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listing the factors considered by the courts when determining due process requirements
Summary of this case from Thomas v. EvansOpinion
June 1988
RULE 11 STANDARDS AND GUIDELINES Introduction
The Standards and Guidelines that follow were drafted by the Trial Practice Committee of the Section of Litigation of the American Bar Association. They were approved by the Section of Litigation in September 1988. Two underlying concerns motivated the drafting and publication of these Standards and Guidelines: (1) uneven application of Rule 11 by the courts and (2) a lack of awareness among many lawyers of significant issues that arise under the Rule.The Committee's survey of all reported Rule 11 decisions (which now number more than 1,000) confirmed that, on many of the recurring issues, the courts apply Rule 11 uniformly. The survey also confirmed, however, that on some material issues there are differences among the district courts and individual judges that can lead to disparate treatment of similarly situated persons. These Standards and Guidelines are intended to reduce instances of disparate treatment by setting forth a uniform position on each major issue raised by Rule 11. Where the courts have differed in their approaches to the Rule, the Section has expressed its preferred approach.
These Standards and Guidelines are also intended to educate the bar on the complexities of practice under Rule 11. Most of the Standards and Guidelines are non-controversial and codify existing case law. Representative citations are provided after each Standard for the convenience of the reader. Where the Standards and Guidelines take a position on controversial issues — such as those on which the circuits are split — the divergence of authorities is reflected by "but see" citations and, in five instances, by a statement of the opposing view. The citations do not purport to be exhaustive, and neither the citations nor the headings in the text are intended to add to or detract from the substance of the respective Standards that they accompany.
See Standards (C)(4), (H)(3), (K)(2), (O)(2) and (Q).
Some courts appear to have construed Rule 11 expansively in order to reach litigating conduct deemed undesirable or inappropriate. These Standards and Guidelines strive to construe the Rule neither broadly nor narrowly but in a balanced way, in light of the text and the avowed purposes of the Rule. This approach recognizes that judges have numerous sanctioning powers to which they can turn when confronted with inappropriate behavior that is not proscribed by Rule 11. The sources of these powers include, among others: Federal Rules of Civil Procedure 16(f), 26(g), 30(g)(2), 37, 41, 45(f), 55 and 56(g); 28 U.S.C. §§ 1912 and 1927; Federal Rule of Appellate Procedure 38; civil and criminal contempt power; and the inherent power of the court. Courts are urged to turn to these other sources of authority in appropriate cases rather than to read into Rule 11 sanctioning power that the Rule does not confer.
See generally ABA Section of Litigation, SANCTIONS: RULE 11 AND OTHER POWERS (2d ed. 1988).
Section of Litigation
Trial Practice Committee
Jerold S. Solovy, Esq.
Committee Chair
Rule 11 Subcommittee
Alvin K. Hellerstein, Esq.
Subcommittee Chair
Gregory P. Joseph, Esq.
Drafting Committee Chair
Professor Margaret A. Berger
Jerome Gotkin, Esq.
Standish F. Medina, Jr., Esq.
Professor Maurice Rosenberg
Professor Jeffrey W. Stempel
Professor Georgene M. Vairo
Professor Ettie Ward
Drafting Committee Members
June 1988
TEXT OF FEDERAL RULE OF CIVIL PROCEDURE 11 Rule 11. Signing of Pleadings, Motions, and Other Papers; Sanctions
Every pleading, motion, and other paper of a party represented by an attorney shall be signed by at least one attorney of record in the attorney's individual name, whose address shall be stated. A party who is not represented by an attorney shall sign the party's pleading, motion, or other paper and state the party's address. Except when otherwise specifically provided by rule or statute, pleadings need not be verified or accompanied by affidavit. The rule in equity that the averments of an answer under oath must be overcome by the testimony of two witnesses or of one witness sustained by corroborating circumstances is abolished. The signature of an attorney or party constitutes a certificate by the signer that the signer has read the pleading, motion, or other paper; that to the best of the signer's knowledge, information, and belief formed after reasonable inquiry it is well grounded in fact and is warranted by existing law or a good faith argument for the extension, modification, or reversal of existing law, and that it is not interposed for any improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of litigation. If a pleading, motion, or other paper is not signed, it shall be stricken unless it is signed promptly after the omission is called to the attention of the pleader or movant. If a pleading, motion, or other paper is signed in violation of this rule, the court, upon motion or upon its own initiative, shall impose upon the person who signed it, a represented party, or both, an appropriate sanction, which may include an order to pay to the other party or parties the amount of the reasonable expenses incurred because of the filing of the pleading, motion, or other paper, including a reasonable attorney's fee.
(1) 1938 Notes of Advisory Committee on Rules
This is substantially the content of former Equity Rules 24 (Signature of Counsel) and 21 (Scandal and Impertinence) consolidated and unified. Compare former Equity Rule 36 (Officers Before Whom Pleadings Verified). Compare to similar purposes, English Rules Under the Judicature Act (The Annual Practice, 1937) O. 19, r. 4, and Great Australian Gold Mining Co. v. Martin, L.R., 5 Ch.Div. 1, 10 (1877). Subscription of pleadings is required in many codes. 2 Minn. Stat. (Mason, 1927) § 9265; N.Y.R.C.P. (1937) Rule 91; 2 N.D.Comp. Laws Ann. (1913) § 7455.
This rule expressly continues any statute which requires a pleading to be verified or accompanied by an affidavit, such as:
U.S.C. Title 28 former:
§ 381 (Preliminary injunctions and temporary restraining orders).
§ 762 (Suit against the United States).
U.S.C., Title 28, former § 829 (now § 1927) (Costs; attorney liable for, when) is unaffected by this rule.
For complaints which must be verified under these rules, see Rules 23(b) (Secondary Action by Shareholders) and 65 (Injunctions).
For abolition of the rule in equity that the averments of an answer under oath must be overcome by the testimony of two witnesses or of one witness sustained by corroborating circumstances. See Pa. Stat.Ann. (Purdon, 1931) see 12 P.S.Pa., § 1222; for the rule in equity itself, see Greenfield v. Blumenthal, 69 F.2d 294 (C.C.A.3d, 1934).
(2) 1983 Amendment [Advisory Committee Notes]
Since its original promulgation, Rule 11 has provided for the striking of pleadings and the imposition of disciplinary sanctions to check abuses in the signing of pleadings. Its provisions have always applied to motions and other papers by virtue of incorporation by reference in Rule 7(b)(2). The amendment and the addition of Rule 7(b)(3) expressly confirms this applicability.
Experience shows that in practice Rule 11 has not been effective in deterring abuses. See 6 Wright Miller, Federal Practice and Procedure: Civil § 1334 (1971). There has been considerable confusion as to (1) the circumstances that should trigger striking a pleading or motion or taking disciplinary action, (2) the standard of conduct expected of attorneys who sign pleadings and motions, and (3) the range of available and appropriate sanctions. See Rhodes, Ripple Mooney, Sanctions Imposable for Violations of the Federal Rules of Civil Procedure 64-65, Federal Judicial Center (1981). The new language is intended to reduce the reluctance of courts to impose sanctions, see Moore, Federal Practice ¶ 7.05 at 1547, by emphasizing the responsibilities of the attorney and reinforcing those obligations by the imposition of sanctions.
The amended rule attempts to deal with the problem by building upon and expanding the equitable doctrine permitting the court to award expenses, including attorney's fees, to a litigant whose opponent acts in bad faith in instituting or conducting litigation. See, e.g., Roadway Express, Inc. v. Piper, 447 U.S. 752, 100 S.Ct. 2455, 65 L.Ed.2d 488 (1980); Hall v. Cole, 412 U.S. 1, 5, 93 S.Ct. 1943, 1946, 36 L.Ed.2d 702 (1973). Greater attention by the district courts to pleading and motion abuses and the imposition of sanctions when appropriate, should discourage dilatory or abusive tactics and help to streamline the litigation process by lessening frivolous claims or defenses.
The expanded nature of the lawyer's certification in the fifth sentence of amended Rule 11 recognizes that the litigation process may be abused for purposes other than delay. See, e.g., Browning Debenture Holders' Committee v. DASA Corp., 560 F.2d 1078 (2d Cir. 1977).
The words "good ground to support" the pleading in the original rule were interpreted to have both factual and legal elements. See, e.g., Heart Disease Research Foundation v. General Motors Corp., 15 Fed.R.Serv.2d 1517, 1519 (S.D.N.Y. 1972). They have been replaced by a standard of conduct that is more focused.
The new language stresses the need for some prefiling inquiry into both the facts and the law to satisfy the affirmative duty imposed by the rule. The standard is one of reasonableness under the circumstances. See Kinee v. Abraham Lincoln Fed.Sav. Loan Ass'n, 365 F.Supp. 975 (E.D.Pa. 1973). This standard is more stringent than the original good-faith formula and thus it is expected that a greater range of circumstances will trigger its violation. See Nemeroff v. Abelson, 620 F.2d 339 (2d Cir. 1980).
The rule is not intended to chill an attorney's enthusiasm or creativity in pursuing factual or legal theories. The court is expected to avoid using the wisdom of hindsight and should test the signer's conduct by inquiring what was reasonable to believe at the time the pleading, motion, or other paper was submitted. Thus, what constitutes a reasonable inquiry may depend on such factors as how much time for investigation was available to the signer; whether he had to rely on a client for information as to the facts underlying the pleading, motion, or other paper whether the pleading, motion or other paper was based on a plausible view of the law; or whether he depended on forwarding counsel or another member of the bar.
The rule does not require a party or an attorney to disclose privileged communications or work product in order to show that the signing of the pleading, motion, or other paper is substantially justified. The provisions of Rule 26(c), including appropriate orders after in camera inspection by the court, remain available to protect a party claiming privilege or work product protection.
Amended Rule 11 continues to apply to anyone who signs a pleading, motion, or other paper. Although the standard is the same for unrepresented parties, who are obliged themselves to sign the pleadings, the court has sufficient discretion to take account of the special circumstances that often arise in pro se situations. See Haines v. Kerner, 404 U.S. 519, 92 S.Ct. 594, 30 L.Ed.2d 652 (1972).
The provision in the original rule for striking pleadings and motions as sham and false has been deleted. The passage has rarely been utilized, and decisions thereunder have tended to confuse the issue of attorney honesty with the merits of the action. See generally Risinger, Honesty in Pleading and its Enforcement: Some "Striking" Problems with Fed.R.Civ.P. 11, 61 Minn. L. Rev. 1 (1976). Motions under this provision generally present issues better dealt with under Rules 8, 12, or 56. See Murchison v. Kirby, 27 F.R.D. 14 (S.D.N.Y. 1961); 5 Wright Miller, Federal Practice and Procedure: Civil § 1334 (1969).
The former reference to the inclusion of scandalous or indecent matter, which is itself strong indication that an improper purpose underlies the pleading, motion, or other paper, also has been deleted as unnecessary. Such matter may be stricken under Rule 12(f) as well as dealt with under the more general language of amended Rule 11.
The text of the amended rule seeks to dispel apprehensions that efforts to obtain enforcement will be fruitless by insuring that the rule will be applied when properly invoked. The word "sanctions" in the caption, for example, stresses a deterrent orientation in dealing with improper pleadings, motions or other papers. This corresponds to the approach in imposing sanctions for discovery abuses. See National Hockey League v. Metropolitan Hockey Club, 427 U.S. 639, 96 S.Ct. 2778, 49 L.Ed.2d 747 (1976) (per curiam). And the words "shall impose" in the last sentence focus the court's attention on the need to impose sanctions for pleading and motion abuses. The court, however, retains the necessary flexibility to deal appropriately with violations of the rule. It has discretion to tailor sanctions to the particular facts of the case, with which it should be well acquainted.
The reference in the former text to wilfulness as a prerequisite to disciplinary action has been deleted. However, in considering the nature and severity of the sanctions to be imposed, the court should take account of the state of the attorney's or party's actual or presumed knowledge when the pleading or other paper was signed. Thus, for example, when a party is not represented by counsel, the absence of legal advice is an appropriate factor to be considered.
Courts currently appear to believe they may impose sanctions on their own motion. See North American Trading Corp. v. Zale Corp., 83 F.R.D. 293 (S.D.N.Y. 1979). Authority to do so has been made explicit in order to overcome the traditional reluctance of courts to intervene unless requested by one of the parties. The detection and punishment of a violation of the signing requirement, encouraged by the amended rule, is part of the court's responsibility for securing the system's effective operation.
If the duty imposed by the rule is violated, the court should have the discretion to impose sanctions on either the attorney, the party the signing attorney represents, or both, or on an unrepresented party who signed the pleading, and the new rule so provides. Although Rule 11 has been silent on the point, courts have claimed the power to impose sanctions on an attorney personally, either by imposing costs or employing the contempt technique. See 5 Wright Miller, Federal Practice and Procedure: Civil § 1334 (1969); 2A Moore, Federal Practice ¶ 11.02, at 2104 n. 8. This power has been used infrequently. The amended rule should eliminate any doubt as to the propriety of assessing sanctions against the attorney.
Even though it is the attorney whose signature violates the rule, it may be appropriate under the circumstances of the case to impose a sanction on the client. See Browning Debenture Holders' Committee v. DASA Corp., supra. This modification brings Rule 11 in line with practice under Rule 37, which allows sanctions for abuses during discovery to be imposed upon the party, the attorney, or both.
A party seeking sanctions should give notice to the court and the offending party promptly upon discovering a basis for doing so. The time when sanctions are to be imposed rests in the discretion of the trial judge. However, it is anticipated that in the case of pleadings the sanctions issue under Rule 11 normally will be determined at the end of the litigation, and in the case of motions at the time when the motion is decided or shortly thereafter. The procedure obviously must comport with due process requirements. The particular format to be followed should depend on the circumstances of the situation and the severity of the sanction under consideration. In many situations the judge's participation in the proceedings provides him with full knowledge of the relevant facts and little further inquiry will be necessary.
To assure that the efficiencies achieved through more effective operation of the pleading regimen will not be offset by the cost of satellite litigation over the imposition of sanctions, the court must to the extent possible limit the scope of sanction proceedings to the record. Thus, discovery should be conducted only by leave of the court, and then only in extraordinary circumstances.
Although the encompassing reference to "other papers" in new Rule 11 literally includes discovery papers, the certification requirement in that context is governed by proposed new Rule 26(g). Discovery motions, however, fall within the ambit of Rule 11.
(3) 1987 Amendment [Advisory Committee Note]
The amendments are technical. No substantive change is intended.
A. "PLEADING, MOTION, OR OTHER PAPER"
1. Scope.a. Generally. Rule 11 applies to all pleadings, motions and other papers served or filed in civil actions in federal district court, subject to the exclusions set forth in Rule 81.
Fed.R.Civ.P. 1, 7, 11, 81.
b. Limitations.
i. Rule 11 does not apply to all manner of litigating misconduct but only to the signing of a pleading, motion or other paper in violation of the Rule. Misconduct that does not involve the signing of such a document is not sanctionable under the Rule.
Oliveri v. Thompson, 803 F.2d 1265, 1274 (2d Cir. 1986), cert. denied, 480 U.S. 918, 107 S.Ct. 1373, 94 L.Ed.2d 689 (1987); F.H. Krear Co. v. Nineteen Named Trustees, 810 F.2d 1250, 1268 (2d Cir. 1987); Adduono v. World Hockey Ass'n, 824 F.2d 617, 621 (8th Cir. 1987); Robinson v. National Cash Register Co., 808 F.2d 1119, 1128, 1129, 1132 (5th Cir. 1987); United Energy Owners Committee, Inc. v. United States Energy Mgmt. Sys., 837 F.2d 356, 364-65 (9th Cir. 1988). See also Standard (K)(2) (Vicarious Liability) and (K)(3) (Successor Liability), infra.
ii. Although Rule 11 by its terms applies to all signed papers that are served or filed, certain papers are governed by more specific requirements imposed in other rules.
See, e.g., Rule 26(g) (discovery requests and responses); Adv.Com. Note to Fed.R.Civ.P. 11; Bell v. Bell, No. 86-4321 (5th Cir. Sept. 17, 1986). Cf. Rule 37(c) (improper failure to admit); Rule 56(g) (affidavits filed on summary judgment).
2. Removed Proceedings. Rule 11 does not apply to, and sanctions may not be imposed for defects in, pleadings, motions or other papers served or filed in a state court action, even if that action is subsequently removed to federal court.
Brown v. Capitol Air, Inc., 797 F.2d 106, 108 (2d Cir. 1986); Kirby v. Allegheny Beverage Corp., 811 F.2d 253, 256-57 (4th Cir. 1987).
a. Rule 11 applies to the removal petition that is filed in federal district court.
Davis v. Veslan Enters., 765 F.2d 494, 499-500 (5th Cir. 1985).
b. Rule 11 applies to all pleadings, motions and other papers served or filed in federal court following removal.
Brown v. Capitol Air, Inc., 797 F.2d 106, 108 (2d Cir. 1986); Kirby v. Allegheny Beverage Corp., 811 F.2d 253, 256-57 (4th Cir. 1987); Fed.R.Civ.P. 81(c).
3. Appeals. Rule 11 applies to a notice of appeal that is served or filed in federal district court.
Thornton v. Wahl, 787 F.2d 1151, 1153 (7th Cir. 1986), cert. denied, 479 U.S. 851, 107 S.Ct. 181, 93 L.Ed.2d 116 (1986).
a. Where sanctions have been (1) wrongly denied or (2) properly granted by the district court, reasonable expenses, including attorneys' fees, incurred on an appeal of that decision may be recovered under Rule 11.
Westmoreland v. CBS, Inc., 770 F.2d 1168, 1179 (D.C. Cir. 1985); Muthig v. Brant Point Nantucket, Inc., 838 F.2d 600, 607 (1st Cir. 1988) (same).
b. Rule 11 does not otherwise apply to papers served or filed on appeal, unless the local rules of the pertinent court of appeals incorporate Rule 11.
Braley v. Campbell, 832 F.2d 1504, 1510 n. 4 (10th Cir. 1987); In re Disciplinary Action Boucher, 837 F.2d 869, 871 (9th Cir. 1988); In re Disciplinary Action Curl, 803 F.2d 1004, 1007 (9th Cir. 1986). But see Thornton v. Wahl, 787 F.2d 1151, 1153 (7th Cir. 1986), cert. denied, 479 U.S. 851, 107 S.Ct. 181, 93 L.Ed.2d 116 (1986) (Rule 11 applies to appellate briefs).
4. Court Papers. Rule 11 applies only to papers signed in connection with federal court litigation if those papers are served or filed pursuant to statute, rule or order, or are served or filed by or on behalf of the signatory, in the action sub judice. Adduono v. World Hockey Ass'n, 824 F.2d 617, 620-21 (8th Cir. 1987).
a. Rule 11 does not extend to settlement agreements that are not submitted to or filed with the court for approval.
Adduono v. World Hockey Ass'n, 824 F.2d 617, 621 (8th Cir. 1987).
b. A court may not impose Rule 11 sanctions for transgressions which occurred before another court or in another action, except that an appellate court may order the imposition of sanctions for transgressions that occurred before a lower court in the same action.
Burull v. First Nat'l Bank, 831 F.2d 788, 790 (8th Cir. 1987), cert. denied, ___ U.S. ___, 108 S.Ct. 1225, 99 L.Ed.2d 425 (1988). But cf. Standard (L)(6)(d), infra (prior violations may be considered in determining an appropriate sanction).
B. "SIGNED BY AT LEAST ONE ATTORNEY OF RECORD . . . [OR BY ANY] PARTY WHO IS NOT REPRESENTED BY AN ATTORNEY"
1. Signing Requirement.
a. Every pleading, motion or other paper must be signed. If a party is represented, the signature must be that of one of the attorneys of record for the party and may not be that of a law firm. If a party appears pro se, the party must sign every pleading, motion or other paper, and the party's signature has the same effect as that of an attorney.
Robinson v. National Cash Register Co., 808 F.2d 1119, 1128 (5th Cir. 1987).
b. "If a pleading, motion, or other paper is not signed, it shall be stricken unless it is signed promptly after the omission is called to the attention of the pleader or movant." Fed.R.Civ.P. 11. 2. Reading Requirement. Rule 11 requires that every pleading, motion or other paper be read by the signer before it is signed. Personal ignorance of defects in a paper challenged as unmeritorious is no defense.
Zaldivar v. City of Los Angeles, 780 F.2d 823, 830 (9th Cir. 1986); Thornton v. Wahl, 787 F.2d 1151, 1154 (7th Cir. 1986), cert. denied, 479 U.S. 851, 107 S.Ct. 181, 93 L.Ed.2d 116 (1986).
C. "THE SIGNATURE OF AN ATTORNEY OR PARTY CONSTITUTES A CERTIFICATE BY THE SIGNER"
1. Certification. Upon signing a pleading, motion or other paper, an attorney or pro se litigant certifies that he or she has fulfilled the affirmative duties imposed by Rule 11. This certification includes: (1) that the signer has conducted a reasonable inquiry into the facts that support the pleading, motion or other paper; (2) that the signer has conducted a reasonable inquiry into the law such that the paper embodies existing law or a good faith argument for the extension, modification, or reversal of existing legal principles; and (3) that the paper is not interposed for any improper purpose.
Fed.R.Civ.P. 11; Thomas v. Capital Sec. Serv., Inc., 836 F.2d 866, 874 (5th Cir. 1988).
2. Standard. In determining whether Rule 11 has been violated, the court tests the certification under an objective standard of reasonableness, except that it may inquire into the signer's actual knowledge and motivation to determine whether a paper was interposed for an improper purpose.
Note: The improper purpose standard is set forth in Part H, infra. 3. Time of Testing Certification. The certification by the signer is tested as of the time the pleading, motion or other paper is signed. The court must strive to avoid the wisdom of hindsight in determining whether the certification was valid when the paper was signed, and all doubts must be resolved in favor of the signer.
Adv.Com. Note to Fed.R.Civ.P. 11; Eastway Constr. Corp. v. City of New York, 762 F.2d 243, 254 (2d Cir. 1985); Oliveri v. Thompson, 803 F.2d 1265, 1275 (2d Cir. 1986), cert. denied, 480 U.S. 918, 107 S.Ct. 1373, 94 L.Ed.2d 689 (1987); Eavenson, Auchmuty Greenwald v. Holtzman, 775 F.2d 535, 540 (3d Cir. 1985); INVST Fin. Group, Inc. v. Chem-Nuclear Sys., 815 F.2d 391, 401 (6th Cir. 1987), cert. denied, ___ U.S. ___, 108 S.Ct. 291, 98 L.Ed.2d 251 (1987); Laborers Local 938 v. B.R. Starnes Co., 827 F.2d 1454, 1458 (11th Cir. 1987); Donaldson v. Clark, 819 F.2d 1551, 1556 (11th Cir. 1987).
4. No Continuing Obligation.
a. Rule 11 does not impose a continuing obligation on the signer to update, correct or withdraw any pleading, motion or other paper which, when signed, satisfies the requirements of the Rule.
Oliveri v. Thompson, 803 F.2d 1265, 1274, 1275 (2d Cir. 1986), cert. denied, 480 U.S. 918, 107 S.Ct. 1373, 94 L.Ed.2d 689 (1987); Pantry Queen Foods, Inc. v. Lifschultz Fast Freight, Inc., 809 F.2d 451, 454 (7th Cir. 1987); Thomas v. Capital Sec. Serv., Inc., 836 F.2d 866, 874-75 (5th Cir. 1988). But see Albright v. Upjohn Co., 788 F.2d 1217, 1221 n. 7 (6th Cir. 1986).
b. The adequacy under Rule 11 of each pleading, motion or other paper is tested as of the time that it is signed. Thus, each newly signed paper must satisfy the Rule's requirements, and must reflect the results of intervening inquiry, including discovery, investigation and other case developments, since the last prior paper was signed.
Pantry Queen Foods, Inc. v. Lifschultz Fast Freight, Inc., 809 F.2d 451, 454 (7th Cir. 1987) ("There is an implicit obligation to update because Rule 11 applies to all papers filed in the litigation. Each filing must reflect the results of reasonable inquiry. Rare is the case that goes from complaint and answer to trial without an intervening filing. Updating occurs in the course of these filings").
NOTE: An alternative rule is enforced in certain courts. This alternative may be stated as follows:
Rule 11 imposes a continuing obligation on the signer to update, correct or withdraw any pleading, motion or other paper which, when signed, satisfies the requirements of the Rule if the signer later learns that there is no reasonable basis for the previously asserted position.See, e.g., Albright v. Upjohn Co., 788 F.2d 1217, 1221 n. 7 (6th Cir. 1986). But see Oliveri, 803 F.2d 1265, 1274-75 (2d Cir. 1986), cert. denied, 480 U.S. 918, 107 S.Ct. 1373, 94 L.Ed.2d 689 (1987); Pantry Queen Foods, Inc. v. Lifschultz Fast Freight, Inc., 809 F.2d 451, 454 (7th Cir. 1987); Thomas v. Capital Sec. Serv., Inc., 836 F.2d 866, 874-75 (5th Cir. 1988).
D. "FORMED AFTER REASONABLE INQUIRY"
1. Duty to Investigate. Rule 11 imposes an affirmative duty of investigation as to both law and fact.
Rachel v. Banana Republic, Inc., 831 F.2d 1503, 1508 (9th Cir. 1987); Donaldson v. Clark, 819 F.2d 1551, 1555-56 (11th Cir. 1987); Eastway Constr. Corp. v. City of New York, 762 F.2d 243, 253 (2d Cir. 1985); Adv.Com. Note to Fed.R.Civ.P. 11.
2. Timing of Investigation. Reasonable inquiry must precede signing. A pleading, motion or other paper may not be signed first and the basis investigated thereafter.
Rachel v. Banana Republic, Inc., 831 F.2d 1503, 1508 (9th Cir. 1987); Adv.Com. Note to Fed.R.Civ.P. 11.
3. Objective Standard. Whether an adequate investigation into fact and law has been made is judged under a standard of objective reasonableness.
Fed.R.Civ.P. 11; Eastway Constr. Corp. v. City of New York, 762 F.2d 243, 253 (2d Cir. 1985).
4. Circumstantial Nature of Inquiry. What constitutes a reasonable inquiry depends upon the circumstances.
a. "[W]hat constitutes a reasonable inquiry may depend on such factors as how much time for investigation was available to the signer; whether he had to rely on a client for information as to the facts underlying the pleading, motion, or other paper; whether the pleading, motion, or other paper was based on a plausible view of the law; or whether he depended on forwarding counsel or another member of the bar."
Adv.Com. Note to Fed.R.Civ.P. 11.
b. Whether a party is represented by counsel may affect the determination whether a particular prefiling inquiry was reasonable in the circumstances, but the duty to conduct a reasonable prefiling investigation extends to pro se litigants as well as represented parties.
Shrock v. Altru Nurses Registry, 810 F.2d 658, 661-62 (7th Cir. 1987).
Reasonable Inquiry into Fact
5. Generally. In determining whether a reasonable inquiry into fact has been made, the court considers all relevant circumstances, including:
a. the amount of time that was available to the signer to investigate the facts;
b. the complexity of the factual and legal issues in question;
c. the extent to which pre-signing investigation was feasible;
d. the extent to which pertinent facts were in the possession of opponents or third parties, or otherwise were not readily available to the signer;
e. the knowledge of the signer;
f. the extent to which counsel relied upon his or her client for the facts underlying the pleading, motion or other paper;
g. the extent to which counsel had to rely upon his or her client for the facts underlying the pleading, motion or other paper;
h. whether the case was accepted from another attorney and, if so, at what stage of the proceedings;
i. the extent to which counsel relied upon other counsel for the facts underlying the pleading, motion or other paper;
j. the extent to which counsel had to rely upon other counsel for the facts underlying the pleading, motion or other paper;
k. the resources reasonably available to the signer to devote to the inquiry; and
l. the extent to which the signer was on notice that further inquiry might be appropriate.Brown v. Federation of State Medical Bds., 830 F.2d 1429, 1435 (7th Cir. 1987); Thomas v. Capital Sec. Serv., Inc., 836 F.2d 866, 875-76 (5th Cir. 1988); Donaldson v. Clark, 819 F.2d 1551, 1556 (11th Cir. 1987).
6. Pro Se Status. While the fact that a party is appearing pro se may be relevant to the court's determination whether a reasonable inquiry into fact was made, the choice to proceed without counsel does not excuse a pro se litigant from the duty to conduct a reasonable inquiry into the factual basis of every pleading, motion and other paper that he or she signs. The standard imposed by the Rule is objective: what a reasonable person in the pro se litigant's position would have done.
Shrock v. Altru Nurses Registry, 810 F.2d 658, 661-62 (7th Cir. 1987).
7. Repetitive Submissions. Re-serving or re-filing a pleading, motion or other paper that was previously adjudicated deficient, without substantially addressing the factual deficiencies previously adjudicated, violates the duty to conduct a reasonable inquiry into fact.
Orange Prod. Credit Ass'n v. Frontline Ventures, Ltd., 792 F.2d 797, 800-01 (9th Cir. 1986); Fuji Photo Film USA, Inc. v. Aero Mayflower Transit Co., 112 F.R.D. 664, 667-68 (S.D.N.Y. 1986).
8. Available Information. The signer is obliged to review documents and information reasonably available to the signer that tend to prove or disprove any fact or claim asserted.
Burgess v. United States Postal Service, Nos. 83 Civ. 8122, 8133 RLC (S.D.N.Y. Aug. 1986).
9. Pre-Signing Obligation. Reasonable inquiry into fact must precede the signing of any pleading, motion or paper. No document may be signed before the requisite inquiry has been made.
Cabell v. Petty, 810 F.2d 463, 466 (4th Cir. 1987).
10. Reliance on Client.
a. A reasonable inquiry into fact ordinarily requires more than exclusive reliance on representations of fact made by a client.
Southern Leasing Partners, Ltd. v. McMullan, 801 F.2d 783, 788 (5th Cir. 1986).
b. In determining whether a reasonable inquiry into fact requires more than exclusive reliance on representations of fact made by a client, the court considers all relevant circumstances, including:
i. the availability of alternate sources of information;
ii. the character of the client's knowledge, including whether it is firsthand, derivative or hearsay in nature;
iii. the plausibility of the client's account;
iv. the history and duration of the relationship between the attorney and the client;
v. the extent to which the attorney questioned the client; and
vi. the other factors considered by the court in determining whether a reasonable inquiry into fact has been made (Standard (D)(5), supra).Continental Air Lines, Inc. v. Group Systems Int'l Far East, Ltd., 109 F.R.D. 594, 597 (C.D.Cal. 1986); Whittington v. Ohio River Co., 115 F.R.D. 201, 206 (E.D.Ky. 1987); Nassau-Suffolk Ice Cream, Inc. v. Integrated Resources, Inc., 114 F.R.D. 684, 689 (S.D.N.Y. 1987); Harris v. Marsh, 679 F.Supp. 1204, 1385-86 (E.D.N.C. 1987); Fleming Sales Co. v. Bailey, 611 F.Supp. 507, 519 (N.D.Ill. 1985).
11. Reliance on Counsel.
a. The duty to conduct a reasonable inquiry into fact may require more of counsel than exclusive reliance on other counsel to determine the merit of factual allegations.
Unioil, Inc. v. E.F. Hutton Co., Inc., 809 F.2d 548, 557-58 (9th Cir. 1986), cert. denied, ___ U.S. ___, 108 S.Ct. 83, 98 L.Ed.2d 45 (1987).
b. In determining whether a reasonable inquiry into fact requires more of counsel than exclusive reliance on other counsel, the court considers all relevant circumstances, including:
i. the availability of alternate sources of information (including the client);
ii. the basis of relied-upon counsel's knowledge, including whether it is firsthand, derivative or hearsay in nature;
iii. the plausibility of the factual account;
iv. the respective roles of counsel in the litigation (e.g., local counsel, lead counsel, forwarding counsel);
v. the respective expertise of relying counsel and of counsel on whom reliance is placed;
vi. the history, duration and nature of the relationship between counsel;
vii. the extent to which the signer questioned counsel upon whom reliance was placed concerning the nature and scope of the latter's inquiry into fact; and
viii. the other factors considered by the court in determining whether a reasonable inquiry into fact has been made (Standard (D)(5), supra).
Reasonable Inquiry Into Law
12. Generally. In determining whether a reasonable inquiry into the law has been made, the court considers all relevant circumstances, including:
a. the amount of time that was available to the signer to research and analyze the relevant legal issues;
b. the complexity of the factual and legal issues in question;
c. the clarity or ambiguity of existing law;
d. the plausibility of the legal position asserted;
e. whether the signer is an attorney or pro se litigant;
f. the knowledge of the signer;
g. whether the case was accepted from another attorney and, if so, at what stage of the proceedings;
h. the extent to which counsel relied upon other counsel to conduct the legal research and analysis underlying the position asserted;
i. the extent to which counsel had to rely upon other counsel to conduct the legal research and analysis underlying the position asserted;
j. the resources reasonably available to the signer to devote to the inquiry; and
k. the extent to which the signer was on notice that further inquiry might be appropriate.Brown v. Federation of State Medical Bds., 830 F.2d 1429, 1435 (7th Cir. 1987); Thomas v. Capital Sec. Serv., Inc., 836 F.2d 866, 875-76 (5th Cir. 1988); Donaldson v. Clark, 819 F.2d 1551, 1556 (11th Cir. 1987).
13. Pro Se Status. While the fact that a party is appearing pro se is relevant to the court's determination whether a reasonable inquiry into law was made, the choice to proceed without counsel does not excuse a pro se litigant from the duty to conduct a reasonable inquiry into the legal basis of every pleading, motion and other paper that he or she signs. The standard imposed by the Rule is objective: what a reasonable person in the pro se litigant's position would have done.
Stelly v. Comm'r, 761 F.2d 1113, 1116 (5th Cir. 1985) (construing Fed.R.App.P. 38), cert. denied, 474 U.S. 851, 106 S.Ct. 149, 88 L.Ed.2d 123 (1985); Bacon v. American Fed'n of State, County and Mun. Employees Council No. 13, 795 F.2d 33, 35 (7th Cir. 1986) (same); Shrock v. Altru Nurses Registry, 810 F.2d 658, 661-62 (7th Cir. 1987); Pryzina v. Ley, 813 F.2d 821, 823-24 (7th Cir. 1987).
14. Repetitive Submissions. Re-serving or re-filing a pleading, motion or other paper that was adjudicated deficient, without substantially addressing legal deficiencies previously adjudicated, violates the duty to conduct a reasonable inquiry into law.
Zaldivar v. City of Los Angeles, 780 F.2d 823, 831-32 (9th Cir. 1986); Cannon v. Loyola University of Chicago, 784 F.2d 777 (7th Cir. 1986), cert. denied, 479 U.S. 1033, 107 S.Ct. 880, 93 L.Ed.2d 834 (1987); Martin v. Supreme Court of New York, 644 F.Supp. 1537, 1544-45 (N.D.N.Y. 1986).
15. Pre-Signing Obligation. The duty to conduct a reasonable inquiry into law requires the signer to research and analyze the legal issues involved before signing a pleading, motion or other paper.
Thornton v. Wahl, 787 F.2d 1151, 1154 (7th Cir. 1986), cert. denied, 479 U.S. 851, 107 S.Ct. 181, 93 L.Ed.2d 116 (1986).
16. Reliance on Client. The duty to conduct a reasonable inquiry into law generally precludes reliance by counsel on representations of law made by a client where the client is not a lawyer. Where the client is a lawyer, the following paragraph is applicable.
In re Disciplinary Action of Curl, 803 F.2d 1004, 1006-07 (9th Cir. 1986).
17. Reliance on Counsel.
a. The duty to conduct a reasonable inquiry into law may require more than exclusive reliance on other counsel to determine the merit of legal positions asserted.
Robinson v. National Cash Register Co., 808 F.2d 1119, 1128 (5th Cir. 1987).
b. In determining whether a reasonable inquiry into law requires more than exclusive reliance on other counsel, the court considers all relevant circumstances, including:
i. the plausibility of the legal position asserted;
ii. the respective roles of counsel in the litigation (e.g., local counsel, lead counsel, forwarding counsel);
iii. the respective expertise of counsel;
iv. the history, duration and nature of the relationship between counsel;
v. the extent to which the signer questioned counsel upon whom reliance was placed concerning the nature and scope of the latter's inquiry into law; and
vi. the other factors considered by the court in determining whether a reasonable inquiry into the law has been made (Standard (D)(12), supra).Robinson v. National Cash Register Co., 808 F.2d 1119, 1128 (5th Cir. 1987); Unioil, Inc. v. E.F. Hutton Co., 809 F.2d 548, 557-58 (9th Cir. 1986), cert. denied, ___ U.S. ___, 108 S.Ct. 83, 98 L.Ed.2d 45 (1987); In re Disciplinary Action Curl, 803 F.2d 1004, 1006-07 (9th Cir. 1986).
E. "WELL GROUNDED IN FACT"
1. Generally. In addition to requiring a reasonable inquiry into fact, Rule 11 requires that the signer reasonably believe that each pleading, motion or other paper is well grounded in fact. A pleading, motion or other paper is well grounded in fact if a reasonable person in the signer's position, following reasonable inquiry, would believe the statements of fact contained therein. The reasonableness of the signer's belief is judged under an objective standard.
a. Rule 11 sanctions are not appropriate merely because a pleading, motion or paper does not prevail on the merits. Losing on the merits, without more, does not warrant the imposition of sanctions.
Wasyl, Inc. v. First Boston Corp., 813 F.2d 1579, 1583 (9th Cir. 1987); Oliveri v. Thompson, 803 F.2d 1265, 1279 (2d Cir. 1986), cert. denied, 480 U.S. 918, 107 S.Ct. 1373, 94 L.Ed.2d 689 (1987); Hartman v. Hallmark Cards, Inc., 833 F.2d 117, 124 (8th Cir. 1987).
b. Isolated factual errors do not ordinarily warrant the imposition of sanctions if the pleading, motion or other paper as a whole is well grounded in fact.
Forrest Creek Assoc., Ltd. v. McLean Sav. Loan Ass'n, 831 F.2d 1238, 1244-45 (4th Cir. 1987).
c. It is not a violation of Rule 11 to assert or pursue a litigable issue of fact.
Rossman v. State Farm Mut. Auto Ins. Co., 832 F.2d 282, 289-90 (4th Cir. 1987).
2. Speculation. Speculation may not be presented as fact.
In re Kelly, 808 F.2d 549, 551-52 (7th Cir. 1986); In re Disciplinary Action Curl, 803 F.2d 1004, 1006-07 (9th Cir. 1986).
3. Unfounded or Untrue Statements. A baseless statement or deliberate misstatement may not be presented as a statement of fact. Frazier v. Cast, 771 F.2d 259, 265 (7th Cir. 1985); Golden Eagle Distributing Corp. v. Burroughs Corp., 801 F.2d 1531, 1537 (9th Cir. 1986); Perkinson v. Gilbert/Robinson, Inc., 821 F.2d 686, 690-91 n. 4 (D.C. Cir. 1987).
F. "WARRANTED BY EXISTING LAW"
1. Generally. A position is warranted by existing law if it is supported by a non-frivolous legal argument. A legal argument is non-frivolous if it is likely to succeed on the merits or if reasonable persons could differ as to the likelihood of its success on the merits. A legal argument is frivolous only if it is obviously and wholly without merit.
Hoover Universal, Inc. v. Brockway Imco, Inc., 809 F.2d 1039, 1044 (4th Cir. 1987); Golden Eagle Distrib. Corp. v. Burroughs Corp., 801 F.2d 1531, 1537 (9th Cir. 1986); Szabo Food Serv., Inc. v. Canteen Corp., 823 F.2d 1073, 1081-82 (7th Cir. 1987), cert. dismissed, ___ U.S. ___, 108 S.Ct. 1101, 99 L.Ed.2d 229 (1988). Cf. Autorama Corp. v. Stewart, 802 F.2d 1284, 1288-89 (10th Cir. 1986) (construing Fed.R.App.P. 38); Reliance Ins. Co. v. Sweeney Corp., 792 F.2d 1137, 1138 (D.C. Cir. 1986) (same). See also Standard (G)(2), infra.
a. Rule 11 sanctions are not appropriate merely because a pleading, motion or paper does not prevail on the merits. Losing on the merits, without more, does not warrant the imposition of sanctions.
Wasyl, Inc. v. First Boston Corp., 813 F.2d 1579, 1583 (9th Cir. 1987); Oliveri v. Thompson, 803 F.2d 1265, 1279 (2d Cir. 1986), cert. denied, 480 U.S. 918, 107 S.Ct. 1373, 94 L.Ed.2d 689 (1987); Hartman v. Hallmark Cards, Inc., 833 F.2d 117, 124 (8th Cir. 1987).
b. Advancing a groundless claim or defense may violate Rule 11 even if other claims or defenses in the same paper are not groundless.
Frantz v. United States Powerlifting Fed'n, 836 F.2d 1063, 1067 (7th Cir. 1987) (groundless claim); Burull v. First Nat'l Bank, 831 F.2d 788, 789-90 (8th Cir. 1987), cert. denied, ___ U.S. ___, 108 S.Ct. 1225, 99 L.Ed.2d 425 (1988) (same); Kramer, Levin, Nessen, Kamin Frankel v. Aronoff, 638 F.Supp. 714, 726 (S.D.N.Y. 1986) (groundless affirmative defenses and counterclaims).
c. Advancing a non-meritorious argument or position, not interposed for an improper purpose, does not ordinarily justify the imposition of sanctions if the paper, as a whole, is warranted by existing law.
Brown v. Federation of State Medical Bds., 830 F.2d 1429 (7th Cir. 1987); Golden Eagle Distrib. Corp. v. Burroughs Corp., 801 F.2d 1531, 1540-41 (9th Cir. 1986).
d. Advancing a debatable issue of law is not sanctionable.
Laborers Local No. 938 Joint Health Welfare Trust Fund v. B.R. Starnes Co., 827 F.2d 1454, 1458 (11th Cir. 1987); Morristown Daily Record, Inc. v. Graphic Communications, Union Local 8N, 832 F.2d 31, 32 n. 1 (3d Cir. 1987).
2. Recurring Problems. A pleading, motion or other paper is not warranted by existing law if it asserts a claim or defense that is plainly barred by operation of the doctrine of collateral estoppel or res judicata or by the applicable statute of limitations and the signer lacks a non-frivolous argument for avoiding the bar.
McLaughlin v. Bradlee, 803 F.2d 1197, 1201 (D.C. Cir. 1986); Norris v. Grosvenor Mktg., Ltd., 803 F.2d 1281, 1286-87 (2d Cir. 1986); Sam Mary Housing Corp. v. New York State, 632 F.Supp. 1448, 1452-53 (S.D.N.Y. 1986); Magnus Elec., Inc. v. La Republica Argentina, 830 F.2d 1396, 1403-04 (7th Cir. 1987); International Ass'n of Machinists v. Boeing Co., 833 F.2d 165, 172 (9th Cir. 1987), cert. denied, ___ U.S. ___, 108 S.Ct. 1488, 99 L.Ed.2d 715 (1988); O'Connell v. Champion Int'l Corp., 812 F.2d 393, 395 (8th Cir. 1987).
3. Judicial Views. The fact that a judge has considered and accepted a legal argument is evidence that the argument is non-frivolous.
Indianapolis Colts v. Mayor City Council of Baltimore, 775 F.2d 177, 182 (7th Cir. 1985).
4. Misrepresentation of Law. A baseless statement or a deliberate misrepresentation of law may not be made in a pleading, motion or other paper.
Thornton v. Wahl, 787 F.2d 1151, 1154 (7th Cir. 1986), cert. denied, 479 U.S. 851, 107 S.Ct. 181, 93 L.Ed.2d 116 (1986).
G. "WARRANTED BY . . . A GOOD FAITH ARGUMENT FOR THE EXTENSION, MODIFICATION, OR REVERSAL OF EXISTING LAW"
1. Objective Standard. Whether a pleading, motion, or other paper is warranted by a good faith argument for the extension, modification, or reversal of existing law is judged under a standard of objective reasonableness.
Eastway Constr. Co. v. City of New York, 762 F.2d 243, 254 (2d Cir. 1985); Szabo Food Serv., Inc. v. Canteen Corp., 823 F.2d 1073, 1081-82 (7th Cir. 1987), cert. dismissed, ___ U.S. ___, 108 S.Ct. 1101, 99 L.Ed.2d 229 (1988).
2. Factors. In determining whether a pleading, motion, or other paper is warranted by a good faith argument for the extension, modification, or reversal of existing law, the court considers all relevant circumstances, including:
a. whether the signer has offered arguments in support of the extension, modification or reversal of existing law;
b. the legal sufficiency and plausibility of those arguments;
c. the creativity, novelty or innovativeness of those arguments;
d. any other objective indication that the signer sought the extension, modification or reversal of existing law;
e. the candor and adequacy of the discussion of existing law, including adverse precedent;
f. the clarity or ambiguity of existing law;
g. the nature of the case, including whether constitutional doctrines are implicated; and
h. the danger of chilling either (i) the enthusiasm or creativity of counsel or (ii) reasonable efforts to extend, modify, or reverse existing law.Brown v. Federation of State Medical Bds., 830 F.2d 1429 (7th Cir. 1987); Cabell v. Petty, 810 F.2d 463, 466 (4th Cir. 1987); Dalton v. United States, 800 F.2d 1316, 1320 (4th Cir. 1986); Southern Leasing Partners, Ltd. v. McMullan, 801 F.2d 783, 788-89 (5th Cir. 1986); Szabo Food Serv., Inc. v. Canteen Corp., 823 F.2d 1073, 1081-82 (7th Cir. 1987), cert. dismissed, ___ U.S. ___, 108 S.Ct. 1101, 99 L.Ed.2d 229 (1988); Thornton v. Wahl, 787 F.2d 1151, 1154 (7th Cir. 1986); Gaiardo v. Ethyl Corp., 835 F.2d 479 (3d Cir. 1987).
H. "IMPROPER PURPOSE"
1. Generally. No pleading, motion or other paper may be interposed for an improper purpose, such as to harass or to cause unnecessary delay or a needless increase in the cost of litigation. Fed.R.Civ.P. 11.
2. Objective Standard. Whether a signer acted with an improper purpose is judged under an objective standard.
Brown v. Federation of State Medical Bds., 830 F.2d 1429 (7th Cir. 1987); In re TCI, Ltd., 769 F.2d 441, 445 (7th Cir. 1985).
a. Successive Filings. Repetitive service or filing of previously rejected positions evidences an improper purpose.
Zaldivar v. City of Los Angeles, 780 F.2d 823, 831-32 (9th Cir. 1986).
b. "Harass[ment]." "Harass[ment]," within Rule 11, is not gauged by the effect of the challenged conduct on the opposing party — whether, e.g., the conduct did in fact bother, annoy or vex. The focus is on the improper purpose of the signer, objectively tested, rather than the consequences of the signer's act, subjectively viewed by the signer's opponent.
Zaldivar v. City of Los Angeles, 780 F.2d 823, 831-32 (9th Cir. 1986).
3. Filing of Objectively Meritorious Paper for Improper Purpose.
a. The service or filing of a pleading, motion or other paper for an improper purpose violates the Rule, even if the paper is well grounded in fact and law.
Brown v. Federation of State Medical Bds., 830 F.2d 1429 (7th Cir. 1987); In re TCI, Ltd., 769 F.2d 441 (7th Cir. 1985); Hill v. Norfolk W. Ry. Co., 814 F.2d 1192, 1202 (7th Cir. 1987). But see Rachel v. Banana Republic, Inc., 831 F.2d 1503, 1508 (9th Cir. 1987); Cf. Oliveri v. Thompson, 803 F.2d 1265, 1275 (2d Cir. 1986), cert. denied, 480 U.S. 918, 107 S.Ct. 1373, 94 L.Ed.2d 689 (1987).
b. The service or filing of excessive, successive or repetitive pleadings, motions or other papers may constitute evidence of an improper purpose even if each paper is well founded in fact and law.
Robinson v. National Cash Register Co., 808 F.2d 1119, 1130 (5th Cir. 1987). NOTE: An alternative rule is enforced in certain courts. This alternative may be stated as follows:
A pleading, motion or other paper that is well grounded in fact and law does not violate the improper purpose clause regardless of the signer's subjective intent.Rachel v. Banana Republic, Inc., 831 F.2d 1503, 1508 (9th Cir. 1987); Hudson v. Moore Business Forms, Inc., 836 F.2d 1156, 1159 (9th Cir. 1987). Cf. Oliveri v. Thompson, 803 F.2d 1265, 1275 (2d Cir. 1986), cert. denied, 480 U.S. 918, 107 S.Ct. 1373, 94 L.Ed.2d 689 (1987). But see Brown, supra; Hill, supra; Robinson, supra.
I. "THE COURT, UPON . . . ITS OWN INITIATIVE"
1. Sua Sponte Sanctions. The court may impose Rule 11 sanctions upon its own initiative, provided that the manner in which sanctions are imposed comports with due process requirements and, in appropriate cases, with other applicable rules or statutes.Sanko S.S. Co. v. Galin, 835 F.2d 51, 53 (2d Cir. 1987); Gagliardi v. McWilliams, 834 F.2d 81, 82-83 (3d Cir. 1987). See also Standards (L)(2)(k) (Types of Sanctions) and (M) (Procedure), infra.
J. "THE COURT . . . SHALL IMPOSE"
1. Mandatory Nature of Sanctions. If a pleading, motion or other paper is not well grounded in fact or warranted by existing law or by a good faith argument for the extension, modification or reversal of existing law, or if it is interposed for an improper purpose, the court must, subject to the following paragraph, impose a sanction.Brown v. Federation of State Medical Bds., 830 F.2d 1429 (7th Cir. 1987); Eastway Constr. Corp. v. City of New York, 762 F.2d 243, 253 n. 7 (2d Cir. 1985); McLaughlin v. Bradlee, 803 F.2d 1197, 1205 (D.C. Cir. 1986).
2. Equitable Considerations. A court may decline to impose a sanction if a violation of the Rule is merely technical or de minimis in nature or if, in the circumstances, it would be inequitable to impose a sanction.
Oliveri v. Thompson, 803 F.2d 1265, 1280 (2d Cir. 1986), cert. denied, 480 U.S. 918, 107 S.Ct. 1373, 94 L.Ed.2d 689 (1987); Brown v. Capitol Air, Inc., 797 F.2d 106, 108 (2d Cir. 1986); Greenberg v. Sala, 822 F.2d 882, 887 (9th Cir. 1987); but see Thomas v. Capital Sec. Serv., Inc., 836 F.2d 866 (5th Cir. 1988) (en banc).
3. Discretion as to Form. The type of sanction that is imposed rests within the discretion of the judge.
Westmoreland v. CBS, Inc., 770 F.2d 1168, 1174-75 (D.C. Cir. 1985); Eastway Constr. Corp. v. City of New York, 821 F.2d 121, 123 (2d Cir.), cert. denied, ___ U.S. ___, 108 S.Ct. 269, 98 L.Ed.2d 226 (1987); Albright v. Upjohn Co., 788 F.2d 1217, 1222 (6th Cir. 1986); INVST Fin. Group, Inc. v. Chem-Nuclear Sys., 815 F.2d 391, 401 (6th Cir.), cert. denied, ___ U.S. ___, 108 S.Ct. 291, 98 L.Ed.2d 251 (1987); Unioil, Inc. v. E.F. Hutton Co., 809 F.2d 548, 559 (9th Cir. 1986), cert. denied, ___ U.S. ___, 108 S.Ct. 83, 98 L.Ed.2d 45 (1987). See also Part L, infra.
K. "UPON THE PERSON WHO SIGNED IT, A REPRESENTED PARTY, OR BOTH"
1. Generally. Sanctions may be imposed on the signer of the offending pleading, motion or other paper; on the signer's client; or both.Fed.R.Civ.P. 11; Chevron, U.S.A., Inc. v. Hand, 763 F.2d 1184, 1187 (10th Cir. 1985).
2. Vicarious Liability.
Liability for a Rule 11 violation ordinarily does not extend beyond the signing attorney, other than to the client.
Robinson v. National Cash Register Co., 808 F.2d 1119, 1132 (5th Cir. 1987); Thomas v. Capital Sec. Serv., Inc., 836 F.2d 866 (5th Cir. 1988) (en banc); see also In re DeLorean Motor Co. Litig., 59 B.R. 329 (E.D.Mich. 1986). But see: Calloway, infra; Anschutz, infra; Sony, infra. NOTE: An alternative rule is enforced in certain courts. This alternative may be stated as follows (in two parts):
a. Liability for a Rule 11 violation extends beyond a signing attorney to other members of his or her law firm.Calloway v. Marvel Entertainment Group, 650 F.Supp. 684, 687-88 (S.D.N.Y. 1986); Anschutz Petroleum Mktg. Corp. v. E.W. Saybolt Co., 112 F.R.D. 355 (S.D.N.Y. 1986); Sony Corp. v. S.W.I. Trading, Inc., 104 F.R.D. 535, 542 (S.D.N.Y. 1985). But see Robinson, infra; DeLorean, infra.
b. The liability of other members of the firm exists only to the extent that the pertinent court papers were signed and served or filed in violation of Rule 11 while the offender was a member of the firm; it does not extend to other papers.Calloway v. Marvel Entertainment Group, 650 F.Supp. 684, 687-88 (S.D.N.Y. 1986).
3. Successor Liability. When new counsel assumes responsibility for a pending case, new counsel's liability is limited to liability for the pleadings, motions and other papers that he or she signs; no responsibility is assumed for papers previously signed by predecessor counsel except to the extent that such papers are expressly relied upon or incorporated within papers signed by successor counsel.
United States v. Kirksey, 639 F.Supp. 634 (S.D.N.Y. 1986). Note: See also Standard (C)(4)(a)-(b), supra.
L. "AN APPROPRIATE SANCTION"
1. Generally. The district court is vested with broad discretion to fashion an appropriate sanction for violation of Rule 11.Eastway Constr. Corp. v. City of New York, 762 F.2d 243, 254 n. 7 (2d Cir. 1985); McLaughlin v. Bradlee, 803 F.2d 1197, 1205 (D.C. Cir. 1986); Albright v. Upjohn Co., 788 F.2d 1217, 1222 (6th Cir. 1986). 2. Types of Sanctions. Among the types of sanction that the court, in its discretion, may choose to impose are:
a. a reprimand of the offender;
b. mandatory continuing legal education;
c. a fine;
d. an award of reasonable expenses, including reasonable attorneys' fees, incurred as a result of the misconduct;
e. reference of the matter to the appropriate attorney disciplinary or grievance authority;
f. an order precluding the introduction of certain evidence;
g. an order precluding the litigation of certain issues;
h. an order precluding the litigation of certain claims or defenses;
i. dismissal of the action;
j. entry of a default judgment;
k. injunctive relief limiting a party's future access to the courts; and
l. censure, suspension or disbarment from practicing before the forum court, subject to applicable rules or statutes.Lieb v. Topstone Indus., Inc., 788 F.2d 151, 157-58 (3d Cir. 1986); Davis v. Veslan Enters., 765 F.2d 494, 500-01 n. 14 (5th Cir. 1985); In re Kelly, 808 F.2d 549, 552 (7th Cir. 1986); Cheek v. Doe, 828 F.2d 395, 397-98 (7th Cir.), cert. denied, ___ U.S. ___, 108 S.Ct. 349, 98 L.Ed.2d 374 (1987); In re Disciplinary Action Curl, 803 F.2d 1004, 1007 (9th Cir. 1986); Cotner v. Hopkins, 795 F.2d 900, 902-03 (10th Cir. 1986); Gagliardi v. McWilliams, 834 F.2d 81, 82-83 (3d Cir. 1987); Thomas v. Capital Sec. Serv., Inc., 836 F.2d 866 (5th Cir. 1988) (en banc); Frantz v. United States Powerlifting Federation, 836 F.2d 1063, 1066 (7th Cir. 1987).
3. Allocation.
a. Relative Culpability. Sanctions should be allocated among the persons responsible for the offending pleading, motion or other paper, based upon their relative culpability.
Chevron, U.S.A., Inc. v. Hand, 763 F.2d 1184, 1187 (10th Cir. 1985); Westmoreland v. CBS, Inc., 770 F.2d 1168, 1178-79 (D.C. Cir. 1985).
b. Attorney-Client Relationship. In allocating sanctions between counsel and client, the court takes into account the privileged nature of their relationship and avoids encroaching upon the attorney-client privilege or jeopardizing counsel's ability to act, and act effectively, for the client.
4. Least Severe Sanction. In determining the appropriate sanction, the court considers which of the purposes underlying Rule 11 it seeks to implement and then imposes the least severe sanction adequate to serve the purpose or purposes.
Matter of Yagman, 796 F.2d 1165, 1182-83 (9th Cir. 1986); INVST Fin. Group, Inc. v. Chem-Nuclear Sys., 815 F.2d 391, 404 (6th Cir. 1987), cert. denied, ___ U.S. ___, 108 S.Ct. 291, 98 L.Ed.2d 251 (1987); Cabell v. Petty, 810 F.2d 463, 466-67 (4th Cir. 1987); Brown v. Federation of State Medical Bds., 830 F.2d 1429, 1437 (7th Cir. 1987); Thomas v. Capital Sec. Serv., Inc., 836 F.2d 866 (5th Cir. 1988); Gaiardo v. Ethyl Corp., 835 F.2d 479 (3d Cir. 1987).
5. Purposes of Rule 11. Among the purposes for which a court may impose Rule 11 sanctions are:
a. deterring dilatory or abusive litigation tactics by the same offender and others;
b. imposing punishment for deserving misconduct;
c. compensating an offended person for some or all of the reasonable expenses incurred by reason of the misconduct;
d. alleviating other prejudice to an offended person resulting from the misconduct, including prejudice to that person's litigation positions; and
e. streamlining litigation and bringing about economies in the use of judicial resources by curtailing frivolous and abusive practices.Westmoreland v. CBS, Inc., 770 F.2d 1168, 1180 (D.C. Cir. 1985); Brown v. Capitol Air, Inc., 797 F.2d 106, 108 (2d Cir. 1986); Oliveri v. Thompson, 803 F.2d 1265, 1281 (2d Cir. 1986), cert. denied, 480 U.S. 918, 107 S.Ct. 1373, 94 L.Ed.2d 689 (1987); Szabo Food Serv., Inc. v. Canteen Corp., 823 F.2d 1073, 1083 (7th Cir. 1987), cert. dismissed, ___ U.S. ___, 108 S.Ct. 1101, 99 L.Ed.2d 229 (1988); Brown v. Federation of State Medical Bds., 83.0 F.2d 1429, 1437-38 (7th Cir. 1987); Lieb v. Topstone Indus., Inc., 788 F.2d 151, 158 (3d Cir. 1986); Donaldson v. Clark, 819 F.2d 1551, 1556 (11th Cir. 1987).
6. Mitigating and Aggravating Factors. Among the factors which the court may consider (1) as militating in favor of, or against, the imposition of a particular sanction, or (2) in the case of a monetary sanction, in assessing the amount thereof, are:
a. the good faith or bad faith of the offender;
b. the degree of willfulness, vindictiveness, negligence or frivolousness involved in the offense;
c. the knowledge, experience and expertise of the offender;
d. any prior history of sanctionable conduct on the part of the offender;
e. the reasonableness and necessity of the out-of-pocket expenses incurred by the offended person as a result of the misconduct;
f. the nature and extent of prejudice, apart from out-of-pocket expenses, suffered by the offended person as a result of the misconduct;
g. the relative culpability of client and counsel, and the impact on their privileged relationship of an inquiry into that area;
h. the risk of chilling the specific type of litigation involved;
i. the impact of the sanction on the offender, including the offender's ability to pay a monetary sanction;
j. the impact of the sanction on the offended party, including the offended person's need for compensation;
k. the relative magnitude of sanction necessary to achieve the goal or goals of the sanction;
l. burdens on the court system attributable to the misconduct, including consumption of judicial time and incurrence of juror fees and other court costs;
m. the degree to which the offended person attempted to mitigate any prejudice suffered by him or her;
n. the degree to which the offended person's own behavior caused the expenses for which recovery is sought;
o. the extent to which the offender persisted in advancing a position while on notice that the position was not well grounded in fact or warranted by existing law or a good faith argument for the extension, modification or reversal of existing law; and
p. the time of, and circumstances surrounding, any voluntary withdrawal of a pleading, motion or other paper.Lieb v. Topstone Indus., Inc., 788 F.2d 151, 157-58 (3d Cir. 1986); Cabell v. Petty, 810 F.2d 463, 466 (4th Cir. 1987); In re Disciplinary Action of Curl, 803 F.2d 1004, 1007 (9th Cir. 1986); Huettig Schromm, Inc. v. Landscape Contractors Council, 790 F.2d 1421, 1426-27 (9th Cir. 1986); INVST Financial Group, Inc. v. Chem-Nuclear Sys., Inc., 815 F.2d 391, 404 (6th Cir.), cert. denied, ___ U.S. ___, 108 S.Ct. 291, 98 L.Ed.2d 251 (1987); Cleveland Demolition Co. v. Azcon Scrap. Corp., 827 F.2d 984, 988 (4th Cir. 1987); Chevron, U.S.A., Inc. v. Hand, 763 F.2d 1184, 1187 (10th Cir. 1985); Oliveri v. Thompson, 803 F.2d 1265, 1281 (2d Cir. 1986), cert. denied, 480 U.S. 918, 107 S.Ct. 1373, 94 L.Ed.2d 689 (1987); Anschutz Petroleum Mktg. Corp. v. E. W. Saybolt Co., 112 F.R.D. 355, 358 (S.D.N.Y. 1986); Miller v. United States, 669 F.Supp. 906, 911 n. 3 (N.D.Ind. 1987); Brown v. Federation of State Medical Bds., 830 F.2d 1429 (7th Cir. 1987).
7. Attorneys' Fees.
a. If the court decides to award a monetary sanction to compensate an offended person for attorneys' fees incurred as a result of a Rule 11 violation, the relevant circumstances include:
i. the time and labor required;
ii. the novelty and difficulty of the questions involved;
iii. the skill requisite to perform the legal service properly;
iv. the customary fee;
v. whether the fee is fixed or contingent;
vi. time limitations imposed by the client or the circumstances;
vii. the amount involved and the results obtained;
viii. the experience, reputation and ability of the attorneys;
ix. awards in similar cases; and
x. the other factors set forth in Standard (L)(6), supra.Great Hawaiian Fin. Corp. v. Aiu, 116 F.R.D. 612, 619 (D. Haw. 1987); Eastway Constr. Corp. v. City of New York, 637 F.Supp. 558, 569-75 (E.D.N.Y. 1986), mod'd, 821 F.2d 121, 122-24 (2d Cir.), cert. denied, ___ U.S. ___, 108 S.Ct. 269, 98 L.Ed.2d 226 (1987).
b. An agreed-upon fee between a successful party and counsel might be reasonable between attorney and client, in light of the circumstances, yet not reasonable when judicially shifted to the opposing party pursuant to Rule 11.
Aetna Casualty Sur. Co. v. Fernandez, 830 F.2d 952, 956-57 nn. 17-18 (8th Cir. 1987); Doe v. Keane, 117 F.R.D. 103, 106-07 (W.D. Mich. 1987).
M. PROCEDURE
1. Generally. Due process requires that, before sanctions are imposed, the alleged offender be afforded fair notice and an opportunity to be heard.
Gagliardi v. McWilliams, 834 F.2d 81, 82-83 (3d Cir. 1987).
2. Notice. Sanctions may not be imposed upon a person who is not on notice of (a) the fact that sanctions are under consideration, (b) the reasons why sanctions are under consideration or (c) the type of sanctions under consideration.
Gagliardi v. McWilliams, 834 F.2d 81, 82-83 (3d Cir. 1987); Sanko S.S. Co. v. Galin, 835 F.2d 51, 53 (2d Cir. 1987); Shrock v. Altru Nurses Registry, 810 F.2d 658, 662 (7th Cir. 1987); Braley v. Campbell, 832 F.2d 1504, 1514-15 (10th Cir. 1987) (en banc).
3. Factors. The procedure employed may vary with the circumstances, provided that due process requirements are satisfied. Among the factors that the court considers in fashioning a procedure to insure due process are:
a. the severity of the sanction under consideration;
b. the interests of the alleged offender in having a sanction imposed only when justified;
c. the risk of an erroneous imposition of sanctions relative to the probable value of additional notice and hearing;
d. the interest of the court in the efficient use of the judicial system, including the fiscal and administrative burdens that additional procedural requirements would entail;
e. whether the sanctions at issue were sought by a party or are being considered sua sponte by the court;
f. if the sanctions were sought by a party, the type of sanction sought;
g. the type of sanction under consideration by the court;
h. whether the alleged offender was notified, or is otherwise aware, that sanctions are under consideration, and the nature of those sanctions;
i. whether the sanction under consideration rests on a factual finding, such as a finding of bad faith on the part of the alleged offender;
j. whether the judge imposing or considering the sanction presided over the proceedings and is the same judge before whom the offense was committed;
k. whether the alleged offender has been provided an opportunity to be heard before sanctions issued;
l. whether the alleged offender will be provided an opportunity to be heard after sanctions issued;
m. whether counsel, client or both are the target of the proposed sanction, and the impact of the sanctions proceedings on the attorney-client relationship.
Adv.Com.Note to Fed.R.Civ.P. 11; Donaldson v. Clark, 819 F.2d 1551, 1558-60 (11th Cir. 1987); INVST Fin. Group, Inc. v. Chem-Nuclear Sys., Inc., 815 F.2d 391, 405 (6th Cir. 1987), cert. denied, ___ U.S. ___, 108 S.Ct. 291, 98 L.Ed.2d 251 (1987); McLaughlin v. Bradlee, 803 F.2d 1197, 1205-06 (D.C. Cir. 1986); Eavenson, Auchmuty Greenwald v. Holtzman, 775 F.2d 535, 540-41 (3d Cir. 1985); Davis v. Veslan Enters., 765 F.2d 494, 500 n. 12 (5th Cir. 1985); Shrock v. Altru Nurses Registry, 810 F.2d 658, 662 (7th Cir. 1987); Rodgers v. Lincoln Towing Serv., Inc., 771 F.2d 194, 205-06 (7th Cir. 1985).
4. Hearing. The court, in its discretion, shall determine whether to hold a hearing on sanctions under consideration. A hearing is ordinarily required prior to the issuance of any sanction that is based upon a finding of bad faith on the part of the alleged offender. A hearing is appropriate whenever it would assist the court in its consideration of the sanctions issue or would significantly assist the alleged offender in the presentation of his or her defense.
Rodgers v. Lincoln Towing Serv., Inc., 771 F.2d 194, 205-06 (7th Cir. 1985); INVST Fin. Group, Inc. v. Chem-Nuclear Sys., 815 F.2d 391, 405 (6th Cir. 1987), cert. denied, ___ U.S. ___, 108 S.Ct. 291, 98 L.Ed.2d 251 (1987); Brown v. Nat'l Board of Medical Examiners, 800 F.2d 168, 173 (7th Cir. 1986).
5. Discovery. Except in extraordinary circumstances, discovery is not permitted on Rule 11 motions.
See Adv.Com.Note to Fed.R.Civ.P. 11.
N. FINDINGS AND CONCLUSIONS
1. Sanction Granted. The record must reflect the specific reasons for which a sanction is imposed and the basis on which the imposition rests. The degree of specificity required will depend upon the circumstances and upon the amount, type and effect of the sanction imposed. Unless it is otherwise apparent from the record, the trial court should include an identification of each pleading, motion or other paper held to violate the Rule, a specification of the nature of the violation and an explanation of the manner in which the sanction was computed or otherwise determined.
F. H. Krear Co. v. Nineteen Named Trustees, 810 F.2d 1250, 1268 (2d Cir. 1987); Brown v. Federation of State Medical Bds., 830 F.2d 1429 (7th Cir. 1987); Lieb v. Topstone Indus., Inc., 788 F.2d 151, 158 (3d Cir. 1986).
2. Sanction Denied. If the court denies a motion for sanctions, it shall have discretion to determine whether to place on the record the reasons for its action.
Thomas v. Capital Sec. Serv., Inc., 836 F.2d 866 (5th Cir. 1988) (en banc).
O. JURISDICTION TO IMPOSE SANCTIONS
1. Generally. A court has jurisdiction to impose sanctions upon any counsel or pro se litigant who has signed a pleading, motion or other paper served or filed in the action before the court, even if the court lacks jurisdiction over the subject matter of the action.
Orange Prod. Credit Ass'n v. Frontline Ventures Ltd., 792 F.2d 797, 801 (9th Cir. 1986); News-Texan, Inc. v. City of Garland, 814 F.2d 216, 219-20 (5th Cir. 1987).
2. Post-Dismissal or Post-Judgment Sanctions.
a. The court may impose sanctions for a violation of Rule 11 after the underlying action has been dismissed or judgment entered.
McLaughlin v. Bradlee, 803 F.2d 1197, 1205 (D.C. Cir. 1986); Hicks v. Southern Maryland Health Sys. Agency, 805 F.2d 1165, 1166-67 (4th Cir. 1986); Jackson Marine Corp. v. Harvey Barge Repair, Inc., 794 F.2d 989, 991-92 (5th Cir. 1986); In re Ruben, 825 F.2d 977, 981-82 (6th Cir. 1987); Szabo Food Serv., Inc. v. Canteen Corp., 823 F.2d 1073, 1077-79 (7th Cir. 1987), cert. dismissed, ___ U.S. ___, 108 S.Ct. 1101, 99 L.Ed.2d 229 (1988); Langham-Hill Petroleum Inc. v. Southern Fuels Co., 813 F.2d 1327, 1330-31 (4th Cir. 1987), cert. denied, ___ U.S. ___, 108 S.Ct. 99, 98 L.Ed.2d 60 (1987). But see: Foss, infra; Johnson, infra.
b. The court's discretion to impose post-judgment or post-dismissal sanctions may be limited by local court rule.
Hicks v. Southern Maryland Health Sys. Agency, 805 F.2d 1165, 1166 (4th Cir. 1986); In re Ruben, 825 F.2d 977, 982 (6th Cir. 1987); cf. White v. New Hampshire Dep't of Employment Sec., 455 U.S. 445, 450-55, 102 S.Ct. 1162, 1165-68, 71 L.Ed.2d 325 (1982).
NOTE: An alternative rule is enforced in certain courts. This alternative may be stated as follows (in two parts):
a. Once an action is dismissed, the court loses all jurisdiction and is precluded from entering an award of sanctions.Johnson Chemical Co. v. Home Care Prods., Inc., 823 F.2d 28, 31 (2d Cir. 1987); Foss v. Federal Intermediate Credit Bank, 808 F.2d 657, 660 (8th Cir. 1986). But see: McLaughlin v. Bradlee, 803 F.2d 1197, 1205 (D.C. Cir. 1986); Hicks v. Southern Maryland Health Sys. Agency, 805 F.2d 1165, 1166-67 (4th Cir. 1986); Jackson Marine Corp. v. Harvey Barge Repair, Inc., 794 F.2d 989, 991-92 (5th Cir. 1986); In re Ruben, 825 F.2d 977, 981-82 (6th Cir. 1987); Szabo Food Serv. Inc. v. Canteen Corp., 823 F.2d 1073, 1077-79 (7th Cir. 1987), cert. denied, ___ U.S. ___, 108 S.Ct. 1101, 99 L.Ed.2d 229 (1988); Langham-Hill Petroleum Inc. v. Southern Fuels Co., 813 F.2d 1327, 1330-31 (4th Cir. 1987), cert. denied, ___ U.S. ___, 108 S.Ct. 99, 98 L.Ed.2d 60 (1987).
b. Following the entry of judgment, no sanctions may be imposed.Adduono v. World Hockey Ass'n, 824 F.2d 617 (8th Cir. 1987).
P. APPEALABILITY
1. Parties.
a. An order imposing sanctions upon a party is appealable upon the entry of judgment or a final decision adverse to that party.
b. An order imposing sanctions is appealable only after sanctions have been fixed.
In re Jeanette Corp., 832 F.2d 43, 46 n. 2 (3d Cir. 1987).
2. Non-Parties. An order imposing sanctions on counsel, or any other non-party to the underlying action, may immediately be appealed as a final order.
Optyl Eyewear Fashion Int'l Corp. v. Style Cos., 760 F.2d 1045, 1047 n. 1 (9th Cir. 1985); Unioil, Inc. v. E.F. Hutton Co., Inc., 809 F.2d 548, 556 (9th Cir. 1986), cert. denied, ___ U.S. ___, 108 S.Ct. 83, 98 L.Ed.2d 45 (1987); Sanko S.S. Co. v. Galin, 835 F.2d 51, 53 (2d Cir. 1987); Frazier v. Cast, 771 F.2d 259, 262 (7th Cir. 1985).
Q. APPELLATE REVIEW
Generally. All aspects of an order imposing sanctions — factual findings, legal conclusions and the appropriateness of the sanction imposed — are reviewed under the abuse-of-discretion standard. Thomas v. Capital Sec. Serv., Inc., 836 F.2d 866 (5th Cir. 1988) (en banc).
NOTE: An alternative rule is enforced in certain courts. This alternative may be stated as follows:
Upon review of a district court order imposing sanctions:
a. factual determinations are reviewed under the clearly erroneous standard;
b. the legal conclusion that the facts constitute a violation of the Rule is reviewed de novo; and
c. the appropriateness of the sanction imposed is reviewed under the abuse-of-discretion standard.Zaldivar v. City of Los Angeles, 780 F.2d 823, 828 (9th Cir. 1986); Brown v. Federation of State Medical Bds., 830 F.2d 1429 (7th Cir. 1987).