Opinion ID: 1190367
Heading Depth: 3
Heading Rank: 4

Heading: W & F's Motion for Appellate Sanctions Pursuant to FRAP 38

Text: FRAP 38 provides that [i]f a court of appeals determines that an appeal is frivolous, it may, after a separately filed motion or notice from the court and reasonable opportunity to respond, award just damages and single or double costs to the appellee. In Wilton Corp. v. Ashland Castings Corp., 188 F.3d 670 (6th Cir. 1999), we held that sanctions under FRAP 38 were appropriate when an appeal is wholly without merit and when the appellant's arguments essentially had no reasonable expectation of altering the district court's judgment based on law or fact. Id. at 677. We have conclud[ed] that a finding of bad faith is not required before sanctions under Rule 38 may be imposed by this court. Id.; see also Tareco Props., Inc. v. Morriss, 321 F.3d 545, 550 (6th Cir.2003) (An appellee does not have to demonstrate that the appellant or his attorneys acted in bad faith to succeed on a motion for sanctions.) (citing Jones v. Continental Corp., 789 F.2d 1225, 1230 (6th Cir.1986)). Nonetheless, we have observed that [w]e will usually impose Rule 38 . . . sanctions only where there was some improper purpose, such as harassment or delay, behind the appeal. Barney v. Holzer Clinic, Ltd., 110 F.3d 1207, 1212 (6th Cir.1997) (emphasis added). Other circuits approach requests for appellate sanctions in a similar fashion. In one particularly relevant case from the Fifth Circuit, that court imposed a sanction of double costs in an antitrust case when appellate counsel made no attempt to address most of the issues raised in the district court's opinion. Olympia Co. v. Celotex Corp., 771 F.2d 888, 893 (5th Cir. 1985). The court further stated that [w]hile we realize that the lack of damages or injury was enough to dispose of [the plaintiff's] action, we note that [the plaintiff] did not address enough of the requisite elements to obtain reversal on any of its substantive claims. Id. Other courts of appeals have found appellate sanctions appropriate when appellants have failed to explain how the district court decision was in error, including failing to discuss key aspects of the court's holding, Spiegel v. Continental Ill. Nat'l Bank, 790 F.2d 638, 650 (7th Cir.1986), and when appellants merely reiterate[ ] the arguments [they] made to the district court and that the district court sanctioned below, Optyl Eyewear Fashion Int'l Corp. v. Style Cos., 760 F.2d 1045, 1052 (9th Cir.1985).
Our analysis above has already highlighted the numerous blatant deficiencies in B & H's lawsuit, as well as the improper and baseless nature of its appellate briefing. Here we summarize the most egregious examples of B & H and Ryan's conduct in support of our decision to impose sanctions against both. First, perhaps the most frivolous and sanction-worthy aspect of this appeal is B & H's entirely new argument that the SUPPORT network constituted a price-fixing conspiracy when it never pursued such a theory in the district court. Given that arguments relating to price fixing constitute a large portion of B & H's appellate brief, this conduct alone might warrant sanctions. Second, although B&H dedicated substantial space in its briefing to propounding a brand new theory of liability, in its opening brief B&H neglected to challenge the district court's crucial determination that B&H lacked antitrust standing because B&H had failed to show that the SUPPORT network had caused an injury to competition. Even when W & F argued this point in its responsive brief, B&H offered only three conclusory sentences in its Reply Brief to purport to show that it had demonstrated an injury to competition and satisfied the requirements of antitrust standing. B&H could not possibly prevail on any of its antitrust claims without demonstrating that it had antitrust standing, [10] and the district court clearly rested its decision to grant W & F's motion for summary judgment in part on the lack of antitrust standing. See J.A. at 113-17 (Op. & Order Granting Summ. J. at 40-44). B & H's effective failure to challenge the antitrust-standing basis of the district court's decision renders the remainder of its antitrust appeal essentially meaningless. Third, the district court imposed, and we affirm, Rule 11 sanctions against Ryan for failing to dismiss this case when a lengthy discovery period failed to disclose any support for the antitrust claims asserted in the complaint. B & H Med., 354 F.Supp.2d at 748. Indeed, the district court stated that it was a close question whether Rule 11 sanctions were warranted against B & H and Ryan simply for filing the lawsuit at all. Id. at 751. B & H should have voluntarily dismissed this case at the close of discovery; pursuing an appealespecially one that raises entirely new theories of liability and fails to challenge crucial grounds of the district court's opinionis the essence of frivolity. Our final consideration is whether to impose sanctions against Ryan only or against B & H as well. The district court elected not to impose sanctions pursuant to Rule 11 against B & H because it found that counsel bore the responsibility to impress upon his client that the record did not warrant the continued pursuit of this action. Id. at 752. At that point, however, B & H should have been well aware of the many fundamental weaknesses in its case and it should not have requested that Ryan pursue its antitrust claims on appeal. We therefore find that B & H and Ryan must jointly pay W & F the costs incurred in defending this appeal. W & F shall have fifteen days from the filing of this opinion to file an affidavit setting forth the hourly rates of their counsel and the number of hours spent in defending this appeal, and whatever documentation and argument in support thereof they deem appropriate. B & H and Ryan may then file a response to this documentation within ten days. See Tareco Props., 321 F.3d at 550 (citing Wilton Corp., 188 F.3d at 678 (Gilman, J., concurring)); see also Blachy v. Butcher, 129 F. App'x 173, 181 (6th Cir.2005). We do note that the decision to impose appellate sanctions is a difficult one, and [w]e do not wish to chill any appeal, especially in the criminal context, which involves serious, controversial, doubtful, or even novel questions. Wilton Corp., 188 F.3d at 677. Sanctions are not appropriate simply because an appellant's case may indeed be quite weak, Uhl v. Komatsu Forklift Co., 512 F.3d 294, 308 (6th Cir.2008), and we generally impose sanctions only in the rare case when an appeal involves an improper purpose, such as harassment or delay, Barney, 110 F.3d at 1212, or when, as here, an appeal consists of baseless or improperly raised arguments, see Blachy, 129 Fed.Appx. at 181 (6th Cir.2005) (granting motion for FRAP 38 sanctions when [t]he result of the [appellants'] appeal was obvious since their arguments were either untimely, could not be raised for the first time to this Court, or were objectively meritless). In sum, B & H's antitrust claims lack any conceivable merit, and this has been apparent for a long time. B & H's appeal failed to address meaningfully the district court's reasoning regarding the evidence pertaining to the DME/P & O market, failed utterly to address the district court's conclusion that B&H had not demonstrated antitrust injury, and inappropriately devoted much of its appellate briefing to introducing an entirely new theory of antitrust liability. Such conduct on appeal deserves sanction pursuant to FRAP 38.