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Tax Protestor Cases Exhibit
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ROBERT H. TAYLOR,
Plaintiff,
v.
JAMES E. GAITHER, ET AL.,
Defendants.

IN THE DISTRICT COURT OF THE UNITED STATES FOR THE
SOUTHERN DISTRICT OF ALABAMA, MOBILE DIVISION

ORDER

[1] This lawsuit is now before the court on the motion of defendants Candice Trahan and Tina Blanchard for sanctions against plaintiff Robert H. Taylor pursuant to Rule 11 of the Federal Rules of Civil Procedure. For the reasons that follow, this motion will be granted.

I. BACKGROUND

Chronologically, the relevant events are as follows.

[2] FEBRUARY 22, 1998: Taylor filed suit in this court seeking to enjoin his employer, Petroleum Helicopters, Inc., and present and former employees of the Internal Revenue Service (IRS) from garnishing his wages or otherwise collecting income tax from him. That case was dismissed by United States District Judge Virgil Pittman on July 31, 1998.

[3] APRIL 20, 2000: Taylor filed this lawsuit against United States District Judges Pittman and Charles Butler, charging them with conspiracy to deprive him of equal protection of the law, in violation of 42 U.S.C.A. section 1985; against Trahan and Blanchard (two other employees of Petroleum Helicopters, Inc.) and against former or present employees of the IRS, charging them with violating the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C.A. section 1961 et seq., committing federal mail fraud in contravention of 18 U.S.C.A. section 1341, and for common-law extortion.

[4] JUNE 16, 2000: Trahan and Blanchard filed a motion to dismiss with the court, and they served a copy of a motion for Rule 11 sanctions on Taylor. The sanctions action requested that reasonable attorney's fees be taxed against Taylor for the frivolous prosecution of this suit.

[5] JULY 7, 2000: Trahan and Blanchard filed their motion for sanctions with the court.

[6] AUGUST 24, 2000: The court dismissed Taylor's claims against Trahan and Blanchard.

II. LIABILITY FOR SANCTIONS

[7] Rule 11 of the Federal Rules of Civil Procedure empowers a court to impose "appropriate sanctions upon [] attorneys, law firms or parties," Fed. R. Civ. P. 11(c), for presenting pleadings, motions, and other papers to the court, for improper purposes, frivolous arguments, or factual allegations that lack evidentiary support. Fed. R. Civ. P. 11(b). The rule also provides a "safe harbor" by requiring the moving party to serve the nonmoving party with the motion, but the motion itself may not be filed with the court "within 21 days after service." Id. 11(c)(1)(A). This gives the nonmoving party ample opportunity to withdraw or remedy the submission to the court or to make clear its non-frivolous nature and thus avoid possible sanction. In this case, there is no doubt that the 21-day notice period required for a notion for sanctions under Rule 11 has been satisfied.

[8] Faced with a motion for sanctions, a court must consider two questions. First, the court must determine whether the claims that are the subject of the notion are objectively frivolous; second, the court must ascertain whether the person responsible should have been aware that the claims were frivolous. See Baker v. Alderman, 158 F.3d 516, 524 (11th Cir. 1998).

[9] Rule 11 sanctions are not appropriate where a claim is brought solely as a result of poor judgment. See Davis v. Carl, 906 F.2d 533, 537 (11th Cir. 1990). However, where there is evidence that a claim is brought in bad faith, Rule 11 sanctions are appropriate. See Nesmith v. Martin Marietta Aerospace, 833 F.2d, 1489, 1491 (11th Cir. 1987) (discussing inclination to reverse Rule 11 sanctions where there was insufficient evidence of bad faith).

[10] On the facts of this case, sanctions against Taylor are warranted. His claims are unfounded in law and advance no reasonable argument to change existing law. See Baker, 158 F.3d at 524. It is obvious from Taylor's complaint that he has already raised substantially the same claim as to his tax liability in a previously dismissed lawsuit. See Complaint at paragraph 28. In this lawsuit, as stated, he has added additional defendants, including Trahan and Blanchard, as well as additional claims. His new claims arise out of the dismissal of his previous suit and relate to the imposition of tax liability on him and attempts to collect taxes from him. As the court explained in its order entered August 24, 2000, the sixteenth amendment to the United States Constitution empowers Congress to "lay and collect taxes on income, from whatever source derived." Title 26 of the United States Code, known as the Internal Revenue Code, is a lawful exercise of that constitutional power. It is legally indisputable that the proper attempts by Taylor's employer, through Blanchard and Trahan, to comply with the tax cannot give rise to claims for extortion, racketeering, or mail fraud.

[11] It is also manifest that a reasonable person should have been aware of this. This standard is an objective one and does not turn on the individual capabilities of the party against whom sanctions are sought. See Baker, 158 F.3d at 524. As the Eleventh Circuit Court of Appeals has framed this inquiry, the court must ask whether the prosecution of this suit was reasonable under the circumstances at the time the suit was filed. See id. The laws that make this suit objectively unreasonable were firmly established when this case was filed, and, indeed, long before Taylor's first case was filed in 1998. There was no doubt before this suit was filed that the income tax is a legal exercise of Congress's constitutional power, and that the IRS in legally empowered to collect that tax. Taylor's claims do not present any colorable arguments that call this into doubt, nor do they present any issue of first impression. Moreover, even were the standard of reasonableness not objective, the pleadings in this case show considerable effort and research, indicating that Taylor is a motivated and capable litigant. The court is satisfied that any reasonable person, especially one of Taylor's ability and motivation, should have known that his claims against Trahan and Blanchard were frivolous.

[12] Finally, the court is satisfied that the pleadings that Taylor has filed provide evidence that these papers were not submitted for a proper purpose. For example, in his notion for summary judgment, filed on July 9, 2000, Taylor asserts that defendants

"could have prevented this civil suit by providing Plaintiff with a section of law making Plaintiff 'subject' to or 'liable' for a so-called income tax. The latest occasion being December, 1999. . . . The reason they have been unable to do so is because no such sections exist in law or fact."

Although the summary-judgment motion was filed after Trahan and Blanchard filed their motion for sanctions, it is evident from the part of his motion quoted that Taylor is unwilling to recognize existing law, and that he blames this suit on Trahan and Blanchard's inability to convince him otherwise. Trahan and Blanchard are under no obligation to convince Taylor that he is subject to the tax laws.

[13] Taylor's complaint reveals that he has filed at least two frivolous lawsuits in this court because he is unconvinced that he must pay United States income tax. As Taylor continues to maintain this position after this court has made as plain as possible the unquestionable constitutional and legal basis of the income tax as it applies to him, the court doubts whether it lies within any powers of reason to "convince" Taylor. The court also finds that this is evidence of intent to frustrate Trahan and Blanchard in the lawful exercise of their employment. This is not a proper purpose for bringing suit in this court.

[14] Taylor's pro so status is no shield against sanctions. As the Eleventh Circuit has made plain, "one acting pro so has no license to harass others, clog the judicial machinery with meritless litigation, and abuse already overloaded court dockets." Patterson v. Aiken, 841 F.2d 386, 387 (11th Cir. 1988) (quoting Ferguson v. MBank Houston, N.A., 806 F.2d 358, 359 (3th Cir. 1986)). Accordingly the motion for sanctions against Taylor will be granted.

III. ATTORNEYS' FEES & EXPENSES

A. FEES

[15] Trahan and Blanchard have requested attorney's fees and expenses in the amount of $3,681.47 as sanctions against Taylor. Rule 11 specifically contemplates an award of "some or all of the reasonable attorney's fees and other expenses incurred as a direct result of the violation." Fed. R. Civ. P. 11(c)(2). The violation in this instance was the prosecution of this lawsuit. Thus the court must ask what, if any, of Trahan and Blanchard's attorney's fees and expenses in this suit should be allowed as sanctions.

[16] Trahan and Blanchard have submitted detailed billing statements delineating the legal fees and costs of defending the case against them. Although Rule 11 does not provide specific guidance as to what constitutes reasonable fees or expenses, other courts assessing fees and costs as Rule 11 sanctions have used the "lodestar" approach. See, e.g., View Engineering, Inc. v. Robotic Vision Systems, Inc., 208 F.3d 981 (Fed. Cir. 2000); Harsch v. Eisenberg, 956 F.2d 651 (7th Cir. 1992).

[17] The starting point in setting an attorney's fee is determining the "lodestar" figure -- that in, the product of the number of hours reasonably expended to prosecute the lawsuit and the reasonable hourly rate for work performed by similarly situated attorneys in the community. After calculating the lodestar fee, the court should then proceed with an analysis of whether this fee should be adjusted upwards or downwards. See Hensly v. Eckerhart, 461 U.S. 433-34, 103 S. Ct. 1933, 1939-40 (1983). In making these determinations, the court should be guided by the 12 factors set out in Johnson v. Georgia Highway Express, Inc., 488 F.2d 714, 717-19 (5th Cir. 1974). ¹ See Blanchard v. Bergeron, 489 U.S. 87, 91-92, 109 S. Ct. 939, 943-44 (1989). These factors are: (1) the time and labor required; (2) the novelty and difficulty of the questions; (3) the skill required to perform the legal services properly; (4) the preclusion of other employment by the attorney due to the case; (5) the customary fee in the community; (6) whether the fee is fixed or contingent; (7) time limitations imposed by the client or circumstances; (8) the amount involved and the results obtained; (9) the experience, reputation, and ability of the attorneys; (10) the "undesirability" of the case; (11) the nature and length of the professional relationship with the client; and (12) awards in similar cases.

[18] T.J. Woodford, Matthew C. McDonald, and Edward B. Holzwanger represented Trahan and Blanchard in this matter. Woodford seeks compensation for 15.04 hours at a rate of $175.00 per hour; McDonald seeks compensation for 2.88 hours at $205.00 per hour; and Holzwanger seeks compensation for 4.17 hours at a rate of $50.00 per hour.

[19] The court considers three Johnson factors -- the time and labor required, the novelty and difficulty of the case, and the customary fee in the community -- in assessing the reasonableness of the hours claimed. The court notes that Taylor has not challenged the reasonableness of any of the hours; however, the court itself is obliged to assess independently the reasonableness of the attorney's fees claimed. ² The court, after closely considering the billing records and hours spent, considers that the hours charged were reasonable given the nature of the case. It is also apparent that Woodford, McDonald, and Holzwanger exercised conservative billing judgment by not charging for all their hours. Thus, Trahan and Blanchard are entitled to the following hours: Woodford for 15.04; McDonald for 2.88; and Holzwanger for 4.17.

[20] Next, the court considers the prevailing market rate that should be assessed for these hours. "A reasonable hourly rate is the prevailing market rate in the relevant legal community for similar services by lawyers of reasonably comparable skills, experience, and reputation." Norman v. Housing Authority of Montgomery, 836 F.2d 1292, 1299 (11th Cir. 1988). In civil rights cases in which fees are assessed, the court determines the fee with regard to the remaining Johnson factors. See 488 F.2d at 717-19. However, Johnson factors are only of limited use in this context which does not involve civil rights issues and where the primary consideration is to deter the conduct that is being sanctioned. Nevertheless, the court will consider the following Johnson factors: customary fee; novelty and difficulty of the questions; skill required to perform the legal services properly; experience, reputation, and ability of the attorneys; time limitations; preclusion of other employment; nature and length of the attorneys' relationship with their clients; and awards in similar cases.

[21] Preliminarily, the court notes that there is insufficient evidence to support the Johnson factors of experience and reputation of the attorneys, preclusion of other employment, and the nature and length of the attorneys' relationship with their clients. Moreover, this case did not present any particularly difficult or novel issues, nor was the skill required to defend it beyond that which is usual for competent and experienced lawyers. Nor were there extraordinary time limitations or pressures on the attorneys. However, in the court's experience, the rates requested are reasonably within the mid-range of rates charged in this legal market for this species of civil litigation.

[22] Trahan and Blanchard may recover, therefore, at the following rates: Woodford: $150.00; McDonald $175.00; and Holzwanger: $35.00.

[23] The unadjusted lodestar consists, as stated, of the product of the attorney's compensable hours multiplied by the prevailing market fee. The lodestars for counsel in this case are therefore:

    ______________________________________________

                   HOURS      RATE          TOTAL

    Woodford       15.04  x $150.00    = $2,256.00
    McDonald        2.88  x  175.00    =    504.00
    Holzwanger      4.17  x   35.00    =    145.95
      TOTAL                              $2,905.95
    ______________________________________________

The case does not warrant adjusting these lodestars upwards or downwards.

B. EXPENSES

[24] The defendants seek $75.97 in expenses incurred in connection with this litigation. With the exception of routine overhead office expenses normally absorbed by the practicing attorney, all reasonable expenses incurred in case preparation, during the course of litigation, or as an aspect of settlement of the case, may be taxed as costs. See NAACP v. City of Evergreen, 812 F.2d 1332, 1337 (11th Cir. 1987). Taylor has not specifically objected to any of the items claimed as expenses by Trahan and Blanchard. After independently assessing the expenses, the court finds then generally reasonable with one exception. As stated, there were no extraordinary time limitations on the attorneys in this lawsuit. Consequently, the $10.30 incurred for express delivery is unwarranted. Trahan and Blanchard may therefore recover a total of $65.67 for their expenses.

IV. ABILITY TO PAY

[25] In cases involving violations of Rule 11, "deterrence remains the touchstone" of the court's imposition of sanctions. Baker v. Alderman, 158 F.3d 516, 528 (11th Cir. 1998). Accordingly, the court may consider the ability to pay in assessing sanctions. See id. at 529. In this case, however, Taylor has not raised inability to pay as a defense to the instant notion for sanctions.

V. CONCLUSION

[26] For the foregoing reasons, the court will impose sanctions as follows:

        __________________________________
        Attorneys Fees            2,905.95
        Expenses                     65.67
        TOTAL                     2,971.62
        __________________________________

[27] Accordingly, it is ORDERED as follows:

(1) The motion for sanctions, filed by defendants Candice Trahan and Tina Blanchard on July 7, 2000, is granted.

(2) The amount of 2,971.62 is taxed against plaintiff Robert H. Taylor as a sanction for violating Rule 11 of the Federal Rules of Civil Procedure.

(3) Defendants Trahan and Blanchard shall have and recover $2,971.62 from plaintiff Taylor for their reasonable attorney's fees and expenses.

[28] DONE, this the 22nd day of March, 2001.

Myron H. Thompson
United States District Judge

FOOTNOTES

¹ In Bonner v. Prichard, 661 F.2d 1206, 1209 (11th Cir. 1981) (en banc), the Eleventh Circuit Court of Appeals adopted as binding precedent all of the decisions of the former Fifth Circuit handed down prior to the close of business on September 30, 1981.

² Taylor asserts that Trahan and Blanchard have provided no evidence that they themselves paid the fees for their defense. The bills were sent to the their employer, Petroleum Helicopters, Inc. If Trahan and Blanchard have reached an agreement with their employer for their legal fees, this does not infringe on the court's discretion to award fees. There is no reason why Trahan and Blanchard, or anyone who chooses to indemnify them, should bear the expense of defending this litigation. Moreover, Taylor sued Trahan and Blanchard as employees of Petroleum Helicopters, Inc., and, as a result, Petroleum Helicopters, Inc. is also a real party in interest.

END OF FOOTNOTES

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