Custom Shutters LLC v. Saia Motor Freight Line LLC

Filing 43

ORDER signed by Judge J P Stadtmueller on 5/16/14: GRANTING 34 Plaintiff's Motion for Attorney Fees and Costs; within 30 days of the date of this order Defendant shall pay Plaintiff's attorneys fees and costs totaling $24,057.29; and, within 30 days of the date of this order the parties shall file appropriate papers closing this case. See Order. (cc: all counsel) (nm)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF WISCONSIN
CUSTOM SHUTTERS, LLC,
Plaintiff,
v.

Case No. 12-CV-1070-JPS

SAIA MOTOR FREIGHT LINE, LLC,

ORDER
Defendant.
This matter, originally filed by plaintiff Custom Shutters, LLC (“CS”)
in the Waukesha County Circuit Court, was randomly assigned to this
branch of the court following defendant Saia Motor Freight Line, LLC’s
(“Saia”) removal of the action. (Docket #1). On November 21, 2013, this court
denied Saia’s motion for partial summary judgment. (Docket #31). The matter
was set for trial, but the parties notified the court that they had resolved their
dispute, save the legal question of entitlement to fees and costs. On
December 6, 2013, this court issued an order establishing a briefing schedule
for a motion on the subject. (Docket #33). The motion is now fully briefed and
ready for adjudication.
First, a brief review of relevant facts as recounted in this court’s
summary judgment order. CS is a Wisconsin limited liability company that
manufactures and sells custom shutters. Saia is a Louisiana limited liability
company, and an interstate motor carrier. In August of 2012, Tracy Woznicki
(“Woznicki”), CS’s Vice President and part-owner, arranged with Saia to ship
a 5,500 pound package of shutters to a Lowe’s store in Naples, Florida; the
parties agreed to a fee of $1,341.00. Woznicki was not given options or
choices of limited liability, and the Saia representatives made no reference to

limited liability. A Saia driver picked up the shipment, and when the
shipment arrived in Florida, the shutters had been damaged in transit.
Along with its motion for fees, CS filed copies of the parties’
communications from the months leading up to the lawsuit. Those
communications show that CS initially filed a claim with Saia seeking
compensation in the amount of Lowe’s purchase price: $33,259.20. (Docket
#36-1). Saia declined the claim, citing limited liability provisions found in
Saia’s tariff, and instructing CS to refile its claim for a much lower amount of
$1.00 per pound of freight, or $5,500.00. (Docket #36-2). CS retained counsel,
and sent a letter dated August 24, 2012, denying that Saia’s tariff limiting
liability applies, citing legal authority supporting this position, and
demanding the full payment. (Docket #36-3). On September 11, 2012, CS sent
a follow-up letter seeking Saia’s response. (Docket #36-4). By letter dated
October 2, 2012, counsel for Saia responded that it believed liability to be
limited, and citing its own legal authority for this position. (Docket #35-5). CS
filed suit in Waukesha County Circuit Court, seeking to recover Lowe’s
purchase price: $33,259.20. (Docket #35-7). Saia removed the case to federal
court and asserted that its liability is limited to $5,500.00. (Docket #1). Saia
also immediately filed a motion to dismiss invoking federal law, which
yielded an amended complaint, and Saia’s subsequent answer. (Dockets #3,
#6, #9). This case thus sought to determine liability for a very small amount
of money as compared to most federal cases. Indeed, had this case been
removed on the basis of diversity jurisdiction instead of a federal question,
it would not have satisfied the required amount in controversy to justify a
federal forum. Be that as it may, due to the invocation of federal law, the case
was properly brought to a federal court, even though the parties disputed
only $27,759.20. The parties engaged in discovery, and on August 30, 2013,
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Saia filed a motion for partial summary judgment. (Docket #21). The motion
was fully briefed, and on November 21, 2013, the court issued an order
denying Saia’s motion. (Docket #31).
In the instant motion, CS seeks attorney’s fees and costs of suit,
arguing that Saia’s litigation strategy was abusive and designed to make it
so expensive for CS that CS would simply walk away from the recovery to
which it was entitled. In support of its motion, CS cites two authorities. First,
CS cites the court’s inherent authority to impose sanctions. A court may
assess fees as a sanction when a party has “acted in bad faith, vexatiously,
wantonly, or for oppressive reasons.” Chambers v. NASCO, Inc., 501 U.S. 32,
45-46 (1991) (citations). Sanctions awarded under this authority serve two
purposes: first, they allow the court to vindicate its interests to punish a party
for disruption to the system of justice, and second, they shift costs stemming
from one party’s obstinacy to the prevailing party. Id. As a second authority
for awarding fees, CS cites 28 U.S.C. § 1927, which provides:
Any 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.
28 U.S.C. § 1927. The purpose of this statute is “to deter frivolous litigation
and abusive practices by attorneys and to ensure that those who create
unnecessary costs also bear them.” Kapco Manufacturing Co., Inc. v. C & O
Enterprises, Inc., 886 F.2d 1485, 1491 (7th Cir. 1989) (internal citation omitted).
“Sanctions against counsel under 28 U.S.C. § 1927 are appropriate when
‘counsel acted recklessly, counsel raised baseless claims despite notice of the
frivolous nature of these claims, or counsel otherwise showed indifference

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to statutes, rules, or court orders.’” Grochocinski v. Mayer Brown Row & Maw,
LLP, 719 F.3d 785, 799 (7th Cir. 2013) (quoting Kotsilieris v. Chalmers, 966 F.2d
1181, 1184–85 (7th Cir. 1992)).
CS raises several aspects of Saia’s litigation strategy that, in CS’s
opinion, expose Saia to liability under one or both of these authorities. The
court will discuss some of CS’s points below, but first finds it appropriate to
dismiss some of CS’s points with limited discussion. For example, CS argues
that Saia maintained a “rigid insistence” on paying only $5,500.00 and would
not negotiate. Brief in Support (Docket #35) at 16. However, Saia answers this
allegation by arguing that it was CS who would not budge from its demand
for $33,259.20. Brief in Opposition (Docket #37) at 6. The court is simply not
going to expend any energy deciphering which party’s offers to negotiate
were genuine, and which party’s were less so. Likewise, the court will not
award fees based on certain litigation decisions Saia made, such as flying in
out-of-state counsel for a deposition and filing a motion for partial judgment
on the pleadings instead of “ignoring” the complaint’s statements regarding
fees. These strike the court as reasonable decisions, for the myriad reasons
Saia articulates in its brief. See Brief in Opposition at 6-7.
More troubling to the court, however, is Saia’s general litigation
strategy, including its decision to file a motion for partial summary
judgment. Saia’s business is interstate shipping of freight, and it certainly
knows that a carrier seeking to limit its liability under the Carmack
Amendment must show, among other facts, that the shipper agreed to a
choice of liability for the shipment. Hughes v. United Van Lines, Inc., 829 F.2d
1407, 1415 (7th Cir. 1987). When presented with Saia’s motion for partial
summary judgment, the court easily denied it, finding that the facts did not
support Saia’s contention that CS had agreed to limit its liability for the
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shipment. The court need not reiterate the analysis from its order denying
Saia’s motion; it is sufficient for purposes of the instant motion to simply note
that Saia’s showing as to CS’s agreement to limit its liability—again, a fact
essential to prevailing on its motion—was a non-starter.
CS’s motion asks the court to find that Saia ought be sanctioned for
persisting in its position that Saia’s liability was, in fact and law, limited in
this case. The court so finds, and without hesitation. It is appropriate for a
court to impose sanctions when an attorney pursued a claim that is “without
a plausible legal or factual basis and lacking in justification,” Pacific Dunlop
Holdings, Inc. v. Barosh, 22 F.3d 113, 119 (7th Cir. 1994), or when counsel
“pursue[d] a path that a reasonably careful attorney would have known,
after appropriate inquiry, to be unsound,” Kapco, 886 F.2d at 1491. In this
case, there was no basis in fact to support Saia’s argument that CS had
agreed to limit its liability. After undertaking an “appropriate inquiry,” and
then assessing Saia’s position given the actual facts of the case, no reasonable
attorney would have persisted in arguing that CS agreed to limit its liability.
The argument simply lacks “a plausible legal or factual basis.” Pacific Dunlop
Holdings Inc., 22 F.3d at 119. The court can only conclude that Saia’s litigation
strategy was intentional, and designed to employ the legal process to yield
not justice, but unjustified capitulation. See Knorr Brake Corp. v. Harbil, Inc.,
738 F.2d 223, 228 (7th Cir. 1984) (a court may infer intent from a “total lack
of factual or legal basis for a suit.”). The result of Saia’s strategy was a draw
on CS’s resources because it would have to combat the motion, and on the
court’s limited resources to adjudicate the motion. The court will thus award
sanctions to CS, pursuant to its inherent authority, in order to punish Saia for
wrongly drawing on the court’s and CS’s resources. Chambers v. NASCO, Inc.,
501 U.S. at 45-46.
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Saia maintains that an award of fees in this case would “disrupt the
Carmack Amendment’s careful balance of rights and remedies between
shippers and carriers.” Brief in Opposition at 10. The court disagrees. As even
Saia admits, the Carmack Amendment “cannot insulate a party from the
consequences of unethical or improper conduct.” Brief in Opposition at 10.
Having determined that sanctions are appropriate in this case, the
court must now determine a suitable amount to award. A district court
awarding sanctions must determine the reasonable number of hours
expended, and the reasonable hourly rate for such work. Kotsilieris v.
Chalmers, 966 F.2d 1181, 1187 (7th Cir. 1992). CS submitted billing sheets in
support of its request for $24,057.29, a figure representing the fees and costs
CS incurred in prosecuting this action, but not including the instant motion
or the amended complaint. Saia does not contest the reasonableness of hours
expended on any specific entry. The court has reviewed the billing sheets and
likewise finds the number of hours expended to be reasonable. Additionally,
while Saia quibbles about opposing counsel’s billing rate in a footnote, Brief
in Opposition at 7 n.2, Saia offers no real argument regarding the
reasonableness of the rate. Due to this lack of argument to the contrary, and
in combination with the court’s knowledge of area rates, the court finds CS’s
billing rates to be reasonable. Having found the hours expended and the
billing rate to be reasonable, the court will order fees and costs totaling
$24,057.29 in this case.
The final question to be answered is whether these fees ought be
charged to Saia’s counsel in his individual capacity, or to Saia itself. See
Oliveri v. Thompson, 803 F.2d 1265, 1273 (2d Cir. 1986) (an award of attorney’s
fees made under the court’s inherent power may be made against an
attorney, a party, or both.) The court deems it proper to order Saia to pay the
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fees. As is evident from the materials submitted in opposition to CS’s motion,
Saia instructed its counsel to defend the case based on the limitation of
liability argument, and approved the filing of the motion for partial summary
judgment on that basis. Pennison Aff. (Docket #40) at ¶ 7, ¶ 9. While every
attorney has a duty to ensure that the filings bearing his or her name are
appropriate, in this case it appears that it was Saia that made the decision to
pursue the strategy. Therefore, the court will order that Saia pay the
attorney’s fees in this case.
The parties earlier notified the court that they settled the underlying
dispute in this case. This order adjudicates the sole pending motion. Thus, it
appears that this file should be closed. The parties are directed to file
appropriate closing papers within thirty (30) days.
Accordingly,
IT IS ORDERED that Plaintiff’s Motion for Attorney’s Fees and Costs
(Docket #34) be and the same is hereby GRANTED;
IT IS FURTHER ORDERED that Saia shall, within thirty (30) days of
the date of this order, pay Plaintiff’s attorney’s fees and costs totaling
$24,057.29; and
IT IS FURTHER ORDERED that the parties shall, within thirty (30)
days of the date of this order, file appropriate papers closing this case.
Dated at Milwaukee, Wisconsin, this 16th day of May, 2014.
BY THE COURT:

J.P. Stadtmueller
U.S. District Judge

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