Etrade Securities LLC v. Felipe Gomez

United States Court of Appeals
For the Seventh Circuit
Chicago, Illinois 60604
Submitted December 13, 2022 *
Decided December 15, 2022
Before
FRANK H. EASTERBROOK, Circuit Judge
DIANE P. WOOD, Circuit Judge
THOMAS L. KIRSCH II, Circuit Judge
No. 21-1597
E*TRADE SECURITIES LLC,
Plaintiff-Appellee,
v.
FELIPE GOMEZ,
Defendant-Appellant.
Appeal from the United States District
Court for the Northern District of
Illinois, Eastern Division.
No. 19 C 827
Rebecca R. Pallmeyer,
Chief Judge.
O R D E R
This appeal involves arguments similar to those we recently rejected in Charles
Schwab & Co. v. Gomez, Nos. 21-1344 & 21-2531, 2022 WL 523085 (7th Cir. Feb. 22, 2022).
Both cases are interpleader suits that brokerage firms (Charles Schwab & Co. in the first
suit; E*TRADE Securities LLC in this suit) brought to determine whether Felipe Gomez
or his son owned investment accounts. Gomez argued in both cases that the district
* We have agreed to decide the case without oral argument because the appeal is
frivolous. FED. R. A PP. P. 34(a)(2)(A).
NONPRECEDENTIAL DISPOSITION
To be cited only in accordance with FED. R. A PP. P. 32.1

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court lacked subject-matter jurisdiction to resolve the suits. As in the first suit, we affirm
the judgment of the district court. On its motion for sanctions, we award E*TRADE its
reasonable costs and attorneys’ fees associated with this appeal.
Gomez’s mother listed Arthur (“AJ”), her grandson and Gomez’s son, as a
beneficiary of a retirement account at Charles Schwab & Co. After she died, some assets
were transferred to E*TRADE in AJ’s name. Gomez demanded control of the E*TRADE
account. To resolve the question of control and to discharge it of any liability, E*TRADE
filed this interpleader action under Rule 22 of the Federal Rules of Civil Procedure.
Litigation carried on for two years before resolution. During this time, Gomez
unsuccessfully moved to disqualify E*TRADE’s counsel, sought an administrative stay
pending Gomez’s bankruptcy filing, and requested that the district judge recuse herself.
He also rejected a proposed settlement that would have resolved the ownership of the
funds and dismissed a parallel state-court suit that Gomez had filed. In 2021, the district
court entered judgment discharging E*TRADE of any liability, declaring AJ the owner
of the account, and awarding E*TRADE its attorneys’ fees and costs.
On appeal, Gomez primarily argues that the district court lacked jurisdiction
over the interpleader suit. Interpleader can be invoked in two ways; the first is under
28 U.S.C. § 1335. Gomez repeats his contentions, which we rejected in Charles Schwab &
Co., that he and his son are not “adverse” in the way that § 1335 requires. But just as
Charles Schwab & Co. did in the earlier suit, E*TRADE in this suit invoked interpleader
under Rule 22 of the Federal Rules of Civil Procedure. The general jurisdiction statutes
govern federal jurisdiction under Rule 22. Arnold v. KJD Real Est., LLC, 752 F.3d 700, 704
(7th Cir. 2014). And here, federal diversity jurisdiction is satisfied. See 28 U.S.C. § 1332.
E*TRADE is a citizen of New York and is incorporated in Delaware while both Gomez
and his son are Illinois citizens; furthermore, the cash and stock assets in the account
total more than $75,000.
Gomez next argues that E*TRADE lacked standing to bring this suit because a
live case or controversy between him and his son was, in his view, speculative.
See, e.g., Spokeo, Inc. v. Robins, 578 U.S. 330, 338 (2016). But the grandmother bequeathed
an interest in the account to AJ, and Gomez insisted that he, not AJ, control that interest.
Thus, E*TRADE faced a realistic possibility of litigation over conflicting claims of
control, and the district court could resolve that conflict. The case therefore satisfied
standing requirements. See Aaron v. Mahl, 550 F.3d 659, 663 (7th Cir. 2008).

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No. 21-1597 Page 3
Last, Gomez argues that the “cumulative” effect of the district court’s errors
require reversal. But Gomez has not identified a single error, much less any
accumulation of them that requires reversal.
That brings us to E*TRADE’s motion under Rule 38 of the Federal Rules of
Appellate Procedure for its attorneys’ costs and fees. It contends that Gomez’s appeal is
frivolous because it repeats arguments that we already rejected. See Charles Schwab &
Co., Nos. 21-1344 & 21-2531, 2022 WL 523085, at *1–2, en banc reh’g denied, 2022 WL
880853 (7th Cir. Mar. 24, 2022).
Rule 38 demands a two-step inquiry. First, we determine whether the appeal is
frivolous—that is, foreordained to lose—therefore permitting a discretionary sanctions
award. H.A.L. NY Holdings, LLC v. Guinan, 958 F.3d 627, 635 (7th Cir. 2020); Jaworski v.
Master Hand Contractors, Inc., 882 F.3d 686, 691 (7th Cir. 2018). Because Gomez
repeated—verbatim, at times—his principal arguments about jurisdiction that this court
rejected in his prior appeal, we readily conclude that this appeal is frivolous.
Next, we determine whether a sanction award of costs and fees to E*TRADE is
appropriate, and it is. We look for “some indication of the appellant’s bad faith
suggesting that the appeal was prosecuted with no reasonable expectation of altering
the district court’s judgment and for purposes of delay or harassment or out of sheer
obstinacy.” H.A.L. NY Holdings, LLC, 958 F.3d at 636–37 (quoting Reid v. United States,
715 F.2d 1148, 1155 (7th Cir. 1983)). This appeal reprised Gomez’s strategy, which the
district court sanctioned, of delaying the inevitable resolution of this matter. Gomez,
whose law license was suspended in part for his conduct toward opposing counsel in
the Charles Schwab & Co. proceedings, see In re Gomez, 829 F. App’x 136 (7th Cir. 2020),
should have known after losing his first appeal that his second appeal repeating his
recently rejected contentions was doomed. And his pro se status does not insulate him
from an award of sanctions under Rule 38. Dix v. Edelman Fin. Servs., LLC, 978 F.3d 507,
521 (7th Cir. 2020).
Gomez’s sole reply is that E*TRADE was not the “winner” of the litigation and
therefore is not entitled to fees and costs. But Rule 38 authorizes awarding costs to any
“appellee” in a frivolous appeal, which here is E*TRADE. And in any event, E*TRADE
“won” in that it obtained the judgment that it sought from the district court.
Thus, we AFFIRM the judgment of the district court and AWARD E*TRADE its
reasonable costs and attorneys’ fees in this appeal. E*TRADE may file, within 14 days,

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an affidavit and supporting papers specifying its reasonable costs and attorneys’ fees
from this frivolous appeal. Gomez may file a written response no later than 14 days
after E*TRADE files its affidavit. We warn Gomez that if he does not pay any monetary
sanction that we order, we may impose a filing bar consistent with Support Sys. Int’l v.
Mack, 45 F.3d 185, 186 (7th Cir. 1995).

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