Category: False Allegations

Patient’s Truth in Lending Claim Against Surgeon Was Frivolous – Rule 11 Sanctions Awarded


The plaintiff entered into an agreement with the defendant for one of its doctors to repair a torn ACL in his knee. The agreement provided that the plaintiff would pay installment payments until the balance due was satisfied.

After the surgery, the plaintiff filed a Truth in Lending claim against the Defendant surgery practice. The Court found several bases under which Rule 11 sanctions were appropriate. First, the court noted that the plaintiff alleged that he paid some of the installment payments from his bank account. This allegation was false. The court notes:

As discussed in more detail below, Plaintiff’s counsel had no grounds to make these allegations, when simple investigation would have revealed that Defendant never received any further payment from Plaintiff because Plaintiff did not have sufficient funds in his bank account. Nonetheless, Plaintiff’s counsel brought Plaintiff’s claims not only on behalf of Plaintiff, but also alleged that Plaintiff could serve as an adequate representative of “a class of similarly-situated individuals” who suffered supposed injuries because “Defendant used these very same tactics on tens of other consumers . . . .” (Id. ¶¶ 5, 44).

The court held telephone conference with the lawyers and the plaintiff’s lawyer made further admissions detrimental to the case. The court found these admissions revealed that the case had no merit and that plaintiff’s counsel had not done any investigation to determine whether TILA applied.

Again the court explains:

These statements by Plaintiff’s counsel: (1) contradicted the factual allegations that Plaintiff had made further payments; (2) confirmed the allegation in paragraph 22 of the Complaint, cited above, that Plaintiff did not provide “written authorization” for any further payment; and (3) supports the Court’s conclusion that there was no “written agreement,” and that the arrangement between Plaintiff and Defendant was not an “extension of credit,” as required by law.

The statements by Plaintiff’s counsel above indicated that counsel may have secured Plaintiff’s financial records of his financial transactions with the Defendant, as had been ordered on October 28, 2016. Nonetheless, as further discussed below, later events showed that Plaintiff’s counsel had not done this.

On December 22, 2016, the Court dismissed the Complaint with prejudice[5] and sua sponte instituted Rule 11 proceedings to determine whether sanctions should be imposed against Plaintiff and/or his counsel. (ECF 23). In its Order, the Court stated its conclusion that “Plaintiff’s counsel filed this lawsuit without any regard to the requirements of the statute or the implementing regulations . . . [T]he lack of a finance charge or written agreement precludes any claims under TILA, as a matter of law.” 2016 WL 7411527.

Even at the time of the sanctions hearing, plaintiff’s counsel had not obtained the financial records necessary to prove up the claim.

The court found that plaintiff’s counsel had not done any investigation of the claim and concluded:

The Court finds that Plaintiff’s counsel violated Rule 11. There was no reasonable or suitable investigation by Plaintiff’s counsel as required under the standards of Rule 11. Under statutory language, regulations, and precedential opinions of the Third Circuit and other courts, there was no reasonable or legal basis to allege a “written agreement” or “extension of credit” under TILA and Regulation Z, individually or as a class action, particularly if a reasonable investigation had been conducted. Several complaint allegations were false, because of the failure to investigate.

Comment: this is a classic sanctions case in which the plaintiff’s attorney failed to conduct any investigation to determine if the claims had merit.

Source: WOLFINGTON v. RECONSTRUCTIVE ORTHOPAEDIC ASSOCIATES II, PC, Dist. Court, ED Pennsylvania 2017 – Google Scholar

District Court Awards Google and YouTube Sanctions For Frivolous Allegations


This is apparently an antitrust case against Google and YouTube, a subsidiary of Google. The plaintiff also included other allegations against the two defendants that the court deemed to be frivolous. Plaintiff alleged that the defendants conspire to “game” the view counts of certain videos posted on YouTube. There were also certain allegations that the defendants wrongfully remove “independent” music videos.

The court concluded that, although portions of the complaint stated a claim, these particular allegations violated Rule 11 and awarded sanctions. The court explained:

Defendants take issue with paragraphs 19(a), 22-24, 30, 38, 44, 91, 92, 103, 109 and 110 of Plaintiffs’ 3AC. Together, these paragraphs alleged that Defendants and their named executives agreed to permit certain record labels to game the view count without enforcement. First, Defendants argue that Plaintiffs have no evidentiary basis for this theory. Plaintiffs respond that significant circumstantial evidence supported their theory. For example, the 3AC described very high view counts for certain videos, and noted that Defendants would have benefitted from such a conspiracy because they shared in advertising revenue. The Court concludes that it was baseless to allege that Defendants conspired to game view counts—the circumstantial evidence does not provide a basis for such an allegation. These allegations violate Rule 11.

Second, Defendants argue that, contrary to Plaintiffs’ allegations, YouTube has taken action against the alleged conspirator record labels. See 3AC ¶ 22 (alleging that “G-Y and the G-Y Executives refrain from 4H TOS enforcement action against the Major Labels and the other Conspiring Entities”). Publicly-available information demonstrates that Plaintiffs’ counsel could not have undertaken an objectively reasonable inquiry before presenting this allegation. For example, Defendants submit an online news article entitled: “YouTube cancels billions of music industry video views after finding that they were fake or `dead,'” discussing a video by Rihanna, a Universal artist. Haas Dec. Ex. 5. Huffington Post published a similar story the following day. Id. Ex. 6. Paragraph 22 violates Rule 11.

Third, Defendants argue that Plaintiffs have insufficient factual support for their allegations regarding Google and YouTube executives’ actions. Plaintiffs make two arguments in response. They argue that David Drummond’s inaction following Plaintiffs’ counsel’s May 12, 2014 letter to him outlining the sequence of events giving rise to their legal claims could be construed as evidence of his and others’ prior awareness of the conspiracy. See Docket No. 101-9. The lack of response to this letter does not serve as a basis for Plaintiffs’ specific claims about Defendants’ executives’ participation in and knowledge of a view count gaming conspiracy. Next, Plaintiffs argue that, if there were a conspiracy, it must have been at the direction of senior management. However, as explained above, there was no basis to allege the view count gaming conspiracy. For these reasons, the allegations pertaining to the actions and knowledge of particular Google and YouTube executives violate Rule 11.

The court also discussed other examples of false allegations in the complaint. The court then awarded the defendants their costs and legal fees in bringing the motion for sanctions. Obviously, when battling a powerful defendant such as Google, which has access to excellent lawyers and has first class discovery technology tools available to it, a lawyer must be exceedingly careful to make sure that allegations are well-grounded in fact before they are pleaded. These plaintiffs lawyers apparently failed to do that and were sanctioned as a result.

Source: SONG FI, INC. v. GOOGLE, INC., Dist. Court, ND California 2016 – Google Scholar