Cooter & Gell v. Hartmarx Corp.

496 U.S. 384 (1990)

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Nature of the Case

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Facts

Danik, Inc. owned and operated a number of discount men’s stores in D.C. In June 1983, Intercontinental, a subsidiary of Hartmarx Corp. brought a breach of contract action against Danik in District Court. Danik was represented by the law firm of Cooter & Gell and filed a counterclaim against Intercontinental alleging violations of Robinson-Patman Act. In March 1984, the District Court granted Intercontinental summary judgment on its claim against Danik. In February 1985, a jury returned a verdict for Intercontinental on Danik’s counterclaim. Both judgments were affirmed on appeal. While this litigation was proceeding, the petitioner prepared two additional antitrust complaints against Hartmarx and its two subsidiaries, Hart, Schnaffner & Marx and Hickey-Freeman Co. One of the complaints alleged a nationwide conspiracy to fix prices and to eliminate competition through an exclusive retail agent policy and uniform pricing scheme as well as other unfair competition practices such as resale price maintenance and territorial restrictions. Those two complaints were filed in November 1983. Respondents moved to dismiss the antitrust complaint alleging that Danik’s allegations had no basis in fact. Respondents then moved for sanctions under Rule 11. In opposition to the motion, petitioner filed three affidavits setting forth the prefiling research that supported the allegations in the complaint. Petitioner’s research consisted of telephone calls to salespersons in a number of men’s clothing stores in major U.S. cities. Petitioner inferred from this research that only one store sold Hart, Schaffner & Marx suits. In April 1984, petitioner filed a notice of voluntary dismissal of the complaint pursuant to Rule 41(a)(1)(i). The dismissal became effective in July 1984. In June 1984, the District Court heard oral argument on the Rule 11 motion. The District Court took the matter under advisement. In December 1987, the District Court ordered respondents to submit a statement of costs and attorney’s fees. Respondents requested $61,917.99 in attorney’s fees. Two months later, respondent’s Rule 11 motion was granted. The court ruled that petitioner’s prefiling inquiry was grossly inadequate. The Court also imposed sanctions of $21,452.52 against petitioner and $10,701.26 against Danik. The Court of Appeals affirmed. That court also held that an appellant who successfully defends a Rule 11 award is entitled to recover attorney’s fees on appeal and the case was remanded to the District Court to determine the reasonable attorney’s fees. The Supreme Court granted certiorari.