Court Opinion

ID: 1038315
Source: CourtListenerOpinion
Date Created: 2013-08-24 00:01:20.284306+00
Date Added: 2024-06-11T09:18:29.061893
License: Public Domain

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
                           File Name: 13a0782n.06

                                            No. 12-4295                                   FILED
                                                                                    Aug 23, 2013
                           UNITED STATES COURT OF APPEALS                       DEBORAH S. HUNT, Clerk
                                FOR THE SIXTH CIRCUIT

DAVID MURRAY,                                     )
                                                  )
       Plaintiff S Appellant,                     )
v.                                                )    ON APPEAL FROM THE UNITED
                                                  )    STATES DISTRICT COURT FOR THE
CITY OF COLUMBUS, OHIO, et al.,                   )    SOUTHERN DISTRICT OF OHIO
                                                  )
       Defendants – Appellees.                    )
                                                  )
                                                  )

Before: GIBBONS, WHITE, Circuit Judges; GREER, District Judge*

       JULIA SMITH GIBBONS, Circuit Judge. David Murray appeals the district court’s

failure to impose sanctions on the defendants and its failure to order an investigation of defendants’

counsel under the Southern District of Ohio’s Model Rules of Disciplinary Enforcement. For the

reasons stated below, we affirm the district court’s refusal to impose sanctions on the defendants and

dismiss Murray’s challenge to the district court’s failure to order an investigation of defendants’

counsel.

                                                 I.

       The following facts are taken from the complaint. Murray was a police lieutenant for the City

of Columbus. In September 2007, Mitchell Brown, Columbus’s Director of Public Safety, filed a

       *
       The Honorable J. Ronnie Greer, United States District Judge for the Eastern District of
Tennessee, sitting by designation.

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Murray v. City of Columbus, Ohio, et al., No. 12-4295

complaint with Murray’s supervisor alleging that Murray improperly disclosed information from the

Internal Affairs Bureau to the news media. The Collective Bargaining Agreement (“CBA”) between

the City and the Fraternal Order of the Police (“FOP”) provides a 90-day time limit on investigating

a complaint. Brown ordered the investigation to continue past the 90-day time limit, and Murray

alleges that this violated his due process rights. After the investigation, Brown held a pre-

termination hearing for Murray. Brown terminated Murray on September 4, 2008, and Murray filed

a grievance under the CBA.

        On September 3, 2010, Murray filed this suit under 42 U.S.C. § 1983, naming the City and

Brown as defendants. He alleged that the pre- and post-termination procedures violated his

procedural and substantive due process rights protected by the Fourteenth Amendment. Instead of

answering the complaint, the defendants filed a motion to dismiss. The magistrate judge issued a

preliminary pretrial order, stating that the parties appeared before him on May 20, 2011 and that

Murray complained that the City had not agreed to a date to arbitrate his grievance under the CBA.

The magistrate judge noted that counsel for the City said that it did, in fact, want to arbitrate.1 The

magistrate judge expressed his concern that this federal suit was a waste of time and money because

an arbitration of the underlying grievance might resolve the issues. Accordingly, he ordered the

parties to contact the arbitrator and agree to a date for arbitration. If the parties failed to do so, the

magistrate judge ordered the parties to appear before him on June 23, 2011, along with counsel for

the FOP and the arbitrator, David Stanton. The parties failed to agree to an arbitration date and

        1
            The FOP has the discretion to determine whether a grievance proceeds to arbitration.

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Murray v. City of Columbus, Ohio, et al., No. 12-4295

appeared before the magistrate judge on June 23. In the scheduling conference order issued on June

24, the magistrate judge wrote:

              Mr. Stanton said that he was assigned to the case in December 2009. Since
       then he had offered the parties 24-25 dates for arbitration, but none had been held.

               Counsel for the City of Columbus and the F.O.P. said that a settlement in
       principle regarding the grievance was reached in July 2010. Although the settlement
       has not been executed, they said that the settlement language has been finalized and
       the agreement should be executed on or before July 15, 2011. Lt. Murray said that
       neither he nor his attorney has ever been provided a copy of the settlement
       agreement.

The magistrate judge gave Murray until July 29, 2011, to file a motion to amend the pleadings and

add parties to account for receipt of the settlement agreement. On July 28, 2011, the magistrate

judge issued an amended scheduling order after holding a telephonic scheduling conference with the

parties. The order stated that the City and the FOP had not signed the settlement agreement, but that

the City believed it would be signed the next week or two.

       Murray filed a motion for sanctions on September 28, 2011, complaining that the City failed

to produce the signed settlement agreement. The next day, the parties participated in another

scheduling conference with the magistrate judge. Counsel for the City said that it had just received

the settlement agreement signed by the FOP, and during the conference Murray received the

agreement via email. Pursuant to the settlement agreement, Murray resigned in good standing

effective October 3, 2011.

       On December 20, 2011, Murray filed an amended motion for sanctions and an amended

complaint. Murray added the FOP and its president, James Gilbert, as defendants. Murray’s

amended complaint adds two allegations to his original complaint: (1) that the City and the FOP

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Murray v. City of Columbus, Ohio, et al., No. 12-4295

falsely stated that a settlement had been reached in July 2010; and (2) that they did so to avoid

arbitrating the dispute. The amended complaint adds claims that the FOP and Gilbert violated

Murray’s procedural and substantive due process rights, that all of the defendants committed fraud

and civil conspiracy, and that the City and the FOP breached its contract with Murray.

       In his amended motion for sanctions, Murray argued that the City and the FOP committed

fraud on the court by falsely stating that a settlement had been reached in July 2010. Murray sought

judgment against the City, monetary sanctions, attorney’s fees, and an order prohibiting introduction

of the settlement agreement. Murray asked the court to issue these sanctions under its inherent

power and Federal Rule of Civil Procedure 37, which authorizes district courts to issue sanctions for

failure to obey discovery orders.

       Before the court ruled on Murray’s amended motion for sanctions, the defendants filed

motions to dismiss. In response, Murray filed a document that purports to be a response to the

motions to dismiss and a motion for summary judgment.2 Murray attached an affidavit by Larry

Champlin, a former Lieutenant of Police for the City of Columbus. Champlin stated that he was

provided with a Bi-Weekly Grievance/Discipline Report (“Grievance Report”), which is a

chronological record of grievances between the City and the FOP. The grievance report for

December 31, 2010, was attached, and it chronicled the progress of Murray’s grievance. This report

indicates that Murray’s grievance was not settled in July 2010.

       2
       In a scheduling conference order, the magistrate judge denied Murray’s summary judgment
motion as moot because the parties agreed that it presented the same issues that would be raised in
Murray’s motion to reconsider the denial of his motion for sanctions.

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Murray v. City of Columbus, Ohio, et al., No. 12-4295

       The magistrate judge denied Murray’s amended motion for sanctions. He found that Rule

37 did not apply because the defendants had not disobeyed a discovery order. However, the

magistrate judge recognized the court’s inherent power to impose sanctions. The magistrate judge

considered the Grievance Report in his analysis and noted that it “indicates that no settlement had

been reached and that as of December 2010, the grievance was proceeding to arbitration.” In

denying Murray’s amended motion for sanctions, the magistrate judge wrote:

              Defendants have provided no explanation for counsels’ apparent lack of
       knowledge that a settlement had been reached. Despite the lack of any explanation
       on the part of defendants, plaintiff has not provide[d] sufficient evidence to
       demonstrate that a fraud on the Court has been committed. My efforts were directed
       toward settlement of this federal lawsuit to avoid further expenditures of time and
       money on it. I thought that could be accomplished by focusing on the resolution of
       Lt. Murray’s grievance. While I do not understand why defendants’ counsel was
       unaware of the settlement of the grievance until after the preliminary pretrial
       conference, her lack of knowledge is not a ground for sanctions. Plaintiff did
       ultimately receive the information he needed. The delay in getting the information
       did not interfere with his ability to prosecute this federal lawsuit. As a result, I
       conclude that sanctions are not warranted under the Court’s inherent powers.

However, the magistrate judge permitted Murray to conduct discovery to determine whether an

agreement had been reached in July 2010.

       Murray filed a motion for reconsideration, which the district court denied. The district court

explained:

       The Magistrate Judge properly concluded that sanctions were not warranted under
       the Court’s inherent powers. In order for the Court to sanction defendants under its
       inherent power, the sanctionable conduct must be proven by clear and convincing
       evidence and the district court must make a specific finding of bad faith.

Soon thereafter, the district court granted the defendants’ motions to dismiss.

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Murray v. City of Columbus, Ohio, et al., No. 12-4295

        Murray timely appealed. In his notice of appeal, he designated his intent to appeal the district

court’s opinion and order dismissing this case. On appeal, however, Murray does not challenge the

district court’s dismissal of this case; rather, he argues that the court abused its discretion by failing

to impose sanctions on the defendants and to order an investigation of defendants’ counsel.

                                                   II.

        As a threshold matter, we address the City and Brown’s argument that this court does not

have jurisdiction because Murray’s notice of appeal designated the district court’s opinion and order

dismissing the case, rather than the magistrate judge’s order denying Murray’s motion for sanctions

or the district court’s order denying the motion for reconsideration. Federal Rule of Appellate

Procedure 3(c)(1)(B) states that the notice of appeal must “designate the judgment, order, or part

thereof being appealed.” Although this court must liberally construe the requirements of Rule 3, the

rule’s requirements “are jurisdictional in nature, and their satisfaction is a prerequisite to appellate

review.” Smith v. Barry, 502 U.S. 244, 248 (1992).

        The City and Brown’s argument that we lack jurisdiction is not well-taken because it ignores

this court’s “rule [] that we will entertain arguments on all objections and asserted errors prior to the

final disposition of a case if a party indicates in its notice of appeal that it appeals either the final

judgment or the final order in the case.” Caudill v. Hollan, 431 F.3d 900, 906 (6th Cir. 2005); see

also Smith v. ABN AMRO Motrg. Grp., Inc., 434 F. App’x 454, 464 65 (6th Cir. 2011). Because

Murray designated the final order in his notice of appeal, we have jurisdiction to hear his challenge

to all asserted errors made prior to dismissal of this case, including the denial of Murray’s motion

for sanctions.

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Murray v. City of Columbus, Ohio, et al., No. 12-4295

       The defendants’ reliance on the unpublished opinions Braithwaite v. Department of

Homeland Security, 473 F. App’x 405, 415 16 (6th Cir. 2012), and Martin v. General Electric Co.,

187 F. App’x 553, 557 (6th Cir. 2006), is misplaced. In Braithwaite and Martin, the district court

imposed sanctions on the plaintiffs after granting summary judgment to the defendants, and the

plaintiffs failed to designate the sanctions orders in their notices of appeal. 473 F. App’x at 409 10,

415; 187 F. App’x at 556 57. By contrast, in this case, the orders denying sanctions were entered

prior to dismissal of the case, and therefore, pursuant to Caudill, this court has jurisdiction over

Murray’s appeal insofar as he challenges the denial of his motion for sanctions.

                                                 III.

                                                  A.

       Turning to the merits of Murray’s appeal, we note that pursuant to Federal Rule of Civil

Procedure 72(a), the district court had authority to modify or set aside the magistrate judge’s order

denying Murray’s motion for sanctions to the extent that it was clearly erroneous or contrary to law.

See Fed. R. Civ. P. 72(a). We then review the district court’s decision whether to impose sanctions

under its inherent power for abuse of discretion. Jones v. Ill. Cent. R.R. Co., 617 F.3d 843, 850 (6th

Cir. 2010). “‘A court abuses its discretion when it commits a clear error of judgment, such as

applying the incorrect legal standard, misapplying the correct legal standard, or relying upon clearly

erroneous findings of fact.’” Id. (quoting In re Ferro Corp. Derivative Litig., 511 F.3d 611, 623 (6th

Cir. 2008)).

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Murray v. City of Columbus, Ohio, et al., No. 12-4295

                                                  B.

         District courts are vested with the power to “‘manage their own affairs so as to achieve the

orderly and expeditious disposition of cases.’” Chambers v. NASCO, Inc., 501 U.S. 32, 43 (1991)

(quoting Link v. Wabash R.R. Co., 370 U.S. 626, 630 31 (1962)). To achieve this goal, they have

the inherent power “to fashion an appropriate sanction for conduct [that] abuses the judicial process.”

Id. at 44 45. This power must be exercised with restraint and discretion. Id. at 44; Stalley v.

Methodist Healthcare, 517 F.3d 911, 920 (6th Cir. 2008). Depending on the circumstances, an

appropriate sanction might be dismissal of the suit or imposition of attorney’s fees. Chambers, 501

U.S. at 45. A court may assess attorney’s fees when a party has “‘acted in bad faith, vexatiously,

wantonly, or for oppressive reasons.’” Id. at 45 46 (quoting Alyeska Pipeline Serv. Co. v.

Wilderness Soc’y, 421 U.S. 240, 258 59 (1975)). This includes situations where “fraud has been

practiced upon [the court]” and where a party “shows bad faith by delaying or disrupting the

litigation.” Id. at 46 (internal quotation marks and citations omitted). “The exercise of inherent

authority is particularly appropriate for impermissible conduct that adversely impacts the entire

litigation.” First Bank of Marietta v. Hartford Underwriters Ins. Co., 307 F.3d 501, 516 (6th Cir.

2002).

         Murray argues that the district court abused its discretion by failing to impose sanctions on

the defendants because the evidence demonstrates that the defendants committed fraud on the court.

Specifically, Murray argues that the Grievance Report conclusively shows that a settlement

agreement had not been reached in July 2010. Murray also points to the following facts to support

his argument: (1) the City and Brown never mentioned the settlement agreement in their motion to

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Murray v. City of Columbus, Ohio, et al., No. 12-4295

dismiss, reply to their motion to dismiss, or at the initial scheduling conference; (2) the arbitrator

continued to offer the parties dates to arbitrate the grievance up until the June 23, 2011 conference;

(3) although the City and the FOP represented on June 23, 2011, that they had reached a settlement

agreement and that it should be signed on or by July 15, 2011, Murray did not receive a copy of the

agreement until September 29, 2011; (4) the City’s counsel, Susan Thompson, has been assigned to

Murray’s grievance since 2008, so she knew that no settlement had been reached in July 2010; (5)

Brooke Carnevale, the City’s Public Safety Human Resources Officer, was at the June 23, 2011

conference, and she authored the Grievance Report, which shows that a settlement agreement did

not exist in July 2010. With respect to the FOP, Murray notes that Grant Shoub appeared on behalf

of the FOP for the first time at the June 23, 2011 conference. Previously, Robert Sauter had

represented the FOP in this dispute. Murray seems to suggest that Shoub either falsely represented

that a settlement had been reached in July 2010 or was willfully blind to the truth. Murray argues

that Shoub had a duty to confer with Sauter and learn the status of Murray’s grievance, which would

have revealed that the parties had not reached a settlement.

       To be sure, the defendants’ behavior in this case is odd, and on appeal, they did not offer any

explanation for it. The magistrate judge acknowledged this much, stating that the “[d]efendants have

provided no explanation for counsels’ apparent lack of knowledge that a settlement had been

reached.” Nevertheless, the district court should exercise its inherent power to impose sanctions

with restraint and discretion. Chambers, 501 U.S. at 44. We then review its decision for abuse of

discretion. Jones, 617 F.3d at 850. Neither the magistrate judge nor the district judge made a

finding that the defendants acted in bad faith or vexatiously. The district court should have set aside

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Murray v. City of Columbus, Ohio, et al., No. 12-4295

the magistrate judge’s refusal to accept Murray’s assertion that the defendants lied only if that

conclusion was clearly erroneous. Fed. R. Civ. P. 72(a). The magistrate judge was present at the

conference where the alleged misrepresentation was made and observed the demeanor of the counsel

and parties. Because there is no transcript of this conference in the record, the magistrate judge was

better situated to analyze the defendants’ comments in context. He met with the parties on other

occasions and resolved numerous disputes between them. The magistrate judge’s failure to find that

the defendants made an intentional misrepresentation was not clearly erroneous, and the district court

did not abuse its discretion by refusing to set aside the magistrate judge’s order.

       Even if the district court should have found that the defendants lied at the June 23, 2011

conference, it does not follow that the court necessarily abused its discretion in failing to impose

sanctions. Because the court’s inherent power to impose sanctions is discretionary, the court is not

required to sanction a party or attorney even if it has determined that some wrongdoing has occurred.

See Chambers, 501 U.S. at 44 45. In this case, the misrepresentation that Murray alleges is

sanctionable was not in response to an order by the court, issued in a written pleading submitted to

the court, or made under oath. As the magistrate judge noted, the defendants’ statement did not

interfere with Murray’s ability to prosecute this suit. Although the defendants did not provide the

settlement agreement in the time frame they initially said that they would, Murray did not complain

about this delay as the basis for his motion for sanctions. Ultimately, the City and the FOP signed

a settlement agreement, which was honored by Murray when he resigned effectively October 3,

2011. The date upon which this settlement was initially agreed to had no bearing on the merits of

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Murray v. City of Columbus, Ohio, et al., No. 12-4295

the defendants’ motion to dismiss. Accordingly, we hold that the district court did not abuse its

discretion by failing to impose sanctions on the defendants.

                                                    IV.

        Finally, Murray argues that the district court erred when it failed to investigate the

defendants’ counsel for misconduct. Rule V(A) of the Southern District of Ohio’s Model Rules of

Disciplinary Enforcement provides that:

        When misconduct or allegations of misconduct which, if substantiated, would
        warrant discipline on the part of an attorney admitted to practice before this Court
        shall come to the attention of a Judge of this Court, whether by complaint or
        otherwise, and the applicable procedure is not otherwise mandated by these Rules,
        the Judge shall refer the matter to counsel for investigation and the prosecution of a
        formal disciplinary proceeding or the formulation of such other recommendation as
        may be appropriate.

S. D. Ohio Model Fed. R. of Disciplinary Enforcement V.A. For two reasons, Murray is not entitled

to have the district court order an investigation. First, Murray did not ask the district court to order

an investigation under this rule, and therefore, he has waived this argument on appeal. See Marcilis

v. Twp. of Redford, 693 F.3d 589, 601 (6th Cir. 2012). Second, Murray lacks standing to challenge

the district court’s failure to order an investigation. See In re Attorney Disciplinary Appeal, 650

F.3d 202, 203 (2d Cir. 2011) (per curiam) (collecting case-law); Starr v. Mandanici, 152 F.3d 741,

751 (8th Cir. 1998) (Beam, J., concurring); In re Cont’l Steel Corp., 966 F.2d 1456, 1992 WL

133897, at *2 3 (7th Cir. June 17, 1992) (unpublished). In In re Continental Steel Corp., the

Seventh Circuit explained that the court’s power to discipline an attorney comes from its inherent

authority to oversee the conduct of its officers and maintain the integrity of the court. 1992 WL

133897 at *2. Even if the person complaining of an attorney’s conduct is a party to the case, “the

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Murray v. City of Columbus, Ohio, et al., No. 12-4295

role of a party or counsel ends after a report has been submitted to the court.” Id. The court

explained that the existence of local rules providing for disciplinary proceedings does not change the

principles of standing. Id. at *3. These rules do not create a “cause of action but simply guide the

court in the exercise of its inherent right to oversee the integrity of the court by disciplining the bar.”

Id. Even if Murray had not waived this argument, he lacks standing, and therefore, we dismiss his

challenge on appeal.

                                                    V.

        For the foregoing reasons, we affirm the denial of Murray’s motion for sanctions and dismiss

his challenge to the district court’s failure to order an investigation under the Southern District of

Ohio’s Model Rules of Disciplinary Enforcement.

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