Tuesday, January 19, 2010

There'll Always Be Posner (again)

Last week's decision in Carr v. Tillery, 2010 WL 92487 (7th Cir. Jan. 12, 2010), was not, strictly speaking, a product liability case. But it involves some key players in that field, and a very key location. And, truth be told, the case appeals to the voyeur within us.

The players are former partners in a plaintiff class action law firm that made a nice business out of hauling corporations (e.g., IBM, Pfizer, Xerox) into Madison County, Illinois. The courthouse is in Edwardsville. It's a lovely courthouse. Very unlovely things have happened there. Madison County calls itself the horseradish capital of the World. We are tempted to call it the "horse[not radish] lawsuit" capital. In 1998 there were only two class actions filed in Madison County. And then something changed to transform the local court into a drive-through class certification franchise. Why? Everyone has their favorite explanation. Some point to the nature of the bench-bar relationship. The press reported that at least one Madison County judge (now retired) received significant campaign contributions from attorneys … when the judge was running unopposed for re-election. Hmmmm. Before we descend into tedious cynicism, let's just leave it at this: there were some huge verdicts in that Edwardsville courthouse, and Madison County showed up on the ATRA's listing of "judicial hellholes" often enough that we expect its jersey number has been retired. Retired or not, Madison County is still on ATRA's Watch List.

Sadly, as Judge Posner tells it, those huge verdicts apparently did not purchase perfect contentment for our justice-seeking, do-gooder plaintiff attorneys. Rather, they commenced "mortal combat" over division of fees. Carr, 2010 WL 92487 at *1. The law firm ceased to engage in the practice of law in 2003, but "continued a twilight existence to administer the allocation of fees." Id. (Throughout the opinion, Posner's prose rises to the majesty of the subject matter.) There were "a flurry of lawsuits" filed by the ex-partners against each other in Illinois state court. Id. In one Madison County proceeding, the judge shooed a newspaper reporter out of the courtroom while the ex-partners duked it out over dollars. Those ex-partners seemed to have resolved their disputes via a "Memorandum of Understanding" drafted by Carr. Id. Not quite. Carr later added a counterclaim that he had been fraudulently induced to sign that Memo of Understanding. Id. (Yes, the one he drafted.) The Illinois courts rejected Carr's counterclaim and dismissed the lawsuits, pursuant to the Memorandum of Understanding, in 2006. The dismissals were affirmed by the Illinois Appellate Court in 2007 and Carr did not seek review by the Illinois Supreme Court. Id.
Thus ends the tale, right? No, not even close.

Since we're reading a Seventh Circuit opinion, that means somehow this fee dispute made its way into federal court. Carr was now accusing his ex-partners of, inter alia, violating RICO (where the "R" stands for racketeering -- that sort of thing really reduces the chance of a kumbaya ending). Carr wanted his share of the fees -- pegged at $20 million -- as well as punitive damages. Id. The defendants sought dismissal of the case, because, well, how do we put this, it's over. The district court agreed, granting a 12(b)(6) motion to dismiss the federal claim and the supplemental state law claim on the ground of res judicata. Posner could not resist pointing out that res judicata is an affirmative defense and that the defendants should have filed under 12(c). Thus, the district court "jumped the gun in dismissing the case under Rule 12(b)(6)." No worries, though, because "plaintiff does not complain of the error." Id.

So the first thing the opinion decides is that Judge Posner is smarter than the litigants and the district judge. (Honestly, Your Honor, we already knew this. We always will.)

Now we get to the guts of the case. Dressing the same old allegations in a RICO costume does not make for a new case. "You cannot maintain a suit, arising from the same transaction or events underlying a previous suit, simply by a change of legal theory." It's nothing more than "claim-splitting." Id. at *2. Moreover, Illinois has a "single refiling" rule (even counting dismissals without prejudice). That rule comes out to bite the plaintiff big-time. In 2007, while the state court appeal was pending, Carr had filed four more state court actions. Then he filed the federal action. Then he dismissed the four state court actions. Id. The defendants must have been confused and vexed by all this. We know we are (confused, that is, not vexed). The Seventh Circuit rules that the Illinois "single refiling" rule, being a substantive rule of preclusion, applies in federal court, and that, counting the four state court actions separately (because, big surprise, they were pretty much the same suit), the plaintiff violated it several times over. Id. at *3.

So the Seventh Circuit agrees with the defendants, who groused about their ex-partner's parade of lawsuits. (Yes, we should have posted an Irony Alert. These defendants are, after all, plaintiff class-action lawyers.)

The Seventh Circuit holds that the district judge was right to dismiss the case, but not because of res judicata. Carr was now claiming that the defendants had violated the Memorandum of Understanding. Remember? The one he had drafted, but now says he had been duped into signing? That claim had not been decided in state court. But it had been included in the four state actions that had been voluntarily dismissed. So it is the Illinois "single refiling" rule, not res judicata, that finally halts the parade. Id. at *5.

At this point Posner engages in an almost metaphysical discussion of whether the RICO complaint is so frivolous as to deprive the court of federal jurisdiction -- which would engender "a certain perversity" because Carr would be permitted to refile his case.

Not again?!

But Posner to the rescue.  Just in the nick of time, he concludes that the RICO claim is "weak, indeed feeble" and a "nonstarter," but -- unluckily for Carr -- not yet so frivolous as to warrant dismissal on jurisdictional grounds. Id. at *5-7. Posner is torturing the plaintiff at this point, isn't he?

By the way, if you think you have heard this jurisdictional discussion before, then you have really been paying attention. Our recent summary of the earlier Posner opinion in the Nightingale case goes over similar ground.  Let's just say that Posner opinions are rife with certain jurisdictional leitmotifs.

Now comes the fun part. The defendants had appealed because they think their request "for sanctions should not have been denied. The plaintiffs' lawyers may secretly agree, for they make no attempt to counter the arguments for sanctions made in the defendants' brief." Carr, 2010 WL 92487 at *7. (Ouch! Note to selves:  when the other side asks the court to sanction our side, we should always explain our disagreement.) There does appear to be one potential obstacle to sanctions: section 1927 of the Judicial Code does not reach misconduct that occurred before the case appears on the federal docket. But that old bugaboo, "common law power," permits the court to sanction the plaintiff anyway. Id. at *8. Here are the factors set forth by the Seventh Circuit to justify sanctions:

  • motive to harass, evinced by the "vitriolic tone of the complaint," and the character of the briefing and oral argument;
  • failure to cite a controlling case on the "single refiling" rule
  • "disingenuous efforts at distinguishing" that case in the reply brief; 
  • false statement in the brief that "Carr does not seek to relitigate issues from the 2004 litigation;" 
  • improper attempt to raise issues in the reply brief that had not been mentioned in the opening brief; and  
  • failure to attempt to rebut the cross-appeal on sanction.
Id.

These facts, and others, convinced Judge Posner that the "litigation is groundless," that "plaintiff is out of control," and that "his lawyers are neglecting their duties as officers of the state and federal courts by failing to rein him in." Id. at *9. Consequently, the Seventh Circuit orders the district court to impose monetary sanctions on the plaintiff. Posner also throws out a tease by noting that the defendants had not sought sanctions "for misconduct in the proceedings in this court." Id. (When you litigate before Judge Posner, you lose even when you win.) Lastly, the Seventh Circuit directs the district court to consider "whether to enjoin Carr from conducting further litigation arising from actions by the defendants of which he has complained in his voluminous filings to date." Such injunctions would "complement" monetary sanctions, and seem appropriate because of the unlikelihood that the plaintiff "will accept defeat gracefully." Id.

In short, it's another virtuoso performance by Judge Posner. But let's not forget to credit the defendants for making effective, heartfelt arguments against meritless, repetitive, harassing litigation. We might even quote them some day -- maybe the next time we're in Madison County.

There has lately been a fair amount of discussion about how certain unusual words crop up in appellate matters. We've heard how a litigant dazzled the Supreme Court by characterizing an irrelevant question as "orthogonal." We've also heard that Justice Scalia sputters when he hears what is arguably a non-word, "choate." While it doesn't show up in Judge Posner's opinion in the Carr case, there is a word that comes to mind when we are treated to a battle among plaintiff attorneys -- schadenfreude.

1 comment:

Attorneys Mesa said...

This is just so brilliant that I couldn't stop laughing!

"The press reported that at least one Madison County judge (now retired) received significant campaign contributions from attorneys … when the judge was running unopposed for re-election."