material raising some dubiety to the contrary, that finding may
not be disturbed, for it is the law of the case. See Catanzano
v. Wing, 103 F.3d 223, 230 n. 5 (2d Cir. 1996).
By March 1990, CWS's sales of JVC merchandise to BWAC had
declined significantly. See Caribbean, 963 F. Supp. at 1346.
Soon after, BWAC began buying video equipment through MARTA
Cooperative of America, Inc. ("MARTA"), a mainland purchasing
group, and so informed CWS in or around June of 1990. See id.
Yet, because JVC audio products*fn2 were not available through
MARTA, in the summer of 1990,*fn3 BWAC arranged to purchase
audio equipment directly from JVC. While it was originally CWS's
contention that JVC offered BWAC lower prices than it charged CWS
for the same products, BWAC actually paid substantially higher
prices than did CWS. See Caribbean, 963 F. Supp. at 1346. Still,
CWS almost certainly added a mark-up to cover overhead and
profit, which would have increased the price CWS charged BWAC to
an amount higher than what BWAC paid directly to JVC. See id.
at 1353 n. 24. In fact, Villani confirms that JVC's prices were
lower than CWS's. See id. (citing Faber Aff., Exh. 16, at 66).
CWS's sole remaining claim under Law 75 alleges that JVC
impaired the parties' established distribution relationship by
selling audio equipment directly to BWAC, thereby bypassing CWS
entirely. In its earlier summary judgment opinion, the Court
found "evidence in the record that could reasonably lead a jury
to infer that JVC performed acts that directly or indirectly
caused BWAC to decide not to resume purchasing from CWS once it
learned that JVC audio products could not be obtained from
MARTA." Id. at 1352. It therefore concluded that JVC had failed
to rebut the statutory presumption, under P.R. Laws Ann. tit. 10,
§ 278a-1(b)(1), that the parties' relationship was impaired by
its "establish[ment of] facilities in Puerto Rico for the direct
distribution of merchandise." Caribbean, 963 F. Supp. at
JVC now effectively challenges the Court's prior ruling that "a
jury could conclude that JVC's participation in such negotiations
constituted an action directly or indirectly contributing to the
establishment of facilities for direct distribution in Puerto
Rico." Id. at 1353. Its argument is based on two recent
decisions of the United States District Court for the District of
Puerto Rico, Innovation Mktg. v. Tuffcare Inc., 31 F. Supp.2d 218
(D.P.R. 1998), and Caribe Indus. Sys., Inc. v. National
Starch & Chem. Co., 36 F. Supp.2d 448 (D.P.R. 1999), aff'd,
212 F.3d 26, 31 (1st Cir. 2000), which JVC claims compel the
dismissal of CWS's claim. In response, CWS characterizes JVC's
renewed motion as "an attempt to ignore or gloss-over" the
Court's previous findings regarding JVC's negotiations with BWAC.
See Pl. Opp. Mem. at 5 (citing Caribbean, 963 F. Supp. at
1353). CWS argues further that JVC's
motion is unwarranted because this Court has previously
considered all of the authority cited by JVC in its memorandum of
law, with the exception of Innovation and Caribe, and has
deemed it "unavailing." Caribbean, 963 F. Supp. at 1353 n. 25.
I. Summary Judgment Standard
A moving party is entitled to summary judgment if "the
pleadings, depositions, answers to interrogatories, and
admissions on file, together with the affidavits, if any, show
that there is no genuine issue as to any material fact and that
the moving party is entitled to a judgment as a matter of law."
Fed.R.Civ.P. 56(c); see also Celotex Corp. v. Catrett,
477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Holt v.
KMI-Continental, Inc., 95 F.3d 123, 128 (2d Cir. 1996). Though
they are equally applicable here, because the oft-cited standards
for summary judgment have been set forth in detail in the Court's
previous Opinion and Order, see Caribbean, 963 F. Supp. at 1351,
they need not be repeated at this juncture.
Although a party may renew its motion for summary judgment "as
long as it is supported by new material," Twin Labs., Inc. v.
Weider Health & Fitness, 720 F. Supp. 31, 34 (S.D.N.Y. 1989),
aff'd, 900 F.2d 566 (2d Cir. 1990); see also Whitford v.
Boglino, 63 F.3d 527, 530 (7th Cir. 1995), the Court retains
discretion to determine the scope of its reconsideration, see
Warner Bros., Inc. v. American Broad. Cos., Inc., 720 F.2d 231,
245 (2d Cir. 1983); Corporacion de Mercadeo Agricola v. Mellon
Bank Int'l, 608 F.2d 43, 48 (2d Cir. 1979). The Court may grant
a revived motion "upon a showing of good cause." 10A Charles A.
Wright & Arthur R. Miller, Federal Practice and Procedure §
2717, at 299 (1998); see also id. § 2718, at 303. Nonetheless,
district courts must heed the Second Circuit's direction to
"balance the need for finality against the forcefulness of any
new evidence and the demands of justice." Corporacion de
Mercadeo, 608 F.2d at 48; see also Dictograph Prods. Co. v.
Sonotone Corp., 230 F.2d 131, 137 (2d Cir. 1956) (L.Hand, J.).
The cases cited by JVC clearly reflect new developments of
controlling law not previously available for the Court's
consideration. Because the law is constantly evolving, "a new
decision clarifying the applicable substantive law may justify
reexamining a denial of summary judgment." Lavespere v. Niagara
Mach. & Tool. Works, 910 F.2d 167, 185 (5th Cir.), reh'g
denied, 920 F.2d 259 (5th Cir. 1990), abrogated on other
grounds, Little v. Liquid Air Corp., 37 F.3d 1069, 1075 n. 14
(5th Cir. 1994) (en banc); see also Bush Dev. Corp. v. Harbour
Place Assocs., 632 F. Supp. 1359, 1366 (E.D.Va. 1986). Thus,
while this Court is not bound to follow an interpretation of
local law enunciated by a district judge sitting in the
jurisdiction, see Carolco Pictures Inc. v. Sirota, 700 F. Supp. 169,
171 (S.D.N.Y. 1988), it is undoubtedly wise to defer to the
expertise of a local court.*fn4 Judges sitting in Puerto
Rico — and particularly members of the United States District
Court for the District of Puerto Rico — enjoy much greater
familiarity and expertise than this Court with regard to such
esoteric issues of Puerto Rico law. Likewise, the United States
Court of Appeals for the First Circuit, which reviews the
decisions of the Puerto Rico district court, necessarily has
great familiarity with Law 75. Finally, it is particularly
prudent for the Court to defer to local expertise in this case,
given the unique nature of Puerto Rico law. See Oliveras-Salas
v. Puerto Rico Highway Auth., 884 F.2d 1532, 1534-35 (1st Cir.
1989) ("When we are faced with a question involving the proper
construction of Puerto Rico law, we accord respect to the
district judges who are citizens of Puerto Rico and well versed
in the Spanish underpinnings of Puerto Rico law."); Motor Sport,
Inc. v. Harley-Davidson Motor Co., 39 F. Supp.2d 140, 142 (D.P.R.
1999) (suggesting that the Puerto Rico district court is "more
familiar" with Law 75 issues than a Wisconsin district court);
In re Developers of Caguas, Inc., 26 B.R. 977, 980 (Bankr.
E.D.N.Y. 1983) (transferring venue, having concluded that
critical issues "can best be decided by a court knowledgeable as
to Puerto Rican conditions").
Had the Court been able to consider these two cases in
resolving JVC's original summary judgment motion, it might have
been afforded a different perspective on the material issues.
See Lavespere, 910 F.2d at 185. Thus, renewal of JVC's motion
II. The Innovation and Caribe Decisions
Puerto Rico's Law 75 "governs the business relationship between
principals and the locally appointed distributors/dealers for
marketing their products." Irvine v. Murad Skin Research Labs.,
Inc., 194 F.3d 313, 317 (1st Cir. 1999). In 1966, the Puerto
Rico legislature amended the statute to provide that
"[n]otwithstanding the existence in a dealer's contract of a
clause reserving to the parties the unilateral right to terminate
the existing relationship, no principal or grantor may directly
or indirectly perform any act detrimental to the established
relationship or refuse to renew said contract on its normal
expiration, except for just cause." P.R. Laws Ann. tit. 10, §
278a. To demonstrate the impairment of an "established
relationship," CWS must show a detriment to a contractually
acquired right, as defined by its Agreement with JVC. See
Irvine, 194 F.3d at 318 ("The protection afforded dealers by Law
75 . . . is circumscribed by those rights acquired under the
agreement regulating their business relationship. Therefore,
whether or not an impairment has taken place will depend on the
specific terms of the distribution contract."); Vulcan Tools v.
Makita USA, Inc., 23 F.3d 564, 569 (1st Cir. 1994) ("[T]he
`established relationship' between dealer and principal is
bounded by the distribution agreement, and . . . therefore [Law
75] only protects against detriments to contractually acquired
rights."); id. ("The question whether there has been a
`detriment' to the existing relationship . . . is just another
way of asking whether the terms of the contract . . . have been
impaired."); see also P.R. Laws. Ann. tit. 10, § 278a-1(b)(2)
(creating a presumption of impairment of an existing relationship
"when the principal . . . establishes a distribution relationship
with one or more additional dealers . . . in conflict with the
contract existing between the parties").
A. Law 75 and Non-Exclusive Agreements
The First Circuit has held that a manufacturer's appointment of
in Puerto Rico does not impair an "established agreement" with an
existing distributor if the parties' relationship was
non-exclusive. See Borschow Hosp. & Med. Supplies, Inc. v. Cesar
Castillo Inc., 96 F.3d 10, 15-16 (1st Cir. 1996); Vulcan, 23
F.3d at 569; see also Harley-Davidson Motor Co. v. Motor Sport,
Inc., 6 F. Supp.2d 996, 1001 (E.D.Wis. 1998); Santiago v. Canon
U.S.A., Inc., Civ. No. 93-2225, 1997 WL 188453, at *3 (D.P.R.
Mar.7, 1997), aff'd, 138 F.3d 1 (1st Cir. 1998). In November
1998, the United States District Court for the District of Puerto
Rico extended this proposition by denying provisional relief to a
non-exclusive sales representative aggrieved by its principal's
decision to sell products directly to Puerto Rican customers
through a wholly-owned subsidiary. See Innovation, 31 F. Supp.2d
at 220, 223. Thus, in Law 75 cases, "[t]he exclusive or
nonexclusive nature of the contract between [the manufacturer and
the distributor] is critical because `whether or not an
impairment [under Law 75] has taken place will depend upon the
specific terms of the distribution contract.'" Twin County
Grocers, Inc. v. Mendez & Co., 81 F. Supp.2d 276, 286 n. 6
(D.P.R. 1999) (quoting Irvine, 194 F.3d at 318-19); cf. Newell
P.R., Ltd. v. Rubbermaid Inc., 20 F.3d 15, 23 (1st Cir. 1994)
(upholding jury verdict for exclusive distributor based in part
on evidence of supplier's direct sales to retail stores); Orba,
Inc. v. MBR Indus., Inc., 49 F. Supp.2d 67, 71 (D.P.R. 1999)
("[A] jury could find that MBR had impaired the relationship with
Orba when it sold directly in Puerto Rico through house accounts
if the jury had previously found that the Agreement between them
furnished exclusivity upon Orba.") (emphasis added).
There can be no question that CWS and JVC enjoyed a
non-exclusive relationship. Cf. Graphics Supply Inc. v.
Polychrome Corp., 116 F.3d 464, 1997 WL 351637, at *2 (1st Cir.
June 23, 1997). In fact, the Agreement's first paragraph stated
JVC hereby appoints [CWS] as a non-exclusive
distributor for the warehousing and resale to
retailers of the JVC products set forth on the
Schedule of Products annexed hereto . . . as said
schedule may from time to time be deleted from,
amended or modified or Products substituted by JVC. .
. . Nothing herein contained shall be construed as
granting to [CWS] an exclusive right to sell the
Products, it being understood by [CWS] that the
rights herein granted shall be on a non-exclusive
Taffet Aff., Exh. B, ¶ 1 (emphasis added). Moreover, subparagraph
5(c)(v) further provided that "JVC [had] the right . . . at any
time to effect changes in . . . or reallocate the distribution of
any of its Products . . . without incurring any liability to
[CWS]," id. ¶ 5(c)(v), and paragraph 5(f) confirmed that "[n]o
territory [was] assigned exclusively to [CWS] by JVC," and
"reserve[d] [JVC's] absolute right to increase or decrease the
number of DISTRIBUTORS in [CWS's] primary area of responsibility
or elsewhere, at any time without notice to [CWS]," id. ¶ 5(f).
Nowhere did the Agreement require that JVC use distributors to
market its products in Puerto Rico, nor did it prohibit JVC from
selling directly to Puerto Rican customers. Cf. Twin County,
81 F. Supp.2d at 285 ("`The law imposes no prohibition upon the
principal of selling or establishing parallel distributorship
agreements if he reserved the right to do so.'") (quoting
General Office Prods. Corp. v. Gussco Mfg., Inc., 666 F. Supp. 328,
331 (D.P.R. 1987)).
Although non-exclusive distributors are entitled to protection
under Law 75, the statute "does not operate to convert
non-exclusive distribution contracts into exclusive distribution
contracts." Vulcan, 23 F.3d at 569; see also Nike Int'l, Ltd.
v. Athletic Sales, Inc., 689 F. Supp. 1235, 1238 (D.P.R. 1988)
("[T]he legislature did not intend that Law 75 be a safe haven
for dealers to avoid the express terms of the contracts to which
they willingly subscribed
. . . ."). Therefore, CWS must identify specific terms of the
Agreement that JVC violated in order to demonstrate that JVC's
actions impaired a contractually acquired right. See Vulcan, 23
F.3d at 569. Absent such a showing, the Court must grant summary
judgment in favor of JVC.
B. Direct Sales to BWAC
In its earlier decision, this Court dismissed CWS's claims
arising from BWAC's participation in MARTA, having found "no
evidence that BWAC's decision was induced or influenced by any
communication or other affirmative act on JVC's part."
Caribbean, 963 F. Supp. at 1352. By contrast, the Court
concluded that JVC's "direct sales to BWAC stand on a different
footing than the sales through MARTA, because there is evidence
in the record that could reasonably lead a jury to infer that JVC
performed acts that directly or indirectly caused BWAC to decide
not to resume purchasing from CWS once it learned that JVC audio
products could not be obtained from MARTA." Id. at 1353.
Moreover, in a footnote, the Court addressed JVC's defense that
regardless of their effect on CWS, its "direct sales [we]re
equivalent to the creation of additional dealerships under Law
75, and thus a non-exclusive dealer cannot complain of either
action." Id. at 1352 n. 25. The Court deemed JVC's argument
"unavailing because the issue is not the creation of other
distributorships, but direct sales to BWAC." Id. It also chided
JVC for its "strained reading" of Homedical Inc. v. Sarns/3M
Health Care, Inc., 875 F. Supp. 947, 951 (D.P.R. 1995), observing
that Homedical "hardly compels a ruling that direct sales
cannot be an impairment of a non-exclusive dealership."
Caribbean, 963 F. Supp. at 1352 n. 25.
Notwithstanding this Court's prior analysis, the Puerto Rico
district court's decision in Caribe and the First Circuit's
recent affirmance both strongly support JVC's prior argument and
compel reconsideration of the Court's May 12, 1997 decision.
Caribe involved facts remarkably similar to the case at hand.
There, the plaintiff, Caribe Industrial Systems, Inc. ("Caribe"),
was a non-exclusive local distributor for defendant National
Starch and Chemical Company ("National"), a manufacturer of "hot
melt" adhesive products, whose customer, Checkpoint Systems, Inc.
("Checkpoint"), had ceased purchasing adhesives from Caribe
because it was prepared to manufacture the product itself. See
Caribe, 212 F.3d 26, 28. However, after informing Caribe that it
would no longer be a customer, instead of making the adhesives
locally, Checkpoint contracted to "buy them directly from
National, omitting Caribe from the distribution chain." Id.
Caribe sued for damages and provisional relief under Law 75. See
id. Facing a motion to dismiss for failure to state a claim,
Caribe argued that even if the Court deemed its distributorship
non-exclusive, Law 75 prohibited National from selling directly
to Checkpoint because such sales constituted "an unjustified act
detrimental to the established relationship between both
entities." Caribe, 36 F. Supp.2d at 450.
The district court disagreed. Characterizing the issue as
"whether a non-exclusive distribution agreement under Law 75,
although flexible to allow multiple distributors, nevertheless
forbids the principal from supplying its products directly to the
customers of its own distributors," id., the court extended the
logic of Innovation, 31 F. Supp.2d at 221, reasoning that
[i]f a supplier is free to create a wholly-owned
subsidiary to distribute products where a
non-exclusive distributor already exists, it would be
absurd to conclude that the same supplier cannot sell
its products directly under similar circumstances.
It does not make any practical difference whether
the proceeds of the sales go directly to the
supplier, or if they first go to a wholly-owned
subsidiary of the supplier that
eventually transfers the profits to the supplier
Caribe, 36 F. Supp.2d at 451 (emphasis added). The court then
reiterated that Law 75 "does not pamper distributors into
acquiring rights that they have never possessed to begin with,"
and dismissed Caribe's claims in their entirety. Id. at 452.
On May 8, 2000, the First Circuit affirmed the dismissal,
albeit on different grounds. This time, the panel focused on the
fact that by the time Checkpoint entered into its agreement with
National to buy the adhesives directly, it had already terminated
its customer relationship with Caribe. See Caribe, 212 F.3d 26,
30. Although Caribe had argued on appeal that "Checkpoint
remained its customer even after Checkpoint announced its
intention to discontinue purchasing product from Caribe." id.
at 28, the Court of Appeals found that "Checkpoint had made it
clear that it would no longer purchase adhesives from Caribe —
i.e., that Checkpoint effectively announced its plans to end
its existing customer relationship with Caribe — before it
entered a new arrangement to purchase products directly from
National," id. at 29. It therefore held that when Checkpoint
"communicated that it would no longer proceed with its
relationship with Caribe," id. at 30, "Caribe's status as a
dealer supplying Checkpoint with National's product was at an
end," id. at 29. Thus, once Checkpoint terminated its
relationship with Caribe, there was nothing to prevent National
from dealing with Checkpoint directly. See id. at 30.*fn6
Both Caribe decisions are obviously applicable to the facts
at hand. As the Court has previously discussed, see supra at
241-42, the relationship between CWS and JVC was
non-exclusive;*fn7 hence, JVC was free to appoint as many
distributors in Puerto Rico as it wished. See Borschow, 96 F.3d
at 16; Vulcan, 23 F.3d at 569. Under Innovation, 31 F. Supp.2d
at 223, JVC could have created a wholly-owned subsidiary for the
purpose of distributing its products in Puerto Rico, even if that
subsidiary competed with CWS.*fn8 And, according to the district
court in Caribe, the fact that JVC sold its products directly
BWAC rather than forming a Puerto Rican subsidiary is a
distinction without a difference. See Caribe, 36 F. Supp.2d at
CWS endeavors to distinguish Caribe, emphasizing that
Caribe's distributorship agreement expressly reserved National's
right to sell its products directly to Puerto Rican customers, in
contrast to the Agreement between JVC and CWS, which did not
contain analogous provision. Compare Caribe, 212 F.3d 26, 27;
and Caribe, 36 F. Supp.2d at 451, with Taffet Aff., Exh. B.
JVC correctly points out, however, that "[t]he issue . . . is not
whether JVC expressly reserved such a right to itself, but rather
whether a right contractually granted to [CWS] was impaired by
JVC's direct sales." Def. Mem. at 9. The fact that JVC's
Agreement did not explicitly reserve its right to sell its
products directly to customers does not, by itself, suggest that
it had covenanted not to do so.*fn10 Rather, the Agreement
unambiguously stated that CWS had no "exclusive right" to sell
JVC products. Taffet Aff., Exh. B, ¶ 1. It also guaranteed JVC's
right "to effect changes in . . . or reallocate the distribution
of" any of its products in Puerto Rico. Id. ¶ 5(c)(v). Were
subparagraph 5(c)(v) to be construed as limited only to the
appointment of additional distributors, it would render
superfluous paragraph 5(f), which guaranteed JVC "the absolute
right to increase or decrease the number of DISTRIBUTORS in
[Puerto Rico] or elsewhere, at any time without notice to [CWS]."
Id. ¶ 5(f). Clearly, then, JVC never granted CWS the right to
be free from direct competition from JVC.
Like Caribe, CWS is essentially arguing that even after losing
BWAC as a customer, it should have had the exclusive right to
recapture BWAC's business on JVC's behalf. In its memorandum of
law, CWS cited this Court's earlier statement that a jury could
find that "[BWAC] would have decided to resume buying such
merchandise from CWS, had not JVC offered advantageous terms."
Pl. Opp. Mem. at 5 (citing Caribbean, 963 F. Supp. at 1353);
see also Faber Letter at 2. Indeed, "before commencing direct
purchases of audio products from JVC, BWAC had to negotiate with
JVC the prices and other terms it would receive." Caribbean,
963 F. Supp. at 1352. According to CWS, it was this solicitation
that violated Law 75.
Yet, while CWS characterizes Caribe's case as lacking evidence
that National engaged in similar negotiations with Checkpoint,
see Pl. Opp. Mem. at 9, in fact, quite the opposite is true. In
early June 1997, National met privately with Checkpoint, after
which the two "agreed that instead of manufacturing the adhesives
would by them directly from National." Caribe, 212 F.3d 26, 27.
Furthermore, Caribe specifically alleged that Checkpoint "`would
have never ceased purchasing adhesives from [it] had National
never offered them directly to Checkpoint.'" Id. at 29 (quoting
Caribe, 36 F. Supp.2d at 450). Finally, National waited until
many months — almost exactly as long as JVC waited — after
Checkpoint had terminated its relationship with Caribe before
approaching Checkpoint with its offer. Compare Caribe,
212 F.3d 26, 29-30 (finding that Checkpoint terminated its relationship
with Caribe on March 26, 1997, and National entered into its own
agreement with Checkpoint in May or June of 1997), with supra
at 237-38 & n. 3 (noting that while BWAC's purchases from CWS had
declined dramatically by March 1990, BWAC did not begin
negotiating with JVC until that summer). Therefore, though JVC
may have persuaded BWAC to buy merchandise from it directly
rather than resume purchasing from CWS, see Caribbean,
963 F. Supp. at 1353, there is no material difference between such
conduct and the negotiations alleged and assumed in Caribe.
Given the similarities between National's solicitation of
Checkpoint and JVC's courtship of BWAC, this effort to
distinguish Caribe must also fail. The First Circuit has
recognized that under CWS's approach, "if [CWS] were not able to
persuade [BWAC] to purchase [JVC's] product through it, then
[JVC] would have no recourse but to accept the loss of [BWAC's]
business." Caribe, 212 F.3d 26, 30 n. 5. Despite their past
dealings, once BWAC ended their relationship, CWS had no
exclusive right to seek BWAC's business. Absent any evidence that
JVC induced BWAC's original decision to stop buying from CWS,
see Caribbean, 963 F. Supp. at 1351-53, the Court "see[s]
nothing in the terms of the Agreement that imposes such an
extreme restriction on [JVC's] right to sell directly," Caribe,
212 F.3d 26, 30 n. 5. Thus, JVC did not violate CWS's contractual
rights and cannot be held liable under Law 75.*fn11
Having construed all of the evidence in the light most
favorable to CWS and having drawn all reasonable inferences in
its favor, the Court finds no material distinction between the
facts of this case and those in Caribe. As a result, the First
Circuit's decision in Caribe is controlling authority for the
proposition that, in the absence of an exclusive distributorship
agreement or some express contractual prohibition, a manufacturer
does not violate Law 75 by selling its product directly to a
former customer of its distributor. See Caribe, 212 F.3d 26,
30. "The fact of the matter is that [JVC] has decided to exercise
one of its rights under the contract that it previously — for
whatever reason — had chosen not to exercise, and said right
implicates direct selling, not termination nor harm to the
supplier-distributor, non-exclusive relationship." Caribe,
36 F. Supp.2d at 451; see also Jones Distrib. Co., 943 F. Supp. at
1481 ("[T]he alleged violations of good faith were actually
exercises of rights specifically reserved under the
[distributorship] Agreement and therefore cannot form the basis
of a claim of breach of duty of good faith."). To the extent that
this Court, in its previous decision, held otherwise, that
portion of the Opinion and Order must be vacated. CWS's remaining
claim against JVC shall be dismissed with prejudice.
III. CWS's Motion for Sanctions
On May 21, 1999, CWS filed a cross-motion seeking sanctions
against JVC, pursuant to Fed.R.Civ.P. 11(c), on the grounds that
JVC's renewed motion for summary judgment was frivolous and
intended to delay trial and increase CWS's litigation costs. Now
that the Court has granted JVC's motion, it is obvious that it
was CWS's cross-motion for sanctions — not JVC's motion — that
was unwarranted. See General Elec. Co. v. Speicher,
877 F.2d 531, 538 (7th Cir. 1989) (characterizing motion for sanctions for
filing a frivolous appeal as "itself frivolous and sanctionable,"
because "[f]ar from appealing frivolously, [the] appeal has
overwhelming merit"). Moreover, it should be noted that CWS
provided only seven days' notice of its motion, see Pl. Notice
of Cross-Motion at 2, and thus failed to comply with the 21-day
"safe harbor" requirement of Fed. R.Civ.P. 11(c)(1)(A). This, in
and of itself, is sufficient grounds for denial of CWS's motion.
See Hadges v. Yonkers Racing Corp., 48 F.3d 1320, 1328-29 (2d
In response to CWS's request for sanctions, JVC asks the Court
to award it the reasonable expenses and attorneys' fees it
incurred in opposing the cross-motion. See Fed.R.Civ.P.
11(c)(1)(A) ("If warranted, the court may award to the party
prevailing on the motion the reasonable expenses and attorney's
fees incurred in presenting or opposing the motion."); Koar v.
United States, No. 96 Civ. 5166, 1997 WL 1038181, at *2 n. 2
(S.D.N.Y. Sept.2, 1997) ("[T]he making of a frivolous Rule 11
motion can itself result in sanctions against the movant."). This
request is entirely reasonable, for a Rule 11 motion must never
be used as a mere tactic to bolster a response — whether
meritorious or not — to a motion or pleading. See Nakash v.
United States Dep't of Justice, 708 F. Supp. 1354, 1366-67
(S.D.N.Y. 1988). For these reasons, Norman L. Faber, Esq.,
counsel to CWS, shall remit to JVC its reasonable expenses and
attorneys' fees incurred in opposing the cross-motion, not to
exceed five hundred dollars.
For the foregoing reasons, JVC's renewed motion for summary
judgment is HEREBY GRANTED. The Clerk of the Court is directed to
dismiss CWS's Complaint in its entirety. Furthermore, CWS's
cross-motion for sanctions is HEREBY DENIED. Norman L. Faber,
Esq., counsel to CWS, is HEREBY ORDERED to remit to JVC its
reasonable expenses and attorneys' fees incurred in opposing
CWS's cross-motion, not to exceed five hundred dollars. Within
ten days of the date of this Opinion and Order, counsel to JVC
shall submit an application and affidavit detailing such expenses
and fees. Finally, the parties are ordered to appear before this
Court at the United States Courthouse, 500 Pearl Street,
Courtroom 18B, New York, New York, on Thursday, July 6, 2000, at
10:00 a.m. for a pre-trial conference.