Priority One Servs., Inc. v. W&T Travel Servs., LLC, Civil Action No. 10–1873(BAH)

• Decision Date: 30 July 2013
• Docket Number: Civil Action No. 10–1873(BAH)
• Parties: Priority One Services, Inc., Petitioner, v. W & T Travel Services, LLC, Respondent.
• Court: U.S. District Court — District of Columbia

987 F.Supp.2d 1

Priority One Services, Inc., Petitioner,

v.W & T Travel Services, LLC, Respondent.

Civil Action No. 10–1873(BAH)

United States District Court, District of Columbia.

Filed July 30, 2013

Joshua M. Siegel, Cooley, LLP, Washington, DC, for Petitioner.

Ralph Charles Thomas, III, Barton, Baker, Thomas & Tolle LLP, McLean, VA, for Respondent.

MEMORANDUM OPINION AND ORDER

BERYL A. HOWELL, United States District Judge

Pending before the Court is petitioner Priority One Services, Inc.'s (“Priority One”) renewed motion for attorney's fees and costs, and respondent W & T Travel Services, LLC's (“W & T”) motion to rescind the Court's May 7, 2013 Minute Order and to modify the Court's January 22, 2012 Order. On August 23, 2011, the Court granted Priority One's petition to confirm an arbitration award, which arose out of a contract between Priority One and W & T. SeePriority One Servs., Inc. v. W & T Travel Servs., LLC (“ Priority One I ”), 825 F.Supp.2d 43 (D.D.C 2011). As a part of that decision, the Court also awarded Priority One the costs and fees associated with the filing of its sur-reply brief. Seeid. at 48 n.9;see alsoPriority One Servs. v. W & T Travel Servs., LLC (“ Priority One II ”), 841 F.Supp.2d 64 (D.D.C.2012) (awarding attorney's fees and costs to Priority One). The Court of Appeals affirmed this decision in all but one part: the D.C. Circuit vacated and remanded the award of attorney's fees and costs. Priority One Servs., Inc. v. W & T Travel Servs., LLC (“ Priority One III ”), 502 Fed.Appx. 4 (D.C.Cir.2013). In response to that decision, this Court permitted Priority One to file a renewed motion for attorney's fees and costs. Upon consideration of that renewed motion, the Court concludes that, although W & T's litigation conduct was careless and borderline incompetent, it did not rise to the level of bad faith. Accordingly, for the reasons discussed below the Court denies Priority One's renewed motion for attorney's fees and costs and also denies W & T's motion to rescind and modify.

I. BACKGROUND

On November 3, 2010, Priority One filed a petition to confirm an arbitration award entered in its favor. See Pet. Confirm Arbitration Award, ECF No. 1. On January 18, 2011, W & T filed a motion to vacate, modify, and correct the same arbitration award, contending that the arbitration panel made certain errors. See Resp't's Mot. to Vacate at 1–2, ECF No. 6. On February 4, 2011, Priority One filed an opposition to W & T's motion to vacate and, on February 11, 2011, W & T filed the reply brief that is the root cause of these post-appeal proceedings. See Resp't's Reply, ECF No. 8. Apparently caught up in litigation fervor, W & T argued in its reply brief that the Court should giant the motion to vacate as conceded “due to the fact that [Priority One's] Opposition was filed more than 14 days after the date of service of [W & T's] motion in violation of [Local] Rule 7(b).” Id. at 1. Had W & T elected to read the Federal Rules of Civil Procedure before filing its reply brief it would have seen that those Rules add three days to the 14–day response period provided in Local Civil Rule 7(b) when service is made electronically, as it was in this case. SeeFed. R. Civ. P. 6(d). Priority One's opposition brief—filed on the seventeenth day after W & T's motion to vacate—was thus timely filed. Because W & T apparently chose not to read the Rules, and chose instead to assert carelessly the aforementioned untimeliness argument, Priority One was forced to seek leave to file a sur-reply brief to address W & T's newly asserted untimeliness ground for relief and defend the timeliness of its opposition. See Pet's Mot. for Leave to File Sur–Reply, ECF No. 9. The Court granted leave to Priority One, and in its sur-reply Priority One correctly identified W & T's error and requested that the Court “award Priority One all costs associated with filing [its] Sur–Reply, including reasonable attorney's fees and costs.” See Pet.'s Sur–Reply at 3, ECF No. 10.

On August 23, 2011, the Court granted in part and denied in part Priority One's petition to confirm the arbitration award, granted in part and denied in part W & T's motion to vacate or modify the arbitration award, and awarded Priority One the costs associated with filing the motion for leave to file a sur-reply, as well as the sur-reply itself. Priority One I, 825 F.Supp.2d at 48 n.9, 57. At the Court's direction, Priority One filed an accounting of its attorney's fees and costs and, after permitting W & T an opportunity to respond to that accounting, on January 22, 2013, the Court awarded Priority One $9,369.50 in attorney's fees and costs. SeePriority One II, 841 F.Supp.2d at 69.

On appeal, the D.C. Circuit affirmed this Court's ruling on the merits of the arbitration award dispute, but reversed and remanded the Court's award of attorney's fees. See Priority One III, 502 Fed.Appx. at 6. The Court of Appeals recognized that courts have the “inherent authority to order sanctions, including attorney's fees, if a party has ‘acted in bad faith, vexatiously, wantonly, or for oppressive reasons.’ ” Seeid. (quoting Chambers v. NASCO, Inc., 501 U.S. 32, 45–46, 111 S.Ct. 2123, 115 L.Ed.2d 27 (1991)). The Court of Appeals held, however, that this Court “made no such finding before awarding attorney's fees in this case,” and accordingly it “reverse[d] [this Court's] award and remand[ed] the attorney's fees issue for further proceedings.” Id. On remand, this Court entered a scheduling order, which allowed Priority One to file a renewed motion for attorney's fees and also permittedW & T to oppose that motion. See Minute Order dated May 7, 2013. Although not provided for in the Court's scheduling order, on May 16, 2013, W & T filed a motion “to rescind [the Court's] Minute Order of May 7, 2013 and to modify its Order of January 22, 2011 [sic] to conform to the Mandate of the U.S. Court of Appeals.” See Mot. to Rescind & Modify at 1, ECF No. 23. On May 17, 2013, Priority One filed its renewed motion for attorney's fees, as directed by the Court. See Pet'r's Renewed Mot. for Att'y's Fees, ECF No. 24. These two motions are now pending before the Court.

II. LEGAL STANDARD

Courts have the inherent power to impose sanctions “to achieve the orderly and expeditious disposition of cases.” Chambers, 501 U.S. at 43, 111 S.Ct. 2123 (internal quotation marks omitted). While other sanctioning mechanisms exist, such as Fed.R.Civ.P. 11¹ and 28 U.S.C. § 1927,² their availability does not preclude the court from exercising its inherent power. SeeChambers, 501 U.S. at 46–47, 111 S.Ct. 2123. Egregious misconduct may warrant the extreme sanction of total dismissal, but for lesser wrongdoing a court may assess attorney's fees and costs. Id. at 45, 111 S.Ct. 2123; see alsoUnited States v. Wallace, 964 F.2d 1214, 1219 (D.C.Cir.1992). This is known as the bad-faith exception to the “American Rule,” which “ordinarily requires parties to shoulder their own counsel fees and other litigation expenses.” SeeLipsig v. Nat'l Student Mktg. Corp., 663 F.2d 178, 180 (D.C.Cir.1980). To impose monetary sanctions against a party under its inherent power, a court must make “specific finding[s]” that a party has “acted in bad faith, vexatiously, wantonly, or for oppressive reasons,” see, e.g.,Roadway Express, Inc. v. Piper, 447 U.S. 752, 767, 100 S.Ct. 2455, 65 L.Ed.2d 488 (1980) (internal quotation marks omitted), by “clear and convicting evidence”, seeShepherd v. Am. Broad. Cos., Inc., 62 F.3d 1469, 1478 (D.C.Cir.1995).

Thus, “the narrow exceptions to the American Rule effectively limit a court's inherent power to impose attorney's fees as a sanction to cases in which a litigant has engaged in bad-faith conduct or willful disobedience of a court's orders.” Chambers, 501 U.S. at 47, 111 S.Ct. 2123. The D.C. Circuit has echoed this principle, holding that “it is settled that a finding of bad faith is required for sanctions under the court's inherent powers.” Wallace, 964 F.2d at 1219. In this regard, “negligent,even sloppy, performance by the defense counsel,” is insufficient to award monetary sanctions under a court's inherent power. Id. at 1215.³ Comparing bad faith to the “less stringent standard” of recklessness, the D.C. Circuit in Wallace held that bad faith “would require finding an intent unreasonably to delay the proceedings,” while recklessness “does not require showing unreasonable delay as the purpose of the attorney's actions.” Id. at 1219 (emphasis in original). Thus, the D.C. Circuit requires a clear and convincing showing of subjective bad faith on the part of a litigant before a court may impose monetary sanctions against that litigant under its inherent powers.

III. DISCUSSION

Before discussing the merits of Priority One's renewed motion for attorney's fees, the Court will briefly address W & T's motion “to rescind [the Court's] Minute Order of May 7, 2013 and to modify its Order of January 22, 2011 [sic] to conform to the Mandate of the U.S. Court of Appeals.” See Mot. to Rescind & Modify at 1. W & T says it filed this motion because it “is concerned that the wording of [the Court's May 7, 2013] Minute Order could be interpreted as the district court already deciding to giant Petitioner's request [for] attorney's fees again and to award the attorney's fees and costs that Petitioner incurs in drafting its renewed motion.” Id at 2. The respondent's belief is apparently premised on its perception that “it appeals that the Petitioner is being permitted to state the amount of its attorney's fees and costs ... without first being required to demonstrate the behavior on the part of Respondent that must be shown before fees and costs can be awarded.” Id. at 3. As a result, W & T contends that this Court's scheduling order was inconsistent with the mandate issued by the Court of Appeals, and it somehow believes that it “should have the first opportunity to request that the district court vacate...