Stephen E. Eberhardt v. Patrick J. Walsh

                               In the

    United States Court of Appeals
                For the Seventh Circuit
                    ____________________
Nos. 22-2623 & 23-1770
STEPHEN E. EBERHARDT,
                                                 Plaintiff-Appellant,
                                 v.

PATRICK J. WALSH,
                                                Defendant-Appellee.
                    ____________________

        Appeals from the United States District Court for the
          Northern District of Illinois, Eastern Division.
          No. 20 C 1171 — Charles R. Norgle, Judge, and
                   Rebecca R. Pallmeyer, Judge.
                    ____________________

  ARGUED NOVEMBER 8, 2023 — DECIDED DECEMBER 5, 2024
               ____________________

   Before ROVNER, JACKSON-AKIWUMI, and PRYOR, Circuit
Judges.
    PRYOR, Circuit Judge. In this appeal, Attorney Stephen
Eberhardt challenges the district court’s decision to sanction
him under Rule 11 of the Federal Rules of Civil Procedure and
its denial of his motion to reconsider. Seeing no abuse of
discretion in either decision, we affirm.
2                                       Nos. 22-2623 & 23-1770

                     I.    BACKGROUND
    Eberhardt has a history with the Village of Tinley Park and
its officials. At last count, he has filed more than 25 lawsuits,
14 ethics complaints, and 150 Freedom of Information Act
requests since 2014, the vast majority of which have been
dismissed. In one of those dismissed cases, the judge “put[]
Eberhardt on notice” that his litigation strategy was nearly
sanctionable, as Eberhardt seemingly did not “appreciat[e]
the need for substantive legal support for his claims.”
Eberhardt v. Seaman, No. 17 L 11231 (Cir. Ct. Cook Cnty. Sep.
28, 2018) (Dkt. 153-4, Ex. C, at 19–20). Undeterred, Eberhardt
continued filing frivolous lawsuits.
    A. Eberhardt’s Underlying Lawsuit
    In early 2020, Eberhardt, an attorney who represented
himself pro se, filed a 102-page, 19-count complaint against 11
defendants in federal court, including the Village, its officials,
attorneys, and residents. Most of the complaint focused on an
alleged scheme by the Village to prevent Eberhardt from
making public comments at Village board meetings and on
Village-related Facebook pages, in violation of his
constitutional rights. Eberhardt also brought two claims
against the Village’s outside counsel, Patrick Walsh, and his
law firm, Walsh Law Group, P.C., under the Illinois Open
Meetings Act. Eberhardt alleged that Walsh was unlawfully
appointed to this role.
    The Defendants moved to dismiss the complaint, and the
district court granted the motion without prejudice pursuant
to Federal Rule of Civil Procedure 8. The district court noted
that the complaint was “so lengthy, repetitive, and jumbled”
that it was “impossible for Defendants or the court to
Nos. 22-2623 & 23-1770                                                   3

ascertain which facts [were] relevant to which claims and to
which [D]efendants.”
   A few days later, Eberhardt filed an amended complaint,
which he slimmed down to 39 pages and 16 counts, but it still
contained many of the same wide-ranging allegations against
the Village and Walsh.
   All of the Defendants again filed motions to dismiss,
which the district court granted. The court then entered final
judgment.
    B. District Court Rule 11 Sanctions Order and Award
    Following judgment, Walsh’s attorney filed a Federal Rule
of Civil Procedure 11 motion for sanctions against Eberhardt
for attorneys’ fees and costs. 1 Walsh’s attorney argued that
Eberhardt’s filings against Walsh—two claims that Walsh
was unlawfully appointed to serve as outside counsel for the
Village—violated Eberhardt’s ethical duties under Rule 11.
These filings, in Walsh’s view, arose from a bad-faith desire
by Eberhardt to harass Walsh and demonstrated Eberhardt’s
lack of due diligence to ensure that his claims were supported
by existing law. To provide context for the alleged
harassment, Walsh attached a table of Eberhardt’s numerous
lawsuits, Freedom of Information Act requests, and ethics
and disciplinary complaints against the Village and its elected



1 The motion for sanctions was brought under both Rule 11 and 

28 U.S.C. § 1927

, a statute that allows courts to impose costs and attorneys’ fees on
“[a]ny attorney … who … multiplies the proceedings in any case
unreasonably and vexatiously.” Because the district court sanctioned
Eberhardt under Rule 11, it did “not address whether sanctions pursuant
to § 1927 are applicable.”
4                                            Nos. 22-2623 & 23-1770

officials, employees, attorneys, and citizens. Eberhardt
responded and requested a hearing.
    The district court denied Eberhardt’s hearing request and
granted Walsh’s Rule 11 motion, ordering Eberhardt to pay
Walsh $26,951.22 in attorneys’ fees. The district court found
Eberhardt’s claims were “frivolous” and “brought with
inadequate investigation into the relevant law and facts.” The
district court explained that Eberhardt’s claims had three
fundamental legal flaws: a lack of facts establishing the
court’s subject-matter jurisdiction; a lack of injury-in-fact
based on Walsh’s appointment; and a lack of evidentiary
support that Walsh was appointed in violation of the Village’s
Purchasing Ordinance. 2 At bottom, the district court found
“Eberhardt sued Walsh, alleging little action and no injury,
for violations of Village ordinances that were not violations at
all.”
    The district court concluded that Eberhardt’s legal
theories were “not objectively warranted by existing law or a
good faith argument for its extension.” The court also
determined, based on Eberhardt’s history with the Village
and his actions in the present case, that Eberhardt had
brought these claims to be “a nuisance.” In support, the
district court noted the vast number of suits that Eberhardt
had filed against the Village and its officials. Additionally,
Judge Norgle pointed to Eberhardt’s hyperactive motions
practice in this case, which consisted of sixteen motions—

2 As Eberhardt points out on appeal, the district court cited to a
superseded version of this Purchasing Ordinance. (App. Dkt. 36 at 8 n. 2).
But the operative language of the correct version is identical to the
previous version, so that does not undermine the court’s analysis.
(Compare Dkt. 153-9 at 6–9, with Dkt. 194-3 at 10–12).
Nos. 22-2623 & 23-1770                                                5

including several made on an emergency basis—that were,
other than two minor motions, all denied. This, the court
determined, all “scream[ed] bad faith.”
    C. Denial of Reconsideration of the Sanctions Order
   Eberhardt moved for reconsideration of the Rule 11
sanctions order. 3 The district court denied the motion finding
the sanctions order “amply justified.” In denying
reconsideration, the court also found that the lack of a hearing
before the sanctions order did not violate due process because
Eberhardt could not explain what purpose would have been
served by such a hearing.
                         II.    ANALYSIS
    Eberhardt now appeals both the sanctions order and the
order denying reconsideration. We address each argument
in turn.
    A. Legal Summary
     The purpose of Federal Rule of Civil Procedure 11
sanctions is to deter baseless filings in the district court.
Cooney v. Casady, 

735 F.3d 514

, 523 (7th Cir. 2013). As a result,
Rule 11 imposes certain duties on attorneys and pro se parties.
See FED. R. CIV. P. 11, Notes of Advisory Committee on Rules,
1983 Amendment (“Rule 11 … appl[ies] to anyone who signs
a pleading, motion, or other paper.”). One duty is to not make
filings “for any improper purpose,” like harassment. Id. at
11(b)(1). Another duty is to make “an inquiry reasonable
under the circumstances” and then submit only “claims” and

3 After this motion was filed, Judge Charles Norgle took inactive senior

status, and the case was transferred to then-Chief Judge Rebecca
Pallmeyer.
6                                       Nos. 22-2623 & 23-1770

“legal contentions” that “are warranted by existing law.” Id.
at 11(b)(2). If a district court finds that a lawyer or party has
breached either of those duties, it “may impose an
appropriate sanction.” Id. at 11(c).
    There must be due process before Rule 11 sanctions are
issued, including notice and an opportunity to respond. Kapco
Mfg. Co. v. C & O Enterprises, Inc., 

886 F.2d 1485

, 1494 (7th Cir.
1989); FED. R. CIV. P. 11(c)(1). But the right to a hearing is
“obviously limited to cases where a hearing could assist the
court in its decision.” 

Id.

 at 1494–95. When a party’s
sanctionable conduct is apparent from the record, the district
court does need not to conduct a hearing because “there are
no issues that a hearing could illuminate and hence the
hearing would be pointless.” 

Id. at 1495

.
    B. Discussion
       1. Order Granting Rule 11 Sanctions
    Eberhardt maintains that the district court erred both
substantively and procedurally in ruling on Walsh’s Rule 11
motion. We review a Rule 11 sanctions order for an abuse of
discretion. Cooper v. Retrieval-Masters Creditors Bureau, Inc., 

42 F.4th 688

, 694 (7th Cir. 2022).
              a. Whether the district court abused its discretion
                 in sanctioning Walsh
    The district court found that Eberhardt violated Rule
11(c)(1) of the Federal Rules of Civil Procedure in bringing his
claims against Walsh. First, the district court found that
Eberhardt filed suit to harass Walsh. This determination is
supported by the record. This suit is but one of an incredible
number of cases that Eberhardt has brought against the
Village of Tinley Park and its officials, attorneys, and
Nos. 22-2623 & 23-1770                                           7

residents. In this case alone, Eberhardt filed over a dozen
motions—including three motions for a preliminary
injunction and two motions for a temporary restraining
order—which were almost entirely denied. We agree the
district court made a reasonable determination that
Eberhardt’s tactics, as informed by his past practice, were
designed to harass Walsh. See Mars Steel Corp. v. Cont'l Bank
N.A., 

880 F.2d 928

, 931–32 (7th Cir. 1989) (en banc) (“A paper
‘interposed for any improper purpose’ is sanctionable
whether or not it is supported by the facts and the law … .”).
Therefore, the district court did not abuse its discretion in
finding Eberhardt’s conduct to be in violation of Rule 11(b)(1).
    Second, the district court determined that Eberhardt failed
to conduct “an inquiry reasonable under the circumstances”
and bring only claims “warranted by existing law.” Because
Eberhardt brought claims that he knew were meritless and
that suffered from “fundamental” jurisdictional defects, the
district court did not err in concluding Eberhardt violated
Rule 11(b)(2). Both reasons are supported by the record. See
Berwick Grain Co. v. Ill. Dep’t of Ag., 

217 F.3d 502

, 504 (7th Cir.
2000) (“[L]egally unreasonable arguments … may incur
penalty.”).
   By the time Eberhardt filed his amended complaint, he
should have known that his claims relating to Walsh’s
appointment were groundless. A reasonable inquiry under
the circumstances would have revealed that the Village’s
Purchasing Ordinance squarely permitted the type of
appointment at issue here: engaging a lawyer for services
worth less than $20,000. Indeed, Eberhardt didn’t need to do
much homework—Walsh’s attorney told him about the
Purchasing Ordinance in his Rule 11 notice that predated the
8                                       Nos. 22-2623 & 23-1770

amended complaint. Armed with this information, Eberhardt
should not have pressed these claims against Walsh. By
pursuing these claims anyway, Eberhardt violated Rule
11(b)(2) and (b)(3). See Flaherty v. Gas Rsch. Inst., 

31 F.3d 451

,
459 (7th Cir. 1994) (affirming Rule 11 sanction issued after
attorney filed complaint despite being apprised that claims
were clearly subject to dismissal).
    Eberhardt’s claims against Walsh also contained serious
jurisdictional flaws. First, the district court plainly lacked
supplemental jurisdiction over these claims, because they had
no factual overlap with the federal claims that provided
jurisdiction. See 

28 U.S.C. § 1367

(a) (providing supplemental
jurisdiction for “claims that are so related to claims in the
action within such original jurisdiction that they form part of
the same case or controversy”). Second, Eberhardt lacked
standing to sue over these claims because the allegations
concerning Walsh’s appointment were nothing more than
generalized grievances that are insufficient to confer standing
in federal court. See Warth v. Seldin, 

422 U.S. 490

, 499 (1975)
(no Article III standing based on “generalized grievance
shared … by all or a large class of citizens”).
    To be sure, not every jurisdictional misstep justifies Rule
11 sanctions. But here, the district court reasonably found that
Eberhardt—an attorney acting pro se—should not have made
these claims given the fundamental errors underlying them.
Viewed in context, this decision was not an abuse of
discretion. See Royce v. Michael R. Needle P.C., 

950 F.3d 939

, 958
(7th Cir. 2020) (affirming Rule 11 sanctions based on “legally
frivolous” arguments); Orange Prod. Credit Ass’n v. Frontline
Ventures Ltd., 

792 F.2d 797

, 801 (9th Cir. 1986) (affirming Rule
11 sanctions when party filed a complaint “which it must
Nos. 22-2623 & 23-1770                                                  9

have known completely lacked a factual foundation for
subject matter jurisdiction”); Collins v. Daniels, 

916 F.3d 1302

,
1320–23 (10th Cir. 2019) (affirming Rule 11 sanctions when
lawyer “ha[d] no objectively reasonable basis for asserting
standing to sue”). 4
                b. Whether the district court needed to hold a
                   hearing
   Regardless of the propriety of the sanctions order,
Eberhardt’s main argument on appeal is that he was denied
due process because the district court declined to hold a
hearing before sanctioning him.
    It is true that there must be due process before Rule 11
sanctions are issued. Kapco Mfg. Co. v. C & O Enterprises, Inc.,

886 F.2d 1485

, 1494 (7th Cir. 1989). But a hearing is not
required unless it “could assist the court in its decision.” 

Id.

 at
1494–95. Indeed, if the “record [i]s adequate to determine
whether sanctions [a]re necessary,” hearings are discouraged.
Teamsters Loc. No. 579 v. B & M Transit, Inc., 

882 F.2d 274

, 279
(7th Cir. 1989).
    There was no need for a hearing here. The district court
sanctioned Eberhardt on two independent grounds: (1) his
legal claims were objectively frivolous, and (2) his claims
were subjectively brought in bad faith simply to harass
Walsh. By Eberhardt’s own admission, however, the purpose
of a hearing would have been only to undermine the second
grounds for sanctions: Walsh’s argument that this suit was

4 Eberhardt argues—for the first time in his reply brief—that Walsh failed

to substantially comply with Rule 11’s safe-harbor provision before
moving for sanctions. An argument made for the first time in a reply brief
is waived, Bradley, 59 F.4th at 897, so we do not consider it.
10                                     Nos. 22-2623 & 23-1770

brought in bad faith. The district court was under no
obligation to hold a hearing as Eberhardt challenged only one
of the two independent grounds for imposing sanctions.
See Kapco Mfg. Co., 886 F.2d at 1494–95 (“Whether an attorney
who is being sanctioned acted in good faith is not material if
his conduct was objectively unreasonable.”).
       2. Order Denying Motion for Reconsideration
   Eberhardt also argues that the district court abused its
discretion in denying his motion to reconsider the sanctions
order. He contends that Chief Judge Pallmeyer erred in
agreeing with the findings in Judge Norgle’s sanctions order
and that the district court should have granted his request for
a hearing. We apply an “extremely deferential” abuse of
discretion standard when evaluating a denial of a motion to
reconsider. Eskridge v. Cook County, 

577 F.3d 806

, 808 (7th Cir.
2009).
   “Motions for reconsideration serve a limited function; to
correct manifest errors of law or fact or to present newly
discovered evidence.” Hicks v. Midwest Transit, Inc., 

531 F.3d 467

, 474 (7th Cir. 2008) (internal quotations omitted). Here,
there was no “error[] of law or fact” to correct, given that the
court appropriately ruled on the sanctions issue. Moreover,
Eberhardt points to no newly discovered evidence he
provided the district court. Thus, it was not an abuse of
discretion to deny Eberhardt’s motion to reconsider.
                   III.   CONCLUSION
   For these reasons, we AFFIRM the district court’s
sanctions order and denial of the motion to reconsider.


Case Details

Case Name: Stephen E. Eberhardt v. Patrick J. Walsh

Court Name: Court of Appeals for the Seventh Circuit

Date Published: Dec 5, 2024

Citation: 122 F.4th 681

Docket Number: 22-2623

Court Abbreviation: 7th Cir.