Court Opinion

ID: 4911950
Source: CourtListenerOpinion
Date Created: 2021-09-17 19:05:49.429842+00
Date Added: 2024-06-11T08:13:36.198991
License: Public Domain

USCA11 Case: 20-13390      Date Filed: 09/17/2021   Page: 1 of 9

                                                                [DO NOT PUBLISH]

                  IN THE UNITED STATES COURT OF APPEALS

                          FOR THE ELEVENTH CIRCUIT
                            ________________________

                                   No. 20-13390
                               Non-Argument Calendar
                             ________________________

                        D.C. Docket No. 9:19-cv-81660-DMM

DEONDRA MILLER,
individually, and
on behalf of all other similarly situated consumers,

                                                    Plaintiff - Appellant,

versus

MIDLAND CREDIT MANAGEMENT, INC.,

                                                    Defendant - Appellee.

                             ________________________

                     Appeal from the United States District Court
                         for the Southern District of Florida
                           ________________________

                                 (September 17, 2021)

Before LAGOA, BRASHER and MARCUS, Circuit Judges.

PER CURIAM:

         Attorneys Daniel Zemel and Brian Giles appeal from the district court’s order

imposing sanctions on them, arising out of their representation of plaintiff Deondra
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Miller in the district court. On appeal, the attorneys argue that the district court

abused its discretion in sanctioning them: (1) by not providing sufficient notice

before issuing sanctions; (2) by basing its decision on insufficient evidence and

failing to make a finding of bad faith; and (3) by ignoring evidence the attorneys

presented in denying their motion for reconsideration. After careful review, we

vacate and remand the order imposing sanctions.

       The relevant procedural background is this. In 2019, Deondra Miller filed a

class action complaint against Midland Credit Management, Inc. (“Midland”),

asserting violations of the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et

seq. Pursuant to a pretrial scheduling order referring the case to mediation, the

mediation should have been conducted by June 4, 2020. Because that deadline had

passed and the record did not reflect that a mediation had occurred, the district court

directed the parties to file a status report.

       On June 12, 2020, the parties filed a status report explaining that they had

scheduled a mediation for June 16, 2020. In a subsequent order, the district court

noted that the parties did not “address why despite their diligence, [they] have been

unable to mediate by the mediation deadline.” But the court entered a “limited”

extension of the mediation deadline to June 16 and ordered the parties to file a

mediation report by the next day. The court also instructed the parties to explain any

further requests to extend the mediation deadline.

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      On June 16, the mediator filed a report explaining that while Miller’s attorneys

had appeared, she did not, so the mediation could not proceed. The next day,

Midland filed a status report and requested that the district court enter sanctions

against Miller for her failure to appear. Attorney Zemel also filed a status report that

day, noting that he did not know why Miller did not appear at the mediation. He

said that the last communication his office had had with Miller was on June 14, when

Miller confirmed that she would be attending the mediation, and that despite his

attempts to reach her, he had not heard back from her.

      On June 19, the district court entered an order to show cause why Miller failed

to appear at the mediation. In it, the court also ordered Miller’s counsel to “address

whether they have regained contact with their client,” noting that “[r]epresentation

requires communication.” The court explained that while its order “may seem harsh

in isolation,” there were many other examples of Miller’s “lack of diligence” in

prosecuting the case. On June 22, Miller responded to the order to show cause,

noting that counsel had regained contact with her. She explained that she did not

attend the mediation because she was relieved of duty from work three hours late,

and could not access her phone to inform her attorneys of this unexpected issue.

      On June 25, 2020, the district court imposed sanctions on Miller and her

attorneys. After discussing the reasons for the imposition of sanctions against Miller

(who does not join in this appeal), the district court said:

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      [H]ad I not entered the Order to Show Cause . . . there is no indication
      that [Miller] or her counsel would have made known to the Court the
      circumstances surrounding her failure to appear. Counsel should have
      made a prompt and reasonable investigation into [Miller’s] failure to
      appear and immediately informed the Court of the reasoning for the
      same. Counsel did not. This led to my entry of the Order to Show
      Cause and it was only then that Counsel investigated and discovered
      the circumstances surrounding [Miller’s] failure to appear.

The parties settled the lawsuit. However, Zemel and Giles requested the court to

reconsider its sanctions order. The motion detailed counsel’s efforts to reach Miller

from June 16 to June 22, 2020. The court denied the motion, finding that “[c]ounsel

[did] not provide any new argument or evidence that would justify granting the

requested relief.” This timely appeal followed.

      We review a district court’s decision to impose sanctions under its inherent

powers for abuse of discretion. Amlong & Amlong, P.A. v. Denny’s, Inc., 500 F.3d

1230, 1237–38 (11th Cir. 2007). That standard requires us to affirm unless we find

that the district court made a clear error of judgment or applied the wrong legal

standard. Id. at 1238. “A decision that is contrary to the law plainly is an abuse of

discretion.” Id.

      “A court may impose sanctions for litigation misconduct under its inherent

power.” Eagle Hosp. Physicians, LLC v. SRG Consulting, Inc., 561 F.3d 1298, 1306

(11th Cir. 2009). The inherent power is “vested in courts 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) (quotations omitted). However, this power
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“must be exercised with restraint and discretion.” Roadway Express, Inc. v. Piper,

447 U.S. 752, 764 (1980). Thus, when a district court is imposing sanctions under

its inherent power, it must “comply with the mandates of due process.” Chambers,

501 U.S. at 50. In this context, “[d]ue process requires that the attorney (or party)

be given fair notice that his conduct may warrant sanctions and the reasons why.

Notice can come from the party seeking sanctions, from the court, or from both.” In

re Mroz, 65 F.3d 1567, 1575 (11th Cir. 1995) (citation omitted). The court is also

required to give the attorneys “an opportunity to respond, orally or in writing, to the

invocation of such sanctions and to justify [their] actions.” Id. at 1575–76.

      Here, the record indicates that the district court did not provide attorneys

Zemel and Giles with fair notice that it was considering imposing sanctions against

them for their client’s failure to appear at the mediation. For starters, the pretrial

scheduling order referring the case to mediation warned that “[t]he Court may

impose sanctions against parties or counsel who do not comply with” mediation

requirements. But Miller’s attorneys attended the mediation; only Miller herself did

not. Then, after Miller did not attend the scheduled mediation, Midland requested

the court to sanction Miller for her failure to appear. The motion notably did not

mention sanctions against Miller’s attorneys.

      Nor did the district court’s subsequent order to show cause constitute fair

notice of possible sanctions against the attorneys. The order directed Miller to show

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cause why she failed to appear at the mediation, but only ordered counsel to “address

whether they have regained contact with their client.” The only other comments

specifically directed at counsel noted that: “Representation requires communication.

Plaintiff’s counsel cannot continue to represent Plaintiff if she has abandoned their

representation and more generally this lawsuit.” The order concluded by again

directing counsel only to “indicate on the record whether they have regained contact

with their client.” There is simply no support for Midland’s argument that these few

sentences put Miller’s attorneys on notice about the possibility of sanctions against

them, nor that the order’s general discussion of Miller’s lack of diligence throughout

the litigation did so either.

       Indeed, in Miller’s response to the show-cause order, her lawyer Zemel said

that he “has regained contact with his client,” but did not address any potential

sanctions against the attorneys themselves. The response instead focused on why

Miller did not attend the mediation, and asked the district court to decline to impose

sanctions on Miller alone.

       Thus, reading the record as a whole, it appears that the parties believed that

the district court was considering imposing sanctions against Miller, but not against

her counsel. As a result, we do not think that Zemel and Giles were given a

meaningful opportunity to respond to that possibility. See United States v. Shaygan,

652 F.3d 1297, 1318 (11th Cir. 2011) (“The district court conducted an inquiry, not

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an adversarial hearing, and both [attorneys] were denied a meaningful opportunity

to be heard in that proceeding.”). “We express no view about whether the district

court should conduct further proceedings” -- and readily acknowledge that it was

within the district court’s purview to consider sanctions against counsel in this

context -- “but if the district court decides again to consider sanctions against [Zemel

and Giles], it must, of course, afford them due process.” Id. at 1319. As we see it,

the district court has not yet done so.

      Moreover, if a district court decides to impose sanctions, a finding of bad faith

is required.   See Chambers, 501 U.S. at 49 (recognizing that “invocation of

[sanctions under] the inherent power would require a finding of bad faith”); see also

Wilson v. Citigroup, N.A., 702 F.3d 720, 724 (2d Cir. 2012) (“Our case law is clear

that a district court may not impose attorney’s fees as a sanction without first making

an explicit finding that the sanctioned party . . . acted in bad faith in engaging in the

sanctionable conduct.”); Primus Auto. Fin. Servs., Inc. v. Batarse, 115 F.3d 644, 648

(9th Cir. 1997) (“Before awarding sanctions under its inherent powers, however, the

court must make an explicit finding that counsel’s conduct ‘constituted or was

tantamount to bad faith.’” (quoting Roadway Exp., 447 U.S. at 767)). A finding of

bad faith is warranted where a party delays or disrupts the litigation. Barnes v.

Dalton, 158 F.3d 1212, 1214 (11th Cir. 1998).

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      Here, when addressing the attorneys in the sanctions order, the district court

said only that they “should have made a prompt and reasonable investigation into

[Miller’s] failure to appear and immediately informed the Court of the reasoning for

the same.” Importantly, however, the court did not make the requisite finding of bad

faith before imposing the sanctions. See Roadway Exp., 447 U.S. at 767 (“[T]he

trial court did not make a specific finding as to whether counsel’s conduct in this

case constituted or was tantamount to bad faith, a finding that would have to precede

any sanction under the court’s inherent powers.”). Nor did the district court mention

bad faith or cite the bad-faith standard from the Supreme Court or our Court. Cf.

Metz v. Unizan Bank, 655 F.3d 485, 490 (6th Cir. 2011). We recognize that the

court mentioned in the show-cause order that the plaintiff had been “far from diligent

in this litigation,” perhaps attributing Miller’s delays to her attorneys. But neither

the show-cause order nor the sanctions order squarely placed the blame for these

delays on the attorneys nor did they tie them to a finding of bad faith. It’s also worth

noting that, as best we can tell, counsel did inform the district court the day after

Miller failed to attend the mediation that she had not appeared; that counsel did not

know why Miller had not appeared; and that counsel had been unable to reach her

despite several attempts to inquire why.

      On this record, “we cannot glean . . . whether [the district court’s] outrage [at

Miller’s attorneys] stemmed from a belief that [the] attorneys acted in bad faith, or

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whether it was due to a belief that they acted negligently or without due diligence.”

Mroz, 65 F.3d at 1576; see also Primus, 115 F.3d at 649. It may be that the district

court’s imposition of sanctions was based on a finding of bad faith and was

supported by the record. At this time, however, we cannot make this determination.

       Accordingly, we vacate the court’s order imposing sanctions and remand. 1

       VACATED AND REMANDED.

1
 Because we resolve the case on this ground, we need not address Zemel and Giles’s argument
about the motion for reconsideration.
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