Opinion ID: 801189
Heading Depth: 1
Heading Rank: 2

Heading: Propriety of the Bond Order

Text: On appeal Gay contends that the district court abused its discretion by requiring him to post a cost bond that it knew he could not afford. He argues that the bond requirement effectively blocked his access to the courts, a result he asserts is contrary to basic principles of due process. The defendants respond that dismissing a case because the plaintiff failed to post security for costs in the case is no different from barring filings by a plaintiff as a sanction for failing to pay sanctions or court fees in past cases. We agree with Gay that requiring a plaintiff to post a bond to secure costs in a pending suit is different from sanctioning a litigant for failing to pay costs or sanctions from past suits. As we explain below, before requiring a bond to cover costs under Rule 54(d), a court must consider a party’s ability to pay. A court abuses its discretion when it requires a cost bond that it knows the party cannot afford. By contrast, courts can bar future suits as a sanction to punish a refusal to pay past court costs and sanctions even if the litigant is indigent. The district court here did not impose a filing bar as a sanction against Gay but invoked only its power to order a bond for costs. The court erred when it ordered Gay to post a bond it knew he could not afford. No. 11-2523 7 The district court correctly reasoned that its authority to award costs to a prevailing party implies a power to require the posting of a bond reasonably calculated to cover those costs, even though no statute or rule expressly authorizes such an order. See Anderson v. Steers, Sullivan, McNamar & Rogers, 998 F.2d 495, 496 (7th Cir. 1993) (affirming dismissal); Pedraza v. United Guaranty Corp., 313 F.3d 1323, 1335-36 (11th Cir. 2002) (recognizing inherent authority but vacating order not supported by necessary findings); Simulnet East Assocs. v. Ramada Hotel Operating Co., 37 F.3d 573, 574 (9th Cir. 1994) (same); Ehm v. Amtrak Board of Directors, 780 F.2d 516, 517 (5th Cir. 1986) (affirming dismissal). A court may require a bond where “there is reason to believe that the prevailing party will find it difficult to collect its costs” when the litigation ends. Anderson, 998 F.2d at 496. Relying on Anderson, the defendants contend that Gay’s poverty makes it likely that they will be unable to collect their costs at the end of the litigation and therefore justifies the bond requirement in this case. But the defendants’ interpretation of Anderson would unmoor the bond requirement from its underlying purpose. A cost bond is not a sanction. It is meant “to insure that whatever assets a party does possess will not have been dissipated or otherwise have become unreachable by the time such costs actually are awarded.” Selletti v. Carey, 173 F.3d 104, 112 (2d Cir. 1999) (emphasis in original); see also In re Merrill Lynch Relocation Mgmt., Inc., 812 F.2d 1116, 1123 (9th Cir. 1987) (rejecting constitutional challenge to rule allowing court to require non- 8 No. 11-2523 resident parties to post cost bonds). This understanding of cost bonds has deep historical roots. The practice of requiring such bonds developed to help resident defendants collect costs when victorious against non-resident plaintiffs whose property was beyond the reach of the court. See John A. Gliedman, Access to Federal Courts and Security for Costs and Fees, 74 St. John’s L. Rev. 953, 95859 (2000). The practice was imported from English courts, which did not require that an impoverished party post security. Id. at 958. We have never addressed directly whether a court must consider a party’s current ability to afford a bond before requiring one as a condition of prosecuting a lawsuit, but the weight of authority from other circuits supports Gay’s argument that a court may not ignore an indigent litigant’s inability to pay. The First Circuit concluded that a district court abuses its discretion when it does not consider a plaintiff’s financial situation before imposing a cost bond. Murphy v. Ginorio, 989 F.2d 566, 568-69 (1st Cir. 1993); Aggarwal v. Ponce School of Medicine, 745 F.2d 723, 727-28 (1st Cir. 1984). To do otherwise, the court explained, “comes dangerously close to making judicial access a privilege for only the most financially secure.” Murphy, 989 F.2d at 569. The First Circuit instructs courts to weigh (1) the merits of the case, (2) the prejudice to the defendant of not requiring a bond, and (3) the prejudice to the plaintiff of requiring a bond. Aggarwal, 745 F.2d at 727-28. The Ninth Circuit has cited the Aggarwal factors with approval and has cautioned that in imposing a bond, “care No. 11-2523 9 must be taken not to deprive a plaintiff of access to the federal courts.” Simulnet East Assocs., 37 F.3d at 575-76. When a court requires a bond it knows a plaintiff cannot pay, the Ninth Circuit reasoned, it is essentially granting judgment to the defendant without allowing the judicial process to run its normal course. Id. at 576. And the Second Circuit has also implied that a plaintiff’s ability to pay should factor into a court’s decision whether to impose a bond. See Selletti, 173 F.3d at 111 n.9 (finding no abuse of discretion in imposing bond on plaintiff who did not argue that amount of bond “would effectively preclude compliance”). We agree with the reasoning of these courts, which is not inconsistent with our decision in Anderson, where we affirmed dismissal where the plaintiff had made no effort to show that he could not afford to post the required bond. 998 F.2d at 496. The parties here agree that Gay is indigent and could not post a $1,000 bond. The bond requirement thus did nothing to ensure that the defendants would recoup their costs if they prevailed. All it ensured was the end of Gay’s suit. The bond requirement therefore was an abuse of discretion, as was the dismissal order for failure to pay.2 2 Even if the bond order itself had not been an abuse of discretion, the dismissal order would still have been improper because the court did not consider Gay’s financial situation before dismissing with prejudice. Dismissal under Rule 41(b) is appropriate only when “there is a clear record of delay or contumacious conduct” or when less severe sanctions will (continued...) 10 No. 11-2523 III. Other Tools for Addressing Frivolous Litigation Although Gay’s filings in the district court far outnumber his appeals, we understand well the district court’s and defendants’ frustration with Gay’s pattern of unsuccessful litigation. We share the district court’s concern over the financial burden that Gay’s long string of suits has placed on the defendants, and groundless litigation makes the courts less accessible to other parties with more substantive claims and defenses. Federal courts have a number of means to control vexatious litigation without resorting to impossible bond require- (...continued) not suffice. Maynard v. Nygren, 332 F.3d 462, 467 (7th Cir. 2003), quoting Williams v. Chicago Bd. of Educ., 155 F.3d 853, 857 (7th Cir. 1998). And while inability to pay a fee imposed in a pending suit is not an “automatic defense” to dismissal for failing to pay it, Williams v. Adams, 660 F.3d 263, 266 (7th Cir. 2011), a court abuses its discretion when, as here, it fails even to consider a party’s lack of resources before ordering dismissal, see id. at 265-66; English v. Cowell, 969 F.2d 465, 473 (7th Cir. 1992); Selletti, 173 F.3d at 111; Moon v. Newsome, 863 F.2d 835, 838 (11th Cir. 1989); Hornbuckle v. Arco Oil & Gas Co., 732 F.2d 1233, 1237 (5th Cir. 1984); Thomas v. Gerber Prods., 703 F.2d 353, 356-57 (9th Cir. 1983). In addition, a court must also consider the probable merits of the case before dismissing a suit based on a plaintiff’s failure to pay a fee. If the suit has likely merit, then the value of the suit itself may reduce the need to insist on a separate payment from the plaintiff. See Williams, 660 F.3d at 266. But by its own account, the district court here never assessed the merits of Gay’s claims. No. 11-2523 11 ments. Some of these means have controlled Gay before but were not available or were not used here. The screening process allows a judge to dismiss, before service on the defendants, a complaint that is frivolous, malicious, or fails to state a claim. 28 U.S.C. §§ 1915(e)(2)(B), 1915A(a), (b)(1); see Hoskins v. Poelstra, 320 F.3d 761, 763 (7th Cir. 2003); Rowe v. Shake, 196 F.3d 778, 781, 783 (7th Cir. 1999). As has already happened with Gay, a litigant who “strikes out” under the PLRA with three frivolous cases or appeals can be denied the privilege of proceeding without prepaying fees. See 28 U.S.C. § 1915(g). Five of Gay’s federal suits have been dismissed for this reason.3 The PLRA’s three-strikes obstacle does not apply in state courts, where Gay filed this suit. Nevertheless, district courts also can impose both monetary and nonmonetary sanctions under Rule 11 for filing or maintaining claims for an improper purpose or without adequate legal or factual support. Fed. R. Civ. P. 11(b), (c); see Fabriko Acquistion Corp. v. Prokos, 536 F.3d 605, 609-10 (7th Cir. 2008). A court also can require the submission of verified pleadings, placing the party under penalty of perjury for his assertions. See In re Tyler, 839 F.2d 3 See Gay v. Clover, No. 3:09-cv-00925-JPG-PMF, ECF Dkt. No. 61 (S.D. Ill. Oct. 4, 2011); Gay v. Blackman, No. 11-cv-014-JPG, ECF Dkt. No. 15 (S.D. Ill. Mar. 8, 2011); Gay v. Powers, No. 11-20-GPM, ECF Dkt. No. 8 (S.D. Ill. Feb. 5, 2011); Gay v. Wagoner, No. 10-cv-128-JPG, ECF Dkt. No. 4 (S.D. Ill. July 13, 2010); Gay v. Williams, No. 09-cv-1051-MJR, ECF Dkt. No. 4 (S.D. Ill. June 11, 2010). 12 No. 11-2523 1290, 1294 (8th Cir. 1988); Green v. White, 616 F.2d 1054, 1056 (8th Cir. 1980). We recognize, though, that these options may have little effect on Gay, who is indigent and is not scheduled for parole until 2095. As a last resort, when the litigant refuses to pay outstanding fees imposed for abusing the judicial process, either we or a district court can institute a filing bar as a sanction to prevent a plaintiff from bringing future suits until he pays the outstanding fines. Support Systems Int’l, Inc. v. Mack, 45 F.3d 185, 186 (7th Cir. 1995); In re Chapman, 328 F.3d 903, 905 (7th Cir. 2003). We have also imposed a prospective cost bond as part of a comprehensive set of sanctions against another particularly persistent filer of frivolous claims, requiring that plaintiff to post a bond in future cases after affirming the dismissal of one of his frivolous suits. Sassower v. American Bar Ass’n, 33 F.3d 733, 736 (7th Cir. 1994). Here, the district court might have imposed a filing bar as a sanction on Gay because he has not paid the fees and costs imposed on him for his past unsuccessful litigation. We have considered whether the district court’s bond requirement, which is invalid because the court did not consider Gay’s indigence, could be affirmed as a filing bar, which the court might have imposed as a discretionary sanction for Gay’s failure to pay past court debts. We leave it to the district court to decide in the first instance whether Gay’s litigation history and refusal to pay outstanding debts justifies the sanction of a filing bar. If the court so decides, it No. 11-2523 13 must carefully craft a bar that is appropriate for this particular party. See In re Davis, 878 F.2d 211, 212 (7th Cir. 1989). And even then the bar can apply only to future filings. See Mack, 45 F.3d at 186. The judgment of dismissal is R EVERSED , and the case is R EMANDED for further proceedings consistent with this opinion. 5-30-12