United States District Court, Northern District of Illinois, E.D
August 28, 1985
THE NORTHERN TRUST COMPANY, PLAINTIFF,
L.A. MULLER, DEFENDANT.
The opinion of the court was delivered by: Shadur, District Judge.
MEMORANDUM OPINION AND ORDER
This Court's April 25, 1985 memorandum opinion and order
(the "Opinion") suggested
the possible liability of the lawyers for L.A. Muller
("Muller"), under either or both of Fed.R.Civ.P. ("Rule") 11
and 28 U.S.C. § 1927 ("Section 1927"), for a portion of the
attorneys' fees and expenses incurred by Northern Trust Company
("Northern") in this action.*fn1 In response Northern
petitioned for its fees and expenses (in part against Muller
and in part against the lawyers), and one of Muller's lawyers —
Thomas Wilson Waters ("Waters") — replied.
This Court has previously deferred its ruling on the motion
because it was aware our Court of Appeals had in the works one
or more cases posing the question of the proper interpretation
of Rule 11 as amended in 1983. Now the Court of Appeals has
spoken in Rodgers v. Lincoln Towing, Inc., 771 F.2d 194, 204-05
(7th Cir. 1985) and just last week in Frazier v. Cast,
771 F.2d 259, 263 (7th Cir. 1985), both times confirming the same
reading of Rule 11 earlier suggested by this Court in the
Opinion and elsewhere.*fn2 Accordingly the issue is ripe for
Northern's petition has been modest. It distinguishes
carefully among its counsel's various services:
1. Muller but not his lawyers is sought to be
made responsible for $2,703 attributable to
preparation of the Complaint.
2. Miscellaneous expenses of $1,305.75
(including a skip tracer hired because Muller was
evading service) are also sought to be attributed
to Muller and not to his lawyers.
3. Northern's summary judgment motion, forced
to be pursued because of the baseless (and
bootless) arguments advanced by Muller and his
lawyers and rejected in the Opinion, cost
Northern $6,633.05. That expense is asked to be
charged against Muller and his lawyers jointly
Waters responds in several respects. None is persuasive.
First Waters observes accurately that Rule 11 by its terms
applies only to him as the signer of the offending documents,
not to the firm of Morrissey and Kay. This Court need not
decide whether, under the realities of law firm practice, any
room exists for reading Rule 11 more expansively than its
individualized language, so as to extend liability to the firm
as well as to the individual signer.*fn3 If no such room
exists, any recovery from Morrissey and Kay must look to the
provisions of Section 1927 (which has been applied by the
courts to impose liability on all counsel for a litigant).
On that score our Court of Appeals has also recently
departed from its prior strict reading of Section 1927,
applying to counsel's conduct an objective test rather than
one of purely subjective bad faith. As In re TCI, Limited,
769 F.2d 441, 445 (7th Cir. 1985) put it (citations omitted):
"Bad faith" sounds like a subjective inquiry, and
this is probably why Judge Hertz looked for
evidence of "malice" on White's part. Despite its
sound, however, "bad faith" has an objective
meaning as well as a subjective one. . . . A
lawyer has a duty, which the recent amendment to
Rule 11 emphasizes, to limit litigation to
contentions "well grounded in fact and . . .
warranted by existing law or a good faith
argument for the extension, modification, or
reversal of existing law." Fed.R.Civ.P. 11. If a
lawyer pursues a path that a reasonably careful
attorney would have known, after appropriate
inquiry, to be unsound, the conduct is
objectively unreasonable and vexatious. To put
this a little differently, a lawyer engages in
bad faith by acting recklessly or with
indifference to the law, as well as by acting in
the teeth of what he knows to be the law. Our
court has long treated reckless and intentional
conduct as similar, . . . . A lawyer's reckless
indifference to the law may impose substantial
costs on the adverse party. Section 1927 permits
a court to insist that the attorney bear the
costs of his own lack of care.
Precisely the same principles apply to "acting recklessly or
with indifference to" the facts, which are equally implicated
in the handling of litigation and which are always a particular
focus of a Rule 56 motion. Frazier, announcing a like principle
as to Rule 11, was dealing entirely with the factual basis for
All the circumstances here strongly call Section 1927, as so
read, into play. Indeed in many ways Section 1927 fits
counsel's conduct better than Rule 11. Northern's Petition at
4 is accurate in stating:
Prior to Northern's attorneys' initiation of any
work on summary judgment, this Court suggested to
Muller's counsel during the several status
hearings that Muller's arguments were groundless.
Muller's attorneys nevertheless persisted in
defending the action on patently frivolous
grounds. As a result, Northern was forced to go
to the expense of obtaining summary judgment.
That reflects lawyers' conduct that "so multiplies the
proceedings . . . unreasonably and vexatiously" as to be
subjected to personal responsibility under Section 1927.
Though Waters asserts reasons for putting Northern to its
proof under Rule 56, not one of those items need have taken
more than a few minutes' conversation between counsel — each
acting in good faith to resolve the issue of Muller's
unquestioned liability. Instead Muller's counsel forced
Northern to the time-consuming and expensive summary judgment
route. Waters' current arguments are cut from the same cloth as
those found without merit — or worse — in the Opinion.
Accordingly this Court orders payment of the following
amounts in addition to the full face amount of the Collateral
1. $4,008.75 to be paid by Muller individually;
2. $6,633.05 to be paid by Muller, Waters and
Morrissey and Kay or any of them (such liability
to be joint and several).
Those amounts are ordered to be paid forthwith. Northern may
determine whether, for that purpose, it requires any separate
judgment or other order in addition to this one.