Sanctions: Does § 1927 Apply to Pro Se As One Admitted to Conduct Cases? (Inexplicable Circuit Split) — No R .11 for Mere Misapplication of Facts, Law: Even If an Argument is … Unpersuasive, That Doesn’t Mean It’s Frivolous-Good Quote
Ctr. for Individual Rights v. Chevaldina, 2018 U.S. Dist. LEXIS 89847 (S.D. Fla. May 30, 2018):
This matter is before the Court on several discovery motions that are ripe for disposition. [D.E. 142, 152, 154, 155, 159, 164, 166, 172, 178, 182, 183]. Having reviewed the motions, responses, replies, relevant authority, and record evidence submitted in support of or in opposition to the same, the Court's ruling on each motion follows.
This is an action for breach of contract. The complaint — filed on March 11, 2016 [D.E. 1] — alleges that the Center for Individual Rights ("Plaintiff" or "CIR") successfully represented Irina Chevaldina ("Defendant" or "Chevaldina") pro bono in an [*2] appeal before the 11th Circuit in Katz v. Google, Appeal No. 14-14525, in which the Eleventh Circuit affirmed summary judgment in favor of Defendant in a copy infringement action.1 See Katz v. Google, Inc., 802 F.3d 1178 (11th Cir. 2015), aff'g, Katz v. Chevaldina, 12-cv-22211, 2014 WL 5385690 (S.D. Fla. Sept. 5, 2014). Plaintiff alleges that Chevaldina had few financial obligations under the retainer agreement in that case and that Plaintiff paid the out of pocket expenses of the suit. Plaintiff contends that it only asked Chevaldina for (1) reasonable attorney fees and expenses as permitted under law, and (2) that Chevaldina provide Plaintiff with any fees or expenses that were attributable to Plaintiff's expenditures and/or the work of its attorneys. If Chevaldina decided to settle the case, Plaintiff alleges that Chevaldina was also obligated to provide Plaintiff with a reasonable amount in attorney's fees and expenses.
In December 2015 — while being represented by another attorney — Defendant settled all the remaining claims in the Katz case. In the settlement, Plaintiff claims that Defendant obtained only $10,000 in attorney fees for the work of Plaintiff's attorneys as well as both taxable and non-taxable costs. Shortly thereafter, Plaintiff sought to challenge the fee [*3] award in the Eleventh Circuit, but Defendant allegedly instructed Plaintiff to withdraw its motion and Plaintiff reluctantly complied. Therefore, Plaintiff suggests that Defendant did not obtain a reasonable amount in attorneys' fees for the work of Plaintiff's attorneys and that Defendant breached the retainer agreement. In exchange for the low sum of $10,000 in attorney fees, Plaintiff alleges that Chevaldina agreed with Katz to drop a substantial claim against Chevaldina in excess of $100,000. Because Plaintiff alleges that it has been deprived of a reasonable attorney fee award, Plaintiff seeks judgment against Chevaldina in an amount of no less than $105,000 — including reasonable costs and expenses in accordance with 28 U.S.C. § 1920.
F. Plaintiff's Motion for § 1927 Sanctions [D.E. 164]
On April 30, 2018, Plaintiff filed a motion for sanctions under 28 U.S.C. § 1927 for Chevaldina's submission of a meritless and vexatious motion to compel. [D.E. 164]. Plaintiff argues that Chevaldina filed a motion to compel for the sole purpose of requiring Plaintiff to expend time and energy to oppose the motion. After Plaintiff submitted its opposition, Chevaldina withdrew the motion, asserting that "Plaintiff has finally provided its signed statement/stipulation that it (1) does not have any accounting records supporting [*44] its claim for damages other than those produced in response to a prior document request and (2) does not have any accounting records that reflects the amount that CIR claims in this lawsuit for breach of contract." [D.E. 147]. Plaintiff denies that there was any stipulation that could explain a proper reason for Chevaldina's withdrawal. And even if Chevaldina's alleged reason was true, Plaintiff suggests that Chevaldina did not receive any of the relief that her motion sought, which was a stipulation under oath. Plaintiff therefore concludes that Chevaldina's goal was not to obtain discovery but to harass Plaintiff and force it to do unnecessary work in this case. Accordingly, Plaintiff seeks sanctions under § 1927.
A district court's authority to issue sanctions under § 1927 is either broader than or equally as broad as a court's authority to issue sanctions under its inherent powers. See Cordoba v. Dillard's, Inc., 419 F.3d 1169, 1178 n. 6 (11th Cir. 2005). Specifically, Section 1927 provides that unreasonable or vexatious conduct may be sanctionable in certain circumstances:
Any 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 [*45] by the court to satisfy personally the excess costs, expenses, and attorneys' fees reasonably incurred because of such conduct.
First, the attorney must engage in unreasonable and vexatious conduct. Second, that unreasonable and vexatious conduct must be conduct that multiplies the proceedings. Finally, the dollar amount of the sanction must bear a financial nexus to the excess proceedings, i.e., the sanction may not exceed the costs, expenses, and attorneys' fees reasonably incurred because of such conduct.
To date, the Eleventh Circuit has not addressed the question of whether sanctions under § 1927 may be assessed against a pro se litigant.12 See Meidinger v. Healthcare Industry Oligopoly, 391 Fed. App'x 777, 780 (11th Cir. Aug. 9, 2010); but see Avirgan v. Hull, 932 F.2d 1572, 1582 (11th Cir. 1991) (in discussing Rule 11 and § 1927, stating that "[a] court may assess attorney's fees against litigants, counsel, and law firms who willfully abuse judicial process by conduct tantamount to bad faith.") (citing Roadway Express Inc. v. Piper, 447 U.S. 752 (1980)); Spolter v. Suntrust Bank, 403 F. App'x 387, 389, 390 (11th Cir. Nov. 16, 2007) (affirming sanctions against pro se lawyer litigant under Federal Rule of Civil Procedure 11, § 1927, and the court's inherent powers).
But, we are skeptical that sanctions under § 1927 can be imposed to pro se litigants because the statute — by its plain language — only applies to "[a]ny [*46] attorney or other person admitted to conduct cases in any court of the United States." 18 U.S.C. § 1927. Plaintiff insists that Chevaldina fits into the criteria of "other person admitted to conduct cases," but the Eleventh Circuit has only applied § 1927 against litigants, counsel, and law firms who abuse the judicial process. See Avirgan v. Hull, 932 F.2d 1572, 1582 (11th Cir. 1991).
"The starting point for all statutory interpretation is the language of the statute itself." United States v. DBB, Inc., 180 F.3d 1277, 1281 (11th Cir. 1999). And we should "assume that Congress used the words in a statute as they are commonly and ordinarily understood." Id. In applying these principles, we should "only look beyond the plain language of a statute at extrinsic materials to determine the congressional intent if: (1) the statute's language is ambiguous; (2) applying it according to its plain meaning would lead to an absurd result; or (3) there is clear evidence of contrary legislative intent." Id. None of these exceptions apply because the statute is clear that either an attorney or a person who is admitted to conduct cases may be sanctioned under § 1927. Because Chevaldina fits neither category, we conclude that § 1927 does not apply to pro se litigants.
Yet, even if we assume that § 1927 applies to Chevaldina, we would still decline to impose [*47] sanctions because they are only appropriate for litigants that intentionally and unnecessarily cause delays during litigation. See Peer v. Lewis, 606 F.3d 1306, 1314 (11th Cir. 2010). In reviewing the underlying motion in question and Chevaldina's reason for her withdrawal, we find that there is no basis to impose sanctions under § 1927. Plaintiff argues that Chevaldina's withdrawal without obtaining the relief sought can only lead to the conclusion that she filed her motion for an improper purpose and to require Plaintiff to engage in unnecessary motion practice. But, we decline to make that assumption based solely on the withdrawal of Chevaldina's motion. Therefore, Plaintiff's motion for sanctions under § 1927 is DENIED.13
G. Plaintiff's Motion for Rule 11 Sanctions [D.E. 166]
On May 1, 2018, Plaintiff filed a motion for Rule 11 sanctions against Chevaldina. [D.E. 166]. Plaintiff argues that on March 27, 2018, Chevaldina filed a frivolous motion to dismiss on the basis that the amount in controversy had not been sufficiently pled and that this Court lacks subject matter jurisdiction. Plaintiff suggests that Chevaldina's motion violates Rule 11 because it is patently frivolous and that all of her motions have been either denied or voluntarily withdrawn. Therefore, Plaintiff [*48] requests that sanctions be imposed to deter Chevaldina from filing frivolous motions.
"Rule 11 is intended to deter claims with no factual or legal basis at all; creative claims, coupled even with ambiguous or inconsequential facts, may merit dismissal, but not punishment." Davis v. Carl, 9106 F.2d 533, 538 (11th Cir. 1990) (emphasis in original). Rule 11 sanctions are proper "(1) when a party files a pleading that has no reasonable factual basis; (2) when the party files a pleading that is based on legal theory that has no reasonable chance of success and that cannot be advanced as a reasonable argument to change existing law; or (3) when the party files a pleading in bad faith for an improper purpose." Worldwide Primates, Inc. v. McGreal, 87 F.3d 1252, 1254 (11th Cir. 1996) (quoting Jones v. International Riding Helmets, Ltd., 49 F.3d 692, 694 (11th Cir. 1995)). Federal Rules of Civil Procedure 11(b)(1) and 11(b)(3) provide the standard in determining when a pleading may be sanctionable:
By presenting to the court a pleading, written motion, or other paper—whether by signing, filing, submitting, or later advocating it—an attorney or unrepresented party certifies that to the best of the person’s knowledge, information, and belief, formed after an inquiry reasonable under the circumstances: (1) it is not being presented for any improper purpose, such as to harass, cause unnecessary delay, or needlessly increase the cost of litigation . . . (3) [*49] the factual contentions have evidentiary support or, if specifically so identified, will likely have evidentiary support after a reasonable opportunity for further investigation or discovery . . . .
Additionally, Federal Rule of Civil Procedure 11(c)(1) states the following:
If, after notice and a reasonable opportunity to respond, the court determines that Rule 11(b) has been violated, the court may impose an appropriate sanction on any attorney, law firm, or party that violated the rule or is responsible for the violation.
"In this circuit, a court confronted with a motion for Rule 11 sanctions first determines whether the party's claims are objectively frivolous—in view of the facts or law—and then, if they are, whether the person who signed the pleadings should have been aware that they were frivolous; that is, whether he would've been aware had he made a reasonable inquiry. If the attorney failed to make a reasonable inquiry, then the court must impose sanctions despite the attorney’s good faith belief that the claims were sound. The reasonableness of the inquiry 'may depend on such factors as how much time for investigation was available to the signer; whether he had to rely on a client for information as to the facts underlying the [*50] [violative document]; . . . or whether he depended on forwarding counsel or another member of the bar." Worldwide Primates, Inc., 87 F.3d at 695 (quoting Mike Ousley Productions, Inc. v. WJBF-TV, 952 F.2d 380, 382 (11th Cir. 1992)); see also Byrne v. Nezhat, 261 F.3d 1075, 1105 (11th Cir. 2001). "Although sanctions are warranted when the claimant exhibits a 'deliberate indifference to obvious facts,' they are not warranted when the claimant=s evidence is merely weak but appears sufficient, after a reasonable inquiry, to support a claim under existing law." Baker v. Adelman, 158 F.3d 516, 524 (11th Cir. 1998) (citations omitted).
Here, Plaintiff's motion is unpersuasive because, despite Chevaldina filing motions that misapply the law, we cannot find that they were objectively frivolous. Plaintiff is correct that most of Chevaldina's motions have been denied in this case. But, a misapplication of the facts and the law does not warrant Rule 11 sanctions. If that was the governing principle, Rule 11 would be applied whenever an unpersuasive motion is presented to the Court. That is not how we apply Rule 11 because even if an argument is substantively unpersuasive that does not mean it is frivolous. Indeed, the policy underlying Rule 11 is to "discourage dilatory or abusive tactics and help to streamline the litigation process by lessening frivolous claims or defenses." Pin v. Texaco, Inc., 793 F.2d 1448, 1455 (5th Cir. 1986) (quoting Advisory Committee Note)). Therefore, we conclude — after [*51] a thorough review of the motion presented and the underlying record — that Rule 11 sanctions are inappropriate given the facts of this case and that Plaintiff's motion must be DENIED.
For the foregoing reasons, it is hereby ORDERED AND ADJUDGED that:
A. Plaintiff's motion to compel the production of 56 documents on GSG's privilege log is DENIED. [D.E. 142].
B. Plaintiff's motion to compel the re-designation of confidential documents is DENIED. [D.E. 142].
C. Chevaldina's motion for protective order is GRANTED and Plaintiff's motion for sanctions is DENIED. [D.E. 152].
D. Plaintiff's motion to preclude evidence is GRANTED in part and DENIED in part. [D.E. 154]. Chevaldina is precluded from introducing any evidence of damages that she incurred on any of her claims or using any witnesses not previously identified. To this extent, [*59] Plaintiff's motion is GRANTED. As for Plaintiff's motion for Chevaldina to pay Plaintiff's expenses and attorneys' fees, that motion is DENIED.
E. Plaintiff's motion to compel better responses is GRANTED in part and DENIED in part. [D.E. 155]. Chevaldina is compelled to provide better responses to requests 1-2, 4-5, and 8-10 within fourteen (14) days from the date of this Order. As for Plaintiff's request for the payment of fees and expenses, Plaintiff's motion is DENIED.
F. Plaintiff's motion to compel better responses and documents is DENIED, including Plaintiff's request for Chevaldina to pay its reasonable fees and expenses. [D.E. 159].
G. Plaintiff's motion for § 1927 sanctions is DENIED. [D.E. 164].
H. Plaintiff's motion for Rule 11 sanctions is DENIED. [D.E. 166].
I. Chevaldina's motion to stay discovery and other deadlines is DENIED. [D.E. 172].
J. Chevaldina's motion to compel Ms. Mandel's deposition is DENIED. [D.E. 178].
K. Plaintiff's motion for a protective order to preclude the deposition of Ms. Mandel is GRANTED. [D.E. 182]. Plaintiff's motion for the payment of fees and expenses is DENIED.
L. Chevaldina's motion to expedite a ruling on her motion to compel Ms. Mandel's deposition is DENIED [*60] as moot. [D.E. 183].
1 Plaintiff is a public interest law firm organized under the laws of the District of Columbia.
12 See also Inst. For Motivational Living, Inc. v. Doulos Inst. For Strategic Consulting, Inc., 110 F. App'x 283, 286-87 (3d Cir. Oct. 5, 2004) (noting that while the circuits are split on whether a court may sanction a pro se party under 28 U.S.C. § 1927, the "vexatious litigation" statute, the court may award identical sanctions under its inherent authority); Smartt v. First Union Nat'l Bank, 245 F. Supp. 2d 1229, 1235 (M.D. Fla. 2003) (holding that § 1927 sanctions may be levied against pro se litigants); Godwin v. Marsh, 266 F. Supp. 2d 1355, 1359 (M.D. Ala. 2002) (holding that § 1927 sanctions may not be levied against pro se litigants).
13 Plaintiff's motion is based on the allegation that Chevaldina has improperly increased Plaintiff's costs and the frequency of motion practice in this case. But, both parties have filed an abundance of motions — which raise issues that could have been resolved without motion practice. To conclude that Chevaldina is solely at fault for the increased costs of this case would require one to ignore the countless motions that Plaintiff has filed.
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