Argued December 10, 2014.
Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 08 C 5913 -- Thomas M. Durkin, Judge.
For Merced Rojas, Plaintiff - Appellee: Dana L. Kurtz, Attorney, James Vanzant, Attorney, Heidi K. Sleper, Attorney, Kurtz Law Offices, Hinsdale, IL.
For Town of Cicero, Defendant - Appellant: Cynthia S. Grandfield, Attorney, K. Austin Zimmer, Attorney, Del Galdo Law Group, Llc, Berwyn, IL.
For LARRY DOMINICK, President of the Town of Cicero, Defendant - Appellant: Craig D. Tobin, Attorney, Tomas Petkus, Attorney, Sean M. Sullivan, Attorney, Tobin & Munoz, Llc, Chicago, IL.
Before EASTERBROOK, SYKES, and HAMILTON, Circuit Judges.
Easterbrook, Circuit Judge.
Merced Rojas contended in this suit under 42 U.S.C. § 1983 that the Town of Cicero violated the First Amendment by firing him because he supported a political opponent of Larry Dominick, the Town's president. After an eight-day trial, a jury found in Rojas's favor and awarded him $650,000 in damages.
The victory was short-lived. District Judge Holderman granted defendants' motion for a new trial, concluding that Dana L. Kurtz, Rojas's lawyer, had engaged in serious misconduct during the trial. (N.D. Ill.Dec. 22, 2011). Judge Holderman found that Kurtz made statements designed to mislead the jury, elicited hearsay responses that she knew would prejudice the defendants even though the judge was bound to strike the testimony (which he did), argued with the judge in a way that informed the jury about evidence that the court had excluded, and undermined the credibility of an important defense witness by asking him questions that presented him in a bad light, even though Kurtz lacked a good-faith basis for believing the questions proper.
Before the second trial could occur, the case was reassigned to District Judge Durkin. With his encouragement, the parties settled. The resolution provides Rojas with $212,500 as compensation for the discharge and Kurtz with fees of $287,500. (The settlement states that the amounts are confidential, but counsel for both sides have consented to their disclosure.) Both amounts are significantly less than Rojas and Kurtz would have received, had the jury's verdict stood. Judge Durkin estimated that Kurtz would have obtained an award under 42 U.S.C. § 1988 at least as high as the $650,000 in damages, if not higher.
The settlement did not resolve the defendants' motions for sanctions under 28 U.S.C. § 1927 and Fed.R.Civ.P. 26(g)(3). Section 1927 authorizes sanctions against lawyers who needlessly multiply the proceedings, as Kurtz had done by improper conduct that led to many post-verdict motions and the need to prepare for a second trial. The motion under Rule 26(g)(3) was based on conduct different from Kurtz's behavior in court. After Judge Holderman set aside the jury's verdict, defense counsel learned that Rojas had filed a bankruptcy petition six months after this suit began. Kurtz did not reveal this during discovery. (Apparently Rojas kept it a secret from Kurtz for a while, but after she learned of the bankruptcy she still did not tell defendants.) The bankruptcy petition could have affected whether Rojas is a proper plaintiff. Perhaps the legal claim passed to the trustee in bankruptcy for the benefit of his creditors--and the fact that Rojas valued the suit on his schedule of assets at much less than he asked the jury to award (indeed, much less than he demanded in settlement) could have provided the defense with a talking point at the trial or retrial.
Judge Durkin denied the motion for sanctions. Section 1927 gives a judge discretion whether to award sanctions, and Judge Durkin exercised that discretion against an award. He thought that both Rojas and Kurtz had lost a lot of money (about $400,000 apiece) when the settlement replaced the jury's verdict. That is sanction enough, he concluded. As for concealing the bankruptcy, the judge ...