-CAN Firth et al v. Gangluf et al, No. 3:2010cv00068 - Document 41 (N.D. Ind. 2010)
Court Description: OPINION AND ORDER granting 28 MOTION for Summary Judgment filed by Matt Chupp as to Count I of the complaint and in all other respects is denied without prejudice to being refiled in the state court following remand; and denying 30 MOTION for Sanctions deposition of Firth and interrogatory answers filed by Matt Chupp. Signed by Chief Judge Philip P Simon on 12/27/2010. (kds)
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-CAN Firth et al v. Gangluf et al Doc. 41 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF INDIANA SOUTH BEND DIVISION ROBERT FIRTH and FAN ACTION, INC., ) ) ) Plaintiffs, ) ) v. ) ) MATT CHUPP, AARON TAYLOR, ) AARON DEVINE, INTERNET ) BUSINESS SOLUTIONS, AND ) COLOSTORE, ) ) Defendants. ) -----------------------------------------------------ROBERT FIRTH and ) FAN ACTION, INC., ) ) Plaintiffs, ) ) v. ) ) WILLIAM GANGLUF and ) UNIVERSITY OF NOTRE DAME ) DU LAC, ) ) Defendants. ) Case No. 3:09CV512-PPS/CAN consolidated with: Case No. 3:10CV68-PPS/CAN OPINION AND ORDER Plaintiffs Robert Firth and Fan Action, Inc. filed two lawsuits in the Circuit and Supe rior Courts of St. Joseph County, Indiana arising out of allegations of the faithlessness of their former employee, Matt Chupp. The first lawsuit (cau number 3:09cv512), filed on September 29, 2009, se named as defe ndants Chupp, Aaron Taylor, Aaron Devine, Internet Business Solutions, and Colostore. The second com plaint (cause number 3:10cv68), f iled Fe bruary 4, 2010, nam ed as defendants William Gangluf and the University ofNotre Dame du Lac. Both lawsuits were rem oved to t his c ourt by the defendants who had been se rved and entered their appearance, nam ely all Dockets.Justia.com defendants except Aaron Taylor. Once in this court, the two cases have been consolidated. [DE 23]. Since then, the claim against defendant Colost re [DE 38] and defendant Gangluf and Notre Dam s o s e [DE 42] have been dismissed. In their Notice of Removal, Taylor’s co-defendants in Cause No. 3:09cv512 asserted that, on information and belief, defendant Taylor had not been properly served [DE 2 at ¶8]. Following the issuance of an order to show cause concerning tim ely service on Taylor, plaintiffs have acknowledged that they were unable to obtain service on Taylor and have agreed to his dismissal. [DE 54]. All claim against defendant Aaron Tayl r will therefore be dism s o issed without prejudice. 1 Now before me are a m otion for summary judgment filed by defendants Chupp, Devine and Internet Business Solutions, and defendant Chupp’s motion for sanctions under Fed.R.Civ.P. 11. Motion for Sanctions The motion for sanctions is predicated on the ba selessness of Count I of plaintiffs’ Verified Complaint, a claim for “Contributory and Vicari ous Copyright Infringem ent Pursuant to the Copyright Act, 17 U.S.C. 101 et seq.” The gist ofRule 11(b) provides that an attorney’s “signing, filing, submitting, or later advocating” any pleading, m otion or other paper constitutes his or her certification that the m atter is “not being pres ented for any im proper pur pose,” that the legal contentions are “warranted by existing law or by a nonfrivolous argument,” and that the “factual contentions have evi dentiary support or...will likely have evidentiary support” after discovery. Where a 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.” Fed.R.Civ.P. 11(c)(1). 1 The summary judgment motion identifies the defendant as Aaron “Divine” rather than “Devine,” as he is denominated in plaintiffs’ pleadings. 2 Chupp seeks sanctions against plaintiff Firth i dividually, against Firth’s original attorney, n Doug Bernacchi, and his current counsel, Chelsea Pejic. Because Rule 11(b) expressly applies to “an attorney or unrepresented party,” it does not appear to support the im position of sanctions on plaintiff Firth personally here, because he is neither an attorney nor a party acting pro se. The attorney who drafted and filed the Verified Com plaint has since withdrawn from the case, and I am not persuaded that he was properly served with a copy of the motion for sanctions. Movants’ certificate of service does not include attorney Bernacchi in its list of recipients, but indicates that service was via the CM/ECF system The Notice of Electronic Filing associated with . the Motion f or Sanctions lists two e-m ail addresses f or attorney Bernacchi (under the now terminated Case Number 3:10cv68, rather than 3:09cv512). However, even if Bernacchi received the e-mail notification of the filing in a case in which he was no longer counsel of record, I cannot assume that Bernacchi would have opened and read th filing, particularly as it was identified in the e docket entry as a m otion for sanctions relating to a deposition and interrogatory answers whic h occurred after Bernacchi’s withdrawal fromthe case. Further, the record contains no indication that Bernacchi was served with the “safe harbor” copy of the motion prior to its filing wi th the court, which would have allowed him an opportunity to attempt any corrective measures. I conclude that Rule 11 sanctions cannot properly be considered ag attorney Bernacchi because the record does ainst not establish that he was given adequate noticeof the motion and the opportunity to defend him self against the sanctions sought. As to plaintiffs’ current counsel, she has not, in her filings with the court, resisted the conclusion that there is no factual basis for Count I, so has not advocated the m and atter to the court in violation of the strictures of Rule 11(b). The im position of sanctions under Rule 11 relates to 3 “Representations to the Court,” as the heading on Rule 11(b) indicates. The motion for sanctions against Pejic is based on the assertion that she “advocated this claim by continuing to pursue it even after it becam fully apparent, based on Plaintiff’s e deposition and discovery responses, that the claim lacked evidentiary support.” [DE 30, p.5]. For Rule 11 purposes, the “continuing to pursue” must take some form of representations to the court,and Chupp identifies none byPejic that persist in an unwarranted advocacy of the copyright claim . To the contrary, it appears that i n r esponse to Chupp’s challenges of record to Count I [DE 41& 43], Pejic has acknowledged the claim lack of ’s support and has not resisted its dism issal [DE 45 & 48]. The fact that, in dealings between counsel, Pejic did not capitulate on the m atter to Chupp’s counsel as quickly and readily as desired does not form the basis for the imposition of sanctions under Rule 11. For all of these reasons, I will deny the motion for sanctions. Motion for Summary Judgment and Remand to State Court Remaining defendants Chupp, Devine a nd Internet Business Solutions seek sum mary judgment on all the claim s remaining against them. As earlier noted, in response to the m otion, plaintiffs concede that the copyright claimin Count I is subject to dism issal because it is “incorrect” and no claim for copyright lies. [DE 45, p. 14]. I will grant the summary judgment with respect to Count I, which will be dismissed with prejudice. Thereafter, only state law claims remain, because the only other claim supported by federal question jurisdiction – the RICO claim in Count XI – has already been dism issed as against all defendants. [DE 39]. The r emaining claims in Counts II through X are for m isappropriation of a trade secret, unfair com petition, breach of contr act, unjust enrichm ent, conversion, i ntentional infliction of emotional distress, disclosure of trade secrets, m alicious interference with em ployment 4 contract, and wrongful appropriation of customer lists. After the removal of the case to this court, defendant Chupp a sserted four counterclaim s for defamation, intentional infliction of em otional distress, failure to pay wages and punitive dam ages. These, too, are state law claim over which the s court would exercise supplemental jurisdiction under 28 U.S.C. §1367. In instances like thi s, where all federal law claim s have been elim inated and only supplemental state law claims remain, a district court has discretion to remand a properly removed case to state court. Carnegie-Mellon Univ. v. Cohill, 484 U.S. 343, 350 (1988); United Mine Workers of Am. v. Gibbs, 383 U.S. 715, 726 (1966). Indeed, the Seventh Circuit has repeatedly expressed its preference that district courts take this course of action. See, e.g., Leister v. Dovetail, Inc., 546 F.3d 875, 882 (7th Cir. 2008) ("W the federal claim in a case drops out before trial, the hen presumption is that the district judge will relinquish jurisdiction over any supplem ental claim to the state courts."); Contreras v. Suncast Corp., 237 F.3d 756, 766 (7th Cir. 2001); Groce v. Eli Lilly & Co., 193 F.3d 496, 501 (7th Cir. 1999). In order to decide whether to retain jurisdic over supplemental state law claim a district tion s, court should consider and weigh the factors of j udicial economy, convenience, fairness, and com ity. Carnegie-Mellon Univ., 484 U.S. at 350. These factors weigh in favor of rem and. Notions of comity support remand since this Court should de fer to the St. Joseph County Court' s interest in enforcing the laws of the State of Indiana. The convenience of retaining the consolidated cases in this court so as to obtain the efficiencies of consolidation is no longer an i ssue, since the Gangluf/Notre Dame action has been disposed of. And there is no serious risk of unfairness to any of the parties or a loss of judicial econom y becau se the rem ainder of the issues raised in the 5 summary judgment motion can easily be reasserted inand resolved by the state court, applying state law. Therefore, what remains of the case will be remanded to St. Joseph Circuit Court. Conclusion In view of plaintiffs’ failure to tim obtain service of process on defendant Aaron Taylor, ely and with plaintiffs’ consent [DE 54], plaintiffs’ claims against defendant Aaron Taylor are DISMISSED WITHOUT PREJUDICE , pursuant to Fed.R.Civ.P. 4(m for lack of tim service. ) ely Defendant Chupp’s Motion for Sanctions [DE 43 in 3:09CV512; DE 30 in 3:10CV68] is DENIED. The Motion for Summary Judgment of defendants Chupp, Devine and Internet Business Solutions [DE 41 in 3:09CV512; DE 28 in 3:10CV68] is GRANTED as to Count I of the complaint, and in all other respects is DENIED WITHOUT PREJUDICE to being refiled in the state court following remand. The case of Robert Firth and Fan Action, Inc. v. Matt Chupp, et al., Case No. 3:09cv512PPS, is hereby REMANDED to the Circuit Court of St. Joseph County. SO ORDERED. ENTERED: December 27, 2010 /s/ Philip P. Simon PHILIP P. SIMON, CHIEF JUDGE UNITED STATES DISTRICT COURT 6
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