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Municipal Revenue Services v. McBlain

February 5, 2010

MUNICIPAL REVENUE SERVICES PLAINTIFF,
v.
JOHN P. MCBLAIN, INDIVIDUALLY AND IN HIS OFFICIAL CAPACITY AS VICE PRESIDENT OF ALDAN BOROUGH, AND ALDAN BOROUGH DEFENDANTS.



The opinion of the court was delivered by: DuBOIS, J.

MEMORANDUM

I. INTRODUCTION

Plaintiff, Municipal Revenue Services ("MRS"), filed suit on October 23, 2006, asserting claims against defendants, John P. McBlain and Aldan Borough, for violations of the First and Fourteenth Amendments to the United States Constitution and for commercial disparagement in violation of Pennsylvania law. This Court dismissed plaintiff's Fourteenth Amendment Due Process claims by Order dated March 17, 2007. It disposed of the remaining claims in an August 1, 2008 Order dismissing the state law commercial disparagement claim and entering judgment for the defendants on the First Amendment and Equal Protection claims. The United States Court of Appeals for the Third Circuit affirmed both of these orders in an opinion dated October 6, 2009.

Presently before the Court is Defendants' Petition for Counsel Fees. For the reasons discussed below, the petition is denied.

II. BACKGROUND

The history of this case is set forth in detail in this Court's Memorandum and Order of August 1, 2008 granting in part and denying in part defendants' motion for summary judgment, Municipal Revenue Servs. v. McBlain, No. 06-4749, 2008 WL 2973852 (E.D. Pa. Aug. 4, 2008) ("McBlain I"), and in the Third Circuit's Opinion of October 6, 2009. It will be recited in this Memorandum only as necessary to address the issues presented by defendants' petition for counsel fees.

III. DISCUSSION

A. Legal Standard

The American Rule states that a prevailing litigant is not entitled to collect attorneys' fees from the loser. See Travelers Cas. and Sur. Co. of Am. v. Pac. Gas and Elec. Co., 549 U.S. 443, 448 (2007). 42 U.S.C. § 1988(b)*fn1 creates an exception to this rule for litigants who prevail in an action filed pursuant to 42 U.S.C. § 1983. See Solomen v. Redwood Advisory Co., 223 F. Supp. 2d 681, 682 (E.D. Pa. 2002). For prevailing defendants, this exception is construednarrowly. "[A] prevailing defendant is entitled to attorney's fees only upon a finding that the plaintiff's action was frivolous, unreasonable, or without foundation." Barnes Found. v. Twp. of Lower Merion, 242 F.3d 151, 158 (3d Cir. 2001) (citing Christianburg Garment Co. v. EEOC, 434 U.S. 412, 421(1978)). The prevailing defendant may also recover upon a showing that plaintiff acted in bad faith. Id. at 165. The standard for evaluating bad faith is an objective one. Id. at 158

A lawsuit is not "frivolous, unreasonable or without foundation" simply because a plaintiff loses.See Christianburg, 434 U.S. at 421 -22 (admonishing courts to resist the understandable temptation to engage in post hoc reasoning). Rather, a lawsuit is frivolous when it "lacks an arguable basis in the law," where "the results are obvious, or the arguments . . . are wholly without merit," or "a suit [is] so completely without hope of succeeding that the court can infer that the plaintiff brought it to harass the defendant rather than to obtain a favorable judgment." Solomen v. Redwood Advisory Co., 223 F. Supp. 2d 681, 682-83 (E.D. Pa. 2002) (ellipsis in original) (collecting definitions). The Supreme Court has recognized the difficulty of using these abstract words to deal with concrete cases, noting that the "course of litigation is rarely predictable." Christianburg, 434 U.S. at 422. "Even when the law or the facts appear questionable or unfavorable at the outset, a party may have an entirely reasonable ground for bringing suit." Id.

B. Factual and Legal Sufficiency of Plaintiff's Claims

This Court's orders dismissing plaintiff's claims and granting summary judgment in defendants' favor called into question the legal and evidentiary sufficiency of plaintiff's claims. But insufficient claims are not necessarily frivolous. See Nietzke v. Williams, 490 U.S. 319, 328 (1989) (distinguishing between dismissal for failure to state a claim on the one hand, and dismissal on the basis of frivolousness on the other); Whiteland Woods, L.P. v. Twp. of W. Whiteland, No. 96-8086, 2001 WL 936490, at *5 (E.D. Pa. Aug. 14, 2001) (noting that summary judgment in defendant's favor does not imply frivolousness).

Plaintiff's substantive and procedural due process claims, dismissed by this Court for failure to state a claim, were weak, but they were not frivolous. Those claims were rooted in an expansive and complex area of constitutional law and were supported with citations to relevant authority. The Court disagreed with plaintiff's arguments in its opinion. It did not find plaintiff's claims to be frivolous then; it does not find them to be frivolous now. The Third Circuit, likewise, issued an opinion explaining why it was unpersuaded by plaintiff's arguments. Plaintiff's arguments failed, but failure is not frivolousness. The Court concludes that it would be improper to exercise its discretion to award attorneys' fees to defendants for their defense of these claims when petitioner's substantive and procedural due process claims had an arguable basis in the law.

Plaintiff's First Amendment retaliation claim survived defendants' motion to dismiss but not their motion for summary judgment. In its presentation of this claim, plaintiff did not offer evidence of a pre-existing relationship with a governmental entity. This omission proved fatal. In McClintock v. Eichelberger, the Third Circuit held that the First Amendment's protections against retaliation based on political discrimination do not extend to independent contractors with no pre-existing relationship to a governmental entity. 169 F.3d 812, 817 (3d Cir. 1999). Applying McClintock, this Court concluded that plaintiff's argument failed. In its evaluation of this claim for frivolousness, this Court must refrain from committing the fallacy of post hoc ergo propter hoc. First Amendment claims require a probing analysis of the precise speech at issue in its unique context. See e.g., See Clemente v. Espinosa, 749 F. Supp. 672, 677 (E.D. Pa. 1990) (noting that "catchy phrases" or "hyperbole" must be viewed in context to determine a statement's legal status). This Court was unpersuaded by plaintiff's evidence, but plaintiff had credible arguments, grounded in the relevant facts and legal authority, to the contrary. Indeed, plaintiff's First Amendment retaliation claim was sufficiently serious to inspire an opinion from the Third Circuit that affirmed this Court's order on the alternative ground that, even assuming plaintiff is ...


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