Court Opinion

ID: 194608
Source: CourtListenerOpinion
Date Created: 2011-02-07 02:21:08+00
Date Added: 2024-06-11T09:43:09.403393
License: Public Domain

March 17, 1993        [NOT FOR PUBLICATION]

                UNITED STATES COURT OF APPEALS
                    FOR THE FIRST CIRCUIT

                                        

No. 92-1985

                  TROPICANA PRODUCTS, INC.,

                     Plaintiff, Appellee,

                              v.

                   VERO BEACH GROVES, INC.,

                    Defendant, Appellant.

                                        

         APPEAL FROM THE UNITED STATES DISTRICT COURT

              FOR THE DISTRICT OF MASSACHUSETTS

         [Hon. Robert E. Keeton, U.S. District Judge]
                                                    

                                        

                            Before

                  Torruella, Cyr and Boudin,
                       Circuit Judges.
                                     

                                        

   Steven J.  Comen,  William  R.  Moore, Michael  C.  Fee  and
                                                          
Hinckley,  Allen & Snyder on  Motion in Opposition  to Motion for
                       
Costs and Attorneys' Fees, for appellant.
   Robert F. Sylvia,  Steven J. Comen, Michael  C. Fee, William
                                                               
R.  Moore and Hinckley, Allen  & Snyder on  Further Opposition to
                                     
Motion for Costs and Attorneys' Fees, for appellant.
   R. Mark  McCareins, W. Gordon Dobie, John M. Bowler, Winston
                                                               
&  Strawn, Gary  R.  Greenberg, Goldstein  &  Manello, P.C.,  and
                                                         
Steven  B. Gold  on  Motion for  Costs  and Attorneys'  Fees  and
             
Memorandum in Support, for appellee.

                                        

                                         

          Per Curiam.    Tropicana Products,  Inc. is seeking
                    

to  recover  double  costs,  expenses,  and  attorneys'  fees

against  both  Vero  Beach  Groves,  Inc.  and  its  counsel,

Hinckley, Allen & Snyder,  under Fed. R. App. Proc.  Rules 38

and  39  and  28 U.S.C.     1927  for  bringing an  allegedly

frivolous  appeal.   We  deny the  motion  for double  costs,

attorneys' fees and sanctions  under Rule 38 and 28  U.S.C.  

1927, but award Tropicana its costs under Rule 39.  

                         I.  Background
                                       

          In May 1992, Tropicana  sued Vero Beach for damages

and preliminary  and  permanent injunctive  relief,  claiming

that it had violated and continued to violate a prior consent

judgment  of  the district  court  and section  43(a)  of the

Lanham Act, 15 U.S.C.    1125(a), by its print advertisements

and television commercials comparing  Tropicana's pasteurized

orange   juice  with  Vero  Beach's  non-pasteurized,  fresh-

squeezed orange juice.   The advertising in question depicted

a  carton of Tropicana Pure Premium orange juice atop an open

gas flame next  to a  carton of Vero  Beach's Honestly  Fresh

Squeezed  orange juice  chilling  on a  block  of ice.    The

accompanying text  stated that ".  . . Tropicana  cooks their

juice  before they  package it.   So  when you  see the  word

'pasteurized' on their  carton, you know it  has been cooked.

Honestly Fresh Squeezed orange juice is never cooked.  That's

why we can call it fresh squeezed . . . ."  

                             -2-

          After  a  hearing,   the  district  court   granted

Tropicana a temporary restraining order, determining that the

statement that Tropicana "cooked" its orange juice,  together

with  the picture  of its  orange juice  over an  open flame,

misrepresented the nature of Tropicana's flash pasteurization

process.    After a  further hearing,  the  court on  July 23

granted Tropicana's request for a preliminary injunction.  At

that time, a full trial on Tropicana's request for a judgment

of  contempt  and a  permanent  injunction  had already  been

scheduled for November 23.  

          On  August 6,  Vero Beach appealed  the preliminary

injunction.   Its  initial brief  was due  September 24,  but

approximately one week before the due date Vero Beach  sought

an  extension  of time  in  which  to  file  the brief.    It

requested  the  extension  because  it wished  to  await  the

results  of settlement discussions  through the Civil Appeals

Management Program (CAMP) which were scheduled for October 5.

Two  days  after the  CAMP hearing  had  failed to  produce a

settlement, Hinckley,  Allen moved to withdraw  as counsel in

the  district court  proceedings because  Vero Beach  had not

paid it  any legal fees  since the suit  had begun.   It also

filed  a  motion  requesting   the  district  court  to  stay

discovery and postpone the trial on the merits to permit Vero

Beach time  to find new counsel.   On October  30, Vero Beach

                             -3-

filed a second motion to extend the time for filing briefs so

that it could seek substitute counsel.   

          On November 2, the district court granted Hinckley,

Allen's  motion  to withdraw  and  informed  Vero Beach  that

corporations could  not litigate  pro se  in this  circuit so

that it would have to accept a default judgment if it did not

find new  counsel.    The district  court  also  denied  Vero

Beach's  motion to stay discovery and continue the trial.  In

a  letter to Tropicana dated November 10 and forwarded to the

district  court,  Vero Beach  stated that  it would  accept a

default judgment given its deteriorating  financial condition

and the fact  that it could not proceed pro  se.  On November

23, the court entered a default judgment against Vero  Beach,

finding that  it had willfully violated  the consent judgment

and  permanently enjoining  it  from any  false or  deceptive

advertising  or any comparative  advertising relating  to any

Tropicana product.  

          On  November  30, Hinckley,  Allen  filed a  motion

under  Fed.  R.  App. Pro.  Rule  42(b),  to which  Tropicana

assented in  a telephone  call, moving the  court to  dismiss

Vero  Beach's appeal  from  the preliminary  injunction.   As

grounds for  the motion,  the  firm cited  its withdrawal  as

counsel for Vero  Beach in  the district court  and the  fact

that  the default  judgment below  rendered the  appeal moot.

This  court ordered  the  appeal dismissed.   Tropicana  then

                             -4-

filed its motion for  costs and attorneys' fees  against both

Vero Beach and Hinckley, Allen.

                             -5-

                         II. Discussion
                                       

          Tropicana's request for costs is clearly justified.

Rule 39 states that, "[e]xcept as otherwise provided by  law,

if an appeal is  dismissed, costs shall be taxed  against the

appellant unless otherwise ordered  . . . ."  As  noted, Vero

Beach  voluntarily dismissed  its  appeal  under Rule  42(b),

which provides that "[a]n appeal  may be dismissed on  motion

of the appellant upon such terms as may be agreed upon by the

parties or fixed  by the  court."1   Presumably, a  voluntary

dismissal under Rule 42  would come within the terms  of Rule

39, particularly since the notice  of dismissal filed in this

case did not contain any  indication as to who would  pay the

costs of  the appeal and Rule  39 addresses that issue.   See
                                                             

Atlantic Coast Line  R. Co. v.  Wells, 54 F.2d 633,  634 (5th
                                     

Cir. 1932) (costs  of appeal dismissed  by appellant as  moot

were taxed against appellant under  a rule awarding costs  to

                    

1.  Rule 42(b)  also provides that  "[i]f the  parties to  an
appeal  . . . shall sign and file with the clerk of the court
of  appeals an  agreement that  the proceeding  be dismissed,
specifying  the terms as to  payment of costs,  and shall pay
whatever  fees  are  due,  the  clerk  shall enter  the  case
dismissed, .  . . ."   Since Vero Beach's  motion to dismiss,
though  assented  to   by  Tropicana,   contained  no   terms
specifying who would pay the costs and fees and dismissal was
effected  through  an order  of  this court,  the  appeal was
actually dismissed under the portion of the rule quoted above
in  the text of our  opinion.  See  Clarendon Ltd. v. Nu-West
                                                             
Industries, Inc., 936 F.2d 127, 128 (3d Cir. 1991).  
                

                             -6-

appellee  whenever  an   appeal  is  dismissed,  except   for

jurisdictional reasons).   

          Rule  38 provides  that the  court may  award "just

damages and single  or double  costs to the  appellee" if  it

determines  that an  appeal  was "frivolous."   Just  damages

includes attorneys' fees.   Applewood Landscape & Nursery Co.
                                                             

v.  Hollingsworth, 884 F.2d 1502,  1508 (1st Cir.  1989).  An
                 

appeal  is  frivolous  if   the  "result  was  obvious,"  the

"overwhelming   weight   of  precedent   militate[d]  against

[appellant's] position," or there was "no legitimate  ground"

for the appeal, or if the appellant failed to set forth facts

to support  its legal theory.   E.H.  Ashley &  Co. v.  Wells
                                                             

Fargo Alarm Services,  907 F.2d 1274,  1280 (1st Cir.  1990).
                    

To find an appeal frivolous, the  court need not find that it

was brought in  bad faith or  with malice.   "[I]t is  enough

that the appellants and their attorney should have been aware
                                             

that the appeal had no chance of  success."  Id. (emphasis in
                                                

original).  

          Under 28 U.S.C.    1927, "any attorney . . . who so

multiplies  the  proceedings  in any  case  unreasonably  and

vexatiously  may   be  required  by  the   court  to  satisfy

personally  the  excess costs,  expenses  and  attorneys fees

reasonably incurred because of  such conduct."  An attorney's

bad faith in bringing an appeal will always justify sanctions

under section 1927, but bad faith need not be shown to obtain

                             -7-

sanctions.   Cruz v. Savage,  896 F.2d 626,  631-32 (1st Cir.
                           

1990).   Rather,  sanctions are  justified "if  an attorney's

conduct  in  multiplying   proceedings  is  unreasonable  and

harassing  or annoying" in an objective sense.  "It is enough

that an  attorney acts  in disregard  of whether  his conduct

constitutes  harassment   or  vexation,  thus   displaying  a

'serious  and studied  disregard for  the orderly  process of

justice.'"   Id.  (citation omitted).   However,  the conduct
                

must be  "more severe than mere  negligence, inadvertence, or

incompetence . . . ."  Id.   Bringing  a "frivolous, dilatory
                          

and  vexatious" appeal would warrant an award of double costs

against  an attorney under Rule 38 and an award of attorneys'

fees under section 1927.  Id. at 635.  
                             

          Accordingly, Tropicana's ability  to obtain  double

costs and  attorneys' fees  against Vero Beach  and Hinckley,

Allen turns  essentially on  the question whether  the appeal

was frivolous,  although Tropicana  could also recover  if it

showed  bad  faith,  unreasonable  or  vexatious  conduct  in

"multiplying" the proceedings, or  some "serious and  studied

disregard  for the  orderly process  of justice."   Tropicana

alleges that Vero Beach's likelihood of persuading this court

to vacate the  preliminary injunction was "non-existent"  and

decries the "total and  obvious meritlessness" of the appeal.

Yet it makes  no attempt to explain to us  why the appeal was

substantively  frivolous  --  its  brief  is  devoid  of  any

                             -8-

reference  to the  legal  issues considered  by the  district

court  in granting the injunction.  Because Tropicana has not

addressed the issue, and this appeal was dismissed before the

parties submitted  their briefs,  we do not  consider whether

the appeal had merit or was substantively frivolous. 

          Tropicana argues  that the  decision to  appeal the

preliminary  injunction  was   ill-considered,  wasteful   of

judicial resources and  caused undue  expense for  Tropicana.

Thus,  its argument  appears to  be one based  essentially on

section 1927 standards -- that Vero Beach and Hinckley, Allen

unreasonably  and  vexatiously  multiplied   proceedings  and

showed  a disregard  for the  orderly process  of justice  in

bringing  the appeal  in  the first  place  and then  in  not

prosecuting  it  appropriately.   To  support  its  argument,

Tropicana makes  the following points.   Hinckley, Allen must

have known to  a certainty that the appeal would not be heard

before the full  trial on the  merits, yet  the firm did  not

file a motion  for an  expedited hearing.2   To make  matters

worse,  the firm did not  file a timely  appellate brief, but

twice sought extensions.   In  fact, as it  turned out,  Vero

                    

2.  Tropicana  also  states  that  Vero  Beach's  appeal  was
interlocutory and "not  certified for immediate  or expedited
appeal," but does  not elaborate  on this point.   We do  not
understand why the appeal should have been certified since 28
U.S.C.    1292(a) clearly gives this  court jurisdiction over
appeals from  "[i]nterlocutory orders of the  district courts
of the United States . . .  granting . . . injunctions . .  .
."

                             -9-

Beach  never  filed any  brief at  all.   Moreover, Hinckley,

Allen  failed  to move  promptly  to  dismiss  the appeal  or

withdraw its appearance  before this court after  it moved to

withdraw  as counsel  for Vero Beach  in the  district court.

Vero  Beach did  not stipulate  to dismiss  the appeal  until

after  it  was  defaulted  in  the  district  court, and  its

decision to  accept the  default judgment rather  than retain

successor counsel demonstrated that it had never been serious

about the appeal.   Furthermore, once the parties had  agreed

to dismiss the  appeal, Hinckley, Allen  filed its motion  to

dismiss the appeal  without first forwarding a draft  copy of

the motion to Tropicana for inclusion of terms on the payment

of costs and fees, as Tropicana had expressly asked it to do.

Finally, the appeal  was basically motivated by  a desire "to

get away  from Judge Keeton who was  well versed in the facts

and  applicable law, and [to] obtain a more friendly forum in

the court of appeals."  

          The points  made by Tropicana do not persuade us to

award double costs and attorneys' fees against Vero Beach and

Hinckley, Allen.    Although it  was  not a  "certainty",  as

Tropicana  asserts,  that the  appeal  would  not be  decided

before the  trial on the merits,  it is probably true  that a

decision by  us before the  trial was unlikely.   It  is also

true  that Hinckley,  Allen  did not  file  a motion  for  an

expedited appeal, but its failure to do so does not mean that

                             -10-

the appeal  was ill-considered.  Hinckley,  Allen did attempt

to stay discovery and  to continue the trial in  the district

court.  Although it filed its stay motion two months after it

had  noticed  its appeal,  the  motion was  filed  almost two

months before  the date  of the trial.   Had the  motion been

granted,  a matter which was outside  its control, the appeal

would have been heard before the trial on the merits.  

          Furthermore, Vero  Beach's  motions to  extend  the

time  for filing its  brief were  made for  good cause.   The

record shows that  the parties  were unable  to schedule  the

CAMP hearing until  after Vero Beach's brief was  due because

the judge who was to preside over the hearing was unavailable

before that time.  It was no abuse of process  for Vero Beach

to request  an extension  of time under  those circumstances.

Had  Vero Beach timely filed  its brief and  then settled the

case,  it would have incurred  an unnecessary expense, a very

legitimate concern for a company in financial trouble.  Since

Vero Beach's brief was  due almost two weeks before  the CAMP

hearing,  Tropicana  would  likely have  begun  preparing its

response before  the hearing was held,  thereby incurring its

own expenses that would have  proven unnecessary had the case

settled.  In addition, Vero Beach moved to extend the initial

time for  filing its brief  over a week before  the brief was

actually due, further indicating that it sought the extension

for valid reasons and not just as a delaying tactic.  

                             -11-

          The second extension which Vero Beach requested was

also justified.  It  seems clear that Vero Beach  needed some

reasonable  period of time in which to seek new counsel after

Hinckley,  Allen  announced   its  desire  to   withdraw  its

representation.  The  request for an extension  until the end

of November was not excessive -- not only did Vero Beach need

to locate new counsel, but its new counsel would have had  to

review  the lengthy  record  below, evaluate  the issues  and

prepare  a brief.  At  the time the  extension was requested,

the  district court had not yet denied Vero Beach's motion to

postpone  the trial on the  merits so that  further action on

the  appeal  was feasible.    Accordingly,  we conclude  that

Hinckley, Allen  and Vero  Beach acted reasonably  in seeking

these extensions,  in a way  calculated to save  both parties

unnecessary expenses  and to  conserve the resources  of this

court as well.  

          We  see  no  improper  dilatoriness   in  Hinckley,

Allen's failure to seek immediately to withdraw its appellate

representation of Vero Beach or to  have the appeal dismissed

after it filed  its motion  to withdraw as  counsel for  Vero

Beach  in  the  district  court.   Hinckley,  Allen  informed

Tropicana at the  hearing on November  2 that its  withdrawal

from representation  would apply  to the  appeal as  well and

that  Vero  Beach's  new   counsel  should  be  permitted  to

determine the status of the appeal,  a point that seems to us

                             -12-

an indisputably valid  one.   The firm also  arguably had  an

obligation to ensure that its withdrawal  from representation

proceeded  in a  way  that would  not  adversely impact  Vero

Beach's interests,  and permitting  Vero  Beach a  reasonable

period of time to find new counsel who could evaluate whether

the  appeal  should proceed  would  be  consistent with  that

obligation.   Cf.  ABA Model  Rules of  Professional Conduct,
                 

Rule  1.16(b) ("a  lawyer  may withdraw  from representing  a

client if  withdrawal  can be  accomplished without  material

adverse  effect  on the  interests of  the client");  id. (d)
                                                         

("[u]pon termination of  representation, a lawyer  shall take

steps  to  the extent  reasonably  practicable  to protect  a

client's  interests,  such  as  .  .  .  allowing  time   for

employment of  other counsel .  . .  ."); see also  ABA Model
                                                  

Code of Professional Responsibility, DR  2-110(A)(2) ("In any

event,  a lawyer shall not  withdraw from employment until he

has taken reasonable steps  to avoid foreseeable prejudice to

the  rights of his client, including giving due notice to his

client,  allowing time for employment of other counsel, . . .

.").   Moreover,  the transcript  of  the November  2 hearing

shows that, already  then, Vero Beach was  attempting to find

new  counsel,  but having  difficulty  doing so.    Under the

circumstances, Hinckley, Allen may  have decided that it made

most sense  to continue  its representation at  the appellate

level  in case it was needed to  file a motion to dismiss the

                             -13-

appeal on Vero Beach's  behalf, which, as it turned  out, the

firm eventually did.

          We doubt that Tropicana means to suggest  seriously

that Hinckley, Allen  had some obligation  to try to  dismiss

the appeal on  its own since only  Vero Beach could  make the

definitive  decision to do so.  Nor does Vero Beach's failure

to dismiss the appeal  until November 30  seem to us to  have

been unduly  untimely.   In Tropicana's presence,  Vero Beach

was informed on November 2 that it could not litigate in this

circuit without being represented by counsel.  By letter sent

eight  days later,  it  informed Tropicana  and the  district

court that, given its  deteriorating financial condition,  it

would  not  retain new  counsel  and would  accept  a default

judgment  on November 23.   Thus, within two  weeks after the

conditions arose which made it more difficult for  Vero Beach

to  proceed before  the district  court or  to  prosecute its

appeal, Tropicana  knew  that it  would win  in the  district

court and that the appeal would have to be dismissed.   Under

those circumstances, the failure  to formally file the motion

to dismiss until the end of November cannot  be regarded as a

vexatious,   annoying   or   unreasonably  dilatory   action.

Moreover, our  docket indicates that no action  on the appeal

was taken  by either party  or by the  court in  November, so

that the  failure to dismiss  the appeal earlier  in November

                             -14-

clearly caused no  undue expense  for Tropicana  or waste  of

judicial resources.3  

          Nor are we persuaded  that Vero Beach's decision to

accept a default judgment in the district court shows that it

had  not  brought  its  appeal  seriously.    As  the  record

demonstrates, the district court  informed Vero Beach that it

would have to accept  a default judgment  if it did not  find

substitute counsel since a corporation may not  appear pro se

in this circuit.   The  record also shows  Vero Beach's  poor

financial  condition, which  had  rendered it  unable to  pay

Hinckley,  Allen's  bills and  apparently  had  also made  it

impossible  to   find  replacement   counsel.    Given   this

unresolvable tangle,  Vero Beach's acceptance of  the default

judgment cannot possibly reflect  adversely on its motivation

in bringing the appeal in the first place.  

          Tropicana    suggests    that    Hinckley,    Allen

deliberately  filed its  assented-to  motion to  dismiss  the

appeal before  Tropicana could append its  statement of costs

and fees to  the motion.   A careful  reading of  Tropicana's

asseverations regarding the relevant  events suggests no such

deliberateness.  In its  memorandum supporting its motion for

fees  and costs,  Tropicana states  that it  informed William

                    

3.  We realize that Tropicana  sent a letter to the  clerk of
this court on November  3, to which the clerk  responded, but
Tropicana's  letter responded  to  the  court's October  30th
order  granting Vero  Beach a  second  extension of  time for
filing its brief.

                             -15-

Moore,   a   Hinckley,  Allen   attorney,   in   a  telephone

conversation  on November 25  that it would  agree to dismiss

the appeal, but that it intended to "seek an Order" for costs

and  fees.     As  phrased,  Tropicana's   comment  is  fully

consistent with  an intent  to file  a separate  petition for

fees  with this court, which it eventually did.  The specific

request  that   Hinckley,  Allen  send  it   a  draft  motion

dismissing the appeal so that it could append its request for

fees and costs to the motion was made  separately in a letter

dated November 25, the  same day the phone  conversation took

place.  Although that  letter was sent by facsimile  and thus

presumably arrived the day it was sent, it was addressed to a

different Hinckley, Allen attorney,  Steven Comen, and not to

Moore  who  appears to  have  been  the one  responsible  for

preparing  the  motion.    November  25  was  the day  before

Thanksgiving.   Moore filed the  motion to dismiss by mailing

it on Monday, November  30, the first business day  after the

intervening  weekend.  In its memorandum opposing Tropicana's

request for fees, Hinckley, Allen explains that "[t]he letter

. . . due to the Thanksgiving holiday  crossed paths with the

Assented-to Motion."  From that we infer that Hinckley, Allen

is saying that, because of the holiday, Comen did not receive

Tropicana's letter in time to direct Moore to send a draft of

the  motion to dismiss to Tropicana  before filing the motion

with this  court.  The present  record gives us no  reason to

                             -16-

doubt the firm's  explanation, although  we note  that it  is

somewhat ambiguously phrased.    

          We need  not spend long  on Tropicana's  allegation

that Vero Beach  brought its appeal  in an attempt to  find a

more receptive  forum for  its arguments.   Absent  a showing

that  the appeal itself had no  substantive legal merit, that

motivation  alone would not support  an award of double costs

and  attorneys'  fees.   We have  no  doubt that  appeals are

generally  brought in  an attempt  to receive  more favorable

treatment from us than that accorded by the trial court.    

                         III. Conclusion
                                        

          Tropicana's  request  for  costs under  Rule  39 is

granted.  Its  request for double  costs and attorneys'  fees

under Rule  38 and for  sanctions under  28 U.S.C.    1927 is

denied.  

                             -17-