Masco Corporation v. Peter Prostyakov , 593 F. App'x 570 ( 2015 )

NONPRECEDENTIAL DISPOSITION
To be cited only in accordance with Fed. R. App. P. 32.1
United States Court of Appeals
For the Seventh Circuit
Chicago, Illinois 60604
Submitted February 3, 2015 *
Decided February 10, 2015
Before
RICHARD A. POSNER, Circuit Judge
MICHAEL S. KANNE, Circuit Judge
JOHN DANIEL TINDER, Circuit Judge
No. 14-3210
MASCO CORPORATION, Appeal from the United States District
Plaintiff-Appellee, Court for the Southern District of
Indiana, Indianapolis Division.
v.
No. 1:09-cv-500-RLY-TAB
PETER A. PROSTYAKOV,
Defendant-Appellant. Richard L. Young,
Chief Judge.
ORDER
Peter Prostyakov and Masco Corporation have been litigating for the last 20 years
over an embittered business relationship, which the parties attempted to resolve through
arbitration. For details of their litigation history, see Prostyakov v. Masco Corp., 513 F.3d
*This successive appeal has been submitted to the original panel under Operating
Procedure 6(b). After examining the parties’ briefs and the record, we have concluded
that oral argument is unnecessary. Thus the appeal is submitted on the briefs and the
record. See FED. R. APP. P. 34(a)(2)(C).
No. 14-3210 Page 2
716 (7th Cir. 2008) and Masco Corp. v. Prostyakov, 558 F. App’x 685 (7th Cir. 2014). This is
now the parties’ third appeal related to their arbitration. In the last appeal, we upheld
the district court’s decision to confirm an arbitral award for Masco. We also upheld the
court’s decision “to fine Prostyakov” because “of the legion of meritless motions he
made” in the district court. But we remanded so that the court could explain how it
“arrived at the substantial and oddly precise amount of $25,500” for that fine. Masco, 538
F. App’x at 688-89.
After the case was remanded, both parties filed statements (as directed by S.D.
IND. L.R. 16-2) providing the district court with their positions on what action the court
should take. In his statement Prostyakov attacked the court’s decision to impose
sanction as well as the court’s underlying decision in favor of Masco. He invoked Rule
60(b)(4) of the Federal Rules of Civil Procedure and argued that the judgment was void
for lack of subject-matter jurisdiction. Masco asserted that our remand order limited the
district court to one issue: explaining its rationale for choosing the $25,500 sanction.
The district court explained its reason for the sanction amount. As a starting
point, it began with $25,000 because that figure modestly reflected a mere one-half of one
percent of the $5 million that Prostyakov unreasonably demanded during their latest
settlement negotiations. When the negotiations collapsed, Prostyakov then frivolously
contested in court Masco’s efforts to confirm the arbitral decision that had awarded
Prostyakov nothing. The remaining $500 was added to the sanction because, the court
explained, that amount is our “common and evidently presumptive fine on litigants who
abuse the court’s processes.” The court also denied Prostyakov’s Rule 60(b) motion.
On appeal Prostyakov generally contests the district court’s order reimposing the
sanction, but the district court’s detailed rationale persuades us that the $25,500 sanction
is reasonable. We have recently observed that excessive demands are sanctionable when
they produce needless litigation. See Smith v. Greystone Alliance, LLC, 772 F.3d 448, 450
(7th Cir. 2014). And we have repeatedly warned parties not to raise baseless challenges
to arbitral awards, emphasizing that we will uphold sanctions against parties who do so
frivolously, as Prostyakov did here. See Cuna Mut. Ins. Soc’y v. Office & Prof’l Emps. Int’l
Union, Local 39, 443 F.3d 556, 561 (7th Cir. 2006). Moreover, sanctions “may exceed the
amount of fees incurred by the opposing party” in order to protect “the court itself” and
other litigants, whose day in court is delayed by needless motions. Frantz v. U.S.
Powerlifting Fed’n, 836. F.2d 1063, 1066 (7th Cir. 1986). Here, the district court reasonably
estimated that the cumulative harm arising from Prostyakov’s outrageous demand was
roughly comparable to a tiny percentage of that demand. It then reasonably considered
No. 14-3210 Page 3
the need to deter similar misconduct. Thus we conclude that the court did not abuse its
discretion by imposing its sanction. See Chambers v. NASCO, Inc., 501 U.S. 32, 55 (1991);
Schmude v. Sheahan, 420 F.3d 645, 650 (7th Cir. 2005); Kapco Mfg. Co. v. C&O Enters., Inc.,
886 F.2d 1485, 1496 (7th Cir. 1989).
Prostyakov also presses his Rule 60(b)(4) collateral challenge to the ruling
affirming the arbitral award for Masco. Prostyakov frames his argument in terms of
jurisdiction. But a party may not attack subject-matter jurisdiction collaterally. Travelers
Indem. Co. v. Bailey, 557 U.S. 137, 152 (2009); In re Lodholtz, 769 F.3d 531, 534 (7th Cir.
2014). In any case, his argument, to the extent it is decipherable, actually attacks the
merits of the district court’s underlying order. And as Masco correctly points out, had
the district court dived back into the merits of the lawsuit, it would have violated the
mandate rule. That rule limits the scope of the district court’s power on remand to the
specific directions in the remand order and bars the court from revisiting issues disposed
of by the appellate court. See 28 U.S.C. § 2106; United States v. White, 406 F.3d 827, 831 (7th
Cir. 2005); Moore v. Anderson, 222 F.3d 280, 283 (7th Cir. 2000).
AFFIRMED.