Merced Rojas v. Town of Cicero

In the

United States Court of Appeals
For the Seventh Circuit
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No. 14-‐‑1446
MERCED ROJAS,
Plaintiff-‐‑Appellee,
v.

TOWN OF CICERO, ILLINOIS, and LARRY DOMINICK,
Defendants-‐‑Appellants.
____________________

Appeal from the United States District Court for the
Northern District of Illinois, Eastern Division.
No. 08 C 5913 — Thomas M. Durkin, Judge.
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ARGUED DECEMBER 10, 2014 — DECIDED JANUARY 5, 2015
____________________

Before EASTERBROOK, SYKES, and HAMILTON, Circuit Judg-‐‑
es.
EASTERBROOK, Circuit Judge. Merced Rojas contended in
this suit under 42 U.S.C. §1983 that the Town of Cicero vio-‐‑
lated the First Amendment by firing him because he sup-‐‑
ported a political opponent of Larry Dominick, the Town’s
president. After an eight-‐‑day trial, a jury found in Rojas’s
favor and awarded him $650,000 in damages.
2 No. 14-‐‑1446

The victory was short-‐‑lived. District Judge Holderman
granted defendants’ motion for a new trial, concluding that
Dana L. Kurtz, Rojas’s lawyer, had engaged in serious mis-‐‑
conduct during the trial. 2011 U.S. Dist. LEXIS 147867 (N.D.
Ill. Dec. 22, 2011). Judge Holderman found that Kurtz made
statements designed to mislead the jury, elicited hearsay re-‐‑
sponses that she knew would prejudice the defendants even
though the judge was bound to strike the testimony (which
he did), argued with the judge in a way that informed the
jury about evidence that the court had excluded, and un-‐‑
dermined the credibility of an important defense witness by
asking him questions that presented him in a bad light, even
though Kurtz lacked a good-‐‑faith basis for believing the
questions proper.
Before the second trial could occur, the case was reas-‐‑
signed to District Judge Durkin. With his encouragement,
the parties settled. The resolution provides Rojas with
$212,500 as compensation for the discharge and Kurtz with
fees of $287,500. (The settlement states that the amounts are
confidential, but counsel for both sides have consented to
their disclosure.) Both amounts are significantly less than
Rojas and Kurtz would have received, had the jury’s verdict
stood. Judge Durkin estimated that Kurtz would have ob-‐‑
tained an award under 42 U.S.C. §1988 at least as high as the
$650,000 in damages, if not higher.
The settlement did not resolve the defendants’ motions
for sanctions under 28 U.S.C. §1927 and Fed. R. Civ. P.
26(g)(3). Section 1927 authorizes sanctions against lawyers
who needlessly multiply the proceedings, as Kurtz had done
by improper conduct that led to many post-‐‑verdict motions
and the need to prepare for a second trial. The motion under
No. 14-‐‑1446 3

Rule 26(g)(3) was based on conduct different from Kurtz’s
behavior in court. After Judge Holderman set aside the ju-‐‑
ry’s verdict, defense counsel learned that Rojas had filed a
bankruptcy petition six months after this suit began. Kurtz
did not reveal this during discovery. (Apparently Rojas kept
it a secret from Kurtz for a while, but after she learned of the
bankruptcy she still did not tell defendants.) The bankruptcy
petition could have affected whether Rojas is a proper plain-‐‑
tiff. Perhaps the legal claim passed to the trustee in bank-‐‑
ruptcy for the benefit of his creditors—and the fact that Ro-‐‑
jas valued the suit on his schedule of assets at much less than
he asked the jury to award (indeed, much less than he de-‐‑
manded in settlement) could have provided the defense with
a talking point at the trial or retrial.
Judge Durkin denied the motion for sanctions. Section
1927 gives a judge discretion whether to award sanctions,
and Judge Durkin exercised that discretion against an
award. He thought that both Rojas and Kurtz had lost a lot
of money (about $400,000 apiece) when the settlement re-‐‑
placed the jury’s verdict. That is sanction enough, he con-‐‑
cluded. As for concealing the bankruptcy, the judge wrote
that a “district court in its discretion may impose sanctions
for discovery violations” and that the same considerations
that led to a denial of relief under §1927 also justify a discre-‐‑
tionary denial under Rule 26.
The denial of the §1927 motion was not an abuse of dis-‐‑
cretion. Judge Durkin thought that Kurtz was out of pocket
as a result of her misconduct, and this seems likely, though
she may not have lost as much as the judge supposed. The
right comparison is not between the verdict and the settle-‐‑
ment, but between that settlement and what the verdict (and
4 No. 14-‐‑1446

corresponding fees) would have been in the absence of mis-‐‑
conduct. If a zealous advocate who stayed within ethical
bounds would have produced a verdict of, say, $300,000,
then both Rojas and Kurtz lost much less than Judge Durkin
supposed. If, indeed, a properly conducted trial would have
led to a verdict under $212,500, or to a verdict for the de-‐‑
fense, then Kurtz has gained from her misconduct. But the
fact that defendants were willing to pay $500,000 (compensa-‐‑
tion plus fees) to avoid a second trial implies that Rojas had
good chances of a substantial recovery at a properly con-‐‑
ducted proceeding. And we recognize that the Town’s op-‐‑
tion to obtain a second trial was itself costly to Kurtz; the
Town would not have asked for this relief if it expected Ro-‐‑
jas and Kurtz to do better the second time. Evaluating a
counterfactual—what verdict Rojas would have received
had the trial been conducted properly—is a daunting task,
and any answer is contestable. Since the district court would
have had discretion to find that Judge Holderman’s opinion,
which impugned Kurtz’s reputation, was a sufficient re-‐‑
sponse even if she did not suffer a monetary loss, we think it
best to respect the court’s conclusion under §1927.
Rule 26(g)(3) is a different matter. Judge Durkin believed
that it, like §1927, affords a district court the discretion to let
a delict pass without sanctions. It does not. Lawyers must
certify that they have fulfilled their discovery obligations.
Rule 26(g)(3) provides (emphasis added): “If a certification
violates this rule without substantial justification, the court,
on motion or on its own, must impose an appropriate sanc-‐‑
tion on the signer, the party on whose behalf the signer was
acting, or both. The sanction may include an order to pay the
reasonable expenses, including attorney’s fees, caused by the
violation.” Rule 26(g)(3) gives the judge discretion over the
No. 14-‐‑1446 5

nature of the sanction but not whether to impose one. Kurtz
has not contested Judge Durkin’s conclusion that her con-‐‑
duct violates Rule 26(g)(1), so some sanction is mandatory.
Defendants maintain that only money (measured by their
attorneys’ fees) will do. That is not what the Rule says, how-‐‑
ever. The sanction “may” include attorneys’ fees, but that is
not essential. All that is required is a sanction “appropriate”
under the circumstances.
Identifying the “appropriate” sanction is a task for the
district court. It could be money, but it also could be a formal
(and public) reprimand or censure. The discovery problem is
unrelated to the reason Judge Holderman granted a new tri-‐‑
al, and to the reputational effect of Judge Holderman’s opin-‐‑
ion, so Judge Durkin’s reasons for not sanctioning Kurtz un-‐‑
der §1927 do not carry over to Rule 26(g)(3).
Judge Durkin also should consider Kurtz’s disciplinary
history, which is substantial. See, e.g., Gross v. Cicero, 619
F.3d 697, 701–02 (7th Cir. 2010) (striking the statement of
facts from Kurtz’s brief for failing to cite the record); Gross v.
Cicero, 528 F.3d 498, 500–01 (7th Cir. 2008) (fining Kurtz be-‐‑
cause she failed to file an opening brief for more than 17
months after filing the notice of appeal); Matula v. Des
Plaines, 2013 U.S. Dist. LEXIS 146017 (N.D. Ill. Oct. 8, 2013)
(fining plaintiff’s counsel—Kurtz and one other lawyer—
$100 for missing the deadline for delivering a paper copy of
the complaint to the assigned district judge); Lujano v. Cicero,
2011 U.S. Dist. LEXIS 148913 (N.D. Ill. Dec. 23, 2011) (impos-‐‑
ing sanctions on Kurtz’s client for delaying the production of
certain documents for several years); AG Equipment Co. v.
AIG Life Insurance Co., 2008 U.S. Dist. LEXIS 99915 (N.D. Okla.
Dec. 10, 2008) (fining Kurtz $250 for discovery abuses); Gross
6 No. 14-‐‑1446

v. Cicero, 2005 U.S. Dist. LEXIS 23088 at *6–7 (N.D. Ill. Sept. 20,
2005) (prohibiting Kurtz’s client from introducing expert tes-‐‑
timony as a sanction for her delay during discovery); Crohan
v. Orland Park, 2004 U.S. Dist. LEXIS 5006 at *4, 6–8 (N.D. Ill.
Mar. 24, 2004) (same) (“circumstances in this case indicate
that Plaintiff’s counsel has engaged in gamesmanship”).
Kurtz’s unwillingness to conform her conduct to require-‐‑
ments laid down by judicial orders or rules of procedure is
unlikely to change unless courts respond firmly.
The decision is affirmed with respect to the motion under
§1927 and vacated with respect to the motion under Rule
26(g)(3). The case is remanded for proceedings consistent
with this opinion.