CarMax Auto Superstores, Inc. v. Montgomery Sibley ( 2019 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 18-2256
CARMAX AUTO SUPERSTORES, INC.,
Plaintiff - Appellee,
v.
MONTGOMERY B. SIBLEY,
Defendant - Appellant,
v.
RICHARD W. BLACK; LITTLER MENDELSON, PC.; JOSHUA B. WAXMAN,
Third Party Defendants - Appellees.
Appeal from the United States District Court for the District of Maryland, at Greenbelt.
Roger W. Titus, Senior District Judge. (8:16-cv-01459-RWT)
Submitted: March 12, 2019 Decided: April 18, 2019
Before WILKINSON and HARRIS, Circuit Judges, and SHEDD, Senior Circuit Judge.
Affirmed in part, vacated in part, and remanded by unpublished per curiam opinion.
Montgomery B. Sibley, Appellant Pro Se. Steven E. Kaplan, Joshua B. Waxman,
LITTLER MENDELSON PC, Washington, D.C., for Appellees.
Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:
Montgomery B. Sibley appeals the district court’s orders granting CarMax Auto
Superstores, Inc.’s (“CarMax”) petition to confirm an arbitration award, denying Sibley’s
cross-petition to vacate the award, granting CarMax’s motion for sanctions, and denying
Sibley’s motion to recuse. We affirm the district court’s orders in part, vacate in part,
and remand for further proceedings.
I.
We review de novo a district court’s order confirming an arbitration award and
denying a motion to vacate an award. Brown & Pipkins, LLC v. Serv. Emps. Int’l Union,
846 F.3d 716, 723 (4th Cir. 2017); Jones v. Dancel, 792 F.3d 395, 401 (4th Cir. 2015).
As relevant here, a court may vacate an arbitration award where the arbitrator “refuse[ed]
to hear evidence pertinent and material to the controversy,” 9 U.S.C. § 10(a)(3) (2012), or
on common law grounds, i.e., “where an award fails to draw its essence from the
contract, or the award evidences a manifest disregard of the law,” MCI Constructors,
LLC v. City of Greensboro, 610 F.3d 849, 857 (4th Cir. 2010) (internal quotation marks
omitted). Applying this standard, we conclude that the district court did not err in
rejecting Sibley’s arguments and confirming the arbitration award. Accordingly, we
affirm for the reasons stated by the district court. CarMax Auto Superstores, Inc. v.
Sibley, No. 8:16-cv-01459-RWT (D. Md. filed Aug. 15, 2018 & entered Aug. 16, 2018).
II.
Turning to the district court’s order granting sanctions, the court ordered sanctions
pursuant to Fed. R. Civ. P. 11 and its inherent power. We review such an order for abuse
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of discretion. Six v. Generations Fed. Credit Union, 891 F.3d 508, 519 (4th Cir. 2018)
(inherent authority); Morris v. Wachovia Sec., Inc., 448 F.3d 268, 277 (4th Cir. 2006)
(Rule 11). “A court abuses its discretion when its conclusion is guided by erroneous
legal principles or rests upon a clearly erroneous factual finding.” In re Jemsek Clinic,
P.A., 850 F.3d 150, 156 (4th Cir. 2017) (internal quotation marks omitted).
Under Rule 11, a district court may impose sanctions against a party who files
pleadings that are not well grounded in fact or law or who files pleadings for improper
purposes such as harassment or delay. Cooter & Gell v. Hartmax Corp., 496 U.S. 384,
403-04 (1990). A party must certify that his “claims, defenses, and other legal
contentions are warranted by existing law or by a nonfrivolous argument for extending,
modifying, or reversing existing law or for establishing new law.” Fed. R. Civ. P.
11(b)(2). “The legal argument must have absolutely no chance of success under the
existing precedent to contravene” Rule 11(b)(2). Morris, 448 F.3d at 277 (internal
quotation marks omitted).
A court’s inherent authority to impose sanctions derives from its inherent powers
to manage its own affairs to achieve the orderly and expeditious disposition of cases. Six,
891 F.3d at 519. Under this power, courts can fashion an appropriate sanction for
conduct that abuses the judicial process, such as an attorney’s lack of candor to the court,
including ordering a party that has acted in bad faith to reimburse legal fees incurred by
the opposing party. Id.
The district court ordered sanctions because it found that Sibley raised three
frivolous or repetitious arguments: (1) the district court lacked subject-matter
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jurisdiction, (2) the class action waiver in the arbitration agreement violated the National
Labor Relations Act (NLRA), 29 U.S.C. §§ 151-169 (2012), and (3) the arbitration
agreement’s confidentiality provision was unconscionable. We discern no abuse of
discretion in sanctioning Sibley for challenging the district court’s subject-matter
jurisdiction because Sibley relitigated the issue after the court rejected his argument. A
district court may sanction a party for attempting to relitigate issues already decided by
the court. See, e.g., Serritella v. Markum, 119 F.3d 506, 512-13 (7th Cir. 1997); Virgin
Atl. Airways, Ltd. v. Nat’l Mediation Bd., 956 F.2d 1245, 1254-55 (2d Cir. 1992). While
Sibley contends he was required to relitigate his claim to preserve appellate review, we
have clearly held that a party cannot waive an argument that the district court lacked
subject-matter jurisdiction. Constantine v. Rectors & Visitors of George Mason Univ.,
411 F.3d 474, 480 (4th Cir. 2005). Sibley ignored the district court’s finding that his
argument was meritless and its warning that it would not tolerate vexatious litigation
tactics. Moreover, Sibley did not introduce new facts to support his jurisdictional
argument. Therefore, we conclude that the district court did not abuse its discretion by
ordering sanctions to reimburse CarMax for responding to this argument.
However, we conclude that the district court did abuse its discretion in awarding
sanctions based on Sibley’s claims that the class action arbitration waiver violated the
NLRA and that the confidentiality provisions were unconscionable. The Supreme Court
recently held that class action waivers in arbitration agreements do not violate the NLRA.
Epic Sys. Corp. v. Lewis, 138 S. Ct. 1612, 1619 (2018). However, prior to Epic Systems,
we had not previously decided this question, and we have concluded that sanctions are
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not appropriate “[w]here neither the Supreme Court nor any courts within this circuit
have ruled on the issue and the statute itself does not offer a clear answer.” Brubaker v.
City of Richmond, 943 F.2d 1363, 1378 (4th Cir. 1991). Moreover, a slight majority of
our sister Courts of Appeals had concluded that such waivers violated the NLRA.
Compare Nat’l Labor Relations Bd. v. Alt. Entm’t, Inc., 858 F.3d 393, 401-05 (6th Cir.
2017), and Morris v. Ernst & Young, LLP, 834 F.3d 975, 981-90 (9th Cir. 2016), and
Lewis v. Epic Sys. Corp., 823 F.3d 1147, 1151-60 (7th Cir. 2016), with Cellular Sales of
Mo., LLC v. Nat’l Labor Relations Bd., 824 F.3d 772, 776-78 (8th Cir. 2016), and
Murphy Oil USA, Inc. v. Nat’l Labor Relations Bd., 808 F.3d 1013, 1018 (5th Cir. 2015).
In light of the uncertainty surrounding the enforceability of class action waivers, we
conclude that the district court abused its discretion in finding that Sibley’s argument was
frivolous.
Likewise, Maryland courts had not addressed whether a confidentiality provision
in an arbitration agreement is unconscionable. While the district court relied on two
cases from federal district courts in California to conclude that the exact provision Sibley
challenged was not unconscionable, Sibley cited one of the California cases relied on by
the district court and asked the court to reach a different result. “A plaintiff under such
circumstances has a right to come to court seeking to obtain a different result from that
reached by other districts.” Brubaker, 943 F.2d at 1378. Thus, we conclude that the
district court abused its discretion in sanctioning Sibley for bringing this argument.
Accordingly, while we affirm the district court’s conclusion that sanctions were
appropriate regarding Sibley relitigating his subject-matter jurisdiction argument, we
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vacate the remainder of the district court’s sanctions order and remand for further
proceedings. On remand, the district court shall determine what portion of CarMax’s
fees were incurred responding to Sibley’s jurisdictional argument and only sanction
Sibley in this amount.
III.
Finally, Sibley argues that the district court erred in denying his motion to recuse.
We review the denial of a recusal motion for abuse of discretion. Kolon Indus. Inc. v.
E.I. DuPont de Nemours & Co., 748 F.3d 160, 167 (4th Cir. 2014). “[J]udicial rulings
and opinions formed by the judge on the basis of facts introduced or events occurring in
the course of the current proceedings[,] almost never constitute a valid basis for a bias or
partiality motion.” Belue v. Leventhal, 640 F.3d 567, 573 (4th Cir. 2011) (internal
quotation marks omitted). We conclude that the district court did not abuse its discretion
in denying this motion, as Sibley’s allegations are based on his dissatisfaction with the
district court’s rulings and fail to demonstrate that the court was not impartial.
IV.
Accordingly, we affirm the district court’s orders in part, vacate them in part, and
remand for further proceedings. We grant Sibley leave to proceed in forma pauperis. We
deny Sibley’s motion for oral argument because the facts and legal contentions are
adequately presented in the materials before this court and argument would not aid the
decisional process.
AFFIRMED IN PART, VACATED IN PART, AND REMANDED
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