Credit Control Services, Inc. et al v. Noble Systems Corporation

Filing 46

Judge Joseph L. Tauro: ORDER entered. MEMORANDUM and ORDER(Geraldino-Karasek, Clarilde)

UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
CREDIT CONTROL SERVICES, INC.,
CCS COMMERCIAL, LLC, and
ENTERPRISE ASSOCIATES, LLC
Plaintiffs,
v.
NOBLE SYSTEMS CORP.,
Defendant.

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Civil Action No. 12-11321-JLT

MEMORANDUM
December 12, 2013
TAURO, J.
I.

Introduction
Plaintiffs Credit Control Services, Inc., CCS Commercial, LLC, and Enterprise

Associates, LLC brought suit against Defendant Noble Systems Corporation alleging, among
other claims, breach of contract, negligent misrepresentation, and violation of Chapter 93A of the
Massachusetts General Laws. Presently at issue are Defendant’s Motion for Rule 11 Sanctions
[#38] and Plaintiffs’ Motion to Amend Order, for Relief from Order, and/or for Reconsideration
of Order [#40]. For the following reasons, Defendant’s Motion for Sanctions is DENIED and
Plaintiffs’ Motion to Amend is DENIED.
II.

Background
On March 20, 2013, this court issued a Memorandum [#36], summarizing the

background as follows:
CCS Resources and Plaintiffs function as consumer debt collectors. They
are all affiliates under common control of parent company CCS Global Holdings,
Inc. These companies–CCS Resources, Plaintiffs, CCS Global Holdings, and

related companies not involved in this suit–refer to themselves collectively by the
trade name “CCS Companies.” Together, the CCS Companies process millions of
telephone calls on behalf of their clients for the purpose of collecting debts. To
function effectively, they require a sophisticated call dialing system that can
initiate, receive, and process efficiently millions of telephone calls.
In late 2009 and early 2010, Plaintiffs met with [Defendant] to discuss
purchasing a new dialing system for the CCS Companies. Plaintiffs carefully
described their requirements, emphasizing the need for a dialing system capable
of handling large call volumes, passing calls to available agents and appropriate
work groups, minimizing agent idleness, and complying with federal and state
debt collection regulations. [Defendant] indicated that it could meet Plaintiffs’
specifications.
CCS Resources and [Defendant] then executed a contract on April 23,
2010, for purchase of [Defendant’s] system. Although only CCS Resources
signed the contract, both parties understood that the CCS Companies generally,
including Plaintiffs, had purchased and would use the system.
The CCS Companies soon discovered that [Defendant’s] product fell short
of expectations. The system failed to reliably pass calls between work groups, and
call agents experienced lengthy idle time between calls. Because [Defendant]
could not successfully implement the system, Plaintiffs reinstated their former
dialing system on an emergency basis in December 2010.
After this disintegration of the system implementation, CCS Resources
commenced arbitration against [Defendant] pursuant to the contract’s arbitration
clause. The arbitrator entered a final award against CCS Resources on June 1,
2012, and this court confirmed the award on October 16, 2012. Plaintiffs initiated
this suit against [Defendant] on July 9, 2012. 1
Although Plaintiffs purported to bring their claim as parties separate and distinct from
CCS Resources, this court held that “Plaintiffs’ allegations establish sufficient identicality
between CCS Resources and Plaintiffs,” and, therefore, allowed Defendant’s Motion for
Judgment on the Pleadings [#12] pursuant to principles of claim preclusion. 2 Because Federal
Rule of Civil Procedure 11 required Plaintiffs’ counsel to make a reasonable inquiry into the
existing law, which would have made plainly apparent that this claim was precluded, Defendant
1

Mem. [#36], 1-3.

2

Mem. [#36], 5.
2

urges this court to sanction Plaintiffs’ counsel for failing to make such inquiry. 3 After failing to
convince this court that their claims did not warrant dismissal under well-established claim
preclusion principles, Plaintiffs not only deny engaging in any conduct sanctionable under Rule
11, but additionally ask this court to reconsider its March 20, 2013 Order [#35]. 4
III.

Discussion
A.

Defendant’s Motion for Rule 11 Sanctions
In order to succeed on a claim for sanctions under Rule 11, movants must convince the

court that opposing parties presented a “patently frivolous” claim by showing that they made
unwarranted factual contentions, failed to make reasonable inquiry of the law, or brought their
case for an improper purpose. 5 Rule 11, however, “is not a strict liability provision, and a
showing of at least culpable carelessness is required before a violation of the Rule can be
found.” 6 The “mere fact that [a plaintiff’s] arguments proved unavailing does not necessarily
mandate the imposition of Rule 11 sanctions.” 7 Moreover, courts “ought not invoke Rule 11 for
slight cause; the wheels of justice would grind to a halt if lawyers everywhere were sanctioned
every time they made unfounded objections, weak arguments, and dubious factual claims.” 8
Courts, therefore, require more than “slight misconduct” to impose sanctions under Rule 11. 9
3

See generally Mot. Rule 11 Sanctions [#38].

4

See generally Pl.’s Mot. Amend Order, Relief Order, Recons. [#40].

5

CQ Int’l Co. v. Rochem Int’l, Inc., USA, 659 F.3d 53, 60 (1st Cir. 2011).

6

Id. (quoting Citibank Global Mkts., Inc. v. Santana, 573 F.3d 17, 32 (1st Cir. 2009));
see also Roger Edwards LLC v. Fiddes & Son, Ltd., 437 F.3d 140, 142 (1st Cir. 2006).
7

CQ Int’l, 659 F.3d at 61.

8

Young v. City of Providence ex rel. Napolitano, 404 F.3d 33, 39-40 (1st Cir. 2005).

9

Id.
3

Defendant does not show that Plaintiffs were culpably careless in bringing this claim.
Although Plaintiffs’ motions and memoranda are riddled with spelling and grammatical errors
and Plaintiffs failed to employ proper legal citation, Plaintiffs did present legal arguments in
support of their contention that their claims are not barred under judicial estoppel principles. The
fact that Plaintiffs’ arguments ultimately proved unavailing, and were weak to begin with, does
not warrant sanctions under Rule 11 without a showing of more serious misconduct.
Additionally, considering that, at the time that they filed the Complaint [#1], Plaintiffs’ affiliate
had already made full payment pursuant to the arbitration judgment rendered against it, it is not
clear that Plaintiffs brought this claim for an improper purpose. Because Defendant fails to show
that Plaintiffs’ claims rise to the “patently frivolous” level, Defendant’s Motion for Sanctions is
DENIED.
B.

Plaintiff’s Motion to Amend Order, for Relief from Order, and/or for Reconsideration
of Order
As Defendant correctly points out, “[i]t is very difficult to prevail on a Rule 59(e) motion

for reconsideration.” 10 Plaintiffs have not offered evidence of new facts and have not shown that
this court has made a “manifest error of law.” 11 Plaintiffs are merely relitigating the same issues
that were raised on Defendant’s Motion for Judgment on the Pleadings and reiterating arguments
that this court heard and rejected. 12 Plaintiffs’ Motion to Amend Order is, therefore, DENIED.
IV.

Conclusion
For the foregoing reasons, Defendant’s Motion for Rule 11 Sanctions is DENIED and

10

Linton v. N.Y. Life Ins. & Annuity Corp., No. CIVA 04-11362 RWZ, 2006 WL
3043224, at *1 (D. Mass. Oct. 25, 2006); see Resp. Opp’n Pls.’ Mot. [#44], 1.
11

See Linton, 2006 WL 3043224, at *1; see generally Pls.’ Mem. Supp. Mot. [#41].

12

See generally Pls.’ Mem. Supp. Mot. [#41].
4

Plaintiff’s Motion to Amend Order, for Relief from Order, and/or for Reconsideration of Order is
DENIED.
AN ORDER HAS ISSUED.
/s/ Joseph L. Tauro
United States District Judge

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