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Dempsey v. Nathan

United States District Court, N.D. Illinois, Eastern Division

November 7, 2016

GREGORY DEMPSEY, Plaintiff,
v.
RICHARD NATHAN, RTC INDUSTRIES INC., CITY OF ROLLING MEADOWS, and DETECTIVE ANTHONY PELUSO, Defendants.

          MEMORANDUM OPINION AND ORDER

          MARVIN E. ASPEN, District Judge.

         On June 7, 2016, we granted Defendant City of Rolling Meadows and Detective Anthony Peluso's ("City Defendants") motion for summary judgment. (Dkt. No. 144.) The City Defendants then filed a motion for sanctions, arguing that Plaintiff Gregory Dempsey's claims were frivolous and designed to harass them. (Dkt. No. 151.) We referred the motion to Magistrate Judge Mary M. Rowland, who issued a Report and Recommendation ("Report") on October 11, 2016 that concluded the motion for sanctions should be granted in part. (Dkt. No. 165.) Both Plaintiff and the City Defendants timely filed objections to the Report, which we now consider under Federal Rule of Civil Procedure 72. For the reasons stated below, we accept and adopt Judge Rowland's Report in part.

         BACKGROUND

         We assume familiarity with the facts presented in this case, as they were previously set forth in detail in our order granting Defendants' motion for summary judgment. (Summ. J. Order (Dkt. No. 144); see also Mot. to Dismiss Order (Dkt. No. 41).) Accordingly, we discuss the relevant facts and procedural history as necessary below.

         Plaintiff filed an 11-count complaint against the City Defendants, and against Richard Nathan and RTC Industries, Inc. ("RTC Defendants"), alleging violations of 42 U.S.C. § 1983 against all defendants, state law tort claims of false arrest, malicious prosecution and conversion against the RTC Defendants, and breach of contract and unjust enrichment against RTC Industries. On September 30, 2014, we dismissed several of the claims against the defendants, including Plaintiff sMonell claims against the City of Rolling Meadows and his claims related to the alleged illegal search and seizure of property at his former home. (Dkt. No. 41.) At the time we granted the City Defendants' motion for summary judgment on June 7, 2016, the only remaining claims against the City Defendants were a § 1983 false arrest claim against Detective Peluso and a state-law indemnification claim against the City of Rolling Meadows related to Detective Peluso's alleged conduct in arresting Plaintiff[1] (Dkt. No. 144.) We granted the City Defendants' motion and entered judgment. (Dkt. No. 145.) On June 29, 2016, the City Defendants brought a motion for an award of sanctions against Plaintiff under Federal Rule of Civil Procedure 11, arguing that Plaintiffs claims were frivolous and designed to harass. (Dkt. No. 151.) We referred the motion to Judge Rowland, who issued the Report on October 11, 2016. (Dkt. No. 165.) Both Plaintiff and the City Defendants filed objections. (Dkt. Nos. 166, 167.)

         STANDARD OF REVIEW

         Pursuant to the Federal Magistrates Act, 28 U.S.C. § 636(b)(1), and Federal Rule of Civil Procedure 72, district court judges are permitted to assign certain nondispositive and dispositive matters to a magistrate judge to hear and decide. Schur v. L.A. Weight Loss Cntrs., Inc., 577 F.3d 752, 760 (7th Cir. 2009). "After a magistrate judge rules (on a nondispositive matter) or makes a report and recommendation (on a dispositive matter), either party may object within ten days." Id. We conduct a de novo review of any part of the magistrate judge's findings to which there are proper objections. 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 72(b)(2); Johnson v. Zema Sys. Corp., 170 F.3d 734, 739 (7th Cir. 1999). "If no objection or only partial objection is made, the district court judge reviews those unobjected portions for clear error." Johnson, 170 F.3d at 739.

         ANALYSIS

         The Report recommends that we grant the City Defendants' motion for sanctions pursuant to Federal Rule of Civil Procedure 11(b)(3) and award sanctions against Plaintiff and his counsel in the amount of $2, 500. (Dkt. No. 165 at 7.) Judge Rowland found sanctions are warranted because Plaintiff asserted a false arrest claim without evidentiary support and persisted with the claim through summary judgment, despite the fact that Plaintiff marshalled no evidence supporting his allegations even after engaging in lengthy discovery. (Id. at 6-7.)

         A. Plaintiffs Objections

         Plaintiff objects to the Report on several grounds. Plaintiffs first disagreement concerns whether the motion for sanctions met the notice requirements under Rule 11. Pursuant to Rule 11(c), a court may "impose an appropriate sanction on any attorney, law firm, or party" who violates Rule 11 "after notice and a reasonable opportunity to respond." Fed.R.Civ.P. 11(c)(1). The rule further states that a "motion for sanctions must be made separately from any other motion and must describe the specific conduct that allegedly violates Rule 11(b), " and the motion must be served but not "filed or . . . presented to the court if the challenged paper, claim, defense, contention, or denial is withdrawn or appropriately corrected within 21 days after service." Fed.R.Civ.P. 11(c)(2). "This 21-day window gives the offending party a 'safe harbor' within which to withdraw or correct the offending pleading." Matrix IV, Inc. v. Am. Nat. Bank & Trust Co. of Chi., 649 F.3d 539, 552 (7th Cir. 2011).

         Plaintiff contends the City Defendants' motion for sanctions should be denied because Defendants failed to comply with the safe harbor provision under Rule 11(c)(2) by failing to provide him with a copy of the motion 21 days prior to filing. (PL's Obj. (Dkt. No. 167) at 6.) The City Defendants sent Plaintiff a March 27, 2014 letter, written pursuant to Federal Rule of Civil Procedure 11, warning that Plaintiffs claims against the City and Detective Peluso violated Rule 11(b), and informing Plaintiff that the City Defendants would seek sanctions if Plaintiff did not voluntarily dismiss all claims against them. We agree with Judge Rowland that the letter is sufficient to comply with Rule 11, as it meets the notice and safe harbor requirements. See Matrix IV, 649 F.3d at 552 ("[W]e have held that a letter informing the opposing party of the intent to seek sanctions and the basis for the imposition of sanctions ... is sufficient for Rule 11 purposes.").

         Plaintiff also argues that he was "completely blindsided" by the motion for sanctions, since it came more than two years after Plaintiff received the Rule 11 letter. But Plaintiff has pointed to no facts or circumstances indicating that the City Defendants wrongly delayed in seeking sanctions. See Divane v. Krull Elec. Co., Inc., 200 F.3d 1020, 1027-28 (7th Cir. 1999) (rejecting opposition to motion for sanctions on the ground that the movant did not timely file the motion after giving notice). Rather, the circumstances here indicate the City Defendants' delay, if any, was reasonable-they warned Plaintiff that it appeared he could raise no facts to support his claims against the City Defendants, and after this conclusion was affirmed on summary judgment, the City Defendants promptly filed the motion for sanctions. See, e.g., Matrix IV, 649 F.3d at 552 (finding a motion for sanctions filed two years after sending a Rule 11 letter met the requirements of Rule 11(c)(2), explaining "[t]hat [Plaintiff] had much more 'safe harbor' time before the Rule 11 motion was filed only underscores the fact that it had sufficient opportunity to decide whether to dismiss its suit in response to [Defendant's] notice"). We find no undue delay, nor are we persuaded that Plaintiff was reasonably "blindsided" by the motion for sanctions. We further reject Plaintiffs claim that "[u]nder the approach Defendant is using to support sanctions, every party should send a letter at the outset of the case, why they believe they will win [sic], demand the other side dismiss or settle, and if they prevail use their letter from potentially years earlier as support for what amounts to a fee shifting provision." (Pl.'s Obj. at 7.) The premise of Plaintiff s slippery slope argument is flawed, as such an "approach" would only be proper where, as here, the facts and circumstances supporting the letter have merit. In sum, we agree with Judge Rowland that Plaintiff was afforded sufficient notice under Rule 11, and we therefore turn to the merits of the motion for sanctions.

         We also overrule Plaintiffs objections to the substance of Judge Rowland's Report. Plaintiff raises two main objections: (1) the Report employed "a virtually impossible standard" for Plaintiff to meet-"namely, requiring an explicit admission by Officer Peluso that he knew that the charges against Plaintiff were false"; and (2) Plaintiff reasonably pursued his claims because he had evidence that Detective Peluso violated the City's evidence collection policies and may have tampered with one piece of evidence. (Pl.'s Obj. at 1-6.) Plaintiff submits he "did an extraordinary amount of research and investigation prior to filing the Complaint, and subsequently incurred substantial costs to put forth evidence, " including ...


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