Anyone who has practiced litigation law for more than ten years will run into this situation. Your client has been sued in state court. After your first court appearance, you get a bad feeling that things are not going to go well in that case. You get a great idea – “Hey we can remove this case to federal court!” There are a few pitfalls with that great idea and the case captioned Jackson County Bank v. Mathew R. DuSablon, (7th Circuit. 2/6/19) could be a refresher course in bad removal.
The Jackson County Bank sued its former employee, DuSablon, in Indiana state court. After his motion to dismiss was denied, DuSablon tried to remove the case to federal court.
The way removal works is that you file a petition to remove the case. If the federal judge believes that there is jurisdiction, you are ok. If she decides there is no jurisdiction, you can end up paying the legal fees of your opponent.
In the DuSablon case, the district judge remanded the case to state court for want of jurisdiction and untimely removal and ordered DuSablon to pay costs and fees for wrongful removal. In this case, the bill amounted to $9,035.61 under 28 U.S.C. §1447(c).
DuSablon then appealed to the Seventh Circuit. Unfortunately for him, remand orders cannot be appealed. The court did hear the appeal of the sanctions award. Because there were only state law claims raised in the case, there was no basis to remove the case. There was “no federal question.” Removal was untimely as well. The district judge viewed the removal petition as a litigation stunt to delay the resolution of the state case.
The Seventh Circuit held that “the district court did not abuse its discretion in determining that DuSable lacked an objectively reasonable basis to remove the case to federal court.” Alas, the court also allowed the Bank to file a fee petition for its fees on appeal.
In conclusion, “Ouch.”
Ed Clinton, Jr.
The Clinton Law Firm, LLC
The case is a patent case. The defendant successfully moved to dismiss two of the counts of the complaint and then sought sanctions on those two counts on the ground that the allegations were frivolous. The district court was unimpressed with the sanctions motion and denied it.
Aardvark also contends that the ‘823 and ‘675 patents are invalid, and that Bobcar’s assertion of infringement claims as to these patents was frivolous. (Dkt. No. 67 at 12-16; Dkt. No. 80 at 2-6.) As to these two patents, there is a stronger case that there is no reasonable basis for Bobcar’s assertion of validity. However, the Court need not ultimately decide whether these patents are invalid for anticipation, or whether Bobcar’s claims for their infringement violated Rule 11, because in any event, the Court would deny sanctions. See Perez, 373 F.3d at 326(affirming district court that had declined “to decide definitively whether there had been a [Rule 11] violation because even if there had been, the court would exercise its discretion to deny sanctions”).
Looking to the relevant factors, the Court determines that the “extreme measure” of Rule 11 sanctions is not warranted here. Fleming v. Hymes-Esposito, No. 12 Civ. 1154, 2013 WL 1285431, at *11 (S.D.N.Y. Mar. 29, 2013). Bobcar’s claims of infringement as to the two design patents at issue—’823 and ‘675—constituted only one third of its patent infringement claims, and did not implicate the Second Amended Complaint’s Lanham Act and unfair competition counts. (See SAC ¶¶ 96-97, 106-131.) Any impropriety in the assertion of the challenged claims thus did not “infect the entire pleading.” Cont’l Cas. Co., 2017 WL 1901969, at *7 (quoting Ho Myung Moolsan Co., 665 F. Supp. 2d at 265).
Furthermore, the assertion of infringement as to two relatively simple design patents could not have independently added great time and expense to a litigation involving a third, more involved design patent (‘353), three utility patents, and trade dress and unfair competition claims. See id. (listing the “effect [a Rule 11(b) violation] had on the litigation process in time or expense” as a relevant factor (quoting Ho Myung Moolsan Co., 665 F. Supp. 2d at 265)). And indeed, the fact that Bobcar’s arguments in favor of the validity of one of the three challenged design patents were not frivolous “militates strongly against imposing sanctions” here. Fleming, 2013 WL 1285431, at *11.
“[I]t is well settled that the imposition of sanctions is reserved for `extreme cases.'” Tantaros, 2018 WL 1662779, at *3 (quoting Sorenson v. Wolfson, 170 F. Supp. 3d 622, 626 (S.D.N.Y. 2016)). The Court concludes that this action is not such an “extreme case.”
Comment: the case stands for the proposition that to obtain sanctions you have to show some rather serious conduct. The fact that one count in a complaint was weak is not enough for a sanctions motion.
Bobcar Media, LLC. v. Aardvark Event Logistics, Inc., 16-cv-885 (S.D.N.Y.) February 4, 2019.
Bobcar Media v. Aardvark
Ed Clinton, Jr.