Order Form (01/2005)

United States District Court, Northern District of Illinois

Name of Assigned Judge

or Magistrate Judge

Elaine E. Bucklo Sitting Judge if Other

than Assigned Judge

CASE NUMBER 12 C 1269 DATE 9/14/2012

CASE

TITLE

The Corvus Group, Inc. vs. Nichols Kaster, PLLP and Andrew G. Chase

DOCKET ENTRY TEXT

Defendants’ motion for Rule 11 sanctions [15] is denied. Under my prior ruling on the motion to dismiss,

defendants’ petition for fees and costs [18] is granted in part and defendants and their attorneys are awarded

fees and costs in the amount of $26,723.58. All pending dates and motions are terminated as moot. 

O[ For further details see text below.] Notices mailed by Judicial staff.

STATEMENT

Plaintiff The Corvus Group, Inc. (“Corvus”) sued defendants Nichols Kaster, PLLP and Andrew G.

Chase alleging trade libel (count I) and violations of the Illinois Consumer Fraud and Deceptive Business

Practices Act 815 ILCS 505/2 (“ICFA”) (count II) and the Uniform Deceptive trade Practices Act, 815 ILCS

510/2(a)(8) (“UDTPA”) (count III). On May 24, 2012, I dismissed all three counts of plaintiff’s complaint,

denied defendants’ request for attorney’s fees and costs under the Citizen Participation Act, 735 ILCS 110/1,

et seq., and granted defendants’ request for reimbursement for attorney’s fees and costs in defending the

ICFA claim as allowed under that statute. The day after I issued my order granting the defendants’ motion to

dismiss, defendants filed the present motion seeking sanctions pursuant to Rule 11(b)(2) and (c)(2) of the

Federal Rules of Civil Procedure. Defendants have also filed a petition for attorney’s fees and costs.

I. Defendants’ motion for Rule 11 sanctions

Rule 11 imposes obligations on attorneys presenting pleadings or motions to a court and provides for

sanctions when an attorney fails to meet her obligations. Specifically, an attorney who signs or submits a

filing “certifies that to the best of the person’s knowledge, information, and belief, formed after an inquiry

reasonable under the circumstances . . . the claims, defenses, and other legal contentions are warranted by

existing law or by a nonfrivolous argument for extending, modifying, or reversing existing law or for

establishing new law.” Fed. R. Civ. P. 11(b). Under Rule 11(c)(2) a party may file a motion for sanctions for

alleged violations of Rule 11(b) after giving the opposing party an opportunity to withdraw the complaint or

motion alleged to violate Rule 11(b). Defendants contend that plaintiff’s lawsuit was frivolous, arguing that

all three of plaintiff’s legal claims lacked any basis in law and that plaintiff failed to perform its due diligence

as required by Rule 11(c)(2). Defendants argue that plaintiff failed to investigate its claims and ignored

controlling cases. 

I awarded defendants their attorney’s fees attributable to defending count II of the complaint under

the ICFA. The ICFA allows for an award of reasonable attorney’s fees if there has been a threshold finding

of bad faith. 815 ILCS 505/10a(c). Guided by Rule 11(b)(2), I held that plaintiff’s ICFA claim was

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STATEMENT

frivolous. I based my holding on the fact that binding Illinois Supreme Court precedent absolutely foreclosed

plaintiff’s claim under the ICFA. I do not alter my prior holding here. However, I do not reach the same

conclusion regarding counts I and III of plaintiff’s complaint. The claims plaintiff asserted in counts I and III

were not strong, as evidenced by their eventual dismissal, but they were not frivolous. In arguing that

plaintiff failed to investigate its claims, defendants argue that plaintiffs ignored controlling cases. Yet, at

least as far as counts I and III are concerned, defendants do not cite to any cases that would bind this court. 

As such, defendants motion for Rule 11 sanctions is denied.

II. Petition for Fees and Costs

Plaintiff’s object to defendants’ petition for fees and costs on two grounds, but these arguments are

unpersuasive. First, plaintiff argues that I should not award fees at all, even for the ICFA claim. I awarded

defendants fees and costs related to the plaintiff’s ICFA claim when I granted the motion to dismiss. To the

extent that plaintiff seeks reconsideration of that decision, I decline to revisit the issue. Plaintiff has not

offered any reason why reconsideration would be appropriate in this instance and merely disputes the reach

of Cripe, which it had the opportunity to do in response to the motion to dismiss. 

Next, plaintiff contends that defendants have failed to demonstrate a rational relationship between

work related to the ICFA claim and the total fees requested. I begin by noting that plaintiff has not disputed

the defendants’ claims that the hourly rates charged by the lawyers who worked on the case and the total

number of hours spent defending are reasonable. Instead, plaintiff argues that defendants have not

sufficiently documented which portion of the total fees are attributable to the ICFA claim. While plaintiff

argues that dividing fees and costs by one-third is unfair, I find this to be a reasonable way in which to divide

the fees without incurring further burden on the parties. As defendants correctly point out, many of the hours

involved in this case were required regardless of the number of counts. Plaintiff does not contend that there

was more legal research involved in any of the counts, and defendants have segregated out additional

research they performed related to the defamation count. Further, plaintiff’s argument that fees and costs

related to removal, privilege or SLAPP research is not well-taken. These issues are fairly attributable to all

of the claims and were reasonably undertaken as part of defendants’ general litigation strategy. As such,

dividing the fees and costs by one-third is fair under the circumstances. I will not, however, allow for

recovery of fees and costs related to the unsuccessful Rule 11 motion. Nor will I include all general fees in

the fees attributable to the ICFA claim, as defendants have suggested. Finally, I note that plaintiff has

argued, without support, that defendants have essentially claimed double costs by submitting fees from both

the defendants’ law firm, Nichols Kaster, PLLP, and their counsel, KrausFlaming LLC. But the exhibits

defendants submitted in support of their petition for fees and costs fairly demonstrate that the two law firms

worked collaboratively on the case.

After removing costs related to the Rule 11 motion and the defamation count, I divided the total by

one-third. The amount of fees not attributable to the Rule 11 motion or defamation total $79,017.50. I have

determined that defendants are entitled to recover one-third of this amount, or $26,339.17. I have also

determined that defendants are entitled to recover one-third of the total costs, though I have deducted $100

for Westlaw, paid on June 12, 2012, assuming that research costs incurred after my order on the motion to

dismiss were related to the Rule 11 motion. Thus, the total amount of costs is $1,153.24, and one-third of the

total is $384.41. The total award of attorney’s fees and costs is $26,723.58.

III.

For the foregoing reasons, defendants’ motion for Rule 11 sanctions is denied. Under my prior ruling

on the motion to dismiss, defendants’ petition for fees and costs is granted in part and defendants and their

attorneys are awarded fees and costs in the amount of $26,723.58.

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