U.S. Fifth Circuit Sanctions Defendant Who Contests Liability and Presents Purported Experts in Bad Faith

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“The general rule in federal court, the so-called ‘American Rule,’ is that litigants are responsible for their own fees. Federal courts, however, possess ‘inherent power’ to assess fees as sanctions when the losing party has acted in bad faith, vexatiously, wantonly, or for oppressive reasons. Under this test, sanctions are warranted when a party knowingly or recklessly raises an objectively frivolous argument, or argues a meritorious claim for the purpose of harassing an opponent. Thus, even when a party is pursuing a meritorious claim or defense, sanctions may be assessed when the party abuses the judicial process in the method of prosecution of that claim or defense. Pursuing an aggressive litigation posture is not an abuse of the judicial process, but advocacy simply for the sake of burdening an opponent with unnecessary expenditures of time and effort clearly is.Android

“Here, the district court detailed the factual findings underpinning its conclusion that Marquette abused the judicial process and acted in bad faith during the course of the litigation. Specifically, the district court found that Marquette contested liability up to and through trial even though it clearly knew the extent of its liability based on the circumstances of the case and the actions of its captain and was fully aware of the fact that Moench had no liability whatsoever for this allision. The district court further found that Marquette presented two experts who were so lacking they could not even properly name the vessel at issue.

“On appeal, Marquette does not specifically challenge any of these findings. Instead, Marquette asserts that the fee award was unwarranted because Marquette had a good faith basis to challenge the quantum of damages and thus in proceeding through a trial. But even if true, this fact did not justify Marquette’s intransigence on liability or the means by which Marquette defended Moench’s damages claim — namely, one expert who, according to the district court’s findings, opined on value without including any comparables, without considering the equipment on the vessel, without an accurate description of the vessel, and without reliable underlying information and a second expert who, according to the district court’s findings, not only failed to correct the glaringly incorrect information set forth in the first expert’s report, but incorporated it into his own. We cannot say that the district court’s findings on bad faith were clearly erroneous or that the court abused its discretion in awarding Moench fees as a sanction based on those findings.”

 

Moench v. Marquette Transportation Co., No.15-31105, 2016 WL 5485122 (5th Cir. Sept. 29, 2016).

 

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