Month: March 2018

Sanction Award for Fabricated Evidence Is Affirmed by the Fifth Circuit


The sanctions were awarded based on the court’s inherent power. The ruling affirming the sanctions award is quoted here:

Plaintiff-Appellant Jon Deutsch and his attorney, Omar Rosales, appeal from a sanctions order against Rosales in the form of an award of attorney’s fees to opposing counsel. The district court concluded that Rosales engaged in bad faith by (1) making numerous false and abusive statements, (2) fabricating evidence and lying about doing so in filings and a show cause hearing, and (3) filing a groundless police report and protective order against defense counsel. The court imposed sanctions under its inherent power, awarding defense counsel $175,673.78 in fees and costs.

The standard of review for inherent power sanctions is abuse of discretion. “We review the facts underlying the district court’s decision to sanction for clear error and `its underlying conclusions of law de novo.‘” The court may award attorney’s fees as a sanction under its inherent power. To do so, “[the] court must make a specific finding that the attorney acted in `bad faith.'” But the court “must comply with the mandates of due process,” both in assessing bad faith and in determining the amount of fees to award.

Much of Rosales’s argument stems from his mischaracterization of the sanctions as Rule 11 sanctions. But the defendants’ motion for sanctions and the sanctions order itself expressly invokes the court’s inherent power. This is one instance when Rule 11 is not “up to the task,”[7] because the conduct at issue involved not only improper filings, but also falsifying evidence and using a state court tribunal to delay the litigation.

Rosales never challenges any of the magistrate judge’s factual findings regarding his conduct and his bad faith. Nor could he. Rosales’s bad faith is apparent from the record. Further, there is no serious doubt that Rosales was given due process; that is, notice and opportunity to be heard. The defendants’ briefing described the allegedly sanctionable conduct, as did the magistrate judge’s show cause order. The magistrate judge held a hearing at which Rosales had the opportunity to present evidence.

Rosales’s contentions are frivolous and involve serious misstatements of the law and facts. He mounts numerous attacks on the magistrate judge assigned to the cases and the district judge assigned to some of them. Rosales’s insistence on placing the blame for his conduct anywhere but on himself—to the point of impugning the integrity of the courts—underscores the appropriateness of these inherent power sanctions. We agree with the magistrate judge that it is regrettable that someone who purports to enforce the rights of disabled persons engages in such reprehensible conduct. We are baffled by Rosales’s claims that his actions, including falsifying evidence, were somehow justified. Not only did Rosales make many inappropriate remarks, he perpetuated a fraud on the court. The award of inherent power sanctions was not an abuse of discretion.

The judgment of the district court awarding sanctions is AFFIRMED. The motions carried with the case are dismissed as moot.

via Deutsch v. PHIL’S ICEHOUSE, INCORPORATED, Court of Appeals, 5th Circuit 2018 – Google Scholar 

Footnotes were omitted.


Rare and Exceptional Case Does not Warrant Rule 11 Sanctions

This is a case where the third party defendants moved for sanctions, apparently before they obtained a dismissal of the complaint.  The court could have rejected the sanctions motion on that ground. Instead, the court rejected the motion on the ground that the case was “rare and exceptional” and did not merit sanctions. A brief quotation explains the ruling:

The Court cannot accept the Third Party Defendants’ invitation to accept they would prevail and obtain dismissal with prejudice. Even if Third Party Defendants did prevail, on this record, the Court cannot find the third party claims were sufficiently frivolous or brought for an improper purpose. See, e.g., Hochman Decl., Dkt. No. 85-1. The Court cannot find that this is the type of “rare and exceptional case” justifying the imposition of Rule 11 sanctions.

via EUROSESMILLAS, SA v. PLC DIAGNOSTICS INC., Dist. Court, ND California 2018 – Google Scholar

Pro Se Litigants Escape Sanctions Despite the Lack of Merit of their pleadings

This case was brought by pro se litigants against several banks and financial institutions to challenge a foreclosure sale. The plaintiffs filed three sanctions motions against Defendants’ counsel. The court noted that all three motions were procedurally defective because the plaintiffs did not comply with the Rule 11 safe harbor. Additionally, the motions were substantively meritless. The court declined to grant sanctions because plaintiffs were pro se litigants.

Edward X. Clinton, Jr.


via Hopson v. SPECIALIZED LOAN SERVICING, LLC, Dist. Court, SD Mississippi 2018 – Google Scholar

Plaintiffs’ Counsel Complies with Safe Harbor = Rule 11 Sanctions Denied

Rule 11 contains a safe harbor under which a party can serve a sanctions motion on the opposing party. That party has 21 days to withdraw the complaint or other offending paper.

Here, Defendant served the Rule 11 motion and the Plaintiffs complied and withdrew the complaint.  Understandably, the court rejected the request for sanctions.  The reasoning is simple – because plaintiffs complied with the Rule, there is no motion for them to answer:

The Court finds that Rule 11 sanctions are unavailable in light of the Patels’ voluntary withdrawal of the complaint. See Hockley by Hockley v. Shan Enter. Ltd. P’ship, 19 F. Supp. 2d 235, 240 (D.N.J. 1998) (citing Fed. R. Civ. P. 11 Advisory Committee Notes (1993 Amendment) at 89 (West 1998)) (“The court can impose sanctions only if, after twenty-one days, the non-moving party has not withdrawn the offending petition or acknowledge[d] candidly that it does not currently have evidence to support a specified allegation.'”). To impose sanctions here under Rule 11 would undermine the purpose of the safe harbor provision, which is to curb apprehension that withdrawal may be viewed as evidence of a violation. See Fed. R. Civ. P. 11 Advisory Committee Notes (“Under the former rule, parties were sometimes reluctant to abandon a questionable contention lest that be viewed as evidence of a violation of Rule 11.”). In any event, the rule is clear: “If the pleading is withdrawn in timely fashion, the matter is at an end and sanctions become unavailable; a `safe harbor’ is provided.” Thomas v. Treasury Mgmt. Ass’n, Inc.,158 F.R.D. 364, 366 (D. Md. 1994)See Fed. R. Civ. P. 11 advisory committee’s note (“If, during this period, the alleged violation is corrected, as by withdrawing . . . some allegation or contention, the motion should not be filed with the court.”).

Further, Defendants provide no past examples of sanctions imposed for threatening to refile a complaint that has been voluntarily dismissed without prejudice. Indeed, even a successful Rule 11 motion does not preclude the sanctioned party from refiling its complaint. See Cooter & Gell v. Hartmarx Corp.,496 U.S. 384, 396 (1990). That does make defendants answerable to a unending sequence of abortive litigation. Rather, the threat of successive withdraw-and-refiling is met by Rule 41(a)(1), which provides that voluntary dismissal counts as a final adjudication if “the plaintiff previously dismissed any federal- or state-court action based on or including the same claim . . . .” Fed. R. Civ. P. 41(a)(1)(B). See Cooter & Gell, 496 U.S. at 397 (citations omitted) (“Rule 41(a)(1) was intended to eliminate the annoying of a defendant by being summoned into court in successive actions and then, if no settlement is arrived at, requiring him to permit the action to be dismissed and another one commenced at leisure.”). Defendants’ Rule 11 motions are therefore denied.

The court also denied a motion for Section 1927 sanctions because there was no multiplication of the proceedings. The court noted that such a motion could be brought if the Plaintiffs refiled their complaint.

via Patel v. COLE SCHOTZ, PC, Dist. Court, D. New Jersey 2018 – Google Scholar