Opinion
CIVIL ACTION NO: 99-2204 SECTION: "J"(1)
September 6, 2002
MINUTE ENTRY
Before the Court is plaintiff's Motion for Excess Costs, Expenses, and Attorneys' Fees Pursuant to 28 U.S.C. § 1927. Rec. Doc. 261. Defendants oppose the motion. Following oral argument held on July 17, 2002, the Court took the matter under advisement. For the reasons which follow, the Court finds that the motion should be denied.
Background
Plaintiff Consorcio Rive, S.A. de C.V. ("Rive") seeks an order from this Court requiring counsel for defendant Briggs of Cancun, Inc. ("BCI") to personally satisfy excess costs and fees "in excess of $50,000.00" associated with defendants' pursuit of a defense strategy which defendants knew to have no basis in actual fact. Plaintiff's Memo, Rec. Doc. 262, at 11.
In its prior orders, this Court has already recognized the disingenuousness of one of the defenses raised by BCI to enforcement of the arbitration award, namely, that principal David Briggs could not attend the arbitration and adequately defend BCI because he was fearful of arrest by Mexican authorities. Subsequent to litigation of this defense and David Briggs' testimony on this point, facts brought to light in a lawsuit filed under seal in Washington, D.C. indicate that in truth, David Briggs did not appear because his retained counsel told him not to bother to show up because such an award could not be enforced. Accordingly, the instant motion requires the Court consider whether the pursuit of this unjustified defense warrants the imposition of sanctions pursuant to 28 U.S.C. § 1927.
Discussion
The statute under which plaintiff has requested sanctions provides as follows:
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.A. § 1927 (2002).
The Fifth Circuit has consistently held that this statute is penal in nature, and therefore must be strictly construed. See e.g. Browning v. Kramer, 931 F.2d 340, 344 (5th Cir. 1991). Strict construction requires that sanctions "must be predicated on actions that are both `unreasonable' and `vexatious.' This requires that there be evidence of bad faith, improper motive, or reckless disregard of the duty owed to the court." Edwards v. General Motors Corp., 153 F.3d 242, 246 (5th Cir. 1998) (internal citation omitted, emphasis in original). Furthermore, the Fifth Circuit has recently held that the statute must be construed in the light most favorable to the sanctioned party. See Proctor Gamble Co. v. Amway Corp., 280 F.3d 519, 526 (5th Cir. 2002).
If warranted, the "quantification of [§ 1927 sanctions] are committed to the sound discretion of the court imposing them." Travelers Ins. Co. v. St. Jude Hospital of Kenner, La., Inc., 38 F.3d 1414, 1417 (5th Cir. 1994). Section 1927 only permits the transfer of such excess attorney's fees as were brought on by the attorney's conduct. See Browning, 931 F.2d at 344. Thus, under the statute, a court may only shift fees "associated with `the persistent prosecution of a meritless claim.'" Proctor Gamble Co., 280 F.3d at 525, quoting Browning, 931 F.2d at 345. As the statute itself makes clear, any sanctions imposed must be reasonable. Moreover, by its terms, the statute permits awards against attorneys, not parties. 931 F.2d at 344. "Before an award is made under § 1927, the attorney to be sanctioned must be allowed to respond . . . as to the amount of her opponent's fees and costs which are attributable to any action that multiplied the proceedings." Browning, 931 F.2d at 346.
Plaintiff's problems in connection with the instant motion are twofold. First, plaintiff has offered no evidence to provide that the defense attorneys' conduct rose to a level that is sanctionable under § 1927. To merit sanctions, an attorney's conduct must be the product of bad faith, improper motives, or a reckless disregard of the attorney's duty to the court. See Edwards, 153 F.3d at 246. While the Court is convinced that David Briggs' testimony on why he did not appear in Mexico to defend the arbitration was less than candid, it is not prepared to reject entirely his attorneys' assertion that they believed that this was one of several reasons he did not appear. While the better course would have been to abandon this defense given the facts surrounding the Washington D.C. lawsuit, the Court simply cannot find that the defense attorneys' actions in this case were the product of bad faith, impermissible motives, or reckless disregard of their respective duties to the Court.
Second, if this were not reason enough to deny the requested sanctions, the Court also observes that plaintiff has failed to prove any excess costs or fees were directly attributable to the alleged sanctionable conduct. Despite being given two opportunities to file supporting documentation, and being ordered by the Court to produce contemporaneous time records, plaintiff has declined to do so. See Rec. Doc. 274. Instead, plaintiff appears to have arbitrarily allocated either 50% or 100% of what appears to be reconstructed time records to litigating the defense in question.
An example of the flaws in plaintiff's method is illustrated by counsels' fee claim for the first day of trial. While the trial lasted from approximately 8:00 a.m. to 5 p.m. (nine hours, exclusive of breaks), both plaintiffs' attorneys claim to have worked 15 hours that day, at tasks including trial preparation, attending trial, meeting with clients, co-counsel, and expert, and legal research. Fifty percent of this time, or 15 hours between both attorneys, is allocated toward litigating the alleged baseless defense. However, the trial transcript reveals that on the first day of trial, two witnesses testified: plaintiff's expert on piercing the corporate veil, Harold Asher; and plaintiff's expert on Mexican law, Jose Orozco. Asher's testimony was wholly unrelated to any of BCI's defenses to the arbitration, and of the 107 transcript pages covering Orozco's testimony, 20 pages address David Briggs' failure to defend the arbitration. In fact, as a percentage of the entire transcript of the whole first day of trial, the 20 pages of Orozco testimony related to the arbitration defense amounts to about 8.7% of the testimony. Given this, it strains credulity to believe that 15 hours of time on the first day of trial was made necessary by the alleged sanctionable conduct. While this represents only one example, it is illustrative of the problem created by plaintiff's counsels' failure to provide contemporaneous time records as ordered by the Court, and their choice to rely instead on arbitrary allocations of time applied to a reconstructed billing record. Accordingly,
IT IS ORDERED that plaintiff's Notion for Excess Costs, Expenses, and Attorneys' Fees Pursuant to 28 U.S.C. § 1927 (Rec. Doc. 261) should be and is hereby DENIED.