Ruschel v. Nestlé Holdings, Inc.

89 F. App'x 518
CourtCourt of Appeals for the Sixth Circuit
DecidedFebruary 23, 2004
DocketNo. 02-4251
StatusPublished
Cited by6 cases

This text of 89 F. App'x 518 (Ruschel v. Nestlé Holdings, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Sixth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Ruschel v. Nestlé Holdings, Inc., 89 F. App'x 518 (6th Cir. 2004).

Opinion

OPINION

COLE, Circuit Judge.

Plaintiff-Appellant John Ruschel appeals the district court’s order of September 30, 2002, granting him leave to amend his complaint on the condition that he pay a portion of Defendant-Appellee Nestlé’s attorneys’ fees. The district court imposed this condition to mitigate the prejudice to Nestlé caused by Ruschel’s repeated attempts to avoid confronting the merits of his action. Ruschel also appeals the district court’s follow-up order of October 22, 2002, directing him to pay Nestlé $5,000 in attorneys’ fees.

Because it was within the district court’s discretion to impose this condition on Ruschel’s leave to amend his complaint, we affirm the district court’s orders.

I. BACKGROUND

The dilatory nature of Ruschel’s litigation tactics is clear from the record. Ruschel initially filed suit in state court against Nestlé alleging that it breached a merger agreement related to its December 2001 merger with Ralston Purina Company. After Nestlé moved to dismiss the complaint, Ruschel sought and was granted leave to file an amended complaint, which Nestlé also moved to dismiss. Rather than oppose Nestlé’s motion to dismiss the complaint. Ruschel voluntarily dismissed the action from state court. He next turned to federal court and filed a putative class action complaint in the United States District Court for the Northern District of Ohio. Ruschel re-alleged the breach of contract claim that he initially raised in state court and also alleged a violation of the Securities and Exchange Act.

Prior to Nestlé’s submission of any responsive pleading, Ruschel amended his [520]*520complaint pursuant to Federal Rule of Civil Procedure 15(a), which permits a plaintiff to amend his complaint “once as a matter of course at any time before a responsive pleading is served.” Nestlé moved to dismiss that complaint (“the first amended complaint”). On September 5, 2002, Ruschel sought leave to file a second amended complaint in order to add a claim alleging a violation of Rule 10b-5, 17 C.F.R. § 240.10b-5. On that same day, and before the district court ruled on his motion to file a second amended complaint, Ruschel moved for an unspecified extension of time to respond to Nestlé’s motion to dismiss. Ruschel also asked the district court to permit him to respond first to the federal claim only, such that he would address the state law claim only if the court denied Nestlé’s motion to dismiss the federal claim. Ruschel’s motion stated that his “counsel is still researching state law issues. He will need at least three months to finish researching this claim and draft a final brief.”

On September 17, 2002, Ruschel moved to withdraw his motion for leave to file a second amended complaint. But on September 18, 2002, instead of granting Ruschel’s motion to withdraw, the district court denied Ruschel’s motion to file a second amended complaint, finding the amendment futile because Ruschel failed to allege critical elements of a § 10(b)/Rule 10-b5 violation. The district court also entered marginal orders denying Ruschel’s motion for a bifurcated briefing schedule but granting Ruschel’s motion for an extension of time to respond to Nestlé’s motion to dismiss the first amended complaint.

Ruschel then launched another series of unconventional and dilatory filings designed to terminate his action without prejudice. On September 18, 2002, he filed a notice titled “Dismissal of Securities Violation claim only.” On that same date, he moved for leave to amend his complaint to delete the securities violation claim to the extent that the district court “determines for any reason that Plaintiffs dismissal of those claims was not effective.” Finally, on that date, Ruschel filed a notice titled, “Suggestion of lack of jurisdiction,” asking the district court to dismiss the remaining state law contract claim without prejudice pursuant to Federal Rule of Civil Procedure 12(b)(1), in the event that the court dismissed the federal securities claim. The reason for Ruschel’s filings is clear — he sought to avoid the district court’s ruling on the merits of Nestlé’s motion to dismiss so that he could withdraw his only federal claim and compel the district court to dismiss his action for lack of jurisdiction, thereby permitting him to return to federal or state court at a later date.

Having already filed a motion to dismiss the first amended complaint, Nestlé opposed Ruschel’s motion to amend his complaint for a second time, which would have the effect of deleting the only federal cause of action (and thereby lead to dismissal of the case, yet again, without having the merits of Nestlé’s motion addressed). Nestlé asked the district court to condition the grant of leave to amend — which would trigger dismissal of Ruschel’s action — on Ruschel’s paying a portion of Nestlé’s attorneys’ fees.

Ruschel’s dilatory and peculiar pleadings persisted. Prior to the district court ruling on Ruschel’s motion for leave to amend his complaint to remove the federal cause of action. Ruschel unilaterally filed an amended complaint asserting only the state law contract claim. After the district court issued an order four days later, on September 30, 2002, granting Ruschel leave to amend but conditioning it upon his paying a portion of Nestlé’s attorneys’ [521]*521fees, Ruschel again filed his amended complaint pleading only the state law contract claim.

In its order of September 30, 2002, the district court granted Ruschel leave to amend his complaint to remove the federal claim, conditioning the leave upon Ruschel’s paying a portion of Nestlé’s attorneys’ fees incurred in preparing its motion to dismiss, which was rendered moot by Ruschel’s amending his complaint for a second time. The district court also dismissed the remaining state law claim without prejudice. Cumulatively, the effect of the September 30 order was the dismissal of Ruschel’s action from the district court. The district court justified its conditioning Ruschel’s leave to amend on his paying a portion of Nestlé’s attorneys’ fees based on what the district court called Ruschel’s “continuous course of conduct” and “obvious intentions” to “avoid confronting the merits of his action.”

As instructed by the district court, Nestlé submitted substantiation of the attorneys’ fees that it incurred in filing its motion to dismiss Ruschel’s first amended complaint. Although Nestlé sought $11,065.61 in fees, in an order dated October 22, 2002, the district court awarded it $5,000. The court indicated that it was “not questioning the integrity of the affidavit substantiating defendant’s attorneys’ fees.” but was simply exercising its discretion to award a lesser amount. The district court also reiterated that it directed Ruschel to pay a portion of Nestlé’s attorneys’ fees “to deter plaintiffs continuous course of conduct of avoiding confronting the merits of his action.”

Ruschel now appeals (1) the order of September 30, 2002, granting him leave to amend his complaint on the condition that he pay a portion of Nestlé’s attorneys’ fees and (2) the order of October 22, 2002, awarding Nestlé $5,000 in attorneys’ fees.

II. DISCUSSION

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