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Greeley Publishing Co. v. Hergert

February 8, 2006

GREELEY PUBLISHING COMPANY, A NEVADA CORPORATION DOING BUSINESS AS GREELEY TRIBUNE, PLAINTIFF,
v.
MARY HERGERT, IN HER OFFICIAL CAPACITY AS WELD COUNTY PUBLIC TRUSTEE, DEFENDANT.



The opinion of the court was delivered by: Magistrate Judge Craig B. Shaffer

MEMORANDUM ORDER REGARDING PLAINTIFF'S MOTION FOR SANCTIONS PURSUANT TO RULE 11(c)(1)(A)

Pending before the court is Plaintiff Greeley Publishing Company's Motion for Sanctions Pursuant to Rule 11(c)(1)(A) [Document # 50], filed on October 11, 2005. Plaintiff filed the Motion for Sanctions in the wake of Defendant Hergert's Motion for Stay of Proceedings Pending Determination of Eleventh Amendment Immunity [Document # 37], dated September 6, 2005. Defendant filed her Response to Plaintiff's Motion for Sanctions [Document # 62] on November 7, 2005. Ms. Hergert then filed a Supplement to Her Response [Document # 73] on November 17, 2005. Greeley Publishing Company filed its Reply in Support of Motion [Document # 79] on December 2, 2005, and a further Supplement to its Reply [Document # 83] on January 1, 2006. Defendant Hergert fired a final volley on February 3, 2006 with her Response to Plaintiff's Supplement to its Reply [Document # 94].

The court has reviewed the motion, the parties' briefs, the related exhibits, the entire case file, and the applicable law and is sufficiently advised in the premises. For the reasons discussed below, Plaintiff's Motion for Sanctions Pursuant to Rule 11(c)(1)(A) is denied.*fn1

I. Background

On August 23, 2005, the Greeley Publishing Company filed its First Amended Complaint seeking monetary and injunctive relief, and alleging that Ms. Hergert had infringed on Plaintiff's free speech rights and engaged in a campaign of deceptive trade practices in retaliation for an adverse editorial and Plaintiff's news coverage. Plaintiff contends that Ms. Hergert "rescinded her prior policy of publishing the Public Trustee's legal advertising in the Greeley Tribune . . . and . . . willfully and wantonly distributed a series of false or deceptive notices that disparage and falsely represent the advertising rates or advertising practices of the Greeley Tribune and its sister publication, the Windsor Tribune." Plaintiff asserts its claims against Defendant in her official capacity as the Weld County Public Trustee.

On September 6, 2005, Defendant filed her Motion to Dismiss Plaintiff's First Amended Complaint, arguing, in part, that the Eleventh Amendment affords her immunity from the 42 U.S.C. § 1983 claim for damages asserted against her in her official capacity. Ms. Hergert's motion characterized as an issue of first impression the question of "whether the Office of Public Trustee is an arm of the state for Eleventh Amendment purposes." See Defendant's Motion to Dismiss, at 9. Defendant's motion devoted approximately nine pages to her Eleventh Amendment argument and cited a number of statutes and reported decisions, both for and against the arguments she was advancing.

Concurrent with her Motion to Dismiss, Ms. Hergert filed a Motion for Stay of Proceedings Pending Determination of Eleventh Amendment Immunity. This motion argued that "clear precedent from the United States Supreme Court and the lower federal courts" supported the requested stay of all discovery and other pretrial proceedings pending a determination of Ms. Hergert's assertion of Eleventh Amendment immunity. See Defendant's Motion for Stay, at 2. Defendant readily conceded that "the Eleventh Amendment provides immunity from suit in federal court with respect to money damages only" and acknowledged that Greeley Publishing Company's First Amended Complaint also included a demand for prospective injunctive relief. However, Hergert stated that she was unaware of any Tenth Circuit or Supreme Court authority that addresses application of a stay under the Eleventh Amendment when claims for both money damages and prospective injunctive relief under federal law are asserted. Defendant Hergert is aware of one opinion from the United States District Court for the District of Kansas, Howse v. Atkinson, 2005 U.S. Dist. LEXIS 7511, in which a stay pursuant to the Eleventh Amendment and qualified immunity was granted where claims were brought pursuant to § 1983 and state law, and where not all parties were entitled to a stay. In Howse, the court noted the appropriateness of staying discovery until a pending motion is decided "where the case is likely to be finally concluded as a result of the ruling thereon: where the facts sought through uncompleted discovery would not affect the resolution of the motion; or where discovery on all issues of the broad complaint would be wasteful and burdensome. See Defendant's Motion for Stay of Proceedings, at 3.

In its Response to Defendant's Motion for Stay of Proceedings, filed on September 26, 2005, Greeley Publishing Company argued that Ms. Hergert had failed to cite any "controlling case law" requiring or authorizing a broad stay of all discovery in a case involving claims of Eleventh Amendment immunity. Notably, Plaintiff dismissed the Howse decision as "easily distinguishable." Greeley Publishing Company reasoned that "in contrast to the situation in Howse, where the trial court issued its ruling on the immunity defenses within one week of the issuance of the stay . . . no such speedy resolution is likely here." See Plaintiff's Response to Defendant's Motion for Stay, at 10.

On October 11, 2005, Plaintiff filed the instant Motion for Sanctions. Greeley Publishing Company argues "[t]here is no basis whatsoever, let alone a colorable basis, in fact or law for Hergert to claim that her office is an arm of the State of Colorado, and even less to seek a stay of all discovery." See Plaintiff's Motion for Sanctions, at 2. Plaintiff contends that there is no basis whatsoever for Defendant's argument that her office is an arm of the State of Colorado. Ms. Hergert concedes that the Office of Weld County Public Trustee receives no funds from the State of Colorado, and that no state funds would be used to satisfy a judgment in this case. Plaintiff contends that this concession undermines Defendant's Eleventh Amendment defense. Therefore, there is no factual basis for Ms. Hergert's assertion that she is an arm of the state. Further, Greeley Publishing Company repeats its argument that the Eleventh Amendment does not bar Plaintiff's claim for injunctive relief for constitutional violations under 42 U.S.C. § 1983. See Ex Parte Young, 209 U.S. 123 (1908). As a result, Plaintiff argues, it is frivolous to request a complete stay of discovery on Eleventh Amendment grounds because the claim for injunctive relief will proceed regardless of the ruling on immunity.

On October 20, 2005, this court held a hearing on Defendant's Motion for Stay. At the outset of that hearing, the parties advised the court that Greeley Publishing Company previously had served interrogatories and requests for production, as well as deposition notices on three non-parties. Plaintiff's counsel acknowledged that his client's discovery efforts were intended, in part, to develop factual information that might be germane to Eleventh Amendment issues that may be addressed in a future motion for summary judgment. During the October 20th hearing, Ms. Hergert's counsel again conceded that the Eleventh Amendment would not bar a claim for prospective injunctive relief. However, defense counsel noted there was little case law addressing the issue of a stay of discovery under the Eleventh Amendment where both money damages and prospective injunctive relief were sought. Counsel reasoned that a complete stay of discovery was appropriate in the latter situation because there's no way to differentiate factually these claims and divvy up discovery that way. And it would be highly inefficient to have, as I pointed out previously, two tracks of discovery going forward to that point.

See Transcript of Proceedings on October 20, 2005, at 10-11.

While acknowledging the legal arguments raised by Ms. Hergert and her legitimate desire to avoid unnecessary discovery burdens, the court concluded that the decision in Howse v. Atkinson could not be read so broadly as to stay all discovery simply because Defendant had asserted an Eleventh Amendment defense to a damages claim. According, I made the following ruling at the conclusion of the October 20th hearing:

I am going to deny the motion to stay to the extent that the motion for stay seeks to stay all discovery. That sweeps too broadly. I will allow discovery to go forward. To the extent that Ms. Hergert believes she has received written discovery that is uniquely and solely directed to a claim of damages, she may assert whatever remedies she believes are appropriate under [Rule] 26(c). To the extent that the discovery that is sought by the ...


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