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Davis v. Detroit Downtown Development Authority

United States District Court, E.D. Michigan, Southern Division

January 26, 2018

ROBERT DAVIS, et al., Plaintiffs,
v.
DETROIT DOWNTOWN DEVELOPMENT AUTHORITY, et al., Defendants.

         OPINION & ORDER GRANTING IN PART DEFENDANTS' SECOND MOTION FOR SANCTIONS (Dkt. 34); GRANTING IN PART DEFENDANTS' AMENDED MOTION FOR SANCTIONS (Dkt. 77); DENYING DEFENDANTS' JOINT MOTION FOR SANCTIONS (Dkt. 23); DENYING DEFENDANTS' MOTION FOR RULE 11 SANCTIONS (Dkt. 76); AND DENYING DEFENDANTS' MOTION TO STRIKE (Dkt. 83)

          HON. MARK A. GOLDSMITH, UNITED STATES DISTRICT JUDGE.

         This matter is before the Court on Defendants' joint motion for sanctions (Dkt. 23); second motion for sanctions (Dkt. 34); motion for Rule 11 sanctions (Dkt. 76); amended motion for sanctions (Dkt. 77); and joint motion to strike Plaintiffs' response (Dkt. 83).[1] For the reasons that follow, the Court grants in part the second motion for sanctions (Dkt. 34) and amended motion for sanctions (Dkt. 77), and denies all other motions.

         I. BACKGROUND

         This lawsuit arose out of the relocation of the Detroit Pistons professional basketball team from Auburn Hills, Michigan to the Little Caesars Arena in Detroit. Plaintiffs Robert Davis and Etta Wilcoxon are residents of Wayne County who claimed that Defendants planned to unlawfully use revenue generated from the Detroit Public Schools operating millage and the 2016 Wayne County Parks millage to fund certain aspects of the Pistons' relocation. Plaintiffs alleged that this violated their fundamental rights to vote, then later amended their complaint to add claims for violations of substantive and procedural due process and of the Racketeering Influenced Corrupt Organization (“RICO”) Act. See Compl. (Dkt. 1); Am. Compl. (Dkt. 15).

         Plaintiffs filed the instant lawsuit on June 1, 2017, and filed an emergency motion for a temporary restraining order or preliminary injunction four days later (Dkt. 8). The day before the Defendants' response to this emergency motion was due, Plaintiffs filed a second emergency motion, for a declaratory judgment with respect to Count VII of the amended complaint (Dkt. 19). Defendants filed a motion to sanction Plaintiffs for the filing of this second emergency motion on June 14, 2017 (Dkt. 23).

         Plaintiffs then filed a motion to strike Defendants' response to the emergency motion for a TRO and/or preliminary injunction (Dkt. 25). Defendants sought sanctions a second time for the motion to strike (Dkt. 34). On June 19, 2017, the Court denied the emergency motion for a TRO or preliminary injunction (Dkt. 47).

         On June 27, 2017 Plaintiffs filed a separate complaint, Davis v. Detroit Public School Community District, No. 17-cv-12100 (“Davis II”), raising different claims against different defendants, but again seeking to prevent the use of school operating millage to fund the Pistons' relocation. Three days later, Defendants served Plaintiffs with a copy of a motion for sanctions under Rule 11of the Federal Rules of Civil Procedure. See 6/30/2017 Email, Ex. 1 to Pl. Resp. to Am. Mot. for Sanctions (Dkt. 78-1). On July 1, 2017, Plaintiffs filed a notice of voluntary dismissal of the instant case (Dkt. 62).

         Defendants filed a joint motion for sanctions pursuant to Federal Rule of Civil Procedure 11 (Dkt. 76) and an amended motion for sanctions pursuant to 28 U.S.C. § 1927, this Court's inherent authority, and 42 U.S.C. § 1988 (Dkt. 77) on September 6, 2017.

         II. ANALYSIS

         In the various motions for sanctions, Defendants argue that this Court should impose sanctions pursuant to 28 U.S.C. § 1927, this Court's inherent authority, 42 U.S.C. § 1988, and Federal Rule of Civil Procedure 11. The Court will address each argument in turn.

         A. Sanctions pursuant to 28 U.S.C. § 1927 and the Court's inherent authority

         Section 1927 of Title 28 provides that attorneys' fees may be awarded where an attorney “so multiplies the proceedings in any case unreasonably and vexatiously[.]” Sanctions may be appropriate when an attorney knows or reasonably should know that her claim is frivolous, or that her litigation tactics will “needlessly obstruct the litigation of nonfrivolous claims.” Jones v. Cont'l Corp., 789 F.2d 1225, 1230 (6th Cir. 1986). The court need not find bad faith on the part of the sanctioned party. Dixon v. Clem, 492 F.3d 665, 679 (6th Cir. 2007); see also In re Ruben, 825 F.2d 977, 983-984 (6th Cir. 1987) (noting that “a relaxed standard” is applicable to § 1927 sanctions, as a court may assess fees against an attorney “despite the absence of any conscious impropriety”) (emphasis in original). However, “[s]imple inadvertence or negligence that frustrates the trial judge will not support a sanction under section 1927.” Ridder v. City of Springfield, 109 F.3d 288, 298 (6th Cir. 1997); see also Red Carpet Studios Div. of Source Advantage, Ltd. v. Sater, 465 F.3d 642, 646 (6th Cir. 2006) (“§ 1927 sanctions require . . . something more than negligence or incompetence.”).

         Defendants also urge the Court to impose sanctions under its inherent authority. “A district judge has inherent equitable power to award attorneys' fees for ‘bad faith' or frivolous conduct of a case, ” whether against a party or against her attorney. In re Ruben, 825 F.2d at 983. The court may sanction a party “when a party has acted in bad faith, vexatiously, wantonly, or for oppressive reasons.” Chambers v. NASCO, Inc., 501 U.S. 32, 45-46 (1991) (internal quotations omitted). To impose sanctions under this bad faith standard, Sixth Circuit law requires a district court to find: (i) the claims advanced were meritless; (ii) counsel for the offending party knew or had reason to know the claims were meritless; and (iii) the motive for filing the suit was an improper purpose such as harassment. Metz v. Unizan Bank, 655 F.3d 485, 489 (6th Cir. 2011). Although the filing of a meritless claim may be evidence of bad faith, the “mere fact that an action is without merit does not amount to bad faith.” BDT Prods., Inc. v. Lexmark Intern, Inc., 602 F.3d 742, 753 (6th Cir. 2010). “[T]he court must find something more than that a party knowingly pursued a meritless claim or action at any stage of the proceedings.” Id. (emphasis in original). This “something more” could be a finding that the party filed suit for purposes of harassment or delay, or for other improper reasons, see Big Yank Corp. v. Liberty Mut. Ins. Co., 125 F.3d 308, 314 (6th Cir. 1997); a finding that the plaintiff had improperly used the courts by filing a meritless lawsuit and withholding material evidence, First Bank of Marietta, 307 F.3d at 523 n. 18; or a finding that the party was delaying or disrupting the litigation or hampering enforcement of a court order, Chambers, 501 U.S. at 46.

         Defendants argue that Plaintiffs brought their claims for an improper purpose; that is, to disrupt the financing of the Little Caesars Arena “through the mere pendency of the litigation” and to promote their own political careers. Defs. Mot. at 4 (Dkt. 77). Defendants argue that the emergency motion for a TRO or preliminary injunction did not attempt to show irreparable harm; that Plaintiffs publicized this action online and attempted to gain media exposure; that Plaintiffs filed frivolous motions[2] in an attempt to prevent Defendants from fully responding to their motion for a TRO or preliminary injunction; and that Plaintiffs voluntarily dismissed this case when it appeared that a ruling on the Defendants' motion to dismiss was imminent. Id. at 4-5. Defendants also claim that Plaintiffs timed the filing of their claims in order to cause maximum prejudicial effect, noting that Plaintiff Wilcoxon waited ...


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