By CLJ Staff (May 11, 2008) - For the second time in as many days, the Sixth Circuit has affirmed a district court's award of Rule 11 sanctions against an attorney for pursuing frivolous claims. This time, the court threw in an award for appellate sanctions for good measure.
In 1992, Blue Cross Blue Shield of Michigan established an exclusive network of preferred providers to supply durable medical equipment,prosthetics and orthotics to enrollees in certain health-benefits plans. Wright & Filippis (W&F) was selected to administer the plan. After its application to join the network was rejected, B & H Medical (B&H) brought an antitrust action alleging that the network was as an illegal exclusive-dealing arrangement.
The district court granted summary judgment in favor of W&F, finding that B&H failed to demonstrate antitrust standing and that the alleged exclusive-dealing agreement foreclosed no more than thirteen percent
of a properly defined relevant market. The district court later granted in part W&F's motion for sanctions pursuant to Rule 11 of the Federal Rules of Civil Procedure. It imposed over $84,000 dollars in sanctions against Attorney Stephen M. Ryan for "failing to dismiss this case when a lengthy discovery period failed to disclose any support for the antitrust claims asserted in the complaint."
On appeal, the Sixth Circuit made short shrift of the plaintiff's antitrust arguments and found that B&H and Ryan pursued and appealed "an
obviously meritless antitrust lawsuit long beyond the time at which discovery demonstrated that the claims lacked support." The court affirmed the district court's award of sanctions and then proceeded to analyze W&F's motion for appellate sanctions.
The court first noted that the most frivolous and sanction-worthy aspect of the appeal was presenting a theory relating to a price-fixing conspiracy when it never pursued such a theory in the district court. The court concluded that "Given that arguments relating to price fixing constitute
a large portion of B&H's appellate brief, this conduct alone might warrant sanctions." But there was more: in its opening brief, B&H failed to even address the district court's crucial determination that it lacked antitrust standing. The Sixth Circuit concluded that "B&H should have voluntarily dismissed this
case at the close of discovery" but that "pursuing an appeal- especially one that raises entirely new theories of liability and fails to challenge crucial grounds of the district court's opinion- is the essence of
frivolity."
The court granted the motion for appellate sanctions and ordered W&F to file an affidavit setting forth hourly rates and the number of hours spent in defending the appeal.
The day before issuing its opinion in the B&H case, the Sixth Circuit affirmed an award of sanctions against flamboyant Michigan attorney Geoffry Fieger for suing a state supreme court justice. See, Fieger v Cox.
The U.S. Court of Appeals for the Sixth Circuit is one of 13 federal circuit courts which occupy an intermediate level between the federal district courts and the U.S. Supreme Court. The Sixth Circuit is headquartered in Cincinnati and hears appeals from the district courts located within Kentucky, Michigan, Ohio and Tennessee.
