Wrolstad, Gary v. CUNA Mutual Insurance Society

Filing 59

OPINION & ORDER denying 47 Motion for Sanctions. Signed by District Judge James D. Peterson on 7/24/2017. (kwf)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF WISCONSIN

GARY WROLSTAD,
Plaintiff,
v.
CUNA MUTUAL INSURANCE SOCIETY,

OPINION & ORDER
15-cv-798-jdp

Defendant.
On April 4, 2017, the court granted defendant CUNA Mutual Insurance Society’s
motion for summary judgment, entered judgment in CUNA Mutual’s favor, and closed this
case. Dkt. 45 and Dkt. 46. Several days later, CUNA Mutual moved for sanctions under
Federal Rule of Civil Procedure 11. Dkt. 47. CUNA Mutual wants its reasonable attorney fees
and expenses because plaintiff Gary Wrolstad’s discrimination claims were frivolous and
unsupported, and he should have withdrawn them before the court had to rule on CUNA
Mutual’s motion for summary judgment.
This is a close call. But one of Wrolstad’s claims had minimally arguable merit, so the
court will deny the motion for Rule 11 sanctions.

BACKGROUND1
CUNA Mutual moved for summary judgment on November 30, 2016. Dkt. 10. On
February 6, 2017, shortly after the parties had completed briefing, CUNA Mutual sent
Wrolstad’s attorney a draft Rule 11 motion. Dkt. 49-1. In a cover letter, CUNA Mutual stated

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For a more complete recitation of facts, see Dkt. 45.

that Wrolstad’s “continued prosecution of his age discrimination claims relating to the
elimination of his position and his non-selection for the various other positions violates the
provisions of Rule 11(b)(2), (3) and (4), . . . as set forth in the enclosed draft Rule 11 motion.”
Id. at 1. Wrolstad’s counsel reviewed her case and the draft Rule 11 motion and decided to
voluntarily withdraw four of Wrolstad’s discrimination claims. Counsel determined that “there
is no reason to proceed on four of the five positions Plaintiff alleged he did not received in this
case . . . . We believe there are genuine factual issues for the pension participant support
specialist position. Thus, we are not willing to dismiss the age case.” Dkt. 49-2.
Because Wrolstad did not withdraw all of his discrimination claims, CUNA Mutual
deposed him. In March, after Wrolstad’s deposition, CUNA Mutual again asked Wrolstad to
drop his claim based on CUNA Mutual’s failure to hire Wrolstad as a pension participant
support specialist (PPSS). Dkt. 49-3. Wrolstad declined. Dkt. 49-4.

ANALYSIS
Rule 11(b) provides:
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 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;

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(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.
If the court determines that an attorney or a party has violated Rule 11(b), the court
may impose sanctions. Fed. R. Civ. P. 11(c)(1). Sanctions “must be limited to what suffices to
deter repetition of the conduct or comparable conduct by others similarly situated,” and the
court may award reasonable attorney fees and other expenses “directly resulting from the
violation.” Fed. R. Civ. P. 11(c)(4).
“Under Rule 11, the district court may impose sanctions if a lawsuit is ‘not well
grounded in fact and is not warranted by existing law or a good faith argument for the
extension, modification, or reversal of existing law.’” CUNA Mut. Ins. Soc’y v. Office & Prof’l
Emps. Int’l Union, Local 39, 443 F.3d 556, 560 (7th Cir. 2006) (quoting Nat’l Wrecking Co. v.
Int’l Bhd. of Teamsters, Local 731, 990 F.2d 957, 963 (7th Cir. 1993)). The court considers
whether the accused attorney or party should have known, objectively, that his claims were
groundless. Id.
Rule 11 sanctions are punitive; they are not designed to reward the prevailing party. “A
court should not impose sanctions on a party that loses an argument, as long as the argument
was not entirely groundless.” Philos Techs., Inc. v. Philos & D, Inc., 802 F.3d 905, 917 (7th Cir.
2015). But “deterrence may well include the payment of expenses and attorneys’ fees generated
as a result of the filing of abusive litigation.” Brandt v. Schal Assocs., Inc., 960 F.2d 640, 646
(7th Cir. 1992).

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One procedural point before the court takes up CUNA Mutual’s accusations. Wrolstad
contends that CUNA Mutual did not comply with Rule 11’s safe-harbor provisions and that
the motion is untimely, both because CUNA Mutual waited too long after the safe-harbor
period to file the motion and because it filed the motion only after the court entered judgment.
Under Rule 11(c)(2), CUNA Mutual was required to serve its motion for sanctions on
Wrolstad and to allow Wrolstad 21 days to withdraw or correct the challenged claims before
it filed the motion with the court. After receiving CUNA Mutual’s February 6 letter and the
draft motion, Wrolstad refused to withdraw all of his discrimination claims, and CUNA Mutual
was free to file for sanctions after February 27. Beyond that 21-day safe-harbor period, “Rule
11(c)(1)(A) does not specify any time period when a motion for sanctions must be filed, and
we see no need to establish one.” Divane v. Krull Elec. Co., 200 F.3d 1020, 1025 (7th Cir. 1999).
And Rule 11 does “not justify a broad rule that sanctions cannot be imposed as a result of a
motion properly submitted to the court after a judgment.” Id. The Seventh Circuit has explicitly
declined to follow other circuits that have refused to grant motions for sanctions filed only after
the court grants a motion for summary judgment. Id. at 1026. Instead, “[i]t is well established
in this Circuit that 90 days from the date of entry of final judgment represents ‘the outer
parameters of the timeliness for sanctions claims.’” Sullivan v. Hunt, 350 F.3d 664, 666 (7th
Cir. 2003) (quoting Kaplan v. Zenner, 956 F.2d 149, 151 (7th Cir. 1992)). Rule 11 and the
Seventh Circuit require compliance with the 21-day safe-harbor period, and CUNA Mutual so
complied. And CUNA Mutual filed its motion well within 90 days of judgment.
Turning to the meat of the motion, CUNA Mutual demands sanctions because
Wrolstad’s discrimination claims lacked evidentiary support at summary judgment. CUNA
Mutual is correct, which is why the court granted summary judgment. But Rule 11 sanctions

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are not warranted merely because a party loses the case on summary judgment. Sanctions
would be warranted only when a party’s claims lack even arguable evidentiary support.
That is the case with Wrolstad’s claim based on the elimination of his original financial
reporting manager position. As the court explained, Wrolstad did not adduce any direct
evidence that CUNA Mutual eliminated the position because of Wrolstad’s age. He did not
adduce any indirect evidence of age-based discrimination, either: “even if he had been meeting
CUNA Mutual’s expectations (the evidence says otherwise), he has not shown that any
similarly situated, substantially younger employees were treated more favorably.” Dkt. 45, at
11. Wrolstad had no evidence whatsoever to support his contention that CUNA Mutual
eliminated the position because of Wrolstad’s age.
Wrolstad does not defend this claim in response to CUNA Mutual’s motion for
sanctions; Wrolstad denies that he pressed such a claim. According to Wrolstad, he never
claimed that CUNA Mutual’s decision to eliminate his position violated the ADEA. Wrolstad’s
amended complaint was ambiguous on this point: both CUNA Mutual and the court believed
that Wrolstad claimed that CUNA Mutual’s decision to eliminate his position discriminated
against him, in addition to its decision not to hire him for the PPSS position. For example, the
amended complaint provides that “[a]t all times, Wrolstad was meeting the employer’s
performance standards,” and “CUNA solicited and hired younger individuals and laid off older
employees.” Dkt. 43, ¶¶ 27, 37. More important, Wrolstad did nothing to disabuse CUNA
Mutual (and, in turn, the court) of that notion when the parties briefed summary judgment.
In fact, the summary judgment submissions spent a good amount of time discussing Wrolstad’s
performance in his old position and CUNA Mutual’s decision to eliminate it. If Wrolstad did
not intend to pursue that claim, he certainly did not make that clear. If Wrolstad had forced

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CUNA Mutual to move for summary judgment on this claim alone, the court would award
Rule 11 sanctions.
But Wrolstad’s summary judgment case included a second claim, based on CUNA
Mutual’s failure to hire Wrolstad into the PPSS position. This claim had minimally arguable
merit. Essentially, Wrolstad made out a good prima facie case: he was technically qualified for
the position (though over qualified), and a much younger individual secured the position.
Wrolstad argued that the circumstantial evidence supported an inference of discrimination.
Wrolstad was unable to adduce evidence that he and the younger individual were similarly
situated, and CUNA Mutual offered a legitimate, non-discriminatory reason for hiring the
younger candidate. But just because Wrolstad did not have evidence sufficient to get to a jury
does not mean that his claim was frivolous.
The court would be reluctant to impose Rule 11 sanctions on a plaintiff who can make
a prima facie case of discrimination, unless, despite that foundation, pressing the case further
is plainly frivolous or in bad faith. And there is no evidence of bad faith here: Wrolstad’s
counsel reasonably withdrew a number of Wrolstad’s claims in response to CUNA Mutual’s
Rule 11 letter. The court recognizes that deciding to abandon the PPSS position claim, and
thus giving up Wrolstad’s case entirely, would have been a tough decision for Wrolstad’s
counsel. In a close call like this one, the court will generally give the benefit of the doubt to
plaintiff’s counsel. Because plaintiff-side counsel in this area generally work on a contingency
basis, shifting the cost of litigation to the unsuccessful discrimination plaintiff—more
realistically his counsel—would inhibit counsel from taking any but the strongest cases, which
is not the purpose of Rule 11. And had counsel abandoned Wrolstad’s case in response to the
Rule 11 letter, Wrolstad may have fired her, sought a continuance, and perhaps pressed on

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with the case pro se (as he has done on appeal). So, at least potentially, both the court and
CUNA Mutual benefited from counsel’s persistence, because it helped bring the case to a
prompt and orderly conclusion. This was not a strong case for plaintiff, but Rule 11 sanctions
are not warranted.

ORDER
IT IS ORDERED that defendant CUNA Mutual Insurance Society’s motion for
imposition of sanctions, Dkt. 47, is DENIED.

Entered July 24, 2017.
BY THE COURT:
/s/
________________________________________
JAMES D. PETERSON
District Judge

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