VANDOR, INC. v. MILITELLO, (W.D.N.Y. 2001)

JUDGE JOHN T. ELFVIN

Presently before the undersigned is a motion brought by defendants 438 Main Street, Inc., Delaware North Companies Inc., Jeremy Jacobs, Andrew Nicol and Solar Sport Systems (collectively "the Delaware North defendants"), a motion brought by defendants Buffalo Economic Renaissance Corporation, Alan H. Delisle and Anthony M. Masiello (collectively "the BERC defendants"), and a motion brought by the City of Buffalo each requesting a determination on the amount of sanctions to be imposed stemming from this Court's Memorandum and Order filed February 16, 2001 ("February Order").

By way of background, the February Order granted the aforementioned defendants' motions for sanctions pursuant to Rule 11 of the Federal Rules of Civil Procedure ("FRCvP") and in such amount equivalent to such defendants' reasonable costs of defending against the dismissed federal claims. As set forth in such order, the undersigned found that the factual assertions outlined in the Complaint did not provide any basis for the federal claims asserted therein. For example, the undersigned found that plaintiff's 42 U.S.C. § 1981 claims were groundless because a corporation "itself cannot be a member of a racial minority" that plaintiff's 42 U.S.C. § 1983 claims were groundless because "plaintiff [had] not alleged anything remotely approaching the deprivation of a federal right, "that — relatedly — plaintiff's takings claim was groundless because "plaintiff had neither a legitimate claim to the lease's renewal nor a legitimate claim to any governmental incentives" and that, even if plaintiff had asserted a proper takings claim — which assumes that plaintiff's partiuclar property was capable of being taken —, it could also be dismissed because the plaintiff had failed to exhaust state methods for seeking compensation and that plaintiff's 42 U.S.C. § 1985 and 42 U.S.C. § 1986 claims were groundless because such provisions do not reach conspiracies driven by economic or commercial animus. See February Order at 11-25. Simply stated, "the [federal] claims * * * [were not] warranted by existing law or by a nonfrivioulous argument for the extension, modification, or reversal of existing law or the establishment of new law." FRCvP 11(b)(2).

Each of the moving defendants has now submitted papers quantifying the costs incurred in defending against the dismissed federal claims. In particular, the Delaware North defendants claim $33,052.50 in attorney fees and costs, the BERC defendants claim $20,379.30 in attorney fees and costs and the City of Buffalo claims $2,613.30 in attorney fees and costs. In response thereto, plaintiff's counsel principally argues that the attorney fees and costs claimed by the moving defendants — a combined total of $56,045.10 — should be reduced 75% , inasmuch as such an amount is attributable to the personal attack waged on him by the moving defendants. It is also argued that, inasmuch as this action was premised in part on civil rights claims, this Court should be especially cautious in setting the amount of sanctions and that the imposition of a significantly smaller amount would serve the purpose of FRCvP 11.

Preliminarily, the undersigned notes that no materials have been filed which challenge the rates and hours asserted by attorneys for the moving defendants. Consequently, the issue is then one of reasonableness. Insofar as the moving defendants seek a combined total of $56,045.10 in sanctions, the undersigned finds that such is not reasonable. As all counsel for the moving defendants are undoubtedly aware, the Complaint filed in this action and the issues raised herein are strikingly similar to state court pleadings previously filed by plaintiff's counsel on behalf of clients not a party to the instant matter. Compare Complaint with Kearney Decl. Ex. K (state court complaints). In addition, a memorandum of law filed in support of dismissal by the attorneys for the Delaware North defendants in one of those earlier cases raised many of the same reasons for dismissal that were later relied upon in the present action. Compare Kearney Decl., received Oct. 10 2000, Ex. J at 26-32 with Delaware Defendant's Mem. of Law, filed Sept. 19, 2000, at 6-8. As a result, it is reasonable to assume that, when faced with the present action, the attorneys for the moving defendants were already familiar with the types of federal claims asserted and had some inkling as to the legal grounds which would likely result in such claims' dismissal. This familiarity and the circumstance that it is highly doubtful that counsel for the moving defendants were "starting from scratch" requires that the amount claimed by the moving defendants be reduced by one-third. Such will be sufficient to cover the moving defendants' reasonable costs of defending against the dismissed federal claims and provide a sufficient deterrent to future such baseless filings in this Court.

At the hearing on this matter July 13, 2001, a question also arose as to who should pay the monetary sanctions to be imposed — viz., plaintiff or plaintiff's counsel? Inasmuch as the sanctions to be imposed are premised on FRCvP 11(b)(2) and monetary sanctions"may not be awarded against a represented party for a violation of subdivision (b)(2)," it is plaintiff's counsel who must bear the weight of the sanctions. FRCvP 11(c)(2)(A).

Accordingly, it is hereby, ORDERED that plaintiff's counsel shall pay to the Delaware North defendants $22,035.00, that plaintiff's counsel shall pay to the BERC defendants $13,586.20 and that plaintiff's counsel shall pay to the City of Buffalo $1,742.20 as sanctions.