United States District Court, S.D. Indiana, Indianapolis Division
WASHINGTON FRONTIER LEAGUE BASEBALL, LLC, and STUART A. WILLIAMS, Plaintiffs,
MICHAEL E. ZIMMERMAN, et al. Defendants. FRONTIER PROFESSIONAL BASEBALL, INC., Nominal Defendant. MURPHY LANDEN JONES PLLC, KEVIN L. MURPHY, and JOSEPH JEFFREY LANDEN, Miscellaneous.
ORDER ADOPTING THE MAGISTRATE JUDGE'S REPORT AND
WALTON PRATT, JUDGE
matter is before the Court on a Motion for Sanctions filed by
Plaintiffs Washington Frontier League Baseball, LLC
(“Washington”) and Stuart A. Williams
“Plaintiffs”) (Filing No. 311). The
Plaintiffs seek sanctions against Kevin L. Murphy
(“Murphy”) and Joseph Jeffrey Landen
(“Landen”), the former attorneys for Nominal
Defendant Frontier Professional Baseball, Inc. (“the
League”), for a minimum amount of $324, 037.26. The
League argues that Murphy and Landen were “the
architects of a deceitful stratagem that infected every
aspect of this case, delayed its resolution for years, and
vexatiously multiplied its costs.” (Filing No. 346
at 13.) The Court referred the Motion to the Magistrate
Judge for a report and recommendation pursuant to 28 U.S.C.
§ 636(b)(1)(B). Magistrate Judge Tim A. Baker issued a
report recommending that the Motion for Sanctions be denied
(Filing No. 344). After a review of the parties'
submissions, the Court finds no error of law or fact in the
Report and Recommendation and therefore
overrules the Plaintiffs' Objection
(Filing No. 346), adopts the
Magistrate Judge's Report and Recommendation (Filing
No. 344), and denies the
Plaintiffs' Motion for Sanctions (Filing No.
district court may assign dispositive motions to a magistrate
judge, in which case the magistrate judge may submit to the
district judge only a report and recommended disposition,
including any proposed findings of fact. Schur v. L.A.
Weight Loss Ctrs., Inc., 577 F.3d 752, 760 (7th Cir.
2009). See 28 U.S.C. § 636(b)(1)(B);
Fed.R.Civ.P. 72(b). “The magistrate judge's
recommendation on a dispositive matter is not a final order,
and the district judge makes the ultimate decision to adopt,
reject, or modify it.” Schur, 577 F.3d at 760;
see also 28 U.S.C. § 636(b)(1); Fed.R.Civ.P.
72(b)(3). After a magistrate judge makes a report and
recommendation, either party may object within fourteen days.
28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 72(b)(2). “A
judge of the court shall make a de novo determination of
those portions of the report or specified proposed findings
or recommendations to which objection is made.” 28
U.S.C. § 636(b)(1). Further, a judge “may accept,
reject, or modify, in whole or in part, the findings or
recommendations made by the magistrate judge.”
Plaintiffs Motion for Sanctions alleges that the League's
prior defense attorneys˗˗Murphy and
Landen˗˗knowingly asserted a baseless defense,
thereby perpetrating a fraud on the Court and unreasonably
and vexatiously multiplying the proceedings. Under U.S.C.
§ 1927, the Court has authority to order defense counsel
to satisfy a sanction award personally, providing as
Any attorney or other person admitted to conduct cases in any
court of the United States or any Territory thereof 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
28 U.S.C. § 1927 (emphasis added). This statute allows
the Court to sanction an attorney but not a party or a law
firm. Claiborne v. Wisdom, 414 F.3d 715, 723-24 (7th
Cir. 2005). Section 1927's principal purpose is
“the deterrence of intentional and unnecessary delay in
the proceedings.” Beatrice Foods Co. v. New England
Printing & Lithographing Co., 899 F.2d 1171, 1177
(Fed. Cir. 1990). Given its punitive nature, however,
“28 U.S.C. § 1927 has been strictly
construed.” Badillo v. Central Steel & Wire
Co., 717 F.2d 1160, 1166 (7th Cir. 1983).
Court referred Plaintiffs' Motion for Sanctions to the
Magistrate Judge who recommended that the Motion be denied.
In making the recommendation, the Magistrate Judge explained:
To be sure, Murphy and Landen's conduct should not be
emulated. But does this conduct support assessing over $324,
000 in sanctions? It does not. Murphy and Landen at least
have some explanation for each allegation against them. Given
that this litigation has stretched on for three and a half
years, there has been ample opportunity for missteps.
Ultimately, the parties reached a settlement, only to result
in more litigation and, now, a motion seeking a hefty
sanctions award. Given all involved, further action by way of
sanctions is not appropriate.
Id. at 1-2.
Court agrees with the Magistrate Judge's
characterizations of the work performed by Murphy and Landen.
A robust discussion of the background and legal analysis of
the issues raised by the parties is contained in the thorough
Report and Recommendation of the Magistrate Judge (Filing
No. 344 at 2-17). In summary, the Plaintiffs'
argument raised in their Motion for Sanctions focused on
their view that defense counsel developed and executed a plan
to defraud the Court and the Plaintiffs based on the business
judgment rule and its three elements: a litigation committee
comprised of independent, disinterested members; an inquiry
conducted in good faith; and a recommendation that was the
product of a thorough investigation.
and Landen represented that the League's special
litigation committee undertook a “thorough
investigation” and considered “all material
facts.” As has become clear throughout this spirited
litigation, defense counsel's view of what constituted
the material facts differed from plaintiffs'
counsel's view of the material facts. Opinions differed
between the parties as to what actions taken by the special
litigation committee could be considered part of the
investigation. Ultimately, what constituted a thorough
investigation in the mind of defense counsel did not meet the
legal standard for summary judgment as determined by the
Court, but counsel still could legitimately present their
argument (later determined to be a losing argument). The same
can be said of the “disinterested members” and
“good faith inquiry” arguments-the other elements
of the business judgment rule advanced by defense counsel.
These differing conclusions reached by the Plaintiffs, the
Defendants, and the Court do not necessarily lead to the
determination that defense counsel blatantly lied to the
Court and acted in bad faith when advancing their views of
the facts and presenting arguments based on various laws.
some of the members of the special litigation committee were
not independent and because a thorough investigation was not
performed by the committee before issuing its litigation
reports, this Court determined that the special litigation
committee's business decision to not pursue litigation
was not entitled to deference. The Plaintiffs' argument
presupposes that their narrative of the facts is one hundred
percent accurate and that defense counsel knew all along that
the Plaintiffs' ...