Methode Electronics, Inc. v. Adam Tehcnologies, Inc.

Citation. 371 F.3d 923 (2004)

Brief Fact Summary.

Plaintiff sued Defendant for breach of a licensing agreement. Defendant argued that venue was improper and moved for sanctions.

Synopsis of Rule of Law.

A court may order sanctions outside of Rule 11 for acts made in bad faith so long as notice and a opportunity to correct are provided.

Facts.

Methode Electronics, Inc. (Plaintiff) agreed to sell all of its stock, trade names, trademark, and inventory in Adams Technologies, Inc. (Defendant) to Vincent DeVito. Plaintiff retained an exclusive right to market Defendant’s remaining products without interference. Plaintiff sued Defendant and DeVito in the United States District Court for the Northern District of Illinois for breaching this agreement by sending a press release advertising the sale of inventory. Defendant’s lawyer sent a letter to Plaintiff, arguing that venue was improper and threatening sanctions under Rule 11. Plaintiff responded by filing a motion for a temporary restraining order and Defendant moved for sanctions.

Issue.

Did the trial judge properly sanction Plaintiff, despite Defendant’s motion for sanctions not complying with Rule 11?

Held.

Yes, the trial judge properly sanctioned the Plaintiff. The sanctions are affirmed.

Discussion.

The Court determined that the trial judge acted with the inherent power of the court when ordering sanctions against the Plaintiff. Under careful consideration of the evidence and after providing the Plaintiff an opportunity to respond, the trial judge determined that Plaintiff acted in bad faith, attempting to deceive the court into believe venue was proper in Illinois.