Szabo Food Service, Inc. v. Canteen Corporation
823 F.2d 1073
7th Cir.
1987
Check Treatment

*3 Canteen, Board, against district court CUDAHY, Before POSNER and members, County, all of the Board’s Cook EASTERBROOK, Judges. Circuit purchasing agent. The County’s and the EASTERBROOK, Judge. Szabo-Digby Circuit asserted that discrimination, that the the victim of racial Twice in recent months we have encoun- procedures used to award the contract to judges tered cases in which district denied the due clause of Canteen violated substantial motions for sanctions without amendment, and that the fourteenth giving reasons. Twice have remanded we law; had state the com- Board violated complete for more consideration. Shrock plaint pendent district court’s invoked the v. Altru Nurses 810 F.2d 658 Registry, support the latter claims. jurisdiction to (7th Cir.1987); Krump Dreis & Manufac 4:00; Szabo-Digby hearing at at obtained turing Aerospace Co. v. Machinists & temporary re- hearing it moved for a Workers, (7th Cir.1986). 802 F.2d 247 We straining judge denied order. The district today. follow the same course See also any injury ground that the motion on the Services, Inc., Capital Security Thomas v. money reparable by dam- (5th Cir.1987); appeared to be F.2d Jackman nonetheless, requested ages; Szabo-Digby Corp., Investment WMAC (7th Cir.1987); leading judge to order Can- expedition, Topstone Lieb v. Indus tries, Inc., (3d papers its and teen to file within 72 hours Cir. 1986). supporting opposition Sza- materials

bo-Digby’s request preliminary in- tion awarded, 1988 fees should be and so tale, junction. motion, As Canteen tells the there upon my review of the entire preparation case, round-the-clock followed record in this is denied. background necessary materials and briefs The “entire record in this case” was Szabo- Szabo-Digby’s request oppose for emer- Digby’s complaint attachments, and gency relief. Canteen’s skeletal motion for fees. Can- yet teen had not filed papers either the papers were by p.m. 4:30 Canteen’s prepared had response Friday, 17. At day October 1:15 that or the materials from proceedings the state voluntary served notice of it planned support to use in 41(a)(l)(i). dismissal Fed.R.Civ.P. for sanctions. ended the case notice interven- without court,

tion Scam Instrument II Corp. Corf., Control Data (7th Cir.1972), Canteen therefore dismissed its un- *4 papers. did file 41(a)(l)(i) its moved der Rule and maintains that the street to the across the deprived Circuit Court of dismissal the district court of County, Cook where it filed suit “jurisdiction” based to award attorneys’ fees wholly on state and local Discovery against law. Santiago it. v. Victim Services had; judg Circuit Court (2d Cir.1985), entered Agency, 753 F.2d 219 offers Canteen; ment favor of the case is on position. comfort that Santiago filed appeal. and then dismissed a under 42 1983; U.S.C. 41(a)(l)(i) after the Rule § says during Canteen that discovery dimissal, requested the defendants and re- in the state suit it became convinced that 1988; ceived an award of fees under § Szabo-Digby had filed the federal suit ei- appeals reversed, court of stating that knowing ther prevail could not or “[ojnce plaintiff has dismissed the ac- performing pre-filing investiga- without 41(a)(l)(i)], tion under the court loses [Rule required tion by Fed.R.Civ.P. 11. Canteen jurisdiction all over the action.” 753 F.2d concluded that knew should at 221. The Second Circuit reasoned Canteen, too, have discovered that had a because “jurisdiction” the court lost minority participant. squelched any That could award fees. Id. at 221-23. discrimination, inference of racial according Ezell, Williams v. 531 F.2d 1263-64 Canteen, any even inference that (5th Cir.1976), contains language similar County Board had been indifferent to its comes same conclusion. Corcor minority set-aside ordinance. On Novem- an v. Broadcasting System, Columbia ber 14 Canteen filed a asking motion Inc., (9th Cir.1941), 121 F.2d 575 which district court to award it attorneys’ fees as cited, neither Santiago nor Williams had 11; a sanction under sought Rule it also opposite come to the conclusion on a re “prevailing fees party” as under 42 quest for fees under the copyright laws. parties U.S.C. 1988. The appeared be- § fore the district 21. November agree with Santiago's holding, We Canteen offered to file a support- brief and although explain as we below we do not ing papers by November 24. Szabo-Digby reasoning. endorse Santiago’s holding respond. asked time to for Instead of set- dooms Canteen’s fees ting schedule, a briefing however, the dis- 1988. statute That authorizes § awards to trict court announced: parties “prevailing” only. A dismissal I have reviewed the I am motion. well 41(a)(l)(i) without prejudice under Rule aware of the case. I reviewed the mate- does not decide the case on merits. rials previously that were filed in connec- plaintiff may (or, refile the tion with the case. here, as Szabo-Digby did file redacted believe, I don’t court). under the circumstanc- in a different The de case,

es that a Rule 11 violation fendant remains at risk. A dismissal under occurred, has 41(a) nor do I that Sec- Rule preju- believe unlike a dismissal with Distributing 41(b), (2d under Rule which enables the Cir.1985); dice F.2d 243 Eagle Golden say “prevailed”. defendant to that he has p. v. Burroughs Corp., 809 Cor by may defendant support (9th A cave-in an Cir.1987) 586-89 (Noonan, J., plaintiff of fees to the award without a dissenting from the denial of rehearing en relief, banc). judicial declaration entitlement to Unnecessary complaints sap the 122, 129, Gagne, Maher judges, U.S. 100 time forcing parties with sub 2570, 2574, (1980); S.Ct. L.Ed.2d 653 stantial disputes to longer wait in a queue City Palmer v. Chicago, condemning them to receive judi less (7th Cir.1986). Capitulation 1321-22 or set- cial attention when their finally cases are practical equivalent tlement is the of suc- heard. Rule fees be awarded even plaintiff cess. Surrender against should be prevailing parties, as in Westmore- similarly. treated Because the Rule land. The violation of Rule 11 complete 41(a)(l)(i) prejudice, dismissal is without paper Queen when the is filed. Pantry however, practical it is equivalent Foods, not the Inc. v. Freight, Fast Lifschultz victory Inc., of a defendant on the merits. Cir.1987). splendid Otherwise litigation conduct of the that, 41(a)(l)(i) top pre On does not excuse an established violation. against par vents an award of “costs” implies This always a court should be ty voluntarily. who dismisses the suit fees, able to award plaintiff whether the Only filing of a second suit on the same wins, merits, loses on the or dismisses his claim allows the court to award the costs of own case. Szabo-Digby up took the court’s 41(d); the first case. See Rule 9 Charles time very short notice and received a Wright Miller, Alan & Arthur R. Federal *5 decision TRO; on a for a it de (1971). Practice and Procedure 2375 § manded expedite that Canteen filing of Section 1988 part authorizes an award “as papers; its if it should not have filed the of the costs” Supreme of the action. The all, complaint at it has inflicted both Court takes seriously the assimilation of Canteen and the injury court the sort of attorneys’ fees under 1988 to “costs”. § with which Rule 11 is concerned. 1, 7-11, Chesny, Marek v. 473 U.S. 105 3012, 3016-18, (1985). S.Ct. 87 L.Ed.2d 1 Yet it is easy distinguish not may Because the court not award “costs” Santiago grounds. on these The Second plaintiff drops first time the his suit rely Circuit did not on the considerations 41(a)(l)(i), under Rule may it also particular 1988 that we have dis § attorneys’ award fees under a statute that cussed. It only said that the court lacks part treats fees as of “costs”. “jurisdiction”, implying the district judge could not have awarded fees under inability The court’s to award fees any statute or rule. To the extent imply under 1988 does not the same § Second Circuit believes that a dismissal un treatment authority of its Rule 11. 41(a)(l)(i) deprives der Rule the court of “prevailing” Neither on the merits nor an power all, anything agree to do at we entitlement necessary to “costs” is a condi the Ninth contrary Circuit’s view in Cor- tion of a Rule 11 11 award. Rule is de all-purpose coran. an “Jurisdiction” is signed to discourage unnecessary com denoting power. word A adjudicatory plaints filings, and other for the benefit of may power things court have to do some judicial system as much as of the de others, but and the use of “lack of fendants. See Brown v. National Board jurisdiction” things may to describe the Examiners, (7th Medical 800 F.2d 168 of not do does not mean that the court is out Cir.1986); cf. Weinstein University v. of of business. Illinois, 1091, (7th 811 F.2d 1097-98 Cir. 1987). Unioil, See ways also There are at in which Inc. v. E.F. Hut least three a Co., 548, (9th ton & 809 F.2d may jurisdiction” Cir. court use “lack of to de- 1986); CBS, Inc., Westmoreland v. 770 scribe the effect a motion under Rule of (D.C.Cir.1985); 41(a)(l)(i). First, may F.2d 1168 Eastway mean to invoke the Con York, Cory. image subject jurisdiction. struction If City v. New 762 of matter Smith, (7th Bryan 174 F.2d 212 Cir. Illinois files a suit based citizen one Illinois, 1949). Aluminum, citizen of Harvey another But see Inc. v. against law state Co., (2d jurisdiction lacks over the Cyanamid American 203 F.2d 105 federal a matter; plaintiff if a files a Cir.1953) (court 41(a)(1) so too subject may reject a Rule suit, for an absurd rights civil specious dismissal when there have substantial been invoke federal not even complaint does looking proceedings to a decision on the Lavine, Hagans v. question jurisdiction. merits). parties stipulated In Bryan the 1372, 1379, 39 94 S.Ct. 415 U.S. pending disposition; interim relief Clark, (1974); Cronson L.Ed.2d 577 plaintiff later dismissed the case under Cir.1987); (7th Dozier v. 41(a)(1), and we held that the district Cir. Loop College, stipulation. could not enforce the jurisdiction 1985). has to deter Yet a court opinion Santiago Second Circuit’s may and therefore en jurisdiction mine used some of these cases the basis of its as acts, judicial even the usual gage in all language, yet “jurisdictional” it does not power to decide the case though it has no situ argument take much to show that the discovery, may supervise merits. It A ations are distinct. district court that trial, payment of costs and order the hold power per to decide the loses its merits — too If the is indeed at the end. haps it has decided them once al because subject jurisdiction, matter silly to create power ready not also lose to award —does ordinary inci- fees should be an attorneys’ attorneys’ fees that order as a Roadway the award of costs. See dent of happened result what before the final Express, Piper, Inc. v. U.S. decision. (1980), holding 2455, 65 L.Ed.2d 488 S.Ct. “jurisdictional” analogy rests Still a third attorneys’ power has to award that a court controversy requirement on the case litigation; discourage In fees to vexatious Article III. You can’t have a suit without (7th Cir.1985). Ltd., re TCI plaintiff packs up plaintiff. When the his jurisdiction” sense of “lack The second home, goes portfolio goes the case power his judge has lost is that longer him. There is no a dis- home with proceed, though the case is within the even court to decide. This is so pute for the power. example, For judicial federal comes under Rule whether dismissal judgment a final loses judge who enters *6 41(b) 41(a) prejudice or Rule with without (unless trial “jurisdiction” to hold another event, prejudice; in either the absence a 60), Rule 59 or timely on motion under a power. plaintiff ends the court’s See In re (7th Sharp, 782 F.2d 1366 Bailey see Corp., International Business Machines Cir.1986). losing party the files a Once (2d Cir.1982). occa- 687 F.2d 591 Courts decision, the final the appeal valid from missing sionally up sum the effect of the “jurisdiction” though judge district loses — by stating, Bryan, as we did in plaintiff merits, because awards of fees only on the 214: “It is as if suit had 174 F.2d at the questions. Exchange Na are collateral brought.” never A court could not been (7th Daniels, 763 F.2d 286 tional Bank v. attorneys’ fees a case that had award Cir.1985); Regents, v. Board Patzer analogy prevails if begun, never so this Cir.1985). (7th This Canteen loses. a dismis- comes closer to the sense which compari- get only You can so far with the 41(a)(l)(i) strips sal under Rule a court of filed, Sup- a suit never however. son to “jurisdiction”. The dismissal terminates pays suit and the pose plaintiff the files nothing by the case all itself. There is left check, then orders filing with a rubber fee courts, including adjudicate. to So several proceed- transcript preliminary some a one, judge have held that a in this (such hearing on a TRO ings as the 41(a)(l)(i) reject the Rule notice and then 41(a)(l)(i). case), Rule dismisses under merits; and disposi- decide the case on the one docket paying avoid the plaintiff Does the enough! tion is See Winterland Conces ground reporter Smith, fee and the sions 706 F.2d 793 Cir. Co. never been 1983); 1263-64; if the suit had Williams, is as F.2d at “[i]t brought”? filing Neither fees nor report- to evidentiary submit materials with or af- paid ers need be when filed, suit is never ter the motion; 13(a) Rule says only that a plaintiff the yet up must pay party nonetheless. shall file “a short concise memoran- Suppose plaintiff suit, the a dum in support files seeks a of his/her position, togeth- TRO, in the er hearing midst of the asks citations of authority.” Because approach bench, the specified the time cheer, a by emits Bronx 13(a) Local Rule is days, five punches judge nose, moreover, in the and as the weekends and holi- days excluded, are judge for a 6(a), reaches handkerchief to Fed.R.Civ.P. stanch so that “five days” bleeding is at tenders a least dismissal seven under calendar Rule days. The 41(a)(l)(i). judge district reply In denied the motion inevitable cita- before the end of the seventh court, day. tion for contempt of Can- plaintiff tops teen off position by observing could not say: “I wasn’t there in eye although it filed the motion (nose?) law; November nothing happened for parties stipulate did not until No- I responsible; am which for ‘it is as if the vember 17 to accuracy of the state suit had been brought’.” never court transcript on which Canteen intends An award of fees under Rule is more rely. a like sanction for contempt of court than Szabo-Digby did oppose the motion in disposition like on the merits or even an the district court on account of a documen- award of An costs. award under Rule 11 is tary shortfall; judge district decided a “sanction” for violating a rule of court. the motion on the merits citing rather than obligation to answer for one’s ac- act 13(a); Local Rule so far as we can tell on companies act; lawyer cannot absolve an independent review, Canteen did not vio- himself of responsibility by dismissing his late the Rule (which and had a decent is not client’s suit. A dismissal Rule say smashing) reason for wanting a little 41(a)(l)(i) significant to the extent more time. preclude We do not the district stops running of attorneys’ fees. A court from interpreting and applying its plaintiff who files a in violation local remand, rule on but we also do not of the Rule quickly dismisses usually think the rule a sufficient alternative find will that sanctions are minimal. But ground on which to affirm judgment. they are not they zero—and here may not There is a related timeliness concern: be minimal. Round-the-clock work Szabo-Digby dismissed the case on October large law firm does cheap. not come If 17, but Canteen did not fees until Szabo-Digby imposed costs its adver- November 14. Neither the sary judicial system by violating nor Szabo-Digby suggests 28 days it must expect pay. long. too Supreme held in Court White v. New Hampshire Department of Ill Employment Security, U.S. *7 Szabo-Digby maintains that is Canteen 1162, S.Ct. (1982), 71 L.Ed.2d 325 that mo- responsible for the thin If record. Canteen tions attorneys’ for fees under 1988 are § the wanted district to look at evi- requests not to “alter or the judg- amend” suggesting dence misconduct, Szabo-Digby ment and therefore are not governed by says, why didn’t it furnish the evidence to ten-day the 6(b) limit in Fed.R.Civ.P. judge? the It could have attached support- 59(b). The Court did just not say what ing materials and a brief to its motion for time rules do apply; it both district invited sanctions. It did not and only has itself to adopt (455 courts local rules U.S. at 454 blame predicament, for its 16, 16) n. 102 S.Ct. at 1168 n. and reserved concludes. Szabo-Digby relies on Local judgment on the possibility the time 13(a),which, Rule insists, requires a mov- might limit applicable be that to bills of ing party to submit and supporting briefs 17). costs at 454 n. {id. courts Several materials no than days later five after the suggestion have the seriously, taken latter motion. replies Canteen holding motions to the time within which rules require court’s moving do party party could Mont- E.g., seek costs. 1080 Associates, CFTC, Inc. v. 816 cess branch of complaint

gomery & is not. Szabo- Digby’s (D.C.Cir.1987). ap- theory process This is more of wacky, due is F.2d 783 sanctionably so. “part fees awarded as propriate for 11, for fees under Rule which costs” than process due clause of the as “sanctions”. The local are awarded provides fourteenth amendment that no in Northern District of Illinois rules “deprive any person life, state shall lib days to file of costs give parties bills erty, property, or process without due 45(a)) (Local days and 90 to file re- Rule law”. say does not that it has (Local 46). attorneys’ fees quests for Rule deprived “liberty”. been of “life” or It has for request If the sanctions under Rule 11 deprived not been “property” either. Its category, either is it is time- assimilated right perform food services under the ly. contract, interest, a “property” expired. A person “property” has a interest an ex IV pectation only of renewal if state law so provides. Compare Regents Board contained three Roth, 564, 2701, 408 U.S. 92 S.Ct. engaged kinds of claims: that the Board (1972), L.Ed.2d 548 Perry with v. Sinder discrimination, racial that the Board violat- mann, 593, 2694, 408 U.S. 92 S.Ct. clause, ed and that (1972). A expecta L.Ed.2d 570 unilateral state and local laws. Board violated We property tion of renewal is not a interest. two, the first are concerned with because if “legitimate entitlement”, Only a claim of offended Rule in order to Roth, 577, 2709, 408 U.S. at 92 S.Ct. at an jurisdiction, federal-question the suf- obtain “expectancy legally ... enforce [is] ficiency state claims is of the irrelevant. able”, O’Bannon v. Town Nursing Court provides presence that the of an Center, 773, 21, 447 U.S. 788 n. 100 S.Ct. attorney’s signature is a (1980), 2477 n. 65 L.Ed.2d 506 is certificate that Henman, property. See also Miller v. ...; pleading he has read the that to the (7th Cir.1986) cases). (collecting F.2d 421 information, knowledge, best of his and Szabo-Digby did not have such a claim of inquiry formed after reasonable belief entitlement. The invitation to bid on the grounded in fact well and warranted jail specified food service contract for the by existing good argument law or a faith that the right “reserves the to ac extension, modification, for the or rever- cept reject any proposals or or all and to law, existing sal of and that it is not negotiate any qualified source or to interposed any improper purpose, for part entirety Request cancel in or in its such any as to harass or to cause unnec- Proposal. may accept proposal It essary delay or needless increase in the that it considers to be in the best interest litigation. cost of County.” Supreme Court of The Rule contains several strands. There Illinois has held that when a inquiry” must be “reasonable into both fact sort, language bids contains of this no one law; (that is, good there must be faith an entitlement to has receive the contract— paper may interposed “to ha- if he even submits lowest for the bid rass”); legal theory objectively must be product. Polyvend, best See Inc. v. Puck by existing good “warranted faith law a orius, 294-96, 77 Ill.2d 32 Ill.Dec. argument” existing for the modification of (1979), appeal 395 N.E.2d dis law; lawyer and the must believe that missed for want of a substantial federal *8 grounded in 1062, “well fact”. The 1001, question, 444 U.S. 100 S.Ct. 62 attorney filing paper the (1980). or other accordingly L.Ed.2d 744 We con satisfy requirements. must all four disappointed Szabo- a cluded that bidder a Digby argue does not property for the modification in inter contract Illinois lacks a law, of existing Capital and its brief in Coyne-Delany this est. Co. v. Devel Board, (7th Cir.1980). adequately contends that the 341 opment 616 F.2d supported briefs, by pro- Szabo-Digby’s fact and its defense of the law. The due

1081 quote language the of the complaint, do not the contract. But then it runs smack into They not cite Poly- invitation. do even Bishop Wood, v. 341, 349-50, 426 U.S. 96 vend, by decision which is an authoritative 2074, 2079-80, S.Ct. 48 (1976), L.Ed.2d 684 Supreme of Illinois on the Court state which holds that when there is no substan- Supreme Court of law issues and property tive interest there is no review of question. on the federal United States See “the merits” under the process due clause. 173, 176-77, Bradley, 432 U.S. Mandel v. Even when interest, there is a property 2238, 2240-41, 53 97 S.Ct. L.Ed.2d 199 decision unreviewable, see Univer- (1977). sity Michigan v. Ewing, 214, 474 U.S. 507, 512, 106 S.Ct. (1985) 88 get L.Ed.2d 523 Szabo-Digby tries to around its lack (reserving issue). if property of a interest —as well as And there the fact were by court, review a got process that it oodles of and is federal getting could by insisting prevail more in the state that even so: it is not arbi- courts— get process trary it did not all the to which it is award a contract to the low bidder. entitled under state law. Now one would If Szabo-Digby trying were get think that a claim of depar- unauthorized Supreme Court to reconsider Olim or procedure ture from by established state Bishop we would not impose be keen to exactly law is what the state courts are for. sanctions; party is free to ask for recon 527, See Taylor, Parratt v. 451 U.S. 101 sideration even when the unlikely court is 1908, (1981); S.Ct. 68 L.Ed.2d 420 Hudson respond favorably. But this was not Palmer, 517, 530-36, v. 468 U.S. 104 S.Ct. Szabo-Digby’s strategy. ignored It Bish 3194, 3202-05, (1984); 82 L.Ed.2d 393 Olim., op, and the wealth of cases Morrissette, 1395, v. Gumz 772 F.2d 1403- holding circuit that the Constitution does (7th Cir.1985). insists, 04 guarantee that states will follow their however, that it has a property interest in ignored own law. It language procedures observance of the them Board’s invitation to ignored bid. It Poly- quote selves. To its brief: “[Plaintiffs vend. It relied entirely almost pre- they demonstrated that deprived had been opinion Olim of a court in Pennsyl of a right, ie., substantive constitutional vania and on a more recent decision of the right having be free from estab Eighth Circuit position that assumed a like bidding procedures lished applied in an ar Szabo-Digby’s arguendo way to de bitrary capricious manner.” This is ciding the case defendants on the mer argument that impose induced us to Sanitation, its. L & H City Inc. v. Lake sanctions on our own initiative Wein Sanitation, Inc., 517, 769 F.2d 523-24 stein, also, 811 F.2d at e.g., 1097-98. See Cir.1985); Cablevision, Three Rivers Inc. Kasper v. Board Election Commission City Pittsburgh, F.Supp. ers, 332, (7th Cir.1987); F.2d (W.D.Pa.1980). Szabo-Digby’s ability to Inc., Companies, Gramenos v. Jewel find obscure cases such as Three Rivers 432, (7th Cir.1986). 434-35 The Su suggests presentation of the due held, preme Court Szabo-Dig- has in cases process issue does not suffer from want of cite, by does not time to track down citations. What it does clause require does not states to follow suffer from is ostrich-like tactic of “[t]he procedures, their own if there is no under pretending potentially dispositive au lying property interest. Olim v. Wakine thority against litigant’s contention does kona, 238, 248-51, 461 U.S. 103 S.Ct. not exist”. Hill v. Ry., & Western Norfolk 1746-48, (1983); 75 L.Ed.2d 813 Hewitt v. 1192, 1198(7th Cir.1987); 814 F.2d see also Helms, 460, 471, 459 U.S. 103 S.Ct. Co., Bonds Coca-Cola (1983). also, 74 L.Ed.2d e.g., See (7th Cir.1986). Mayor’s Schwartz v. Committee Judiciary, (2d paid argu- Cir.1987). We have close attention to the Perhaps Szabo-Digby means ment in brief not “arbitrary because capricious” requires scholarly exposition that the Rule 11 Board was wrong on the merits: that it exhaustive research —it does “deserved” not—but be- *9 penal- must take care not to

cause a court V legal evolution. The arguments ize We come at last to Szabo-Digby’s claim clause has un- meaning of the of racial discrimination. The claim suffi- change; dergone rapid what a district court cient in complaint form. The alleges that in with confidence Three Rivers could state Szabo-Digby participants; has black that away by Supreme the in 1980 was washed not; Canteen does Szabo-Digby made complaint in in 1983. The need Court Olim bid, got “better” but that Canteen the not contain citations or le- not and should contract. prima This states a facie case of gal argument. To find out whether it was discrimination, strengthened racial if the campaign in a opening shot for some changed (by increasing Board the rules legal principle, a court must new examine importance in, price), after the bids were lawyers say later what about their so that it could award the contract to Can- work. Rule creates difficulties responds by invoking teen. Canteen simultaneously requiring penalize courts to three protecting requirements complaints frivolous suits and of Rule 11. It maintains that that, although supported by existing (a) not grounded is not in “well law, change fide efforts fact”; (b) are bona to was not up by backed the neces- only way to find out law. whether a sary “reasonable inquiry” into the facts change is an effort to the law is filed; (c) before it was “interposed and was arguments to examine with care coun- improper purpose, such as to ha- [an] represent sel later adduce. When counsel any rass or to cause unnecessary delay” in something cleanly rejected by the Su- the transition to a new vendor. law, preme governing Court is then it is arguments Each of Canteen’s has some appropriate to conclude that counsel are plausibility. respect With to com- engaged trying change law; in plaint’s being grounded fact”, “well in Can- trying counsel either are to buffalo the teen insists that it had black co-venturers not done their or have homework. too, Szabo-Digby and that knew this. If way, requires Either Rule 11 the court to minority each bidder had participants, the impose protection a sanction—for the inference that a decision for one was based judicial process as much as to relieve hostility the race of litigation the financial burden that baseless evaporates. respect venturers With imposes on the other side. requirement of inquiry” “reasonable before process argument The due in this case is filing complaint, Canteen believes that standard; objective frivolous on an it is Szabo-Digby performed none. And if these by existing therefore not “warranted law” allegations are Szabo-Digby true —if filed meaning within the of Rule 11. See Thorn ignorance, or worse if Sza- Wahl, ton v. Cir. bo-Digby knew that Canteen had black co- 1986). ignore Counsel rather ac than appropriate venturers —then it knowledge law, existing force of so this faith, infer that acted in bad case cannot be called an effort to alter the using allegations of discrimination to being law. The violation established Perhaps stave off the inevitable. Szabo- record, legal hearing unnecessary. Digby trying impose on Canteen the Hill, 814 (collecting cases). F.2d at 1200-03 litigation, hope costs of in the that Canteen requires The Rule every sanction for ag- would learn its lesson and not bid so violation, Shrock, 810 F.2d at so gressively the next time. This inference is (to word) use the Rule’s the district court supported by the fact impose “shall” a sanction. We take Rule dropped the claim once it saw that could counterpart 11 and its Fed.R.App.P. 38 ser get only waiting long a TRO—but after iously expect judges, lawyers, enough litigants to ensure that Canteen incurred all also, to do the e.g., same. See responding Bailey Minerals, Inc., of the costs of to the motion. Bicknell (7th Cir.1987), litigation” many Arguments “predatory and the about citations law, Hill and staples Brown. are in antitrust see Premier *10 produce v. Co. National Electrical Construction results is also unnecessary. FDIC Association, Inc., Elefant, Cir.1986). 790 F.2d Electrical Contractors (7th Cir.1987)(collect- How inquiry much would 814 F.2d 371-76 have been “rea- Bork, filing sonable” before sources); H. this is ing Robert The Anti- something we (1978). cannot determine. Neither Perhaps 347-64 trust Paradox court, could the district on the information here too. they have substance available it. to dispute cannot resolve the between We Szabo-Digby’s Much of brief in this court existing Canteen and on the is devoted to a demonstration that it had an yet supply record. Canteen has what it objectively sufficient basis for its claim of damning believes is evidence. Perhaps racial per- discrimination. it can making plans knew that Canteen was some did, suade the district court that it but venturers, perhaps as to involve black sub- enough. is not Because Rule 11 has a recruiters; or it relies on a contractors subjective well, component as the district legal opinion Attorney of the State’s of why court must find out Szabo-Digby pur- County people that these would not Cook litigation. sued this effectively “partners” participants “joint or a be picks up (fil- the torts of abuse of venture” with Canteen. But this is not ing suit) objectively an frivolous and mali- right question. necessarily the Partner- prosecution (filing cious a colorable suit for ship pertinent law to whether Can- purpose imposing expense on the qualified “minority” as teen a bidder for defendant purpose rather than for the set-aside, purposes of the is not but it 30% Hill, winning). 1202; See 814 F.2d at In re pertinent County to a claim that the Board TCI, 445-46; 769 F.2d at Knorr Brake against Szabo-Digby discriminated on ac- Harbil, Inc., Corp. count of race. And state- (7th Cir.1984). Attorney’s ment that relied on the State’s assessing In objective both the and sub- complete reply is not a view claim jective components of Rule the district something that it knew State’s Attor- judge will need to take into account the not, ney did have found it would out had litigation unusual cast this has assumed. investigation it done some on its own. In- Ordinarily plaintiff a claims his that race insists, quiry led, would have Canteen to a employed disadvantage. to his Much discovery that a Canteen was as much ra- Szabo-Digby’s complaint Canteen’s —and cially Szabo-Digby. mixed co-venture as response protest County a that —is principal function of the 1983 give preference, Board failed to a racial amendment to Rule 11 was to add the give preference and that failure to a is requirement adequate investigation be According Szabo-Dig- “discrimination”. filing complaint. fore a permissi It is not “black”, “white”, by, it is is Canteen discovery ble to file suit and use as the sole under the set-aside it is therefore entitled finding you means of out whether have to the contract. The “violation” of the Discovery details, case. you fills in the but Board, Szabo-Dig- by set-aside must have the outline of claim at the believes, by is either the act of discrimina- beginning. requires independent Rule 11 tion or the basis of an inference of discrimi- inquiry. e.g., Rogers See Brown and v. nation. The claim that an award to a Service, Inc., Towing Lincoln corporation “violates” the ordi- “white” (7th Cir.1985). The amount of program A nance is feeble. set-aside cov- investigation required by depends Rule 11 contracts; require ers all it does not investigate on both the time available to any particular contract be awarded to a probability investiga bidder, that more any bidder be mul- minority or that evidence; up important tion turn will The Board could award of all ti-racial. 70% require steps Rule does not corporations” that are without contracts “white cost-justified. Only inquiry raising problems under the ordinance. The “reasonable” Queen, program necessary. arguments is also on the set-aside Pantry See based however, led, allegation unlikely F.2d at to the curious Inquiry 454. have you by that “we’re as black as a claim government Canteen that the acting un- countercharge by Szabo-Dig- constitutionally. are” and the “real” Canteen doesn’t have black The district abrupt court’s dismissal *11 co-venturers. the Rule 11 motion receiving before evi- argument pro- dence way in which this means that we cannot resolve the Moreover, claim any by Szabo-Digby claim ceeds ourselves. we weakens cannot tell from the judge’s cryptic that it the victim district that it was of believed statement why he for against Szabo-Digby. Perhaps It decided discrimination blacks. saw Can- he believed the record scrambling to associate itself sufficient to show teen with that Szabo-Digby complied had blacks; Rule apparently the staff with of 11; perhaps thought he pre-filing in- that it expect told Canteen Board could vestigation subjective and intent were irrel- the contract until did more to receive if complaint formally evant an score; frames then Canteen made a “better” acceptable legal theory; perhaps he be- proposal picture Board. to the is of all lieved he had discretion to deny sanc- competitors trying corporate to darken the tions even if had violated the legal This apart raises issues worlds color. Rule; perhaps he believed that complaints simple prima facie from case of dis- filed under 1983 are held to lower stan- § appeared crimination that in dards. None of these beliefs have would complaint. however, been Perhaps, correct. the dis- We cannot resolve Canteen’s con judge trict had in mind some other fact or tention that it is entitled to sanctions under argument that we perceive, do not now claim, Rule for the racial discrimination which adequate would have been an basis can clear any argu but we out of this case deny on which to Canteen’s motion. The give ment that a failure to Szabo-Digby a judge’s explain failure to deci- his preference program under the set-aside is deprives sion any us of access to sufficient an itself act racial discrimination or the reasons he have had. basis of an Any adverse inference. consti join We do not now the Fifth tutional claim runs the way. other Minori requiring judges Circuit in find make ty programs set-aside employ race as a ings give explanations and every time a ground decision; any governmental pro party seeks sanctions under Rule gram that hands out benefits on the basis Capital Services, Thomas v. Security of race receives the scrutiny. closest One F.2d at 989. Sometimes the for reason program set-aside scrutiny survived decision is obvious. When the motion for the Supreme Court, see Fullilove Klutz foolish, sanctions is or when the reasons nick, 448 U.S. 100 S.Ct. denying appar colorable motion are (1980), L.Ed.2d with the aid of Con record, ent need not bela gress’s special powers 5 of under § bor the obvious. But when the motion fourteenth amendment and the short dura serious, judge ought to treat with it seri program. tion of the pro Other set-aside ously. $10,000 Canteen wants more than grams adopted by govern state and local in attorneys’ fees. This claim would be ments, unlimited in time or percent with enough support an entire lawsuit under ages not adequately justified, have been diversity jurisdiction, a suit in which a held unconstitutional. See Associated by findings full trial followed and conclu General Contractors California, Inc. v. sions be A necessary. would serious Francisco, San 813 gnat motion is not a be off brushed Cir.1987). See also Days, Drew S. Fulli with the back the hand. This motion love, (1987). 96 Yale L.J. 453 serious; it should have received seri has not contended County’s that Cook set- attention; ous Canteen and this are court program aside is a necessary remedy for explanations. entitled to other violations of the Constitution. The give failure to preference a racial of dubi The judgment of the district court ous constitutionality cannot basis of affirmed the extent it denied Canteen’s fees other- to distinguish, § certain other cases. I am remand, wise is vacated. On persuaded by Szabo-Digby’s claim Ibut pursuit would, shall fix the sanction for the worst, at rate it “incomplete” an objectively frivolous claim. rather than a solid “flunk.” The majority’s The court shall take such evidence and “wackiness” conclusion requires analy- an findings appropriate make such as are sis consuming five dense paragraphs and respect pursuit of the racial discrimi- citing more twenty than possible cases—a nation claim. Circuit Rule 36 apply shall indicator that the result is blindingly not so on remand. obvious bring as to reasonably within the ambit of Rule 11. A similar indicator is the

CUDAHY, Judge, Circuit concurring in fact that one of the “obscure cases” on part dissenting part: which this “frivolous” *12 process due claim was based—Three Cablevision, Rivers I, join I in II Inc. Parts and III of majori- City Pittsburgh, 502 ty opinion F.Supp. company but part it on with of (W.D.Pa.1980) been explicitly ap- Parts and IV V. These sections remand —has proved by an Illinois court approach for its the case to judge another for Rule process. to due Disposal Northwest Judge determinations. Co. v. Holderman denied Village Lake, Fox 119 Ill.App.3d 546, Canteen’s motion for Rule 11 I sanctions. 8, 12, 75 Ill.Dec. feel sure N.E.2d that his well-informed but unem- (1983) (“We recognize very response broidered to this limited motion is solid as process right for and secure a unsuccessful disposition basis for bidders of the as established question sanctions under the opinion as rationale of will be Three Rivers.”).1 a coming new to the matter without

prior exposure, to Judge If the merits. addition, In problems there are real with Holderman imposed sanctions, had we imposing Rule 11 plead- sanctions a might require explanation. well more ing not “warranted existing law or —as approach good The argument revealed in extension, Parts and faith IV V for the majority opinion modification, effectively or trans- reversal of existing law”— forms Rule protector against from a sophistication of the basis litigation, frivolous legal boon to the parties arguments presented to defend the courts, and the into a fomentor pleading of deriva- and the erudition displayed by the litigation, tive a mire for unwary parties responsible counsel. Here counsel are both and overzealous In addition, sophisticated. courts. And Szabo-Digby has cited approach judicial process becomes relevant state and authority sup- federal a task not grading unlike the port process law school its due I claim. But sense examinations. Presumably that, in general, submis- majority’s ap- with the parties sions of the are proach might be marked on a “objectively to what friv- of “A” through scale Anything olous,” “F”. ingenious fall- sophisticated (read and ing on the far side of “C” only expensive) merits not salvage rhetoric can any almost loss of one’s case but position loss of one’s as shirt and avoid sanctions. But beware well. counsel, (or resources) whose research or argumenta- unlimited whose in skills majority finds the due claim tion fall short of finely the most honed. here to be objectively frivolous “wacky” apparently because process, the claim is Due unfortunately, is an area — partially based on “obscure cases,” and creativity where and frivolity sometimes cite, because it fails to rather merge; than strives threaten I be more re- would majority bidder, 1. The mischaracterizes sible and where a decision has been argument by selectively brief, quoting its contract, made to award such a a bidder has supra at merely 1081. summarized having procedure, an interest in not which Rivers, holding adopted Three in North- regulates enjoyment sought, of the benefit Disposal, argued: west when it applied arbitrary capricious in an manner. [Wjhere, here, as requires public state law Appellees’ (emphasis supplied). Brief at 38 contracts to be respon- awarded to the lowest my in handing strained than brethren out rights sanctions for civil claims. For the NATIONAL LABOR RELATIONS today’s

chilling effect of decision will reach BOARD, Petitioner, tellingly as the most meritorious such least. claim as to the Teamsters General Local No. fact-finding remand the race Intervening-Petitioner, v. claim, disposition

discrimination supportable seems less even than the due

process critique, opens pe- new vistas for ADVERTISERS MANUFACTURING ripheral litigation. Again Szabo-Digby COMPANY, Respondent. losing arguments. may have But we now No. 86-2632. point seem almost at the of saying that the question main before the court is not “Are United States Court Appeals, you right?” you but “Are sanctionable?” Seventh Circuit. danger We are in of creating a whole new Argued April 20, 1987. cottage industry of sanctions. I continue to believe the 1983 amendment of Decided June 1987. concept, sound but will surely purpose defeat its if not applied own

wisdom and restraint.2

I would more to accept inclined

judgments courts these

matters generally and not require much

explanation if sanctions are refused. The pursue

alternative is to nit-picking appel-

late review that will add more to our bur-

dens than sanctions for “objectively friv-

olous” cases will take away.

I therefore respectfully dissent re-

spect to IV and Parts V. advisory 2. The supported committee that To assure that the efficiencies achieved 1983 amendment was much through aware of the operation threat plead- more effective litigation poses goals derivative ing regimen to the will not be offset the cost of the amendment. The majority’s holding litigation in sec- satellite imposition over the of sanc- appears sculpt tion V virtually tions, every Rule 11 possible the court must to the extent motion into summary judg- the likeness of scope proceedings limit the sanction motion, perhaps ment Thus, requiring even discovery that ex- record. should be conducted plicit findings of fact and only by court, conclusions of law only leave and then accompany every disposition extraordinary of Rule 11 mo- circumstances. surely tion. roughshod This runs (Notes Comm., over the com- Advisory Fed.R.Civ.P. warnings against mittee's proceedings: Amendment) (emphasis collateral supplied).