Boler v. Space Gateway Support Co. LLC
| Decision Date | 29 May 2003 |
| Docket Number | No. 6:02-CV-837-ORL18JGG.,6:02-CV-837-ORL18JGG. |
| Citation | 290 F.Supp.2d 1272 |
| Parties | BOLER, et al., Plaintiffs, v. SPACE GATEWAY SUPPORT COMPANY LLC, Defendant. |
| Court | U.S. District Court — Middle District of Florida |
Mark E. Tietig, Esq., Tietig & Tietig, Merritt Island, FL, for Plaintiffs.
Beth S. Joseph, Morgan, Lewis & Bockius LLP, Miami, FL, James J. Kelley II, Esq., Kathy B. Houlihan, Laine S. Posel, Morgan, Lewis & Bockius LLP, Washington, DC, for Defendants.
This cause comes before the Court on Defendant's Motion for Attorney's Fees and Costs (Doc. No. 29) filed September 5, 2002, and Defendant's Motion for Attorney's Fees and Costs (Doc. No. 40) filed April 26, 2003.
The United States Magistrate Judge has submitted a report recommending that both motions be denied.
After review of the record in this matter, and noting that no objections were timely filed, the Court agrees entirely with the findings of fact and conclusions of law in the Report and Recommendation. Therefore, it is ORDERED as follows:
1. That the Report and Recommendation filed May 29, 2003 (Doc. No. 43) is ADOPTED and CONFIRMED and made a part of this Order.
2. That Defendant's Motion for Attorney's Fees and Costs (Doc. No. 29) is DENIED.
3. That Defendant's Motion for Attorney's Fees and Costs (Doc. No. 40) is DENIED.
This cause came on for hearing on March 5, 2003 on the following motions:
THEREON it is RECOMMENDED that the motion be DENIED.
THEREON it is RECOMMENDED that the motion be DENIED.
Defendant Space Gateway Support Company, LLC ("SGS") seeks approximately $31,000 in attorney's fees and costs pursuant to 28 U.S.C. § 1927 and the Court's inherent powers from non-settling plaintiffs Kenneth Palmer, John Smiley, and John Williams, as well as from their attorney, Mark E. Tietig ("Tietig"). SGS claims that Tietig and the plaintiffs filed and pursued this case, Boler et al. v. Space Gateway, 6:02-cv-837-28JGG, even though they knew that it was frivolous.1 SGS further claims that Tietig and the plaintiffs have pursued this case solely to gain leverage in their then-pending case of Goolsby et al. v. Space Gateway, 6:01-cv-178-28JGG. SGS therefore claims entitlement to § 1927 sanctions from Tietig for vexatiously multiplying the litigation, and for the wilful abuse of the judicial process tantamount to bad faith. Plaintiffs respond that they have pursued this Boler case in good faith; that this case is meritorious; that they could not have asserted the Boler claims in the Goolsby action because they had not yet arisen; that they voluntarily dismissed the Boler complaint only to correct a pleading deficiency; and that the three non-settling plaintiffs may soon reassert their claims in a separate action.
SGS seeks a severe sanction against Tietig alone, and the burden is high. Section 1927 of 28 U.S.C. provides as follows:
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 by the court to satisfy personally the excess costs, expenses, and attorney's fees reasonably incurred because of such conduct.
28 U.S.C. § 1927. The word "vexatious" is not defined in the statute. In such circumstances, courts typically read statutory terms to convey their ordinary meaning. See Buckhannon Bd. & Care Home, Inc. v. West Virginia Dep't of Health & Human Resources, 532 U.S. 598, 121 S.Ct. 1835, 149 L.Ed.2d 855 (2001) ().
Black's Law Dictionary defines the term "vexatious" to mean "without reasonable or probable cause or excuse; harassing; annoying." Black's Law Dictionary 1559 (7th ed.1999). It further defines "vexatious suit" to mean a "lawsuit instituted maliciously and without good cause." Id. Standard English-language dictionaries give the term similar meaning. See, e.g., Webster's Third New International Dictionary 2548 (3d ed.1961) (defining "vexatious" to mean "lacking justification and intended to harass"); 19 Oxford English Dictionary 596 (2d ed.1989) (defining "vexatious" for legal purposes as "[i]nstituted without sufficient grounds for the purpose of causing trouble or annoyance to the defendant").
There is little case law in the United States Court of Appeals for the Eleventh Circuit articulating the standard applicable to an award of attorney's fees under § 1927. Peterson v. BMI Refractories, 124 F.3d 1386, 1395 (11th Cir.1997). Moreover, decisions from other circuits are not in agreement on the governing principles. Some circuits have held that subjective bad faith is required for an award under § 1927. Oliveri v. Thompson, 803 F.2d 1265, 1273 (2d Cir.1986); Hackman v. Valley Fair, 932 F.2d 239, 242 (3d Cir. 1991). Other circuits have held that it is not. See Wilson-Simmons v. Lake County Sheriff's Dep't, 207 F.3d 818, 824 (6th Cir.2000); Miera v. Dairyland Ins. Co., 143 F.3d 1337, 1342 (10th Cir.1998).
While the Eleventh Circuit has not specifically required a finding of subjective bad faith, it has stated that § 1927 allows district courts to assess attorney's fees against counsel and law firms who wilfully abuse the judicial process by "conduct tantamount to bad faith." Avirgan v. Hull, 932 F.2d 1572, 1582 (11th Cir.1991) (emphasis added); Roadway Express Inc. v. Piper, 447 U.S. 752, 100 S.Ct. 2455, 65 L.Ed.2d 488 (1980). Additionally, the Eleventh Circuit has agreed with the Ninth Circuit that "[a] finding of bad faith is warranted where an attorney knowingly or recklessly raises a frivolous argument." Barnes v. Dalton, 158 F.3d 1212, 1214 (11th Cir.1998) (quoting Primus Automotive Fin. Servs., Inc. v. Batarse, 115 F.3d 644, 649 (9th Cir.1997)). The Eleventh Circuit has also warned that "[w]hen it becomes apparent that discoverable evidence will not bear out the claim, the litigant and his attorney have a duty to discontinue their quest." Avirgan, 932 F.2d at 1582.
The purpose of § 1927 is to deter frivolous litigation and abusive practices by attorneys and to ensure that those who create unnecessary costs bear them. O'Rear v. American Family Life Assurance Co. of Columbus, Inc., 144 F.R.D. 410, 413 (M.D.Fla.1992). Section 1927 Roadway Express, 447 U.S. at 762, 100 S.Ct. 2455.
As previously discussed, courts in the Eleventh Circuit apply a standard for vexatious litigation that is tied to the standard for "bad faith"—i.e., the wilful abuse of the judicial process by conduct tantamount to bad faith. Therefore the law establishing the "bad faith" standard should provide insight.
The American Rule prohibits fee shifting as a general rule. See Alyeska Pipeline Service Co. v. Wilderness Society, 421 U.S. 240, 257, 95 S.Ct. 1612, 44 L.Ed.2d 141 (1975). As an exception to the American Rule, however, the district court may award attorney's fees when a losing party has "acted in bad faith, vexatiously, wantonly or for oppressive reasons." Chambers v. NASCO, Inc., 501 U.S. 32, 44—46, 111 S.Ct. 2123, 115 L.Ed.2d 27 (1991); Alyeska Pipeline, 421 U.S. at 258—59, 95 S.Ct. 1612; Barnes v. Dalton, 158 F.3d 1212, 1214 (11th Cir. 1998); In re Mroz, 65 F.3d 1567, 1575 (11th Cir.1995); Kreager v. Solomon & Flanagan, P.A., 775 F.2d 1541, 1543 (11th Cir.1985); Thomas v. Tenneco Packaging Co., 293 F.3d 1306, 1320 (11th Cir.2002). A federal court may exercise its inherent power to sanction bad faith misconduct even if that conduct could be sanctioned under a statute or procedural rule. See Chambers, 501 U.S. at 49—51, 111 S.Ct. 2123. However, when bad faith conduct in the course of litigation could be adequately sanctioned under the rules, the court ordinarily should rely on the rules and not on its inherent power. Id.
The bad faith exception to the American Rule is not limited to conduct at the moment of filing, but also incorporates bad faith acts preceding and during litigation. See 775 F.2d at 1543. A finding of bad faith is warranted where an attorney knowingly or recklessly raises a frivolous argument, or argues a meritorious claim for the purpose of harassing an opponent. Barnes, 158 F.3d at 1214. A party also demonstrates bad faith by delaying or disrupting the litigation or hampering enforcement of a court order. Barnes, 158 F.3d at 1214. In assessing whether an award is proper under the bad faith standard, "the inquiry will focus primarily on the conduct and motive of a party, rather than on the validity of the case." See Rothenberg v. Security Management Co., Inc., 736 F.2d 1470, 1472 (11th Cir.1984).
The invocation of the court's inherent power to sanction requires a finding of bad faith after the party is afforded a due process opportunity to be heard. See Chambers, 501 U.S. at 49, 111 S.Ct. 2123; In re Mroz, 65 F.3d 1567, 1575—76 (11th Cir.1995). Inherent powers must be exercised with restraint and discretion. Barnes, 158 F.3d at 1214. A primary aspect of that discretion is the ability to fashion an appropriate sanction for conduct which abuses the judicial process. 501 U.S. at 44—45, 111 S.Ct. at 2132—33; see also Amsted Indus. Inc. v. Buckeye Steel Castings Co., 23 F.3d 374, 377—78 (Fed.Cir.1994) ().
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