Stillwater Lakes Civic Association, Inc. v. Gorka et al
Filing
153
MEMORANDUM AND OPINION - For the foregoing reasons, the Court will deny Defendants' Motion for Relief from Judgment. (Doc. 137). The Court also will deny Defendants' Motion for Hearing (Doc. 151) as moot. Aseparate Order follows.Signed by Honorable Robert D. Mariani on 10/25/13. (jfg)
THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF PENNSYLVANIA
STILLWATER LAKES CIVIC ASSOC., INC.:
Plaintiff
v.
3:08·CV·2264
(JUDGE MARIANI)
NOREEN GORKA, et al.,
Defendants
MEMORANDUM OPINION
I. Introduction
Before the Court is Defendants' Motion for Relief from Judgment. (Doc. 137). Upon
consideration of the briefs and evidence presented at a hearing held on September 11 ,
2013 with the parties' and Attorney Collins's participation, the Court will deny Defendants'
motion. The Court also will deny Defendants' Motion for Hearing (Doc. 151) as moot.
II. Background
Plaintiff initiated this case in December 2008 against Defendants for alleged
infringement of its trade name under the Lanham Act and common law, unfair competition,
misappropriation of corporate name, anti-dilution of trade name, and cybersquatting. (See
Complaint, Doc. 1, 1m 63-157).
After the Court denied Defendants' motion to dismiss and after unsuccessful
settlement negotiations, Plaintiff filed an Amended Complaint on January 28,2010 setting
forth substantially the same claims. (Doc. 48). In September 2010, Defendants' first
attorney, Stewart Rosenblum, filed a Motion to Withdraw as Attorney (Doc. 61) as
Defendants' second attorney, Marshall Anders, had entered his appearance on their behalf
the preceding month. (Doc. 57).
In May 2011, Plaintiff filed a Motion to Dismiss Voluntarily. (Doc. 69). Defendants
opposed the motion and also filed a Motion for Sanctions (Doc. 72) and a Motion for
Attorney's Fees. (Doc. 74). On December 13, 2011, Magistrate Judge Blewitt issued a
Report & Recommendation ("R&R") in which he recommended granting Plaintiffs motion for
voluntary dismissal, denying Defendants' motion for sanctions, and denying Defendants'
motion for attorney's fees. (Doc. 101 ).1 In recommending that the Court grant Plaintiffs
motion for voluntary dismissal, Judge Blewitt recognized that "Defendants are the prevailing
party for purposes of their Doc. 74 Motion [for attorney's fees]." (Doc. 101, at 20).
In discussing whether Defendants were entitled to attorney's fees, Judge Blewitt
concluded that
Despite Plaintiff's Motion for Voluntary Dismissal of its case, we find that there
was a SUbstantial basis for Plaintiff's claims in both of its pleadings that
Defendants were liable to it under the Lanham Act and as such, we do not
find that Plaintiff acted in bad faith or with malice when it raised its claims
under the Act. Thus, we do not find that there was sufficient culpable conduct
on the part of Plaintiff. We further 'find that this case is not an exceptional
case in which attorney fees are warranted. As mentioned, Defendants
previously sought to dismiss Plaintiff's Lanham claims in their Rule 12(b)(6)
Motion to Dismiss and they were unsuccessful in dismissing any of those
claims. (Doc. 17).
(Id. at 21).
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The case had been transferred to the undersigned judge in November 2011.
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Eight days later, Attorney Anders filed a Motion to Withdraw as Attorney (Doc. 102),
stating that Defendants "refused to follow the advice of counsel on several occasions,
preferring to be guided by their own advices," and as such, he "did not have a productive or
viable attorney/client relationship with the Defendants." (Id. at 1m 6-7). In his motion, he
represented that he had the consent of his clients. (See Certificate of Concurrence, Doc.
105). Based on this representation, the Court granted his motion to withdraw as counsel on
December 28,2011. (Doc. 107).
On January 4, 2012, Defendants Gorka and Glassic filed a Motion for
Reconsideration of the Order granting Attorney Anders's motion to withdraw as counsel.
(Doc. 112).2 In their motion, they stated that they "were asked to sign a Praecipe to
Substitute Appearance, but declined because they did not concur with the request this late
in the proceedings," (Id. at 11 3), an allegation that squarely contradicted Attorney Anders's
representation to the Court. Because of this contradiction, the Court scheduled a hearing
and oral argument on Defendants' Motion for Reconsideration for February 9,2012. {See
Jan. 27, 2012 Order, Doc. 119). In that Order, the Court suspended the deadline for
submitting Amended Objections to the R&R. (Id.).
On February 9, 2012, the Court heard sworn testimony from Attorney Anders and
Defendants Gorka and Glassic. After hearing their testimony, the Court issued an Order
denying Defendants' Motion for Reconsideration under Pennsylvania Rules of Professional
2 Meanwhile, Defendants had filed Objections to the R&R without the benefit of counsel on December 29,
2011. (Doc. 108). They then filed a Motion to Amend/Correct Objections on January 10,2012. (Doc. 115).
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Conduct 1.16(b)(4), (5), (6), and (7).3 (Doc. 123, at ~ 1). In light of this ruling, Defendants
were granted ninety days from the date of the Order to find new counsel. (Id. at ~ 2). During
that time, the parties were excused from all further filings and the case was held in
abeyance. (Id.).
On May 14, 2012, Defendants' third attorney, Michael D. Collins, entered his
appearance on their behalf. (Doc. 124). As such, the Court directed Defendants to file their
Revised Objections to the R&R by June 15, 2012. {Doc. 125, at 1f 1}. Upon Defendants'
motion, the Court later extended the deadline to June 22,2012. {Doc. 129}.
On June 22, 2012, Attorney Collins, on behalf of Defendants, submitted Revised
Objections to the R&R. (Doc. 130). In the Revised Objections, Attorney Collins stated:
I.
In connection with plaintiffs Motion to Dismiss Voluntarily with
prejudice (Doc. 69) the Defendants hereby withdraw their opposition to
the motion and, in turn, their objections to that portion of the report and
recommendation that the Court grant plaintiffs Rule 41 motion to
dismiss voluntarily the complaint with prejudice.
II.
In connection with defendants' Motion for Sanctions, defendants
hereby request permission to withdraw the motion or, in the
alternative, to withdraw their objections to that portion of the report and
recommendation that finds defendants failed to comply with the 21 day
safe harbor provision of Rule 11 and that failure to comply with the
safe harbor rule is the defect sufficient to sustain the magistrate
3
The relevant provisions of the Rules of Professional Conduct state:
a lawyer may withdraw from representing a client if: ... (4) the client insists upon taking action
that the lawyer considers repugnant or with which the lawyer has a fundamental disagreement; (5)
the client fails substantially to fulfill an obligation to the lawyer regarding the lawyer's services
and has been given reasonable warning that the lawyer wi11 withdraw unless the obligation is
fulfilled; (6) the representation will result in an unreasonable fmancial burden on the lawyer or
has been rendered unreasonably difficult by the client; or (7) other good cause for withdrawal
exists.
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judge's recommendation that defendants' motion for sanctions under
F.R.Civ.P. Rule 11 be denied.
III.
In connection with defendants' Motion for Attorneys Fees and Costs,
withdraw their objection to the Report and Recommendation to the
portion that basis [sic] the denial on the grounds that the motion for
attorney fees was not supported by exhibits or affidavits. (See
M.D.P.A. LR 7.3 Exhibits and Other Documents Substantiating
Motions.... Defendants further withdraw their objection to the Report
and Recommendation to the extent that it denied defendants' oral
request for an evidentiary hearing at oral argument as untimely").
(Id. at I-III). On June 29,2012, the Court issued an Order (1) granting Defendants
permission to withdraw the previous Objections (Doc. 108) to the R&R, (2) adopting the
R&R, (3) denying Defendants' Motion for Sanctions, (4) denying Defendants' Motion for
Attorney's Fees, (5) granting Plaintiffs Motion to Voluntarily Dismiss with Prejudice, and (6)
closing the case. (Doc. 132).
,
Nearly a year later, Defendant Glassic filed a Motion for Extension of Time & Page
Limit. (Doc. 133). On June 26,2013, he filed a Motion to Terminate Attorney Collins from
Representing Defendants. (Doc. 136). On June 28,2013, he also filed a Motion for Relief
from Judgment. (Doc. 137). In his Brief in Support of his motion, Defendant Glassic stated
that "[o]n June 22, 2012, Attorney Michael Collins filed Amended Objections to the
Magistrate Judge's Report and Recommendations without the defendants' authorization or
knowledge as to its contents, that were in complete contrast with what was agreed upon."
(Doc. 138, at 5).
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The Court scheduled a hearing on Defendants' pending motions for September 11,
2013. (See Sept. 5, 2013 Order, Doc. 144). At the hearing, the Court heard sworn testimony
from Attorney Collins and Defendant Glassic, and also heard argument from Collins and
both Defendants. Counsel for Plaintiff participated to a limited extent. At the conclusion of
the hearing, the Court orally granted Defendants' Motion to Terminate Attorney Collins and
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memorialized the verbal order in a written order. (Doc. 147).
The parties also expressed a willingness to submit to mediation one final time. As a
result, the Court referred the case to Magistrate Judge Schwab (Doc. 148), who held a
settlement conference on October 7,2013. Unfortunately, the negotiations were
unsuccessful, prompting this Court to rule on Defendants' Motion for Relief from Judgment.
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(Doc. 137).
III. Analysis
Defendants filed their Motion for Relief from Judgment (Doc. 137) lion the grounds of
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mistake, inadvertence, excusable neglect, new evidence, 'fraud, and the exceptional
circumstances that ensued after the Court directed the Defendants' to file their Revised
Objections to Magistrate Judge Blewitt's Report and Recommendation." (Doc. 138, at 1).
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Both Defendants swear that they "never authorized Attorney Collins to 11/e Amended
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Objections to ask the Court to adopt the Magistrate Judge's Report and Recommendation,
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withdraw the motion for Attorney's fees and costs, or the motion for sanctions." (Doc. 137,
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Ex. A, at1f5; Doc. 137, Ex. B, at1f 13).
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In an affidavit in support of their motion, Defendant Glassic swears that he first
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learned that Attorney Collins had withdrawn all objections to the R&R "[o]n or about
February 28, 2013, after talking to another Attorney regarding Malicious Prosecution for the
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Plaintiffs actions." (Doc. 137, Ex. B, at1f 12).
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"On motion and just terms, the court may relieve a party or its legal representative
from afinal judgment, order, or proceeding for the following reasons: (1) mistake,
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inadvertence, surprise, or excusable neglect; ... (3) fraud ... misrepresentation, or other
misconduct of an adverse party, ... or (6) any other reason that justifies relief." FED. R. CIV.
P. 60(b)(1), (3), (6).4
60(b)(1)
Defendants, as the prevailing party, seek relief from judgment because they wish to
"get the record straight." (Transcript of Sept. 11,2013 Hearing, Doc. 152, at 8:20-22).
Excusable neglect
"The test for 'excusable neglect' is equitable, and requires us to weigh the 'totality of
the circumstances.'" Nara v. Frank, 488 F.3d 187, 193-94 (3d Cir. 2007) (internal citations
omitted). "In particular, we consider 1) the danger of prejudice to the other party; 2) the
length of the delay and its potential impact on judicial proceedings; 3) the reason for the
delay-and whether it was within the movant's control; and 4) whether the movant acted in
good faith. Id.
II
4 Defendants filed their motion for relief from judgment pursuant Rule 60(b) of the Pennsylvania Rules of
Civil Procedure. Because this is a federal case, the Court will apply the Federal Rules of Civil Procedure, which are
substantively identical to the state rules.
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This case had been closed for nearly a year before Defendants moved for relief from
judgment. (Doc. 137). Plaintiff filed a motion to voluntarily dismiss the case as early as May
2011. (Doc. 69). To grant Defendants' motion at this stage when Plaintiff believed the case
had been resolved and Defendants had been declared the prevailing parties would
prejudice Plaintiff by forcing it to litigate claims it attempted to give up over two years ago.
While Defendants are technically within the one-year window in which to 'file a Rule
60(b) motion,5 they could have raised their concerns about Attorney Collins's representation
as soon as he 'filed their Revised Objections, much as they did when Attorney Anders filed
his Motion to Withdraw Representation. Attorney Anders filed his Motion to Withdraw (Doc.
102) on December 21, 2011 which the Court granted on December 28, 2011 (Doc. 106),
and Defendants filed their Motion for Reconsideration on January 4, 2012 (Doc. 112). The
Court was able to resolve the issue of Attorney Anders's representation of Defendants
quickly because Defendants alerted it of the dispute with Attorney Anders in atimely
manner. Similarly, though the Court adopted the R&R aweek after receiving Defendants'
Revised Objections (Doc. 123), it easily could have held a hearing much earlier than it did
on September 11, 2013 had Defendants acted in a timelier manner.
Furthermore, Defendants claim that they did not learn of this Court's adoption of the
R&R until approximately February 28,2013. 6 Yet, as early as April 15, 2011, Attorney
5 "A motion under Rule 60(b) must be made within a reasonable time--and for reasons (I), (2), and (3) no
more than a year after the entry of the judgment or order or the date of the proceeding." FED. R. CIV. P. 60(c)(l).
6 To the extent Defendants claim their "discovery" of Attorney Collins's actions constitutes "new
evidence," the Court rejects this assertion because the "newly discovered evidence" exception requires that the
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Anders advised Defendants to monitor this case's progress through the Court's PACER
system. (Doc. 112, at App. 15). At the September 11,2013 hearing, the Court inquired of
Defendants:
THE COURT: There's been some suggestion in the record that, very early on,
your prior attorney Mr. Anders advised you to monitor the Electronic Court
Filing system documents, and my understanding is you have access to that.
Are you telling me that you never saw the document that Mr. Collins filed on
June 22, 2012?
MS. GORKA: No, I did not.
THE COURT: Did you not look for it?
MS. GORKA: I haven't been on the PACER system, Mike has.
(Doc. 152 at 8:4-12). Mr. Glassic never answered the question of whether he had seen the
Revised Objections to the R&R filed by Attorney Collins on the PACER system.
In Nara, the Commonwealth had failed to file timely objections to a Report &
Recommendation, resulting in the district court's adoption of it. The Commonwealth then
filed a Rule 60(b)(1) motion, which the district court denied. On appeal, the Third Circuit
found:
There is no evidence the Commonwealth acted in bad faith. Nevertheless, the
Commonwealth's overall negligence in handling the matter precludes us from
finding "excusable neglect." First, the District Court found that the Magistrate
Judge served the R & R upon Mr. Nara and the Commonwealth's attomeys
by first-class mail. The Commonwealth has presented no evidence to the
contrary. Second, attorneys practicing in the Western District of Pennsylvania
were under a standing order to register with the Case Management/Electronic
Case Files (CM/ECF) system by July 1, 2005. If the Commonwealth's
evidence "with reasonable diligence, could not have been discovered in time to move for a new trial under Rule
59(b)." FED. R. CrY. P. 60(b)(2).
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attorneys had complied with that order, they would have received immediate
electronic notification that the Magistrate Judge had issued the R & Rand
could have accessed it by hyper-link. Finally, the Commonwealth failed to
respond to the District Court's order for 17 days. Despite the urgency of the
situation, the Commonwealth has offered no excuse for this latter delay. We
cannot conclude the Commonwealth's failure to object to the R & R for over
six weeks was excusable.
Id. at 194.7 The Third Circuit also found that "the Commonwealth's failure to object was not
caused by forces outside its control," but rather, "[i1f the Commonwealth's attorneys had
complied with the Western District's standing order, they would have had immediate notice
of the R &R's filing and access to it." Id. at 197.
Based on Defendants' demonstrated ability to monitor the docket by responding to
Attorney Anders's Motion to Withdraw and the evidence they submitted which shows he
advised them to monitor the progress of this case via PACER, the Court concludes that the
delay was within Defendants' control.
Thus, if the Court granted Defendants' Motion for Relief from Judgment (Doc. 137),
(1) Plaintiff would be prejudiced, (2) the case will have been ongoing for 'five years with little
progress made, and (3) the ability to file timely objections to Attorney Collins's actions was
entirely within Defendants' control. Without discussing whether Defendants acted in good
faith, the Court finds there was no excusable neglect that would warrant granting
Defendants' Motion for Relief from Judgment.
7 "In early 2001, the federal courts began implementing the Case ManagementlElectronic Case Files
(CMlECF). Under the program, federal courts and parties file and issue all documents electronically (with certain
exceptions for pro se prisoners, etc.). Attorneys of record receive email notices, containing hyperlinks to documents,
immediately upon every filing." Nora, 488 F.3d at 194, n.ll.
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Mistake, Inadvertence, Surprise
The exchange of emails between Defendant Glassic and Attorney Collins leading up
to the filing of Defendants' Revised Objections shows that the two were in regular contact.
(Doc. 138, Ex. 8). It is extremely difficult for this Court to believe that between June 11,
2012 and June 20,2012, Attorney Collins and Defendant Glassic exchanged multiple
rounds of e-mails discussing their approach to the Revised Objections, and that after June
22nd when Attorney Collins filed the Revised Objections, Defendants were ignorant as to
Attorney Collins's action for over eight months.
Attorney Collins was sworn in at the September 11, 2013 hearing and testified that
he had conversed with Defendants by telephone on either June 20th or 21st, 2012, after an
e-mail dated June 20th from Defendant Collins. At the hearing, he had the following
exchange with Defendant Gorka:
Q. Are you saying that you spoke with both Michael and I on the 20th or the
21st or 22?
A. Yes.
Q. And were we at the house? Where were we?
A. My recollection was atelephone call.
Q. Do you know which date?
A. I'm sorry?
Q. Do you know which date? We're saying it's either the 20th or the 21st.
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A. No, I'm not precise. My best recollection is it would have been on the 20th,
although, it may have been on the 21st. It was following Mr. Glassic's email to
me of the 20th, in which he makes reference to affidavits. And I realized at
that stage that my thinking had developed to the point that an opposition was
not or objections was not indicated in this case. And that's why there's no
follow up emails concerning affidavits, because we had reached an
agreement at that time and an understanding that those affidavits would not
be necessary, because we would not be filing objections to the report.
(Id. at 56:6-58:25). Attorney Collins gave the following explanations for withdrawing the
Defendants' original Objections to the R&R:
A. What I very specifically said were, one, there are a number of problems
that were identified in the Report and Recommendation, which I felt were the
fault of your previous counsel. One had to do with the Rule 11 sanctions,
because there had not been the Safe Harbor motion filed, we had that
conversation. That subject was in our conversation.
The second one had to do with sanctions. And I had also felt that Judge
Blewitt, for procedural reasons, had a good point to make that sanctions were
not properly preserved, procedurally....
I further said that, in connection with that, this was not the time and place to
litigate the issues, because we are not going to be bound by anything that
was said in the report, for purposes of our malicious prosecution. That was
my opinion, right or wrong, that was my opinion, and I shared that with you.
I also remember, very distinctly, as part of this conversation, as we made this
important decision, I asked you about emotional distress and the effect the
filing of this lawsuit had on you, personally, and YOll responded very strongly
and poignantly back to me that, indeed, you had. And that was one of the
reasons for moving forward with concluding this with 'finality, taking that as a
prevailing party position, and then pursuing the malicious prosecution action.
We had that discussion in that telephone conversation, prior to my filing the
amended objections and supporting brief.
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(Id. at 57:9-58:14). He further testified that he "did not want a Federal Court, on an issue of
a motion for voluntary dismissal, to be making determinations" that "would have a preclusive
effect if you had a full-blown evidentiary hearing." (Id. at 59:10-13).
During the Court's examination of Defendant Glassic, his sworn testimony largely
dovetailed with that of Attorney Collins:
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Q. So [Attorney Collins] wasn't going to pursue the motion for attorney's fees
or motion for sanctions in this case?
A. Exactly.
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Q. You understood that?
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A. That I understood.
Q. Did you tell him, "No, I want you to pursue those"?
A. I did not.
Q. So you understood that Mr. Collins's intention was not to pursue the
motion for attorney's fees or the motion for sanctions? You understood that?
A. I did understand that, yes.
(Id. at 44:22-45:7). The following exchange with the Court took place later:
Q. What understanding did you have?
A. I had the understanding that he was just going to let the motions go, as far
as not pursuing them, but at the same time put in our objections to the Report
and Recommendation, just so that we could get the Report and
Recommendation of record rejected or terminated, and then the case was
going to be closed. Because -- and then we started working almost
immediately on the malicious prosecution claim.
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(Id. at 46:19-47:12). After the Court concluded its questioning of Defendant Collins, counsel
for Attorney Collins asked him a few follow-up questions:
Q. You understood that, in order to proceed with malicious prosecution, there
had to be finality, an end to the Federal case, correct?
A. Correct.
Q. How did you know that the finality of the Federal Court action had been
reached?
A. Because I believe -- I just assurned it was going to be done with the final
filing. The filing was to basically not pursue the two motions and just file the
objections.
Q. And allow the case to be dismissed?
A. Right.
(Id. at 50:2-5, 51:11-17).
From the excerpts of the transcript above, it is clear that Defendant Glassic
understood that Defendants' Motion for Sanctions (Doc. 72) and Motion for Attorney's Fees
(Doc. 74) likely would not be granted by this Court, and based on this understanding, he
authorized Attorney Collins not to pursue those motions in the Revised Objections. s What is
also clear is that Defendant Glassic understood that once this Court ruled on the R&R, this
federal case would be concluded, and Defendants would pursue their malicious prosecution
8 Though Defendant Gorka was not sworn in at the hearing, during her questioning of Attorney Collins, she
also conceded "I think we're all in agreement that you did address the Safe Harbor issue with the Rule 11 attorney
fees and sanctions." (Doc. 152 at 58: 15-17).
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action in a different forum. As such, the Court finds no mistake, inadvertence, or surprise
that would justify granting Defendants' Motion for Relief from Judgment (Doc. 137).
Effect of a Voluntary Dismissal
In addition to the above discussion pertaining to the Motion for Sanctions and the
Motion for Attorney's Fees, however, Defendant Glassic also believed that the Revised
Objections would contest Judge Blewitt's so-called findings with respect to the merit of
Plaintiffs Complaint:
So he's saying, on your behalf, on Ms. Gorka's behalf, he was withdrawing
his objections to Judge Blewitt's Report and Recommendation so that that
Report and Recommendation was that I grant Plaintiffs Rule 41 motion to
dismiss this case voluntarily. I mean, this is what he wrote. Did you
understand that's what he was going to do?
Q.
A. No, Your Honor.
Q.
You did not understand that?
A. No. I was expecting our objections to be on record. It was very important to
us, because, I mean, it affects our business, our reputation.
But you did, a moment ago, tell me that you understood that whatever Mr.
Collins was going to do was going to end this case.
Q.
A. That's correct, Your Honor.
Q.
You did understand that?
A. Right. But at the same point, getting our objections on the record. I
honestly expected our objections to be on the record.
(Id. at 48:13-49:6). Counsel for Attorney Collins clarified:
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Q. And the only thing you were looking for, actually, is to get your side of the
facts on record somewhere?
A. Correct.
Q. To preserve your reputation?
A. Yes.
(Id. at 51 :18-22). Thus, Defendants sought vindication in their Revised Objections, because
as they interpreted the R&R, Judge Blewitt had determined that Plaintiffs claims against
Defendants were valid and substantiated by the evidence of record. Defendants wished to
pursue this course of action, despite Attorney Collins's explanation that the R&R contained
no findings of fact that would bind subsequent legal proceedings. The Court noted as much
to Defendants:
THE COURT: It seems to me what, perhaps, you failed to understand or what
you have a contrary view of is what the effect of the voluntary dismissal of the
case means, it seems that's where the problem lies. There's an insufficient
understanding, on your part, of what that means, because you did understand
that the case was going to end, but I think what you didn't understand or
frankly didn't want to understand was that no one was going to eradicate or,
in any way, eliminate what was in the Report and Recommendation. I think
that's what troubles you, am I right?
(Id. at 71 :25-72:9). Defendant Gorka responded, "Yes, and that's why we felt objections
would be filed, that's why we wanted that as a matter of record." (Id. at 72:10-11).
Although there was testimony from Attorney Collins as to what the effect of aMotion
to Dismiss under FED. R. CIV. P. 12(b)(6) necessitates when addressing the factual
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allegations of a Complaint, the Court will discuss it here in the hopes of finally putting the
matter to rest.
When Defendants previously filed a Motion to Dismiss (Doc. 8), the Court adopted
(Doc. 17) Judge Blewitt's R&R in which he recommended denying the motion because "[t]he
court must accept as true all ... allegations of the Complaint and all reasonable factual
inferences must be viewed in the light most favorable to plaintiff." (Doc. 16, at 3). The
standard when deciding a Motion to Dismiss under Rule 12(b)(6) requires a reviewing court
to accept as true all of the factual allegations in acomplaint. Therefore, when the Court
denied Defendants' Motion to Dismiss, there was no finding that Plaintiff had proven its case
or had established the facts alleged in the Complaint. 9
However, Plaintiff did move to voluntarily dismiss the Amended Complaint, thus
precluding the need for a resolution on the merits. Though Defendants are the prevailing
parties, they take issue with Judge Blewitt's R&R because he concluded that:
Despite Plaintiff's Motion for Voluntary Dismissal of its case, we find that there
was a substantial basis for Plaintiff's claims in both of its pleadings that
Defendants were liable to it under the Lanham Act and as such, we do not
find that Plaintiff acted in bad faith or with malice when it raised its claims
under the Act. Thus, we do not find that there was sufficient culpable conduct
on the part of Plaintiff. We further find that this case is not an exceptional
case in which attorney fees are warranted. As mentioned, Defendants
previously sought to dismiss Plaintiffs Lanham claims in their Rule 12(b)(6)
Motion to Dismiss and they were unsuccessful in dismissing any of those
claims. (Doc. 17).
9 The Court recognizes that Defendants are dissatisfied with the content of the R&R and are unhappy that
the filings in this case are a matter of public record. However, Defendants must also recognize that the R&R made
no findings in favor of Plaintiff on the claims alleged in the Amended Complaint, which Plaintiff voluntarily
withdrew before the Court ever made a ruling on the merits.
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(Doc. 101, at 21). The Court makes two observations here: (1) Judge Blewitt's
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determination that there was a "substantial basis for Plaintiffs claims in both of its
pleadings" and that Plaintiff did not act "in bad faith or with malice" was with respect to
Defendants' Motion for Attorney's Fees, which Defendants conceded they were not entitled
to and did not oppose withdrawing, and (2) the proper forum for deciding the issues of
malice, bad faith, and "get[ting] the record straight" is in Defendants' malicious prosecution
action, if and when it commences.
In fact, the portion of the R&R disclJssing Plaintiffs motion to voluntarily dismiss the
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case was limited to the following discussion:
At oral argument, Defendants stated that they had no opposition to Plaintiffs
Motion for Voluntary Dismissal with Prejudice (Doc. 69). Defendants stated
that they only want the Court to retain jurisdiction over this case so that it can
rule on their Motion for Sanctions and Motion for Attorney Fees (Docs. 72 and
74) before the Court dismisses this case.
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We find that the Court can grant Plaintiff's Motion for Voluntary Dismissal with
Prejudice (Doc. 69) and still rule on Defendants' two pending motions for
sanctions and attorney's fees if they are considered collateral motions.
As the Court stated in Stauffer v. D.R. Horlon, Inc. --New Jersey Horlon, Inc.
-New Jersey, 2008 WL 5215951, *2 (E.D. Pa. December 10, 2008), the Court
stated: Although a timely notice of voluntary dismissal under Rule 41(a) (1)(A)
usually ends a case and deprives the courl of jurisdiction to issue a merits
ruling, the courl may continue to decide "collaterar issues, including
sanctions, costs, and attorneys' fees. Id. at 166, n. 8 {citing Cooter & Gell v.
Harlmarx Corp., 496 U.S. 384, 396-98, 110 S.Ct. 2447, 110 L.Ed.2d 359
(1990)).
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(Doc. 101, at 9) (emphasis added). Thus, in addressing Defendants' Motion for Attorney's
Fees and Motion for Sanctions, Judge Blewitt was not addressing the merits of Plaintiffs
case, but deciding only collateral issues.
In other words, Judge Blewitt, and by extension, the undersigned Judge, never
issued a merits ruling in this case. Plaintiff never established any claims or any facts in
support of its claims. Should Defendants pursue a malicious prosecution action against
Plaintiff, they will do so on a clean slate with no findings of fact from this Court to bind courts
in subsequent actions.
In conclusion, the Court finds no mistake, inadvertence, surprise, or excusable
neglect with respect to the Revised Objections (Doc. 130) that Attorney Collins submitted on
Defendants' behalf.
Situations in which relief has been granted pursuant to Rule 60(b)(1) include:
Where the defendant's attorney did not know that the defense of forgery was
available when he agreed to a consent judgment against his client in an
action on a written guaranty note; where a defendant corporation had no
actual notice that a suit had been entered against it; and where an attorney
confused two similar cases involving his client.
Boughner v. Secyof Health, Ed. & Welfare, 572 F.2d 976,977-78 (3d Cir. 1978). None of
these situations apply to this case. There simply was no mistake, inadvertence, surprise, or
excusable neglect in this case which warrants relief from judgment.
60(b)(3)
"To prevail, the movant must establish that the adverse party engaged in fraud or
other misconduct, and that this conduct prevented the moving party from fully and fairly
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presenting his case." Stridiron v. Stridiron, 698 F.2d 204, 207 (3d Cir. 1983). "In order to
sustain the burden of proving fraud and misrepresentation under Rule 60(b)(3), the
evidence must be clear and convincing." Brown v. Pennsylvania R. Co., 282 F.2d 522,527
(3d Cir. 1960).
"[A]n attorney's deliberate attempt to mislead the court may be such afraud as will
permit the reopening of ajudgment." Bandai America Inc. v. Bally Midway Mfg. Co., 775
F.2d 70,73 (3d Cir. 1985).10 "Failure to disclose or produce evidence requested in discovery
can constitute Rule 60(b)(3) misconduct." Stridiron, 698 F.2d at 207.
Defendants argue that Plaintiff has made fraudulent allegations throughout the
course of these proceedings, but even if Plaintiff did act in bad faith, such "fraud" is not the
basis for re-opening the case. Rule 60(b)(3) relief is granted when an opposing party's fraud
prevented the moving party 'from fairly presenting its case.
For instance, in the seminal case of Stridiron, the plaintiff-husband's dishonest
discovery answers that he had never been married before his marriage to defendant-wife
were subsequently proven untrue by a certificate of a prior marriage that the wife procured
after the trial court awarded a divorce decree the husband sought. The Third Circuit held
that such dishonesty constituted the type of fraud that would justify vacating a divorce
decree and granting a new trial. See also Bethel v. McAllister Bros., Inc., 81 F.3d 376 (3d
Cir. 1996) (affirming district court's grant of a new trial under Rule 60(b)(3) because the
10 To the extent Defendants contend that Attorney Collins engaged in fraud by misleading this Court into
adopting the R&R, the Court rejects such assertions for the reasons set forth in the Court's discussion of Rule
60(b)(1) in this Opinion.
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plaintiff had given patently contradictory testimony at trial and at a subsequent arbitration in
aseparate case). Thus, in Stridiron, the plaintiffs fraud, which was proven by clear and
convincing evidence, prevented the defendant from fully and fairly presenting her case.
Here, Plaintiff does not wish to pursue its claims against Defendants, so there is no need for
either side to fully and fairly present its case.
Furthermore, as the Court stated above, determining whether Plaintiff did make
fraudulent and unfounded accusations against Defendants for the sole purpose of harming
them financially, emotionally, and reputationally is a matter that will be the subject of any
future malicious prosecution case that Defendants may bring against Plaintiff.
Therefore, the Court will deny Defendants' Motion for Relief from Judgment (Doc.
137) on the basis of fraud or other misconduct.
60(b)(6)
'U[E]xtraordinary circumstances' must be present to justify the use of the Rule
60(b)(6) catch-all provision to vacate the judgment." Budget Blinds, Inc. v. White, 536 F.3d
244,251 (3d Cir. 2008). "This requirement exists in order to balance the broad language of
Rule 60(b)(6), which allows courts to set aside judgments for 'any' reason justifying relief,
with the interest in the finality of judgments." Id. at 255. "Rule 60(b)(6) exists so that courts
may 'vacate judgments whenever such action is appropriate to accomplish justice/ in
situations that are not addressed by the other five clauses of Rule 60(b)." Id. at 254 (internal
citations and quotation marks omitted).
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We have explained that a showing of extraordinary circumstances involves a
showing that without relief from the judgment, an extreme and unexpected
hardship will result. This hardship requirement may sometimes be satisfied
when the judgment precluded an adjudication on the merits. But extraordinary
circumstances rarely exist when a party seeks relief from a judgment that
resulted from the party's deliberate choices.
Id. at 255 (internal citations and quotation marks omitted); see also Coltec Indus., Inc. v.
Hobgood, 280 F.3d 262, 275 (3d Cir. 2002) ("Coltec, ... deliberately chose to negotiate
away its constitutional claims while actively represented by competent counsel."); In re Fine
Paper Antitrust Litig., 840 F.2d 188, 195 (3d Cir. 1988) ("They do not contend that their
choice to forego appellate remedies was other than counseled and knowledgeable".).
As discussed above, Defendant Glassic admitted that he and Attorney Collins
agreed that Defendants would not pursue their Motion for Sanctions (Doc. 72) and Motion
for Attorney's Fees (Doc. 74) in the Revised Objections. Defendant Glassic also admitted he
knew that after Attorney Collins filed Defendants' Revised Objections, the case would be
over. Therefore, there is no basis to award Rule 60(b)(6) relief because "extraordinary
circumstances rarely exist when a party seeks relief from ajudgment that resulted from the
party's deliberate choices." Budget Blinds, 536 F.3d at 255. 11
Defendants cite to Boughner v. Secretary of Health, Education & Welfare for the
proposition that they should not be bound by Attorney Collins's actions. 572 F.2d 976, 978
(3d Cir. 1978) ("in the factual setting here, which warrants relief under Rule 60(b){6),
appellants are not bound by the acts of their attorney for the purposes of the rule.").
11 The same reasoning and conclusion would apply in the Court's analysis of Defendants' 60(b)( 1) claim of
mistake, inadvertence, surprise, or excusable neglect.
22
However, the factual circumstances of Boughner were unique and are not analogous to this
case:
All six appellants were represented by Peter Krehel, Esquire, who instituted
the actions in the district court. In each case the Secretary filed a motion for
Summary Judgment. These motions were unopposed and granted pursuant
to Local Rule 301.01(e), of the United States District Court for the Middle
District of Pennsylvania. Present counsel for appellants was then substituted
and in each case moved to vacate the summary judgments pursuant to
F.R.Civ.P. 60. The appellants relied specifically on sections 60(b)(1) and
60(b)(6), citing as the basis for the motion: (1) Krehel's intense involvement in
his campaign for the office of Common Pleas Judge of Northumberland
County, Pennsylvania; (2) the loss of his secretary who allegedly was
responsible for his calendar; and (3) Krehel's large backload of cases. Their
reasons were insufficient in the judgment of the district court. However, a
survey was conducted to determine how many other summary judgment
motions Krehel had permitted to go unopposed. The results of the survey
were astounding. Krehel had failed to file a responsive pleading in a total of
52 H.E.W. cases. This egregious conduct amounted to nothing short of
leaving his clients unrepresented.
Id. at 977.
Boughner represented the "extraordinary circumstances" that would justify the award
of relief from judgment under Rule 60(b)(6). Here, though Defendants were dissatisfied with
the content of the Revised Objections (Doc. 130), the evidence elicited at the September
11,2013 hearing shows that they understood they would not pursue Motion for Sanctions
(Doc. 72) and Motion for Attorney's Fees (Doc. 74) any further, and that this particular case
would end once Attorney Collins filed Defendants' Revised Objections and the Court ruled
on the pending R&R.
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IV. Conclusion
For the foregoing reasons, the Court will deny Defendants' Motion for Relief from
Judgment. (Doc. 137). The Court also will deny Defendants' Motion for Hearing (Doc. 151)
as moot. Aseparate Order follows.
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Robert D. Manan;
United States District Court Judge
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