in support. R. 141. The court denied the motion in a written opinion. Tate v. Ancell, 2012 U.S. Dist. LEXIS 70084, 2012 WL 1854888 (S.D. Ill. May 21, 2012).
In the meantime, the Addus defendants submitted their fee petition, which sought reimbursement for all of the fees they had incurred over the life of the case.... When he responded to that petition, Tate took the opportunity to again argue (among other points) that his claims against the Addus defendants were not groundless.... After reviewing the initial fee petition, the district court found it inadequate to make an informed assessment as to the fees to which the Addus defendants were entitled; it therefore ordered a supplemental fee petition supplying more precise detail as to how the fees were incurred.... An amended fee petition complying with the court's order was filed. R. 147. Tate filed a response to the amended petition as well, again arguing at some length that the claims against the Addus defendants were not frivolous. R. 149.
After reviewing the briefing on the original and amended fee petitions, the district court granted the requested fees and costs: $79,838.00 in attorney's fees, $5,213.00 in paraprofessional fees, and $7,175.17 in costs, for a total award of $92,226.17. Tate v. Ancell, 2012 U.S. Dist. LEXIS 89241, 2012 WL 2521614 (S.D. Ill. June 28, 2012). The court noted that Tate had voiced no objection with respect to the billing rates of defense counsel, 2012 U.S. Dist. LEXIS 89241, [WL] at *1, which the court independently found to be reasonable, 2012 U.S. Dist. LEXIS 89241, [WL] at *2. Tate had objected to the reasonableness of the time billed for certain items; the court addressed each of these objections individually and overruled them. 2012 U.S. Dist. LEXIS 89241, [WL] at *3. Tate had also argued that if indeed all of the claims against the Addus defendants were frivolous, then the court should have dismissed them at the outset of the case rather than allowing the case to proceed to summary judgment and thereby permitting defense fees to accumulate. The court rejected this argument, noting that at the pleading stage it was obliged to accept Tate's factual allegations as true and grant him the benefit of all reasonable inferences. 2012 U.S. Dist. LEXIS 89241, [WL] at *4. The court also pointed out that it had dismissed some claims that were not legally cognizable, including some for which the Addus defendants could not be liable. That pruning in itself had been challenging, because the "original complaint was a huge ball of confusion in that plaintiff commingled various claims against the numerous defendants he sued." ... Only at the summary judgment stage had it become apparent that Tate lacked the requisite factual support for any of his claims against the Addus defendants, including the notion of a conspiracy between the State and the Addus defendants. At that time it was clear that the case against the Addus defendants was "made up of many misrepresentations and was absolutely frivolous from the beginning of the case. The case against the Addus defendants should never have been brought and had plaintiff's counsel done his homework beforehand these claims would not have been brought." 2012 U.S. Dist. LEXIS 89241, [WL] at *5.
Finally, although the Addus defendants, in moving for fees under section 1988, implicitly had asked that the liability for fees be placed on Tate, the court sua sponte decided that Fedder should bear the responsibility pursuant to section 1927. "[P]laintiff should not have to shoulder this hefty bill based on his lawyer's malfeasance for filing and pursing such a frivolous case against defendants who did not belong in this case." Id. The court cited its authority under this statute to require an attorney to pay his opponent's fees in cases where the attorney's conduct reflects subjective or objective bad faith, including cases in which an attorney fails to timely abandon claims that are no longer viable. Fedder's conduct, the court concluded, met the statute's criteria: "Clearly, attorney Fedder's conduct in this litigation as to the Addus defendants has been unreasonable and vexatious." Id. It therefore imposed the obligation to pay the Addus defendants' costs and fees on Fedder.
Section 1927 provides that "[a]ny attorney...who so multiplies the proceedings in any case unreasonably and vexatiously may be required by the court to satisfy personally the excess costs, expenses, and attorneys' fees reasonably incurred because of such conduct." We recognized in In re TCI Ltd. that section 1927 is consistent with the American Rule that requires each party to bear its own fees unless one side acts in bad faith. 769 F.2d 441, 445-46 (7th Cir. 1985). Proof of subjective bad faith will of course support the imposition of fees under section 1927. Id. at 445 (noting that subjective bad faith or malice will support section 1927 sanctions when the claim is colorable, but a lawyer pursues the claim for improper purpose of harassing opponent rather than to pursue recovery on the claim). But subjective bad faith is not necessary. Rather, sanctions may be imposed against an attorney "who has demonstrated 'subjective or objective bad faith.'" Moriarty ex rel. Local Union No. 727 v. Svec, 429 F.3d 710, 722 (7th Cir. 2005) (quoting Pac. Dunlop Holdings, Inc. v. Barosh, 22 F.3d 113, 120 (7th Cir. 1994) (emphasis ours)); see also Dal Pozzo v. Basic Mach. Co., 463 F.3d 609, 614 (7th Cir. 2006) (collecting cases). As we explained in TCI:
"Bad faith" sounds like a subjective inquiry... Despite its sound, however, "bad faith" has an objective meaning as well as a subjective one. See Knorr [Brake Corp. v. Harbil, Inc.], supra, 738 F.2d  at 226-27 [(7th Cir. 1984)] (summarizing and reconciling this circuit's cases on § 1927). A lawyer has a duty, which the recent amendment to Rule 11 emphasizes, to limit litigation to contentions "well grounded in fact and...warranted by existing law or a good faith argument for the extension, modification, or reversal of existing law." Fed. R. Civ. P. 11. If a lawyer pursues a path that a reasonably careful attorney would have known, after appropriate inquiry, to be unsound, the conduct is objectively unreasonable and vexatious. To put this a little differently, a lawyer engages in bad faith by acting recklessly or with indifference to the law, as well as by acting in the teeth of what he knows to be the law. Our court has long treated reckless and intentional conduct as similar, see Sundstrand Corp. v. Sun Chemical Corp., 553 F.2d 1033, 1040 (7th Cir.), cert. denied, 434 U.S. 875, 98 S. Ct. 225, 98 S. Ct. 224, 54 L. Ed. 2d 155 (1977). See also Optyl Eyewear Fashion International Corp. v. Style Cos., 760 F.2d 1045, 1048 (9th Cir. 1985) (§ 1927 allows a remedy in the event of bad "intent, recklessness, or bad faith"). A lawyer's reckless indifference to the law may impose substantial costs on the adverse party. Section 1927 permits a court to insist that the attorney bear the costs of his own lack of care.
769 F.2d at 445. See also Grochocinski v. Mayer Brown Rowe & Maw, LLP, 719 F.3d 785, 799 (7th Cir. 2013), pet'n for cert. filed (U.S. Nov. 18, 2013) (Nos. 13-619, 13A256); Dal Pozzo, 463 F.3d at 614; Riddle & Assocs., P.C. v. Kelly, 414 F.3d 832, 835 (7th Cir. 2005); Kotsilieris v. Chalmers, 966 F.2d 1181, 1184 (7th Cir. 1992); see also Mach v. Will Cnty. Sheriff, 580 F.3d 495, 501 (7th Cir. 2009) (applying fee-shifting provision of Age Discrimination in Employment Act, 29 U.S.C. § 626(b)). Fedder suggests that TCI, insofar as it permits fee-shifting without proof of subjective bad faith, is out of step with both the statute and the traditional American Rule that TCI itself acknowledges. But we have now adhered to and repeated TCI's holding that objectively unreasonable conduct is sufficient to support sanctions under section 1927 for over a quarter of a century. And, indeed, as the First Circuit has observed, this represents the majority understanding among the circuits. Jensen v. Phillips Screw Co., 546 F.3d 59, 64 (1st Cir. 2008) (collecting cases).
Garden variety negligence by itself is insufficient to support a fee award under section 1927. See Grochocinski, 719 F.3d at 799; Jolly Grp., Ltd. v. Medline Indus., Inc., 435 F.3d 717, 720 (7th Cir. 2006); Kotsilieris, 966 F.2d at 1184-85. Rather:
We have explained that a court has discretion to impose § 1927 sanctions when an attorney has acted in an "objectively unreasonable manner" by engaging in "serious and studied disregard for the orderly process of justice," Pacific Dunlop Holdings, Inc. v. Barosh, 22 F.3d 113, 119 (7th Cir. 1994); pursued a claim that is "without a plausible legal or factual basis and lacking in justification," id., or "pursue[d] a path that a reasonably careful attorney would have known, after appropriate inquiry, to be unsound," Kapco Mfg. Co. v. C & O Enters., Inc., 886 F.2d 1485, 1491 (7th Cir. 1989). We have also interpreted § 1927 "to impose a continuing duty upon attorneys to dismiss claims that are no longer viable." Dahnke v. Teamsters Local 695, 906 F.2d 1192, 1201 n.6 (7th Cir. 1990).
Jolly Grp., 435 F.3d at 720. The fact that the Addus defendants did not ask the court to impose sanctions under section 1927, and that the court instead did so on its own motion, is immaterial. "Of course, a district court acting under § 1927 is not bound by the parties' motions and may, in its sound discretion, impose sanctions sua sponte as long as it provides the attorney with notice regarding the sanctionable conduct and an opportunity to be heard." Jolly Grp., 435 F.3d at 720 (citing Johnson v. Cherry, 422 F.3d 540, 551-52 (7th Cir. 2005)).
Nor does the opportunity to be heard invariably portend an evidentiary hearing. "Where the sanctionable conduct occurred in the presence of the court, there are no issues that a hearing could illuminate and hence the hearing would be pointless." Kapco Mfg., 886 F.2d at 1495 (citing Hill v. Norfolk & W. Ry. Co., 814 F.2d 1192, 1201-02 (7th Cir. 1987)). Fedder notes that the district court had never conducted any in-person hearings with counsel during the life of the case; but that is neither here nor there. The relevant conduct took place in writing--in the complaints that Fedder filed on Tate's behalf, and in the memoranda he filed in opposition to the motions to dismiss and for summary judgment, which set forth the legal and factual bases for each of Tate's claims. The district court obviously was a witness to those pleadings, having ruled on all of the various motions.
So the only real question is whether Fedder had a meaningful opportunity to address whether the suit against the Addus defendants was frivolous, as the defendants contended it was, and whether he should be held responsible for any sanctions, as the district court ultimately determined he should be. So long as counsel had notice that opposing party was seeking sanctions and counsel had an appropriate opportunity to respond, that is all that is required. Dal Pozzo, 463 F.3d at 613.
In a threshold challenge to the sanctions, Fedder argues that the district court never gave him notice that it was contemplating requiring him, as opposed to his client, to pay the Addus defendants' costs and fees, and consequently he was deprived of the opportunity to address the court's concerns and show why he should not be sanctioned, or should not be sanctioned to the extent that he was.
Fedder has a point about the lack of notice.
The Addus defendants sought recovery of their fees pursuant to section 1988(b), which, as we have noted, permits the court to impose an obligation to pay the prevailing party's fees on the losing party but not that party's attorney. Not until it actually approved the Addus defendants' fee petition and awarded them fees and costs in a certain amount did the court, on its own initiative, impose the obligation to pay those fees and costs on Fedder pursuant to section 1927. We have said more than once that if the court is contemplating sanctions against an attorney sua sponte, it must so inform counsel and give him the chance to respond. See Johnson, 422 F.3d at 551-52 (collecting cases); Jolly Grp., 435 F.3d at 720. Fedder was given no such warning, and thus did not have the opportunity to address the court as to his own prospective liability under section 1927.
This is not to say that Fedder had no opportunity to address whether the claims against the Addus defendants were frivolous; Fedder had multiple and more than adequate opportunities to address that core point.
Needless to say, the Addus defendants' motion for section 1988 fees laid out their theory as to why the case against them was groundless and why an award of fees was warranted. Fedder had the opportunity to respond to the motion on Tate's behalf, but instead remained silent in the four-plus months before the court ruled on the motion. Fedder would later represent to the district court, as he has to this court, that he was unable to file a response during that time period because he needed to spend time with his mother, who had recently suffered a brain hemorrhage. 134 at 4. Yet, Fedder certainly could have asked the court to delay ruling on the motion until such time as he had more of an ability to respond. Although Fedder claims he was not aware of the motion, there is no dispute that he was served with a copy. See R. 125 at 4, R. 126 at 10. Additionally, one of the Addus defendants' attorneys sent him an email indicating that the Addus defendants were prepared to withdraw their request for attorneys' fees if Tate would agree to withdraw his pending appeal of the district court's summary judgment ruling, R. 139-2 at 2. And, during the same time that the fees motion was pending, Fedder filed multiple documents in connection with the summary judgment appeal in this court, including Tate's opening brief. So, like the district court, we can discern no reason why Tate, through Fedder, could not have responded to the request for fees.
Moreover, Fedder did avail himself of multiple subsequent opportunities to contest the Addus defendants' contention that the case against them was frivolous. Fedder made these arguments in Tate's motion to reconsider the court's initial decision to award fees and his reply memorandum in support of the same. He also made such arguments in opposition to the original and amended fee petitions that the Addus defendants filed after the court agreed to award them their fees.
So Fedder, on Tate's behalf, had multiple, significant opportunities to argue why the case was not legally and factually groundless and why sanctions in the form of an attorney fee award were not warranted.
Consequently, the sole point that Fedder was deprived of the opportunity to address ex ante was whether he rather than his client should bear the burden of reimbursing the Addus defendants for their fees and costs; but Fedder has not convinced us that he was materially harmed by the deprivation. The Addus defendants' request for sanctions was never based on actions that Tate, as opposed to his counsel, took. Their contention instead was that the claims against the Addus defendants lacked a reasonable basis in law and in fact and thus should not have been pursued. Regardless of whether the sanctions were sought against Tate or Fedder, Fedder had the opportunity to address the basis for the sanctions; and his arguments on that subject would not have differed had he known in advance that the court might decide to hold him rather than his client responsible for the Addus defendants' fees.
Fedder has listed a number of points that he might have addressed (or addressed differently) had he been placed on notice that the sanctions might be imposed on him. Most of these boil down to legal arguments as to what findings are necessary to support the imposition of sanctions pursuant to section 1927 and whether the district court's findings here support its sanctions decision. As such, they are arguments that Fedder can make and indeed has made on appeal; the inability to make them below has not harmed him. Only two of the points Fedder has identified are circumstance-specific and relate uniquely to his own liability for the sanctions, and, if relevant to the court's analysis under section 1927, potentially might have influenced the court's discretionary decision to sanction Fedder: his ability to pay, and the need to deter.
The first of these is, as a matter of law, immaterial under this circuit's case law: we have expressly held that an attorney's ability to pay is not relevant to the imposition of sanctions under section 1927.
Shales v. Gen. Chauffeurs, Sales Drivers & Helpers Local Union No. 330, 557 F.3d 746, 749 (7th Cir. 2009); see Seth Katsuya Endo, The Propriety of Considering an Attorney's Ability to Pay Under § 1927, 61 DRAKE L. REV. 291, 297-304 (2013) (surveying circuit split on this question). An award under section 1927 turns on a finding of bad faith -- although, as we have explained above, subjective bad faith is not required. Shales, 557 F.3d at 749; see also Grochocinski, 719 F.3d at 799 ("Sanctions against counsel under 28 U.S.C. § 1927 are appropriate when 'counsel acted recklessly, counsel raised baseless claims despite notice of the frivolous nature of these claims, or counsel otherwise showed indifference to statutes, rules, or court orders.'") (quoting Kotsilieris, 966 F.2d at 1184-85). Thus:
A violation of § 1927 is a form of intentional tort. And there is no principle in tort law that damages depend on a tortfeasor's assets. Quite the contrary. Damages depend on the victim's loss, not the wrongdoer's resources. ...
Shales, 557 F.3d at 749. Moreover, as we have also indicated before, section 1927 sanctions are meant to compensate the party injured by an attorney's misconduct and to compel the offending attorney to shoulder the costs that his own lack of care has imposed on the opposing party. Ordower v. Feldman, 826 F.2d 1569, 1574 (7th Cir. 1987) (quoting TCI, 769 F.2d at 445). So Fedder's argument that he was deprived of the opportunity to establish that he lacks the ability to pay, in full or in part, the Addus defendants' fees, is a non-starter. (We would also note that Fedder has not made any showing that he would have a meritorious case to make on this point, if it were relevant.)
The same reasoning may well apply to Fedder's contention that he was deprived of the opportunity to argue that a lesser sanction (or no sanction at all) would be sufficient to deter him from repeating his misconduct. Certainly it is true that section 1927 sanctions serve a deterrent as well as a compensatory purpose. See, e.g., Riddle & Assocs., 414 F.3d at 835 ("The purpose of § 1927 'is to deter frivolous litigation and abusive practices by attorneys and to ensure that those who create unnecessary costs also bear them.'") (quoting Kapco Mfg., 886 F.2d at 1491); cf. Samuels v. Wilder, 906 F.2d 272, 276 (7th Cir. 1990) ("We remind counsel...that Rule 11 and § 1927 are sanctions rules, not compensation devices. Persons required to pay sanctions have no entitlement to a perfect match between the award and the defendants' legal fees..." ) (emphasis in original). It does not necessarily follow, however, that the deterrent role played by section 1927 sanctions requires a court to ascertain the most modest sanction that will deter an offending attorney (and others) from further misconduct and then to set the sanction at that amount, regardless of the costs that the offending attorney's conduct has imposed on his opponents. Whereas that obligation is incorporated into the express terms of Rule 11, for example, see Fed. R. Civ. P. 11(c)(4), section 1927 has no such parsimony provision. See Hamilton v. Boise Cascade Express, 519 F.3d 1197, 1205-06 (10th Cir. 2008). As the First Circuit has observed:
Unlike Rule 11, which finds its justification exclusively in deterrence, it is not clear from the face of section 1927 whether the statute is primarily compensatory or deterrent in nature -- and, accordingly, whether or not the amount of a sanction must be set, as under Rule 11, at the minimum level necessary to deter repetition of the offending conduct or comparable conduct by others. The legislative history of section 1927, to the extent it provides any guidance, suggests both deterrent and compensatory intent. ...
Lamboy-Ortiz v. Ortiz-Velez, 630 F.3d 228, 247 (1st Cir. 2010) (internal quotation marks and citations omitted); see also Haynes v. City & Cnty. of San Francisco, 688 F.3d 984, 987-88 (9th Cir. 2012) ("The purpose of § 1927 may be to deter attorney misconduct, or to compensate victims of an attorney's malfeasance, or to both compensate and deter."). Our own cases tend to talk about deterrence and compensation hand in hand when it comes to section 1927. See, e.g., Riddle & Assocs., 414 F.3d at 835; TCI, 769 F.2d at 445-46. This may be our way of recognizing that when we shift all of the costs of frivolous and abusive litigation practices from the wronged to the wrongdoer, we are, in compensating the aggrieved party for its injury, necessarily deterring the sanctioned attorney and the bar generally from engaging in similar behavior. As to whether compensation or deterrence takes precedence in the sanctions determination, cases like Shales and TCI, in suggesting that the offending attorney's financial resources are irrelevant, suggest that compensation takes the front seat. See Shales, 557 F.3d at 749 ("Damages depend on the victim's loss, not the wrongdoer's resources."); TCI, 769 F.2d at 445 ("A lawyer's reckless indifference to the law may impose substantial costs on the adverse party. Section 1927 permits a court to insist that the attorney bear the costs of his own lack of care."). This would be consistent with the language of the statute, which does not mention deterrence but which expressly grants the court discretion to order the offending attorney "to satisfy personally the excess costs, expenses, and attorneys' fees reasonably incurred because of such [unreasonable and vexatious] conduct." § 1927. On the other hand, deterrence may take on independent significance when the amount necessary to compensate the victim is relatively modest (as when a claim is so obviously frivolous that it is dismissed at the outset of litigation, with little to-do and few fees incurred), and the court believes a heavier sanction is necessary to deter the offending attorney (and/or others) from making the same mistake again. See Samuels, 906 F.2d at 276. But we need not decide this question now.
Let us assume that deterrence would be a basis on which to argue that the court should impose a sanction less than the total amount of fees and costs resulting from an attorney's frivolous and abusive behavior: What argument to that end would Fedder have to make? The answer is, we do not know, because beyond saying that he was deprived of the opportunity to make an argument on the subject of deterrence to the district court, Fedder has not articulated a specific deterrence argument that he would have made, let alone shown why that might have convinced district court to alter its sanctions decision. This is unacceptable. As with any procedural error, counsel must demonstrate that he was harmed by the error in order to establish a basis for reversal; the failure to grant notice and an opportunity to be heard, like any other error, can be harmless. Fed. R. Civ. P. 61; see, e.g., El-Gazawy v. Holder, 690 F.3d 852, 860 (7th Cir. 2012); D. Patrick, Inc. v. Ford Motor Co., 8 F.3d 455, 459 (7th Cir. 1993); Timms v. Frank, 953 F.2d 281, 286 (7th Cir. 1992).
In sum, we conclude that Fedder has failed to establish that he was materially harmed by the district court's failure to warn him that it might impose sanctions pursuant to section 1927, and thus hold him personally liable for the Addus defendants' fees, rather than under section 1988. The procedural history of the case reveals that Fedder had multiple opportunities to address the basis for the requested sanctions--the legally and factually frivolous nature of the claims against the Addus defendants. And Fedder has failed to show that the lack of notice deprived him of an opportunity to make a potentially meritorious argument as to the extent of his own liability, as Tate's counsel, for having pursued those claims.
We turn, at last, to the merits of the district court's sanctions decision, which we review deferentially for abuse of discretion. E.g., Dal Pozzo, 463 F.3d at 614. For the reasons that follow, we conclude that the district court did not abuse its discretion in requiring Fedder to pay the Addus defendants' fees and costs pursuant to section 1927. Our goal is not to provide a comprehensive list of all of the reasons why the claims against the Addus defendants were groundless. Rather, we are highlighting here the reasons we think to be most important and most indicative of Fedder's unreasonable decision to assert these claims and to keep pursuing them on Tate's behalf until the district court entered summary judgment in favor of the Addus defendants.
Fedder's poor judgment is evident from the claims made against the Addus defendants at the outset of the case under both Title VII and the ADA. Only an employer can be liable under those two statutes, and Addus was not Tate's employer. See, e.g., Small v. Chao, 398 F.3d 894, 897-98 (7th Cir. 2005). There has never been any contention, nor any evidence to support the notion, that Addus and its personnel had any employment authority over Tate--who of course was a state employee working for DRS -- let alone that they took any adverse employment action against Tate, see, e.g. Lewis v. City of Chicago, 496 F.3d 645, 653 (7th Cir. 2007). Indeed, when the Addus defendants sought on this basis to dismiss the ADA and Title VII claims against them, Tate (through Fedder) not only acknowledged that such claims were not viable as against the Addus defendants, but stated that--despite naming the Addus defendants on these claims--Tate did not actually intend to assert these claims against the Addus defendants. R. 26 at 6.
Tate's (conceded) inability to sue the Addus defendants under the ADA and Title VII left his conspiracy theory as the only means of attempting to hold those defendants liable for the employment actions taken against him: as discussed, he theorized that the Addus defendants conspired with the State defendants to retaliate against Tate for his involvement with his coworker's EEOC claim and otherwise to discriminate against him. Tate invoked sections 1981 and 1983 as the legal foundations for his theory. In relevant part, section 1981 provides that all persons shall have the same right to make and enforce contracts as white persons. This statute therefore prohibits racial discrimination in contract-making, including racial discrimination in employment, and extends to retaliation claims. See, e.g., Smith v. Bray, 681 F.3d 888, 892, 895-96 & n.2 (7th Cir. 2012). It also applies to private as well as state actors, Patterson v. McLean Credit Union, 491 U.S. 164, 171-76, 109 S. Ct. 2363, 2369-2372, 105 L. Ed. 2d 132 (1989); Humphries v. CBOCS West, Inc., 474 F.3d 387, 392 n.2 (7th Cir. 2007), aff'd on other grounds, 553 U.S. 442, 128 S. Ct. 1951, 170 L. Ed. 2d 864 (2008). Section 1983 grants a broad right to sue for the deprivation of one's rights under the Constitution and laws of the United States, including as relevant here one's rights under the equal protection clause of the Fourteenth Amendment. See Adickes v. S. H. Kress & Co., supra, 398 U.S. at 150-52, 90 S. Ct. at 1604-05. Although a claim under section 1983 must be premised on state rather than private action, a joint effort between public and private actors (including a conspiracy) can be character-ized as state action. See id. at 152, 90 S. Ct. at 1605; see also, e.g., Cooney v. Casady, 735 F.3d 514, 518 (7th Cir. 2013); Lewis v. Mills, 677 F.3d 324, 333 (7th Cir. 2012).
There were at least two problems with relying on sections 1981 and 1983 in this case. First, section 1981 addresses race-based interference with one's contractual rights, and Fedder never identified a shred of evidence suggesting that the Addus defendants were in any way motivated either by racial animus or a desire to punish Tate for having opposed racial discrimination. Tate's theory was that the alleged conspiracy was aimed at punishing him for having opposed sexual harassment in the workplace.
Retaliation was the gist of Tate's Fourteenth Amendment claim under section 1983. But we have repeatedly held that retaliation for one's efforts to oppose unlawful discrimination may be redressed under the First Amendment or Title VII, but not under the equal protection clause of the Fourteenth Amendment. See Boyd v. Ill. State Police, 384 F.3d 888, 898 (7th Cir. 2004) (collecting cases); see also Burton v. Ark. Sec. of State, 737 F.3d 1219, 2013 WL 6596923, at *12 n.7 (8th Cir. 2013) (collecting cases). Fedder concedes that rule noted in Boyd bars his section 1983 claim, but suggests that his claim was supported by a good faith argument to reconsider Boyd's holding in view of the Supreme Court's decision in CBOCS West, Inc. v. Humphries, 553 U.S. 442, 128 S. Ct. 1951, 170 L. Ed. 2d 864 (2008), which held that section 1981's proscription of racial discrimination reached claims of retaliation for opposing racial discrimination. The problem, in the first instance, is that Tate made no such argument below; and even on appeal, he raised it only in his reply brief (in the summary judgment appeal), which of course is too late in the day. See, e.g., United States v. Kennedy, 726 F.3d 968, 974 n.3 (7th Cir. 2013).
Finally, despite his dogged pursuit of the conspiracy theory on Tate's behalf, Fedder has never presented evidence that would support a finding that there was, in fact, a conspiracy between the Addus and the State defendants. ***
[Counsel’s] misstatements of the evidence make it easy to appreciate why Judge Herndon remarked that "the case plaintiff's counsel filed on behalf of his client as to the Addus defendants was made up of many misrepresentations and was absolutely frivolous from the beginning of the case." 2012 U.S. Dist. LEXIS 89241, 2012 WL 2521614, at *5. Fedder has done himself no favors in challenging the fee award by repeating on appeal the very sorts of mistakes that led the district court to impose sanctions under section 1927.
For these reasons, we conclude that the district court did not abuse its discretion in requiring Fedder to compensate the Addus defendants for their costs, including their attorneys' fees. Fedder's objective bad faith in pursuing the claims against the Addus defendants is established by the obvious gaps in the evidentiary basis for those claims and Fedder's misrepresentation of the evidence. Having to litigate the case through summary judgment imposed substantial expenses on the defendants and also wasted a significant amount of the district court's time.
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