Court Opinion

ID: 4309369
Source: CourtListenerOpinion
Date Created: 2018-09-01 00:00:23.364605+00
Date Added: 2024-06-11T14:43:00.102518
License: Public Domain

Case: 17-40476      Document: 00514625468         Page: 1    Date Filed: 08/31/2018

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

                                      No. 17-40476                           FILED
                                                                       August 31, 2018
                                                                        Lyle W. Cayce
M2 TECHNOLOGY, INCORPORATED,                                                 Clerk

              Plaintiff - Appellee

v.

M2 SOFTWARE, INCORPORATED

              Defendant

KING LAW GROUP, P.L.L.C.; RICHARD C. KING, JR.; MARY ELLEN
KING,

              Appellants

                   Appeal from the United States District Court
                        for the Eastern District of Texas
                             USDC No. 4:12-CV-458

Before WIENER, GRAVES, and HO, Circuit Judges.
PER CURIAM:*
       Richard C. King, Jr., Mary Ellen King, and the King Law Group, PLLC,
appeal an imposition of sanctions under Rule 11(b)(2) in the amount of
$39,325.63. We affirm.

       * 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 R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH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.
    Case: 17-40476    Document: 00514625468     Page: 2   Date Filed: 08/31/2018

                                 No. 17-40476
                                         I.
      This appeal is part of a series of three cases between M2 Technology, Inc.
(“M2 Technology”) and David Escamilla and his company, M2 Software, Inc.
(“M2 Software”). M2 Technology sued M2 Software, seeking a declaratory
judgment that M2 Software infringed the “M2” mark. M2 Software did not
appear before the deadline to file an answer. As a result of M2 Software’s
default, the district court entered a declaratory judgment for M2 Technology.
The district court also awarded M2 Technology fees and costs. M2 Software
appealed, and we affirmed. M2 Tech., Inc. v. M2 Software, Inc., 589 F. App’x
671, 673 (5th Cir. 2014) (per curiam).
      M2 Software moved to set aside the default judgment under Rule 60(b).
M2 Technology filed a motion in opposition as well as a motion for sanctions
under Federal Rule of Civil Procedure 11.        The district court denied M2
Software’s motion. We affirmed. Escamilla v. M2 Tech., Inc., 657 F. App’x 318,
319 (5th Cir. 2016) (per curiam).
      In the same order, the district court granted M2 Technology’s motion for
sanctions under Rule 11(b)(2), concluding that “M2 Software’s motion to set
aside the default judgment lack[ed] merit.” The district court ordered M2
Software’s counsel to pay M2 Technology $39,325.63.
      M2 Software’s counsel appealed, arguing that the district court abused
its discretion by imposing Rule 11(b)(2) sanctions after counsel presented
plausible legal grounds for its Rule 60(b) motion. In the alternative, appellants
argue that the district court abused its discretion when it: (1) failed to assess
what fees would have been incurred “but for” the alleged sanctionable conduct;
(2) erred by using M2 Technology’s counsel’s Chicago-based rate to calculate
the lodestar; and, (3) failed to provide an individualized analysis describing
exactly which conduct of Ms. King was being sanctioned.

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                                 No. 17-40476
      We begin with the imposition of Rule 11 sanctions, which we review for
abuse of discretion. See Snow Ingredients, Inc. v. SnoWizard, Inc., 833 F.3d
512, 527 (5th Cir. 2016) (citing Cooter & Gell v. Hartmarx Corp., 496 U.S. 384
(1990)). Sanctions are appropriate if counsel submits a “legally indefensible”
filing. Id. at 528 (citing Whitehead v. Food Max of Miss., Inc., 332 F.3d 796,
802 (5th Cir. 2003) (en banc)). A filing is legally indefensible if it is not
“warranted by existing law or by a nonfrivolous argument.” Id. (citing FED. R.
CIV. P. 11(b)(2)). The trial court should “judge an attorney’s compliance with
rule 11 by an objective standard of reasonableness under the circumstances.”
Smith v. Our Lady of the Lake Hosp., Inc., 960 F.2d 439, 444 (5th Cir. 1992)
(citing Thomas v. Capital Sec. Servs., 836 F.2d 866, 873 (5th Cir. 1988) (en
banc)).
      M2 Software presented multiple interrelated issues in its Rule 60(b)
motion: (1) the district court lacked personal jurisdiction after insufficient
service of process; (2) M2 Software’s failure to appear was because of a good
faith belief that it had no obligation to appear; (3) the district court lacked
subject-matter jurisdiction because Escamilla was the actual owner of the
federal trademark; (4) the district court’s local rules are unconstitutional; (5)
M2 Technology made a fraudulent misrepresentation to the Clerk that M2
Software had been served; (6) M2 Technology’s claims were barred by res
judicata based on final decisions by the United States Patent and Trademark
Office; and (7) the U.S. Supreme Court’s intervening decision in B&B
Hardware, Inc. v. Hargis Indus., Inc., 135 S. Ct. 1293 (2015), gave preclusive
effect to an earlier final judgment of the Trademark Trial and Appeal Board
(“TTAB”).
      First, when counsel re-litigates its previous losses under the guise of
Rule 60(b), that counsel presents arguments that are not warranted by existing
law or by nonfrivolous arguments. See, e.g., Moore v. Exxon Mobil Oil Corp.,
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                                  No. 17-40476
108 F. App’x 177, 178–79 (5th Cir. 2004) (per curiam) (affirming Rule 11
sanctions for a Rule 60 motion that “rest[ed] on the same foundation” as claims
that district court and this Court previously had rejected). If an issue has been
decided on appeal, it “may not be reexamined either by the district court on
remand or by the appellate court on a subsequent appeal.” Fuhrman v. Dretke,
442 F.3d 893, 896 (5th Cir. 2006) (quoting United States v. Becerra, 155 F.3d
740, 752 (5th Cir. 1998)). See also DeWeerth v. Baldinger, 38 F.3d 1266, 1270
(2d Cir. 1994) (holding that “a district court does not have jurisdiction to alter
an appellate ruling where the appellate court has already considered and
rejected the basis for the movant’s Rule 60(b) motion”) (describing Eutectic
Corp. v. Metco, Inc., 597 F.2d 32 (2d Cir. 1979) (per curiam)).         After M2
Software appealed the district court’s denial of its Rule 60(b) motion, we found
that “M2 Software present[ed] no new arguments in its motion to set aside that
have not already been considered and rejected by this court.” Escamilla, 657
F. App’x at 319. The issues concerning personal jurisdiction, good faith delay,
subject matter jurisdiction, unconstitutional local rules, insufficient service of
process, and res judicata were addressed in this Court’s decision affirming the
default judgment. M2 Tech., 589 F. App’x at 676–77.
      Second, M2 Software’s invocation of the Supreme Court’s B&B
Hardware decision is also legally indefensible. We have previously found that
“the district court correctly interpreted B&B Hardware . . . not to constitute
intervening case law, as the present case is a default judgment against M2
Software and the substantive issues were never reached, while B&B Hardware
decided substantive issues.” Escamilla, 657 F. App’x at 319. The judgment
against M2 Software was based on a procedural matter rather than a
substantive one, and B&B Hardware is therefore irrelevant.
      Because appellants’ Rule 60(b) arguments were previously addressed by
the district court as well as this court, and because B&B Hardware does not
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                                  No. 17-40476
act as an intervening case, we conclude that the district court did not abuse its
discretion by imposing sanctions under Rule 11(b)(2).
                                      II.
      We now turn to the district court’s calculation of the Rule 11 sanctions.
District courts have considerable discretion to determine the appropriate
sanction for litigants who violate Rule 11.       See Worrell v. Houston Can!
Academy, 287 F. App’x 320, 326 (5th Cir. 2008) (per curiam) (citing Thomas,
836 F.2d at 876–77). We review the district court’s calculation of attorney’s
fees and expenses for clear error. See Skidmore Energy, Inc. v. KPMG, 455
F.3d 564, 566 (5th Cir. 2006). We conclude there is none here.
      First, appellants contend that the district court was required to find a
causal connection between the sanctionable conduct and the awarded
attorney’s fees, arguing that such a connection is required by Goodyear Tire &
Rubber Co. v. Haeger, 137 S. Ct. 1178 (2017). In Goodyear, the Supreme Court
held that the party seeking sanctions “may recover ‘only the portion of his fees
that he would not have paid but for’ the misconduct.” Id. at 1187 (emphasis
added) (quoting Fox v. Vice, 563 U.S. 826, 836 (2011)). The district court
concluded that the entire Rule 60(b) motion was meritless. Therefore, the
district court did not abuse its discretion when it limited the fee award to those
incurred for preparing the Rule 11 motion, reply in support of the Rule 11
motion, and the opposition to M2 Software’s Rule 60(b) motion.
      Second, appellants argue that the district court used the wrong lodestar
rate. The district court explained that it previously used the Chicago-based
rate to calculate reasonable attorney’s fees granting a default judgment
against M2 Software.      On appeal of the default judgment, M2 Software
asserted that the rate may not be more than the prevailing local lodestar rate.
See Appellants’ Br. at 29–30, M2 Tech., Inc. v. M2 Software, Inc., 589 F. App’x
671 (5th Cir. 2014), (Nos. 13-41060, 14-40192), 2014 WL 7642904 at *30. We
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                                 No. 17-40476
affirmed the district court’s award of attorney’s fees, concluding that “there
[was] no basis for finding that the fee award was an abuse of discretion.” M2
Tech., 589 F. App’x at 677. Therefore, the district court did not commit clear
error in using the Chicago-based rate.
      Finally, appellants claim that the district court failed to conduct an
“individualized analysis” for Mary Ellen King’s sanctions. M2 Software failed
to raise this issue in the district court, and the argument is thus not preserved
for this Court’s review. See Celanese Corp. v. Martin K. Eby Constr. Co., 620
F.3d 529, 531 (5th Cir. 2010) (“The general rule of this court is that arguments
not raised before the district court are waived and will not be considered on
appeal.”) (citing AG Acceptance Corp. v. Veigel, 564 F.3d 695, 700 (5th Cir.
2009)).
      Accordingly, the judgment of the district court is AFFIRMED.

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