Durham School Services LP v. General Drivers Warehousemen and Helpers Local Union No 509
Filing
76
ORDER denying 66 Motion for Sanctions Signed by Honorable David C Norton on 3/21/16.(elim, )
FOR THE DISTRICT OF SOUTH CAROLINA
CHARLESTON DIVISION
DURHAM SCHOOL SERVICES, L.P.,
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Plaintiff,
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vs.
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GENERAL DRIVERS,
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WAREHOUSEMEN and HELPERS,
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LOCAL UNION NO. 509, a/w
)
INTERNATIONAL BROTHERHOOD
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OF TEAMSTERS,
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of the National Labor Relations Board,
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Defendant.
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DURHAM SCHOOL SERVICES, L.P.,
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Third-Party Plaintiff,
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vs.
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PIEDMONT GRIEVANCE COMMITTEE, )
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Third-Party Defendant.
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)
No. 2:14-cv-1241-DCN
ORDER
This matter is before the court on third-party defendant the Piedmont Grievance
Committee’s (“the PGC”) motion for sanctions pursuant to 28 U.S.C. § 1927 and the
court’s inherent equitable powers requesting that the court order plaintiff Durham School
Services, L.P. (“Durham”) to pay the reasonable expenses, including attorney’s fees and
costs, incurred in defending this action. For the reasons set forth below, the court denies
the PGC’s motion.
1
I. BACKGROUND
Durham is a limited partnership organized under the laws of Delaware engaged in
providing bus transportation to students in Charleston County. Durham’s Mot. for
Summ. J. 2. Durham operates a fleet of over 350 school buses and employs over 400
school bus drivers. Id. Defendant General Drivers, Warehousemen, and Helpers, Local
Union 509 (“the Union”) is an unincorporated labor union with its principal place of
business in West Columbia, South Carolina. Id. at 3. Durham and the Union entered into
a collective bargaining agreement in 2007, and again in 2013 (“the 2013 CBA”). Id.
This case arose from Durham’s termination of a Union employee. Id. at 9. The
termination led to a disputed decision issued by the PGC, a bi-partite committee
established to hear unresolved grievances between Durham and the Union. Id.
On April 4, 2014, Durham filed the present action against the Union pursuant to
Section 301 of the Labor Management Relations Act of 1959 (“LMRA”), 29 U.S.C.
§ 185, alleging that the “PGC panel acted in bad faith, arbitrarily, and capriciously” in
rendering its decision, and thereby denied Durham “a fundamentally fair hearing.”
Compl. ¶ 22. Durham asked that the court issue an “order vacating and nullifying the
PGC decision” and that “the costs of this proceeding be taxed to [the Union].” Id. at 8.
On April 14, 2014, the Union filed a counterclaim seeking enforcement of the PGC
decision and an order requiring Durham to pay backpay to the discharged employee. On
May 12, 2014, Durham filed a third-party complaint against the PGC and individual
members of the PGC alleging in a breach of contract claim that the PGC breached the bylaws in issuing its decision.
2
On July 22, 2014, the PGC’s counsel sent Durham’s counsel a letter highlighting
reasons why he believed the PGC and the individual member defendants should be
dismissed from the lawsuit, including subject matter jurisdiction under 29 U.S.C. § 185,
immunity, and Rule 14. See PGC’s Mot. Ex. A. The letter stated that if the action
against PGC was not dismissed, the PGC would proceed with a motion to dismiss and
seek costs and attorney’s fees incurred in having to defend the claim. Id. On August 1,
2014, Durham’s counsel responded to the letter, requesting additional time to research the
issues raised in the letter. PGC’s Mot. Ex. B. On August 27, 2014, Durham’s counsel
responded, stating that he would agree to dismiss the individual defendants but not the
PGC. Id. Durham argued that the PGC did not have immunity as an arbitrator in the
traditional sense because it was a joint grievance resolution body and membership
organization whose proceedings bear only minimal similarity to arbitration. Id. Durham
further argued that the by-laws created a contract between the PGC and its members, the
Union and Durham. Id. Durham further contended that the cases cited by the PGC were
factually dissimilar and that Durham had not found “any case that expressly applies
[arbitral] immunity to a joint grievance resolution body such as the PGC.” Id. Durham
did, however, agree to reconsider its position if the PGC could cite a case that
“specifically addressed an organization such as the PGC.” Id.
On March 27, 2015, the Union, Durham, and the PGC each filed motions for
summary judgment. On June 1, 2015, the court conducted a hearing on the motions for
summary judgment. On July 29, 2015, the court denied Durham’s motion for summary
judgment, granted the Union’s motion for summary judgment, and granted the PGC’s
motion for summary judgment. Pertinent to this motion, the court held that the PGC was
3
immune from suit under the doctrine of arbitral immunity. On August 13, 2015, Durham
appealed the court’s ruling on the motions for summary judgment. The only issues on
appeal relate to the dispute between Durham and the Union and not the PGC.
On August 28, 2015, the PGC filed the present motion for sanctions. The PGC
cites its financial limitations in support of its motion, asserting that “[i]n order to pay for
the fees and costs incurred, [it] had to enact a special assessment against its members in
order to raise the necessary funds.” PGC Mot. 4. Durham filed a response in opposition
to the motion on September 14, 2015, and the PGC replied on September 24, 2015. The
motion has been fully briefed and is now ripe for the court’s review.1
II. DISCUSSION
The PGC argues that Durham “acted unreasonably, vexatiously, without
justification and in bad faith in the filing and prosecution of this action after [the] PGC
notified Durham that there was no legal basis for its claims against [the] PGC.” PGC’s
Mot. 5. The PGC moves for sanctions pursuant to both 28 U.S.C. § 1927 and the
“general equitable powers” of this court. PGC’s Mot. 2. In response, Durham argues
that sanctions should not be imposed pursuant to § 1927 or the court’s inherent powers
because it did not multiply the proceedings or act in bad faith. Durham Resp. 4–5. The
court will first ensure that it has jurisdiction to rule on the PGC’s motion in light of the
pending appeal. The court will then analyze whether the PGC is entitled to sanctions
under either standard below.
1
The court will address the legal standards applicable to each claim for attorney’s
fees below.
4
A.
Jurisdiction
Even though Durham has filed its notice of appeal, neither party claims that this
court lacks jurisdiction to rule on the PGC’s motion for sanctions. However, this court
has an independent obligation to ensure that jurisdiction in fact exists. Arbaugh v. Y&H
Corp., 546 U.S. 500, 514 (2006). When a party files a notice of appeal, jurisdiction over
all questions presented in the appeal is transferred from the district court to the court of
appeals. Griggs v. Provident Consumer Disc. Co., 459 U.S. 56, 58 (1982); Jankovich v.
Bowen, 868 F.2d 867, 871 (6th Cir. 1989). Accordingly, notwithstanding the filing of a
notice of appeal, district courts retain jurisdiction to determine collateral and ancillary
matters that do not affect the questions presented on appeal. Langham-Hill Petroleum,
Inc. v. S. Fuels Co., 813 F.2d 1327, 1330–31 (4th Cir. 1987); Weaver v. Fl. Power &
Light Co., 172 F.3d 771, 771 (11th Cir. 1999). An award of costs and attorney’s fees has
generally been recognized as a collateral issue that is appropriate for resolution by the
trial court even after a party has filed a notice of appeal. See Buchanan v. Stanships, Inc.,
485 U.S. 265, 268 (1988); Langham-Hill, 813 F.2d at 1331 (“[T]he request for attorney’s
fees raised issues collateral to the main cause of action. Attorney’s fees are not
compensation for the injury giving rise to the action and thus are not an element of
relief.” (citing White v. N.H. Dep’t of Emp’t Sec., 455 U.S. 445, 452 (1982))).
The present motion for sanctions relates to Durham’s claims against the PGC.
Durham appealed the court’s ruling in its order as it pertains to the Union and not the
PGC. The issues in the motion for sanctions are collateral and ancillary to the issues
presented in Durham’s appeal. Therefore, the court retains jurisdiction to decide this
motion despite Durham’s pending appeal.
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B.
28 U.S.C. § 1927
The PGC first seeks attorney’s fees pursuant to 28 U.S.C. § 1927. Title 28 United
States Code section 1927 provides that “[a]ny attorney or other person admitted to
conduct cases in any court of the United States or any Territory thereof 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.” “The unambiguous text of § 1927 aims only at attorneys who
multiply proceedings.” DeBauche v. Trani, 191 F.3d 499, 511 (4th Cir. 1999). Section
1927 “does not distinguish between winners and losers, or between plaintiffs and
defendants.” Gagliardo v. Peninsula Reg’l Med. Ctr., 467 F. App’x 237, 238 (4th Cir.
2012) (quoting Roadway Express, Inc. v. Piper, 447 U.S. 752, 762 (1980)). Moreover,
“[t]he statute is indifferent to the equities of a dispute and to the values advanced by the
substantive law.” Id. (quoting Roadway, 477 U.S. at 762). Instead, the statute is
“concerned only with limiting the abuse of court processes.” Id. “Thus, an attorney who
files a meritorious claim and wins a substantial verdict may still be assessed sanctions
under § 1927 if, during the case, he ‘multiplies the proceedings . . . unreasonably and
vexatiously.’” DeBauche, 191 F.3d at 511. Likewise, an attorney who files a meritless
claim may not be sanctioned under § 1927 if he does not engage in” conduct which
multiplies the proceedings vexatiously and unreasonably. Id.
For this reason, a court considering the propriety of a § 1927 award must focus
“on the conduct of the litigation and not on its merits.” Id. (quoting DeBauche, 191 F.3d
at 511) (emphasis added). The Fourth Circuit has held that “[b]ad faith on the part of the
attorney is a precondition to imposing fees under § 1927.” E.E.O.C. v. Great Steaks, Inc.,
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667 F.3d 510, 522 (4th Cir. 2012) (citing Chaudhry v. Gallerizzo, 174 F.3d 394, 411 n.14
(4th Cir. 1999); Brubaker v. City of Richmond, 943 F.2d 1363, 1382 n.25 (4th Cir. 1991)
(emphasis added). The Fourth Circuit reviews a district court’s award under § 1927 for
an abuse of discretion. Chaudhry, 174 F.3d at 410. The factual findings underpinning
the district court’s award are reviewed for clear error. Ohio River Valley Envtl. Coal.,
Inc. v. Green Valley Coal Co., 511 F.3d 407, 413 (4th Cir. 2007).
The parties first disagree as to the appropriate standard to apply in determining
whether to award fees under § 1927. Durham argues that the PGC must establish bad
faith. The PGC argues that while some courts cluster the standard into the phrase “bad
faith,” courts should employ the definition of bad faith as defined in Chambers v. Nasco,
Inc., 501 U.S. 32, 45–46 (1991), to include “vexatiously, wantonly, or for oppressive
reasons.”
It is clear that in the Fourth Circuit, “[b]ad faith on the part of the attorney is a
precondition to imposing fees under § 1927.” Great Steaks, 667 F.3d at 522 (internal
citations omitted) (emphasis added). Further, § 1927 “focuses on the conduct of the
litigation and not on its merits.” Id. (quoting DeBauche, 191 F.3d at 511) (internal
quotation marks omitted). Thus, in determining whether the PGC is entitled to fees under
§ 1927, the court must determine whether Durham acted in bad faith by unreasonably and
vexatiously multiplying the proceedings.
The PGC asserts that Durham multiplied the proceedings by filing its third-party
complaint because it added claims and parties to the action. After the Union asserted its
counterclaim against Durham for enforcement of the PGC’s decision, Durham filed a
third-party complaint against the PGC asserting a breach of contract claim. There were
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no discovery disputes between the parties, and the only documents Durham filed other
than the original complaint were its motion for summary judgment and its responses in
opposition to the Union and the PGC’s motions for summary judgment.
The Fourth Circuit has found that a party’s refusal to dismiss a case that lacks
merit may constitute multiplying proceedings within the meaning of § 1927. Salvin v.
Am. Nat. Ins. Co., 281 F. App’x 222, 226 (4th Cir. 2008) (“By refusing to voluntarily
dismiss the case once its lack of merit became evident, [plaintiff] protracted the
litigation.”). The PGC cites Salvin in support of its motion. However, Salvin is easily
distinguishable. In Salvin, all but one of the plaintiff’s claims were dismissed. Id. at 224.
During a deposition, the plaintiff gave answers that “made clear that her remaining
breach of contract claim lacked merit,” but her attorney refused to voluntarily dismiss the
remaining claim. Id. Rather, the defendant was forced to filed a motion for summary
judgment. Id. In response, the plaintiff relied on an alternative theory based on factual
allegations not included in the complaint and included a new affidavit from the plaintiff
that contained statements contradicting the testimony she provided in her deposition. Id.
Here, Durham filed one third-party complaint asserting a breach of contract claim
and continued to pursue that same claim throughout discovery and the summary
judgment briefing. Unlike the plaintiff in Salvin, Durham did not add new claims or new
allegations after the close of discovery, nor did Durham submit contradictory testimony.
The court finds DeBauche more applicable under these circumstances. In DeBauche, the
plaintiff filed a complaint under 42 U.S.C. § 1983. DeBauche, 191 F.3d at 503. After the
defendants filed a motion to dismiss, the plaintiff filed an amended complaint to modify
some of the allegations and add additional defendants. Id. The district court awarded
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defendants attorney’s fees under § 1927. Id. at 509. The Fourth Circuit recognized that
§ 1927 “aims only at attorneys who multiply proceedings” and that the plaintiff only filed
one amended complaint against the defendants seeking sanctions. Id. at 511. The court
vacated the sanctions award pursuant to § 1927, holding that, as a matter of law, “the
filing of a single complaint cannot be held to have multiplied the proceedings
unreasonably and vexatiously.” Id. at 511–12. Similarly, Durham filed only the thirdparty complaint and a motion for summary judgment against the PGC. Therefore,
Durham cannot be held to have multiplied the proceedings unreasonably and vexatiously.
However, even if Durham had vexatiously multiplied the proceedings, the PGC
cannot establish bad faith to support and award of sanctions under § 1927. The PGC
argues that Durham acted in bad faith by recklessly pursuing its claims against the PGC
despite arbitral immunity. PGC’s Reply 10–12. “In the context of an award of attorney’s
fees, the Supreme Court has found that bad faith exists where ‘a court finds that fraud has
been practiced upon it, or that the very temple of justice has been defiled,’ or where a
party ‘delay[s] or disrupt[s] the litigation or hampers a court order’s enforcement.’” Dash
v. Mayweather, No. 3:10-cv-1036, 2011 WL 5357894, at *2 (D.S.C. Nov. 7, 2011)
(quoting Chambers, 501 U.S. at 46).
There is absolutely no indication that Durham committed a fraud upon this court,
nor did Durham did delay or disrupt the litigation or hamper the enforcement of a court
order. Rather, it appears that the PGC’s motion focuses more on the merits of Durham’s
claims rather than its conduct throughout the course of the litigation. However, the
Fourth Circuit has held that sanctions cannot be imposed pursuant to § 1927 for filing a
frivolous complaint. See DeBuache, 191 F.3d at 512. Although courts may impose
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sanctions for filing a frivolous complaint under Federal Rule of Civil Procedure 112 the
PGC did not move for sanctions pursuant to Rule 11.
Therefore, the court holds that Durham did not multiply the proceedings or act in
bad faith as a matter of law. As such, the PGC is not entitled to attorney’s fees pursuant
to § 1927.
C.
Inherent Authority to Impose Sanctions
The PGC alternatively moves for attorney’s fees pursuant to the court’s inherent
equitable powers. “The district court has the inherent authority to impose sanctions
against a party who ‘has acted in bad faith, vexatiously, wantonly, or for oppressive
reasons.’” Thomas v. Ford Motor Co., 244 F. App’x 535, 538 (4th Cir. 2007) (quoting
Chambers, 501 U.S. at 45–46). “This inherent authority ‘extends to a full range of
litigation abuses.’” Id. (citing Chambers, 501 U.S. at 46). “Due to the very nature of the
court as an institution,” the court has the inherent power to issue sanctions “to impose
order, respect, decorum, silence, and compliance with lawful mandates.” U.S. v. Shaffer
Equipment Co., 11 F.3d 450, 461 (4th Cir. 1993). This inherent power “is necessary to
the exercise of all other powers” of the court. Id.
The inherent power to issue sanctions “must be exercised with the greatest
restraint and caution” because it is not subject to regulation by Congress or the people.
Id. at 461. “Moreover, a court must also comply with due process when exercising this
2
Rule 11 provides for sanctions against attorneys and parties who file pleadings
that contain “claims[or] other legal contentions [that] are [not] warranted by existing law
or by a nonfrivolous argument for the extension, modification, or reversal of existing law
or the establishment of new law,” or factual allegations that have neither evidentiary
support nor the likelihood of forthcoming evidentiary support.
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power.” Dash, 2011 WL 5357894, at *2 (citing Chambers, 501 U.S. at 50). “A court
must find bad-faith on the part of the person to be sanctioned before exercising its
inherent power.” Id. (citing Chambers, 501 U.S. at 45–46).
The parties again disagree as to the appropriate standard when determining
whether to issue sanctions pursuant to the court’s inherent equitable powers. Durham
argues that the PGC must establish that it acted in bad faith to award attorney’s fees
under the court’s inherent powers, Pl.’s Resp. 6–7, while the PGC argues that it is only
required to demonstrate that Durham pursued the action “without justification” or that
Durham’s actions were “frivolous, unreasonable, or without foundation.” PGC’s Mot. 5.
In Chambers v. NASCO, Inc., the Supreme Court recognized the court’s inherent
power to assess attorney’s fees as a sanction. 501 U.S. 32 (1991). The Court outlined
exceptions to the American Rule that generally prohibits fee shifting, allowing courts to
assess fees in the following three circumstances: (1) the common fund exception that
allows a court to award attorney’s fees to a party whose litigation efforts directly benefit
others; (2) willful disobedience of a court order; and (3) when a party acted in bad faith,
vexatiously, wantonly, or for oppressive reasons. Id. at 45. Under the third exception, if
a court finds “that fraud has been practiced upon it, or that the very temple of justice has
been defiled, it may assess attorney’s fees against the responsible party, . . . as it may
when a party shows bad faith by delaying or disrupting the litigation or by hampering
enforcement of a court order.” Id. (internal quotations omitted). The Supreme Court
stated that “[t]he imposition of sanctions [under the third exception] transcends a court’s
equitable power concerning relations between the parties and reaches a court’s inherent
power to police itself, thus serving the dual purpose of ‘vindicat[ing] judicial authority
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without resort to the more drastic sanctions available for contempt of court and mak[ing]
the prevailing party whole for expenses caused by his opponent’s obstinacy.’” Id. at 46
(quoting Hutto v. Finney, 437 U.S. 678, 689, n.14 (1978)).
The Court further discussed what affect, if any, statutory mechanisms that provide
for attorney’s fees under certain circumstances usurp or displace the court’s inherent
powers to issue sanctions. Id. at 26–47. The Court stated that, “while the narrow
exceptions to the American Rule effectively limit a court’s inherent power to impose
attorney’s fees as a sanction to cases in which a litigant has engaged in bad-faith conduct
or willful disobedience of a court’s orders, many of the other mechanisms permit a court
to impose attorney’s fees as a sanction for conduct which merely fails to meet a
reasonableness standard.” Id. at 47 (emphasis added). For example, Rule 11 imposes an
“objective standard of reasonable inquiry which does not mandate a finding of bad faith.”
Id. The Court held that “[t]here is, therefore, nothing in the other sanctioning
mechanisms or prior cases interpreting them that warrants a conclusion that a federal
court may not, as a matter of law, resort to its inherent power to impose attorney’s fees as
a sanction for bad-faith conduct.” Id. at 50.
In arguing that a showing of bad faith is not required, the PCG relies on
Christiansburg Garment Co. v. EEOC, 434 U.S. 412 (1978). In Christiansburg, however,
the award was based on s 706(k) of Title VII, which expressly provides that “the court, in
its discretion, may allow the prevailing party a reasonable attorney’s fee.” 42 U.S.C.
§ 2000e-5(k). Section 1988 of Title 42 U.S.C. similarly provides for attorneys’ fees in
cases brought under the Civil Rights Act, as amended. Christiansburg eliminates the bad
faith requirement for awards made pursuant to such statutes. 434 U.S. at 421. The PGC
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requests attorney’s fees based on the court’s inherent power and § 1927, not on any other
statutory authority. Further, Christiansburg was decided almost 15 years before
Chambers. Therefore, to the extent Christiansburg might be read to conflict with
Chambers, the principles set out in Chambers rather than in Christiansburg govern this
case.
As stated above, the PGC failed to establish bad faith. However, the PGC also
cites authority indicating that a court may award attorney’s fees when a party challenges
an arbitration award “without justification.”3 The PGC argues that because Durham
challenged the PGC’s award, the court may award fees if the challenge was without
justification.
1.
Without Justification
The PGC utilizes United Food and Commercial Workers, Local 400 v. Marval
Poultry Co., 876 F.2d 346, 350 (4th Cir. 1989),4 in support of its argument that the
“without justification” standard should apply. In Marval Poultry, the Fourth Circuit held
that a court may award attorney’s fees in an action brought under § 301 of the LMRA to
set aside an arbitration award where the party “without justification, refuses to abide by
the award of an arbitrator.” Id. at 350. “Where a challenge goes to the fundamental
issues of arbitrability or of whether an arbitration award ‘draws its essence’ from the
contract, the standard for assessing its justification is indeed the relatively lenient one of
whether it has ‘any arguable basis in law.’” Id. at 351. On the other hand, a challenge to
3
The PGC served as the arbitrator for disputes between Durham and the Union.
Under the 2013 CBA, “[t]he decision of the Piedmont Grievance Committee shall be
final and binding.” Union’s Mot. Summ. J., Ex. 1, 10.
4
Notably, Marval Poultry was decided before Chambers.
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the merits of an award is “presumptively unjustified.” Id. at 351. A claim lacks an
arguable basis in law when it is “based on an indisputably meritless legal theory.”
Neitzke v. Williams, 490 U.S. 319, 327 (1989).
Durham’s claims against the Union were filed pursuant to § 301, while its claim
against the PGC was a simple breach of contract claim pursuant to South Carolina law.
Thus, Durham argues that Marval Poultry’s without justification standard does not apply.
Assuming arguendo that the “without justification” standard in Marval Poultry should
apply, the court will analyze whether the PGC is entitled to sanctions under this standard.
Durham’s complaint asserts that the PGC acted outside the scope of its authority
under the CBA, disregarded its own by-laws, denied Durham a fair hearing, engaged in
misconduct, and violated public policy. Durham’s Resp. 10. Durham did not attack the
merits of the PGC’s decision but rather went to the essence of the CBA. See Clearon
Corp. v. United Food & Commercial Workers, Local 400, 2010 WL 1404302, at *6
(S.D.W. Va. Mar. 30, 2010) (“[Plaintiff] alleged in this action that the arbitrator ignored
the plain language of the CBA in order to reach a result he deemed just. Allegations of
this sort go to whether an award ‘draws its essence’ from the agreement.”). Therefore,
because at least some of Durham’s challenges went to the question of whether the
arbitration award drew its essence from the CBA, Durham is entitled to the more lenient
standard set forth in Marval Poultry of whether it had any “arguable basis in law” for the
challenge.
2.
Arguable Basis
Durham argues that there is some legal support for its position that arbitral bodies
do not enjoy immunity from breach of contract claims, just as there is no sovereign
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immunity for breach of contract claims. Durham’s Resp. 14 (citing Kinsey Construction
Co. v. S.C. Dep’t of Mental Health, 272 S.C. 168 (1978), overruled on other grounds,
Unisys Corp. v. S.C. Budget and Control Bd., 346 S.C. 158 (2001)). Durham also argues
that while the PGC had legal support for its position, it cited cases from other
jurisdictions involving tort claims that presented varying factual scenarios. Further,
Durham contends that there was no case law addressing arbitral immunity as it applies to
a joint grievance resolution body.
In its ruling on the PGC’s motion for summary judgment, the court only cited one
case from South Carolina, Corbin v. Washington Fire & Machine Ins. Co., 278 F.Supp.
393, 399 (D.S.C. 1968), in which the court held that statements made in an arbitral
proceeding are entitled to absolute immunity and could therefore not support a
defamation claim. Durham argues that one 50 year old case that is not directly on point
“hardly closed the door on parties and their attorneys . . . making arguments against
arbitral immunity in other cases presented different facts.” Durham’s Resp. 13. Durham
further cites numerous South Carolina cases that demonstrate an aversion to immunity
defenses in general. Id. Additionally, Durham argues that immunity is an affirmative
defense that the PGC must establish as applied to the facts of this case. Id. at 15–16.
The court finds that there is an arguable basis in the law for Durham’s arguments.
Neither party cited a case directly on point regarding arbitral immunity as it applied to a
breach of contract claim against a joint grievance resolution body. Further, Durham
provided at least some legal support for its position. Most importantly, courts within this
circuit have continuously highlighted the narrow nature of the court’s inherent power to
issue sanctions, recognizing that such power should be exercised with caution in only the
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most narrow and extreme circumstances. Hensley v. Alcon Labs., Inc., 277 F.3d 535,
543 (4th Cir. 2002) (“[T]he district court has authority to shift attorney’s fees, but again
only in the extraordinary circumstances where bad faith or abuse can form a basis for
doing so.”) (emphasis added); United States v. Shaffer Equip. Co., 11 F.3d 450, 461 (4th
Cir. 1993) (emphasizing that inherent power to impose sanctions “must be exercised with
the greatest restraint and caution, and then only to the extent necessary”). Although the
court clearly found Durham’s claims against the PGC to be without merit, the court is
unwilling to exercise its inherent powers to award sanctions under these circumstances in
which evidence of vexatious and bad faith conduct is entirely lacking and Durham had
some arguable basis in the law to pursue its breach of contract claim against the PGC.
Therefore, the court finds that the PGC cannot establish bad faith or a vexatious
multiplying of the proceedings to warrant sanctions under § 1927, nor can the PGC
demonstrate that Durham’s breach of contract claim had no arguable basis in the law.
III. CONCLUSION
For the reasons set forth above, the PGC’s motion for sanctions is DENIED.
AND IT IS SO ORDERED.
DAVID C. NORTON
UNITED STATES DISTRICT JUDGE
March 21, 2016
Charleston, South Carolina
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