In the

United States Court of Appeals

For the Seventh Circuit

No. 12-3756

ANIL GOYAL,

Plaintiff-Appellee,

v.

GAS TECHNOLOGY INSTITUTE,

Defendant.

APPEAL OF:

BARRY A. GOMBERG

Appeal from the United States District Court for the 

Northern District of Illinois, Eastern Division.

No. 05 C 5069 — Rebecca R. Pallmeyer, Judge.

SUBMITTED APRIL 22, 2013 — DECIDED October 17, 2013

Before WOOD, Chief Judge, and TINDER and HAMILTON,

Circuit Judges.

PER CURIAM. On June 3, 2013, we issued an opinion

affirming the district court’s order quashing an attorney fee

lien asserted by appellant Barry A.Gomberg, a former attorney
2 No. 12-3756

of plaintiff Anil Goyal. Goyal v. Gas Technology Inst., 718 F.3d

713 (7th Cir. 2013). Because we found that attorney Gomberg’s

arguments on appeal were frivolous, we ordered him to show

cause why we should not impose sanctions under Federal Rule

of Appellate Procedure 38. We also saw a possible violation of

Rule 1.5 of the Rules of Professional Conduct and ordered

Gomberg to show cause why we should not forward a copy of

the opinion to the Illinois Attorney Registration and Disciplinary Commission with a request that it determine whether his

conduct warrants disciplinary action. Id. at 720–21. Gomberg

has filed his response, appellee Anil Goyal has responded, and

Gomberg filed a reply.

After considering these submissions, we conclude that Rule

38 sanctions are justified in the amount of $7500 payable by

Gomberg to Goyal and that a referral to the Commission is

warranted. Gomberg’s assertion of an attorney lien was

entirely unjustified, his legal arguments in support of his

payment demands were frivolous, and his explanations to this

court for his conduct do not excuse it.

To summarize the details set forth in our earlier opinion,

Goyal hired attorney Gomberg in late 2003 to represent him in

mediating a dispute with his employer, defendant Gas Technology Institute. Under the terms of their fee contract, Goyal

paid Gomberg a non-refundable retainer of $2500, which

would count toward a ten percent contingent fee for Gomberg

“on all monies and items of value that we secure for you

beyond what you have obtained from Gas Technology Institute

to this date ... .” The retainer agreement did not contemplate

litigation. Mediation sessions began. Two weeks after the first

mediation session, Gomberg sent a letter to GTI’s attorneys
No. 12-3756 3

claiming an attorney lien in the amount of $70,000. Gomberg’s

response to the order to show cause provides no explanation

or basis for his assertion of a lien in that amount at that time. 

In March 2004, GTI made what it then called its final offer

to settle with Goyal for $375,000. Goyal rejected the offer, and

he and attorney Gomberg parted ways. On March 12, Gomberg

sent Goyal a letter confirming the termination of the attorneyclient relationship and asserting that Gomberg had filed an

attorney’s lien for his fee. In response, Goyal wrote that, since

the mediation had not produced an agreement, the initial

retainer of $2500 that he had already paid Gomberg was the

only fee to which he was entitled.

More than a year after these events, Goyal filed suit against

GTI. In April 2009, acting pro se, Goyal settled with GTI for

approximately $1,300,000. Before all payments were made to

Goyal under the settlement,Gombergcontacted GTI’s lawyers,

invoked his lien, and demanded payment of $34,022.52 in

attorney fees from Goyal’s settlement. (This amount included

a demand for more than $4600 for Gomberg’s efforts to collect

on the lien. For details of the calculation, see 718 F.3d at 716

n.2.) Goyal tried to stop GTI from paying Gomberg and sought

help from the Chicago Bar Association to resolve the fee

dispute. Gomberg refused to cooperate,though, and in January

2010 GTI wired Gomberg the requested amount. Gomberg

held the amount in his client funds escrow until shortly after

we issued our opinion on June 3, 2013. He reports that he then

paid Goyal promptly, with interest.

Federal Rule ofAppellate Procedure 38 authorizes a United

States Court of Appeals to award damages and single or
4 No. 12-3756

double costs to an appellee when an appeal is frivolous. The

Rule has both a compensatory purpose and a deterrent

purpose. E.g., Harris N.A. v. Hershey, 711 F.3d 794, 801 (7th Cir.

2013); Ruderer v. Fines, 614 F.2d 1128, 1132 (7th Cir. 1980). Rule

38 should not be invoked lightly, for reasonable lawyers and

parties often disagree about the application of the law to a

particular case. This court’s doors are open to consider such

reasonable disagreements brought to us in good faith. An

appeal can be frivolous, though, “when the result is obvious or

when the appellant’s argument is wholly without merit.”

Spiegel v. Continental Illinois Nat’l Bank, 790 F.2d 638, 650 (7th

Cir. 1986), quoting Indianapolis Colts v. Mayor and City Council

of Baltimore, 775 F.2d 177, 184 (7th Cir. 1985). When an appeal

is frivolous, Rule 38 sanctions are not mandatory but are a

matter for the sound discretion of this court. Burlington

Northern R.R. Co. v. Woods, 480 U.S. 1, 4 (1987).

We issued our order to show cause based on two concerns

about Gomberg’s professional conduct. First, he took the

frivolous position in the district court and on appeal that he

had “secured” funds for Goyal when the opposing party made

a settlement offer that Goyal then rejected. Second, Gomberg

asserted a lien for $70,000 in December 2003 when there was no

basis for any lien, and certainly not in that amount. We invited

further factual development that might have justified or

excused Gomberg’s decision to appeal to this court despite the

apparent frivolousness of his arguments.

Gomberg first argues in his response to our show cause

order that his claim for a fee was justified, insisting that the

term “secured” in the fee agreement arguably could encompass obtaining an offer of settlement even if the offer is not
No. 12-3756 5

accepted. We rejected this idea in our earlier opinion when we

explained that, based on the most elementary principles of

contract law and contingent fee agreements, Gomberg never

“secured” any funds for Goyal. 718 F.3d at 718–19. Gomberg

correctly points out that there is a critical difference between an

unsuccessful legal argument and one that is frivolous. But

without repeating our discussion from the merits opinion, his

untenable position that he “secured” funds for Goyal when the

opposing party made an unaccepted settlement offer falls

squarely on the frivolous side of that line.

Nor has Gomberg justified his December 2003 assertion of

a lien for $70,000, an assertion he made before any settlement

offer had even been made. Though we ordered Gomberg to

explain his action, his original response to us did not even

mention the point. His reply to Goyal’s response told us only

that he realized in 2009 that an unidentified “mathematical

calculation” had been incorrect. He has provided no basis on

which we could even guess that he had a reasonable basis for

claiming $70,000 or what mathematical mistake he might have

made. His contract with Goyal was for ten percent of any

additional funds his efforts secured for Goyal. When Gomberg

told GTI he was asserting a right to a $70,000 lien, GTI had not

offered any settlement remotely supporting the amount, and

it never did so while Gomberg was representing Goyal. And

even under Gomberg’s specious reasoning, he could have

claimed to have been entitled to only $29,383 based on GTI’s

offer of $375,000, which was not made until several months

later. See 718 F.3d at 716 n.2 ([$318,825.28 ÷ 10] - $2500 retainer

= $29,383).
6 No. 12-3756

Gomberg also asserts that he had a legitimate basis for

seeking a quantum meruit fee because Goyal settled with GTI

after Gomberg had expended time and energy on the case. As

we explained in our earlier opinion, Gomberg waived this

point. He did not make the argument to Magistrate Judge

Keys, see Dkt. 258, and his argument to Judge Pallmeyer failed

to come to grips with the relevant facts, see Dkt. 276 at 4–6. See

generally 718 F.3d at 720 & n.3. In his objections submitted to

Judge Pallmeyer, Gomberg pointed out that if GTI had offered

$1 million to settle, Goyal had rejected it, fired Gomberg, and

then settled for $1 million plus one cent, he would have a

legitimate quantum meruit claim. We agree with him about that

exaggerated example. As we explained in our earlier opinion,

the quantum meruit theory provides a mechanism to protect

lawyers who work on a contingent fee basis from such unfair

treatment by their clients. 718 F.3d at 719–20.

The problem is that each time Gomberg has presented a

conclusory variation of his quantum meruit theory, he has failed

to address the relevant facts, including the contingent nature

of his fee agreement, the very limited scope of his own actions,

the vast difference between the offer he obtained and the terms

of the ultimate settlement, and the many years of litigation

between GTI’s unaccepted offer in March 2004 and its accepted

offer in April 2009. Since Gomberg has never marshaled a

coherent argument under quantum meruit, the theory does not

save his appeal from having been frivolous.

The basic theme of Gomberg’s response is that he worked

hard for Goyal and that he deserved to be paid. What is

missing from the response is any recognition of the facts that

Gomberg agreed to a contingent fee and that his efforts did not
No. 12-3756 7

“secure” any funds for Goyal. Attorneys who work on a

contingent fee basis know that even though they may work

long and hard, the fee may turn out to be zero. If Goyal had

fired Gomberg and turned around and settled quickly with

GTI for essentially the terms of the offer made through

Gomberg, he would have a point, but that is not what happened. Gombeg’s efforts to avoid the reality of the contingent

fee agreement that he drafted and signed have been frivolous.

In a final attempt to avoid Rule 38 sanctions, Gomberg

argues in his response that Goyal, because he acted pro se on

appeal, may not be awarded attorney fees. He argues by

analogy to cases concluding that a pro se litigant is not entitled

to an attorney fee under 42 U.S.C. § 1988. See Kay v. Ehrler, 499

U.S. 432 (1991). The analogy is not persuasive. First, if it

applied here, it would be inconsistent with Gomberg’s own

demand in the district court that Goyal pay him an additional

$4640 in “fees” for his efforts to enforce his frivolous lien. See

718 F.3d at 716 n.2. More fundamental, though, section 1988 is

phrased in terms of attorney fees, while Rule 38 is not so

limited. To serve the deterrent and compensatory purposes of

Rule 38, the fact that Goyal chose to defend himselfrather than

hire an attorney should not work to Gomberg’s benefit.

As noted above, Rule 38 sanctions call for an exercise of

discretion. We are most concerned here that this case shows an

attorney’s persistent, years-long effort to extract money from

a client on frivolous theories. An attorney owes a fiduciary

duty to all her clients—even the difficult ones. Gomberg’s

unsuccessful work on behalf of Goyal has never given him a

viable claim for a fee, yet he has tied up Goyal and the courts

for years with his frivolous efforts to extract a fee for this
8 No. 12-3756

unsuccessful work. Given this prolonged and oppressive

misuse of the law’s mechanisms to protect attorneys from

unreasonable clients, Rule 38 sanctions are justified both to

compensate Goyal and to deter Gomberg and other similarly

situated attorneys.

The amount of those sanctions is also a matter of judgment

and discretion. We again keep in mind both the compensatory

and deterrent purposes of Rule 38. Goyal spent nearly 150

hours on the appeal alone. Anyone who has been a party to

litigation can comprehend the stress that goes along with such

work. We conclude that a Rule 38 sanction of $7500 payable by

Gomberg to Goyal is an appropriate sanction here. That

amount compensates Goyal approximately $50 per hour for his

efforts on the appeal. By coincidence, it is also the approximate

sum of the $2500 retainer that Goyal paid and the amount that

Gomberg himself was claiming in the district court for his own

frivolous efforts to enforce the lien. We believe this sum should

be sufficient to both compensate and deter.

Finally, nothing in Gomberg’s response persuades us that

he did not violate Rule of Professional Conduct 1.5, which

provides in relevant part that a lawyer shall not charge or

collect an unreasonable fee. We read Rule 1.5 to prohibit a

lawyer from asserting unreasonable and baseless demands for

a fee contrary to the terms of his fee agreement. See Restatement (Third) of Law Governing Lawyers § 43, cmt. h (2000) (a

“fee claim with respect to which a lien is asserted must be

advanced in good faith and with a reasonable basis in law and

fact”). We will send a copy of our earlier opinion and this

opinion to the Illinois Attorney Registration and Disciplinary
No. 12-3756 9

Commission for such further consideration as it may deem

appropriate.

SO ORDERED.