
USCA1 Opinion

	




          March 17, 1993        [NOT FOR PUBLICATION]                            UNITED STATES COURT OF APPEALS                                FOR THE FIRST CIRCUIT                                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 . . . ."                                           -2-                      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                                         -3-            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                                         -4-            filed its motion for  costs and attorneys' fees  against both            Vero Beach and Hinckley, Allen.                                         -5-                                                   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).              ________________                                         -6-            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                                         -7-            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                                         -8-            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 . .  .            ."                                         -9-            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                                         -10-            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.                                           -11-                      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                                         -12-            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                                         -13-            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                                         -14-            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.                                         -15-            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                                         -16-            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.                                           -17-
