Schlafly v. Eagle Forum, No. 19-2174 (8th Cir. 2020)
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Plaintiff, a member of the Board of Directors of Eagle Forum, filed suit against Eagle Forum and others, alleging violations of the organization's bylaws and breach of fiduciary duties in connection with the organization's attempt to remove plaintiff and others from the Board.
The Eighth Circuit held that plaintiff waived the Bylaws claim set forth in his original complaint; the district court did not err in dismissing plaintiff's claim that Eagle Forum violated Illinois law by not permitting proxy voting; the district court acted within the scope of its "informed discretion" by awarding attorneys' fees by relying on its inherent power, because Federal Rule of Civil Procedure 11 was not "up to the task" in this situation; the district court did not abuse its discretion in awarding attorney's fees to Eagle Forum under its inherent power as a sanction against plaintiff for acting in bad faith; the district court provided a reasoned basis for its award of $9,851.25 in attorneys' fees to Eagle Forum by relying on and analyzing the invoice submitted by Eagle Forum.
Court Description: [Smith, Chief Judge, with Colloton and Stras, Circuit Judges] Civil case. On claim that the district court erred in dismissing plaintiff's claim in his original complaint that Eagle Forum improperly removed his as a director without allowing proxy voting in violation of Illinois law, plaintiff's amended complaint did not waive his claim that Eagle Forum violated Illinois law by not permitting proxy voting; applying Illinois's General Not for Profit Corporation Act, the court affirms the district court's dismissal of plaintiff's claim; with respect to plaintiff's appeal of sanctions, the district court acted within the scope of its informed discretion by relying on its inherent power to make a remedial award of attorneys' fees as a sanction against plaintiff because Federal Rule of Civil Procedure 11 was not "up to the task" in this situation because of the time frames involved; no error in making an award of attorneys' fees to defendant under the court's inherent power based on plaintiff's bad faith; the amount of the sanction was not an abuse of the district court's discretion and was supported by the material defendant submitted. Judge Stras, concurring in part and dissenting in part.
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