Menovcik v. BASF Corporation

Filing 89

ORDER denying 87 Motion to Stay. Signed by District Judge Julian Abele Cook. (KDoa)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION

GREG MENOVCIK,
Plaintiff,
v.
Case No. 09-12096
Honorable Julian Abele Cook, Jr.
BASF CORPORATION,
Defendant.

ORDER
This is a case in which the Plaintiff, Gregory Menovcik, has accused his employer, BASF
Corporation (ABASF@), of wrongfully terminating his employment in violation of state and
federal laws. Thereafter, he - after unsuccessfully seeking to obtain relief at the trial level from
(1) a jury,1 and (2) the Court in a separate hearing relating to his claim of having been
unlawfully terminated in violation of the Employee Retirement Income Security Act filed an appeal with the Sixth Circuit.

On May 8, 2012, the Court entered an order

that granted an award of $16,190.79 in costs to BASF which was subsequently
incorporated into a second amended judgment on September 5th. Fifteen days later,
Menovcik filed a motion to stay the proceedings to enforce the second amended judgment
pending his appeal without the necessity of posting of a bond.
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The jury rejected his claims that BASF had (1) violated the Elliot-Larsen Civil Rights
Act as it pertained to him, (2) breached his employment contract, and (3) defamed him
during its various communications with third parties.
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I.
The Federal Rules of Civil Procedure provide that when appealing a judgment, an
appellant may stay its enforcement by posting a supersedeas bond. Fed.R.Civ.P.62 (d) This
bond requirement has been interpreted by the Sixth Circuit as being necessary only to obtain a
stay as a matter of right. Arban v. West Publ=g Corp., 345 F.3d 390, 409 (6th Cir. 2003) (citing
Federal Prescription Serv., Inc. v. Am. Pharm Ass=n, 636 F.2d 755, 759 (D.C. Cir. 1980)).
However, the Rule Adoes not limit the district court=s power to issue unsecured stays through an
exercise of its sound discretion.@ Federal Prescription Serv., Inc., 636 F.2d at 760.
While the Sixth Circuit has not outlined a specific test to guide the decision of a district
court when considering whether to grant a request for an unsecured stay, courts have tended to
examine the purpose of Rule 62(d). The bond requirement of this Rule serves to protect both
parties. See Hamlin v. Charter Tp. of Flint, 181 F.R.D. 348, 351 (E.D. Mich. 1998). It protects
the appellant from Athe risk of satisfying the judgment only to find that restitution is impossible
after reversal on appeal@ while protecting the appellee Afrom the risk of a later uncollectible
judgment and also provid[ing] compensation for those injuries which can be said to be the
natural and proximate result of the stay.@ Id. (internal quotation marks omitted). Thus, ARule
62(d) establishes not only the appellant=s right to a stay but also the appellee=s right to have a
bond posted. Because of Rule 62(d)=s dual protective role, a full supersedeas bond should almost
always be required.@ Id.; see also Pucci v. Somers, 834 F. Supp. 2d 690, 706 (E.D. Mich. 2011)
(quoting Hamlin, 181 F.R.D. at 351). Despite this presumption as it relates to a supersedeas
bond, two circumstances exist in which courts are urged to consider foregoing the requirement:
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namely, where (1) Athe [appellant=s] ability to pay the judgment is so plain that the cost of the
bond would be a waste of money@ and (2) Athe requirement would put the [appellant=s] other
creditors in undue jeopardy.@ Pucci, 834 F. Supp. 2d at 707 (quoting Olympia Equip. Leasing Co.
v. Wester Union Tel. Co., 786 F.2d 794, 796 (7th Cir. 1986)); see also Arban, 345 F.3d at 409
(affirming decision to grant stay without bond A[i]n light of the vast disparity between the amount
of the judgment in this case and the annual revenue of the [defendant]@); cf. Dubuc v. Green Oak
Twp., No. 08-13727, 2010 WL 3908616, at *2 (E.D. Mich. Oct. 1, 2010) (preferring an analysis
that Alooks to whether there are >extraordinary circumstances= that justify deviating from the bond
requirement@).
II.
Menovcik contends that the circumstances of this case warrant the granting of an
unsecured stay. He does not, however, argue that either of the two Pucci exceptions to the
presumption of a bond requirement exist here. Instead, he suggests that the Court give
consideration to the following three factors which, in his opinion, would justify his request for a
waiver; to wit, (1) the likelihood of success on appeal, (2) the expected length of the appellate
process, and (3) the perceived legitimacy of BASF=s desire to recover the award of costs. Putting
aside the merit of his argument, Menovcik does not cite any case law which supports the
application of his suggested use of this three-factor test. Moreover, he has failed to relate the
choice of these particular factors to the underlying purposes of Rule 62(d). For the reasons that
are given below, the Court will (1) decline Menovcik=s invitation to utilize this suggested
three-factor test, and (2) deny his request for a stay of these proceedings without bond.
Menovcik first argues that he should not be required to post a bond because Athere is a
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substantial, compelling basis to believe that [his] appeal may be successful.@ Pl. Mot. Stay 6.
This belief, however, provides no protection to BASF should it prove to be unfounded. The bond
requirement of Rule 62(d) is intended to protect the appellee if the appellant loses the appeal and
is subsequently unable to pay the judgment, regardless of how meritorious the appeal appears to
be. Cf., e.g., DiPonio Constr. Co. v. Int'l Union of Bricklayers & Allied Craftworkers Local
9, No. 10-10607, 2011 WL 1827890, at *2 (E.D. Mich. May 10, 2011) (AThe purpose of
a supersedeas bond is to ensure that the judgment will be collectible if the party
awarded fees wins on appeal.@) This analysis presumes the appellant=s loss on appeal and
then asks whether, under those circumstances, he will be able to pay the judgment. See, e.g.,
Arban, 345 F.3d at 409 (requiring a Avast disparity@ in amount of judgment and defendant=s
income without considering the likelihood of success on appeal); cf. O=Callaghan v. SPX Corp.,
No. 09-10196, 2010 WL 299497 (E.D. Mich. Jan. 20, 2010) (declining to issue stay without bond
despite defendant corporation=s $5.7 billion in assets because A[i]n these troublesome economic
times, such assurances are less reliable than in times past@). Menovcik=s belief that his appeal is
meritorious offers no guarantee as to his ability to pay the judgment in the event that he happens
to lose on appeal and thus provides insufficient protection to BASF to justify an unsecured bond.
Menovcik next argues that BASF will not be prejudiced by its request because Aany delay
occasioned by a stay is likely to last no more than a few months.@ Pl. Mot. Stay 6. While this
factor may weigh in favor of granting a stay, it does not have any application as to whether the
proceeding should be secured by a bond. At issue in determining whether to order a secured stay
is the appellant=s ability to pay upon Aultimate disposition of the case.@ Federal Prescription
Serv., Inc., 636 F.2d at 760. A bond should be required where Athere is some reasonable
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likelihood of the judgment debtor=s inability or unwillingness to satisfy the judgment in full upon
ultimate disposition of the case . . . . In unusual circumstances . . . the district court in its
discretion may order partially secured or unsecured stays if they do not unduly endanger the
judgment creditor=s interest in ultimate recovery.@ Id. at 760-61 (footnote omitted). The fact that
the appeals process may be brief offers no insight into Menovcik=s ability to pay the judgment
upon conclusion of these proceedings and therefore does not justify granting an unsecured stay.
Finally, Menovcik argues that BASF will not be prejudiced by a stay without bond
because A[it] seeks to enforce the cost award not from any legitimate desire to recover the
amounts owed but instead merely as a threat to compel [him] to drop his meritorious appeal.@ Pl.
Mot. Stay 7. This deduction is apparently based on representations made by BASF to Menovcik
during settlement negotiations. Aside from the well-known fact that statements made during
negotiations are Amotivated by a desire for peace rather than from a concession of the merits of
the claim@ and should therefore be treated with circumspection, see Goodyear Tire & Rubber Co.
v. Chiles Power Supply, Inc., 332 F.3d 976, 981 (6th Cir. 2003), BASF undeniably possesses the
right to the full recovery of the money judgment awarded in this matter. Menovcik=s evaluation
of the legitimacy of BASF=s desire to recover this judgment is entirely irrelevant to a
determination of whether a bond is necessary to protect BASF=s right to recover.
While the Court has the discretion to grant a stay without requiring the posting of bond, it
should do so only in circumstances that offer sufficient protection to both parties. The three
factors proposed by Menovcik fail to indicate that such circumstances exist in this case.
IV.
For the reasons that have been set forth above, the Court denies Menovcik=s
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motion to stay proceedings to enforce second amended judgment pending appeal
without bond (ECF No. 87) is denied.

IT IS SO ORDERED.
Date: November 9, 2012

s/Julian Abele Cook, Jr.
JULIAN ABELE COOK, JR.
U.S. District Judge

CERTIFICATE OF SERVICE
The undersigned certifies that the foregoing Order was served upon counsel of record via the Court's ECF
System to their respective email addresses or First Class U.S. mail to the non-ECF participants on
November 9, 2012.

s/ Kay Doaks
Case Manager

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