Opinion ID: 551464
Heading Depth: 2
Heading Rank: 2

Heading: Plaintiffs' Motion for Sanctions

Text: 41 Rule 11 prohibits both subjectively and objectively frivolous pleadings: 42 First, subjectively viewing the facts, there must be good faith (that is, the paper may not be interposed to harass). Second, there must be reasonable inquiry into both fact and law; ... the legal theory must be objectively warranted by existing law or a good faith argument for the modification of existing law; and the lawyer must believe that the complaint is well grounded in fact. 43 Tabrizi v. Village of Glen Ellyn, 883 F.2d 587, 592 (7th Cir. Aug. 31, 1989) (quotations and citations omitted; emphasis in original). 44 Defendant contends that plaintiffs have failed in both respects. Plaintiffs' complaint, defendant asserts, contains several factual misrepresentations that reasonable inquiry would have revealed. Specifically, defendant refers to the complaint's allegations that the S & P agreed to grant plaintiffs a license; that plaintiffs notified TCC that they were in breach of their contract; that defendant knew of and intended to induce the breach of plaintiffs' agreement with TCC; and that defendant, by inducing the breach of plaintiffs' contract with TCC, caused plaintiffs damage in the amount of $25 million. Defendant also asserts that plaintiffs filed this suit for the improper purpose of coercing a license to the S & P indexes, and conducted the litigation in bad faith. This, defendant contends, is shown by deposition testimony indicating plaintiffs' goal in this litigation was to obtain a license for the use of the S & P indexes; by false representations in plaintiffs' original Rule 39 affidavit; by plaintiffs' tardiness in disclosing certain discovery materials; and by plaintiffs' false assertions regarding a dispute over counsels' eyes only restrictions on certain documents. 45 The bulk of defendant's asserted bases require only brief comment. First, we are not persuaded that plaintiffs brought or conducted this suit in bad faith. A license to the S & P index was simply one form of equitable relief plaintiffs sought for their claim. The deposition testimony referenced by defendant no more evidences bad faith than would a plaintiff's statement that he hopes to recover money as a result of his personal injury claim. (Defendant does not contend the request for a license was an objectively frivolous prayer for relief.) The remaining incidents cited by defendant do not rise to the level of subjective bad faith. 46 Second, most of defendant's contentions concerning baseless allegations in the complaint are clearly contradicted by the record. Plaintiffs stated repeatedly in their depositions that they felt an oral agreement concerning licensing had been reached; the letter sent to TCC on December 10, 1987 (defendant's ex. 23) is arguably notice of breach; and defendant's knowledge and intent to induce the breach of the agreement between TCC and plaintiffs can be inferred from the circumstances and the existence and language of the waiver agreement executed between TCC and defendant. 47 The same cannot be said, however, for plaintiffs' allegation of injury and prayer for relief in Count II of the complaint. An essential element of a tortious interference with contract claim is damage. J.E.L. Realtors, Inc. v. Mettille, 111 Ill.App.3d 987, 989, 444 N.E.2d 750, 751 (1982); Tecler v. Siwek, 542 N.Y.S.2d 56, 57 (N.Y.A.D.1989). Plaintiffs alleged in their complaint that defendant, by procuring the waiver agreement with TCC, caused plaintiffs substantial damage, and the prayer for relief requests $25 million as compensation. Plaintiffs conceded in their response to the motion for summary judgment that they have no evidence of any monetary damage resulting from the acts alleged in Count II. 48 Count II of the complaint is therefore not well grounded in fact. We agree with defendant that reasonable inquiry before filing the complaint would have revealed that there was, at best, only a threat that S & P might use or disclose plaintiffs' idea sometime in the future. There was not, however, any indication that the execution of the waiver agreement with TCC had caused $25 million of damages to plaintiffs. 1 In these circumstances we have no choice but to impose appropriate sanctions. See Brown v. Federation of State Medical Boards, 830 F.2d 1429, 1433 (7th Cir.1987) (sanctions are mandatory when pleading is not well grounded in fact); Diversified Technologies Corp. v. Jerome Technologies, Inc., 118 F.R.D. 445, 448-51 (N.D.Ill.1988) (sanctions appropriate if relief sought does not bear reasonable relation to injuries in fact sustained, citing Hudson v. Moore Business Forms, Inc., 836 F.2d 1156, 1162-63 (9th Cir.1987)). 49 The primary focus of both parties' energies has been on the issues raised by Count I. Accordingly, we conclude that a sanction of $1,000 is appropriate. 50 Plaintiffs' motion to reconsider the court's grant of summary judgment is denied. Judgment will enter in favor of the defendant and against plaintiffs jointly and severally in the amount of $1,000 as and for a sanction under Rule 11, Fed.R.Civ.P.