United States District Court, N.D. Illinois
May 24, 2004.
JOAN SCHMUDE, Administrator of the Estate of Louis Schmude Plaintiff, V. MICHAEL SHEAHAN, in his official capacity as Cook County Sheriff, WILLIAM SPATZ, PATRICIA PULTZ, and LAWRENCE KOSCIANSKI Defendants
The opinion of the court was delivered by: CHARLES NORGLE, District Judge
OPINION AND ORDER
Before the court is Edward R. Theobald's motion styled as an "Agreed
Motion to St. Enforcement of the Judgment Pending Appeal Without Posting a
Bond," brought pursuant Federal Rules of Civil Procedure 62(c) and 62(d).
For the following reasons, the motion denied.
On March 29, 2004, the court issued an order finding that the conduct
of Anthony Pinelli Alan R. Brunell and Edward R. Theobald (collectively
"counsel") was sanctionable, stating:
The court finds that attorneys Edward R. Theobald,
Alan R. Brunell and Anthony Pinelli have disobeyed
the orders of the United States District Court and
acted improperly by seeking and obtaining numerous
awards of attorney fees, as improperly appointed
counsel, in the Circuit Court of Cook County,
after the entire cause of action had been removed
to the United States District Court. Further,
counsel proceeded with that conduct after a motion
to remand had been denied, while that issue of
remand was on appeal in the Seventh Circuit and
after the Seventh Circuit's decision, after they
were aware that the court was handling issues of
appointments and awards of attorney fees pursuant
to 55 Ill. Comp. Stat. § 5/3-9008 for other
attorneys in the case, and despite the court's
repeated admonitions that further litigation in
the state court would be in contravention of the
federal court's jurisdiction and improper.
Additionally, the court finds that the statements
and actions of each attorney violated their duty
of candor to the court. The sanctionable conduct
of each officer of the court was willful,
intentional and repeated, and was an attempt to
circumvent the United States District Court's removal jurisdiction. Attorneys Edward R.
Theobald, Alan R. Brunell and Anthony Pinelli are
hereby sanctioned pursuant to the court's inherent
See Schmude v. Sheahan, et al., F. Supp.2d ,
2004 WL 718501, *43 (N.D. Ill. March 29, 2004). The court sanctioned
counsel, ordering disgorgement of all improperly acquired attorney fees
and payment of a $5,000.00 fine. See id. at *44. In
order to assess the exact amount of disgorgement, the court ordered that
counsel file "a detailed accounting of all fees requested and received in
the Circuit Court of Cook County which relate to this civil matter,
including copies of all pleadings filed by counsel, orders entered by the
Circuit Court of Cook County, and all fee petitions submitted to date"
within 28 days of the court's order. See id. The
court stated that "[o]nce counsel submit such accountings, the court will
enter an order requiring counsel to disgorge those improperly acquired
attorney fees in a specific dollar amount to the source of such funds by
May 28, 2004." See id. On April 26, 2004, counsel
submitted their accountings to the court. On May 4, 2004, the court
entered a Final Judgment Imposing Sanctions Against Anthony Pinelli, Alan
R. Brunell and Edward R. Theobald. See Schmude v. Sheahan, et
al., F. Supp.2d , 2004 WL 1045798 (N.D. Ill. May 4,
2004). The court ordered counsel to pay a sanction of $5,000.00 to the
Clerk of the United States District Court for the Northern District of
Illinois by May 28, 2004. See id. at 40. The court
also imposed the sanction of disgorgement, ordering counsel to disgorge
the full amounts of improperly obtained attorneys to Cook County by May
28, 2004, and to certify compliance with the court's order by June 14,
2004. See id. Lastly, the court also "enjoined [counsel] from
seeking attorney fees or receiving remuneration from Cook County for
their representation of their clients in this case or for defending
themselves against the Rule to Show Cause and resultant proceedings."
Id. The court also indicated that in order to ensure compliance
with the court's orders, the injunction would be reviewed at six-month
intervals from the date of entry of judgment. See id.
The court has addressed numerous other motions filed by counsel, and
issued decisions, which are not directly relevant to the instant motion.
The court will now proceed to address the instant motion. II. DISCUSSION
A. Standard of Decision
Attorney Theobald*fn1 is asking the court to stay enforcement of the
court's May 4, 2004 sanction order pending appeal, without posting a
supersedeas bond, pursuant to Federal Rules of Civil Procedure 62(c) and
62(d). Rules 62(c) and 62(d) state:
(c) Injunction Pending Appeal. When an appeal is
taken from an interlocutory or final judgment
granting, dissolving, or denying an injunction,
the court in its discretion may suspend, modify,
restore, or grant an injunction during the
pendency of the appeal upon such terms as to bond
or otherwise as it considers proper for the
security of the rights of the adverse party.
. . .
(d) Stay Upon Appeal. When an appeal is taken the
appellant by giving a supersedeas bond may obtain
a stay subject to the exceptions contained in
subdivision (a) of this rule. The bond may be
given at or after the time of filing the notice of
appeal or of procuring the order allowing the
appeal, as the case may be. The stay is effective
when the supersedeas bond is approved by the
Fed.R.Civ.P. 62(c, d).
Under Rule 62(d), a party may obtain an automatic stay of execution of
a money judgment pending appeal by posting a supersedeas bond. See
BASF Corp. v. Old World Trading Co., 979 F.2d 615, 616 (7th Cir.
1992); see also Northern District of Illinois Local Rules 62.1,
65.1 and 65.2 (discussing procedures for supersedeas bond). In the
instant motion, attorney Theobald requests the court to stay enforcement
of the court's May 4, 2004 sanction order without first requiring him to
post a supersedeas bond; thus, he is not entitled to a stay as a matter
of right. See Fed.R.Civ.P. 62(d); BASF, 979 F.2d at 616.
In its discretion, however, the district court may waive the bond
requirement. See Dillon v. City of Chicago, 866 F.2d 902, 904
(7th Cir. 1988); see also Olympia Equip. Leasing Co. v. Western
Union Tel. Co., 786 F.2d 794, 796 (7th Cir. 1986) (indicating that
sometimes equivalent security may replace the bond). When determining
whether to waive the posting of bond, the court looks to several
criteria, including: (1) the complexity of the collection process; (2)
the amount of time required to obtain a judgment after it is affirmed
on appeal; (3) the degree of confidence that the district court has in
the availability of funds to pay the judgment; (4) whether the movant's
ability to the bond to pay the judgment is so plain that the cost of a
bond would be a waste of money; and (5) whether the movant is in such a
precarious financial situation that the requirement to post a bond would
place other creditors of the defendant in an insecure position. See
Dillon, 866 F.2d at 904-05 (citations omitted). However, before the
court can exercise its discretion to grant a stay without a bond, it must
first determine whether a stay is warranted.
The United States Supreme Court has set forth the general factors
regulating the issuance of a stay pending appeal: "(1) whether the stay
applicant has made a strong showing that he is likely to succeed on the
merits; (2) whether the applicant will be irreparably injured absent a
stay; (3) whether issuance of the stay will substantially injure the
other parties interested in the proceedings; and (4) where the public
interest lies." Hilton v. Braunskill, 481 U.S. 770, 776 (1987)
(citations omitted); see also Bradford-Scott Data Corp, v. Physician
Computer Network, Inc., 128 F.3d 504, 505 (7th Cir. 1997);
Glick v. Koenig, 766 F.2d 265, 269 (7th Cir. 1985). "Since the
traditional stay factors contemplate individualized judgments in each
case, the formula cannot be reduced to a set of rigid rules."
Id. at 777. Further, a request for a stay is a request for
extraordinary relief, equitable in character, and the movant bears a
heavy burden. See Winston-Salem/Forsyth County Bd. of Educ. v.
Scott, 404 U.S. 1221, 1231 (1971) (Burger, C.J., in chambers);
Chan v. Wodnicki, 67 F.3d 137, 139 (7th Cir. 1995).
B. Analysis of Stay Factors under Rules 62(c) and (d)
1. Likelihood of Success on the Merits
Attorney Theobald has not made a sufficient showing of his likelihood
of success on the merits. "In the context of a stay pending appeal, where
the applicant's arguments have already been evaluated on the success
scale, the applicant must make a stronger threshold showing of likelihood
of success to meet his burden." In re Forty-Eight Insulations,
115 F.3d 1294, 1300-01 (7th Cir. 1997) (citation omitted). Further, the Seventh Circuit
has stated: "Our case law is adamant that an appellant faces an uphill
battle in seeking to reverse an award of sanctions by the district
court." Langley v. Union Elec. Co., 107 F.3d 510, 513 (7th Cir.
1997) (citing Marrocco v. General Motors Corp.,
966 F.2d 220, 223 (7th Cir. 1992) ("We cannot understate the difficulty of the
task litigants face when challenging a district court's choice of
To reiterate, in the Rule to Show Cause, the court framed the issues to
which counsel were ordered to respond. The Rule to Show Cause alleged
that counsel had willfully disobeyed established statutory and case law
authority and the court's orders by improperly seeking to become
court-appointed counsel and obtaining numerous awards of attorney fees in
the Circuit Court of Cook County after the cause of action had been
removed to the United States District Court for the Northern District of
Illinois. The Rule to Show Cause also alleged that counsel had exhibited
a lack of candor toward the court. The allegedly sanctionable conduct
involved one simple matter circumventing the federal court's
removal jurisdiction and the obtaining of substantial public funds.
The instant motion simply reiterates arguments that the court has
previously ruled upon and found to be without merit on numerous
occasions. The arguments that are proffered as a sufficient showing of
the likelihood of success on the merits present an untenable position in
response to the sanction, as repeatedly indicated by the court. The court
has reviewed these arguments on no less than five separate occasions.
First, the court addressed these arguments in its 80-page opinion, which
found that counsels' conduct was sanctionable. See Schmude v.
Sheahan, et al., F. Supp.2d , 2004 WL 718501 (N.D.
Ill. March 29, 2004). Second, the court reviewed these arguments in its
9-page opinion, which found the first motion to reconsider to be untimely
because the amount of the sanction had yet to be determined.
See Opinion of April 23, 2004 [docket entry 166-1], Third, the
court reviewed these arguments in its 60-page final order imposing
sanctions. See Schmude v. Sheahan, et al., F. Supp.2d
, 2004 WL 1045798 (N.D. Ill. May 4, 2004). Fourth, the court again reviewed these arguments
in its 13-page opinion, which found the second (timely) motion to
reconsider to be without merit. See Opinion of May 19, 2004
[docket entry 176-1]. Lastly, here they are again. For all the reasons
stated in the court's initial opinion finding that counsels' conduct was
sanctionable, these arguments are largely immaterial, failing to respond
to the discrete acts alleged by the Rule to Show Cause and later found to
be sanctionable, and equally without merit. See Schmude v.
Sheahan, et al., F. Supp.2d , 2004 WL 718501 (N.D.
Ill. March 29, 2004). In sum, attorney Theobald has not made a
sufficient showing of the likelihood that the court's sanction will be
reversed on appeal.
2. Irreparable Injury to Attorney Theobald
Additionally, attorney Theobald's paltry submission, containing various
self-serving statements, does not provide the court with a basis for
waiving the requisite supersedeas bond. Attorney Theobald states that his
financial situation is such that the immediate payment of the sanction
and disgorgement of ill-gotten fees, or the posting of a supersedeas
bond, would cause him economic hardship and place his creditors in an
insecure position. See Theobald Mot of May 20, 2004, at 13-14.
No realistic assessment of the scanty financial information given by
Theobald can support a bondless appeal.
As a preliminary matter, mere economic injury does not equate to
irreparable injury. Further, the assertions of Theobald about his dire
financial condition are unsubstantiated. He presents nothing to indicate
his personnel balance sheet or income at relevant times. Thus, on the
other hand, attorney Theobald has represented to the court very reason
why parties are required to post a supersedeas bond, to ensure that once
a sanction or monetary judgment has been imposed that payment will be
made and a court's order or judgment will not be thwarted. Sec
BASF, 979 F.2d at 617 ("A bond secures both sides: the winner is
sure to recover if the judgment is affirmed, and the loser need not fear
inability to recoup if the judgment is reversed."). The sanction is case-specific and directed at Edward R. Theobald, an
officer of the court. The court, in fixing the amount of the
disgorgement, cannot consider the economic circumstances of a wrongdoer.
The economic circumstances of the wrongdoer may be considered regarding
the manner and schedule of payments to recoup the loss; however, the
economic circumstances of the wrongdoer do not vitiate the obligation to
recoup the loss. One cannot retain that to which one is not entitled.
Theobald personally is to return the money to the public fund.
The argument of irreparable injury to attorney Theobald based upon
having to disgorge improperly obtained attorney fees rings hollow. In
short, attorney Theobald has not established that he will be irreparably
injured absent a stay pending appeal.
3. Substantial Injury to Other Parties / Public Interest
In its simplest terms, the court has found that attorney Theobald went
improperly to the well to draw $301, 321.29. The court rejects his
argument that he should be permitted to continue with that sanctionable
conduct by returning to draw again from the public well to supply bond
funds and support expenses of appealing the sanction. To allow otherwise
would thwart the court-ordered sanction of disgorgement of ill-gotten
public funds, and in effect reward the sanctionable conduct.
Lastly, the sanctionable conduct at issue in this matter was an affront
to the federal court, and well-settled principles and federalism and
comity. The public interest requires that the courts remain able to
address conduct that calls their authority and jurisdiction into
Attorney Theobald has failed to establish that other parties would not
be substantially injured, nor that the public interest would not be
adversely affected, by the issuance of the stay. III. CONCLUSION
Attorney Theobald has presented nothing to the court that would
implicate its equitable discretion to grant a stay of the court's May 4,
2004 sanction order, without posting a supersedeas bond, pending appeal.
For the foregoing reasons, Edward R. Theobald's motion styled as an
"Agreed Motion to Stay Enforcement of the Judgment Pending Appeal Without
Posting a Bond" is denied.
IT IS SO ORDERED.