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Rackemann v. Lisnr, Inc.

United States District Court, S.D. Indiana, Indianapolis Division

July 6, 2018

ALAN RACKEMANN, individually and on behalf of all others similarly situated, Plaintiff,
v.
LISNR, INC., a Delaware Corporation, ADEPT MOBILE, LLC, a Massachusetts Limited Liability Company, and INDIANAPOLIS COLTS, INC., an Indiana Corporation, Defendants.

          ORDER GRANTING ATTORNEYS' FEES PURSUANT TO MOTION TO COMPEL

          MARK J. DINSMORE UNITED STATES JUDGE

         For the reasons described below, the Court GRANTS Defendants' Motion for Fees pursuant to this Court's October 31, 2017 Order on Motion to Compel, and awards $44, 512 for attorneys' fees to Defendants. [Dkt. 162; Dkt. 168.]

         Background

         Defendants LISNR, Inc. (“LISNR”) and the Indianapolis Colts, Inc. (the “Colts”) (collectively, “Defendants”) seek an award of the attorneys' fees accrued in making their Motion to Compel Plaintiff to Produce Documents and Information Regarding the “Forensic Accounting” referenced in Plaintiff's Complaint (the “Motion to Compel”). [Dkt. 130.] This Court issued an order granting Defendants' Motion to Compel (the “Order") on October 31, 2017, which required Alan Rackemann (“Plaintiff”) to produce documents related to the “forensic accounting” (the “Documents”) referenced in his Complaint. [Dkt. 162; see also Dkt. 1.] Plaintiff claimed that the Documents constituted protected work product because the Documents had been prepared in anticipation of future litigation. [Dkt. 141.] This Court concluded that Plaintiff waived any work-product protection that existed, because (1) Plaintiff's Complaint put the Documents at issue in this suit, and (2) Plaintiff failed to produce a timely and sufficient privilege log. [Dkt. 162.] In its Order, the Court gave Defendants leave to file a motion for fees within fourteen days of October 31, 2017. [Id. at 7-8.]

         On November 14, 2017, Defendants filed their Motion for Fees Pursuant to October 31, 2017 Order on Motion to Compel (“Motion for Fees”). [Dkt. 168.] Defendants initially requested $26, 412 in attorneys' fees for LISNR and $25, 000 for attorneys' fees for the Colts, for a total of $51, 412 in attorneys' fees. [Dkt. 169 at 11.] When Plaintiff asserted that LISNR sought fees for time spent on tasks unrelated to making Defendants' Motion to Compel, LISNR agreed to withdraw its request for fees for four time entries, reducing LISNR's total requested fees by $2, 160. [Dkt. 202 at 16-17; Dkt. 226 at 7-8.] This reduced the available fees for LISNR to $24, 252 and to Defendants together to $49, 252. Plaintiff's claims were subsequently dismissed on March 21, 2018, under Fed.R.Civ.P. 12(h)(3) for lack of subject matter jurisdiction. [Dkt. 288; see also Dkt. 253.]

         Discussion

         Defendants contend that they are entitled to attorneys' fees under Fed. R. Civ. P 37(a)(5)(A) because this Court granted Defendants' Motion to Compel, and none of the exceptions described in Fed.R.Civ.P. 37(a)(5)(A)(i)-(iii) apply. Fed.R.Civ.P. 37(a)(5)(A); [Dkt. 169 at 8-10.] The issue now before the Court is whether (1) a federal district court can award attorney fees in a case dismissed for lack of subject matter jurisdiction; and, (2) if the Court does have the authority to award fees, whether they are warranted in this particular case.

         A. Authority to Award Fees After Dismissal for Lack of Subject Matter Jurisdiction

         In some circumstances, federal district courts have the authority to award attorney fees when the case has been dismissed for lack of subject matter jurisdiction. For instance, in Citizens for a Better Environment v. Steel Co., the Seventh Circuit held that a federal district court's lack of subject matter jurisdiction over a civil rights suit did not negate the court's jurisdiction over a party's request for attorneys' fees under Federal Rule of Civil Procedure 11. 230 F.3d 923 (7th Cir. 2000); Fed.R.Civ.P. 11; see also Willy v. Coastal Co., No. 90-1150, 503 U.S. 131 (1992) (holding that Article III did not prohibit Rule 11 sanctions in cases later dismissed for lack of subject matter jurisdiction); Chambers v. NASCO, Inc., 501 U.S. 32, 43-50 (1991) (indicating that federal district courts have an inherent power to assess attorney fees as a sanction against parties who act in bad faith). The Seventh Circuit has differentiated between the “legislative authority to create rights and remedies” that comes from Article I, and adjudicative authority, which comes from Article III. Citizens for a Better Env't, 230 F.3d at 927. It is Article I-not Article III-that authorized Congress to enact the Rules Enabling Act, 28 U.S.C. §§ 2071-77, which underpins the Federal Rules of Civil Procedure. Id. Accordingly, the Seventh Circuit reasons as follows:

[A] motion seeking an award under any [Fed. R. Civ. P.] is a case or controversy that may be adjudicated to the extent the movant has suffered at its adversary's hands an injury [that] may be redressed by a decision in its favor. Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, at 102-04 (1998). Article III therefore presents no obstacle to fee-shifting, whether or not the fees were incurred in proceedings that were cases or controversies under Article III.

Citizens for a Better Env't, 230 F.3d at 927.

         Similarly, here, Defendants seek to recover fees under a Federal Rule of Civil Procedure, meaning that this Court's authority to consider attorney fees comes not from Article III, but from Article I. Therefore, this Court's lack of subject matter jurisdiction over Plaintiff's claims does not negate this Court's jurisdiction over Defendants' Motion for Fees.

         However, the federal district court's authority to award fees when a suit has been dismissed for lack of subject matter jurisdiction is not unlimited. In W.G. v. Senatore, the Second Circuit affirmed a district court's denial of a motion for attorney fees when the motion for fees was filed after the case was dismissed for lack of subject matter jurisdiction. 18 F.3d 60 (2nd Cir. 1994). Though the plaintiff in Senatore was claiming fees under 20 U.S.C. § 1415(3)(4)(B) (Individuals with Disabilities Education Act), rather than a federal rule of procedure as here, the Second Circuit's reasoning is informative here. Id. at 62. In Senatore, the court ruled that attorney fees could not be awarded because the Judgment of Dismissal for lack of subject matter jurisdiction was the law of the case at the time the motion for attorney fees was filed. Id. at 63. Further, the Senatore court observed that the fee-shifting provisions often included in federal statutes cannot themselves confer jurisdiction, and “must be read in conjunction with substantive statutes to establish proper jurisdiction over fee applications.” Id. at 64. Unlike the Senatore plaintiff, Defendants here filed the Motion for Fees prior to the dismissal Plaintiff's claims for lack of subject matter jurisdiction, and Defendants request fees pursuant to a procedural rule rather than a substantive statute. Furthermore, due to the pendency of counterclaims, no final judgment has issued in this case.

         For the reasons discussed in this section, this Court has the authority to award attorneys' fees under Rule 37(a)(5)(A), even though Plaintiff's claims were dismissed for lack of subject matter jurisdiction after the Motion for Fees was filed. Fed.R.Civ.P. 37(a)(5)(A). Section ...


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