Opinion ID: 3159024
Heading Depth: 2
Heading Rank: 1

Heading: Challenge to Process

Text: The voters initially raise several complaints about the process the court followed in imposing sanctions. The first challenge stems from their July 5, 2013 motion under Federal Rule of Civil Procedure 41(a)(2) that the court dismiss the case without prejudice. As described above, when the Mayor opposed the motion and filed his own motion requesting dismissal with prejudice, the court deferred ruling on either motion in an order staying proceedings until after the upcoming elections. Although denials of requests under Rule 41(a)(2) to dismiss without prejudice generally receive abuse-of-discretion review, “[a]bsent ‘legal prejudice’ 3 (...continued) multiply proceedings until after those proceedings have begun.” Id. at 1225. -9- to the defendant, the district court normally should grant such a dismissal.” Ohlander v. Larson, 114 F.3d 1531, 1537 (10th Cir. 1997). And, because a “court abuses its discretion when denying a motion to dismiss under Rule 41(a)(2) based on its inconvenience,” the “court’s time or effort spent on the case” is not a proper consideration. See id. The voters complain the court’s order staying the case (1) identified no legal prejudice to the Mayor, and (2) was based solely on its time or effort spent on the case. According to them, this violates Ohlander and amounts to a legal error sufficient to break the causal connection between any objectionable conduct of counsel and multiplication of proceedings. But, for several independent reasons, we disagree. As an initial matter, denying a motion to dismiss is different from deferring decision on that motion by means of a stay. Ohlander concerned legal error arising when improper considerations enter into a decision to deny a motion to dismiss without prejudice. See id. (explaining we were considering a “district court’s decision to deny a voluntary dismissal”). Here, the voters assert error in the court’s stay order, not in its later order denying their motion and dismissing the case. 4 While Ohlander may place some constraints on a court’s ability to 4 This matters because the voters argue it “was the decision of the court, and not any conduct by Plaintiffs’ counsel, that imposed the stay and result[ed] in proceedings that would not have been conducted otherwise.” 1st Cx-App. Br. at 20 (internal quotation marks omitted) (alteration and emphasis in original). But they have not appealed the stay order; their claim is essentially that the sanctions were inappropriate because the stay was inappropriate. As discussed below, that (continued...) -10- deny a Rule 41(a)(2) motion, it says nothing about the district court’s “broad discretion to stay proceedings as an incident to its power to control its own docket.” Clinton v. Jones, 520 U.S. 681, 706 (1997). And “[i]t is well settled that the district court has the power to stay proceedings pending before it and to control its docket for the purpose of economy of time and effort for itself, for counsel, and for litigants.” Pet Milk Co. v. Ritter, 323 F.2d 586, 588 (10th Cir. 1963) (internal quotation marks omitted). Thus, the stay order comports with our precedent. And the voters identify no reason the stay, as a factual matter, fell outside the court’s broad discretion to control its docket. Moreover, even if Ohlander’s rule reached as far as the voters think, the court did not elevate its convenience over potential legal prejudice to the defendant in staying the case. Proper considerations in the legal-prejudice inquiry include “the opposing party’s effort and expense in preparing for trial; excessive delay and lack of diligence on the part of the movant; insufficient explanation of the need for a dismissal; and the present stage of litigation.” Brown v. Baeke, 413 F.3d 1121, 1124 (10th Cir. 2005). But these “factors are neither exhaustive nor conclusive” and courts “should be sensitive to other considerations unique to the circumstances of each case” in determining legal prejudice, including the equities facing both parties. Id. 4 (...continued) argument has an independent causal infirmity—the decision to award sanctions did not depend on the resolution of any legal issue in the stay order. -11- The voters claim the court “considered and rejected the city’s assertions of legal prejudice,” 1st Cx-App. Br. at 22, implying the court concluded that dismissing the case without prejudice would not prejudice the Mayor. Under the voters’ view of Ohlander, that would have meant the court had no discretion to do anything but dismiss the case. See id. at 23 (asserting the court “answered” the question of “whether [the] case should be dismissed with or without prejudice” against the Mayor). Thus, they conclude, the court’s “sole reason for staying the case rather than granting the motion to dismiss without prejudice was the court’s time or effort spent on the case,” i.e., its convenience. Id. at 22–23 (internal quotation marks omitted). But this argument reads too much into the court’s order. What the court actually said was that “[a]t [that] point, the record [was] insufficient to warrant dismissal with prejudice” and that staying the case until after the “upcoming mayoral election” would “prejudice[] neither” party and benefit judicial economy. App. 190. This must be understood in the context of the reasons the voters gave for seeking dismissal without prejudice. The asserted reason for seeking a dismissal was “to assure that [the lawsuit] would not interfere with the upcoming elections . . . and to ascertain whether” further litigation would be necessary after the city-charter amendment. Id. at 46. The Mayor objected to that request, arguing the legal-prejudice factors counseled against allowing dismissal without prejudice. The sufficiency of the reasons for -12- seeking dismissal was key to the legal-prejudice inquiry and, consequently, key to the resolution of the motion. Complicating the inquiry, however, was that the voters’ reason for seeking dismissal without prejudice turned on the uncertain future effect of the citycharter amendment on the upcoming elections. The court apparently thought the voters’ explanation sufficiently unpersuasive to make it prudent to wait until the upcoming election actually happened before reaching a final decision. 5 See App. 190 (reasoning that if the city-charter amendment indeed “render[ed] further legal action unnecessary,” as the voters conjectured, they “would have no need to continue to prosecute [the] case,” but that if it did not, they would “be free to pursue the litigation without having to re-file the case”). Thus, we do not read the order as concluding the Mayor would suffer no legal prejudice from a dismissal without prejudice; we read it as expressing uncertainty about whether legal prejudice would attach and staying the case 5 Even after that election passed, the voters did nothing beyond requesting an extension of the stay to determine the amendment’s effect on yet another election. That was their last action before the court denied the motion to dismiss without prejudice and granted the Mayor’s motion to dismiss with prejudice in January 2014. By that time, the election-based reasons for seeking dismissal without prejudice lacked salience, and the voters had offered no substitute reasons for dismissal. Failing to offer current, relevant reasons for dismissing without prejudice probably offers an “insufficient explanation of the need for a dismissal.” Brown, 413 F.3d at 1124. The court apparently thought so. See App. 196 (noting the election-centric reasons for dismissal “seem to be disingenuous” since after the election’s passage the voters had not yet “ma[d]e a decision about whether they ha[d] a meritorious lawsuit or not”); id. at 410 (stating none of the reasons for dismissing without prejudice were “compelling”). -13- accordingly. For those reasons, the court’s reasoning cannot be fairly characterized as resting solely on its convenience. In fact, the court explicitly enumerated the legal-prejudice factors at the outset of the order and concluded ultimately that its decision to stay the case prejudiced neither party. Far from resting solely on convenience, the court’s decision indicates full awareness of the need to consider legal prejudice. Thus, even if the voters were right that Ohlander’s rule restricts the stay-granting power of district courts, the court fully complied with its dictates. Finally, even assuming the correctness of the two premises just rejected— (1) that Ohlander prevents courts from staying a decision on a motion to dismiss without prejudice without first finding prejudice to the non-movant, and (2) that the court failed to base its decision on potential legal prejudice to the defendant— the voters would still face an insurmountable obstacle. They would have only shown a legal error in the September 2013 stay order. It would remain to be shown that imposing sanctions in August 2014 depended on that incorrect legal conclusion. We do not see how it could have. Perhaps it would have if this supposed error necessarily enabled or led to the conduct later sanctioned as multiplication of proceedings. But that does not follow. As an initial matter, the conduct the court sanctioned as impermissible multiplication of proceedings began in June 2013. It is difficult to see how an error in a September 2013 stay could have caused that conduct; by the time the court entered the stay, the -14- proceedings had already multiplied. Nor can they show—to the extent this is their claim—that absent the legal error the court would have necessarily granted their motion to dismiss without prejudice. The court certainly could have still denied the motion to dismiss even had it applied the law as the voters perceive it. It is one thing to identify a legal error in a decision one actually appeals, since it makes some sense to assume the decision rested in part on that error. It is another to argue a court order should be reversed based on a legal error in a separate order issued at an entirely different stage of proceedings. The voters fail to show how this error—assuming it occurred—would even be relevant to the issue on appeal. A far tighter connection must be demonstrated. As far as we can tell, their challenge boils down to a backdoor attack on a decision they have not appealed with law that does not apply. Accordingly, the challenge to the court’s order staying the case cannot resolve this appeal. Two other complaints about the court’s process can be readily dismissed. The voters allege the court “invite[d] [their] actions by statements in its own orders” and thus could not sanction them “for following the court-approved path.” 1st Cx-App. Br. at 24. This gets the chronology backwards. The court found the sanctionable conduct began in June 2013. Statements made in the stay order could not have “invited” sanctionable conduct months earlier. Moreover, the voters cite no Tenth Circuit law in support of their claim, and the out-of-circuit -15- cases cited 6 are unpersuasive. Those cases involved denials of motions for summary judgment, which were in essence determinations that the cases contained meritorious, triable issues. Nothing similar happened here. The voters next claim that the district court committed reversible error in not allowing plaintiffs to “proceed with only the state claim in state court,” id. at 26. That argument also fails. As background, the voters offered, for the first time, at the November telephone conference to dismiss 7 the federal claims and proceed only with state law claims in state court. The Mayor did not acquiesce. In asserting error, the voters rely on an out-of-circuit case stating that in these cases the “mere prospect of the transfer of litigation to state court [is] an insufficient basis for denying [a] motion for voluntary dismissal.” Davis v. USX Corp., 819 F.2d 1270, 1275 (4th Cir. 1987). They provide no Tenth Circuit case for this proposition, and because the legal-prejudice factors are “neither exhaustive nor conclusive,” Brown, 413, F.3d at 1124, it is far from certain we would adopt such a bright-line rule. But the insurmountable causal problems the voters would face even if we did mean we need not decide that question. 6 Medtronic Navigation, Inc. v. BrainLAB Medizinische Computersysteme GmbH, 603 F.3d 943 (Fed. Cir. 2010); Browning v. Kramer, 931 F.2d 340 (5th Cir. 1991); In re Ruben, 825 F.2d 977 (6th Cir. 1987). 7 It is unclear from the record whether this offer was to dismiss with or without prejudice. -16- The Davis rule would only apply to the January 2014 order actually denying plaintiffs’ motion for voluntary dismissal. But nothing in that order indicates the prospect of proceeding in state court influenced the denial. 8 And, again, the voters decided against appealing that order, choosing instead to appeal only the September 2014 order imposing sanctions. As mentioned, errors in separate, not-appealed orders are only pertinent to the degree they necessarily resulted in errors in the order appealed. We doubt this would be such an error, given that the sanctions rested on the finding that sanctionable conduct began long before January 2014. Perhaps recognizing that causal problem, the voters in places appear to claim the court committed reversible error in the sanctions order by rejecting an argument that offering to proceed in state court should have precluded sanctions. But we see no reason such an offer would bar a court from later concluding that a party improperly multiplied proceedings, and the voters cite no authority to that effect. 9 The sanctions order only mentioned the offer in dismissing the voters’ attempt to shift blame for prolonging the case to the Mayor’s rejection of that offer. See 8 The denial was based entirely on the underlying case’s lack of merit and the court’s finding that the voters’ claimed reasons for seeking dismissal without prejudice were “disingenuous” and insufficient. App. 196. 9 This case’s chronology demonstrates why that would be an odd rule. The offer to proceed in state court was made months after the case became meritless and months after the court found the voters began unreasonably multiplying proceedings in a meritless case. -17- App. 410 (“The Court finds no fault with Defendant’s refusal to [return to state court] because [it] would involve the continuation, or possible continuation, of a meritless case.”); id. at 493 (court noting the Mayor “exercised a right [he has] to remove to federal court” and lack of any motion to remand). The voters do not dispute that the Mayor had the right to remove the case or that they never moved to remand. Nor do they claim the Mayor was required to acquiesce in their offer to return to state court. Thus, their argument that this case could have proceeded in state court is beside the point. Of course the state courts could have adjudicated the claim, but so could the federal courts, and this claim was validly in federal court. We detect no error. Rounding out their process challenges, the voters claim the court improperly applied a subjective standard by commenting on their “subjective knowledge regarding the merits of [their] case.” Id. at 410. This argument, however, rests on a legal misunderstanding. To be sure, they point to Braley and that case explained that § 1927 allows sanctions “against an attorney personally for conduct that, viewed objectively, manifests either intentional or reckless disregard of the attorney’s duties to the court.” Braley, 832 F.2d at 1512. But that does not mean an attorney’s subjective bad faith is irrelevant, let alone that commenting on apparent bad faith is reversible error. To the contrary, an “attorney’s actions are considered vexatious and unreasonable under § 1927 if the attorney acted in bad faith.” Dreiling v. Peugeot Motors of Am., Inc., 768 F.2d -18- 1159, 1165 (10th Cir. 1985); see also Braley, 832 F.2d at 1512 (noting parenthetically that attorneys are “accountable under § 1927 not only for subjective bad faith conduct but also for ‘reckless indifference to the merits of a claim’” (emphasis added)); cf. Steinert v. Winn Grp., Inc., 440 F.3d 1214, 1221 (10th Cir. 2006) (listing, as an example of sanctionable conduct under § 1927, instances when attorneys are “cavalier or bent on misleading the court”). 10 The court committed no legal error in commenting on plaintiffs’ subjective knowledge regarding the merits of their case. 11 10 The voters point to our statement in Miera v. Disneyland Insurance Co., 143 F.3d 1337 (10th Cir. 1998), that Braley “rejected a subjective good faith inquiry.” Id. at 1342. But that takes Miera out of context. That case simply described Braley’s rejection of the argument that § 1927 sanctions “should be imposable against an attorney personally only for subjective bad faith.” Braley, 832 F.2d at 1512 (emphasis added). To read that as holding that subjective bad faith has no place in this analysis goes too far, and makes scant sense. Has an attorney discovered to be acting in bad faith but who cloaked that bad faith behind objectively reasonable actions insulated himself from § 1927 sanctions? Nothing in the statute requires that result. It would be strange if subjective bad faith did not constitute “conduct that, viewed objectively, manifests . . . intentional . . . disregard of the attorney’s duties to the court.” Id. 11 Moreover, the court plainly rested its sanctions award on counsel’s “objectively unreasonable” pursuit of the case after June 25. App. 407. Even on the voters’ erroneous view of the law, a court that expressly bases sanctions on an attorney’s objectively unreasonable conduct surely would not err by commenting on the possibility that the conduct stemmed from subjective bad faith. -19-