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Tegg Corp. v. Beckstrom Electric Co.

December 10, 2008

TEGG CORPORATION, PLAINTIFF,
v.
BECKSTROM ELECTRIC CO., AND EXTENSIA TECHNOLOGIES, INC., DEFENDANTS.



The opinion of the court was delivered by: Judge Nora Barry Fischer

MEMORANDUM OPINION

I. INTRODUCTION

Before the Court is a Motion for Sanctions pursuant to Rules 11(b)(2) and (3) of the Federal Rules of Civil Procedure brought by Defendant Beckstrom Electric Co. ("Beckstrom") (Docket No. 76). Beckstrom contends that Plaintiff TEGG Corporation ("Plaintiff") did not conduct proper due diligence prior to filing this action for copyright infringement, breach of contract, tortious interference, and civil conspiracy, and that it continues to advocate these allegedly meritless claims through multiple filings. (Docket No. 77 at 2). Beckstrom then requests sanctions in the form of attorney's fees and costs to be imposed on Plaintiff and Plaintiff's counsel for filing its initial and Verified Amended Complaints without conducting a proper pre-filing inquiry. (Id. at 2, 11). For the reasons set forth below, Beckstrom's Motion for Sanctions is DENIED.

II. PROCEDURAL HISTORY*fn1

Plaintiff initiated this lawsuit on April 1, 2008, simultaneously requesting a preliminary injunction to prevent Defendants from allegedly causing further economic harm to the Plaintiff. (Docket No. 3). The Court sua sponte dismissed Plaintiff's Motion for a Preliminary Injunction on April 4, 2008 for failure to comply with applicable local rules. (Docket No. 6).*fn2

On April 11, 2008, Plaintiff filed a second Motion for Preliminary Injunction (Docket No. 9), this time attaching an affidavit of its counsel, Jay D. Marinstein, Esq., setting forth efforts made to contact Defendants. (See Docket No. 9, Ex. 4). On April 22, 2008, Defendants filed Motions to dismiss the first complaint. (Docket Nos. 22 and 25). Plaintiff responded by filing a Verified Amended Complaint on May 6, 2008. (Docket No 35). On the same day, Plaintiff filed an Amended Motion for Preliminary Injunction. (Docket No. 36).

Defendants filed Briefs in Opposition to the Amended Motion for Preliminary Injunction on May 16, 2008. (Docket Nos. 37 and 38). Defendants then moved to dismiss the Verified Amended Complaint on May 22, 2008. (Docket Nos. 39 and 42). Plaintiff filed its Responses to Defendants' Motions to Dismiss the Verified Amended Complaint on June 9, 2008. (Docket Nos. 49 and 50). On July 1, 2008, this Court dismissed Plaintiff's copyright claim, without prejudice, and with it, Plaintiff's Amended Motion for Preliminary Injunction.(Docket No. 51). However, this Court granted Plaintiff leave to amend its copyright claim, and Plaintiff proceeded to file its Second Amended Complaint. (Docket No. 56).*fn3

In response to Plaintiff's multiple filings, Beckstrom filed this motion for Sanctions on October 6, 2008, (Docket No. 76), to which Plaintiff filed its Response on October 22, 2008. (Docket No. 82). Beckstrom then filed its Reply to Plaintiff's Response on October 30, 2008. The motion is now ripe for disposition.

III. LEGAL STANDARD

Beckstrom contends that Plaintiff failed to conduct a reasonable pre-filing inquiry pursuant to Rule 11(b) of the Federal Rules of Civil Procedure.

Rule 11(b) provides, in pertinent part:

(b) Representations to the Court. By presenting to the court a pleading, written motion, or other paper - whether by signing, filing, submitting, or later advocating it - an attorney or unrepresented party certifies that, to the best of the person's knowledge, information, and belief, formed after an inquiry reasonable under the circumstances:

(2) the claims, defenses, and other legal contentions are warranted by existing law or by a non-frivolous argument for extending, modifying, or reversing existing law or for establishing new law;

(3) the factual contentions have evidentiary support or, if specifically so identified, will likely have evidentiary support after a reasonable ...


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