Opinion
Case No. 1:02-cv-319
June 13, 2003
OPINION
Plaintiffs William Q. Tingley III and William Q. Tingley filed this lawsuit on May 8, 2002, purporting to bring a pro se qui tam action under the False Claim Act, 31 U.S.C. § 3729, on behalf of the government of the United States. Although neither Tingley III or Tingley are licensed attorneys, they filed the complaint on behalf of a corporation, The Local Area Watch, a corporation the Tingleys "organized" in September 2000 and incorporated in February 2001. (Complaint, ¶ 6). This lawsuit is yet another in a lengthy series of unsuccessful lawsuits by plaintiffs and corporations they control against judges, attorneys, corporations, individuals and municipal government related to the development of a parcel of real estate located in Grand Rapids, Michigan, known as the Berkey Gay property. The history of prior lawsuits is examined in detail in the court's lengthy opinion dismissing the companion case of William Q. Tingley III, et al. v. City of Grand Rapids, et at., 1:02-cv-673 (W.D. Mich.), which is incorporated herein by reference.
"`Qui tam' is an abbreviation for the Latin phrase ` qui tam pro domino rege quam pro si ipso in hac parte sequitur,' meaning `Who sues on behalf of the King as well as himself.'" United States v. Horizon Healthcare Corp., 160 F.3d 326, 329 n. 1 (6th Cir. 1998) (quoting BLACK'S LAW DICTIONARY 1251 (6th ed. 1990)).
In this opinion, the court deliberately uses the term "plaintiffs" rather than "relators" because, as is shown in greater detail below, this lawsuit involves only the Tingleys' ongoing private dispute with defendants, and not any legitimate interest of the United States government. The term "plaintiffs" more accurately describes the roles of William Q. Tingley III, William Q. Tingley, and The Local Area Watch in this lawsuit.
On June 28, 2002, prior to a responsive pleading by defendant, plaintiffs filed a 130-paragraph first amended complaint. (docket #13). In the amended complaint, The Local Area Watch, the corporation in whose name the Tingleys had initiated this lawsuit, was no longer listed as a plaintiff in the caption of the complaint. However, The Local Area Watch was still mentioned in the complaint, although references to its corporate status had been deleted. (docket #13, ¶¶ 7, 94). The Local Area Watch remains a party to this lawsuit because it never voluntarily dismissed its claims pursuant to the procedures set forth in Rule 41(a)(1), nor did it obtain an order from the court dismissing it from this lawsuit. FED. R. Civ. P. 41(a)(2). Plaintiffs' first amended complaint asserts the following claims: (1) CERCLA violations; (2) Solid Waste Disposal Act Violations; (3) False Claims Act violations; (4) and False Claims Act conspiracy stemming from the development of the Berkey Gay property. The amended complaint names a dozen defendants, most of whom plaintiffs have previously sued without success in state court: 900 Monroe L.L.C.; 940 Monroe L.L.C.; Pioneer Incorporated; Dykema Excavators, Inc.; Fifth Third Bancorp; Superior Environmental Corp.; Prein Newhof, Inc.; Dickinson Wright P.L.L.C.; Frank D. Marshall; William J. Fischer III; John H. Logie; and Thomas Beckering.
The matter is before the court on defendants' motions to dismiss. (docket #'s 31, 36, 40, 45, 50 and 56). Also before the court is plaintiffs's motion for Rule 11 sanctions against defendants 900 Monroe, 940 Monroe, Pioneer Incorporated, William J. Fischer III, and Thomas Beckering. (docket #109). Upon review, plaintiffs' motion will be denied. Defendants' motions will be granted. Furthermore, defendants will be awarded their reasonable attorney's fees and costs incurred in defending this lawsuit. A permanent injunction will issue against plaintiffs as a deterrent against future abusive lawsuits by plaintiffs against defendants.
Discussion
I. Plaintiffs' Motion For Rule 11 Sanctions
Plaintiffs ask the court to impose Rule 11 sanctions against defendants 900 Monroe, 940 Monroe, Pioneer Incorporated, William J. Fischer III, and Thomas Beckering. Plaintiffs object to the second paragraph on page three of a February 14, 2003 "Memorandum Regarding Rule 16 Conference" signed by attorney Dickinson on behalf of these defendants. (docket #96). Defendants' memorandum was in response to the court's February 10, 2003 order (docket #94), which had provided the parties with a deadline by which to file responses to an oral request for a Rule 16 conference made by plaintiffs at a February 4, 2003 hearing. The defendants' memorandum argued that conducting a Rule 16 conference in this case would be a needless waste of time and resources. The challenged statement, placed in context, is highlighted in the paragraphs set forth below:
[D]efendants want to respond to relators' suggestion that a stay of proceedings entered in this case or the stay previously entered in Tingley v. Grand Rapids should be lifted or modified to permit the filing of a motion for preliminary injunction, to enjoin what relators characterize as an "ongoing danger to public health."
First, the activities that relators allege resulted in illegal disposal of contaminated soil at the former Water Filtration Plant occurred in connection with renovation and construction work performed at the former Berkey Gay building, now a multi-use development with tenants including the Waterworks Pub and Boardwalk Apartments, located at 940 Monroe. The renovation and construction work at that site was essentially complete by Spring 2001, when new tenants began occupying the renovated property. The activities of which relators complain took place approximately 2 years ago, or longer, as the bulk of the excavation work occurred in the year 2000. Relators have not alleged that any significant event since then has created any new threat to public health.
Second, in the intervening time since those activities took place, relators have told their story to the Michigan Department of Environmental Quality (MDEQ), the Michigan Attorney General, the U.S. EPA, and the U.S. Department of Justice. Relator's presentation has included photographs and videotapes of the alleged illegal disposal activities. No governmental enforcement actions have been taken against any of the defendants in response to relator's charges. The MDEQ completed its investigation of relators' allegations and found them to be unsubstantiated, according to statements made by MDEQ representatives to the Grand Rapids Press, reported in the paper on March 6, 2001 (page A13). However, rather than dispelling relator's misconceptions, the MDEQ's actions simply served to persuade relators that MDEQ was part of the elaborate environmental crime conspiracy they refer to as "the Enterprise." Presumably, relators contend that the other governmental agencies to which they have presented their case are either corrupt co-conspirators, also, or else grossly negligent in discharging their official duties. Defendants contend that a different conclusion should be drawn from the lack of any governmental enforcement action in response to relators' claims, namely that relators failed to persuade these governmental agencies that their allegations had merit.
(docket #96 at 3-4). Defendants pointed out that plaintiffs failed to produce in any court an affidavit signed by a qualified environmental professional in support of their allegations. Defendants argued that the plaintiffs are certainly not indigent, and could afford environmental experts and legal counsel. Specifically, defendants cited Tingley III's February 2003 appearance before Kent County Circuit Judge James Redford during which Tingley III argued that his father's company, Proto-Cam, Inc., should be accepted as a surety on an appeal bond to stay the execution of judgments assessing the aforementioned monetary sanctions. Tingley III apparently represented to the state court that Proto-Cam had "over $900,000 in assets." (Id. at 4-5).
Plaintiffs' motion for Rule 11 sanctions is utterly frivolous. Plaintiffs do not and cannot contest defendants' statement that no governmental entity has ever taken any environmental enforcement action against defendants related to the development of the Berkey Gay property. Plaintiffs' motion for Rule 11 sanctions is directly undermined by plaintiffs' own exhibits. For example, Exhibit B is a report from the Michigan Department of Environmental Quality. (docket #109, Ex. B). The report provides a detailed explanation of the investigation the state government conducted in response to the Tingleys' complaints. Scientific test results showed that the soil in question met all applicable residential criteria. The MDEQ investigation concluded that the allegations made by "Mr. Tingley Sr. and Mr. Tingley III that contaminated soil had been removed from the Berkey and Gay building site and taken to both the North Monroe Filtration Plant and to Pettis Avenue Gravel" appeared "unfounded" in light of scientific testing of soil samples. (Ex. B at 7-8).
Undeterred, the plaintiffs now purport to take issue with an "implication" in defendants' memorandum that government agencies had determined that plaintiffs' charges were unfounded "after reviewing the photographic and videotape evidence." (Plf. Motion, ¶ 5). The MDEQ investigation report expressly mentions photographs taken by Tingley III. (Ex. B at 2). The MDEQ either had, or easily could have, obtained from public records, photographs of the excavation work. The public records in this case, the companion federal case, and presumably in state court include numerous pictures that plaintiffs have filed with the court of loaded dump trucks and earth moving equipment. ( See, e.g., Ex. C at 43, 45-46, 49-51, 53, 56-58, 60-61, 64-66, 69-71, 74-77, 79, 81, 83, 85, 87, 89, 91, 93, 97-104, 106-07, 109-10, 113-16, 118). Whether or not the plaintiffs also provided the MDEQ with the same or similar photographs and videotape in connection with the Tingleys' complaints is irrelevant. Plaintiffs' pictures simply cannot show that soil being moved was contaminated. Soil test results are required. In this instance, the MDEQ found that plaintiffs' allegations concerning environmental contamination were "unfounded" because the Tingleys' allegations were refuted by scientific test results. Plaintiffs' motion for Rule 11 sanctions against defendants will be denied.
II. Defendants' Motions to Dismiss
A. Plaintiffs Lack Authority to Bring a Qui Tam Action on Behalf of the United States.
Plaintiffs purport to bring this lawsuit on behalf of the United States. Even if it had not been raised by the parties, this court would have an independent obligation to sua sponte consider whether William Q. Tingley III, William Q. Tingley, or The Local Area Watch could represent the United States and its interests in this lawsuit. See Wenger v. Canastota Cent. Sch. Dist., 146 F.3d 123, 125 (2d Cir. 1998). Plaintiffs Tingley and Tingley III are not licensed attorneys. They are not authorized to pursue any claim on behalf of others. 28 U.S.C. § 1654. The Tingleys cannot represent The Local Area Watch or any other corporation in federal court. See Collinsgru v. Palmyra Bd. of Educ., 161 F.3d 225-231-32 (3d Cir. 1998) (collecting cases); see also Heldt v. Nicholson, No. 99-2120, 2000 WL 1176879, at *1 (6th Cir. Aug. 10, 2000). Corporations may not appear or prosecute lawsuits pro se. See Power Serve Int'l, Inc. v. Lavi, 239 F.3d 508, 514 (2d Cir. 2001); Scandia Down Corp. v. Euroquilt, Inc., 772 F.2d 1423, 1427 (7th Cir. 1985); Beard v. Veneman, No. 02-5380, 2003 WL 1528010, at *1 (D.C. Cir. Mar. 20, 2003). Pro se parties are not authorized to represent the United States in bringing a qui tam action. See United States v. Onan, 190 F.2d 1, 6 (8th Cir. 1951); United States ex rel. Schwartz v. TRW, Inc., 118 F. Supp.2d 991, 994 (C.D. Cal. 2000). Accordingly, plaintiffs' complaint must be dismissed for failure to state a claim upon which relief can be granted.
B. Sanctions
Plaintiffs elected to file and maintain this lawsuit in federal court under the qui tam provisions of the FCA after their numerous unsuccessful state-court lawsuits against these defendants and others. The United States declined to intervene in this lawsuit.
Section 3730(d)(4) states that in its discretion, the court may award prevailing defendants "reasonable attorney's fees and expenses" if "the court finds that the claims of the persons bringing the action were clearly frivolous, clearly vexatious, or brought primarily for purposes of harassment." 31 U.S.C. § 3730(d)(4). The court finds that this lawsuit, a reformulation of plaintiffs' unsuccessful lawsuits in state courts, violated all three of the very high statutory standards set forth in § 3730(d)(4). This lawsuit was clearly frivolous, clearly vexatious and brought primarily for purposes of harassment. See United States v. National Academy of Sciences, No. 90-2568, 1992 WL 247587, at * 7-9 (D.D.C. Sept. 15, 1992).
The National Academy case cited above is particularly instructive. Like this case, the purported qui tam action was a "dressed up" version of plaintiffs personal grievances and nearly identical to a claim previously dismissed. Id. at *5. "[S]uch an action is an abuse of the qui tam process." Id. "The qui tam provisions are not intended as a consolation prize for `disappointed litigators.'" Id. at *6. In National Academy, the court found that appropriate relief was imposition of monetary sanctions against plaintiff pursuant to 31 U.S.C. § 3730(d)(4). Id. at *7-9. The same relief is warranted in this case. Defendants are also entitled to recover their costs as prevailing parties pursuant to 28 U.S.C. § 1920 and Rule 54 of the Federal Rules of Civil Procedure. See United States ex rel. Costner, 317 F.3d 889, 891 (8th Cir. 2003) (§ 3730(d)(4) (does not displace the district court's authority to award costs to prevailing parties under Rule 54). The court will order defendants to submit affidavits setting forth in detail their reasonable attorney's fees, expenses, and costs incurred in defending this lawsuit within fourteen days from the date of this opinion and the accompanying order. Plaintiffs will have fourteen days thereafter to submit any challenge to the reasonableness of the attorney's fees, expenses, and costs sought by defendants.
Injunctive relief against plaintiffs is also appropriate under the court's inherent authority and under 31 U.S.C. § 3730(d)(4). An injunction is necessary to deter plaintiffs from filing future frivolous and vexatious lawsuits against defendants. The state courts have already imposed more than $27,000 in sanctions against plaintiffs and corporations under their control with no discernable deterrent effect. There is no evidence that the plaintiffs have ever paid these court-imposed sanctions. Monetary sanctions obviously have not deterred plaintiffs. The court therefore finds it necessary to grant injunctive relief
It is well established that federal courts have inherent powers to impose appropriate non-monetary sanctions to deter future frivolous lawsuits and/or relitigation of the same lawsuit and frivolous and vexatious litigation. See Cauthon v. Rogers, 116 F.3d 1334, 1337 (10th Cir. 1997); United States v. Circuit Court for Taylor County, 73 F.3d 669, 670 (7th Cir. 1995); Wrenn v. Vanderbilt Univ. Hosp., Nos. 94-5453, 94-5593, 1995 WL 111480, at *3 (6th Cir. Mar. 15, 1995); accord Feathers v. Chevron U.S.A., Inc., 141 F.3d 264, 269 (6th Cir. 1998); Telechron, Inc. v. Intergraph Corp., No. 95-1039, 1996 WL 370136, at *2 (6th Cir. July 2, 1996) ("Although imposing sanctions pursuant to inherent power and Rule 11 are analogous, courts are not bound by the strictures of Rule 11 case law when exercising their inherent powers."). Every paper filed with the Clerk of this court, no matter how repetitious or frivolous, requires some portion of the institution's limited resources. A part of the court's responsibility is to see that these resources are allocated in a way that promotes the interests of justice. See In re McDonald, 489 U.S. 180, 184 (1989). Federal district courts necessarily have "considerable discretion" in drafting orders restricting a litigious party's access to courts. See Martin-Trigona v. Shaw, 986 F.2d 1384, 1387 (11th Cir. 1993); Procup v. Strickland, 792 F.2d 1069, 1074 (11th Cir. 1986) ( en banc); United States v. Barker, 182 F.R.D. 661, 664 (S.D. Ga. 1998); United States v. MK-Ferguson Co., 99 F.3d 1538, 1548 (10th Cir. 1996); United States v. Hughes Aircraft Co., Nos. 94-55620, 94-55826, at *1 (9th Cir. Oct. 21, 1996).
Both the Supreme Court and the Sixth Circuit have reaffirmed the district court's inherent authority to take action to prevent abuse of the judicial system. See Chambers v. Nasco, Inc., 501 U.S. 32, 43-45 (1991); Big Yank Corp. v. Liberty Mut. Fire Ins. Co., 125 F.3d 308, 313 (6th Cir. 1997); accord First Bank of Marietta v. Hartford Underwriters Ins. Co., 307 F.3d 501, 511 (6th Cir. 2002). A prerequisite to the exercise of such power is a finding that a litigant has acted in bad faith, vexatiously, wantonly, or for oppressive reasons. Big Yank, 125 F.3d at 313. The concept of bad faith is an objective one. See Coppedge v. United States, 369 U.S. 348, 445 (1962). A claim is brought in bad faith if it is frivolous. Id.; see Nabkey v. Gibson, 923 F. Supp. 117, 122 (W.D. Mich. 1990). Objectively, plaintiffs' lawsuit was filed and continued vexatiously and in bad faith by litigants dissatisfied with the outcome of state-court lawsuits.
The court's order cannot completely foreclose a litigant from access to the court. See Ortman v. Thomas, 99 F.3d 807, 811 (6th Cir. 1996); Washington v. Alaimo, 934 F. Supp. 1395, 1400 (S.D. Ga. 1996). However, the right of access to courts is neither absolute or unconditional, and there is no right of access to the courts to prosecute an action that is frivolous and malicious. See Tripati v. Beaman, 878 F.2d 351, 353 (10th Cir. 1989); Roscoe v. Hansen, No. 96-2250, 1997 WL 116992, at *2 (10th Cir. Mar. 17, 1997). Requiring court review of any proposed filings by plaintiffs would likely result in waste of scarce judicial resources. See Sassower v. American Bar Ass'n, 33 F.3d 733, 736 (7th Cir. 1994). Requiring plaintiffs to pay all costs and attorney's fees imposed in this case and to post a bond before allowing plaintiffs to file another civil lawsuit in this court is an appropriate and proportionate response. See United States v. Circuit Court for Taylor County, 73 F.3d at 674; Jean v. Dugan, 29 F. Supp.2d 939 (N.D. Ind. 1998) (requiring payment of all sanctions and imposing $5,000 bond before allowing plaintiff to bring any future lawsuits).
The court is authorized to require plaintiffs to post a bond in any future lawsuit to cover potential costs, attorney's fees and other sanctions. See Sassower v. American Bar Ass'n, 33 F.3d at 736; Anderson v. Steers, Sullivan, McNamara Rogers, 998 F.3d 495, 496 (7th Cir. 1993); Ehm v. Amtrak Bd. of Directors, 780 F.2d 516, 517 (5th Cir. 1986); Hawes v. Club Ecquestre El Comandante, 535 F.2d 140, 143 (1st Cir. 1976); Dugan, 29 F. Supp.2d at 941; United States v. Barker, 182 F.R.D. at 664; Student Loan Mktg. Ass'n v. Hanes, 181 F.R.D. 629, 638 (S.D. Cal. 1998); Washington v. Alaimo, 934 F. Supp. at 1400; AM Gregos, Inc. v. Robertory, 70 F.R.D. 321 (E.D. Pa. 1976); accord Soo Hardwoods, Inc. v. Universal Oil Prod. Co., 493 F. Supp. 76, 78 (W.D. Mich. 1980). The Sixth Circuit reviews such orders under an abuse-of-discretion standard. See Stewart v. Fleet Fin., No. 99-2282, 2000 WL 1176881, at *2 (6th Cir. Aug. 10, 2000) (upholding injunction requiring plaintiff to post a $25,000 cash bond before filing any future civil lawsuit against defendants). If the bond is not posted in violation of the injunction, the lawsuit is dismissed. If posted, the bond is held by the Clerk of the Court. If the litigant conducts the litigation in accordance with law, the bond is returned at the conclusion of that case. 181 F.R.D. at 638.
The court concludes that the least severe sanction likely to deter plaintiffs from filing abusive lawsuits in the future is payment of the defendants' reasonable attorney's fees and costs, and nonmonetary sanctions in the form of a permanent injunction against plaintiffs, prohibiting them from filing any civil action in this court unless plaintiffs first file with the Clerk of the Court a bond in the amount of $25,000 to cover costs, fees, and sanctions that may be levied against plaintiffs in the litigation. The injunctive relief has no punitive aspect, and serves a purely deterrent function. Further, it does not close the courthouse to plaintiffs and should not deter the maintenance of meritorious litigation, as the bond secures plaintiffs' future liability for costs, attorney's fees, and sanctions in the future litigation, which presupposes that the litigation will be unsuccessful or that plaintiffs will engage in sanctionable behavior. If plaintiffs do not bring meritless or sanctionable claims, they have nothing to fear. By the same token, defendants and the court are given real and substantial protection against the maintenance of meritless litigation in the future, as they are assured of a solvent fund for the satisfaction of costs, attorney's fees and sanctions.
The court gave serious consideration to extending the permanent injunction issued in this case to plaintiffs' corporations Proto-CAM Incorporated, Bend Tooling, Inc., and Tennine Corporation, particularly in light of plaintiffs' unsuccessful efforts to amend the complaint to join these three corporations as plaintiffs. (docket #64, ¶ 3). On and before January 3, 2003, plaintiffs were certainly aware that corporations could only be represented in court by licensed attorneys. However, the court has decided to refrain from expanding the scope of the injunction in this case because, unlike the companion case (1:02-cv-673) wherein Tingley, Tingley III, and Bradley actually filed a complaint purporting to represent these three corporations, here the plaintiffs simply proposed an amendment which this court denied.
Plaintiffs must attach a copy of this opinion and the court's accompanying judgment and permanent injunction to any future complaints filed in this court. Failure to comply with the terms of the court's injunction shall be sufficient grounds to dismiss his complaint with prejudice. See Barker, 182 F.R.D. at 665.
Conclusion
For the reasons set forth herein, plaintiffs' motion for Rule 11 sanctions (docket #109) will be denied. Defendants' motions to dismiss (docket #'s 31, 36, 40, 45, 50 and 56) will be granted. Defendants will be awarded their reasonable attorney's fees, expenses, and costs incurred in defending this lawsuit and a permanent injunction will issue against plaintiffs.