BRISCOE, Circuit Judge.
These appeals challenge a sanction award against counsel pursuant to Federal Rule of Civil Procedure 11 and 28 U.S.C. § 1927, as well as a fee award against two individual plaintiffs pursuant to 42 U.S.C. § 1988. Both appeals arise out of the same ill-fated § 1983 action.
Plaintiffs Stephen Roth and Ellen Gumeson, represented by attorney Robert Mulhern, filed suit under 42 U.S.C. § 1983 against various Colorado municipalities, counties, and local and state employees, arguing that the stop and search of their car, as well as their ensuing arrest, was unconstitutional. The district court granted defendants' motions to dismiss and/or for summary judgment. Plaintiffs appealed. While the appeal was pending the district court granted defendants' motions for sanctions and fees against attorney Mulhern. Thereafter, this court affirmed the district court's decision on the merits, granted a motion by one group of defendants for attorneys fees on appeal, and remanded the case to the district court for a determination of the proper amount of fees.
In Appeal No. 05-1129, attorney Mulhern appeals the district court's award of sanctions and fees against him and in favor of defendants. In Appeal No. 05-1272, plaintiffs Roth and Gumeson appeal the fee determination made by the district court on remand. We exercise jurisdiction over both appeals pursuant to 28 U.S.C. § 1291. In Appeal No. 05-1129, we reverse the district court's order granting Rule 11 sanctions against Mulhern and remand to the district court for a determination of the proper amount of fees to be assessed against Mulhern pursuant to 28 U.S.C. § 1927. In Appeal No. 051-272, we vacate the district court's fee award and remand for further proceedings to include the district court's consideration of the ability of Roth and Gunneson to pay whatever fee amount the court may assess against them.
On June 15, 2000, officers associated with the Twenty-Second Judicial Drug Task Force in Colorado set up a narcotic "ruse" checkpoint on Highway 145 just north of the town of Rico, in Dolores County, Colorado. As part of this "ruse" checkpoint, the officers placed a sign on the highway that stated a narcotics checkpoint was being conducted one mile ahead. A second sign was placed further down the highway stating that a drug dog was in use as part of the narcotics checkpoint. The statements made on the signs, however, were false. No narcotics checkpoint existed. Instead, officers were stationed in inconspicuous areas along the highway in the area of the signs watching for any illegal or suspicious activity. No stops were to be made unless officers observed or otherwise had reasonable suspicion of some type of illegal activity associated with a particular vehicle.
At approximately 4:30 p.m. on June 15, 2000, Deputy Hugh Richards of the Montezuma County Sheriff's Department was stationed between the two signs on Highway 145. Richards observed a female passenger in a blue Toyota throw an object out of the window. Based upon his observations, Richards radioed ahead and the blue Toyota was stopped for littering by task force member Dennis Spruell, a sergeant with the Cortez (Colorado) Police Department. After initially radioing Spruell, Richards retrieved the object, which turned out to be a wooden pipe with burnt residue and a screen. The pipe smelled of marijuana. Richards again radioed Spruell to advise him of what he had found. The driver of the vehicle, Stephen Roth, was advised that he had been stopped because his passenger had been observed throwing an object out the window. Roth stated that the object was a pop can. Roth was then asked if he would consent to a search of his vehicle. Roth declined to give consent. Spruell informed Roth and the passenger, Ellen Gumeson, that he suspected that marijuana contraband had been thrown from the vehicle, and thus he had reasonable suspicion that further evidence of contraband would be found in the vehicle. During the ensuing search, Spruell and Jeff Coleman, another member of the task force from the Durango (Colorado) Police Department, found a wooden marijuana pipe with burnt residue under the front driver's seat. Inside a cooler located in the back seat, officers found plastic baggies containing psilocybin mushrooms, a Schedule I controlled substance. Both Roth and Gumeson were arrested.
During the ensuing criminal proceedings in Dolores County, Roth unsuccessfully moved to suppress the evidence seized during the search of the vehicle. Gumeson subsequently pled guilty to littering. On December 11, 2001, Roth was found guilty at trial of possession of drug paraphernalia and fined $100.00. Roth appealed his conviction to the Colorado Court of Appeals (CCA), arguing that the evidence seized from his vehicle should have been suppressed because it was the fruit of an unconstitutional checkpoint employed by law enforcement officers, and because Deputy Richards could not reasonably have observed Gumeson throw anything out of the vehicle window and/or likely searched the incorrect area after observing Gumeson's actions. The CCA affirmed Roth's conviction on August 14, 2003.
The original district court proceedings
On June 12, 2002, while Roth's state criminal appeal was still pending, Roth and Gumeson initiated this 42 U.S.C. § 1983 action by filing a complaint in federal district court against seventy-six defendants, including various state and county officials (e.g., the governor of the State of Colorado and the heads of at least three municipal police departments whose employees participated in the narcotics task force), several Colorado municipalities, and approximately fifty "unknown Doe defendants." In their complaint, Roth and Gumeson alleged that the defendants "created, established, and executed an unconstitutional drug checkpoint on . . . June 15, 2000," that ultimately resulted in Roth and Gumeson being unlawfully stopped, detained, searched and arrested. ROA, Vol. 1, Doc. 1 at 8. The complaint, which alleged four separate causes of action under § 1983 arising out of the general allegations, sought general, special and punitive damages, attorneys' fees and costs, and declaratory relief.
Defendants moved to dismiss the complaint and/or for summary judgment. Rather than responding directly to those motions, Roth and Gumeson asked the district court to stay the case "until the appellate process, including any writs," in Roth's state criminal case was "completed." ROA, Vol. 1, Doc. 46 at 1. The district court denied the motion to stay and ordered Roth and Gumeson to respond to the defendants' pending motions.
On December 5, 2003, after allowing the parties to complete their briefing on the pending motions to dismiss and/or for summary judgment, the district court granted the motions and dismissed the action in its entirety. In doing so, the district court concluded: (1) it was precluded by the
Roth and Gumeson filed a notice of appeal on January 5, 2004. On that same date, Roth and Gumeson filed a motion asking the district court for permission to proceed on appeal in forma pauperis. The district court denied that motion on February 2, 2004, concluding "th[e] appeal [wa]s not taken in good faith because plaintiffs ha[d] not shown the existence of a reasoned, nonfrivolous argument on the law and facts in support of the issues raised on appeal."
The motions for sanctions and/or fees and costs
In late December 2003 (after the district court entered judgment but before Roth and Gumeson filed their notice of appeal) and in early January 2004, defendants filed motions for sanctions against Robert Mulhern, the attorney for Roth and Gumeson, and/or for attorney fees and costs pursuant to 28 U.S.C. § 1927. Mulhern filed a lengthy response to those motions on January 14, 2004. According to Mulhern, he filed the complaint on June 12, 2002, out of concern "that the Statute of Limitations was about to expire on June 15, 2002. . . ."
On February 13, 2004, Roth and Gumeson filed a motion for sanctions pursuant to Rule 11 and/or attorney fees and costs pursuant to 28 U.S.C. § 1927 against the defendants' attorneys. The only ground offered in support of the motion was that "the defendants' attorneys did not meet and confer with the plaintiffs, through their attorney of record, prior to filing the[ir] motions [for sanctions and/or fees and costs] and did not follow the required procedure for Rule 11 sanctions."
On June 15, 2004, the district court granted the defendants' motion for sanctions and/or fees and costs, and denied the plaintiffs' similar motion.
The district court also concluded that "charging fees and costs personally to . . . Mulhern was appropriate" under 28 U.S.C. § 1927.
In light of this vexatious conduct, "coupled with the need for Rule 11 sanctions," the district court "conclude[d] that Mulhern should be personally liable for the fees and costs associated with [the] . . . Defendants' defense under § 1927."
As for the plaintiffs' cross-motion for sanctions and/or fees and costs, the district court characterized it as "audacious,"
This court's award of fees and costs to defendants On February 3, 2005, this court issued an order and judgment affirming the district court's order dismissing the action on its merits, affirming the district court's order denying plaintiffs' motion for sanctions, and dismissing for lack of jurisdiction Mulhern's own appeal of the district court's order granting defendants' motions for sanctions and/or fees and costs against him.
On February 17, 2005, one group of defendants (Dennis Spruell, Danny Dufur, Roy Lane, and the City of Cortez, Colorado) filed a motion for an award of attorney fees and costs pursuant to Fed. R. App. P. 38 and 28 U.S.C. § 1912. In their motion, these defendants asked that the fees and costs be assessed against plaintiffs' attorney, Mulhern. Mulhern filed a response to the motion on behalf of himself, as well as on behalf of Roth and Gumeson. In his response, Mulhern argued that he had a reasonable basis for pursuing the appeal, sanctioning him would effectively result in the loss of his ability to practice law, and that "Roth and . . . Gumeson . . . ha[d] no money and c[ould] not pay costs." Add. 10 to Aplt. Br., Resp. at 10. On March 28, 2005, this court granted the defendants' motion in part. Joint App. at 59. Rather than relying on Fed. R. App. P. 38 or § 1912, however, this court awarded costs "in the amount of $363.20 pursuant to Fed. R. App. P. 39," and, "[p]ursuant to 42 U.S.C. § 1988," "award[ed] the defendants attorney's fees on appeal, in an amount to be determined by the district court on remand."
On remand, the defendants who prevailed on their motion for fees and costs filed a pleading and supporting documentation asking the district court to award them fees in the amount of $12,049.00. Roth and Gumeson responded, arguing in pertinent part that the requested fees were unreasonable and, as they had in their response filed with this court, that they were "paupers" who could not afford to pay any amount of fees.
Appeal No. 05-1129
In Appeal No. 05-1129, Mulhern challenges, on various grounds, the district court's decision to award sanctions against him and in favor of all the defendants pursuant to Rule 11 and 28 U.S.C. § 1927. We review for abuse of discretion the district court's decision to impose Rule 11 sanctions against Mulhern.
a) Did the "law of the case" preclude the district court from issuing sanctions?
In his first issue on appeal, Mulhern contends that this court, in deciding the first set of appeals, concluded he should not be sanctioned, thereby establishing the "law of the case" and precluding the district court from deciding the issue again.
The law of the case doctrine "posits that when a court decides upon a rule of law, that decision should continue to govern the same issues in subsequent stages in the same case."
Applying those principles to the case at hand, the question is whether this court previously decided, as a matter of law, that Mulhern was not subject to sanctions under either Rule 11 or § 1927. After this court resolved the three prior appeals (by affirming the district court's rulings in two of those appeals and dismissing the third appeal for lack of jurisdiction), one group of defendants (Dennis Spruell, Danny Dufur, Roy Lane, and the City of Cortez, Colorado) filed a motion asking this court to assess attorney fees and costs against Mulhern pursuant to Fed. R. App. P. 38 and 28 U.S.C. § 1912. This court ultimately granted the motion in part, but instead of assessing fees and costs against Mulhern pursuant to Fed. R. App. P. 38 or § 1912, assessed fees against Roth and Gumeson pursuant to § 1988.
There are several reasons why this court's prior order did not decide the issue of Mulhern's liability for sanctions under Rule 11 or § 1927. To begin with, neither the defendants' motion nor this court's order mentioned or otherwise cited either Rule 11 or § 1927, the two authorities relied upon by the district court in sanctioning Mulhern. And for good reason. Rule 11, which "focuses only on a challenged pleading or written motion,"
In sum, we conclude that this court's prior ruling on the motion for sanctions had no bearing on the district court's order sanctioning Mulhern under Rule 11.
b) Did the § 1983 claims have merit?
Mulhern next contends that sanctions should not have been imposed against him because the § 1983 claims asserted in the complaint had merit. More specifically, Mulhern argues that (a) "the legal contentions [we]re warranted by existing law and by non-frivolous arguments for the reversal of existing law," including "the
The district court noted, and we agree, that there were a host of legal impediments to Roth and Gumeson prevailing on their claims. To begin with, the majority of the defendants named in the complaint had, at best, only tangential relationships to the "ruse" checkpoint, and thus were not properly named as defendants in the complaint. For example, defendant Bill Owens, the Governor of the State of Colorado, was not alleged to have had any direct connection with, or participation in, the "ruse" checkpoint.
Even with respect to the named defendants who directly participated in the "ruse" checkpoint, it is clear that their conduct was entirely legal. Although Mulhern continues to maintain that the claims asserted in the complaint were not controlled by our decision in
If there were any doubts about the legality of the ruse utilized by defendants in this case (and it appears that, even prior to
Mulhern's assertion that he "had" to file the complaint to avoid the running of the statute of limitations, and that, in turn, the district court had an obligation to stay the case pending the outcome of Roth's state criminal proceedings, is simply wrong. "A plaintiff may not bring a civil rights suit if a favorable result in the suit would necessarily demonstrate the invalidity of an outstanding criminal judgment against the plaintiff."
In sum, the district court did not abuse its discretion in concluding that Mulhern violated the provisions of both Rule 11 and § 1927 in filing and pursuing the § 1983 claims on behalf of Roth and Gumeson.
c) Did the defendants fail to meet and confer with Mulhern?
Mulhern contends that sanctions were improperly imposed against him because the defendants failed to first "meet and confer" with him prior to filing their motions for sanctions, as required by Rule 7.1 of the district court's local rules. We review a district court's application of its local rules for abuse of discretion.
District of Colorado Local Rule 7.1 provides, in pertinent part, as follows:
D.C. Colo. L. Civ. R. 7.1.
In its order granting defendants' motions for sanctions, the district court rejected Mulhern's assertion that defendants failed to comply with Local Rule 7.1. Specifically, the district court noted that each set of defendants sent Mulhern a "warning or `safe-harbor'" letter outlining the deficiencies of each claim asserted in the complaint, asking that Mulhern voluntarily dismiss the complaint, and warning that Mulhern's failure to do so would result in the filing of motions for sanctions and fees. ROA, Vol. 3, Doc.171 at 9. In the district court's view, these letters "substantially satisf[ied] . . . the local rule."
Mulhern offers four reasons why the defendants' letters should not be deemed sufficient to satisfy Rule 7.1's "meet and confer" requirement. First, he argues that if defense counsel "did meet and confer [with him], they would have stated and were required to state in their sanctions motions and/or certify their specific efforts." Aplt. Br. at 10. Second, he argues that the letters "did not say anything about Rule 7.1 A or that the letters were meet and confer letters."
We reject Mulhern's arguments and conclude that the district court did not abuse its discretion in applying Rule 7.1. As noted, each letter advised Mulhern that, in the defendants' view, the claims asserted in the complaint were, for various reasons, meritless and should therefore be voluntarily dismissed. Further, each letter provided Mulhern with notice that, should he fail to voluntarily dismiss the complaint, defendants would move for sanctions against him. In short, each letter effectively complied with Local Rule 7.1 by attempting to seek a resolution of the issue (i.e., the frivolousness of the plaintiffs' claims) without first seeking resort to the district court's intervention. Although Mulhern complains that defendants failed to outline, in their motions, their efforts to meet and confer, he acknowledges that defendants attached to their motions copies of the letters they sent to him. In our view, the district court did not abuse its discretion in concluding that this "substantially satisfied" the requirements of Rule 7.1. Lastly, Rule 7.1 is silent with regard to precisely when the parties must meet and confer prior to the filing of a related motion. Thus, it was not a violation of Rule 7.1 for defendants to wait several months after sending their letters to Mulhern before filing their motions for sanctions (indeed, it arguably favored Mulhern by providing him with a considerable period of time in which to voluntarily dismiss the complaint).
d) Did defendants follow the procedures outlined in Rule 11?
Finally, Mulhern contends the district court should not have granted the defendants' motions for Rule 11 sanctions because defendants "did not serve [him] with their Rule 11 motions prior to filing the motions," and thus violated the so-called "safe harbor" provision of Rule 11. Aplt. Br. at 17. Mulhern also contends that "Rule 11 required that the motions for sanctions were to be served and filed before the conclusion of the civil rights case."
Federal Rule of Civil Procedure 11 provides, in pertinent part, as follows:
Fed. R. Civ. P. 11(c).
The first question raised by Mulhern is whether defendants complied with the "safe harbor" provisions outlined in Rule 11(c)(1)(A). As noted, that subsection states that motions for sanctions "shall be served . . . but not filed with or presented to the court unless, within 21 days after service of the motion" the challenged pleadings or claims have not been "withdrawn or appropriately corrected." Although defendants all sent Mulhern warning letters well in advance of filing their motions for sanctions, it is uncontroverted that they did not, as required by subsection (c)(1)(A), serve him with copies of their actual motions for sanctions twenty-one days prior to filing those motions. Indeed, it appears from the record on appeal that the motions were served on Mulhern at the same time as, or after, the motions were actually filed.
As they did in the district court, however, defendants contend that the warning letters they sent to Mulhern months in advance of filing their motions for sanctions effectively satisfied the requirements of subsection (c)(1)(A) by providing Mulhern with notice of their intent to seek sanctions and an opportunity to withdraw the complaint prior to them filing their motions. Although the district court agreed with defendants, we conclude, for the reasons discussed below, that defendants' letters were not sufficient to satisfy the requirements of subsection (c)(1)(A), and thus the district court abused its discretion in granting defendants' motions for Rule 11 sanctions.
Contrary to defendants' arguments, nothing in subsection (c)(1)(A) suggests that a letter addressed to the alleged offending party will suffice to satisfy the safe harbor requirements. Rather, the plain language of subsection (c)(1)(A) requires a copy of the actual motion for sanctions to be served on the person(s) accused of sanctionable behavior at least twenty-one days prior to the filing of that motion. This conclusion is bolstered by the Advisory Committee's Notes to the 1993 amendment to Rule 11 (which added the safe harbor provision):
Fed. R. Civ. P. 11, advisory committee notes, 1993 Amendments (emphasis added). In other words, the Advisory Committee's Notes clearly suggest that warning letters, such as those sent by defendants to Mulhern, are supplemental to, and cannot be deemed an adequate substitute for, the service of the motion itself.
The reason for requiring a copy of the motion itself, rather than simply a warning letter, to be served on the allegedly offending party is clear. The safe harbor provisions were intended to "protect litigants from sanctions whenever possible in order to mitigate Rule 11's chilling effects, formaliz[e] procedural due process considerations such as notice for the protection of the party accused of sanctionable behavior, and encourag[e] the withdrawal of papers that violate the rule without involving the district court. . . ." 5A Charles Alan Wright and Arthur R. Miller,
To be sure, the Seventh Circuit has, as noted by defendants, held that a letter sent to an offending party, rather than a copy of the actual motion, can constitute substantial compliance with Rule 11(c)(1)(A).
Mulhern also contends that the motions for sanctions should have been denied because they were not filed until after the district court had dismissed the complaint. We agree. "The addition of the safe harbor provision in the 1993 amendment [to Rule 11] dramatically changed the effect that a final judgment or the dismissal of the claim has on the possibility of a Rule 11 proceeding." Wright and Miller,
For these reasons, we conclude the district court abused its discretion in granting defendants' motions for sanctions under Rule 11. Because, however, the district court also awarded defendants fees under § 1927, we conclude the proper course is to reverse and remand to the district court to determine the proper amount of fees and costs to be assessed under § 1927 (i.e., "the excess costs . . . and attorneys' fees reasonably incurred because of" his unreasonable and vexatious conduct).
Appeal No. 05-1272
In Appeal No. 05-1272, Roth and Gumeson challenge the district court's May 12, 2005 order directing them to pay attorney fees in the amount of $12,049.00. "We review both the court's decision to award attorney's fees and the reasonableness of the amount awarded for an abuse of discretion."
a) Inability to pay
In the first of their two arguments on appeal, Roth and Gumeson contend that the district court, in determining the reasonableness of the fee award, abused its discretion by failing to take into account their inability to pay. In support of this argument, Roth and Gumeson state that they are paupers who simply cannot afford to pay any award. Roth and Gumeson assert that the district court's fee award will effectively penalize them by forcing them "into financial ruin and bankruptcy. . . ." Aplt. Br. at 5. Thus, they argue, the district court's fee award violates their due process rights.
In deciding this issue, it is necessary to begin with the statute under which the fee award was issued. As noted, the fee award originated at the conclusion of the prior set of appeals, when a group of defendants moved for costs and fees and we granted their motion in part and awarded them fees pursuant to 42 U.S.C. § 1988. Section 1988 provides, in pertinent part, that "[i]n any action or proceeding to enforce a provision of . . . 1983 . . . of this title, . . . the court, in its discretion, may allow the prevailing party . . . a reasonable attorney's fee as part of the costs. . . ." 42 U.S.C. § 1988(b). Construing this statute, the Supreme Court has held that the prevailing party in a civil rights case "should ordinarily recover an attorney's fee unless special circumstances would render such an award unjust."
Roth and Gumeson argued to the district court, prior to its determining the amount of the fee award, that they were paupers who could not afford to pay any amount of fees. Joint App. at 148 (detailing each plaintiff's monthly income and expenses). The district court, in its order establishing the amount of the fee award, rejected this argument on the grounds that the plaintiffs' ability to pay "may be a factor when determining whether to award fees—which has already been decided by the Tenth Circuit—not when assessing the proper amount of the award, which is my charge here on remand."
b) Reasonableness of amount of fee award
In their second argument, Roth and Gumeson argue that the amount of fees assessed by the district court was unreasonable (and thus an abuse of discretion) because it represented the fees incurred by the defendants' attorneys in responding to all three of the prior appeals (i.e., the appeal of the dismissal of the complaint on the merits, the appeal of the sanction award against Mulhern, and the appeal of the denial of plaintiffs' cross-motion for sanctions), rather than just the fees incurred in responding to the appeal by Roth and Gumeson of the district court's dismissal of their § 1983 claims.
Roth and Gumeson asserted this same argument below. The district court rejected it, stating:
Joint App. at 171.
Roth and Gumeson fail to offer any rational arguments, let alone any authority, establishing that the district court abused its discretion in including in the fee award amounts related to work spent by defense counsel on all three appeals. As the relevant facts establish, all three of the prior appeals arose out of plaintiffs' filing, and ultimately the dismissal, of their § 1983 claims. This includes the two appeals that pertained to the sanctions issues, since those issues directly pertained to whether or not Mulhern had a reasonable basis for filing the claims in the first place, and for continuing to maintain those claims after receiving the various warning letters from defense counsel. Moreover, the defendants were the "prevailing party" with respect to all of those related issues, and thus appear to have been entitled to the full amount of the fees incurred pursuant to § 1988(b). Thus, the district court did not abuse its discretion in taking into account all of the fees incurred by defendants in responding to the three related appeals.
In Appeal No. 05-1129, we REVERSE the district court's order granting Rule 11 sanctions against Mulhern and in favor of defendants, and REMAND to the district court for a determination of the proper amount of fees to be assessed against Mulhern pursuant to 28 U.S.C. § 1927. In Appeal No. 05-1272, we VACATE the district court's fee award and REMAND for further proceedings to include the district court's consideration of the ability of Roth and Gumeson to pay whatever fee amount the court may assess against them.