Second Circuit Weighs In On The Rule 11 Safe Harbor

STAR MARK MANAGEMENT, INC. v. KOON CHUN HING KEE SOY & SAUCE FACTORY, LTD., Court of Appeals, 2nd Circuit 2012 – Google Scholar.

A party seeking Rule 11 sanctions must serve the opposing party with a copy of the motion and give that party 21 days to withdraw or correct the offending pleading.

Contrary to popular belief, writing a letter will not do the job.

Here the party seeking sanction served a copy of the motion, but that copy did not include an affidavit or other exhibits to the motion.

The Second Circuit held that the moving party met the requirements of Rule 11. It explains:

“We hold, in the circumstances here, that Koon Chun met the procedural requirements of the safe harbor provision of Rule 11(c)(2) by serving its notice of motion for Rule 11 sanctions with its January 9, 2008, letter, even though it did not serve at that time supporting affidavits or a memorandum of law.

First, Koon Chun complied literally with the requirements of the rule, as it served its notice of motion more than 21 days before it filed the motion with the district court; the motion was made separately from any other motion; and the notice of motion described the specific conduct that allegedly violated Rule 11(b). Fed. R. Civ. P. 11(c)(2).

Second, while Li contends that Koon Chun did not serve supporting papers such as a memorandum of law or affidavits, Rule 11(c)(2) requires only the service of “[a] motion” or “[t]he motion.” See id. It does not require the service of a memorandum of law or affidavits, nor does it use the words “formal fully supported motion.” See Ideal Instruments, Inc. v. Rivard Instruments, Inc., 243 F.R.D. 322, 339 (N.D. Iowa 2007) (“Rule 11 says nothing about requiring service of the brief in support of a Rule 11 motion to trigger the twenty-one day `safe harbor.'”). While at least one district court in this Circuit has suggested that only “a fully supported motion” satisfies the safe harbor requirement, see Carruthers v. Flaum, 450 F. Supp. 2d 288, 306 (S.D.N.Y. 2006), that is not what Rule 11 requires. We decline Li’s invitation to read into the rule a requirement that a motion served for purposes of the safe harbor period must include supporting papers such as a memorandum of law and exhibits. The motion for Rule 11 sanctions filed with the district court rested on substantially the grounds set forth in the earlier notice of motion, undercutting the argument that the motion did not comply with the safe harbor requirement. The additional ground listed in the filed motion — no evidence of fraud — was part of Koon Chun’s separate request for sanctions under § 1927, which is not subject to the safe harbor requirement….

We reject Li’s contention that he was not able to make an independent, professional judgment as to whether to withdraw the offending pleading “without being given any opportunity to see the movant’s legal arguments, affidavits and exhibits.” Appellant’s Reply Br. at 4. Koon Chun’s notice of motion gave Star Mark and Li notice of the alleged sanctionable conduct, and Li thus had the opportunity to determine whether there was a non-frivolous basis for the pleading. Here, Li made that very professional judgment, informing Koon Chun (in response to its earlier notice of motion) that none of its points had any merit.”

Comment: this decision stretches the safe harbor to the limit. It might be appropriate to seek a writ of certiorari here.

Edward X. Clinton, Jr.

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