Court Opinion

ID: 4097421
Source: CourtListenerOpinion
Date Created: 2016-11-10 19:01:18.95608+00
Date Added: 2024-06-11T07:45:32.386130
License: Public Domain

Case: 16-40563      Document: 00513754748         Page: 1    Date Filed: 11/10/2016

           IN THE UNITED STATES COURT OF APPEALS
                    FOR THE FIFTH CIRCUIT
                                                                       United States Court of Appeals
                                                                                Fifth Circuit

                                    No. 16-40563                              FILED
                                  Summary Calendar                    November 10, 2016
                                                                         Lyle W. Cayce
                                                                              Clerk
JOHN MARGETIS; ALAN E. BARON,

              Plaintiffs - Appellants

v.

HONORABLE WILLIAM ROYAL FURGESON, JR.; HONORABLE STACEY
G.C. JERNIGAN; JOHN BARRON,

              Defendants - Appellees

                  Appeals from the United States District Court
                        for the Eastern District of Texas
                             USDC No. 4:12-CV-753

Before KING, DENNIS, and COSTA, Circuit Judges.
PER CURIAM:*
       The district court awarded attorneys’ fees to Defendants–Appellees as a
sanction against Plaintiffs–Appellants John Margetis and Alan Baron under
Federal Rule of Civil Procedure 11. On appeal, Margetis and Baron argue that
the award cannot stand because Defendants–Appellees failed to comply with
the “safe harbor” provision of Rule 11(c)(2). Because the district court did not

       * Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
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                                    No. 16-40563
abuse its discretion in its treatment of that issue, we AFFIRM the judgment of
the district court.
               I. FACTUAL AND PROCEDURAL BACKGROUND
          Proceeding pro se, John Margetis and Alan Baron (together, Plaintiffs)
filed the instant suit on December 4, 2012, naming as defendants a United
States district court judge, a United States magistrate judge, two employees of
the United States Marshals Service, and twenty unidentified individuals
(collectively, Defendants). Plaintiffs alleged that Defendants individually and
in conspiracy with one another defamed Plaintiffs, intentionally inflicted
emotional distress upon them, and deprived them of their constitutional rights.
After receiving notice of the suit, Defendants’ counsel told Margetis that
Plaintiffs’ suit was barred because Defendants were protected by immunity
and that Defendants would seek sanctions if Plaintiffs proceeded with their
suit. 1
          Defendants moved to dismiss Plaintiffs’ complaint, asserting that the
district court lacked jurisdiction over certain of Plaintiffs’ claims, that
Plaintiffs failed to state a claim for relief, and that Defendants were immune
from suit.      On September 13, 2013, a magistrate judge issued a report
recommending dismissal of all of Plaintiffs’ claims with prejudice.                The
magistrate judge also recommended that a show-cause hearing be held to
determine whether sanctions should “be imposed [against Plaintiffs] for filing
an unjustified, vitreous and frivolous lawsuit.” The magistrate judge’s report
notified the parties that “[w]ithin fourteen (14) days after service . . . any party
may serve and file written objections to . . . [his] recommendation” and that a
party’s “[f]ailure to file written objections” would bar that party “from de novo

        Plaintiffs had previously sued Defendants a few months prior, and Defendants’
          1

counsel had then told Plaintiffs that Defendants were immune from suit and warned that,
should Plaintiffs file another suit against Defendants, Defendants would seek sanctions.
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                                        No. 16-40563
review by the district court . . . and from appellate review . . . except on grounds
of plain error or manifest injustice.”
       On September 18, 2013, Defendants served on Plaintiffs (but did not file)
a copy of a motion for sanctions challenging Plaintiffs’ complaint, stating that
the motion would “not be filed or presented to the [District] Court for
consideration until the 21-day waiting period prescribed by [Federal Rule of
Civil Procedure] 11(c)(2) has passed.” 2 Plaintiffs did not voluntarily dismiss
their complaint (or otherwise attempt to correct it) within the 21-day period
after service.     Instead, on September 30, Plaintiffs timely objected to the
magistrate judge’s report and recommendation, reaffirming their position that
their complaint was meritorious. 3             On October 18, Defendants filed their
motion for sanctions, requesting, among other things, an order holding
Plaintiffs “jointly and severally liable for the full amount of [Plaintiffs’]
attorney’s fees in this case” under Rule 11. Plaintiffs filed a response to that
motion on November 15 and a sur-reply on December 2.
       On January 10, 2014, the district court, after “ma[king] a de novo review
of the objections raised by Plaintiffs,” adopted the magistrate judge’s
recommendation and granted Defendants’ motion to dismiss all of Plaintiffs’
claims with prejudice. That same day, the district court set Defendants’ motion
for sanctions for hearing on February 11.                  After granting Plaintiffs two

       2  The “safe harbor” provision of Rule 11(c)(2) provides that a motion for sanctions
“must be served under Rule 5 [which provides the rules for service of pleadings], but it must
not be filed or be presented to the court if the challenged paper, claim, defense, contention,
or denial is withdrawn or appropriately corrected within 21 days after service” of the motion
for sanctions.
       3 Under the district court’s local rules, Plaintiffs, as pro se litigants, were exempt from

electronic filing and service requirements. See E.D. Tex. Civ. R. 5(a)(1)(B). Thus, Plaintiffs
were served with the magistrate’s report and recommendation by mail, which added three
days to the 14-day time period for objecting specified in the magistrate judge’s report and
recommendation. See Fed. R. Civ. P. 5(b)(2)(C), 6(d).
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continuances, the district court held a hearing on Defendants’ motion for
sanctions on March 21. The hearing lasted more than five hours.
       On May 19, 2014, Plaintiffs filed “supplemental objections” to
Defendants’ motion for sanctions, arguing (for the first time) that Defendants
violated the “safe harbor” provision of Rule 11(c)(2) by serving their motion for
sanctions after their motion to dismiss was “filed and litigated.” The district
court subsequently granted Defendants’ motion for sanctions, finding (among
other things) that Plaintiffs violated Rule 11 by “filing a complaint with an
improper purpose and without any evidentiary or legal basis” and that
monetary sanctions were necessary to deter Plaintiffs “from continuing to
pursue these allegations.” With regard to Plaintiffs’ “safe harbor” argument,
the district court noted that “Plaintiffs failed to raise this argument during the
ample time in which they had to respond to the motion for sanctions and at the
hearing on March 21, 2014,” but nonetheless considered and rejected Plaintiffs’
argument on the merits. 4 According to the district court, Defendants complied
with Rule 11(c)(2) by filing their motion to dismiss 30 days after serving it, and
during that time, “Plaintiffs continued to pursue their claims by filing an
objection to the [magistrate judge’s report and recommendation] rather than
withdrawing any of their claims.”                Defendants subsequently filed a fee
application, which the district court granted, awarding Defendants $25,000 in
fees. Plaintiffs timely appealed, raising only the narrow issue of whether
Defendants complied with the “safe harbor” provision of Rule 11(c)(2).

       4 On appeal, Defendants argue that Plaintiffs forfeited their “safe harbor” argument
by not raising it until after the district court heard Defendants’ motion for sanctions. Because
we find that the district court did not abuse its discretion in rejecting Plaintiffs’ claims on the
merits, “we do not need to address the [forfeiture] issue.” Risher v. Aldridge, 889 F.2d 592,
596 (5th Cir. 1989).
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                                 No. 16-40563
                        II. STANDARD OF REVIEW
      We “apply an abuse-of-discretion standard in reviewing all aspects of a
district court’s Rule 11 determination.” Cooter & Gell v. Hartmarx Corp., 496
U.S. 384, 405 (1990); see also Whitehead v. Food Max of Miss., Inc., 332 F.3d
796, 802 (5th Cir. 2003) (en banc). We apply the “necessarily very deferential”
abuse of discretion standard to a district court’s determination under Rule 11
for two reasons. Whitehead, 332 F.3d at 802. First, the district court “is better
situated than the court of appeals to marshal the pertinent facts and apply the
fact-dependent legal standard mandated by Rule 11.” Id. (emphasis omitted)
(quoting Lulirama Ltd. v. Axcess Broad. Servs., Inc., 128 F.3d 872, 884 (5th
Cir. 1997)).   Second, the district court “is independently responsible for
maintaining the integrity of judicial proceedings in [its] court and,
concomitantly, must be accorded the necessary authority” to deter conduct that
undermines those proceedings. Id. at 803.
                     III. NO ABUSE OF DISCRETION
      Plaintiffs argue that Defendants’ motion for sanctions under Rule 11
should have been denied because it was served and filed after Defendants’
motion to dismiss had been litigated and after the magistrate judge had issued
his report recommending that all of Plaintiffs’ claims be dismissed with
prejudice. According to Plaintiffs, after receiving the magistrate judge’s report
and recommendation, dismissal “was but a perfunctory task for the district
court.”   Thus, Plaintiffs argue, they were deprived of “any meaningful
opportunity . . . to withdraw or correct their Complaint,” in contravention of
the “safe harbor” provision of Rule 11(c)(2).
      Rule 11(c)(2) requires that a party serve a motion for sanctions on the
opposing party at least 21 days before it is filed with the district court. See
Fed. R. Civ. P. 11(c)(2); see also Elliott v. Tilton, 64 F.3d 213, 216 (5th Cir.
1995). If, and only if, “the challenged paper, claim, defense, contention, or
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                                      No. 16-40563
denial” is not “withdrawn or appropriately corrected” within the 21-day period
may the motion then “be filed or . . . presented to the court.” Fed. R. Civ. P.
11(c)(2). Thus, Rule 11(c)(2) creates a period of “safe harbor” whereby parties
can avoid sanctions by withdrawing or correcting the challenged document or
position after receiving the motion for sanctions. See Elliott, 64 F.3d at 216.
Because this period of “safe harbor” is dependent on the ability to withdraw or
correct the challenged document or contention, it follows that “a party cannot
delay serving its Rule 11 motion until conclusion of the case (or judicial
rejection of the offending contention).”             Fed. R. Civ. P. 11(c) advisory
committee’s note to 1993 amendment; see also Tompkins v. Cyr, 202 F.3d 770,
788 (5th Cir. 2000) (holding sanctions properly denied where Rule 11 motion
filed after trial’s conclusion). 5 At that point, there is nothing left for the
opposing party to withdraw or correct, and the “policies and procedural
protections” provided by Rule 11(c)(2) cannot be given effect. 5A Charles Alan
Wright et al., Federal Practice and Procedure § 1337.2 (3d ed. 2016).
       Here, Defendants served their motion for sanctions challenging
Plaintiffs’ complaint on September 18, 2013, and filed it on October 18, 2013—
more than 21 days later.           Although the magistrate judge recommended
dismissal of Plaintiffs’ complaint five days before Defendants served their
motion for sanctions, the district court did not adopt that recommendation

       5 Other than setting this outer limit on the timeliness of service, Rule 11 does not
specify when a motion for sanctions must be brought. The drafters of Rule 11 left that
question for “resolution on a case-by-case basis, considering the particular circumstances
involved.” Fed. R. Civ. P. 11(c) advisory committee’s note to 1993 amendment. Plaintiffs do
not argue on appeal (and did not argue in the district court) that Defendants’ motion for
sanctions was untimely under the particular circumstances of the case, but instead argue
only that Defendants’ motion for sanctions violated the outer limit of timeliness set by Rule
11(c)(2). Thus, Plaintiffs waived any argument that Defendants’ motion for sanctions was
otherwise untimely under the particular circumstances of the case. See Fed. R. App. P.
28(a)(8)(A); see also Mapes v. Bishop, 541 F.3d 582, 584 (5th Cir. 2008) (per curiam)
(“Although pro se briefs are afforded liberal construction, even pro se litigants must brief
arguments in order to preserve them.” (citation omitted)).
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                                 No. 16-40563
until January 10, 2014—several months later. Thus, Plaintiffs could have
voluntarily dismissed their complaint at any point during 30-day period
between service and filing of Defendants’ motion for sanctions. Fed. R. Civ. P.
41(a)(1)(A)(i); see also Thomas v. Phillips, 83 F. App’x 661, 661–62 (5th Cir.
2003) (finding that plaintiff still “had an absolute right to have his suit
dismissed”   under    Rule    41(a)(1),       despite   magistrate   judge’s   prior
recommendation that plaintiff’s complaint be dismissed with prejudice for
failure to state a claim upon which relief could be granted). Indeed, Plaintiffs’
objection to the magistrate judge’s report and recommendation ensured that it
remained just that—a recommendation—which the district court was free to
“accept, reject, or modify” after de novo review. See 28 U.S.C. § 636(b)(1); Fed.
R. Civ. P. 72(b)(3); see also United States v. Wilson, 864 F.2d 1219, 1222 (5th
Cir. 1989) (per curiam) (recognizing that de novo review requires an
independent “determination based upon the record . . . unrestrained by the
findings and conclusion of the magistrate”). Given that Plaintiffs could have
formally or informally disavowed their claims during the 21-day period after
Defendants served their motion, but instead elected to continue pursuing their
claims, the district court did not abuse its discretion in rejecting Plaintiffs’
“safe harbor” argument. See Elliott, 64 F.3d at 216 (recognizing that purpose
of Rule 11(c)(2) is to provide “an opportunity to withdraw or correct the
offending contention”).
                              IV. CONCLUSION
      For the foregoing reasons, the judgment of the district court is
AFFIRMED.

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