United States District Court, D. Minnesota
Erick G. Kaardal and James V.F. Dickey, Mohrman, Kaardal & Erickson, P.A., Counsel for Plaintiffs.
Joseph F. Halloran, Mary B. Magnuson, Sara K. Van Norman, and Michael L. Murphy, Jacobson, Magnuson, Anderson & Halloran, P.C., and Jacobson Law Group, Counsel for Defendant Lower Sioux Indian Community in Minnesota.
Bradley N. Beisel and David J. Krco, Beisel & Dunlevy, P.A., Counsel for Defendants Dennis A. Auslam and Michelle D. Auslam, Lyle Black Living Trust, Scott A. Olafson and Kimberly A. Olafson, John H. Reynolds and Jeanne A. Reynolds, Allen J Kokesch and Jacalyn S. Kokesch, Prouty Properties, LLC, Thomas J. Heiling, Paul W. Schroeder and Karen J. Schroeder, John Hogan, Bruce Robert Black, Lila L. Black, Douglas Scherer and Brenda Scherer, Charles Case, Enid Guggisberg, et al., Marlene A. Platt Revocable Living Trust, William Schmidt and Norma Schmidt, Simmons Valley Trust, Willard Scherer and Eugenie Scherer, Henry G. O' Neil and Judith A. O' Neil, Lee H. Guggisberg Trust, Harold Guggisberg, Julie Anna Guggisberg, George F. Schottenbauer, Sandra Clarken, et al., Keefe Family Farm LLC, John C. Simmons and Mary J. Simmons, Neil and Donna Berger Family [Trust], TJ & CC Properties LLC, Sherman Acres, LLC, and Charles D. Neitzel; Robert G. Benner, Dunlap & Seeger, P.A., Co-Counsel for Defendant Kenneth Larsen.
Garth J. Unke and Louise A. Behrendt, Stich, Angell, Kreidler, Dodge & Unke and Richard A. Duncan, and Michelle E. Weinberg, Faegre Baker Daniels LLP, Counsel for Defendants Elmer C. Dahms and Barbara L. Dahms, Melvin W. Maddock and Kerry D. Maddock, Timothy Kerkoff and Theresa J. Kerkoff, Brent Prouty (Prouty Properties, LLC) Charles Case, Kim M. Cunningham and Mitchell H. Unruh.
Michelle Christensen, HKM Law Group, Counsel for Defendants Janie K. Crooks, Rockford L. Crooks, Eugene A. Engstrom, Alice Goelz, Francis Goelz, John Goelz, John Goelz III, Nancy S. Hansen, Patrick T. Hansen, Dawn R. Helmer, Steven R. Helmer, Cynthia Johnson, Allen J. Kokesch, Jacalyn S. Kokesch, Kelly M. Lipinski, Amy M. Lund, Chad M. Lund, Jon Lussenhop, Larry Lussenhop, and Michael R. Rasmussen.
Ken D. Schueler, Robert G. Benner and Jennifer M. Peterson, Dunlap & Seeger, P.A., Counsel for Defendants Julie Anna Guggisberg, Dale R. Hanna, Nancy Hanna, Robert D. and Lori A. Rebstock, Jon Lussenhop, John C. Simmons, and Mary J. Simmons, Lee H. Guggisberg Trust UWT, Scott A. Olafson and Kimberly A. Olafson.
Zachary W. Peterson, Richardson, Wyly, Wise, Sauck & Hieb, LLP, and Kevin A. Velasquez, Blethen, Gage & Krause, PLLP, Counsel for Defendant Edward J. Gaasch.
Jessica E. Schwie and Nicholas M. Matchen, Jardine Logan and O'Brien, PLLP, Counsel for Defendants Redwood County, Renville County, Sibley County, Paxton Township, Sherman Township, Honner Township, Birch Cooley Township and Moltke Township; Glen Jacobsen, Renville County, Co-Counsel for Defendant Renville County ("Municipal Defendants").
MEMORANDUM OF LAW & ORDER
MICHAEL J. DAVIS, Chief District Judge.
I. Summary of Decision
In this case, Plaintiffs seek possessory rights and damages concerning a twelve square mile area of land in southwestern Minnesota. In order to obtain such relief, Plaintiffs sought to eject an Indian Tribe from reservation lands and seventy-five private landowners who, together with their ancestors, have possessed the land at issue for over one hundred and fifty years.
Prior to bringing this action, Plaintiffs and their counsel, Erick Kaardal, litigated related claims against the United States before the Court of Federal Claims for over eleven years, which resulted in nine published opinions. A review of those nine opinions demonstrates the breadth and depth of the issues that were actually litigated. Those nine opinions also assist in demonstrating that the claims asserted in this case are so completely frivolous and without a factual or legal basis that they had to have been brought in bad faith. As will be discussed in detail below, such conduct warrants severe sanctions against both Plaintiffs and their counsel.
Accordingly, the Court will grant Defendants' motions for sanctions and order Plaintiffs and their counsel to pay Defendants their reasonable attorney's fees and costs. In addition, Plaintiffs shall post an appeal bond in the amount of $200, 000.
On May 20, 2014, Plaintiffs commenced this action seeking damages and possession of certain lands on behalf of themselves and others similarly situated. Plaintiffs claim to be the lineal descendants of a group of Mdewakanton Sioux who assisted white settlers during the Sioux uprising in 1862, and whose conduct was recognized by Congress in Section 9 of the Act of February 16, 1863 ("1863 Act".
[T]he Secretary of the Interior is hereby authorized to set apart of the public lands, not otherwise appropriated, eighty acres in severalty to each individual of the before-named bands who exerted himself in rescuing the whites from the late massacre [by] said Indians. The land so set apart... shall not be aliened or devised, except by the consent of the President of the United States, but shall be an inheritance to said Indians and their heirs forever.
1863 Act, 12 Stat. at 654.
Plaintiffs further allege that in 1865, the Secretary used his authority under the 1863 Act to set aside a 12 square mile reservation for the loyal Sioux, and as a result, Plaintiffs have the right to exclusive title, occupancy and use and the right of quiet enjoyment to such 12 square mile reservation. The named defendants in this case are those individuals or entities that currently possess lands or hold property rights to land within the 12 square mile reservation at issue. Plaintiffs allege the proposed class is believed to exceed 20, 000 members.
Despite the fact that Plaintiffs' claims accrued approximately one hundred and fifty years ago, Plaintiffs asked the Court to eject the defendants from the land and to award Plaintiffs' trespass damages. In other words, Plaintiffs sought a remedy that would result in private landowners being dispossessed of lands and real property that they and their ancestors had owned for over a hundred years, an Indian tribe being dispossessed of reservation lands that are held in trust for the tribe by the United States, municipalities losing the ability to obtain reimbursement in the form of taxes and assessments for the building of roads and other improvements, and a church being forced to move from land that was transferred to the Reverend Henry Whipple, Episcopal Bishop, from Andrew Good Thunder for the sum of $1.00.
By Order dated March 5, 2015, this Court granted Defendants' motions to dismiss this action with prejudice. The Court found that not only did Plaintiffs fail to assert a claim for relief, but that the action had to be dismissed for the equitable reason that Plaintiffs had waited too long to bring an action with respect to the property at issue. In addition, the Court found that it had no subject matter jurisdiction to address the claims against the Lower Sioux Indian Community (the "Community") as the Community was entitled to sovereign immunity against the claims asserted. Plaintiffs have filed a notice of appeal to the Eighth Circuit Court of Appeals.
This matter is now before the Court on the Defendants' motions for sanctions pursuant to Rule 11 of the Federal Rules of Civil Procedure, 28 U.S.C. § 1927 and this Court's inherent authority on the grounds that Plaintiffs and their counsel knowingly commenced and prosecuted this frivolous action on legal theories that are not supported by existing law or that involve a nonfrivolous argument for extending, modifying or reversing existing law or to establish new law.
The Defendants also move the Court to order Plaintiffs to post an appeal bond covering the costs of the appeal itself and the potential damages to be incurred by Defendants as a result of having the titles on their property clouded by the pending appeal. Also before the Court is Plaintiffs' motion to take judicial notice and the Municipal Defendant's motion to review taxation of costs.
Pursuant to Rule 11(b) of the Federal Rules of Civil Procedure, when filing a complaint, motion or other pleading, the attorney:
certifies to the best of the person's knowledge, information, and belief, formed after an inquiry reasonable under the circumstances:
(1) it is not being presented for any improper purpose, such as to harass, cause unnecessary delay, or needlessly increase the cost of litigation;
(2) the claims, defenses, and other legal contentions are warranted by existing law or by a nonfrivolous argument for extending, modifying, or reversing existing law or for establishing new law;
(3) the factual contentions have evidentiary support or, if specifically so identified, will likely have evidentiary support after a reasonable opportunity for further investigation or discovery...
"If, after notice and a reasonable opportunity to respond, the court determines that Rule 11(b) has been violated, the court may impose an appropriate sanction on any attorney, law firm, or party that violated the rule or is responsible for the violation. Absent exceptional circumstances, a law firm must be held jointly responsible for a violation committed by its partner, associate, or employee." Rule 11(c)(1).
Rule 11 further provides:
A motion for sanctions must be made separately from any other motion and must describe the specific conduct that allegedly violates Rule 11(b). The motion must be served under Rule 5, but it must not be filed or be presented to the court if the challenged paper, claim, defense, contention, or denial is withdrawn or appropriately corrected within 21 days after service or within another time the court sets. If warranted, the court may award to the prevailing party the reasonable expenses, including attorney's fees, incurred for the motion.
Fed. R. Civ. P. 11(c)(2).
In determining whether an attorney has violated Rule 11(b), the Court must determine whether a reasonable and competent attorney would believe in the merit of the argument contained in the pleading. Murphy v. Aurora Loan Serv., Inc., 859 F.Supp.2d 1016, 1019 (D. Minn. 2012) aff'd and remanded, 518 F.Appx. 511 (8th Cir. 2013) (citing Coonts v. Potts, 316 F.3d 745, 753 (8th Cir. 2003)). "Arguments for the extension, modification, or reversal of existing law do not violate Rule 11 if they are not frivolous under an objective standard." Charland v. Little Six, Inc., 112 F.Supp.2d 858, 861 (D. Minn. 2000). Rule 11 is violated, however, "when a party invokes jurisdiction of the federal courts without justification." Id. at 862.
When addressing a motion for sanctions, the Court should consider the factual basis for the filing, the legal issue of "whether a pleading is warranted by existing law or a good faith argument for changing the law" and whether an appropriate sanction exists to deter the improper conduct. Murphy, 859 F.Supp.2d at 1020 (citing Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 399 (1990)).
In addition to the sanctions available pursuant to Rule 11, this Court possesses the inherent authority to impose sanctions for bad faith conduct during litigation. See Chambers v. NASCO, Inc., 501 U.S. 32, 46 (1991). "These powers are governed not by rule or statute but by the control necessarily vested in courts to manage their own affairs so as to achieve the orderly and expeditious disposition of cases." Id. (quoting Link v. Wabash R. Co., 37 U.S. 626, 630-31 (1962)).
Because of their very potency, inherent powers must be exercised with restraint and discretion. A primary aspect of that discretion is the ability to fashion an appropriate sanction for conduct which abuses the judicial process. As we recognized in Roadway Express, outright dismissal of a lawsuit, which we had upheld in Link, is a particularly severe sanction, yet is within the court's discretion. Consequently, the "less ...