United States District Court, E.D. Michigan, Southern Division
ORDER DENYING DEFENDANT'S MOTION FOR SANCTIONS
[#24] AND CANCELING HEARING
GERSHWIN A. DRAIN, UNITED STATES DISTRICT JUDGE
INTRODUCTION AND BACKGROUND
January 6, 2016, Plaintiff Schmalz, Inc. filed the instant
patent infringement action raising claims of direct and
indirect infringement of United States Patent No. 6, 364, 299
(the “‘299 Patent”) by Defendant Better
Vacuum Cups, Inc. Plaintiff's Complaint alleges indirect
infringement based on inducement and contributory
before the Court is Defendant's Motion for Sanctions,
filed on August 12, 2016. Plaintiff filed a Response in
Opposition on August 29, 2016, and Defendant filed a Reply
brief on September 15, 2016. Upon review of the parties'
submissions, the Court concludes that oral argument will not
aid in the disposition of this matter. Thus, the Court will
cancel the hearing scheduled for October 13, 2016 and will
decide the instant motion on the submitted briefs.
See E.D. Mich. L.R. 7.1(f)(2).
outset of this litigation, the parties attempted to reach a
settlement agreement. In light of the parties efforts in this
regard, Plaintiff twice agreed to provide Defendant an
extension of time to answer the Complaint. The Court also
held two status conferences with the parties concerning their
efforts to settle the case. However, the parties were unable
to reach a settlement agreement, therefore the Court entered
an Order requiring Defendant to file an Answer no later than
July 12, 2016.
12, 2016, Defendant filed a Rule 12(b)(6) Motion for Partial
Dismissal, as well as an Answer to the
Complaint. Defendant's Motion for Partial
Dismissal argued that Plaintiff's claims of indirect and
willful infringement were legally deficient because they were
not supported by sufficient factual allegations. In lieu of
filing a responsive brief to Defendant's Motion for
Partial Dismissal, Plaintiff filed a First Amended Complaint
on July 29, 2016.
moves for sanctions pursuant to 28 U.S.C. § 1927 and
E.D. Mich. L.R. 7.1(a). Section 1927 states that:
Any attorney or other person admitted to conduct cases in any
courts of the United States . . . 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 attorneys' fees reasonably incurred because
of such conduct.
28 U.S.C. § 1927. “Section 1927 sanctions are
warranted when an attorney objectively ‘falls short of
the obligations owed by a member of the bar to the court and
which, as a result, causes additional expense to the opposing
party.'” Red Carpet Studios Division
of Source Advantage, Ltd. v. Slater, 465 F.3d 642, 646
(6th Cir. 2006) (citing In re Ruben, 825 F.2d 977,
984 (6th Cir. 1987)). An attorney may be sanctioned if there
is “a showing of something less than subjective bad
faith, but something more than negligence or
incompetence.” Followell v. Mills, 317 F.
App'x 501, 511 (6th Cir. 2009). An attorney is subject to
sanctions “when he intentionally abuses the judicial
process or knowingly disregards the risk that his actions
will needlessly multiply proceedings.” Id.
Sanctions pursuant to § 1927 are designed “to
deter dilatory litigation practices and to punish aggressive
tactics that far exceed zealous advocacy.” Red
Carpet Studios, 465 F.3d at 646.
to this Court's Local Rules, a moving party must
ascertain whether a contemplated motion will be opposed.
See E.D. Mich. L.R. 7.1(a)(1). If, after a
conference between the parties, concurrence in the requested
relief is withheld, “[t]he court may tax costs for
unreasonable holding of consent.” E.D. Mich. L.R.
seeks to hold counsel for Plaintiff personally liable for the
costs, expenses and attorney's fees incurred by Defendant
in its preparation and filing of the Motion for Partial
Dismissal. Defendant asserts that it requested Plaintiff
withdraw its original Complaint and re-file it with more
detailed factual allegations, but Plaintiff refused
Defendant's request. It was only after Defendant filed
its Motion for Partial Dismissal that Plaintiff filed its
First Amended Complaint to include additional factual
allegations. Defendant asserts that Plaintiff's purpose
was to force Defendant into wasting time and resources by
preparing a Motion for Partial Dismissal that would
immediately be rendered useless. Defendant argues that
Plaintiff's actions were undertaken in bad faith and to
inflict “maximum financial harm” on Defendant.
to Defendant's assertions, Plaintiff's conduct does
not warrant the imposition sanctions under either § 1927
or Local Rule 7.1(a)(3). Defendant first raised concerns
about the Complaint's factual allegations in an email
dated July 5, 2016. Plaintiff's counsel responded the
same day and explained his belief that the Complaint
satisfied the pleading standard set forth in Ashcroft v.
Iqbal, 556 U.S. 662 (2009) and Bell Atl. Corp. v.
Twombly, 550 U.S. 544 (2007) and requested case
authority supporting Defendant's position. However,
Defendant did not respond. Several communications between the
parties ensued, yet Defendant failed to provide any authority
for his claims that the Complaint failed to satisfy
Iqbal and Twombly's pleading
the Court cannot impose sanctions upon Plaintiff for engaging
in conduct that is expressly permitted by the Federal Rules
of Civil Procedure. Federal Rule of Civil Procedure
15(a)(1)(B) allows a party to amend a pleading once as a
matter of course within twenty-one (21) days after service of
a motion under Rule 12(b). See Fed. R. Civ. P.
15(a)(1)(B). Instead of “needlessly multiplying”
the proceedings, the Advisory Committee Notes indicate that
the rule is designed to have the opposite effect.
Id., Advisory Committee Notes (“A responsive
amendment may avoid the need to ...