The district court did not immediately respond and Langrock ended up filing its response on July 15four days late. It was not until Sept. 13 that the judge granted the motion to file an untimely response to Langrock and said the scheduling conflicts provided "good cause for the grant of an extension."
Nonetheless, Batts said that, to cure any prejudice to Citigroup, the firms had to pay Cleary "reasonable fees and costs incurred in preparing their Reply to Plaintiff's Opposition"an amount Citigroup said was $24,398.83.
Langrock paid that amount to Cleary on Oct. 21, 2011, and then appealed to the circuit.
In its per curiam opinion, the panel said, "As an initial matter, we conclude that Langrock did nothing to warrant a sanction," and had stated good cause for the requested extensions.
"Langrock then filed its opposition brief before the deadline to which Cleary had consented," the panel said. "Langrock disobeyed no order of the district court and caused no prejudice to opposing counsel."
And even if there was a valid reason for sanctioning Langrock, the panel said, it would reverse for procedural reasons.
"Our case law is clear that a district court may not impose attorney's fees as a sanction without first making an explicit finding that the sanctioned party, whether a party or a party's counsel, acted in bad faith in engaging in sanctionable conduct," the panel said, and here, the judge had actually found there was good faith, albeit "nearly two months later."
"Under this sequence of events, we do not think it reasonable to infer that Langrock's submission of opposition papers four days late was 'for reasons of harassment or delay or for other improper purposes,'" the circuit said. "Indeed, had the district court promptly acted upon Langrock's second extension request, Langrock's papers would not have been untimely."
Finally, Langrock had a right to receive fair notice and an opportunity to be heard, the panel said, but "the district court afforded Langrock's none of these due process protections."
Peter Langrock and Devin McLaughlin of Langrock and Terrence Reed represented the two law firms.