United States District Court, E.D. Pennsylvania
D. WOLSON, J.
Jones has moved for summary judgment on a counterclaim from
Pencoyd Iron Works, Inc. asserting claims under a
Pennsylvania statute, 42 Pa.C.S.A. § 2503(9), that
prohibits attorneys from acting in a manner that is
arbitrary, vexatious, or in bad faith. The Parties'
briefs spar over whether the facts in the record support such
a claim. The Court, however, raised a question of whether
Section 2503(9) applies in matters pending in federal court.
Having given the parties a chance to be heard on the issue,
the Court concludes that it does not.
September 26, 2018, Mr. Jones filed this action, asserting
claims of age discrimination, disability discrimination, and
retaliation under both federal and Pennsylvania law. He did
so after filing a complaint with the U.S. Equal Employment
Opportunity Commission, which was cross-filed with the
Pennsylvania Human Relations Commission. (ECF No. 18-1 at Ex.
A.) The EEOC issued a dismissal and a right-to-sue letter on
June 28, 2018. (Id. at Ex. B.)
January 9, 2019, Pencoyd answered and asserted a
counterclaim. (ECF No. 4.) In the Counterclaim, Pencoyd
asserts that Mr. Jones initiated this case without sufficient
factual basis and for the sole purpose of harassment, abuse,
and to impose financial hardship on Pencoyd. On October 1,
2019, Mr. Jones filed a Motion for summary judgment directed
at Pencoyd's counterclaim, arguing that there are no
facts demonstrating that Mr. Jones acted vexatiously or in
bad faith. On December 5, 2019, the Court gave the Parties
the opportunity to submit supplemental briefs addressing the
question of whether Section 2503(9) applies in federal court.
(ECF No. 23.) Each party has responded.
Rule of Civil Procedure 56(a) permits a party to seek, and a
court to enter, summary judgment “if the movant shows
that there is no genuine dispute as to any material fact and
the movant is entitled to judgment as a matter of law.”
Fed.R.Civ.P. 56(a). In ruling on a summary judgment motion, a
court must “view the facts and draw reasonable
inferences ‘in the light most favorable to the party
opposing the [summary judgment] motion.'” Scott
v. Harris, 550 U.S. 372, 378 (2007) (quotation omitted).
However, “[t]he non-moving party may not merely deny
the allegations in the moving party's pleadings; instead
he must show where in the record there exists a genuine
dispute over a material fact.” Doe v. Abington
Friends Sch., 480 F.3d 252, 256 (3d Cir. 2007) (citation
omitted). The movant is entitled to judgment as a matter of
law when the non-moving party fails to make such a showing.
Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986).
Rule 56(f) provides that a court may “grant the motion
on grounds not raised by a party” after “giving
notice and a reasonable time to respond . . . .”
Applicability of Section 2503 in Federal Court
2503(9) provides that any “participant who is awarded
counsel fees because the conduct of another party in
commencing the matter or otherwise was arbitrary, vexatious,
or in bad faith” shall be “entitled to a
reasonable counsel fee as part of the taxable costs of the
matter.” 42 Pa.C.S.A. § 2503(9). This provision
does not apply to actions brought in federal court, for at
least two reasons.
the statutory language demonstrates that Section 2503 applies
only in Pennsylvania state court, not in federal court.
Section 2503 is part of Pennsylvania's Judicial Code.
Pennsylvania law provides that the Judicial Code “shall
be construed so as to vest in the unified
judicial system … power to do all things
that are reasonably necessary for the proper execution and
administration of their functions within the scope of their
respective jurisdiction.” 42 Pa.C.S.A. § 103(a)
(emphasis added). Pennsylvania courts have emphasized that
Section 2503 applies only to matters “before a court of
the unified judicial system of [the] Commonwealth.”
Com., Dept. of Transp. v. Smith, 602 A.2d 499, 502
(Pa. Cmwlth. Ct. 1992); see also Duquesne Light Co. v.
Pa. Pub. Util. Comm'n, 543 A.2d 196, 201 (Pa. Cmwlth
Ct. 1988). Given this language, several federal courts have
held that Section 2503 does not apply in federal court.
See, e.g., Beinlich v. Chief Exploration &
Development LLC, Civ. A. No. 4:11-cv-00579, 2011 WL
2457819, at * 1 (M.D.Pa. June 20, 2011); Bethlehem Area
School Dist. v. Zhou, Civ. A. No. 09-03493, 2010 WL
2928005, at * 5 (E.D.Pa. July 23, 2010); Reitz v.
Dieter, 840 F.Supp. 353, 355 (E.D.Pa. 1993); cf.
Harris v. Coleman, 863 F.Supp.2d 336, 345 (S.D.N.Y.
2012) (New York statute governing vexatious litigation not
applicable in federal court).
decisions make sense as a matter of comity and federalism.
Pennsylvania has an interest in regulating the conduct of
lawyers and parties in its courts. It does not have the same
interest in regulating the conduct of lawyers and parties in
federal courts-even the federal courts that sit within its
territorial limits. Instead, Congress has an interest in
regulating, and has taken steps to regulate, the conduct of
lawyers and parties in federal courts. See, e.g.,
Fed. R. Civ. P. 11; 28 U.S.C. § 1927.
Section 2503(9) does not apply in federal court because it is
a procedural rule, not a substantive one. When sitting in
diversity jurisdiction (or supplemental jurisdiction),
federal courts apply state substantive law and federal
procedural law. See Hanna v. Plumer, 380 U.S. 460,
466 (1965). In general, procedural rules regulate the
“judicial process for enforcing rights and duties
recognized by substantive law and for justly administering
remedy and redress for disregard or infraction of
them.” Shady Grove Orthopedic Assocs. v. Allstate
Ins. Co., 559 U.S. 393, 407 (2010) (quote omitted).
Attorneys' fees statutes can be substantive or
procedural. Substantive fees are those which are tied to the
outcome of the litigation, whereas procedural fees generally
arise from a litigant's bad faith conduct in litigation.
See Chambers v. NASCO, Inc., 501 U.S. 32, 52-54
(1991). That is, if a fee-shifting statute governs only the
“manner and means” by which the litigants'
rights are enforced, then the rule is procedural. Shady
Grove, 559 U.S. at 407.
Section 2503(9) is a procedural rule, not a substantive one.
It does not change or create substantive rights. Instead, it
focuses only on the manner and means by which attorneys in
Pennsylvania courts conduct themselves and seek to enforce
other rights or duties. Moreover, Section 2503(9) is at odds
with Federal Rule of Civil Procedure 11, at least to the
extent that Rule 11 includes a safe harbor provision. In
general, federal courts must apply the Federal Rules of Civil
Procedure unless a particular rule violates either the Rules
Enabling Act or the Constitution. See Hanna, 380
U.S. at 471. ...