Joseph McGreal v. Village of Orland Park

In the United States Court of Appeals For the Seventh Circuit ____________________ No. 18‐3342 JOSEPH S. MCGREAL, Plaintiff, v. VILLAGE OF ORLAND PARK, et al., Defendants‐Appellees, APPEAL OF: JOHN P. DEROSE, Counsel for the Plaintiff, Appellant. ____________________ Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 12 C 5135 — Joan Humphrey Lefkow, Judge. ____________________ ARGUED MAY 29, 2019 — DECIDED JUNE 26, 2019 ____________________ Before KANNE, SYKES, and BRENNAN, Circuit Judges. KANNE, Circuit Judge. The Village of Orland Park fired po‐ lice officer Joseph McGreal in 2010. McGreal sued, alleging that the Village fired him in retaliation for remarks he made 2 No. 18‐3342 at a community board meeting. The district court granted summary judgment for the defendants, finding that McGreal had advanced only speculation to support his claims. We af‐ firmed and also remarked on the dearth of evidence to sup‐ port McGreal’s allegations. After we affirmed summary judgment, the district court granted the defendants’ motion for attorney fees and directed John P. DeRose—McGreal’s attorney—to pay $66,191.75 to the defendants. DeRose now appeals that order. Because the district court did not abuse its discretion, we affirm. I. BACKGROUND Our 2017 opinion provides a summary of McGreal’s suit. See McGreal v. Vill. of Orland Park, 850 F.3d 308, 310 (7th Cir. 2017). Suffice to say, the Village of Orland Park fired McGreal from the police force after he spoke at a November 2009 vil‐ lage board meeting. At the meeting, he suggested several so‐ lutions to a budgetary shortfall facing the Village. McGreal’s recommendations would have protected junior officers from layoffs by eliminating benefits enjoyed by more senior offic‐ ers. McGreal believes that these suggestions motivated his June 2010 termination. But the Village contends that it fired McGreal because he repeatedly engaged in misconduct dur‐ ing late 2009 and early 2010. McGreal contested his termination through arbitration. The arbitrator sustained 75 of the 76 disciplinary charges in McGreal’s record and concluded that the Village fired McGreal for just cause. In June of 2012, McGreal commenced a federal lawsuit, pro se, against the Village and several members of the police de‐ partment. On October 19, 2012, attorney John DeRose No. 18‐3342 3 appeared as plaintiff’s counsel. He promptly filed an amended complaint on McGreal’s behalf. After the defend‐ ants filed a motion to dismiss, the court dismissed most claims but permitted several (significantly narrowed) claims to pro‐ ceed. DeRose aggressively pursued discovery: he took twelve depositions, made 294 document requests, and filed three mo‐ tions to compel. During discovery, defense counsel asked DeRose on multiple occasions to end the litigation. On Febru‐ ary 3, 2014, defense counsel sent DeRose an email requesting dismissal of several individual defendants because discovery had revealed no evidence to support the claims against them. Then in July 2014, defense counsel sent DeRose a letter ad‐ vancing similar arguments. Defense counsel threatened Rule 11 sanctions in both communications. After discovery, McGreal voluntarily dismissed six de‐ fendants but defended against summary judgment on the re‐ maining four defendants. The district court granted judgment for defendants. The court began by noting that DeRose’s sum‐ mary judgment filings did not comply with Northern District of Illinois Local Rule 56.1 (which provides guidelines for sub‐ mitting a statement of facts at summary judgment). “[T]he motion could have been granted by simply rejecting plaintiff’s Local Rule 56.1 submissions,” but the court opted to resolve the summary judgment motion on its merits. The court ex‐ plained that the defendants had offered evidence to support their theories of defense, and McGreal’s arguments and evi‐ dence to the contrary were speculative. On June 6, 2016, McGreal appealed. Several weeks later, the defendants filed a motion for attorney fees. The defend‐ ants spent most of the motion arguing that the court should 4 No. 18‐3342 award fees under the 42 U.S.C. § 1988 fee‐shifting provision. They also argued that the court should sanction DeRose pur‐ suant to Federal Rule of Civil Procedure 11. On March 6, 2017, we affirmed the judgment for the de‐ fendants. 850 F.3d 308. Like the district court, we found that McGreal had “offered no admissible evidence showing that he [was] entitled to relief.” Id. at 310. Several months later, the district court granted the defendants’ motion for fees. Instead of relying on § 1988 fee‐shifting, the court concluded that “un‐ der Rule 11, McGreal’s counsel’s summary judgment filings were not well grounded in fact or warranted by existing law or a good faith argument for the extension, modification, or reversal of existing law.” Ultimately, the court ordered DeRose to pay $66,191.75 in fees (the amount defendants in‐ curred in preparing their Rule 11 letters, seeking summary judgment, and requesting attorney fees). DeRose promptly appealed. II. ANALYSIS We review the imposition of Rule 11 sanctions for abuse of discretion. N. Illinois Telecom, Inc. v. PNC Bank, N.A., 850 F.3d 880, 883 (7th Cir. 2017). “An abuse of discretion may be estab‐ lished if the district court based its decision on an erroneous view of the law or a clearly erroneous evaluation of evidence.” Id. Rule 11 requires attorneys to certify that every court filing advances arguments warranted by existing law or a nonfriv‐ olous argument for extending the law. Fed. R. Civ. P. 11(b)(2). Similarly, the factual contentions attorneys advance must have evidentiary support or be likely to have evidentiary sup‐ port after a reasonable opportunity for further investigation. Id. at 11(b)(3). No. 18‐3342 5 In his brief on appeal, DeRose first argues that the defend‐ ants did not follow the Rule 11 procedures for seeking sanc‐ tions. Specifically, Rule 11(c)(2) specifies that a party may file a “motion for sanctions,” “but it must not be filed or be pre‐ sented to the court if the challenged paper, claim, defense, contention, or denial is withdrawn or appropriately corrected within 21 days after service or within another time the court sets.” In other words, Rule 11(c)(2) creates a safe‐harbor. The moving party must serve the motion on the alleged violator and permit twenty‐one days to remedy the violation. DeRose correctly notes that defense counsel never served him with a motion before seeking sanctions. Rather, they sent him letters and emails raising their concerns and threatening sanctions. A letter is not a motion, and, under the law of eight circuits, these informal communications would not satisfy the Rule 11(c)(2) requirements. See Penn, LLC v. Prosper Bus. Dev. Corp., 773 F.3d 764, 768 (6th Cir. 2014) (explaining that the Sec‐ ond, Third, Fourth, Fifth, Sixth, Eighth, Ninth, and Tenth Cir‐ cuits all require strict compliance). The Seventh Circuit, how‐ ever, interprets Rule 11(c)(2) differently. In Nisenbaum v. Milwaukee Cty., we held that the defend‐ ants “complied substantially” with Rule 11(c) when they sent opposing counsel “a ‘letter’ or ‘demand’ rather than a ‘mo‐ tion.’” 333 F.3d 804, 808 (7th Cir. 2003). We are the sole circuit to adopt this “substantial compliance” theory, and other cir‐ cuits have subsequently criticized our analysis as cursory and atextual. See, e.g., In re Pratt, 524 F.3d 580, 588 (5th Cir. 2008) (“[T]he Seventh Circuit provided little analysis and cited no authority for its holding.”); Roth v. Green, 466 F.3d 1179, 1193 (10th Cir. 2006) (similar); see also Manrique v. United States, 137 S. Ct. 1266, 1272 (2017) (indicating that, if properly raised, 6 No. 18‐3342 mandatory claim‐processing rules are “unalterable” (citation omitted)); In re Wade, No. 18‐2564, 2019 WL 2482413, at *3 (7th Cir. June 14, 2019) (applying Manrique to claim‐processing rules in bankruptcy cases). DeRose’s argument that the defendants should have served him with their Rule 11 motion—not just emails and letters—is directly foreclosed by our holding in Nisenbaum. And DeRose does not ask us to overrule Nisenbaum—he re‐ peatedly disavowed that argument at oral argument. Even if DeRose did advance this argument, he’s waived it. He didn’t argue before the district court that the defendants failed to comply with Rule 11(c)(2) until his motion for reconsideration of the order imposing sanctions. Laserage Tech. Corp. v. La‐ serage Labs., Inc., 972 F.2d 799, 804 (7th Cir. 1992) (explaining that raising issues or arguments for the first time in a motion for reconsideration do not preserve them for appeal) (citing Bally Export Corp. v. Balicar, Ltd., 804 F.2d 398, 404 (7th Cir. 1986))). Accordingly, we leave any reconsideration of Nisen‐ baum for another day. See also N. Ill. Telecom, Inc., 850 F.3d at 887–88. DeRose also argues that the district court abused its dis‐ cretion because he agreed to represent McGreal in good faith and after careful consideration. That argument is inadequate for two reasons. First, the district court sanctioned DeRose for his decision to defend against summary judgment. The court didn’t question DeRose’s decision to represent McGreal or seek discovery. The sanctionable behavior was DeRose’s de‐ cision to continue litigating after discovery revealed no evi‐ dence to support McGreal’s claims. Second, “Rule 11 requires counsel to study the law before representing its contents to a federal court. An empty head No. 18‐3342 7 but a pure heart is no defense.” Thornton v. Wahl, 787 F.2d 1151, 1154 (7th Cir. 1986). The test is objective. An attorney cannot avoid sanctions by claiming subjective good faith if a reasonable inquiry into the facts and law would have revealed the frivolity of the position. Cuna Mut. Ins. Soc. v. Office & Prof’l Emp. Intʹl Union, Local 39, 443 F.3d 556, 560 (7th Cir. 2006); Harlyn Sales Corp. Profit Sharing Plan v. Kemper Fin. Servs., Inc., 9 F.3d 1263, 1270 (7th Cir. 1993). In other words, DeRose’s duty to conduct a reasonable in‐ vestigation into the law and facts supporting McGreal’s claims did not end after he chose to represent McGreal. That duty renews at each stage of the litigation, including sum‐ mary judgment. In fact, the duty compounds. An attorney might reasonably believe that discovery will reveal eviden‐ tiary support. After discovery, an attorney may proceed only if that hypothetical evidence has materialized. And the district court did not abuse its discretion when it found that DeRose violated Rule 11 by opposing summary judgment. The district court found that McGreal lacked evi‐ dence to support at least one element of each claim. And we agreed, finding that McGreal hadn’t produced any admissible evidence on the claims he appealed. 850 F.3d at 310. DeRose didn’t just disregard the complete lack of evi‐ dence. The district court found that DeRose’s “responses to defendants’ statements of material facts were laden with dis‐ ingenuous and misleading statements.” And, as already men‐ tioned, DeRose’s statement of facts did not comply with the Local Rule 56.1 standards.1 Viewed in totality, DeRose’s 1 That failure is particularly difficult to understand because the district court, in its standing order, directs counsel to read Malec v. Sanford, 191 8 No. 18‐3342 summary judgment submissions fell short of the Rule 11 re‐ quirements. The district court did not abuse its discretion by imposing sanctions. III. CONCLUSION Attorneys must satisfy Rule 11’s requirements during the entire pendency of the litigation. Discovery revealed an utter lack of evidentiary support for McGreal’s claims, but DeRose defended against summary judgment anyway. Accordingly, we AFFIRM the district court’s sanctions against DeRose. F.R.D. 581 (N.D. Ill. 2000), before submitting statements of fact under Lo‐ cal Rule 56.1. And the court in Malec admonished DeRose himself for fail‐ ure to comply with the same local rule. Id. at 582–87.