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Apex Colors Inc. v. Chemworld International Limited, Inc.

United States District Court, N.D. Indiana, Hammond Division

April 13, 2017

APEX COLORS, INC., Plaintiff,
v.
CHEMWORLD INTERNATIONAL LIMITED, INC., CHEMWORLD INTERNATIONAL LIMITED, LLC, ATUL MODI, MANOJ MODI, and PAUL BYKOWSKI, Defendants. PAUL BYKOWSKI, Third Party Plaintiff,
v.
ERIC BOGGESS and JAMES BOGGESS, Third Party Defendants.

          OPINION AND ORDER

          PAUL R. CHERRY, MAGISTRATE JUDGE

         This matter is before the Court on Eric and James Boggess' Motion for Sanctions [DE 471], filed by Third Party Defendants Eric and James Boggess on January 30, 2017, and on a Motion to Strike Exhibits 3, 4, and 5 to Reply Memorandum in Further Support of Eric and James Boggess' Motion for Sanctions [DE 483], filed by Third Party Plaintiff Paul Bykowski on February 22, 2017. Both motions are fully briefed and ripe for ruling.

         PROCEDURAL BACKGROUND

         On September 13, 2016, Plaintiff Apex Colors, Inc. filed a Second Amended Consolidated Complaint against Defendants, including Defendant Paul Bykowski.

         On September 28, 2016, Defendant Paul Bykowski filed a Third Party Complaint against Eric Boggess and James Boggess, alleging that, as a result of their conduct described in the Third Party Complaint, Eric and James Boggess “are or may be partially liable to Bykowski for some part or all of the losses and damages assessed against Bykowski as a result of plaintiff's complaint.” (ECF 411, ¶ 16). The “losses and damages” are related to Plaintiff's alleged “trade secrets” that have “actual and potential economic value.” (ECF 411, ¶¶ 18-22). Bykowski further alleged that “[t]he misappropriation of some or all of Apex's alleged trade secrets by Eric Boggess and [James] Boggess renders them liable to Bykowski for some or all of the losses and damages assessed against Bykowski as a result of plaintiff's loss of alleged trade secrets.” (ECF 411, ¶ 25). Finally, Bykowski alleges that “[James] Boggess and Eric Boggess are liable to indemnify Bykowski against some part or all of the losses and damages assessed against Bykowski” and prays “for indemnity or contribution against some or all of any damages that the plaintiff may be awarded by way of the plaintiff's Second Amended Consolidated Complaint.” (ECF 411, ¶¶ 27, “Wherefore” paragraph).

         On November 2, 2016, the Boggesses requested an extension of time to respond to the Third Party Complaint. On November 3, 2016, the Court granted them an extension of time to December 1, 2016.

         Prior to that deadline, on November 21, 2016, the Boggesses filed a Motion to Dismiss, seeking dismissal of the Third Party Complaint for failure to state a claim. On December 1, 2016, Bykowski moved for an extension of time to respond to the Motion to Dismiss. On December 2, 2016, the Court granted the motion, giving Bykowski up to and including December 22, 2016, to file a response.

         On December 5, 2016, the Boggesses served counsel for Bykowski with a Federal Rule of Civil Procedure 11 safe harbor notice and a draft (unfiled) Motion for Sanctions, which sought sanctions under Rule 11, 28 U.S.C. § 1927, and the Court's inherent authority based on the filing of the Third Party Complaint.

         On December 22, 2016, the day the response to the Motion to Dismiss was due and within 21 days of the Boggesses' service of the Rule 11 safe harbor notice, see Fed. R. Civ. P. 11(c)(2), Bykowski filed a Notice of Voluntary Dismissal, dismissing the Third Party Complaint.

         ANALYSIS

         In the instant Motion for Sanctions, Third Party Defendants Eric and James Boggess ask the Court to grant sanctions pursuant to 28 U.S.C. § 1927 and under the Court's inherent authority against Third Party Plaintiff Paul Bykowski's attorney. The Boggesses seek sanctions consisting of their attorney fees and expenses incurred in defending against the Third Party Complaint and in preparing and presenting this motion.

         Section 1927 provides:

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.

28 U.S.C. § 1927. “Sanctions against counsel under 28 U.S.C. § 1927 are appropriate when ‘counsel acted recklessly, counsel raised baseless claims despite notice of the frivolous nature of these claims, or counsel otherwise showed indifference to statutes, rules, or court orders.'” Grochocinski v. MayerBrown Rowe & Maw, LLP, 719 F.3d 785, 799 (7th Cir. 2013) (quoting Kotsilieris v. Chalmers, 966 F.2d 1181, 1184-85 (7th Cir. 1992)). “Whether sanctions should be ...


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