Commercial Litigation and Arbitration

Sixth Circuit Appears to Erroneously Affirm § 1927 Sanctions Imposed on Non-Attorney Pro Se Whose Conduct Could Have Been Sanctioned under Rule 11 or the Inherent Power

In re: Polyurethane Foam Antitrust Litigation, 2017 U.S. App. LEXIS 25352 (6th Cir. Dec. 14, 2017) (unpublished):


Christopher Andrews, proceeding pro se, appeals the district court's judgment imposing sanctions against him (No. 17-3361) and its order denying his motion to stay sanctions pending the appeal of the sanctions judgment (No. 17-3548). This case has been referred to a panel of the court that, upon examination, unanimously agrees that oral argument is not needed. See Fed. R. App. P. 34(a).

These appeals arise from multi-district antitrust litigation alleging price fixing in the polyurethane foam industry. After several years of proceedings, the district court overruled the objections of Andrews and other individuals and granted final approval of nine class-action settlement agreements [*2]  on January 27, 2016. Andrews and the other objectors filed notices of appeal. Upon the motion of settlement counsel ("class counsel") for the Indirect Purchaser Class ("IPC"), the district court, on April 14, 2016, ordered the objectors to post an appeal bond of $145,463.00 on the grounds that each objector had acted vexatiously and/or had pursued objections in bad faith.

Andrews filed motions in the district court for a stay and reconsideration of the bond order, arguing in part that his objections had been meritorious and that the district court was engaging in a cover-up. The district court denied the first motion, observing that it was baseless and included unsupported, previously asserted, allegations of corruption. The second was denied for lack of jurisdiction due to the pendency of an appeal in this court.

Andrews also filed a motion in this court to reverse or stay the appeal bond order, while IPC moved to dismiss Andrews's appeal for failure to post bond. We denied Andrews's motion and granted IPC's motion to dismiss, reasoning in part that Andrews's objections to the settlement lacked merit and that his appeal had "the practical effect of prejudicing IPC by delaying the disbursement [*3]  of settlement funds." In re Polyurethane Foam Antitrust Litig., No. 16-3168 (6th Cir. June 20, 2016) (order). Andrews was given fourteen days to post bond if he wished to reinstate his appeal, but he did not do so. Andrews's petition for en banc rehearing was denied on September 27, 2016, and the Supreme Court denied Andrews's petition for a writ of certiorari on January 23, 2017. Andrews v. Indirect Purchaser Class, 137 S. Ct. 1141 (2017) (mem.).

Meanwhile, IPC filed a motion in the district court for an order of sanctions pursuant to 28 U.S.C. § 1927. IPC argued that Andrews had prevented the disbursement of the settlement monies through his repetitive, frivolous challenges to the appeal bond order in the district court and in this court. Andrews filed a response, arguing in part that he had "Mount Everest high evidence proving he is right," that the Sixth Circuit had put "blind faith in the district court that put its blind faith in the incompetent lawyers," that the district court and class counsel had "created a huge legal mess," and that class counsel had engaged in a fee-inflation scheme. IPC filed a reply, and Andrews filed a sur-reply.

After observing that Andrews's sur-reply was unauthorized and contained "repetitive, warmed-over, and meritless arguments," [*4]  the district court agreed with IPC that Andrews had vexatiously used the judicial system "either to extort a pay-off from the IPC or as a delay tactic to prolong his coercion attempt." Consequently, the district court ordered Andrews to pay $15,303.00 in sanctions, an amount equal to the interest that had been lost to IPC from April 2016 through October 2016.

Undeterred, Andrews filed a motion for reconsideration of the appeal bond, stating that he would be discussing the district court's bias-driven agenda in his certiorari petition and judicial complaints. A week later, Andrews filed a motion for reconsideration of the appeal-bond and sanctions orders, contending that records should be unsealed and that the attorney's fees were excessive. The district court denied the first motion because it was "more a threat against this Court, rather than a new argument or discussion identifying an obvious error." The court denied the second, reasoning that it raised only arguments "previously, and repeatedly, presented." A filing restriction was also imposed.

When IPC sent Andrews a "Notice of Deposition and Request for Production of Documents" in its effort to collect the sanctions, Andrews challenged [*5]  the validity of the notice and moved the district court to cancel or stay the deposition because he was busy preparing his certiorari petition on the appeal-bond order. The district court concluded that the notice was adequate and denied the motion to stay. However, the court granted Andrews a one-day extension and warned him that failing to appear for the deposition could lead to additional sanctions. Andrews gave written notice that he would not appear, and he did not. As a result, the district court held Andrews in contempt and had the United States Marshals deliver Andrews to the courthouse for the deposition.

Following the deposition, Andrews sent emails to class counsel, threatening to sue if counsel "interfere[d] with any of [Andrews's] personal or business relationships" and also threatening to file misconduct complaints against counsel in one or more states. IPC advised the district court of this conduct and requested further sanctions. Andrews responded that class counsel had misconstrued the emails, had assembled the worst class-action settlement in history, and had charged fraudulent fees. Observing that it had "already -- and repeatedly -- found Andrews' conduct vexatious and contumacious," [*6]  the district court granted IPC's motion in part and, inter alia, confirmed the prior sanction award with the addition of interest from November 2016 through January 2017, and $500 for expenses related to the deposition. Andrews filed a notice of appeal that has been docketed in this court as No. 17-3361.

Predictably, Andrews also moved to stay the sanctions judgment, while we considered the appeal in No. 17-3361, on the grounds that the district court's rulings were a result of structural bias. The district court denied the motion, and Andrews again filed a notice of appeal, which has been docketed in this court as No. 17-3548. This court ordered the consolidation of the appeals.

On appeal, Andrews argues that: (1) the district court's failure to include a jurisdiction statement in its orders granting preliminary and final approval to the settlements renders the sanctions order invalid; (2) class counsel filed the motion for sanctions in retaliation for the loss of $8 million in fraudulent attorney's fees; (3) class counsel failed to timely serve the motion for sanctions, in violation of Federal Rule of Civil Procedure 11; (4) the district court abused its discretion by awarding sanctions pursuant to Rule 11; (5) class counsel [*7]  violated Federal Rules of Evidence 403 and 404 and smeared Andrews when responding to his objections to the settlement; (6) the district court ordered sanctions as a result of bias caused by class counsel and in retaliation for Andrews's identification of reversible errors; and (7) the district court erred and exhibited bias by enforcing a defective subpoena. Andrews also moves for an "emergency stay appeal" due to the district court's bias and for this court to take judicial notice of a letter sent to Chief Judge Cole by an attorney in the class action.

We review a sanctions award under § 1927 for an abuse of discretion. Hall v. Liberty Life Assurance Co. of Boston, 595 F.3d 270, 275 (6th Cir. 2010). A district court abuses its discretion when it "applies the wrong legal standard, misapplies the correct legal standard, or relies on clearly erroneous findings of fact." Id. (quoting Geier v. Sundquist, 372 F.3d 784, 789-90 (6th Cir. 2004)).

Under 28 U.S.C. § 1927,

   [a]ny attorney or other person admitted to conduct cases in any court of the United States or any Territory thereof 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.

Sanctions may be imposed where a person "knows or reasonably should know that a claim [*8]  pursued is frivolous," regardless of whether the person acted in bad faith. Hall, 595 F.3d at 275 (quoting Rentz v. Dynasty Apparel Indus., Inc., 556 F.3d 389, 396 (6th Cir. 2009)). Section 1927 applies to counsel as well as other individuals. See, e.g., Moore v. Lafayette Life Ins. Co., 458 F.3d 416, 446-47 (6th Cir. 2006).  [Note:  This is error and the cited case does not stand for this proposition — the client was sanctioned under Rule 11.]

The district court did not abuse its discretion. Andrews unreasonably and vexatiously multiplied the proceedings through his myriad of repetitive, meritless pleadings contesting the appeal bond and the original sanctions award, as well as through his efforts to impede IPC's collection of sanctions. Andrews knew or should have known that his arguments were frivolous because he continued to assert them after repeated rejections by the district court. Moreover, the arguments that Andrews raises on appeal are unpersuasive.

First, Andrews fails to cite authority suggesting that a settlement order must contain an explicit reference to jurisdiction, nor does he cite any compelling authority suggesting that the district court in fact lacked jurisdiction. Second, the district court properly awarded sanctions for the reasons stated above, and Andrews's allegations of a retaliatory motive by class counsel are conclusory and irrelevant. Third and fourth, the district court and class counsel had no duty to comply with Rule 11 because counsel moved for sanctions [*9]  pursuant to § 1927 and the court awarded sanctions on that basis. Fifth, the propriety of class counsel's response to Andrews's objections is beyond the scope of these appeals, which concern only the sanctions award.

Andrews's sixth and seventh arguments likewise fail. Andrews alleges that the district judge exhibited bias against him and/or other objectors when the judge: (1) permitted attorney's fees for a 35-hour deposition; (2) refused to issue an order stating that no one in chambers was submitting a claim form in the class action; (3) erroneously stated in the appeal-bond order that (a) another court had found that Andrews's submissions were not in good faith and were filed to harass, (b) the objectors' "history of misconduct strongly suggests each Objector is not appealing in good faith," (c) "[t]heir conduct here resembles scavenger ants on a jury roll, scrambling to extort money . . ," and (d) "[t]o now have Objectors file frivolous appeals in pursuit of a payoff is not simply a detriment to the settling parties -- it is an insult to the judicial system"; (4) falsely stated that the objectors' motions to reconsider the appeal-bond order were "yet another misguided attempt to delay this litigation"; [*10]  (5) held him in contempt even though the "subpoena for [the] deposition . . . was legally deficient," he was served by email, and related court documents incorrectly referred to the Direct Purchaser Class, rather than IPC; (6) did not grant him leave to file a pleading proving attorney fraud; (7) falsely claimed that he might not be a class member; and (8) held the deposition in the judge's personal conference room instead of class counsel's office.

Even if it is assumed that Andrews's allegations of error are correct, none merits reversing the award of sanctions, when the totality of the record is considered. As noted above, Andrews's own numerous, frivolous pleadings warranted the award of sanctions.

Although Andrews does not argue that the district court should have recused itself due to bias, we nonetheless note that the district court had no duty to do so. Pursuant to 28 U.S.C. § 455(a), "[a]ny justice, judge, or magistrate judge of the United States shall disqualify himself in any proceeding in which his impartiality might reasonably be questioned." A judge must recuse himself only "if a reasonable, objective person, knowing all of the circumstances, would have questioned the judge's impartiality." United States v. Sammons, 918 F.2d 592, 599 (6th Cir. 1990) [*11]  (quoting Hughes v. United States, 899 F.2d 1495, 1501 (6th Cir. 1990)). The judge need not recuse himself under § 455(a) "based on the subjective view of a party, no matter how strongly that view is held." Id. (citation omitted).

Subsection 455(b) lists five specific circumstances in which a judge must recuse himself, only the first of which, involving "personal bias or prejudice concerning a party, or personal knowledge of disputed evidentiary facts concerning the proceeding," is suggested by Andrews. Although the Supreme Court no longer views the presence of an extrajudicial source for the alleged bias or prejudice as an exclusive test for judging the merits of a recusal motion, it still is considered as a factor in determining bias or prejudice. Liteky v. United States, 510 U.S. 540, 551, 554-55 (1994); Bell v. Johnson, 404 F.3d 997, 1005 (6th Cir. 2005).

The judge did not err by failing to recuse himself under § 455. Andrews's allegations challenge judicial rulings and case management decisions. Judicial rulings will almost never serve as a valid basis for recusal. Liteky, 510 U.S. at 555; Amadasu v. Mercy Franciscan Hosp., 515 F.3d 528, 530 (6th Cir. 2008). Furthermore, a judge's negative opinion of a party acquired in the course of the proceedings does not necessarily constitute bias. Liteky, 510 U.S. at 550-51. Thus, no basis for recusal existed.

Due to the above resolution of the appeal of the sanctions award, we conclude that Andrews's appeal of the denial of the stay and his motion for a stay in this court are moot.

We deny Andrews's motion to take judicial notice of a letter sent to this court's [*12]  chief judge by an attorney in the class action. First, we may not consider new evidence with respect to the claims raised below. See Adams v. Holland, 330 F.3d 398, 406 (6th Cir. 2003). Second, the letter fails to rise to the level of facts "not subject to reasonable dispute." Bridgeport Music, Inc. v. Smith, 714 F.3d 932, 936 n.4 (6th Cir. 2013); Fed. R. Evid. 201(b).

Accordingly, we AFFIRM the district court's judgment and order. We DENY the motion to stay the sanctions as moot, and we DENY the motion to take judicial notice.

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