Appeal from the United States District Court for the Northern District of Illinois, Eastern Division, No. 74-C-3788 -- Prentice H. Marshall, Judge.
Before Cummings, Chief Judge, and Eschbach, and Posner, Circuit Judges.
In this case we are asked to decide whether an appellee should be awarded damages and costs pursuant to Fed. R. App. P. 38*fn1 for his efforts in response to an attempted appeal from an obviously nonappealable order, and if so, against whom the damages and costs should be assessed.
The complaint in this action was filed in December, 1974 by the plaintiff- appellee, Victor Maneikis, against the defendants, Van Metre Lund and Wilmer Jordan. Maneikis, the licensee of a certain product, alleged that the defendants defrauded him into entering into a license agreement. In response to the complaint, the defendants filed a counterclaim. Subsequently, in an attempt to expedite this litigation, the parties negotiated an agreement whereby the plaintiff promised to forego certain discovery if the defendants voluntarily dismissed their claim. Accordingly, on March 20, 1978, the court entered an order dismissing the counterclaim. On August 27, 1979, however, defendant Jordan, the present appellant, moved for leave to reinstate that claim.*fn2 On October 6, 1980, the court entered an order denying that motion. Jordan now attempts to appeal from that order.
The initial question in this case is whether we have jurisdiction over this matter. The appellant's explanation of the basis of our jurisdiction consists of the unsupported claim that "the trial court's denial of reinstatement constitutes a final order which adjudicates substantial rights of defendant/counter-plaintiff Jordan."*fn3 Although that statement appears to acknowledge the "general principle that only final decisions of the federal district courts (are) reviewable on appeal," Carson v. American Brands, Inc., 450 U.S. 79, 83, 101 S. Ct. 993, 996, 67 L. Ed. 2d 59 (1981), it completely ignores the fact that this is a multiple claims litigation. See Cold Metal Process Co. v. United Co., 351 U.S. 445, 76 S. Ct. 904, 100 L. Ed. 1311 (1956); 9 Moore's Federal Practice P 110.09 (2d ed. 1980). In such an action, the basic rule is that "any order ... which adjudicates fewer than all the claims or the rights and liabilities of fewer than all the parties shall not terminate the action as to any of the claims or parties...." Fed.R.Civ.P. 54(b). Such an order is not an appealable "final decision" under 28 U.S.C. § 1291. Local P-171, Etc. v. Thompson Farms, Co., 642 F.2d 1065 (7th Cir. 1981).
An exception to the basic rule can arise if the district court, pursuant to Rule 54(b), directs "the entry of a final judgment as to one or more but fewer than all of the claims or parties ... upon an express determination that there is no just reason for delay...." In this case, however, the court neither directed the entry of judgment nor made the requisite certification. See U.S. General, Inc. v. City of Joliet, 598 F.2d 1050, 1051 n.1 (7th Cir. 1979). Despite the appellant's characterization, the district court's order is not a "final decision" within the meaning of Section 1291. Thus it is not appealable under that statutory provision. Accordingly, we dismiss this appeal for want of jurisdiction.*fn4
This disposition leads us to the more novel issue in this case: whether the appellee should be awarded damages and costs under Rule 38.*fn5 In Ruderer v. Fines, 614 F.2d 1128 (7th Cir. 1980), we explained that in order to make an award under the rule, we must make two determinations: (1) that the appeal is frivolous, and (2) that, in our discretion, we consider the appeal an appropriate one for the imposition of a sanction.
The first component of this two-tier analysis relates primarily to the merit of the party's legal position. Although we have cautioned that frivolousness in this context "means something more to us than an unsuccessful appeal,"*fn6 we have also recognized that, in certain cases, the law may be "so clear and well established" that the moving litigant's position is simply untenable. N.L.R.B. v. Lucy Ellen Candy Division, 517 F.2d 551, 555 (7th Cir. 1975). We think that this case fits the latter mold.
"Finality" lies at the heart of appellate jurisdiction. Carson v. American Brands, Inc., supra. The appellant, however, makes only the most perfunctory attempt to demonstrate his compliance with that essential threshold requirement. His assertion that the district court's order is "final" is simply unsupported. Moreover, after the appellee raised the jurisdictional issue in his brief, the appellant made no attempt to respond. Rather, he continued to rely on his cryptic jurisdictional statement. Under these circumstances, we find the instant appeal frivolous.*fn7
We thus turn to the second inquiry under Rule 38: whether the appeal is an appropriate one for the imposition of a sanction. This step reflects a concern for the underlying purposes of the rule. Damages and costs are awarded under Rule 38 "as a matter of justice to the appellee and as a penalty against the appellant." Fed. R. App. P. 38, Notes of Advisory Committee on Appellate Rules; see Ruderer v. Fines, 614 F.2d at 1132.
In this case, the appellee has incurred needless costs to protect his interests in this Court. Moreover, the appellant, ignoring a basic legal predicate, has imposed an unnecessary burden on this Court, and in so doing, has also infringed on the rights of legitimate litigants who are entitled to a prompt adjudication of their claims. See Ruderer v. Fines, 614 F.2d at 1132 ("The penalty aspect of the rule serves to vindicate public interests...."). Thus we find that this is an appropriate case in which to impose sanctions under Rule 38.
In making that assessment in this case, however, we must also consider an additional factor. The specific problem in this appeal, disregard of the jurisdictional requirement, though attributable to the appellant, is in fact more a reflection of the incompetence or obstinancy of the appellant's attorney. See Simon & Flynn, Inc. v. Time Incorporated, supra, 513 F.2d at 835 ("Counsel must realize that the decision to appeal should be a considered one ..., not a knee-jerk-reaction to every unfavorable ruling."). He must have known that the order was not final, yet he nevertheless took an unwarranted procedural step. See Mancuso v. Indiana Harbor Belt Railroad, supra. Both the Illinois Code of Professional Responsibility and the Model Code of Professional Responsibility explicitly caution that an attorney shall not "knowingly advance a claim ... that is unwarranted under existing law ... (unless) it can be supported by a good-faith argument...." Ill.Rev.Stat. ch. 110A, foll. P 771, Rule 7-102(a)(2); Model Code of Professional Responsibility DR 7-102(A)(2) (1980). Here the attorney has offered no justification.
To impose damages and costs against the appellant in these circumstances, though justified, would not guarantee that this attorney will be directly affected nor that he will be deterred from repeating such a tactic in a future case. Thus we conclude that it would be more purposeful to assess the damages and costs arising from this appeal against the attorney personally pursuant to 28 U.S.C. § 1927.*fn8 See Self v. Self, supra; Good Hope Refineries, Inc. v. R. D. Brashear, supra.
Accordingly, we remand this case to the district court for a determination of the amount of damages and costs to be paid to the appellee, and direct that those expenses ...