Fourth Circuit: § 1927 Sanctions Cannot Rest on Disproved Pleading Allegations When Counsel Has Nonfrivolous Summary-Judgment Grounds

Case: Nawal Ali v. BC Architects Engineers, PLC (No. 24-1963)  |  Court: U.S. Court of Appeals for the Fourth Circuit  |  Date: February 20, 2026  |  Disposition: Sanctions order reversed (published opinion by Judge Harris).

1. Introduction

This appeal concerns attorney sanctions—not the ultimate merits of Nawal Ali’s retaliation claim. Ali, a Syrian-American Muslim woman who wore a hijab, sued her former employer, BC Architects Engineers, PLC (“BC”), asserting multiple claims after her April 2016 termination. Although the district court initially dismissed all claims, the Fourth Circuit previously revived one claim—retaliatory termination—and remanded for discovery.

After discovery, the district court granted BC summary judgment on the remaining retaliation claim. It then sanctioned Ali’s counsel under 28 U.S.C. § 1927, reasoning that by the end of discovery counsel “knew, or should have known” that two allegations highlighted in the earlier appellate reversal (satisfactory performance and denial of two work-from-home requests) were “non-existent,” making the continued pursuit of the case “entirely groundless.” The sanctions award ultimately totaled about $57,000 in fees and costs.

The Fourth Circuit reversed, holding the district court’s sanctions ruling rested on a flawed legal premise: even assuming the two highlighted allegations weakened, the operative question at summary judgment was pretext under the McDonnell Douglas framework, and Ali had at least two nonfrivolous grounds to argue pretext.

2. Summary of the Opinion

• The Fourth Circuit reaffirmed that § 1927 targets litigation conduct that “multiplies the proceedings” unreasonably and vexatiously, not merely weak claims.
• The court rejected a categorical argument that responding to summary judgment can never “multiply” proceedings; in exceptional circumstances, continuing to litigate a patently frivolous claim after its lack of merit becomes evident can be sanctionable.
• But the district court abused its discretion by concluding Ali’s summary-judgment opposition was “baseless” solely because two pleading allegations were undermined; the sanctions analysis should have asked whether Ali had an arguable factual or legal basis for her pretext arguments.
• Because Ali advanced at least two nonfrivolous pretext theories—(1) shifting explanations and (2) failure to follow progressive discipline/PIP policy—sanctions were not warranted, and the award was reversed.

3. Analysis

3.1. Precedents Cited (and How They Shaped the Decision)

Standards of Review and the “abuse of discretion” boundary

• Six v. Generations Fed. Credit Union, 891 F.3d 508 (4th Cir. 2018): Cited for abuse-of-discretion review of § 1927 sanctions and as an example of the kind of conduct § 1927 commonly reaches (protracted, bad-faith litigation tactics). The court used Six to situate § 1927 within its intended domain: exceptional misconduct that needlessly extends litigation.
• Abdelhalim v. Lewis, 90 F.4th 265 (4th Cir. 2024): Provided the articulation that a court abuses discretion when its reasoning is “flawed by erroneous factual or legal premises.” That principle was the mechanism of reversal: the district court’s premise (that disproving two allegations made the whole summary-judgment opposition frivolous) was legally misframed.

What it means to “multiply the proceedings” under § 1927

• DeBauche v. Trani, 191 F.3d 499 (4th Cir. 1999): The cornerstone textual holding—“the filing of a single complaint cannot” multiply proceedings under § 1927. Ali’s counsel relied on DeBauche to argue sanctions were categorically barred. The panel distinguished it: here, the sanctioned conduct was post-discovery litigation (opposing summary judgment and pursuing an appeal), not merely filing a complaint.
• Salvin v. Am. Nat'l Ins. Co., 281 F. App'x 222 (4th Cir. 2008) (per curiam): Though unpublished, it supplied a key conceptual bridge the panel found persuasive and “adopt[ed]”: refusing to voluntarily dismiss once lack of merit becomes evident can “protract[] the litigation” and thus multiply proceedings. This is the opinion’s most concrete guidance on how § 1927 can apply to continued litigation after discovery.
• Fahrenz v. Meadow Farm P'ship, 850 F.2d 207 (4th Cir. 1988); Blue v. U.S. Dep't of the Army, 914 F.2d 525 (4th Cir. 1990); Sweetland v. Bank of Am. Corp., 241 F. App'x 92 (4th Cir. 2007) (per curiam): Cited collectively to show Fourth Circuit recognition that, in rare cases, continuing to litigate after a claim becomes obviously untenable can support § 1927 sanctions. The panel invoked these cases to reject any bright-line rule against sanctions in the “failure to dismiss” posture, while stressing the “exceptional circumstances” requirement.

Merits loss ≠ frivolity; sanctions require more than a weak record

• EEOC v. Great Steaks, Inc., 667 F.3d 510 (4th Cir. 2012): Reinforced that § 1927 focuses on litigation conduct and that the “weaknesses” of a case alone do not justify § 1927 sanctions. The panel used this to separate ordinary summary-judgment losses from sanctionable abuse of process.
• Christiansburg Garment Co. v. EEOC, 434 U.S. 412 (1978): Though a fee-shifting case, it supplied the cautionary principle against “post hoc reasoning” that treats non-prevailing plaintiffs as having brought unreasonable actions. The panel used this to underscore the chilling-risk in employment discrimination litigation if sanctions were to follow routine defeats.
• Neitzke v. Williams, 490 U.S. 319 (1989): Provided the definition of frivolousness as lacking an “arguable basis either in law or in fact.” The panel effectively imported that threshold to frame the proper § 1927 inquiry: did counsel have an arguable basis for the summary-judgment opposition?

The operative merits framework: retaliation and pretext

• Roe v. Marshall Univ. Bd. of Governors, 145 F.4th 561 (4th Cir. 2025): Cited for the explanation of the McDonnell Douglas framework in retaliation cases. Its significance here was methodological: once the case reached summary judgment, the live question became pretext, not the literal accuracy of two earlier pleading allegations.

Why Ali’s pretext arguments were “arguable” (and thus not sanctionably frivolous)

• Hollis v. Morgan State Univ., 153 F.4th 369 (4th Cir. 2025) (quoting EEOC v. Sears Roebuck & Co., 243 F.3d 846 (4th Cir. 2001)): The panel relied on the established rule that “different justifications at different times” can itself be evidence of pretext. This directly supported the conclusion that Ali’s “shifting explanations” argument—though unsuccessful—was not frivolous.
• Spatafore v. City of Clarksburg, 2026 WL 49568 (4th Cir. Jan. 7, 2026): Used to illustrate that courts (and even judges on the same panel, given the noted dissent) can disagree over whether inconsistencies are “minor” or enough for a jury question. That variability helped demonstrate why Ali’s counsel’s position—falling on one side of a fine line—could not be deemed obviously baseless.
• Vill. of Arlington Heights v. Metro. Hous. Dev. Corp., 429 U.S. 252 (1977); Cowgill v. First Data Techs., Inc., 41 F.4th 370 (4th Cir. 2022): Cited (via Hollis) for the proposition that deviations from policy may be circumstantial evidence supporting an inference of discriminatory/retaliatory intent. That authority underwrote the court’s conclusion that BC’s departure from its progressive discipline policy (and failure to use a PIP) provided a plausible pretext argument, even if the district court did not address it expressly in the merits order.

Pleading notice vs. “constructive amendment” at summary judgment

• Faulconer v. Centra Health, Inc., 808 F. App'x 148 (4th Cir. 2020) and Zampierollo-Rheinfeldt v. Ingersoll-Rand de P.R., Inc., 999 F.3d 37 (1st Cir. 2021): Cited to support the premise that plaintiffs may rely on discovery evidence at summary judgment so long as it does not advance an entirely new theory outside fair notice. The panel used these cases to rebut any notion that Ali’s reliance on discovery-developed evidence for pretext was improper.

Ancillary appellate-practice reference

• United States v. Heyward, 42 F.4th 460 (4th Cir. 2022): Cited to remind litigants about the proper use of Rule 28(j) letters. The court denied BC’s separate sanctions request based on alleged Rule 28(j) misuse, signaling reluctance to treat ordinary briefing disputes as § 1927-worthy.

3.2. Legal Reasoning

The opinion proceeds in two moves: (1) clarifying the legal space for § 1927 sanctions in the Fourth Circuit, and (2) demonstrating that the district court misapplied that space to this record.

(a) The court rejects categorical “no multiplication” arguments

The panel agreed that § 1927 cannot be triggered by “the filing of a single complaint” (DeBauche v. Trani), but held that the case was different because the district court sanctioned counsel for continuing the litigation—specifically, opposing summary judgment and later appealing. The panel adopted Salvin v. Am. Nat'l Ins. Co.’s reasoning that failing to dismiss a patently meritless case can, in exceptional circumstances, protract litigation and thus multiply proceedings.

(b) The court insists the sanctions inquiry must align with the live merits posture

The critical error was analytical narrowing. The district court treated two discovery-undermined allegations—previously noted at the motion-to-dismiss stage— as “core” to the claim and concluded that once they failed, the entire retaliation claim became frivolous.

The Fourth Circuit held that approach misconceived what mattered at summary judgment. Under the McDonnell Douglas framework, once BC articulated legitimate reasons for termination, the decisive question became pretext. Therefore, the sanctions question was not whether two allegations survived discovery, but whether the opposition to summary judgment lacked any arguable basis in law or fact (Neitzke v. Williams).

(c) The court identifies two nonfrivolous pretext theories supported by record and law

• Shifting explanations: Ali had record material suggesting variations in BC’s stated reasons for termination, and Fourth Circuit law recognizes shifting justifications can be evidence of pretext (Hollis v. Morgan State Univ. (quoting EEOC v. Sears Roebuck & Co.)). Whether discrepancies are “minor” can be a close call (illustrated by Spatafore v. City of Clarksburg), which further undermined any finding that counsel’s argument was sanctionably baseless.
• Departure from progressive discipline/PIP policy: BC did not follow a handbook policy that contemplated a performance improvement plan. Deviations from policy can be circumstantial evidence of pretext and intent (Hollis; Vill. of Arlington Heights v. Metro. Hous. Dev. Corp.; Cowgill v. First Data Techs., Inc.). Even if the merits court did not address this argument, it was presented and had plausible legal footing.

(d) Result: abuse of discretion and reversal

Because counsel had at least two nonfrivolous grounds to oppose summary judgment, the district court’s conclusion that the opposition was “baseless” rested on an erroneous legal premise (Abdelhalim v. Lewis). The Fourth Circuit reversed the sanctions award without reaching the fee calculation.

3.3. Impact

• Raises the precision demanded of § 1927 rulings at the summary-judgment stage: District courts must identify why the specific continued litigation conduct lacked any arguable basis in law or fact as the case actually stood post-discovery (often: the pretext record), rather than anchoring sanctions to the failure of selected complaint-era allegations.
• Clarifies that “multiplication” can occur through continued litigation, but only exceptionally: By adopting Salvin v. Am. Nat'l Ins. Co., the court confirms that refusing to dismiss can be sanctionable—yet the reversal signals courts must be cautious in applying that concept to ordinary summary-judgment practice.
• Protects adversarial testing of pretext evidence: The decision implicitly recognizes that pretext analysis often turns on nuanced inferences (e.g., how “minor” inconsistencies are), making sanctions inappropriate unless the argument is plainly foreclosed or factually nonexistent.
• Chilling-effect guardrail in discrimination/retaliation litigation: Echoing Christiansburg Garment Co. v. EEOC, the opinion discourages converting unsuccessful discrimination suits into sanction events, which could deter plaintiffs and counsel from bringing close but colorable claims.
• Open question flagged: The panel noted (without deciding) whether the district court had authority to sanction counsel for pursuing the appeal of summary judgment; the court reversed on the merits of frivolity, leaving the authority issue “for another day.”

4. Complex Concepts Simplified

28 U.S.C. § 1927 (“unreasonably and vexatiously multiplies the proceedings”)

Section 1927 is aimed at lawyer conduct that needlessly expands litigation—causing the other side to incur “excess” fees and costs. It is not a general “loser pays” rule and is not triggered merely because a lawyer’s arguments ultimately fail.

“Multiplying proceedings” vs. “filing a lawsuit”

Under DeBauche v. Trani, filing a single complaint—even if defective—does not “multiply” proceedings under § 1927. But continuing to litigate after it becomes clear a claim is patently meritless can, in rare cases, multiply proceedings (as recognized in Salvin v. Am. Nat'l Ins. Co. and related cases).

McDonnell Douglas framework (retaliation) and “pretext”

In many retaliation cases, courts use a burden-shifting structure: the plaintiff first makes a basic showing (a “prima facie case”); the employer then states legitimate reasons for its action; the plaintiff must then show those reasons are “pretext”—a cover for retaliation. Here, once discovery was complete, the key question was whether Ali had evidence that BC’s reasons were a cover, not whether early allegations from the pleading stage proved perfectly accurate.

“Shifting explanations” and “policy deviations” as circumstantial evidence

Courts allow juries to infer pretext when an employer gives different reasons at different times, or when it departs from its own stated policies. These are not automatic “wins” for plaintiffs, but they are recognized inferential tools—often making them at least arguable grounds to resist summary judgment.

5. Conclusion

Nawal Ali v. BC Architects Engineers, PLC sets a concrete boundary on § 1927 sanctions in post-discovery practice: courts must evaluate whether counsel’s continued litigation lacked any arguable basis in light of the operative summary-judgment framework (here, pretext), not simply whether discovery weakened select allegations that once helped a claim survive dismissal. By reversing sanctions where counsel advanced plausible pretext theories grounded in recognized Fourth Circuit doctrine, the court reinforces § 1927 as an exceptional remedy reserved for truly abusive litigation conduct, not for ordinary—if unsuccessful— advocacy in close evidentiary disputes.