Orlowski et al v. Bates et al

Filing 571

ORDER denying 549 Motion for Sanctions. Signed by Magistrate Judge Charmiane G. Claxton on 1/20/2016. (Claxton, Charmiane)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TENNESSEE
Western Division
DAMIAN ORLOWSKI, et al
Plaintiffs on behalf of
themselves and others
similarly situated

VS.

LARRY BATES, et al.
Defendants

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No. 2:11-cv-1396-JPM-cgc

ORDER DENYING PLAINTIFFS AND RECIEVER’S JOINT MOTION FOR
SANCTIONS AGAINST DEFENDANTS LARRY BATES AND BARBARA BATES
Before the Court, by way of Order of Reference (D.E. # 550) is the December 8, 2015
Joint Motion for Sanctions Against Defendants Larry Bates and Barbara Bates filed by Plaintiffs
and the Receiver. For the following reasons, the motion is DENIED.
The Plaintiffs and Receiver move for sanctions against Defendants Larry Bates and
Barbara Bates pursuant to Fed. R. Civ. P. 11(b) and 28 U.S.C.§ 1927 and the Court’s inherent
authority for persisting in filing documents with the court which do not address the issue at hand,
repeat arguments that have been dismissed and ruled on and using abusive language and
characterizations for Plaintiffs, the Receiver, Plaintiffs’ counsel and counsel for the Receiver. A
review of the November 10, 2015 safe harbor letter sent by counsel for the Receiver to Larry
Bates and Barbara Bates indicates that the focus of the request for sanctions was the Bares’
repeated arguments regarding the pre-judgment attachment in D.E. # 513, 514, 521, 530, 531 and
548 and filings that “impugn the integrity of the Receiver, his counsel and Plaintiffs’ counsel.”

(D.E. # 549, Exhibit A). A hearing on this motion was held on January 11, 2016 after notice to
the parties. In attendance were Laura Martin, counsel for the Receiver, Amber Griffin Shaw,
counsel for the Plaintiffs, Larry Bates, pro se Defendant and Barbara Bates, pro se Defendant.

At the December 14, 2015 hearing regarding the Motion of Receiver for Contempt and
Sanctions (D.E. # 512), U.S. District Judge McCalla entertained and took under advisement the
issue raised by Larry Bates regarding the pre-judgment attachment. As such, it does not appear
to be appropriate to sanction Larry Bates and Barbara Bates for repeated filings and arguments
which referenced that matter.
With regard to filings by Larry Bates and Barbara Bates which include statements that
may arguably “impugn the integrity of the Receiver, his counsel and Plaintiffs’ counsel” Judge
McCalla has ruled several times that there is no basis for their statements. Specifically in D.E. #
503, page 29, Judge McCalla stated:
“With respect to Larry and Barbara Bates’ assertion that Mr. Ryder
committed perjury and that his counsel and Plaintiffs’ counsel suborned perjury,
Larry and Barbara Bates submit no evidence aside from their own statements.
Accordingly, there is insufficient evidence to find that Mr. Ryder or counsel
engaged in bad faith conduct, willful disobedience, egregious conduct, or to find
any other basis for the imposition of sanctions.”
In D.E. # 543, page 48, Judge McCalla stated:
“There is no evidence that the Receiver’s attorney acted in bad faith or
testified falsely based on her personal knowledge of the events…”

Title 28 United States Code section 1927 provides that any attorney practicing before the
district court who engages in conduct that unreasonably and vexatiously multiplies the
proceedings in a case may personally be required to pay excess costs, expenses and attorneys’

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fees that were incurred because of the conduct. To impose liability under the statute, there must
be bad faith, and the conduct must be egregious. Also, by the clear language of the statute, the
penalty is to be applied to “an attorney”. As Larry Bates and Barbara Bates are proceeding pro
se, the statute would not apply to them. See, Li v. Recellular, Inc., 2010 WL 15236379, *8 (E.D.
Mich. April 16, 2010).
A second basis for sanctions offered is Fed. R. Civ. P. 11(b) which provides that:
“By presenting to the court a pleading, written motion, or other paper—whether
by signing, filing, submitting, or later advocating it—an attorney or unrepresented
party (emphasis added) certifies that to the best of the person’s knowledge,
information, and belief, formed after an inquiry reasonable under the
circumstances:
(1) it is not being presented for any improper purpose, such as to harass,
cause unnecessary delay, or needlessly increase the cost of litigation,
(2) the claims, defenses, and other legal contentions are warranted by
existing law or by a nonfrivolous argument for extending, modifying, or
reversing existing law or for establishing new law;
(3) the factual contentions have evidentiary support or, if specifically so
identified, will likely have evidentiary support after a reasonable
opportunity for further investigation or discovery; and
(4) the denials of factual contentions are warranted on the evidence or, if
specifically so identified, are reasonably based on belief or a lack of
information.
When deciding whether to impose Rule 11 sanctions, courts are directed by the Sixth Circuit to
consider “whether an individual’s conduct was reasonable under the circumstances.” Union
Planters Bank v. L & J Dev. Co., 115 F.3d 378, 384 (6th Cir. 1997). The Advisory Committee
Notes for the rule lists factors for the court to consider when deciding whether or not to impose
sanctions. The factors include,
Whether the improper conduct was willful, or negligent; whether it was part of a
pattern of activity, or an isolated event; whether it infected the entire pleading, or
only one particular count or defense; whether the person has engaged in similar
conduct in other litigation; whether it was intended to injure; what effect it had on
the litigation process in time or expense; whether the responsible person is trained

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in the law; what amount, given the financial resources of the responsible person,
is needed to deter that person from repetition in the same case; what amount is
needed to deter similar activity by other litigants.
At this point, the actions taken by Larry Bates and Barbara Bates do not appear to rise to
the level of egregiousness as contemplated by the Rule. However, Larry Bates and Barbara
Bates are counseled that their filings in this case are to be focused on either supporting whatever
motion they are filing or on responding directly to the specific matters addressed in the motion
that they are responding to. As the District Court has already ruled with regard to the conduct of
the Receiver, his counsel and Plaintiffs’ counsel in this case, further comment along those lines
may be deemed irrelevant, impertinent and immaterial and may subject Larry Bates and Barbara
Bates to sanctions for disregard of the Court’s orders and violation of the rules of civil
procedure.
IT IS SO ORDERED this 20th day of January, 2016.

s/Charmiane G. Claxton
CHARMIANE G. CLAXTON
UNITED STATES MAGISTRATE JUDGE

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