United States District Judge, Northern District of California. I am indebted to Anne O'Meara for her valuable assistance.
WILLIAM W SCHAWZER, District Judge
Widespread concern over frivolous litigation and abusive practices of attorneys led to the amendment in 1983 of Rule 11 of the Federal Rules of Civil Procedure. Until that time Rule 11 simply provided for the striking of a pleading found to lack good ground to support it or to have been interposed for delay. The new rule imposes much more specific and extensive obligations on attorneys and others filing any paper in federal court and subjects them to sanctions for violations. This article will explore the policy considerations underlying the rule, examine and analyze its substantive provisions, consider the procedural implications of imposing sanctions, and discuss the available sanctioning alternatives.
See, e.g., Roadway Express, Inc. v. Piper, 447 U.S. 752, 757 n. 4, 100 S.Ct. 2455, 2459 n. 4, 65 L.Ed.2d 488 (1980).
The following text shows the additions and deletions effected by the 1983 amendment (italics show additions, brackets deletions):
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 his individual name, whose address shall be stated. A party who is not represented by an attorney shall sign his pleading, motion, or other paper and state his 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 him that he has read the pleading, motion, or other paper; that to the best of his knowledge, information, and belief [there is good ground to support it; and that it is not interposed for delay] 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. [or is signed with intent to defeat the purpose of this rule; it may be stricken as sham and false and the action may proceed as though the pleading had not been served. For a wilful violation of this rule an attorney may be subjected to appropriate disciplinary action. Similar action may be taken if scandalous or indecent matter is inserted.] 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.
2A J. Moore J. Lucas, Moore's Federal Practice ¶ 11.01[3] (2d ed. 1984).
For a brief discussion of the historical background of attorney's fees as sanctions, see Appendix A.
IThe growing cost, complexity and burdensomeness of civil litigation has been a serious concern to judges, lawyers and the public. There is no single cause nor is there a single remedy for this problem. But there is considerable opinion, supported by at least anecdotal evidence, that misuse and abuse of the litigation process have contributed to the problem. Resort to frivolous litigation, maintenance of baseless defenses, and harassment of one's opponent are practices that judges and lawyers engaged in civil litigation encounter regularly.
That such practices may in the long-run not succeed is not a sufficient response to the problem. These practices tend to impose unjustified burdens on other parties, frustrate those who seek to vindicate their rights in the courts, obstruct the judicial process, and bring the civil justice system into disrepute. Judges and lawyers alike have therefore felt the need for better tools with which to deter and punish these practices. Those available prior to the amendment of Rule 11, briefly surveyed in the following paragraphs, had been found to be inadequate.
Abuse of judicial processes was originally addressed by Congress as early as 1813 when it adopted legislation providing that any attorney who "multiplied the proceedings in any cause * * * so as to increase costs unreasonably and vexatiously" could be held liable for "any excess of costs so incurred." After the decision in Roadway Express v. Piper, Congress amended the statute to permit recovery of expenses and attorney's fees in addition to costs. It remained limited, however, to sanctions against attorneys and to conduct which is both unreasonable and vexatious.
Roadway Express, 447 U.S. at 759, 100 S.Ct. at 2460 (quoting Act of July 22, 1813, 3 Stat. 21). This provision is now codified at 28 U.S.C. § 1927.
See supra note 1.
As amended in 1980, the statute reads:
Any attorney or other person admitted to conduct cases in any court of the United States or any Territory thereof who so multiplies the proceedings in any case unreasonably and vexatiously may be required by the court to satisfy personally the excess costs, expenses, and attorneys' fees reasonably incurred because of such conduct.28 U.S.C. § 1927
Webster's Third New International Dictionary 2548 (1971), defines vexatious as "lacking justification and intended to harass." See generally Christiansburg Garment Co. v. EEOC, 434 U.S. 412, 421, 98 S.Ct. 694, 700, 54 L.Ed.2d 648 (1978) (defining vexatious).
In addition, courts have been able to impose sanctions for vexatious and bad faith actions of lawyers and litigants in the exercise of their inherent power to control the proceedings before them. That power is reflected also in various provisions of the Federal Rules, such as the provision permitting the court to dismiss an action for failure of the plaintiff to comply with the rules or orders of the court.
Roadway Express, 447 U.S. at 765-66, 100 S.Ct. at 2463-64. See also Viola Sports-wear, Inc. v. Mimun, 574 F.Supp. 619, 621 (E.D.N.Y. 1983).
Fed.R.Civ.P. 41.
One particular application of that power was Rule 11 which originally provided for the striking of pleadings not signed by an attorney of record or signed with intent to defeat the purpose of the rule. The signature of the attorney certified that to the "best of [the attorney's] knowledge, information and belief there is good ground to support it; and that it is not interposed for delay." For a "wilful violation" of the rule an attorney could be "subjected to appropriate disciplinary action."
Rule 11 in its original form was adopted in 1937 and substantially conformed to former Equity Rule 24 relating to signature of counsel and Rule 21 relating to scandalous matters. It was rarely invoked, however, because striking of a pleading was an ineffective penalty. In recent years, a few decisions relied on Rule 11 as well as other authority for the imposition of sanctions, including on occasion dismissal. But, as the Advisory Committee Notes to the 1983 amendment observe, there was considerable confusion concerning the application of the rule, the standards required of attorneys, and the available sanctions.
Advisory Committee Notes of 1937.
See, eg., Rhinehart v. Stauffer, 638 F.2d 1169, 1171 (9th Cir. 1979).
The Advisory Committee Notes of 1983, 97 F.R.D. 198 (1983), are attached as Appendix B.
In response to the felt need for more effective means for deterring abuse and misuse, Rule 11 was amended in 1983, along with Rules 16 and 26. Amended Rule 16 is intended to bring about greater judicial control of civil cases from their earliest stages in order to narrow the scope of the litigation and accelerate its disposition. Amended Rule 26 addresses the problem of excessive or abusive discovery and gives judges greatly enlarged powers to limit and control discovery. Amended Rule 11 is intended to deter misuse or abuse of the litigation process by the imposition of sanctions.
97 F.R.D. 165 (1983).
Id. at 168-71. Rule 16(f) authorizes the imposition of sanctions generally for failure to participate in good faith in pretrial proceedings. Id. at 171.
Id. at 171-74. Rule 26(g) authorizes the imposition of sanctions for abuse of the discovery process. Id. at 173-74. It imposes a certification requirement similar to that under Rule 11 with respect to discovery requests and responses. Rule 11, as the Advisory Committee Notes point out, does not apply to discovery matters except discovery motions. It overlaps in that respect with Rule 37, which provides for recovery of costs and fees by the party prevailing on a discovery motion unless the court finds that an award would be unjust.
Reliance on sanctions as a remedy, however, raises a series of problems of which lawyers and judges must be aware. First, lawyers are generally reluctant to seek sanctions and judges to impose them. The process is unpleasant, adds to the existing work, and increases the tensions in the courtroom. Lawyers may not want to inhibit their own freedom by calling their opponents' practices into question. Judges may be uneasy about appearing to assume the role of policeman, teacher or moral guardian.
Second, judges may fear that initiating the process of imposing sanctions may spawn satellite litigation, i.e. ancillary proceedings that may themselves assume the dimensions of litigation with a life of its own. Indeed, an offending party seeking to obstruct and delay litigation may welcome the resulting proliferation of proceedings as serving his purposes.
Third, judges may also be chary about criticizing a lawyer's conduct out of concern that they are or will be perceived as imposing their personal standards of professionalism on others. The standards of the bar in these matters span a wide spectrum, and just where the line lies between the acceptable and unacceptable is not always clear.
Fourth, imposing sanctions on lawyers for their conduct of litigation raises the spectre of chilling advocacy. The Advisory Committee states in its Notes that the rule "is not intended to chill an attorney's enthusiasm or creativity in pursuing factual or legal theories." Nevertheless lawyers can be expected to resist the imposition of sanctions as penalizing them for discharging their duty to their clients, and judges may be sensitive to that concern.
As this article undertakes to demonstrate, none of these problems should deter lawyers from seeking and judges from imposing Rule 11 sanctions in cases warranting their imposition. Whether sanctions are needed to remedy or to deter, and how severe they need to be, should be determined on the basis of the record before the court. That determination can be made expeditiously, without engaging in satellite litigation or exacerbating the relationships of the participants in the litigation.
That the threat of sanctions for misuse or abuse may tend somewhat to inhibit attorneys is not equivalent to chilling vigorous advocacy. Rule 11 in substance requires the signing lawyer or party to certify that on the basis of a reasonable prefiling inquiry he is informed and believes that the paper has a factual and legal basis and that it is not interposed for delay. A lawyer may therefore be called on to explain the basis or purpose of a paper. But vigorous advocacy is not contingent on lawyers being free to pursue litigation tactics that they cannot justify as legitimate. The lawyer's duty to place his client's interests ahead of all others presupposes that the lawyer will live with the rules that govern the system. Unlike the polemicist haranguing the public from his soapbox in the park, the lawyer enjoys the privilege of a professional license that entitles him to entry into the justice system to represent his client and, in doing so, to pursue his profession and earn his living. He is subject to the correlative obligation to comply with the rules and to conduct himself in a manner consistent with the proper functioning of that system.
II A. The Substance of the Amended Rule
The 1983 amendment made significant changes in Rule 11, the most important of which may be summarized as follows:
(1) The rule now applies to every paper filed in court, not only pleadings; and it applies to persons appearing pro se as well as to attorneys and parties.
(2) It mandates reasonable prefiling inquiry with respect to the facts and the law on which a paper is based.
(3) It specifies that papers filed must be well grounded in fact and warranted by existing law or by a good faith argument for the extension, modification or reversal of existing law.
(4) It further specifies that papers may not be interposed for any improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of litigation.
(5) It directs the court to impose on counsel or the client sanctions, including reasonable expenses which may include reasonable attorney's fees, for violation of the rule.
See supra note 2.
In approaching the analysis of Rule 11, three overriding principles should be kept in mind:
(1) The rule provides for sanctions, not fee shifting. It is aimed at deterring and, if necessary, punishing improper conduct rather than merely compensating the prevailing party. The key to invoking Rule 11, therefore, is the nature of the conduct of counsel and the parties, not the outcome.
(2) At the same time, however, the rule, although derived from precedents resting on bad faith, is not so limited. The Advisory Committee Notes specifically refer to the fact that the "reference in the former text to wilfulness as a prerequisite to disciplinary action has been deleted."
(3) Finally the rule reaches not only frivolous proceedings but also those which, although not without merit, constitute an abuse of legal process because brought for an improper purpose such as causing harassment, unnecessary delay or needless increase in the cost of litigation. As the Advisory Committee Notes state, the rule "should discourage dilatory or abusive tactics and help * * * streamline the litigation process."
B. The Requirement of Certification
The rule operates by giving effect to the signature of the attorney or party on a pleading, motion or other paper. If the party is represented, the signature must be that of an attorney, not a firm, who is one of the attorneys of record for the party. This signature certifies that the paper conforms to the requirements of the rule.
A party appearing pro se must sign the papers he files and the rule gives the same effect to his signature as to that of an attorney.
The person signing the paper may not necessarily be the one responsible for it. An associate in a law firm charged with preparing a paper for filing may be carrying out the instructions of a partner who made the decision to file it. In such a situation, sanctions are more appropriately imposed on the principal rather than the agent carrying out his orders, and nothing in the rule bars its application in that manner.
A similar problem may arise when a paper is signed and filed by local counsel at the direction of out-of-state counsel. Local counsel may be called on to share in the preparation of a paper and in the decision to file it. On the other hand, a client may find it more economical to place responsibility on an out-of-state firm which will use local counsel only as a conduit for papers and communications. Rule 11 is not intended to increase the cost of litigation by requiring review of papers by an additional set of lawyers. What the rule does require is that the lawyer who elects to sign a paper take responsibility for it, even if that responsibility is shared. Where control of the litigation rests with other lawyers, therefore, local counsel may be well advised to let one of those lawyers sign papers to be filed.
Even if the paper is signed by out-of-state counsel, however, the presence of the name of local counsel or his firm on the paper raises an inference that he has authorized or at least concurred in its filing. It would be difficult for a lawyer to disclaim all responsibility for a paper bearing his name. Rule 11 may therefore make it advisable for attorneys acting as local counsel to consider the extent to which they can perform the role of a passive conduit consistent with the responsibilities the rule imposes.
See Golden Eagle Distributing Corp. v. Burroughs Corp., 103 F.R.D. 124 (N.D.Cal. 1984).
The relationship between lawyers on one side of a case may create problems for the court as well. If the purposes of the rule are to be served, sanctions proceedings should be directed at the lawyer responsible for the offending paper. The court should therefore identify the responsible lawyer before such proceedings begin. Where several lawyers are involved, fairness may require an inquiry to determine their relative culpability. Such an inquiry creates a risk of generating satellite proceedings and divisiveness among the lawyers and should therefore be undertaken only in a rare case and, if possible, not until the end of the case.
C. "Well-Grounded in Fact"
The certification which results from the attorney's signature of the paper is directed at the three substantive prongs of the rule: its factual basis, its legal basis, and its legitimate purpose. In this and the following two sections, this article discusses each prong separately. It must be recognized, however, that there is considerable overlap among them.
With respect to the first prong, the signature certifies that the lawyer "has read the [paper] * * * that to the best of his knowledge, information and belief formed after a reasonable inquiry it is well grounded in fact * * *" Why does the rule require the attorney to certify that he has read the paper? The purpose plainly is not to penalize a lawyer for failing to read it but to eliminate ignorance as an excuse. There is no room for a pure heart, empty head defense under Rule 11.
This purpose is also served by the requirement that a reasonable inquiry be made. The Advisory Committee Notes state that "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 * * * paper; * * * whether he depended on forwarding counsel or another member of the bar."
These comments raise the question whether signing counsel may satisfy his obligation under the rule by showing that his client or another lawyer gave him the information or approved the paper. It is not unusual for prefiling inquiry to be made by someone other than the signing attorney due to economic necessity, time pressures or the need for expertise. To what extent will such an inquiry satisfy the signing attorney's obligation?
The rule by its terms does not require signing counsel to have personally performed the inquiry. What it does require is that signing counsel have the requisite "knowledge, information, and belief." Conclu-sory statements from a client or another attorney that, for example, a car had been driven negligently, sales occurred in violation of a trademark, or certain persons conspired to deny plaintiff's constitutional rights, do not without more afford the lawyer a basis for certifying knowledge, information and belief. Regardless of how firmly the attorney may believe such statements from his client, he needs facts on which to ground knowledge, information or belief.
What is crucial under the rule is not who makes the inquiry, but whether as a result the attorney has acquired knowledge of facts sufficient to enable him to certify that the paper is well-grounded in fact. If the rule is to have meaning, those facts must consist of admissible evidence or at least be calculated to lead to such evidence. They need not be undisputed or indisputable but they must be sufficiently substantial to support a reasonable belief in the existence of a factual basis for the paper. Suspicion, rumor or surmise will not do.
Wold v. Minerals Eng'g Co., 575 F.Supp. 166, 167 (D.Colo. 1983) (sanctions imposed for failure to conduct an inquiry that would have disclosed absence of a factual and legal basis for a motion to disqualify counsel).
Miller v. Schweickart, 413 F.Supp. 1059, 1061 (S.D.N.Y. 1976) ("Unverified hearsay based on rumor is not sufficient upon which to subject one to the burdens of complex litigation and heavy legal costs * * *.").
The duty of inquiry therefore should be regarded as nondelegable but capable of being satisfied by the attorney's acquisition of the product of inquiry conducted by others. Thus if the client furnishes facts to the attorney which he can reasonably believe, there should be no need for further inquiry to satisfy the rule. But if all the attorney has is his client's assurance that facts exist, he has not satisfied his obligation.
One aspect of this duty is that the attorney communicate sufficiently with the client to satisfy his obligations under the rule. Dismissal of an action under former Rule 11 was affirmed by the court of appeals where plaintiff's counsel, due to lack of communication with his client, was unable to conduct meaningful discussions with opposing counsel. The court of appeals said:
There appear to be no legitimate reasons for the attorney's failing to discuss the case directly with his client. Before filing a civil action, the attorney has a duty to make an investigation to ascertain that it has at least some merit, and further to ascertain that the damages sought appear to bear a reasonable relation to injuries actually sustained. This is one of the purposes of F.R.Civ.P. 11.
A number of courts have imposed sanctions for failure to make reasonable prefiling inquiry. The following are some examples.
Plaintiff brought an action for trademark infringement based on the alleged sale of a single pair of jeans for ten dollars. Plaintiff made no investigation of the facts before filing and had no other information substantiating the charges in the complaint. Notwithstanding defendants' pleas that the action was baseless and should be dismissed, extensive litigation activity ensued, culminating in summary judgment for defendants, unopposed by plaintiff. The court imposed sanctions under Rule 11, awarding attorney's fees of $20,000 against counsel and plaintiff jointly and severally, in part for the failure to show that " any inquiry was made to lend some assurance that the allegations of the complaint were well-grounded in fact."
Viola Sportswear, 574 F.Supp. at 621 (E.D.N.Y. 1983) (emphasis in original).
In an action for personal injury, counsel failed to ascertain the date on which the accident had occurred to determine whether it was time barred although this information was readily available. The court charged plaintiff's counsel with defendants' expenses and attorney's fees incurred in successfully moving for summary judgment.
Van Berkel v. Fox Farm and Road Mach., 581 F.Supp. 1248, 1251 (D.Minn. 1984).
In an action against an out-of-state defendant, counsel had failed to investigate whether the defendant had any of the contacts specified in the Missouri long-arm statute as a basis for personal jurisdiction. The court found that, as a result, the defendant had been "put to considerable and unnecessary expense and trouble in obtaining [a] dismissal" and invited a motion for sanctions.
Hasty v. Paccar, Inc., 583 F.Supp. 1577, 1580 (E.D.Mo. 1984).
Rule 11 was applied where a union had filed an action against an employer alleging refusal to arbitrate and seeking an order compelling arbitration. The court found that, in fact, the union had not demanded arbitration until after the action had been filed and when it did, the employer immediately agreed. Reasonable inquiry would have disclosed those facts and would have obviated the lawsuit. After granting summary mary judgment for the employer, the court awarded reasonable attorney's fees incurred in defending against the refusal to arbitrate charge.
United Food Commercial Workers v. Armour Co., No. C-84-0080-RFP (N.D. Cal. June 29, 1984) (unpublished) (the court segregated charges incurred in connection with other aspects of the case and did not include them in the award). See also United Food Commercial Workers v. Armour Co., (N.D.Cal. Jan. 11, 1985) (in awarding reasonable attorney's fees, the court imposed a duty of mitigation on party seeking Rule 11 sanctions).
Even if a claim is well-grounded against some of the parties, sanctions may be appropriate for the filing of a blunderbuss complaint that names others who merely happen to have some slight relationship to a party.
The reasonableness of an attorney's belief must of course be assessed in light of the circumstances at the time the paper is signed. The Advisory Committee Notes state, "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."
Conversely a belief reasonable when a paper was filed may become unreasonable in light of subsequent developments. Thus, a claim that may be properly asserted and a defense that may be properly maintained when first filed could be rendered untenable by later discovery disclosures. To persist in claims or defenses beyond a point where they could no longer be considered to be well-grounded in fact may violate the rule.
Nemeroff v. Abelson, 620 F.2d 339, 350-51 (2d Cir. 1980).
D. "Warranted by Existing Law or a Good Faith Argument for Extension, Modification or Reversal." 1. The MeritsThe Advisory Committee Notes state that the rule "is not intended to chill an attorney's enthusiasm or creativity in pursuing factual or legal theories." It does not alter the adversary system or diminish the lawyer's obligation to his client.
The profession has, however, long recognized limits to zealous advocacy. While these limits are not marked by bright lines, the lawyer's concurrent obligations as an officer of the court have been repeatedly and clearly articulated. In the 1969 Code of Professional Responsibility of the American Bar Association, lawyers were enjoined from advancing a claim or defense not warranted by existing law or a good-faith argument for its extension, modification or reversal, and from pursuing an action that would serve merely to harass another. Under the 1983 ABA Model Rules of Professional Conduct, lawyers are barred from asserting frivolous claims or defenses. These pronouncements reflect a substantial consensus of the profession and place a gloss on Rule 11.
Disciplinary Rule 7-102(A) states:
(a) In his representation of a client, a lawyer shall not:
(1) File a suit, assert a position, conduct a defense, delay a trial, or take other action on behalf of his client when he knows or when it is obvious that such action would serve merely to harass or maliciously injure another.
(2) Knowingly advance a claim or defense that is unwarranted under existing law, except that he may advance such claim or defense if it can be supported by good faith argument for an extension, modification, or reversal of existing law.
. . . .
(5) Knowingly make a false statement of law or fact.
Model Code of Professional Responsibility DR 7-102(A) (1981) [hereinafter cited as Model Code].
Rule 3.1 states in relevant part, "A lawyer shall not bring or defend a proceeding, or assert or controvert an issue therein, unless there is a basis for doing so that is not frivolous, which includes a good faith argument for an extension, modification or reversal of existing law." Model Rules of Professional Conduct Rule 3.1 (1983) [hereinafter cited as Model Rules]. The new Model Rules modify the prior Model Code in two respects relevant here: by enlarging the scope of the prohibition to encompass frivolous litigation as well as malicious and harassing proceedings and by adopting an objective test for this enlarged prohibition. The comment further states:
The filing of an action or defense or similar action taken for a client is not frivolous merely because the facts have not first been fully substantiated or because the lawyer expects to develop vital evidence only by discovery. Such action is not frivolous even though the lawyer believes that the client's position ultimately will not prevail. The action is frivolous, however, if the client desires to have the action taken primarily for the purpose of harassing or maliciously injuring a person or if the lawyer is unable either to make a good faith argument on the merits of the action taken or to support the action taken by a good faith argument for an extension, modification or reversal of existing law.Id. comment.
Where an action is patently unmeritorious as a matter of law, sanctions are appropriate. For example, a mother whose child had been taken out of the country by his natural father without her consent sued the State Department and the Secretary of State for negligently failing to enforce a statute which made it unlawful for a citizen to leave the United States without a passport. The court found the action to be "frivolous * * * completely lacking in merit" and assessed sanctions of $200 against counsel.
Dore v. Schultz, 582 F.Supp. 154, 158 (S.D.N.Y. 1984).
An action for defamation and abuse of process was brought against a brokerage firm by a formerly employed broker based on that firm's instituting an arbitration proceeding against the broker to determine whether he knew or should have known that his customer had received stock to which he was not entitled. The court held that the broker's action was baseless and instituted for an improper purpose, and assessed sanctions of $10,000, one half against counsel and one half against the client broker.
Tedeschi v. Smith Barney, Harris Upham Co., 579 F.Supp. 657, 661, 664 (S.D.N.Y. 1984).
The attorney's duty to satisfy himself that the court at least arguably has jurisdiction and that the action is not otherwise barred is illustrated by a case in which an employer sued a union for damages suffered as a result of having to comply with a collective bargaining agreement. The employer charged that these damages were suffered because the union negligently relied on the ostensible authority of the bargaining association, which had entered into the agreement, to represent the plaintiff employer. The National Labor Relations Board had previously issued its order, affirmed on appeal, finding that the employer had unlawfully attempted to repudiate the collective bargaining agreement to which it was a party by reason of its membership in that bargaining association. The court found that no subject-matter jurisdiction existed over that claim and that the action was in any event barred by the prior NLRB adjudication. It held the attorneys to be in violation of Rule 11 and assessed against them defendant's attorney's fees incurred in making a motion for summary judgment.
Heuttig Schromm, Inc. v. Landscape Contractors Council, 582 F.Supp. 1519, 1522 (N.D.Cal. 1984); see also Textor v. Board of Regents, 87 F.R.D. 751, 754 (N.D. Ill. 1980).
Where a motion is made, Rule 11 gives the attorney's signature the effect of certifying that reasonable factual and legal support for it exists. Sanctions were imposed on defendants who had made a motion, without supporting authority, to dismiss a complaint that plainly stated a cause of action, and had attacked jurisdiction and venue without any apparent basis. The court found the motions frivolous and assessed attorney's fees against defendants and their counsel.
Lucha, Inc. v. Goeglein, 575 F.Supp. 785, 788 (E.D.Mo. 1983). See also Wold, 575 F.Supp. at 167 (sanctions imposed on plaintiff's attorney for filing a motion to disqualify opposing counsel on the meritless theory that counsel had received confidential information concerning plaintiff in the course of an unrelated representation of another client); Rodgers v. Lincoln Towing Serv., Inc., 596 F.Supp. 13, 22 (N.D.Ill. 1984) (counsel paying one-third, clients two-thirds).
To test compliance with the rule, as some courts have done, by reference to whether bad faith has been shown is inconsistent with its text and purpose. The Advisory Committee Notes point out that "the 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;" wilfulness as a prerequisite to disciplinary action was deleted by the 1983 amendment which "is intended to reduce the reluctance of courts to impose sanctions * * * by emphasizing the responsibilities of the attorney and reenforcing those obligations by the imposition of sanctions." Reasonable belief that a paper is "warranted by law" should therefore be treated as an objective standard turning on the facts and circumstances of the case, not on the attorney's state of mind.
See Goldman v. Belden, 580 F.Supp. 1373, 1381 (N.D.N.Y. 1984); Wells v. Oppenheimer Co., 101 F.R.D. 358, 359 (S.D.N.Y. 1984) (not requiring finding of subjective bad faith). But see Williams v. E.I. duPont de Nemours Co., 581 F.Supp. 791, 793 (M.D.Tenn. 1983) (applying preamendment standard of bad faith); Williams v. Birzon, 576 F.Supp. 577, 580 n. 5 (W.D.N.Y. 1983) (not applying Rule 11 because no finding of bad faith); Linker v. Custom-Bilt Mach. Inc., 594 F.Supp. 894, 899 (E.D.Pa. 1984) (finding that plaintiff's bad-faith motive raised Rule 11 issue). Confusion on this issue tends to arise in part because bad faith was an appropriate standard prior to the amendment of Rule 11 and remains relevant under 28 U.S.C. § 1927. Compare Suslick v. Rothschild Sec. Co., 741 F.2d 1000, 1007 (7th Cir. 1984) and Badillo v. Central Steel Wire Co., 717 F.2d 1160, 1166 (7th Cir. 1983) (requiring showing of subjective bad faith) with Zaldivar v. City of Los Angeles, 590 F.Supp. 852, 856 (C.D. Cal. 1984) (not requiring finding of subjective bad faith).
See Pudlo v. Director, IRS, 587 F.Supp. 1010, 1011 (N.D.Ill., E.D. 1984).
A useful analogy is found in decisions awarding attorney's fees to prevailing defendants under statutory provisions. In the leading case of Christiansburg Garment Co. v. EEOC, brought under Title VII, the Supreme Court pointed out the difference in the rationale for awarding fees to prevailing plaintiffs on one hand and prevailing defendants on the other. While in the former case, fees serve as an incentive to private enforcement of federal law and are assessed against a violator, in the latter case they serve "to protect defendants from burdensome litigation having no legal or factual basis." The Court held that in Title VII cases the district court may in its discretion award attorney's fees to a prevailing defendant if it finds that the action was "frivolous, unreasonable, or without foundation, even though not brought in subjective bad faith * * * or that the plaintiff continued to litigate after it clearly became so."
434 U.S. 412, 98 S.Ct. 694, 54 L.Ed.2d 648 (1978).
Id. at 420, 98 S.Ct. at 700.
Id. at 421-22, 98 S.Ct. at 700-01. In this connection, the Court added a pertinent note of caution:
In applying these criteria, it is important that a district court resist the understandable temptation to engage in post hoc reasoning by concluding that, because a plaintiff did not ultimately prevail, his action must have been unreasonable or without foundation. This kind of hindsight logic could discourage all but the most airtight claims, for seldom can a prospective plaintiff be sure of ultimate success. No matter how honest one's belief that he has been the victim of discrimination, no matter how meritorious one's claim may appear at the outset, the course of litigation is rarely predictable. Decisive facts may not emerge until discovery or trial. The law may change or clarify in the midst of litigation. Even when the law or the facts appear questionable or unfavorable at the outset, a party may have an entirely reasonable ground for bringing suit.Id.
The following civil rights cases in which fees were awarded to prevailing defendants illustrate the application of this standard:
An action asserting that the defendant Board of Elections and two teachers' unions had systematically worked to exclude minority candidates from holding school board positions, in which plaintiffs had charged the Board with racial discrimination but could produce no supporting facts, and the nominating petition of each plaintiff had been adjudicated to be invalid in prior state court proceedings that had rejected the constitutional claims asserted.
An employment discrimination case in which it appeared that plaintiff had never applied and was not qualified for the position, and the employer had filled it relying entirely on legitimate and nondiscriminatory reasons.
An action by a convicted defendant against a key witness in which plaintiff charged the witness with perjury and suppression of exculpatory statements but failed to point to evidence supporting the charge.
An action under the Voting Rights Act against certain election officials who offered evidence, unopposed by plaintiffs, that the election petitions on which plaintiffs relied were invalid.
An action in which plaintiff, a county official holding what clearly was a political policy-making appointment, was motivated by a desire to generate publicity adverse to a political opponent by charging that his dismissal violated his constitutional rights.
The standard enunciated in Christiansburg has been followed under other federal statutes as well. For example, in an action charging securities fraud, defendants relied on the statutory exception for private offerings. The court granted summary judgment and the court of appeals affirmed, holding that defendants had failed to offer evidence that control had been placed on the number of offerees or that the offerees had been provided with or had access to all material information. The court affirmed the assessment of attorney's fees as sanctions under Section 11(e) of the Securities Act of 1933, which authorizes fee awards if the trial court "believes the suit or defense to have been without merit * * * bordering on the frivolous."
Western Fed. Corp. v. Erickson, 739 F.2d 1439, 1444 (9th Cir. 1984); see also Nemer-off, 620 F.2d at 349-50 (same standard applied under § 9(e) of the Securities Exchange Act of 1934, 15 U.S.C. § 78i(e)).
2. The Corollary of CandorA necessary corollary of the requirement that a paper filed by an attorney be warranted by existing law is the duty of candor toward the court. A court has the right to expect that counsel will state the controlling law fairly and fully; indeed, unless that is done, the court cannot perform its task properly. A lawyer must not misstate the law, fail to disclose adverse authority not disclosed by his opponent of which he knows or should know, or omit facts critical to the application of the rule of law relied on. If the rule on which he relies is circumscribed or conditioned so as to preclude its application to the case, he is obligated to disclose that fact. If he knows another rule such as the statute of limitations, res judicata or collateral estoppel categorically bars his client's claim, he cannot fail to disclose it in the hope that it will be overlooked. These are settled principles explicitly or implicitly acknowledged in the ABA's Model Rules of Professional Conduct.
Rule 3.3 Candor Toward the Tribunal states:
(a) A lawyer shall not knowingly:
(1) make a false statement of material fact or law to a tribunal;
. . . .
(3) fail to disclose to the tribunal legal authority in the controlling jurisdiction known to the lawyer to be directly adverse to the position of the client and not disclosed by opposing counsel;
. . . .
(b) The duties stated in paragraph (a) continue to the conclusion of the proceeding, and apply even if compliance requires disclosure of information otherwise protected by Rule 1.6 [Confidentiality of Information].
Model Rules, supra note 29, Rule 3.3.
The accompanying comment states in part:
The advocate's task is to present the client's case with persuasive force. Performance of that duty while maintaining confidences of the client is qualified by the advocate's duty of candor to the tribunal.
. . . .
Legal argument based on misrepresentation of law constitutes dishonesty toward the tribunal. A lawyer is not required to make a disinterested exposition of the law, but must recognize that the existence of pertinent legal authorities is as much a matter of fact as the existence of evidentiary documents. * * *
Furthermore, as stated in paragraph (a)(3), an advocate has a duty to disclose directly adverse authority in the controlling jurisdiction which has not been disclosed by the opposing party. The underlying concept is that legal argument is a discussion seeking to determine the legal premises properly applicable to the case.Id. comment.
Ethical Consideration 7-23 under the Model Code further explains:
The complexity of law often makes it difficult for a tribunal to be fully informed unless the pertinent law is presented by the lawyers in the cause. A tribunal that is fully informed on the applicable law is better able to make a fair and accurate determination of the matter before it. The adversary system contemplates that each lawyer will present and argue the existing law in the light most favorable to his client. Where a lawyer knows of legal authority in the controlling jurisdiction directly adverse to the position of his client, he should inform the tribunal of its existence unless his adversary has done so; but, having made such disclosure, he may challenge its soundness in whole or in part.
Model Code, supra note 28, EC 7-23.
The most elemental rationale of this part of the Rule 11 certification is that for fair decisions to be rendered, the court must not be misled about the law. A certification that a paper is supported by existing law is a clear representation that the legal argument made is supported by the authorities cited and not undercut by others of which the lawyer knows or should know. It warrants to the court that to the best of the lawyer's knowledge no undisclosed authority exists contrary to the position taken or materially limiting the effect of other authority relied on.
That is not to suggest that the lawyer's signature is a guaranty that every material reported decision has been checked and cited if necessary. It does occur that a lawyer may fail to find an important case, especially if it is recent. The standard which determines whether sanctions are appropriate is whether a reasonable inquiry has been made — in this context, into the state of the law. What is reasonable depends on the circumstances. For example, an attorney holding himself out as an expert in the field can be expected to be better versed in the controlling law than a general practitioner; a firm with substantial research facilities, including access to Lexis or Westlaw, can be expected to discover authorities that may be overlooked by less well-endowed lawyers. That a failure to disclose controlling authority may be the result of negligence will not in itself warrant the imposition of sanctions; the degree of negligence must be sufficiently severe to raise an inference of abuse or misuse.
Subject then to the obligation to disclose the controlling authorities he can reasonably be expected to have discovered, counsel is free to make an argument at odds with existing law. He can argue by analogy or extension from existing law. He can predict what he believes a court would or should hold on an issue not heretofore decided. He can urge that existing law should lead to a result in the particular case even if that issue has not heretofore been decided. What he cannot do is to mislead the court by contending that his argument is supported by existing law in the sense that the issue has been decided when that is not true. He must be clear in presenting his argument for what it is — if acceptance of the argument would require the extension, modification or reversal of existing law, Rule 11 requires disclosure and precludes presentation of the argument as though it rested on existing law.
See also Golden Eagle Distributing Corp., 103 F.R.D. at 127.
E. "Not Interposed For any Improper Purpose"The first two prongs of the rule, as the preceding discussion shows, are directed at the merits: in substance they are aimed at frivolous papers. The third prong is directed at papers which, though not necessarily frivolous, are found to be interposed for an improper purpose. In that respect it is similar to 28 U.S.C. § 1927 which the Supreme Court described as "not distinguish[ing] between winners and losers, or between plaintiffs and defendants. The statute is indifferent to the equities of a dispute and the values advanced by the substantive law."
Unlike § 1927, however, the rule is not limited to papers filed in bad faith. The Advisory Committee Notes specifically point out that "[t]he reference in the former text to wilfulness * * * has been deleted" and that the amended rule is intended to be triggered by a greater range of circumstances. The text of the rule itself does not refer to bad faith but makes the imposition of sanctions turn on the finding of "any improper purpose such as to harass or to cause unnecessary delay or needless increase in the cost of litigation." The bad faith terminology, although a convenient shorthand to describe abusive litigation practices, therefore has no place in Rule 11 cases.
Tedeschi, 579 F.Supp. at 661; cases cited supra note 34.
See Badillo, 717 F.2d at 1166; Lone Ranger Television, Inc. v. Program Radio Corp., 740 F.2d 718, 727 (9th Cir. 1984); supra note 34 and accompanying text.
In considering whether a paper was interposed for an improper purpose, the court need not delve into the attorney's subjective intent. The record in the case and all of the surrounding circumstances should afford an adequate basis for determining whether particular papers or proceedings caused delay that was unnecessary, whether they caused increase in the cost of litigation that was needless, or whether they lacked any apparent legitimate purpose. Findings on these points would suffice to support an inference of an improper purpose. The court can make such findings guided by its experience in litigation, its knowledge of the standards of the bar of the court, and its familiarity with the case before it, and by reference to the relevant criteria under the Federal Rules such as those in Rule 1 and Rule 26(b)(1).
Rule 26(b)(1) sets out indicia of unreasonableness for discovery as follows:
(i) [that it] is unreasonably cumulative or duplicative, or is obtainable from some other source that is more convenient, less burdensome, or less expensive; (ii) the party seeking discovery has had ample opportunity by discovery in the action to obtain the information sought; or (iii) the discovery is unduly burdensome or expensive, taking into account the needs of the case, the amount in controversy, limitations on the parties' resources, and the importance of the issues at stake in the litigation.
Fed.R.Civ.P. 26(b)(1). Item (iii) is particularly relevant to the application of Rule 11, if only by analogy.
It is crucial to the effectiveness of Rule 11 that this approach be followed. Were a court to entertain inquiries into subjective bad faith, it would invite a number of potentially harmful consequences, such as generating satellite litigation, inhibiting speech and chilling advocacy. At the same time, some offenders might escape for lack of sufficient evidence of bad faith. Finally, a bad faith test would make courts more reluctant to impose sanctions for fear of stigmatizing a lawyer by a bad faith finding.
The Supreme Court's analysis of the defense of good-faith immunity of public officials provides a useful analogy. The Court held that the conduct of public officials should be tested on the basis of "objective reasonableness * * *, as measured by reference to clearly established law." If the law is not clearly established, the requisite lack of good faith could not be found. If it is clearly established, action in contravention ordinarily should not be immunized. This analysis, the Court reasoned, would obviate wide ranging and disruptive inquiries into good faith, normally requiring a full trial to resolve.
Harlow v. Fitzgerald, 457 U.S. 800, 815-19, 102 S.Ct. 2727, 2737-39, 73 L.Ed.2d 396 (1982).
Id. at 818, 102 S.Ct. at 2739.
Similar reasoning can be applied under Rule 11. If a reasonably clear legal justification can be shown for the filing of the paper in question, no improper purpose can be found and sanctions are inappropriate. In the absence of such a showing to justify what appears to be a prima facie unreasonable paper, sanctions may be appropriate.
Improper purpose may be manifested by excessive persistence in pursuing a claim or defense in the face of repeated adverse rulings, or by obdurate resistance out of proportion to the amounts or issues at stake. For example, sanctions were imposed when plaintiff persisted in prosecuting claims after they had been rejected by the court of appeals, when plaintiff insisted on relinquishment by defendant of certain rights as a condition to abandoning a frivolous claim, and when plaintiff in addition to persisting with a baseless claim failed to attend sessions on time, failed to adhere to stipulations, made a frivolous motion for reargument, and moved to transfer the action on the eve of the hearing on defendant's motion to dismiss which had been pending two months. Sanctions were also imposed against an employer who had resisted compliance with an EEOC subpoena for four years by various baseless and unsuccessful legal proceedings, and against a defendant for baseless motions to dismiss and unsupported motions to transfer.
Andre v. Merrill Lynch Ready Assets Trust, 97 F.R.D. 699, 702 (S.D.N.Y. 1983).
Viola Sportswear, 574 F.Supp. at 621. See also Van Berkel, 581 F.Supp. at 1251 (imposing sanctions when plaintiff's attorney failed to dismiss a baseless suit, claiming he needed his client's approval). An interesting speculation is whether failure to accept a reasonable settlement might be a basis for awarding attorney's fees for subsequent services under Rule 11 or § 1927, thereby effectively extending Rule 68 which is now limited to costs. Cf. EEOC v. Pet Inc., 719 F.2d 383, 386-87 (11th Cir. 1983) (denying defendant's petition for costs where plaintiff's case was not frivolous and defendant failed to offer evidence that it had made a settlement offer much earlier in the litigation).
Tedeschi, 579 F.Supp. at 663, (court relying on both Rule 11 and § 1927). See also North Am. Foreign Trading Corp. v. Zale Corp., 83 F.R.D. 293, 297 (S.D.N.Y. 1979) (imposing sanctions under § 1927 for a motion to disqualify opposing counsel, which counsel should have known to be baseless).
EEOC v. Appleton Electric Co., 586 F.Supp. 1108, 1113 (N.D.Ill. 1984). The court said in part, "Appleton's grounds for resisting the subpoena are baseless. The failure to allege any substantive defenses which are supported by facts leads this court to the conclusion that the reason behind the respondent's various actions was only to delay the investigation."
Lucha, Inc., 575 F.Supp. at 788. See also Johnson v. Secretary, Dep't of Health and Human Servs., 38 Fed.R. Serv. 2d (Callaghan) 1005, 1008-09 (D.D.C. 1984) (unreasonable delays in answering complaint by social security claimant).
III A. ProcedureProceedings for the imposition of sanctions may be initiated on motion of a party or on the court's initiative. The Advisory Committee Notes state that "[t]he 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." From this one may infer that the rule contemplates judicial action when no motion is made by a party. For effective enforcement and achievement of the rule's deterrent purpose, judges will have to be willing to take the initiative, since lawyers tend to be reluctant to move for sanctions. Conversely, a lawyer filing a Rule 11 motion must satisfy himself that it is for a proper purpose. The rule must not be allowed to become a source of rather than a shield against abuse.
Cf. National Hockey League v. Metropolitan Hockey Club, Inc., 427 U.S. 639, 96 S.Ct. 2778, 2781, 49 L.Ed.2d 747 (1976) (imposing sanctions as a deterrent as well as penalty).
Fisher Bros. v. Cambridge-Lee Indus., Inc., 585 F.Supp. 69, 71 (E.D.Pa. 1983) ("Rule 11 motion cannot be used as a substitute for appropriate discovery by the movant or to prevent discovery of the movant.").
The rule leaves timing to the court's discretion. The Advisory Committee Notes state that "[a] party seeking sanctions should give notice to the court and the offending party promptly upon discovering a basis for doing so." However, the Notes continue, somewhat confusingly, while the time for imposition of sanctions rests in the court's discretion, "in the case of pleadings the sanctions issue * * * 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 decision when to initiate proceedings under Rule 11 must take into account several factors. One is the Advisory Committee's caution that "[t]he court is expected to avoid using the wisdom of hindsight and should test the signer's conduct by inquiring into what was reasonable to believe at the time the * * * paper was submitted." To avoid the risk, or the appearance of relying on hindsight, the decision on sanctions is best made as promptly as possible after the violation is disclosed. Another is that prompt action helps enhance the credibility of the rule and, by deterring further abuse, achieve its therapeutic purpose.
Normally, although not necessarily always, a claim or defense so meritless as to warrant sanctions, should have been susceptible to summary disposition either in the process of narrowing issues under Rule 16 or by motion. Only in the rare case will the offending party succeed in delaying exposure of the baseless character of its claim or defense until trial. Permitting or encouraging the opposing party to litigate a baseless action or defense past the point at which it could have been disposed of tends to perpetuate the waste and delay which the rule is intended to eliminate. It also undermines the mitigation principle which should apply in the imposition of sanctions, limiting recovery to those expenses and fees that were reasonably necessary to resist the offending paper.
Cf. Steinberg v. St. Regis/Sheraton Hotel, 583 F.Supp. 421 (S.D.N.Y. 1984). In awarding sanctions following trial, the court observed:
This was clearly one of the most frivolous employment discrimination actions ever brought. The fact that it survived a summary judgment motion merely indicates that at the time that motion was brought, though the case seemed very weak, there did appear to be genuine issues of fact sufficient, under the stringent standards of this circuit, to warrant denial of the motion.Id. at 424.
This statement says much about the danger of compartmentalizing the Federal Rules rather than administering them as a synergistic system. It makes little sense to treat Rule 56 as incapable of disposing of cases so meritless they subsequently call for sanctions under Rule 11. See Schwarzer, Summary Judgment Under the Federal Rules: Defining Genuine Issues of Material Fact, 99 F.R.D. 465, 465 (1984); Schwarzer, Managing Antitrust and Other Complex Litigation 145-49 (1982).
See supra note 25 and accompanying text. The court in Armour Co., in its discretion, imposed a duty of mitigation on the victim of a frivolous lawsuit.
Due process requires that the offending party be given notice and an opportunity to oppose the imposition of sanctions. Because ordinarily the opposition will consist of an explanation and justification, it can be adequately presented by memorandum and declarations. Oral argument may be helpful, even if not required by due process. An evidentiary hearing would not seem to be necessary and should be avoided, unless the court must find disputed facts or resolve issues of credibility. This should rarely be true if, as this article argues, the sanctions decision is based on the face of the record, not on extraneous matters such as state of mind or the equities. In this regard, the Advisory Committee cautions:
Rodgers, 596 F.Supp. at 27-28 (not requiring hearing where "the ruling is one of law and the facts adduced at the hearing would not alter the legal conclusion"). But see Miranda v. Southern Pac. Transp. Co., 710 F.2d 516, 522 (9th Cir. 1983) (requiring procedural protections of notice of hearing before sanctions may be imposed but noting that failure to request hearing amounts to waiver).
See SFM Corp. v. Sundstrand Corp., 102 F.R.D. 555, 560 (N.D.Ill., E.D. 1984) (noting that "an `unclean hands' defense * * * fails because Rule 11 relief is not equitable in nature").
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.
The rule does not require findings of fact or conclusions of law. But findings and conclusions, even if only brief, serve at least three useful purposes: (1) they assist in appellate review, demonstrating that the trial court exercised its discretion in reasoned and principled fashion; (2) they help assure the litigants, and incidentally the judge as well, that the decision was the product of thoughtful deliberation, and (3) their publication enhances the deterrent effect of the ruling.
B. Attorney-Client Privilege and Conflict
Rule 11 proceedings may raise potential problems of attorney-client privilege and conflict. One problem is that counsel may claim to have relied in making the certification on confidential communications allegedly received from the client. While the Advisory Committee Notes state that "[t]he rule does not require a party or an attorney to disclose privileged communications," it does not address the situation where a real or apparent need for disclosure exists.
A judge should view assertion of the privilege by a lawyer with skepticism. If the information received from the client is relevant to whether a paper is well-founded, it probably must eventually be disclosed in any event, either in a pleading or in discovery; that it may have been incorporated in work product does not immunize it from disclosure. As a last resort, the judge could make an in camera examination; this, however, should be the exception rather than the rule because of the implication of an ex parte communication on the merits.
More serious is the risk that a conflict may arise when the court considers whether to assess sanctions against counsel or against the client. If counsel seeks to vindicate himself personally by relying on directions from his client, the client may need independent representation and the attorney-client relationship may become so tainted as to jeopardize the representation for the remainder of the litigation. A similar problem may arise between out-of-town and local counsel. Care must therefore be used when the issue of allocating responsibility for sanctions between attorney and client, or between attorneys, is addressed, as it will be on occasion. Normally, attorneys will not try to hide behind their client; when they do not, there is no need for the court to raise the issue. But in deciding on whom to impose sanctions, the court may well have questions about the relationship between client and counsel and the degree of control over the litigation exercised by each. Discretion suggests that the judge decide on the basis of the record before him and his observations of the conduct of the litigation, rather than raise sua sponte questions that may lead to ethical conflicts.
If the sanctions to be imposed are heavy and the transgressions charged serious, it may be necessary to defer the decision over allocation of responsibility until the litigation has been concluded. Where a question is raised as to which of several sets of lawyers is responsible, lawyers asking for it may have to be given an opportunity to exonerate themselves. If this presents a risk of disclosure of work product and confidential communications, it should be deferred.
C. Assessing the Gravity of the Violation
The rule purports to make sanctions mandatory by directing that in the event of a violation, the court "shall impose * * * an appropriate sanction." The Advisory Committee, by this language, sought to "focus the court's attention on the need to impose sanctions for * * * abuses." It went on to say, however, that the court "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."
It is not likely that courts will consider themselves bound by the rule's mandatory language to impose sanctions. That the problems giving rise to the rule may be urgent does not diminish the critical role of discretion in the exercise of judicial power under the rule. The decision whether to impose sanctions and what they should be will turn on an assessment of the gravity of the conduct at issue. Several factors are relevant to that assessment.
1. Avoiding Post Hoc Judgments
As previously discussed, not only the decision whether there has been a violation but also the evaluation of its seriousness must be based on the state of facts, including what the signer knew or should have known and could reasonably have believed, at the time the paper was signed.
While hindsight must be rejected as a sword, it also provides no shield. A position that might be reasonable in a paper filed early in the action may become unreasonable or frivolous in the light of subsequent discovery. The relevant state of facts, knowledge and belief will therefore change during the course of the litigation and papers must be assessed accordingly.
Steinberg 583 F.Supp. at 425.
2. The Damage DoneThe court should consider the impact of the violation. The most direct consequence is reflected in the attorney's fees and other expenses inflicted on the other side by the offending paper. There may in addition be measurable litigation delays, added burdens on parties and witnesses, disruption of the court calendar, and imposition on the court itself.
In assessing the damage done, the court should consider the extent to which it is self-inflicted due to the failure to mitigate. If a baseless claim could have been readily disposed of by summary procedures, there is little justification for a claim for attorney's fees and expenses engendered in lengthy and elaborate proceedings in opposition. The rule's purpose would be frustrated if it encouraged the offended party to play the very game at which it is aimed.
See supra note 62 and accompanying text.
3. The Need for Punishment and Deterrence
The rule reflects a dual purpose: compensating the offended party for the expenses caused by a violation as well as penalizing the offender to achieve special and general deterrence. In assessing the gravity of the violation, therefore, the court should determine the extent to which the violation reflects a deliberate effort to misuse or abuse the litigation process. While all attorneys practicing in the federal court are subject to its rules, it is not realistic to hold all to the same standards. For example, a failure to cite contrary authority may be excusable neglect in the case of an inexperienced solo practitioner but amount to serious misconduct if perpetrated by a lawyer from a large, well-equipped law firm engaged in a substantial matter. Similarly, violations by persons appearing pro se must be judged differently from those of lawyers.
Thus a violation may stem from a variety of causes: inexperience, incompetence, neglect, wilfulness or deliberate choice. The need for punishment and deterrence is a function of the cause of the violation. In assessing the cause, the judge should consider not only the circumstances of the particular violation but also the factors bearing on the reasonableness of the conduct, such as experience and past performance of the lawyer and his firm, and the general standard of conduct of the bar of the court.
D. Selecting the Appropriate Sanctions 1. Reprimand
The basic principle governing the choice of sanctions is that the least severe sanctions adequate to serve the purpose should be imposed. Frequently the monetary consequence of a violation will be insignificant, particularly when enforcement of the rule is swift and timely. The main purpose of sanctions in such a case is education and deterrence. Especially where it is a first violation, a reprimand from the court will suffice.
Boazman v. Economics Laboratory, Inc., 537 F.2d 210, 212 (5th Cir. 1976); Reizakis v. Loy, 490 F.2d 1132, 1136 (4th Cir. 1974); Industrial Bldg. Materials, Inc. v. Inter-chemical Corp., 437 F.2d 1336, 1339 (9th Cir. 1970).
Judges are prone to forget the sting of public criticism delivered from the bench. Such criticism, while potentially constructive, can also damage a lawyer's reputation and career. The judge should take care, therefore, that what is said is commensurate with the violation. There is a distinction between bad practice and lack of integrity. Being guilty of the former does not invariably justify a charge of the latter. At the same time, enforcing Rule 11 is the judge's duty, albeit unpleasant. A judge would do a disservice by shying away from administering criticism or reproval where called for.
The impact of a reprimand is greatly increased by including it in a published order. Publication enhances the deterrent effect of sanctions and helps educate the bar about what is expected of them under Rule 11. Publication is also useful in developing the emerging jurisprudence under this new rule. But publication of the name of the offending lawyer will perpetuate the record of his transgression and, in creating a permanent blot on his professional reputation, may be unduly harsh. Names, particularly of individuals, should therefore not be published unless the violation was egregious and more than an isolated lapse. Publication can also be in less permanent media than law reports, such a local legal newspaper, or by distribution of copies of the order to other lawyers in the sanctioned firm.
2. Monetary SanctionsRule 11 authorizes the court to impose "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." The critical provisions here are that
(a) the expenses and fees awarded must be found to have been caused by the violation, and
(b) the amount awarded is found to be reasonable.
An obligation to mitigate is implicit in these provisions and has been recognized by the courts. The court making an award must be satisfied that the fees and expenses were reasonably necessary. It may take into account whether the same result could have been accomplished more expeditiously and whether the charges appear disproportionate, keeping in mind, however, the rule's penal and deterrent purpose.
Taylor v. Prudential-Bache Secs., Inc., 594 F.Supp. 226, 228-29 (N.D.N.Y. 1984); Colucci, 533 F.Supp. at 1013. See also Tedeschi, 579 F.Supp. at 663-64.
While the latter purposes are undeniable, courts need to be wary about imposing fines under the rule. The criminal character of a fine brings into play additional due process safeguards. Criminal contempt proceedings are governed by 18 U.S.C. § 401 and Fed.R.Crim.P. 42; a right to a jury trial exists if the punishment exceeds a fine of $500 or imprisonment of six months. To impose a fine under Rule 11 without extending the procedural protections of criminal contempt proceedings risks reversal on appeal and is inadvisable.
18 U.S.C. § 401 authorizes criminal contempt to punish (1) misbehavior causing obstruction in the administration of justice, (2) misbehavior of officers of the court in their official duties, and (3) wilful disobedience of a clear and definite order. Violation of Rule 11 will rarely rise to a level of culpability covered by this section.
The safer course, therefore, is to limit sanctions to consequential expenses and attorney's fees, i.e., those incurred "because" of the paper filed in violation. Fees and expenses incurred concurrently but not attributable to the offending paper must be segregated and excluded from the award.
Any award is limited by the rule to "the reasonable expenses incurred * * * including a reasonable attorney's fees." Thus the measure is not actual expenses and fees but those the court determines to be reasonable. Proof of the expenses and fees actually incurred will be helpful to the court's determination, but the award will be based on what is found to be reasonable. A party having vigorously resisted a baseless claim may therefore find that the court, in making an award, will consider its expenditures to have been excessive.
See Tedeschi, 579 F.Supp. at 663-64. See also, supra notes 56 and 61 and accompanying text.
While the determination of attorney's fees should be guided by reference to the factors commonly used by federal courts for that purpose, and be supported by findings, the court should observe the Advisory Committee's caution to avoid satellite litigation, particularly additional discovery, and attempt to make its decision on the basis of the record, augmented by appropriate declarations.
See, e.g., Kerr v. Screen Extras Guild, Inc., 526 F.2d 67, 69-70 (9th Cir. 1975), cert. denied, 425 U.S. 951, 96 S.Ct. 1726, 48 L.Ed.2d 195 (1976); Johnson v. Georgia Highway Express, Inc., 488 F.2d 714, 717-19 (5th Cir. 1974).
If enforcement of the rule occurs expeditiously before much damage is done, as this article advocates, monetary sanctions will ordinarily be modest. Their impact on the person against whom they are assessed must, however, be considered and ability to pay is a factor in determining reasonableness.
In assessing fees, a determination must also be made who is to pay them. Where the violation is primarily a professional dereliction, it is appropriate to impose the sanctions on the attorney and prohibit reimbursement by the client. Where, on the other hand, the violation may reflect deliberate litigation strategy, at least some part of the sanctions can fairly be imposed on the client although the client's instructions do not absolve the attorney from professional accountability for carrying them out. In that situation, assessing sanctions jointly and severally leaves it to the client and the lawyer to sort them out.
Wold, 575 F.Supp. at 168; Heuttig, 582 F.Supp. at 1522; Van Berkel, 581 F.Supp. at 1251.
Tedeschi, 579 F.Supp. at 663-64; Lucha, Inc., 575 F.Supp. at 788 (sharing equally); Andre, 97 F.R.D. at 703.
As previously discussed, the basis for allocation will rarely be totally clear. Considering the record before it, however, and the conduct of the lawyers and clients in the light of its experience, the court should ordinarily be able to make a determination with a reasonable degree of confidence. Before embarking on any ancillary proceedings for this purpose, therefore, the court should balance the likely benefits to be gained from further inquiry against the resulting costs and delays.
3. Other Sanctions
In authorizing the imposition of an "appropriate sanction," the rule does not limit the court's choice. Prior to the 1983 amendment, courts occasionally dismissed baseless claims or defenses. While that option theoretically remains open, such a dismissal is now better grounded, not on misconduct, but on the merits under Rules 12, 41, 55 and 56. Abusive activities, while warranting sanctions, may also necessitate prophylactic action regulating the conduct of the litigation, but Rules 16 and 26 afford a more solid basis for such case management orders than Rule 11.
Although the specific provision for lawyer discipline was eliminated from the rule in 1983, it remains an available albeit not very practical option. Disbarment proceedings are subject to stringent due process requirements. Imposition of lesser punishment, such as barring an attorney from appearing for a period of time, probably should also be preceded by a full hearing and the entry of findings of fact and conclusions of law. When the violation has been committed by out-of-state counsel appearing pro hac vice pursuant to leave granted by court, that leave can be withdrawn. The matter could also be referred to the state bar for disciplinary proceedings.
In re Ruffalo, 390 U.S. 544, 550, 88 S.Ct. 1222, 1226, 20 L.Ed.2d 117 (1968).
IV
Rule 11, in focusing on the professional responsibilities of lawyers, also vests in the federal courts greatly enlarged powers and obligations to enforce those responsibilities. If the results are to be constructive, courts will have to approach this task with a proper perspective. Rule 11 does not make them policemen or schoolmasters. Its aim is to make the litigation process work better. The rule therefore should be viewed as a part of an integrated system created by the federal rules for the just, speedy and inexpensive determination of actions.
In most cases, the key to avoiding abuse of the litigation process is early and effective judicial management. The 1983 amendments to Rules 16 and 26 provide the necessary tools for the management of pretrial and discovery. In addition, the summary judgment procedure under Rule 56 enables the court to dispose of claims or defenses that do not warrant trial.
See, e.g., Jaquette v. Black Hawk County, 710 F.2d 455, 463-64 (8th Cir. 1983).
See Schwarzer, Summary Judgment Under the Federal Rules, supra note 61.
More often than not, the need for sanctions arises only when judicial management of the litigation has been ignored or failed. When it does arise, however, courts must not hesitate to enforce Rule 11 with due regard for lawyers' obligations to their clients. Of all the duties of the judge, imposing sanctions on lawyers is perhaps the most unpleasant. A desire to avoid doing so is understandable. But if judges turn from Rule 11 and let it fall into disuse, the message to those inclined to abuse or misuse the litigation process will be clear. Misconduct, once tolerated, will breed more misconduct and those who might seek relief against abuse will instead resort to it in self-defense.
APPENDIX A A Historical Note on Attorney's Fees as Sanctions
Under the American Rule, the prevailing party ordinarily must pay its own attorney's fees and is not entitled to collect them from the loser. The rule differs from that in England where for centuries statutes have authorized the award of costs, including attorney's fees, to the prevailing party; awards are in the discretion of the court but are routinely allowed.
The English Rule was never adopted generally in this country but in the early years of the Republic a number of states had laws prescribing attorney's fees as taxable costs. In 1793 Congress amended the Federal Judiciary Act to clarify the matter of awarding fees; it provided that the federal courts were to allow attorney's fees to prevailing parties in the same manner as the courts of the state in which they sat. This system remained in effect until 1853 when complaints about the lack of uniformity of practice in the federal courts and about exorbitant fee awards to prevailing parties led Congress to adopt legislation narrowly limiting allowable costs. Among other things, this legislation contained a fee schedule which limited recovery of attorney's fees to twenty dollars for a jury trial, ten dollars for a nonjury trial, $2.50 for each deposition taken admitted as evidence, and five dollars for an appeal to a circuit court. The Act did not prohibit attorneys from charging their clients fees in excess of those specified. These provisions survived substantially unchanged in the 1948 Judicial Code and remain in 28 U.S.C. § 1923(a).
§ 4, 1 Stat. 333.
10 Stat. 161-62.
The Supreme Court has consistently interpreted the 1853 Act and its successors as limiting the power of federal courts to award attorney's fees. Certain judge-made exceptions have, however, been recognized. First, where as a result of a party's efforts, a fund is created or preserved for the benefit of a class, that party may on equitable principles have his attorney's fees paid from that fund. Second, a court may assess attorney's fees for "willful disobedience of a court order * * as part of the fine to be levied on the defendant," or when the losing party "has acted in bad faith, vexatiously, wantonly, or for oppressive reasons." These exceptions have been described by the Supreme Court as "assertions of inherent power in the courts to allow attorney's fees in particular situations, unless forbidden by Congress." Only the second exception is relevant to Rule 11.
The Baltimore, 75 U.S. (8 Wall.) 377, 392, 19 L.Ed. 463 (1869); Flanders v. Tweed, 82 U.S. (15 Wall.) 450, 452-53, 21 L.Ed. 203 (1872).
Mills v. Electric Auto-Lite Co., 396 U.S. 375, 392, 90 S.Ct. 616, 625, 24 L.Ed.2d 593 (1970).
Fleischmann Distilling Corp. v. Maier Brewing Co., 386 U.S. 714, 718, 87 S.Ct. 1404, 1407, 18 L.Ed.2d 475 (1967).
F.D. Rich Co. v. United States ex rel. Industrial Lumber Co., 417 U.S. 116, 129, 94 S.Ct. 2157, 2165, 40 L.Ed.2d 703 (1974). A recent example in which fees were assessed against plaintiff involved an action brought by a tax protestor asserting that Federal Reserve notes were not valid money. Callow v. Amerace Corp., 681 F.2d 1242, 1243 (9th Cir. 1982).
In addition, attorney's fees may be awarded in diversity cases pursuant to state law not otherwise in conflict with federal law. Alyeska Pipeline Serv. Co. v. Wilderness Soc'y, 421 U.S. 240, 259 n. 31, 95 S.Ct. 1612, 1622 n. 31, 44 L.Ed.2d 141 (1975).
While adopting a formidable array of statutes authorizing awards of attorney's fees to prevailing parties, Congress has not repudiated the judicially created bad-faith exception to the 1853 Act. Its rationale differs from that underlying statutory fee awards. Provisions for the award of attorney's fees in congressional enactments are generally intended to encourage private enforcement and to promote the remedial purposes of the legislation. The judicially created bad-faith exception to the 1853 Act serves a narrower purpose. It is an exercise of the inherent power of the court to control its docket and the conduct of the attorneys and parties before it. But that power does not extend to the making of awards to prevailing parties on policy grounds nor can it otherwise overcome the clearly expressed congressional purpose of adhering to the American Rule except for narrowly defined statutory exceptions.
Id. at 260-61 n. 33, 95 S.Ct. at 1623 n. 33 (listing some 25 representative statutes).
See Link v. Wabash R.R. Co., 370 U.S. 626, 630-31, 82 S.Ct. 1386, 1388-89, 8 L.Ed.2d 734 (1962). See also Standing Comm. on Discipline v. Ross, 735 F.2d 1168, 1170 (9th Cir. 1984) (finding imposition of discipline for violation of professional canons pursuant to local rule a valid exercise of court's inherent power).
Etymological Note: I am indebted to Judge Jim Carrigan of Colorado for calling my attention to William Safire's discussion of the words sanction/sanctions. Safire points out that the plural of the word turns its meaning around: from permission to penalty. W. Safire, On Language 97 (1980).
The recent amendments to the Federal Rules of Civil Procedure, however, represent a new departure from the American Rule. The first was the 1970 amendment of Rule 37 which provided for attorney's fees (1) to parties prevailing on discovery motions and (2) against parties failing to comply with discovery orders. The purpose was to punish and deter discovery abuse, but the threshold for action clearly was far below that under the judicially created exception previously discussed. The recent amendment of Rule 11 and to a lesser extent of Rules 16 and 26 also goes beyond that exception in authorizing attorney's fees as sanctions against a broad range of conduct which, though amounting to abuse or misuse of judicial processes, falls short of wilfulness or bad faith.
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