United States District Court, N.D. Illinois, Eastern Division
January 12, 2005.
JON MAGIN, Plaintiff
MONSANTO COMPANY, PHARMACIA CORPORATION and CP KELCO U.S., INC. Defendants.
The opinion of the court was delivered by: JAMES HOLDERMAN, District Judge
MEMORANDUM OPINION AND ORDER
On July 9, 2004, this court granted defendants Monsanto Company
("Monsanto"), Pharmacia Corporation ("Pharmacia"), and CP Kelco
U.S., Inc ("Kelco"), motions for summary judgment dismissing
plaintiff Jon Magin's ("Magin"), claims. (Dkt. Nos. 108, 109.)
Magin had previously alleged that the defendants violated the
Employee Retirement Income Security Act of 1974, ("ERISA"),
29 U.S.C. § 1001 et seq., by not paying him certain claimed
severance benefits. On August 19, 2004, Monsanto and Pharmacia
filed a motion for an award of attorneys' fees and costs under
ERISA's fee shifting provision and an assessment of sanctions
against Magin and his counsel pursuant to Rule 11 of the Federal
Rules of Civil Procedure ("Rules"), and 28 U.S.C. § 1927. For the
reasons set forth below, this court grants Monsanto and
Pharmacia's motion in part and denies it in part.
Magin has experienced several set backs during his tenure
before this court. On May 8, 2003, this court dismissed his case
for failure to comply with the court's order of April 22, 2003.
(Dkt. Nos. 21, 22.) Magin failed to meet the court's deadline of April
29, 2003 for filing and serving his amended complaint. Magin had
filed for leave to file an amended complaint on April 17, 2003 in
response to the defendants motions to dismiss his original
complaint. (Dkt. Nos. 19, 20.)
This court eventually allowed Magin to file his amended class
action complaint on May 23, 2003, but his amended class complaint
was dismissed on August 4, 2003 pursuant to Rule 12(b)(6) for
failure to state a claim upon which relief can be granted. (Dkt.
Nos. 25, 45.) In light of the dismissal, this court, in an August
26, 2003 minute order, granted Magin leave to file a second
amended complaint which he filed on September 3, 2003. (Dkt. Nos.
46, 47.) Monsanto and Pharmacia moved to dismiss the second
amended complaint and this court, in its minute order of
September 23, 2003, set a briefing schedule for that motion which
required Magin to file his response by September 30, 2003. (Dkt.
No. 56.) Magin failed to meet his September 30, 2003 deadline for
filing his response with this court and instead this court, in
its minute order of October 2, 2003, granted Magin's untimely
motion to extend the filing of his response to October 9, 2003.
(Dkt. No. 59.) This court, in its November 14, 2003 minute order,
granted in part and denied in part Monsanto and Pharmacia's
motion to dismiss. (Dkt. No. 64.) The court held that the second
amended complaint did state a claim under ERISA, but Magin's
state law claims were preempted under ERISA. (Id.) This was the
second time that this court had dismissed Magin's state law
claims as preempted under ERISA. The court, in its August 4, 2003
minute order, had previously dismissed Magin's state law claims
when they were presented in the first amended complaint. (Dkt.
On November 25, 2003, Monsanto and Pharmacia filed their answer
to the second amended complaint along with affirmative defenses
and a cross claim. (Dkt. No. 66.) Magin responded with motion to
strike the affirmative defenses. (Dkt. No. 72.) This court, in
its January 20, 2004 minute order denying Magin's motion to strike, noted that Magin failed
to provide any basis for striking the affirmative defenses. (Dkt.
On February 3, 3004, during the pretrial discovery period,
Monsanto and Pharmacia brought a motion to deny class
certification, (Dkt. No. 81.), and Magin was given until February
19, 2004 to file a motion for class certification, (Dkt. No.
82.), but did not file his motion until February 20, 2004. (Dkt.
No. 83.) This court, in its April 8, 2004 minute order, denied
Magin's motion for class certification and granted the
defendants' motion to deny class certification. (Dkt. No. 92.) In
the April 8, 2004 minute order, this court noted that Magin had
not moved for class certification until after fact discovery had
closed. (Id.) In fact, Magin had waited until the defendants
had brought their motion against class certification before
bringing his motion for class certification. This led the court
to question whether "had defendants not moved to deny
certification, would plaintiff have ever moved to certify?"
(Id.) Furthermore, the extent of Magin's argument for class
certification was a "four-page conclusory motion with little
factual or legal support." (Id.)
On April 2, 2004, when this court was considering the motion
for class certification, Magin brought a motion for leave to add
additional parties plaintiff. (Dkt. No. 90.) This court, in its
April 20, 2004 minute order denying Magin's motion for leave to
add additional parties plaintiff, noted that the motion had been
filed over two months after discovery in the case had been closed
and less than one month before motions for summary judgment were
due. (Dkt. No. 96.)
This court then dismissed Magin's remaining claims on July 9,
2004 when it granted the defendants motions for summary judgment
on the remaining counts. (Dkt. Nos. 108, 109.) As the court
explained, "The bottom line is that Magin has failed to identify
with the requisite particularity the evidence that supports his
claims. The entirety of Magin's `Argument' section of his memorandum in response runs less than three pages and contains no
citations to the record. Magin has not affirmatively
demonstrated, by specific factual allegations, as opposed to
reliance on his pleadings and conclusory assertions, that there
is a genuine issue of material fact that requires a trial." (Dkt.
A. Attorneys Fees and Costs Under ERISA,
29 U.S.C. § 1132(g)(1)
Monsanto and Pharmacia, as the prevailing party, request an
award of $271,548.47 for attorneys' fees and costs under ERISA's
fee shifting provision. 29 U.S.C. § 1132(g)(1). Magin argues
against any award and he questions whether the $271,548.47 figure
is a proper amount.
1. The Parties Must Comply With Local Rule 54.3
As a preliminary matter, the court notes that the parties have
failed to comply with the requirements of Local Rule 54.3. In
particular, the parties have failed to confer and meet in good
faith to agree on a potential amount as required under Local Rule
54.3(d) or provide to the court a Joint Statement of disputed
items as required under Local Rule 54.3(e). The procedures set
forth in the Local Rules cultivate the groundwork of financial
information that this court must ultimately review when arriving
at a determination of whether the requested dollar amount is
proper. The court does note that Monsanto and Pharmacia attached
a letter dated August 3, 2004 sent to opposing counsel and a one
half inch thick stack of legal invoices. However, these
submissions are not sufficient by themselves to satisfy Local
Rules 54.3 (d) and (e). Failure by the parties to follow the
Local Rules may result in the imposition of sanctions and or the
finding of contempt by this court.
Consequently, this court will not determine at this time
whether the $271,548.47 figure requested by Monsanto and
Pharmacia is an appropriate amount. However, this court will
consider the legal arguments presented by the parties on the issue of
whether Monsanto and Pharmacia are entitled to receive any fees
and costs since that determination is a prerequisite to the
court's review of any requested dollar amount.
2. Monsanto and Pharmacia's Motion for Attorneys' Fees and
Costs under ERISA
"Determination of a fee award is left to the discretion of the
district court in light of its `superior understanding of the
litigation and the desirability of avoiding frequent appellate
review of what essentially are factual matters.'" Wengryn v.
Connor Sports Flooring Corp., No. 01 C 1519, 2002 WL 2022608, at
*2 (N.D. Ill. Sept. 3, 2002) (quoting Hensley v. Eckerhart,
461 U.S. 424, 437 (1983); Eddleman v. Switchcraft, Inc.,
965 F.2d 422, 424 (7th Cir. 1992)). Section 1132(g)(1) of ERISA states,
"In any action under this subchapter . . . by a participant,
beneficiary, or fiduciary, the court in its discretion may allow
a reasonable attorney's fee and costs of action to either party."
29 U.S.C. § 1132(d)(1). "There is a `modest presumption' in favor
of awarding fees to the prevailing party, but that presumption
may be rebutted." Senese v. Chicago Area I.B. of T. Pension
Fund, 237 F.3d 819, 826 (7th Cir. 2001) (quoting Harris Trust &
Sav. Bank v. Provident Life & Accident Ins. Co., 57 F.3d 608,
617 (7th Cir. 1995)).
In determining whether fees and costs are appropriate, the
court may apply one of two tests: (1) the "substantially
justified" test or (2) the multi-factor test.*fn1 The
Seventh Circuit leaves it to the district court to select which test to apply since "both tests
essentially ask the same question: `Was the losing party's
position substantially justified and taken in good faith, or was
that party simply out to harass its opponent?'" Quinn v. Blue
Cross and Blue Shield Ass'n, 161 F.3d 472, 478 (7th Cir. 1998)
(quoting Hooper v. Demco, Inc., 37 F.3d 287, 294 (7th Cir.
1994)). "Substantially justified means something more than
non-frivolous, but something less than meritorious." Senese,
237 F.3d at 826. The substantially justified standard developed
from the underlying policy that "ERISA's remedial purpose is to
protect, rather than penalize participants who seek to enforce
their statutory rights." Stark v. PPM America, Inc.,
226 F.3d 666, 673 (7th Cir. 2004) (quoting Senese, 237 F.3d at 826)).
Upon a review of the factual record in the present case, this
court concludes that Magin's positions in this case were not
substantially justified nor were they taken in good faith. In
fact, this court concludes that Magin's positions were at times
frivolous. Furthermore, there are no special circumstances
present that would make an award of attorneys' fees and cost
unjust. Consequently, the court concludes that Monsanto and
Pharmacia are entitled to an award of attorneys' fees and costs
under ERISA's fee shifting provision.
During his time before the court, Magin submitted a total of
three complaints: His original complaint, the first amended
complaint and the second amended complaint. (Dkt. Nos. 1, 25,
50.) The defendants filed motions to challenge the legal
sufficiency of each complaint and this court evaluated the legal
sufficiency of the first and second amended complaint. (The
defendants' motions to dismiss the original complaint were mooted
when Magin filed his first amended complaint.) This court, in
dismissed the first amended complaint under Rule 12(b)(6) for
failure to state a claim upon which relief can be granted, ruled that Magin was unable to bring
any state law claims because they were preempted under ERISA.
Thus, Magin was on notice that any state law claims that he
brought would be preempted under ERISA. Despite the court's
ruling on the preemption of state law claims under ERISA, Magin
brought state law claims in his second amended complaint and this
court again dismissed those claims. (Dkt. No. 64.)
Magin had no reasonable basis in law to bring his state law
claims in his first amended complaint because they were preempted
under ERISA. Even giving Magin the benefit of the doubt as to the
state law claims in the first amended complaint, there was no
reason for Magin to bring his state law claims in his second
amended complaint in light of the court's ruling on the first
amended complaint. Magin had clear notice of the legal rule of
ERISA preemption after this court's ruling on the first amended
complaint, yet he took a second run at the same argument in his
second amended complaint.
Magin also often failed to support his legal argument with
citations or explanation. As this court previously noted when it
granted the defendants' motion for summary judgment, "The
entirety of Magin's `Argument' section of his memorandum in
response runs less than three pages and contains no citations to
the record." (Dkt. No. 109.) He failed to provide any basis for
his motion to strike the affirmative defenses included by the
defendants in their answer to his second amended complaint, (Dkt.
No. 80), and provided "little factual or legal support" in his
motion for class certification. (Dkt. No. 92.)
Magin provides the same level of incomplete lawyering in his
brief in response to Monsanto and Pharmacia's Motion for
Attorneys Fees and Sanctions. (Dkt. No. 117.) His brief does
provide citation to and discussion of case law but does so over
only one and one-half pages. However, his legal analysis, the application of the case law to the facts in
the present case, is a total of three sentences long. Magin
merely states that "none of the elements for awarding fees to a
successful defendant have been met," (Dkt. No. 117 at pg. 4), but
provides no analysis to support that proposition. This type of
mere minimal effort is characteristic of Magin's efforts
throughout this litigation.
Furthermore, Magin has failed to meet court imposed deadlines
and requirements at various times throughout the litigation. He
missed the court's deadline for filing of his first amended
complaint, (Dkt. No. 22), and filed an untimely motion for
extension of time for filing his response to the defendants
motion to dismiss his second amended complaint. (Dkt. No. 61.)
Magin failed to bring his motion for class certification within
the deadline set by this court and only did so two weeks after
the defendants had brought a motion to deny class certification.
(Dkt. No. 92.) He also attempted to add additional parties
plaintiffs two months after discovery had been closed and less
than one month before motions for summary judgment were due.
(Dkt. No. 96.)
This court also notes no special circumstances that mitigate
against levying an award of attorneys' fees and costs against
Magin in this case. Special circumstances mitigating against an
award under Section 1132(g)(1) include ability to pay and the
fact that ERISA's remedial purpose is to protect beneficiaries of
pension plans. Meredith v. Navistar Int'l Transp. Corp.,
935 F.2d 124, 128-29 (7th Cir. 1991). "Adherence to [ERISA's remedial
purpose] often counsels against charging fees against ERISA
beneficiaries since private actions by beneficiaries seeking in
good faith to secure their rights under employee benefit plans
are important mechanisms for furthering ERISA's remedial
purpose." Id. at 129 (quoting Nachwalter v. Christie,
805 F.2d 956, 962 (11th Cir. 1986)).
Magin provides no evidence that he is unable to pay an award.
In contrast, Monsanto and Pharmacia argue that Magin received over $800,000 in salary and
severance payments from Monsanto in 2000 and 2001. (Monsanto and
Pharmacia Reply Memo. at 3 n. 7.) Furthermore, although this
court recognizes ERISA's remedial purpose of protecting
beneficiaries, this court concludes that Magin's deficiencies in
bringing his claim are not those of an individual bringing his
claim in good faith. Allowing a beneficiary to miss deadlines
before this court, file duplicative state law claims that the
court had previously dismissed as being preempted by ERISA and
file motions devoid of legal argument does not further ERISA's
remedial purpose. This court recognizes that an award of
attorneys' fees could deter future beneficiaries from pursuing
their ERISA claims. Potential ERISA plaintiffs who meet their
deadlines, alter their complaints based on the court's decisions
so that their complaints allege claims upon which relief may be
granted, and provide memorandums of law to the court that
integrate citations to pertinent facts and controlling legal
authority with precise yet thorough legal analysis should have
nothing to fear from this decision.
Consequently, this court in its discretion, concludes that
Magin took actions and positions in this litigation that were not
substantially justified. It is inappropriate under the
circumstances for Monsanto and Pharmacia to bear their own costs
and attorneys' fees. This court applies ERISA's fee shifting
provision and awards to Monsanto and Pharmacia an award of
reasonable costs and attorneys' fees pursuant to ERISA Section
1132(g)(1). This court will not award a monetary figure at this
time but instead orders the parties to comply with the
requirements of Local Rule 54.3 as detailed in the Conclusion
section of this court's memorandum opinion and order.
B. Monsanto and Pharmacia's Motion for Sanctions Pursuant to
Rule 11 and 28 U.S.C. § 1927
Monsanto and Pharmacia argue that Magin and his counsel should
be sanctioned pursuant to Rule 11 and 28 U.S.C. § 1927 because
(1) Magin presented his second amended complaint for the improper purpose of harassing Monsanto and Pharmacia; (2) the
claims and other legal contentions in Magin's second amended
complaint were not warranted by existing law; and (3) there was
no evidentiary support for the allegations and other factual
contentions contained in Magin's second amended complaint. Magin
counters that Monsanto and Pharmacia have waited too long in
bringing a motion for sanctions because the motion was brought at
the end of the case.
1. Rule 11 Sanctions
As a preliminary matter, Monsanto and Pharmacia have not
complied with the plain language of Rule 11. Section (c)(1)(A) of
Rule 11 states that, "A motion for sanctions under this rule
shall be made separately from other motions or requests."
Fed.R.Civ.P. 11(c)(1)(A); see Corley v. Rosewood Care Center, Inc.,
142 F.3d 1041, 1058 (7th Cir. 1998). Monsanto and Pharmacia
brought their motion for sanctions as part of a larger motion
that included a separate request for attorneys' fees and costs
under ERISA's fee shifting provision. Consequently, this court
must deny Monsanto and Pharmacia's request for Rule 11 sanctions.
2. 28 U.S.C. § 1927 Sanctions
Title 28, United States Code, Section 1927 allows for the
imposition of sanctions against a party or attorney who
"multiplies the proceedings in any case unreasonably and
vexatiously." 28 U.S.C. § 1927. "The purpose of sanctions awarded
under 28 U.S.C. § 1927 are to `deter frivolous litigation' and to
`ensure that those who create unnecessary costs also bear them,'
thus compensating the innocent party while punishing the
offending party." Moline v. Trans Union, L.L.C.,
222 F.R.D. 346, 349 (N.D. Ill. 2004) (quoting Kapco Mfg. Co. Inc. v. C & O
Enters., Inc. 886 F.2d 1485, 1491 (7th Cir. 1989)). "A court has
discretion to impose § 1927 sanctions when an attorney has acted
in an `objectively unreasonable manner' by engaging in a `serious
and studied disregard for the orderly process of justice,' or where a `claim is without a plausible
legal or factual basis and lacking in justification.'" The Jolly
Group, Ltd. v. Medline Indus., Inc., No. 03 C 9390, 2004 WL
1276722, at *5 (N.D. Ill. Jun. 8, 2004) (quoting Pacific Dunlop
Holdings, Inc. v. Barosh, 22 F.3d 113, 119 (7th Cir. 1994)).
As detailed above, Magin has duplicated these proceedings by
refiling his state law claims in his second amended complaint
after this court found that those claims were preempted under
ERISA. This court has already found that Magin is liable for
Monsanto and Pharmacia's reasonable costs and attorneys' fees.
This court now finds that the filing of the state law claims in
the second amended complaint was unreasonable and vexatiously,
and the court sanctions Magin's attorney for filing the second
amended complaint. Consequently, Magin's attorney, Mr. Craig E.
Anderson, of the law firm of Jacobson, Bradvick and Anderson,
Ltd. is found to be jointly and severally liable with Magin for
the costs and attorneys' fees incurred by Monsanto and Pharmacia
in responding to Magin's second amended complaint. Monsanto and
Pharmacia are instructed to identify the costs and attorneys'
fees they incurred in responding to the second amended complaint.
This court grants Monsanto and Pharmacia's motion in part and
denies it in part. Monsanto and Pharmacia's request for
reasonable attorneys' fees and costs is granted but the parties
must comply with the requirements of Local Rule 54.3 before the
court can calculate a monetary award. Monsanto and Pharmacia's
request for sanctions pursuant to Rule 11 is denied for failure
to meet the procedural requirements of Rule 11(c)(1)(A). Monsanto
and Pharmacia's motion for sanctions pursuant to 28 U.S.C. § 1927
is granted. Magin and his attorney, Mr. Craig E. Anderson, of the
law firm of Jacobson, Bradvick and Anderson, Ltd. are jointly and
severally liable for the reasonable costs and attorneys' fees incurred by Monsanto and Pharmacia in
responding to Magin's second amended complaint. Monsanto and
Pharmacia must identify the costs and attorneys' fees they
incurred in responding to the second amended complaint when
providing their Local Rule 54.3 material.
The parties must comply with the requirements of Local Rule
54.3 as follows: Monsanto and Pharmacia must provide Magin with
its 54.3 material by January 26, 2005 and Magin must provide
Monsanto and Pharmacia with his 54.3 material by February 9,
2005. The parties should then attempt to resolve any remaining
disputes over attorneys' fees and costs. If an agreement cannot
be reached, Monsanto and Pharmacia's further petition for fees
and costs, including the joint statement under 54.3(e), is due no
later than March 1, 2005. Response is due March 15, 2005 and the
reply is March 29, 2005.