### In the



# United States Court of Appeals For the Seventh Circuit

No. 12-3756

A NI L G O

YAL, Plaintiff-Appellee,

v.

G AS T E C H NOL O GY I N S TI TUT E, Defen dant. A PP E ALOF : B AR R Y A. G OMB E RG

Appe al f ro m the Uni ted S tates Distri ct Co urt fo r the Nor thern Distri ct o f Il l i noi s, Eastern Di v i sio n. No. 05 C 5 06 9 — Rebe cca R. Pa llm eye r , Judg e.
S U B MI TT E D A PRI L 22, 2013

— D E C I D E DOctober 17, 2013

Before W OOD, Chief Ju dge, and T I ND E R and H AMI L TON , Circ uit Judges.

P E R C URI AM

. On June 3, 2013, we i ssu ed a n o p inio n affi rming the di stric t court’s or der quashing an atto rney fee li en asserted by appellant B a rry A. G omberg, a former atto rney2 No. 12-3756
of plainti ff Ani l Goy al. Goy al v
. Gas T echnology Inst. , 718 F .3d 713 (7th Ci r
. 2013). Becaus e we found that atto rney Gomberg’s arg uments on appeal were fri v olous, we or dered hi m to show

caus e why we should not i mpose sanc tions under Feder al Rule of Appellate Procedure 38. W e also saw a possi

ble violati on of Rule 1.5 of the R ul e s of Professi onal Conduct and or dered Gomberg to show caus e why we should not forw ard a copy of the opini on to the Illinoi s Att or ney Registration and Di sciplinary Co mm i ssi on wi th a request that i t deter mine whether hi s conduc t warr ants d isc i plinary acti on. Id

. at 720–21. Gomberg has fi led hi s response, appellee Ani l Goy al has responded, and Gomberg fi led a reply

. After consi dering these sub mi ssi ons, we conclu de tha t Ru le 38 sanctions are justifi ed in the amount of $7500 pay able by Gomberg to Goy al a nd t ha t a refer ral to the Commi ssi on i s
w arr anted. Gomberg’s asserti on of an atto rney li en w as entirely unjusti fi ed, hi s legal arg uments in supp or t of hi s payment demands were fri v olous, and hi s explanations to thi s court for hi s condu ct do notexcuse i t. T o sum mari ze the details set forth in our earlier opin io n, Goy al hi red atto rney Gomberg in late 2003 to repr esent hi m in medi atin g a di spute wi th hi s employ er , defendant Gas T

echnolog y Insti tute. Under the ter ms of their fee contract, Goy al p a id Gomberg a non-refundab le ret ainer of $2500, whi ch

w ould count tow ard a ten percent contingent fee for Gomberg

“ o n all moni es and i tems of v alue that we secu re for you bey ond what y ou hav e obtained from Gas T e ch n ol ogy Insti tute to thi s d ate

... .” The r etainer ag reement di d not contemplate li tigati on. Mediati on sess i ons began. T w o weeks after the fi rst medi ation sess i on, Gomberg sen t a l ett er to GTI’s atto rneysNo. 12-3756 3
clai ming an atto rney li en in the amount of $70,000. Gomberg’s response to t he o r der to show cause pro vides no explanation

or basi s for hi s asserti on of a li en in that amount at that tim e. In Mar ch 2004, G TI made wh at it then called i ts final offer to settle w i th G oy al for $375,000. Goy al rej ected the offer , and he and a tt orne y G om

b e rg parte d w ays. On Mar ch 12, Gomberg sent Goy al a lette r confi rming the ter minati on of the atto rneycli ent relat i onshi p and asserting that Go mberg had fi led an atto rney’ s li en for hi s fee. In response, Goy al wrot e that, since the medi ation had not produced an agr eement, t he ini tial ret ainer of $2500 that he had already p a id Go mberg w as the only fee to whi ch he was enti tled. Mor e than a y ear after these ev ents, Goy al fi led sui t again st GTI. In April 2009, acting pro se, Goy al set tled wi th GTI for approx i mately $1,300,000. Before all payments were made to Goy al under the settle m e nt, G om b e rg c ontacted GTI’s lawy ers, inv oke d hi s li en, and demanded payment of $34,022.52 in atto rney fees from Goy al’s settlement. (Thi s amount inclu ded

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

on the li en. For details of the calculati on, see 7 1 8 F

. 3 d at 716 n.2.) Goy al tr i ed to stop GTI from payin g Gomberg and sought help from the Chi cago Bar Associ ation to resolv e the fee di spute. Gomberg refused to c oo p e ra te, th ou gh , and in January 2010 GTI wired Gomberg the requested amount. Gomberg held the amount in his cli ent fund s escrow unti l shortly after

we i ssu ed our opini on on June 3, 2013. He repo rt s that he then pai d Goy al promptly

, wi th intere st. Feder al Rule of Ap p e llate Procedure 38 authorizes a Uni ted St ates Court of App e a l s to aw ard damages and single or4 No. 12-3756
double cost s t o a n appellee when an appeal i s fri v olous. The Rule has both a compens ator y purpose and a deter rent purpose. E.g. , Harris N.A. v
. Hershey, 711 F .3d 794, 801 (7th Ci r
. 2013); Ruderer v
. Fin es , 614 F .2d 1128, 1132 (7th Ci r
. 1980). Rule 38 shoul d not be inv oke d li ghtly , for reasonable lawy ers and parties often di sagre e abo ut the appli cati on of the law to a particu lar case. Thi s court’s door s are o p e n to consi der such reasonable di sagreements brought to us in goo d fai th. An appeal can be fri v olous, though, “when the result i s obvious or when th e appellant’s arg ument i s wholly wi thout merit.” Spiegel v
. Continen tal Illinois Nat ’ l Bank , 790 F .2d 638, 650 (7th Ci r
. 1986), quot ing Indianapol i s Colts v
. Mayo r and City Counc il of Baltimore, 775 F .2d 177, 184 (7th C ir

. 1 985). When an appeal i s fri v olous, Rule 38 sanc t io ns are not mandatory but are a matter for the sound di sc r e t io n of thi s court. Burlin gton Northern R.R. C o. v. W

oods , 480 U.S. 1, 4 (1987). W e i ssu ed our order to show caus e based on tw o concerns about Gomberg’s professi onal conduc t. First, he too k the fri v olous posi tion in the di st r ict co urt and on appeal that he had “secu red” fund s for Goy al when the opposing party made

a settlement offer that Goy al then rej ect e d

. S econd, Go mberg asserted a li en for $70,000 in December 2003 when there w as no basi s for any li en, and certainly not in that amount. W e invited further factual dev elopment that mi ght hav e justifi ed or excused Gomberg’s deci si on to appeal to thi s court despi te the apparent friv olousnessof hi s arguments. Gomberg fi rst a r gues in hi s response to our show caus e
or der that hi s clai m for a fee w a s j ustifi ed, insi sting that the ter m “ se cu red” in the fee agr eement arg uably could encompass obtaining an offer of settlement ev en i f the offer i s notNo. 12-3756 5 accepted. W

e rej ected thi s i dea in our earlier opini on when we
e x p l a ined that, based on the most elementary prin ci ples of contract law a nd contingent fee agr eements, Gomberg nev er “secu red” any fund s for Goy al. 718 F

. 3d at 718–19. Gomberg

corr ectly points out that there i s a cri tic al di fference betw een an
uns ucc essf

ul le g a l a r gument and one that i s fri v olous. But wi thout repeat ing our di scu ssi on from the m erits opini on, hi s untenable posi tion that he “secu red” fund s for Goy al when the opposing party made an unacce p t ed settlement offer falls squarely on the fr i v olous si de of that line. Nor has Gomberg justifi ed hi s December 2003 asserti on of a li en for $70,000, an as sertion he made b efore any settlement offer had ev en been made. Though we or dered Go mb e r g to exp l a in hi s acti on, hi s or i gin al response to us di d not ev en menti on the point. Hi s reply to Goy al’s r esponse t old us only that he realized in 2009 that an uni denti fi ed “mat hemati cal calculati on” had been incorre ct. He has prov i ded no basi s on whi ch we could ev en guess that he had a reasonable bas i s for clai ming $70,000 or what mathemati cal mi stake he mi ght hav e made. Hi s contract wi th Goy al w as for t en percent of any addi tional fund s hi s efforts secu red for Goy al. When Gomberg told GTI he was asserting a right to a $70,000 li en, GTI had not offered any settlement r e motely supp or tin g the amount, and i t nev er di d so whi le Gombe rg w as repr esenting Goy al. And

ev en under Gomberg’s speci ous r e asoning, he could hav e clai med to hav e been entitled to only $29,383 based o n GTI’s offer of $375,000, whi ch w as not made un t il sev eral months later

. See 718 F .3d at 716 n.2 ([$318,825.28 ÷ 10] - $2500 ret ainer = $29,383).6 No. 12-3756
Go mberg also asserts that he had a legiti mate basi s fo r seeking a qu an tu m merui t fee becau se Goy al settled wi th GTI after Gomberg had expended tim e and energ y on the case. As

we explain ed in our earlier o pini on, Gomberg w ai v ed thi s point. He di d not make the arg ument to Magistrate Judge Key s, see Dkt. 258, and hi s arg ument to Judge P allmey er fai led to come to gr i ps wi th the relev ant facts, see Dkt. 276 at 4–6. See gener ally 718 F .3d at 720 & n.3. I n his objections submi tte d to Judge P allmey er, Gomberg pointed out that i f GTI had offered $1 mi lli on to settle, Goy al had reje cted i t, fi red Gomberg, and then settled for $1 mi lli on plus one cent, he w o uld hav e a legiti mate quantum merui t clai m. W e agr ee wi th hi m about that exag ger ated example. As we explain ed in our earlier opini on, the qu antum merui t theor y prov i des a mechani sm to prot ect lawy ers who w or k on a contin gent fee basi s fro m such unfai r tr eatment by thei r cli ents. 718 F .3d at 719–20. The problem is t hat each tim e Gomberg has presented a conclu sory v ariati on of hi s quantum merui t theor y , he has fai led to address the relev ant facts, including the contingent nature of hi s fee agr eement, the v ery li mi ted scope of hi s own acti ons, the v ast di fference between the offer he obtained and the ter ms
o f the ulti mate settlement, and the many y ears of li tiga t io n betw een GTI’s unac cepted offer in Mar ch 2004 and i ts accepted offer in April 2 0 09. Sinc e Gomberg has nev er marshaled a coherent arg ument under quantum merui t, the theor y does not
sav e hi s appeal fro m having been fri v olous. The bas i c theme of Go mberg’s response i s that he w or ked hard for Goy al and that he deserv ed to be pa id. What i s mi ssing from the response i s any recog ni tion of the facts that Gomberg agr eed to a contingent fee and that hi s efforts di d notNo. 12-3756 7
“secu re” any fund s for Goy al. Att or neys who w or k on a contingent fee basi s know that ev en thoug h they may w or k long and hard, the fee may turn out to be zero
. If Goy al had fi red Gomberg and turned aro un d a nd settled qui ckly wi th GTI for essenti ally the ter ms of the offer made thro ugh Gomberg, he w ou l d ha ve a point, but that i s not what happened. Gombeg’s efforts to av oid the reali ty of the contingent fee agr eement that he drafted and si gned hav e been fri v olous.
In a final atte mpt to av oid Rule 38 sanc tions, Gomberg arg ues in his response that Goy al, becau se he acted pro se o n appeal, may not be aw arded atto rney fees. He a r g ue s by analogy to cases conclu ding that a pro se li tigant i s not entitled to an atto rney fee under 42 U.S.C. § 1988. See Kay v
. Ehrler, 499 U.S

. 4 3 2 (1991). The analogy i s not persuasiv e. First, i f i t appli ed here, i t w ould be inconsi stent wi th Gomberg’s own demand in the di stric t court that Goy al pay hi m an addi tional $4640 in “fees” forhi s effor ts to e nforce hi s fri v olous li en. See 718 F .3d at 716 n.2. Mor e fund amental, though, secti on 1988 i s phrased in ter ms of atto rney fees, whi le Rule 38 i s not so li mi ted. T

o serv e the deter rent and compens ator y purposes of Rule 38, the fact that Goy al chose to defend hi mself rather than hi re an att or ney should not w or k to Gomberg’s benefi t. As noted abov e, Rule 38 sanc tions ca l l fo r an exer ci se of di screti on. W

e are most concerned here that thi s case shows an atto rney’ s per sistent, y ears-long effort to ext ract money from

a cli ent on fri v olous theor i es. An atto rn e y o wes a fi duci ary duty to all her cli ents—ev en the di ffi cult ones. Gomberg’s

uns ucc essf

ul w or k on behalf of Goy al has nev er giv en hi m a viab le claim for a fee, y et he has tied up Goy al and t he courts for yea r s with hi s fri v olous efforts to ext ract a fee for thi s8 No. 12-3756

uns ucc e ssful w or k. Gi v en thi s prolo nged and oppressi v e mi sus e of the law’s mechani sms to prot ect a tto rneys from unreasonable cli ents, Rule 38 sanc tions are justifi e d bo t h to compens ate Goy al and t o deter Go mb e r g and o ther si mi larly si tuated at tor neys. The amount of those sanc tions i s also a matter of judgment and di screti on. W

e again keep in mind both the compens ator y and deter rent purposes of Rule 38. Goy al spent ne a rly 150 hours on th e a p p e al alone. Any one who has been a party to li tigati on can comprehend the stress that goe s along wi th such

w or k. W e conclu de that a Rule 38 sanc tion of $7500 pay able by Gomberg to Goy al i s an appropr i ate sanc tion here. That

am ount c om p e n sates Goy al approx i mately $50 per hour for hi s efforts on the appeal. By coinci dence, i t i s also the approx i mate
sum of the $2500 ret ainer that Goy al pai d and the amount that Gomberg hi mself w as clai ming in the di stric t court for hi s own fri v olous efforts to enforce the li en. W e beli ev e thi s sum should be su ffi ci ent to both compensate and deter

. Fin ally , nothin g in Gomberg’s response persuades us that he di d not violate R ule of Professi onal Conduct 1.5, whi ch pro v ide s in relev ant part that a lawy er shall not charge or collect an unreason a bl e fe e
. W e read Rule 1.5 to prohibi t a lawy er from asserting unreasonable and baseles s demands for

a fee co nt rar y to the ter ms of hi s fee agr eement. See Restatement (Thi rd) of Law Gov ernin g Lawy ers § 43, cmt. h (2000) (a “fee clai m wi th respect t o whi ch a li en i s asserted mus t be adv anced in goo d fai th and wi th a reasonable basi s in law and fa ct ” ). W

e wi ll send a copy of our earlier opini on and t his opini on to the Illinoi s At tor ney Reg i strat i on and Di sci plinaryNo. 12-3756 9
Commi ssi on for such fu r ther consi derat i on as i t may deem appropr i ate. SO ORDERED.