BENCH-BAR PROPOSAL TO REVISE CIVIL PROCEDURE RULE 11 Submitted by: Judge A. Leon Higginbotham, Jr., Third Circuit Court of Appeals Judge Patrick Higginbotham, Fifth Circuit Court of Appeals Judge Mary M. Schroeder, Ninth Circuit Court of Appeals Professor George C. Cochran, University, Mississippi Francis Fox, Esq., Boston, Massachusetts John P. Frank, Esq., Phoenix, Arizona Hugh Jones, Esq., Syracuse, New York Laura Kaster, Esq., Chicago, Illinois Jerold S. Solovy, Esq., Chicago, Illinois Bill Wagner, Esq., Tampa, Florida BENCH-BAR PROPOSAL TO REVISE CIVIL PROCEDURE RULE 11 Any correspondence occasioned by this proposal can be directed to: John P. Frank, Esq. Lewis and Roca 40 North Central Avenue Phoenix, Arizona 86004-4429
BENCH-BAR PROPOSAL TO REVISE CIVIL PROCEDURE RULE 11
The following statement is the submission to the Standing Committee on Procedure of the Judicial Conference of the United States by those whose names are appended.
The proposed revisions to Rule 11 as proposed by the Advisory Committee on Civil Rules make a very bad matter much worse than it was before. While some of us would repeal the Rule, all think it can be improved and this is an effort to do so.
1. The proposal now made is that we can have a sanctions controversy over every claim, every defense, every request, every demand, every objection, every contention and every argument. The change requires that we must certify whether we are seeking to extend, to modify or to reverse existing law or whether we are seeking to establish new law. This multiplies the points of agitation infinitely. The proposed Rule in this report would reverse Golden Eagle, 801 F.2d 1531 (9th Cir. 1986), repeatedly, and almost unanimously followed, and cited more than 150 times.
2. The proposal, as amplified in the note, that if a person has pleaded a denial of some allegation and that if after discovery it appears that that denial is no longer warranted the party must replead or face sanctions, turns a law suit not into a prospective search for the truth but into a retroactive exercise in perfecting pleadings. A more extreme device to undo notice pleading would be hard to imagine.
3. The business of (a) endless amplification of the grounds for sanctions; and (b) endless correspondence of the "you did it" and "no I didn't" variety adds enormously to the cost of litigation. These letters and answers must be responsible. Each one of them is good for five-tenths of an hour minimum; some will be more. From the cost end, we should not turn the legal system into a correspondence school. From the standpoint of one of the unhappiest aspects of Rule 11, the decrease of civility within the profession, the proposal accentuates the deterioration of professional relations. The adverse effect of Rule 11 on lawyer relations is expressly confirmed by the recent Seventh Circuit study on civility.
We are drowning in Rule 11 satellite litigation now. Once we start litigating whether par. 3 of the complaint should have been amended because of the answer of X at p. 1352, l. 6, of the deposition, or whether part IV B of the motion for summary judgment was to change or extend existing law, we will never find court time to try a case.
The proposed Rule should not be accepted. We tender the attached proposal from the named judges and lawyers.
The three sponsoring judges are Judge A. Leon Higginbotham, Jr. of the Third Circuit Court of Appeals, Judge Patrick Higginbotham of the Fifth Circuit Court of Appeals, and Judge Mary Schroeder of the Ninth Circuit Court of Appeals. Hugh R. Jones of Syracuse, formerly of the New York Court of Appeals and now in private practice, headed the New York State Bar Committee study of the sanctions problem. The other attorneys are Mr. Jerold S. Solovy and Ms. Laura Kaster of Chicago, active particularly in this connection with the Litigation Section of the American Bar Association; Mr. Bill Wagner of Tampa, Florida, 1988-89 President of the American Trial Lawyers Association; Professor George C. Cochran, head of the Rule 11 project sponsored by the Center for Constitutional Rights; Mr. Francis Fox of Boston, Chairman of the Committee on the Federal Rules of Civil Procedure of the American College of Trial Lawyers; and Mr. John P. Frank of Phoenix, Arizona, from 1960 to 1970 a member of the Advisory Committee.
BENCH-BAR PROPOSED CIVIL PROCEDURE RULE 11
Rule 11. Signing of Pleadings, Motions, and Other Papers; Sanctions.
(1) 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 similarly and give the party's address. Except when otherwise specifically provided by rule or statute, pleadings need not be verified or accompanied by affidavit. 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 non-signer.
(2) 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, the paper taken as a whole is well grounded in fact and law, including non-frivolous arguments for possible change of law, and that it is not interposed for any improper purpose such as harassment, delay, or needless increase in the cost of litigation.
(3) If a court upon motion or on its own initiative concludes that a pleading, motion or other paper was signed in violation of this rule it may order as a sanction that the person who signed the paper or that person's firm, a represented party, or both, shall pay an appropriate sum into the registry account of the clerk of the district court. The sanction shall be limited to what is sufficient to deter comparable conduct by persons similarly situated. The represented party shall be liable only if the court concludes that the paper was filed to cause harassment, delay or needless cost increase.
(4) No sanction shall issue until the attorney or party who may be sanctioned has been given notice based upon a precisely stated alleged violation of the rule and has had the opportunity to be heard either orally or in writing. Any sanctions shall be based on written findings of fact and conclusions of law, which shall consider the duty violated; the actual injury caused; and the existence of aggravating or mitigating circumstances.
COMMENT ON BENCH-BAR PROPOSED CIVIL PROCEDURE RULE 11
Rule 11 is one of several devices in the procedural system for controlling abusive conduct by lawyers. As the Supreme Court has recently told us, there is inherent power to deal with gross out-of-court abusive conduct, Chambers v. Nasco. Inc., 59 L.W. (June 6, 1991). Rule 37 deals with discovery abuse, 28 U.S.C. § 1927 with unreasonable and vexatious litigation, and Rule 16 provides speedy means to rid cases of frivolous positions. Rule 11 is confined to filed writings.
In short, Rule 11 has a particular and precise niche to fill. Large segments of the bar have felt that despite the usefulness of the Rule 11 concept, severe abuses have crept into its application. To name major concerns, there has been too much costly satellite litigation over the application of the rule; if the cost (time and dollars) of the court system is the patient, Rule 11 as an operation is a success but the patient is dying. "Rule 11 has caused unnecessary satellite litigation . . . a legitimate question is whether the federal courts need Rule 11 at all," Sanctions, Rule 11 and Other Powers, Sec. Litig., ABA, 2d ed. 1988.
By scrutinizing the minor details of cases for possible sanctions instead of focussing on big picture abuse, the practical operation has created a Rule 11 industry instead of an occasional needed corrective. A Shepard's Rule 11 service, reporting 1000 reported Rule 11 cases, has recently come on the market. The rule has "assumed a life of its own — spawned a body of substantive law and itself become a means of abuse," J. Coe,Rule 11 Now, 17 Litigation 10 (1991). The lack of clear procedures permits occasional uninformed arrogance. The premium put on charge and counter-charge takes the focus off trying a case and puts it on trying the lawyers. The result is a depressing increase in the incivility of the bar, a major problem; for illustrations, see the recent Seventh Circuit study noted in the July, 1991 ABAJ, 22.
This Rule 11 proposal seeks to keep its virtues and eliminate the vices. The proposal draws generally on many sources but particularly the article by George Cochran, Rule 11: The Road to Amendment, 2 Attorney Sanctions 138 (Shepard's, June, 1991), forthcoming in 61 Miss. L.J.; and J. Solovy, L. Kaster, and N. Hirsch, "Sanctions and Federal Litigation" (1990). The draft is paragraphed so that the comment following can relate directly to the precise points of the Advisory Committee's proposed rule.
(a) This paragraph is essentially what is in the existing rule, slightly condensed.
(b) A comprehensive survey of Rule 11 and related problems of frivolous pleadings is the 1990 study of the New York State Bar Association special committee, endorsed by the House of Delegates of the New York State Bar Association on April 7, 1990; the resulting proposed rule is directed at "abusive conduct." That concept, though not the words, is a source of this draft. The proposed rule conforms to the definition and criteria of a leading Rule 11 case, Zaldivar v. City of Los Angeles, 780 F.2d 823 (9th Cir. 1986).
This section keeps the essence of the existing language with an important clarification: For sanction purposes, the paper is to be evaluated as a whole; see Golden Eagle Distrib. Co. v. Burroughs, 801 F.2d 1531, 1540 (9th Cir. 1986). The goal is to escape the practice of analyzing this word or that, this line or that, this subsection or that. If the paper as a whole reflects reasonable inquiry and reasonable presentation of law or a non-frivolous proposal for change of law, it will meet the requirement; litigation which takes the form of parsing of fragments of the composition is intended to be eliminated. Sanctions for proposed changes of law are limited to proposals which are frivolous. This is taken from the recommendation of the Advisory Committee on Civil Procedure, par. (b)(2). On what is "frivolous," see quotations from Judge Frank Easterbrook, Rotunda, The Litigator's Responsibility, March, 1989, Trial, 98, 100, and Zaldivar v. City of Los Angeles, 780 F.2d 823, 830-31 (9th Cir. 1986). The fact that a Federal Judicial Center study shows judges almost evenly divided as to whether a given complaint is frivolous is evidence of a need to reduce such decisions; see J.M. Kassin, An Empirical Study of Rule 11 Sanctions, 26 (Fed. Jud. Center, 1985); and for more recent illustration of these problems, see M. Stein, Rule 11 in the Real World, 132 F.R.D. 309 (1990).
(c) This unit changes the sanction from mandatory to permissive, giving discretion to the court. This concept is taken directly from the proposal of the American College of Trial Lawyers, as is the provision that any amounts levied as sanctions shall be shall be paid to the court. For a thoroughly documented study leading to the conclusion that changing the focus of the rule from fee shifting to deterrence would decrease satellite litigation, see G. Vairo, Rule 11. A Critical Analysis, 118 F.R.D. 189, 233 (1988). A major purpose of this change is to reduce the elements of lawyers fighting with each other for personal gain.
The procedural requirements are also, in slightly condensed form, taken from the American College proposal. A primary scholar on the rule has stressed that permissive language would bring Rule 11 into accord with the well established sanctions standards of Rule 37, M. Nelken, Sanctions Under Rule 11, 74 Geo. L.J. 1313, 1353 (1986). The provision permitting sanction of the firm rather than the individual will give the court discretion, particularly where young attorneys are in fact directed by others, to consider where responsibility lies.
Since Cooter Gell v. Hartmarx Corp., 110 S. Ct. 2447 (1990), decided that appellate review is limited to abuse of discretion, it is particularly important that there be clear notice, some opportunity for at least simple hearing, and some explicitness for the ground of the sanction.
The limitation on sanctions on the represented party is taken from the recommendation of the Advisory Committee on Civil Procedure, par. (c). The limitation on sanctions to deterrence is suggested by that same paragraph. This accords with the cases proposing the least severe sanctions to serve the purposes of the rule, Thomas v. Capital Sec. Serv. Inc., 836 F.2d 866, 878 (5th Cir. 1988); and see Cabell v. Petty, 810 F.2d 463, 466 (4th Cir. 1987); Doering v. Union County Board, 857 F.2d 191, 194 (3d Cir. 1988).
RULE 11 AS PROPOSED BY THE ADVISORY COMMITTEE ON CIVIL PROCEDURE
Rule 11. Signing of Pleadings, Motions, and Other Papers; Representations to Court; Sanctions
(a) Signature. Every pleading, written motion, and other paper shall be signed by at least one attorney of record in the attorney's individual name, or, if the party is not represented by an attorney, shall be signed by the party. It shall state such person's address and telephone number, if any. Except when otherwise specifically provided by rule or statute, pleadings need not be verified or accompanied by affidavit. An unsigned paper shall be stricken unless omission of the signature is corrected promptly after being called to the attention of the attorney or party.
(b) Representations to Court. By presenting or maintaining a claim, defense, request, demand, objection, contention, or argument in a pleading, written motion, or other paper filed with or submitted to the court, an attorney or unrepresented party is certifying, until it is withdrawn, that to the best of the person's knowledge, information, and belief formed after an inquiry reasonable under the circumstances —
(1) it is not being presented or maintained for any improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of litigation;
(2) it is warranted by existing law or by a nonfrivolous argument for the extension, modification, or reversal of existing law or the establishment of new law; and
(3) any allegations or denials of facts have evidentiary support or, if specifically so identified, are likely to have evidentiary support after a reasonable opportunity for further investigation or discovery.
(c) Sanctions. Subject to the conditions stated below, the court shall impose an appropriate sanction upon the attorneys, law firms, or parties determined, after notice and a reasonable opportunity to respond, to be responsible for a violation of subdivision (b).
(1) How Initiated.
(A) By Motion. A motion for sanctions under this rule shall be served separately from other motions or requests, and shall describe the specific conduct alleged to violate subdivision (b). It shall not be filed with, or presented to, the court unless the challenged claim, defense, request, demand, objection, contention, or argument is not withdrawn or corrected within 21 days (or such other time as the court may prescribe) after service of the motion. If warranted, the court may award to the party prevailing on the motion the reasonable expenses and attorney's fees incurred in presenting or opposing the motion.
(B) On Court's Initiative. On its own initiative, the court may enter an order describing the specific conduct that appears to violate subdivision (b) and directing an attorney, law firm, or party to show cause why it has not violated subdivision (b) with respect thereto.
(2) Nature of Sanction; Limitations. A sanction imposed for violation of this rule shall be limited to what is sufficient to deter comparable conduct by persons similarly situated. Subject to the limitations in subparagraphs (A) and (B), the sanction may consist of, or include, directives of a nonmonetary nature, an order to pay a monetary penalty into court, or, if imposed on motion, an order directing payment to the movant of some or all of the reasonable attorneys' fees and other costs incurred as a direct result of the violation.
(A) Monetary sanctions may not be awarded, either on motion or on the court's initiative, against a represented party unless it is determined to be responsible for a violation of subdivision (b)(1).
(B) Monetary sanctions may not be awarded on the court's initiative unless the court's order to show cause is issued before a voluntary dismissal or settlement of the claims made by or against the party to be sanctioned.
(3) Order. If requested, the court, when imposing sanctions, shall recite the conduct or circumstances determined to constitute a violation of this rule and explain the basis for the sanction imposed.