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SCHMUDE v. SHEAHAN

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.

I. BACKGROUND

  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 powers.
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 court.
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 sanctions.")).

  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 ...


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