Rule 11 Reaches Attached Pre‑Suit Letters and Post‑Removal Advocacy; Inherent Power Sanctions Pre‑Suit Deception: Sofaly v. Portfolio Recovery Associates

Introduction

In Robert Sofaly v. Portfolio Recovery Associates, LLC (consolidated with Damien Malcolm v. Portfolio Recovery Associates, LLC), the Third Circuit affirmed significant sanctions against two lawyers and their law firm for engineering “designed-to-fail” handwritten dispute letters to manufacture claims under the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692e(8). The case centers on whether lawyers may deploy intentionally confusing, firm-generated “client” letters to provoke an FDCPA violation and then sue for statutory damages and fees—and, critically, whether federal courts may sanction such conduct.

The court’s precedential opinion, authored by Judge Bibas, does more than affirm sanctions. It clarifies important procedural and ethical rules:

Rule 11 applies to pre-suit letters when those letters are attached to, incorporated in, and then advocated as part of the complaint, including after removal to federal court.
Agency authority from clients does not excuse misrepresentations and half-truths that mislead opposing parties and the court.
Courts may use inherent power to impose monetary sanctions for prelitigation deception intended to influence judicial proceedings.

The parties: Plaintiffs Robert Sofaly and Damien Malcolm sued Portfolio Recovery Associates, a debt collector. The District Court sanctioned attorneys Joshua Ward and Travis Gordon, along with their firm, JP Ward & Associates, for a “campaign of deception.” The Third Circuit affirmed in full.

Summary of the Opinion

The Third Circuit upheld the Western District of Pennsylvania’s sanctions after the court discovered that JP Ward & Associates had developed a template of handwritten “client” letters stuffed with distracting anecdotes and non sequiturs (including an aside about a “crazy XR 65A80K thing”) with a single, oblique sentence disputing a debt. The firm’s staff wrote, signed, and sent these letters—often before speaking with the client—intending that automated systems would miss the embedded dispute. That failure would then tee up an FDCPA claim for not reporting the debt as disputed.

The district court found that the complaints—verified under penalty of perjury—misrepresented the letters as authentic, client-signed disputes and used those misrepresentations to harass the defendant and gin up fees. It dismissed both cases with prejudice, issued nonmonetary sanctions under Rule 11, and awarded Portfolio fees and costs under its inherent authority. On appeal, the Third Circuit:

Affirmed nonmonetary Rule 11 sanctions because the letters, incorporated and attached to the complaints, were “part of the pleading for all purposes” (Rule 10(c)). The attorneys also “later advocated” the same material after removal, bringing it within Rule 11’s ambit post-1993 amendments.
Affirmed monetary sanctions under the court’s inherent power because the attorneys acted in bad faith and committed a fraud on the court by engineering deceptive pre-suit conduct intended to influence the judicial process.
Rejected defense arguments that client agency authorized the tactic; that Rule 11 cannot reach “pre-litigation correspondence”; and that removal insulates state-filed complaints.

Analysis

Precedents Cited and Their Influence

Wharton v. Superintendent Graterford SCI, 95 F.4th 140 (3d Cir. 2024): The Third Circuit reiterated that Rule 11 embodies a duty of candor and forbids misrepresentation or half-truths in filings. This principle undergirded the conclusion that the complaints—incorporating misleading letters—violated Rule 11.
Scott v. Vantage Corp., 64 F.4th 462 (3d Cir. 2023): Affirmed sanctions for filing complaints lacking factual support with an improper purpose. The court analogized here, finding an improper purpose to harass and to inflate fees by contrivance.
Fed. R. Civ. P. 10(c) and King v. Fleming, 899 F.3d 1140 (10th Cir. 2018): Rule 10(c) makes attached writings part of the pleading. King upheld Rule 11 sanctions where a doctored email was attached to a complaint. These authorities support treating the deceptive letters as sanctionable components of the pleadings.
Fed. R. Civ. P. 11 and its 1993 Advisory Committee Notes; Buster v. Greisen, 104 F.3d 1186 (9th Cir. 1997): Post-1993, Rule 11 attaches not only at filing but to “later advocating” allegations. Thus, once removed, continuing to urge the validity of the complaint and letters in federal court brings them within Rule 11’s scope.
Tejero v. Portfolio Recovery Assocs., LLC, 955 F.3d 453 (5th Cir. 2020): Noted that Rule 11 can apply to a debt-dispute letter incorporated into a complaint—bolstering the Third Circuit’s treatment of the letters here.
Chambers v. NASCO, Inc., 501 U.S. 32 (1991); Universal Oil Prods. Co. v. Root Refin. Co., 328 U.S. 575 (1946): Foundational precedents recognizing courts’ inherent power to sanction bad-faith conduct and fraud upon the court to protect the integrity of judicial proceedings. These cases anchored the fee award under inherent authority.
Xyngular v. Schenkel, 890 F.3d 868 (10th Cir. 2018); Snider v. L‑3 Commc’ns Vertex Aerospace, LLC, 946 F.3d 660 (5th Cir. 2019): Confirm courts may sanction prelitigation conduct when intended to improperly influence the judicial process—directly supporting the sanction for the pre-suit letters.
Montrose Med. Grp. Participating Sav. Plan v. Bulger, 243 F.3d 773 (3d Cir. 2001): Instructs courts to consider rule- or statute-based sanctions before invoking inherent power. The Third Circuit found any lapse harmless because the same sanctions were supportable under 28 U.S.C. § 1927 and 15 U.S.C. § 1692k(a)(3).
Meyer v. U.S. Bank, N.A., 792 F.3d 923 (8th Cir. 2015): Appellants’ reliance on pre-1993 Rule 11 cases was misplaced; the Third Circuit emphasized the 1993 amendments’ “later advocacy” concept.
United States v. Hudson & Goodwin, 11 U.S. (7 Cranch) 32 (1812); Ex parte Burr, 22 U.S. (9 Wheat.) 529 (1824): Early affirmations of courts’ inherent powers to manage the integrity of their proceedings.
Fashauer v. N.J. Transit Rail Ops., Inc., 57 F.3d 1269 (3d Cir. 1995): Applied for the standard of review—plain error—because appellants did not challenge inherent-power sanctions below.

Legal Reasoning

The court’s reasoning proceeds on two tracks: Rule 11 for nonmonetary sanctions, and inherent power for monetary sanctions (fees and costs).

1) Rule 11 applies to the letters because they were part of the pleadings and later advocated post-removal

The complaints incorporated and attached the handwritten letters. Under Rule 10(c), those letters became part of the pleadings “for all purposes,” bringing them squarely within Rule 11’s reach. This disposes of the notion that the letters were “pre-litigation correspondence” beyond Rule 11.
Even though the complaints were filed in state court, Rule 11 applied once the cases were removed, because the attorneys “later advocated” the same papers in federal court—by responding to the show cause order and defending the letters at the hearing (post-1993 Rule 11 and advisory notes).

2) Duty of candor and improper purpose

The firm verified complaints that misrepresented who wrote and signed the letters and what they were: they were portrayed as genuine client attempts to dispute debts, not as firm-authored missives designed to induce a reporting failure.
This breach of candor (Wharton) supported finding an improper purpose under Rule 11(b)(1): to harass, to needlessly increase litigation costs, and to “gin up attorneys’ fees,” rather than to redress bona fide legal wrongs.
The court highlighted the “oddly specific” and “strange” content used to confuse automated processing. The strategy’s purpose—“to fail” at disputing—contradicted the very premise of the lawsuits.

3) Rejection of defenses to Rule 11

Client agency authority is irrelevant to whether counsel misled the opposing party and the court; agency does not license deception.
The argument that Rule 11 does not cover attached letters fails because Rule 10(c) makes them part of the pleading.
Removal does not shield state-court complaints from Rule 11 once counsel advocates those allegations in federal court.

4) Inherent-power monetary sanctions for pre-suit deception intended to influence the court

The district court found bad faith and a species of fraud on the court: the firm engineered deceptive pre-suit letters to mislead both the adversary and the court about the genuineness of the dispute, thereby corrupting the judicial process.
Courts’ inherent power exists to protect the “temple of justice” (Universal Oil) and authorizes fee-shifting to compensate the victim of such misconduct (Chambers).
Even though much of the conduct was prelitigation, it was designed to influence and manipulate the litigation record, placing it within sanctionable inherent-power territory (Xyngular; Snider).
While courts should consider rule- or statute-based tools before invoking inherent authority (Montrose), any omission was harmless because, as appellants conceded, 28 U.S.C. § 1927 and 15 U.S.C. § 1692k(a)(3) would have supported the same fee award.

Impact

The opinion’s practical and doctrinal consequences are significant across consumer litigation, legal ethics, and federal civil practice.

A. FDCPA litigation and “manufactured” violations

The decision does not forbid pre-suit testing or vigorous enforcement of the FDCPA. It condemns deceitful tactics—especially those that plant misleading materials in the record—to provoke violations for profit.
Lawyers handling § 1692e(8) claims must ensure that any “dispute” communication is authentic, accurately represented, and not contrived to fail. Misrepresenting authorship, intent, or content can trigger Rule 11 exposure.
Debt collectors will likely cite Sofaly to resist suits premised on suspect dispute communications and to seek sanctions where counsel misrepresents the provenance or purpose of such letters.

B. Pleading practice: attachments are within Rule 11

Any document attached to and incorporated in a complaint is “part of the pleading for all purposes” (Rule 10(c)). Counsel must vet attachments with the same rigor as the complaint text. Altered, misleading, or staged attachments can be sanctionable.

C. Removed cases: “later advocacy” is sanctionable

The 1993 amendments to Rule 11 squarely capture post-removal conduct. If counsel stands on the state-court complaint or attached materials in federal court, Rule 11 applies. This forecloses attempts to use state filing as a safe harbor against federal sanctions.

D. Inherent power and prelitigation conduct

Pre-suit misconduct intended to influence the litigation can support fees under inherent authority. Lawyers who seed the record with deceptive materials before filing risk fee-shifting consequences once litigation begins.
District courts should still consider whether rules or statutes (e.g., § 1927, § 1692k(a)(3)) suffice before invoking inherent power; but Sofaly reflects that harmless errors in that sequencing will not save litigants from otherwise justified sanctions.

E. Ethics and law-firm risk management

Agency agreements do not insulate counsel from candor obligations. Client authorization to send a letter is no defense if the letter’s authorship or intent is misrepresented.
Firm-wide templates designed to confuse counterparties or court systems elevate the risk of sanctions, including reputational remedies (e.g., apology letters, attaching sanction orders to future filings) and fee awards.

Complex Concepts Simplified

FDCPA § 1692e(8): Prohibits a debt collector from communicating credit information it knows or should know is false, including failing to communicate that a debt is disputed. If a consumer disputes a debt, the collector should mark it as disputed when reporting to credit bureaus.
Rule 11 (improper purpose; duty of candor): Requires that filings are not submitted to harass, cause unnecessary delay, or needlessly increase cost. Lawyers must not misstate or omit material facts (half-truths can violate this duty).
Rule 10(c) (attachments): Documents attached to a complaint become part of the pleading “for all purposes.” They are treated the same as the complaint for Rule 11 scrutiny.
“Later advocacy” after removal: Even if a complaint originates in state court, once removed, any continued reliance on it in federal court brings it under Rule 11.
Inherent power: Courts’ built-in authority to sanction bad-faith conduct and protect the integrity of proceedings, including by awarding attorney’s fees.
Fraud on the court: Conduct that corrupts the adversarial process or deceives the court about critical facts or documents, warranting strong remedial measures.
Standards of review: “Abuse of discretion” defers to the trial court’s judgment on sanctions; “plain error” is even more deferential, applying when the issue was not properly raised below.
Dismissal “with prejudice”: A final dismissal that prevents refiling the same claims.
Statutory fee-shifting: Statutes like § 1692k(a)(3) can authorize attorney’s fee awards in certain circumstances; § 1927 authorizes fees against attorneys who unreasonably and vexatiously multiply proceedings.

Conclusion

Sofaly cements several principles at the intersection of ethics, pleading practice, and sanctions:

Attorneys’ duty of candor applies to every component of a complaint, including attachments. Misrepresentations and half-truths are sanctionable.
Rule 11 reaches incorporated documents and applies to removed cases when counsel later advocates the same allegations and exhibits.
Courts may impose inherent-power monetary sanctions for pre-suit deception intended to influence judicial proceedings.
Client authorization does not excuse deception aimed at creating claims and fee opportunities.

The opinion sends a clear warning: contrived tactics that “design” a violation by confusing counterparties and courts betray the legal system’s reliance on honesty. The Third Circuit’s affirmance—upholding dismissal with prejudice, nonmonetary remedial measures, and a fee award—reaffirms that the adversarial process is not a game of trickery and that courts will deploy Rule 11 and inherent authority to protect the “temple of justice.”