Prenda Law, Inc. v. Godfread et al
Filing
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MEMORANDUM Opinion and Order Entered by the Honorable John W. Darrah on 6/12/2014.(gcy, )
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
PRENDA LAW, INC.,
Plaintiff,
v.
PAUL GODFREAD, ALAN COOPER,
and JOHN DOES 1-10,
Defendants.
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Case No. 13-cv-4341
Judge John W. Darrah
MEMORANDUM OPINION AND ORDER
Plaintiff Prenda Law, Inc. (“Prenda”) filed a Motion Opposing Attorneys’ Fees with
respect to the fees that were awarded to Defendants Paul Godfread and Alan Cooper as a
sanction against Prenda. For the reasons stated below, this Motion [63] is denied.
BACKGROUND 1
On August 12, 2013, Prenda filed a renewed motion to remand for lack of subject matter
jurisdiction. (Dkt. No. 39.) At a hearing on August 14, 2014, the renewed motion to remand
was entered, Defendants objected, and a briefing schedule was set. (Dkt. No. 43.) Rather than
move orally to withdraw its motion to remand at the hearing, Prenda later that day filed a notice
of motion to withdraw its motion to remand. (Dkt. No. 41.) On August 20, 2013, Defendants
filed their response to the motion to remand and Prenda presented its motion to withdraw noticed
on August 14, 2013. (Dkt. No. 44.) The motion to withdraw the remand motion was granted,
1
In an attempt to limit the inordinate amount time spent addressing Prenda’s deceptive
conduct, the specifics are omitted here. A more detailed account of the facts giving rise to the
underlying complaint as well as those giving rise to the sanctions imposed can be found in the
previous Memorandum Opinion and Order. (Dkt. No. 60.)
and a briefing schedule was set with regard to Defendants’ petition for sanctions pursuant to
Federal Rule of Civil Procedure 11. (Dkt. No. 46.)
On September 24, 2013, Defendants filed their petition for sanctions, alleging Prenda’s
actions with respect to its motion to remand amounted to frivolous litigation and abusive
practice, pursuant to Rule 11(c)(2). (Dkt. No. 51.) Specifically, Defendants sought sanctions for
Prenda’s motion to remand, which was shown to contain substantial misrepresentations, and
Prenda’s related misrepresentations made in open court. (Id. at 18.) Defendants’ petition
demonstrated that: (1) Prenda had previously filed a motion to remand before the
Honorable David R. Herndon in the Southern District of Illinois; (2) Judge Herndon denied the
motion because it was shown that Prenda lied to the Clerk of Court in order to amend its
complaint without leave; (3) Prenda represented to this Court that its motion to remand (which
was virtually identical to the motion denied by Judge Herndon) had not been previously denied;
and (4) Prenda misrepresented in this Court the reasons that the motion had been denied by
Judge Herndon. (Id. at 19.) Based on Prenda’s misrepresentations in this Court – both in its
motion to remand and orally – sanctions were ordered against Prenda in the amount of attorneys’
fees incurred by Defendants occasioned by the misconduct of Prenda Law and Paul A. Duffy in
this Court. (Dkt. No. 60.)
On February 7, 2014, Defendants submitted an itemization of fees associated with their
opposition to Prenda’s motion to remand. (Dkt. No. 61.) On March 5, 2014, Prenda was granted
leave to file its Motion Opposing to Attorneys’ Fees. (Dkt. No. 66.) For the reasons set forth
below, Prenda’s Motion is denied.
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LEGAL STANDARD
When a party submits a motion, and later advocates it, the party certifies that the motion
is supported by existing law and evidence and that it is not brought to harass an opponent or
delay the proceedings. Fed. R. Civ. Pro. 11(b). If any of these certifications is determined or
shown to be invalid, the court may impose appropriate sanctions. Fed. R. Civ. P. 11(c). Rule 11
sanctions aim “to deter baseless filings” and “will be disturbed only where the [district] court
abuses its discretion.” Cooney v. Casady, 735 F.3d 514, 523 (7th Cir. 2013).
“Any attorney . . . 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. Like Rule 11,
this statute serves “to deter frivolous litigation and abusive practices by attorneys and to ensure
that those who create unnecessary costs also bear them.” Riddle & Assocs., P.C. v. Kelly, 414
F.3d 832, 835 (7th Cir. 2005) (citation omitted). Section 1927 applies to cases marked by a
litigant’s bad faith, which is shown when “counsel acted recklessly, counsel raised baseless
claims despite notice of the frivolous nature of these claims, or counsel otherwise showed
indifference to statutes, rules, or court orders.” Grochocinski v. Mayer Brown Rowe & Maw,
LLP, 719 F.3d 785, 799 (7th Cir. 2013) (citations and internal quotations omitted). Whether to
impose sanctions pursuant to Section 1927 is within the discretion of the court. Jolly Group, Ltd.
v. Medline Industries, Inc., 435 F.3d 717, 720 (7th Cir. 2006).
Moreover, a district court may sanction under its “inherent power . . . where a party has
willfully abused the judicial process or otherwise conducted litigation in bad faith.” Tucker v.
Williams, 682 F.3d 654, 662 (7th Cir. 2012) (citations omitted).
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ANALYSIS
Prenda opposes the attorneys’ fees sanction, alleging five reasons: (1) Defendants failed
to mitigate their attorneys’ fees; (2) fees incurred in seeking sanctions are not recoverable;
(3) the fees itemized by Defendants are exorbitant; (4) the itemization contains defects
preventing proper review; (5) fees should not be awarded for actions taken by counsel not
involved in this case.
“A party defending against a frivolous paper has a duty under Rule 11 to mitigate its legal
fees and expenses by resolving frivolous issues quickly and efficiently.” 2 Divane v.
Krull Elec. Co., 319 F.3d 307, 321 (7th Cir. 2003) (quoting Dubisky v. Owens, 849 F.2d 1034,
1037 (7th Cir. 1988)). Therefore, the court must examine the “promptness and method” with
which the Defendants illustrated Prenda’s sanctionable conduct to determine whether
Defendants’ attorneys’ fees “could have been avoided or [were] self-inflicted.” Divane, 319
F.3d at 321. The basis of Prenda’s mitigation argument is that Defendants chose not to trust
Prenda to withdraw its motion to remand. Defendants’ failure to trust Prenda was not
unreasonable, given Prenda’s vigorous defense of its motion to remand on the same day it filed
its motion to withdraw the motion. In any event, Defendants’ response to Prenda’s motion to
remand was sufficiently quick and efficient. Not only did Defendants file their response within
2
A party moving for sanctions pursuant to Rule 11 is required to give notice to the
nonmoving party, who is then afforded 21 days to withdraw or correct the challenged motion.
Fed. R. Civ. Pro. 11(c)(2). Because this notice and time to correct were not given here, Rule 11
is an inappropriate basis for sanctions. However, a Rule 11 analysis is particularly useful in
determining sanctions under the Court’s inherent authority.
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six days, they filed it on the same day that Prenda presented its motion to withdraw. Prenda’s
opposition with respect to Defendants’ fees being self-inflicted or avoidable is denied.
Prenda next argues that Defendants are not entitled to attorneys’ fees associated with
preparing or presenting their motion for sanctions. In support of this argument, Prenda cites
Lockary v. Kayfetz, 974 F.2d 1166, 1178 (9th Cir. 1992). Even if this case was precedential and
had not been superseded by the 1993 Amendment to Rule 11, its reasoning is inapposite here.
As was made clear in the previous Memorandum and Opinion, (Dkt. No. 60.), the sanction of
attorneys’ fees is appropriate in this Court’s inherent authority after a finding of bad faith.
However, even if appropriate, the award of attorneys’ fees must be reasonable.
According to the American Intellectual Property Law Association’s 2013 Report of the
Economic Survey, intellectual property attorneys based in Chicago and Boston within the first
quartile bill $400 per hour, in line with the amount billed by Defendants’ counsel, who are based
in Chicago and Boston. (Dkt. No. 61, Ex. B.) Yet, Prenda argues that this rate is “exorbitant”
because Defendants’ attorney Erin Russell is not registered before the United States Patent and
Trademark Office and, therefore, not an intellectual property attorney. (Dkt. No. 63-1 at 5.)
Prenda cites no law supporting this contention, and its claim of exorbitant rates fails.
Lastly, Prenda argues that Defendants’ itemization of fees should be rejected because it
lacks any dates, making review impossible, and that fees should not be awarded for conduct not
attributable to Prenda’s current counsel. These arguments are addressed together. Defendants
concede that the absence of dates on which services were rendered was a defect in their original
itemization. Therefore, they have submitted a complete version of their invoices as an appendix
to their Response to Prenda’s Opposition. (Dkt. No. 67, Exs. D, E.) The dates reflect fees from
both of Defendants’ counsel, beginning on March 1, 2013. However, sanctions were imposed
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only for Prenda’s conduct in this Court.3 Accordingly, only the fees itemized which occurred on
or after the August 14, 2013 initial status hearing will be awarded.
CONCLUSION
For the reasons provided above, Prenda’s Motion Opposing Attorneys’ Fees [63] is
denied. However, the itemized amount is reduced to reflect sanctions only related to the conduct
that occurred in this Court. Sanctions are awarded to Defendants against Prenda Law, Inc.,
pursuant to the Court’s inherent authority to sanction, in the amount of $11,758.20.
Date:
June 12, 2014
______________________________
JOHN W. DARRAH
United States District Court Judge
3
As set forth above, Judge Herndon was quite apparently aware of the circumstances
surrounding the original motion to remand and could have imposed sanctions in the earlier stages
of this case.
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