March 17, 1993 [NOT FOR PUBLICATION]
UNITED STATES COURT OF APPEALS FOR THE FIRST CIRCUIT
No. 92-1985
TROPICANA PRODUCTS, INC.,
Plaintiff, Appellee,
v.
VERO BEACH GROVES, INC.,
Defendant, Appellant.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Robert E. Keeton, U.S. District Judge]
Before
Torruella, Cyr and Boudin, Circuit Judges.
Steven J. Comen, William R. Moore, Michael C. Fee and
Hinckley, Allen & Snyder on Motion in Opposition to Motion for
Costs and Attorneys' Fees, for appellant. Robert F. Sylvia, Steven J. Comen, Michael C. Fee, William
R. Moore and Hinckley, Allen & Snyder on Further Opposition to
Motion for Costs and Attorneys' Fees, for appellant. R. Mark McCareins, W. Gordon Dobie, John M. Bowler, Winston
& Strawn, Gary R. Greenberg, Goldstein & Manello, P.C., and
Steven B. Gold on Motion for Costs and Attorneys' Fees and
Memorandum in Support, for appellee.
Per Curiam. Tropicana Products, Inc. is seeking
to recover double costs, expenses, and attorneys' fees
against both Vero Beach Groves, Inc. and its counsel,
Hinckley, Allen & Snyder, under Fed. R. App. Proc. Rules 38
and 39 and 28 U.S.C. 1927 for bringing an allegedly
frivolous appeal. We deny the motion for double costs,
attorneys' fees and sanctions under Rule 38 and 28 U.S.C.
1927, but award Tropicana its costs under Rule 39.
I. Background
In May 1992, Tropicana sued Vero Beach for damages
and preliminary and permanent injunctive relief, claiming
that it had violated and continued to violate a prior consent
judgment of the district court and section 43(a) of the
Lanham Act, 15 U.S.C. 1125(a), by its print advertisements
and television commercials comparing Tropicana's pasteurized
orange juice with Vero Beach's non-pasteurized, fresh-
squeezed orange juice. The advertising in question depicted
a carton of Tropicana Pure Premium orange juice atop an open
gas flame next to a carton of Vero Beach's Honestly Fresh
Squeezed orange juice chilling on a block of ice. The
accompanying text stated that ". . . Tropicana cooks their
juice before they package it. So when you see the word
'pasteurized' on their carton, you know it has been cooked.
Honestly Fresh Squeezed orange juice is never cooked. That's
why we can call it fresh squeezed . . . ."
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After a hearing, the district court granted
Tropicana a temporary restraining order, determining that the
statement that Tropicana "cooked" its orange juice, together
with the picture of its orange juice over an open flame,
misrepresented the nature of Tropicana's flash pasteurization
process. After a further hearing, the court on July 23
granted Tropicana's request for a preliminary injunction. At
that time, a full trial on Tropicana's request for a judgment
of contempt and a permanent injunction had already been
scheduled for November 23.
On August 6, Vero Beach appealed the preliminary
injunction. Its initial brief was due September 24, but
approximately one week before the due date Vero Beach sought
an extension of time in which to file the brief. It
requested the extension because it wished to await the
results of settlement discussions through the Civil Appeals
Management Program (CAMP) which were scheduled for October 5.
Two days after the CAMP hearing had failed to produce a
settlement, Hinckley, Allen moved to withdraw as counsel in
the district court proceedings because Vero Beach had not
paid it any legal fees since the suit had begun. It also
filed a motion requesting the district court to stay
discovery and postpone the trial on the merits to permit Vero
Beach time to find new counsel. On October 30, Vero Beach
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filed a second motion to extend the time for filing briefs so
that it could seek substitute counsel.
On November 2, the district court granted Hinckley,
Allen's motion to withdraw and informed Vero Beach that
corporations could not litigate pro se in this circuit so
that it would have to accept a default judgment if it did not
find new counsel. The district court also denied Vero
Beach's motion to stay discovery and continue the trial. In
a letter to Tropicana dated November 10 and forwarded to the
district court, Vero Beach stated that it would accept a
default judgment given its deteriorating financial condition
and the fact that it could not proceed pro se. On November
23, the court entered a default judgment against Vero Beach,
finding that it had willfully violated the consent judgment
and permanently enjoining it from any false or deceptive
advertising or any comparative advertising relating to any
Tropicana product.
On November 30, Hinckley, Allen filed a motion
under Fed. R. App. Pro. Rule 42(b), to which Tropicana
assented in a telephone call, moving the court to dismiss
Vero Beach's appeal from the preliminary injunction. As
grounds for the motion, the firm cited its withdrawal as
counsel for Vero Beach in the district court and the fact
that the default judgment below rendered the appeal moot.
This court ordered the appeal dismissed. Tropicana then
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filed its motion for costs and attorneys' fees against both
Vero Beach and Hinckley, Allen.
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II. Discussion
Tropicana's request for costs is clearly justified.
Rule 39 states that, "[e]xcept as otherwise provided by law,
if an appeal is dismissed, costs shall be taxed against the
appellant unless otherwise ordered . . . ." As noted, Vero
Beach voluntarily dismissed its appeal under Rule 42(b),
which provides that "[a]n appeal may be dismissed on motion
of the appellant upon such terms as may be agreed upon by the
parties or fixed by the court."1 Presumably, a voluntary
dismissal under Rule 42 would come within the terms of Rule
39, particularly since the notice of dismissal filed in this
case did not contain any indication as to who would pay the
costs of the appeal and Rule 39 addresses that issue. See
Atlantic Coast Line R. Co. v. Wells, 54 F.2d 633, 634 (5th
Cir. 1932) (costs of appeal dismissed by appellant as moot
were taxed against appellant under a rule awarding costs to
1. Rule 42(b) also provides that "[i]f the parties to an appeal . . . shall sign and file with the clerk of the court of appeals an agreement that the proceeding be dismissed, specifying the terms as to payment of costs, and shall pay whatever fees are due, the clerk shall enter the case dismissed, . . . ." Since Vero Beach's motion to dismiss, though assented to by Tropicana, contained no terms specifying who would pay the costs and fees and dismissal was effected through an order of this court, the appeal was actually dismissed under the portion of the rule quoted above in the text of our opinion. See Clarendon Ltd. v. Nu-West
Industries, Inc., 936 F.2d 127, 128 (3d Cir. 1991).
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appellee whenever an appeal is dismissed, except for
jurisdictional reasons).
Rule 38 provides that the court may award "just
damages and single or double costs to the appellee" if it
determines that an appeal was "frivolous." Just damages
includes attorneys' fees. Applewood Landscape & Nursery Co.
v. Hollingsworth, 884 F.2d 1502, 1508 (1st Cir. 1989). An
appeal is frivolous if the "result was obvious," the
"overwhelming weight of precedent militate[d] against
[appellant's] position," or there was "no legitimate ground"
for the appeal, or if the appellant failed to set forth facts
to support its legal theory. E.H. Ashley & Co. v. Wells
Fargo Alarm Services, 907 F.2d 1274, 1280 (1st Cir. 1990).
To find an appeal frivolous, the court need not find that it
was brought in bad faith or with malice. "[I]t is enough
that the appellants and their attorney should have been aware
that the appeal had no chance of success." Id. (emphasis in
original).
Under 28 U.S.C. 1927, "any attorney . . . 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 conduct." An attorney's
bad faith in bringing an appeal will always justify sanctions
under section 1927, but bad faith need not be shown to obtain
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sanctions. Cruz v. Savage, 896 F.2d 626, 631-32 (1st Cir.
1990). Rather, sanctions are justified "if an attorney's
conduct in multiplying proceedings is unreasonable and
harassing or annoying" in an objective sense. "It is enough
that an attorney acts in disregard of whether his conduct
constitutes harassment or vexation, thus displaying a
'serious and studied disregard for the orderly process of
justice.'" Id. (citation omitted). However, the conduct
must be "more severe than mere negligence, inadvertence, or
incompetence . . . ." Id. Bringing a "frivolous, dilatory
and vexatious" appeal would warrant an award of double costs
against an attorney under Rule 38 and an award of attorneys'
fees under section 1927. Id. at 635.
Accordingly, Tropicana's ability to obtain double
costs and attorneys' fees against Vero Beach and Hinckley,
Allen turns essentially on the question whether the appeal
was frivolous, although Tropicana could also recover if it
showed bad faith, unreasonable or vexatious conduct in
"multiplying" the proceedings, or some "serious and studied
disregard for the orderly process of justice." Tropicana
alleges that Vero Beach's likelihood of persuading this court
to vacate the preliminary injunction was "non-existent" and
decries the "total and obvious meritlessness" of the appeal.
Yet it makes no attempt to explain to us why the appeal was
substantively frivolous -- its brief is devoid of any
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reference to the legal issues considered by the district
court in granting the injunction. Because Tropicana has not
addressed the issue, and this appeal was dismissed before the
parties submitted their briefs, we do not consider whether
the appeal had merit or was substantively frivolous.
Tropicana argues that the decision to appeal the
preliminary injunction was ill-considered, wasteful of
judicial resources and caused undue expense for Tropicana.
Thus, its argument appears to be one based essentially on
section 1927 standards -- that Vero Beach and Hinckley, Allen
unreasonably and vexatiously multiplied proceedings and
showed a disregard for the orderly process of justice in
bringing the appeal in the first place and then in not
prosecuting it appropriately. To support its argument,
Tropicana makes the following points. Hinckley, Allen must
have known to a certainty that the appeal would not be heard
before the full trial on the merits, yet the firm did not
file a motion for an expedited hearing.2 To make matters
worse, the firm did not file a timely appellate brief, but
twice sought extensions. In fact, as it turned out, Vero
2. Tropicana also states that Vero Beach's appeal was interlocutory and "not certified for immediate or expedited appeal," but does not elaborate on this point. We do not understand why the appeal should have been certified since 28 U.S.C. 1292(a) clearly gives this court jurisdiction over appeals from "[i]nterlocutory orders of the district courts of the United States . . . granting . . . injunctions . . . ."
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Beach never filed any brief at all. Moreover, Hinckley,
Allen failed to move promptly to dismiss the appeal or
withdraw its appearance before this court after it moved to
withdraw as counsel for Vero Beach in the district court.
Vero Beach did not stipulate to dismiss the appeal until
after it was defaulted in the district court, and its
decision to accept the default judgment rather than retain
successor counsel demonstrated that it had never been serious
about the appeal. Furthermore, once the parties had agreed
to dismiss the appeal, Hinckley, Allen filed its motion to
dismiss the appeal without first forwarding a draft copy of
the motion to Tropicana for inclusion of terms on the payment
of costs and fees, as Tropicana had expressly asked it to do.
Finally, the appeal was basically motivated by a desire "to
get away from Judge Keeton who was well versed in the facts
and applicable law, and [to] obtain a more friendly forum in
the court of appeals."
The points made by Tropicana do not persuade us to
award double costs and attorneys' fees against Vero Beach and
Hinckley, Allen. Although it was not a "certainty", as
Tropicana asserts, that the appeal would not be decided
before the trial on the merits, it is probably true that a
decision by us before the trial was unlikely. It is also
true that Hinckley, Allen did not file a motion for an
expedited appeal, but its failure to do so does not mean that
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the appeal was ill-considered. Hinckley, Allen did attempt
to stay discovery and to continue the trial in the district
court. Although it filed its stay motion two months after it
had noticed its appeal, the motion was filed almost two
months before the date of the trial. Had the motion been
granted, a matter which was outside its control, the appeal
would have been heard before the trial on the merits.
Furthermore, Vero Beach's motions to extend the
time for filing its brief were made for good cause. The
record shows that the parties were unable to schedule the
CAMP hearing until after Vero Beach's brief was due because
the judge who was to preside over the hearing was unavailable
before that time. It was no abuse of process for Vero Beach
to request an extension of time under those circumstances.
Had Vero Beach timely filed its brief and then settled the
case, it would have incurred an unnecessary expense, a very
legitimate concern for a company in financial trouble. Since
Vero Beach's brief was due almost two weeks before the CAMP
hearing, Tropicana would likely have begun preparing its
response before the hearing was held, thereby incurring its
own expenses that would have proven unnecessary had the case
settled. In addition, Vero Beach moved to extend the initial
time for filing its brief over a week before the brief was
actually due, further indicating that it sought the extension
for valid reasons and not just as a delaying tactic.
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The second extension which Vero Beach requested was
also justified. It seems clear that Vero Beach needed some
reasonable period of time in which to seek new counsel after
Hinckley, Allen announced its desire to withdraw its
representation. The request for an extension until the end
of November was not excessive -- not only did Vero Beach need
to locate new counsel, but its new counsel would have had to
review the lengthy record below, evaluate the issues and
prepare a brief. At the time the extension was requested,
the district court had not yet denied Vero Beach's motion to
postpone the trial on the merits so that further action on
the appeal was feasible. Accordingly, we conclude that
Hinckley, Allen and Vero Beach acted reasonably in seeking
these extensions, in a way calculated to save both parties
unnecessary expenses and to conserve the resources of this
court as well.
We see no improper dilatoriness in Hinckley,
Allen's failure to seek immediately to withdraw its appellate
representation of Vero Beach or to have the appeal dismissed
after it filed its motion to withdraw as counsel for Vero
Beach in the district court. Hinckley, Allen informed
Tropicana at the hearing on November 2 that its withdrawal
from representation would apply to the appeal as well and
that Vero Beach's new counsel should be permitted to
determine the status of the appeal, a point that seems to us
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an indisputably valid one. The firm also arguably had an
obligation to ensure that its withdrawal from representation
proceeded in a way that would not adversely impact Vero
Beach's interests, and permitting Vero Beach a reasonable
period of time to find new counsel who could evaluate whether
the appeal should proceed would be consistent with that
obligation. Cf. ABA Model Rules of Professional Conduct,
Rule 1.16(b) ("a lawyer may withdraw from representing a
client if withdrawal can be accomplished without material
adverse effect on the interests of the client"); id. (d)
("[u]pon termination of representation, a lawyer shall take
steps to the extent reasonably practicable to protect a
client's interests, such as . . . allowing time for
employment of other counsel . . . ."); see also ABA Model
Code of Professional Responsibility, DR 2-110(A)(2) ("In any
event, a lawyer shall not withdraw from employment until he
has taken reasonable steps to avoid foreseeable prejudice to
the rights of his client, including giving due notice to his
client, allowing time for employment of other counsel, . . .
."). Moreover, the transcript of the November 2 hearing
shows that, already then, Vero Beach was attempting to find
new counsel, but having difficulty doing so. Under the
circumstances, Hinckley, Allen may have decided that it made
most sense to continue its representation at the appellate
level in case it was needed to file a motion to dismiss the
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appeal on Vero Beach's behalf, which, as it turned out, the
firm eventually did.
We doubt that Tropicana means to suggest seriously
that Hinckley, Allen had some obligation to try to dismiss
the appeal on its own since only Vero Beach could make the
definitive decision to do so. Nor does Vero Beach's failure
to dismiss the appeal until November 30 seem to us to have
been unduly untimely. In Tropicana's presence, Vero Beach
was informed on November 2 that it could not litigate in this
circuit without being represented by counsel. By letter sent
eight days later, it informed Tropicana and the district
court that, given its deteriorating financial condition, it
would not retain new counsel and would accept a default
judgment on November 23. Thus, within two weeks after the
conditions arose which made it more difficult for Vero Beach
to proceed before the district court or to prosecute its
appeal, Tropicana knew that it would win in the district
court and that the appeal would have to be dismissed. Under
those circumstances, the failure to formally file the motion
to dismiss until the end of November cannot be regarded as a
vexatious, annoying or unreasonably dilatory action.
Moreover, our docket indicates that no action on the appeal
was taken by either party or by the court in November, so
that the failure to dismiss the appeal earlier in November
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clearly caused no undue expense for Tropicana or waste of
judicial resources.3
Nor are we persuaded that Vero Beach's decision to
accept a default judgment in the district court shows that it
had not brought its appeal seriously. As the record
demonstrates, the district court informed Vero Beach that it
would have to accept a default judgment if it did not find
substitute counsel since a corporation may not appear pro se
in this circuit. The record also shows Vero Beach's poor
financial condition, which had rendered it unable to pay
Hinckley, Allen's bills and apparently had also made it
impossible to find replacement counsel. Given this
unresolvable tangle, Vero Beach's acceptance of the default
judgment cannot possibly reflect adversely on its motivation
in bringing the appeal in the first place.
Tropicana suggests that Hinckley, Allen
deliberately filed its assented-to motion to dismiss the
appeal before Tropicana could append its statement of costs
and fees to the motion. A careful reading of Tropicana's
asseverations regarding the relevant events suggests no such
deliberateness. In its memorandum supporting its motion for
fees and costs, Tropicana states that it informed William
3. We realize that Tropicana sent a letter to the clerk of this court on November 3, to which the clerk responded, but Tropicana's letter responded to the court's October 30th order granting Vero Beach a second extension of time for filing its brief.
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Moore, a Hinckley, Allen attorney, in a telephone
conversation on November 25 that it would agree to dismiss
the appeal, but that it intended to "seek an Order" for costs
and fees. As phrased, Tropicana's comment is fully
consistent with an intent to file a separate petition for
fees with this court, which it eventually did. The specific
request that Hinckley, Allen send it a draft motion
dismissing the appeal so that it could append its request for
fees and costs to the motion was made separately in a letter
dated November 25, the same day the phone conversation took
place. Although that letter was sent by facsimile and thus
presumably arrived the day it was sent, it was addressed to a
different Hinckley, Allen attorney, Steven Comen, and not to
Moore who appears to have been the one responsible for
preparing the motion. November 25 was the day before
Thanksgiving. Moore filed the motion to dismiss by mailing
it on Monday, November 30, the first business day after the
intervening weekend. In its memorandum opposing Tropicana's
request for fees, Hinckley, Allen explains that "[t]he letter
. . . due to the Thanksgiving holiday crossed paths with the
Assented-to Motion." From that we infer that Hinckley, Allen
is saying that, because of the holiday, Comen did not receive
Tropicana's letter in time to direct Moore to send a draft of
the motion to dismiss to Tropicana before filing the motion
with this court. The present record gives us no reason to
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doubt the firm's explanation, although we note that it is
somewhat ambiguously phrased.
We need not spend long on Tropicana's allegation
that Vero Beach brought its appeal in an attempt to find a
more receptive forum for its arguments. Absent a showing
that the appeal itself had no substantive legal merit, that
motivation alone would not support an award of double costs
and attorneys' fees. We have no doubt that appeals are
generally brought in an attempt to receive more favorable
treatment from us than that accorded by the trial court.
III. Conclusion
Tropicana's request for costs under Rule 39 is
granted. Its request for double costs and attorneys' fees
under Rule 38 and for sanctions under 28 U.S.C. 1927 is
denied.
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