Category: False Statement

Rule 11 Motion Denied As Premature


The facts in D’Ottavio v. Slack Technologies, 18-cv-9082 (D. New Jersey April 15, 2019) are disputed. The plaintiff sued alleging that the Defendant’s website sent him unsolicited text messages. Defendant denied these allegations and filed a counterclaim which alleged that plaintiff deliberately caused the text messages to be sent to himself. Plaintiff denied the allegations in the counterclaim. Defendant then moved for Rule 11 sanctions arguing that the denials violated Rule 11 and were without factual basis.

Because no discovery had been taken and the facts were in dispute, the court denied the Rule 11 sanctions motion. The reasoingin:

Plaintiff’s counsel objects to Slack’s arguments. Counsel relates that on July 26, 2018, the parties participated in a Rule 16 initial conference before the Magistrate Judge, and at that conference, Slack’s counsel advised the Magistrate Judge that it wished to take a forensic examination of Plaintiff’s electronic devices to back up its claims that Plaintiff used these devices to repeatedly send himself text messages using Slack’s messaging platform. The Magistrate Judge then ordered the parties to confer as to a forensic examination protocol. The parties submitted a stipulation agreeing to the protocol which was then so-ordered by the magistrate judge on August 13, 2018. The Court then ordered that Slack was to conduct the forensic examination of Plaintiff’s computers and cell phones by no later than September 10, 2018. To date, however, counsel states that Slack has not taken a forensic examination of Plaintiff’s electronic devices.

Plaintiff’s counsel argues that Slack’s motion for sanctions must be denied because it lacks any proof that Plaintiff actually did what Slack says he did. Counsel argues that Slack is seeking sanctions against counsel and Plaintiff for filing an answer that has not been found to be false or frivolous. Counsel contends that Slack could have obtained the forensic examination it demanded, but instead when Plaintiff filed a denial to the counterclaims, Slack tried to bully Plaintiff into withdrawing his response by threatening him and his counsel with sanctions….

In support of its motion for sanctions, Slack takes the position that its proof as to Plaintiff’s conduct — and the conduct of Plaintiff’s counsel — is unrebutted and unrebuttable. The Court cannot credit Slack’s position at this stage in the case.

Slack has asserted counterclaims against Plaintiff alleging that Plaintiff fraudulently manufactured his TCPA claim by sending thousands of text messages to himself. Plaintiff has filed an answer to Slack’s counterclaims denying that allegation. Slack’s claims are pending, still in dispute, and they will proceed to discovery. Slack may view Plaintiff’s denials to be disingenuous and unsupported by the facts, but the procedural posture of the case precludes the Court from applying what is essentially a summary judgment standard to Slack’s motion for sanctions, which, if Slack’s position were credited, would ultimately result in a judgment in Slack’s favor prior to discovery.[5]

Consequently, the Court will deny without prejudice Slack’s motion for sanctions, reserving Slack’s right to reassert its motion at the appropriate time after discovery on its counterclaims.

In sum, the sanctions motion was premature. Should defendant prove that the answer to the counterclaim contained false denials, defendant can reassert the sanctions motion.

Edward X. Clinton, Jr.

 

Lawyer Burned For False Statements In Client’s Affidavit


This is a case where a lawyer was sanctioned pursuant to Rule 11 for false statements in his client’s affidavit. The affidavit was introduced in an effort to fight a change of venue motion. The court, after hearing, concluded that the client’s false statement was the fault of his lawyer and awarded sanctions.  In SyncPoint Imaging, LLC v. Nintendo of America, Inc. 15-cv-00247 pending in the Eastern District of Texas, the parties apparently became embroiled in a venue dispute. Plaintiff was represented by Joseph Pia. The client representative was Karl Hansen.

The court found that in resisting Nintendo’s venue motion, the plaintiff included false statements in an affidavit. The court entered a rule to show cause and held a hearing on the rule. The interesting issue is that the court absolved the client, who signed the false affidavit, from liability. The court reasoned that the client did not understand what he signed. The reasoning:

Here, representations about the alleged SyncPoint consultants were made in Paragraph 61 of Hansen’s declaration, which was submitted in response to Nintendo’s venue motion. Nintendo’s venue motion was brought under 28 U.S.C. § 1404(a). Since “the availability of compulsory process to secure the attendance of witnesses” is a key factor in a § 1404(a) analysis, see In re Volkswagen of Am., Inc., 545 F.3d 304, 315 (5th Cir. 2008), the discussion of four potential witnesses — the SyncPoint consultants — in Paragraph 61 is a critical factual allegation.

Paragraph 61 is also a factual allegation that indisputably lacks evidentiary support. Two of the four nominal consultants had already declined to be involved with SyncPoint by the time the declaration was signed. Of the two remaining consultants, one had at most visited the SyncPoint office. Even if Dr. Thomas, Buechele, Vance, and Bland all agreed to visit SyncPoint’s office, Hansen’s email to Dr. Thomas indicates that the only “business” the alleged consultants were asked to conduct was picking up mail and making sure the server was still running. The declaration clearly implies that these four consultants conducted the business of SyncPoint and should thus be considered as potential witnesses. The email to Dr. Thomas is particularly concerning, as it makes clear that Hansen’s request was made solely to support venue, not to conduct SyncPoint’s business.

The Court finds that this email is necessarily the fault of Hansen’s attorney — Pia — not Hansen. Hansen’s email reflects what his lawyers must have told him to provide, since Hansen candidly admitted at the September 5, 2018 show cause hearing that he “didn’t know what matters in a venue.” Hr’g Tr. 21:16-23, [Dkt. No. 369].

Similarly, Paragraph 61 is also attributable to counsel. Pia admitted that he did not review Hansen’s declaration and never verified whether Dr. Thomas, Buechele, Vance, or Bland were truly SyncPoint consultants. This is especially troubling given that Pia had sufficient time to conduct a prefiling investigation into relatively straightforward factual contentions. In the month Pia took respond to Nintendo’s venue motion, Pia never investigated these venue facts. In fact, nearly three years later, the alleged consultants are still not known to Pia. While Pia advised the Court that he relied on a contract attorney to draft SyncPoint’s response to Nintendo’s venue motion, there has been no showing that the contract attorney was responsible for the misrepresentations in Paragraph 61, which was, in any event, made under Pia’s signature.[2] Thus, there is simply no excuse for Pia’s failure to make a reasonable inquiry into these critical factual representations. Pia violated Rule 11.

As to Hansen, however, the Court finds that he is not jointly responsible for the false allegations in this matter. Rule 11(c)(1) authorizes the Court to impose sanctions on Pia, as the violating attorney, and on Hansen, as the party potentially responsible for the violation. A client is responsible for a Rule 11 violation if the client “know[s] that the filing and signing [of a pleading, motion, or other paper] is wrongful.” In re Motion for Sanctions Against Meyers, No. 4:12-MC-015-A, 2014 WL 1494099, at *8 (N.D. Tex. Apr. 16, 2014), supplemented, No. 4:12-MC-015-A, 2014 WL 1910621 (N.D. Tex. May 9, 2014) (citing Calloway v. Marvel Entm’t Grp., a Div. of Cadence Indus. Corp., 854 F.2d 1452, 1475 (2d Cir.1988) rev’d in part sub nom Pavelic & LeFlore v. Marvel Entm’t Grp., 493 U.S. 120 (1989)). In appropriate instances, the Fifth Circuit has held both the attorney and client jointly and severally liable. See Jennings v. Joshua Indep. School Dist., 948 F.2d 194, 196 (5th Cir. 1991). Here, Hansen’s testimony makes clear that he was not aware of the importance of Paragraph 61 and the need for precision in its wording. Therefore, sanctions against Hansen are inappropriate.

The court concluded that plaintiff’s attorney, Joseph Pia, was responsible for the erroneous statements in the affidavit.

Because Pia violated Rule 11(b)(3), the Court now examines what sanctions are appropriate. See Jennings, 948 F.2d at 197 (citing Business Guides, Inc. v. Chromatic Commc’ns Ent., Inc., 498 U.S. 533, 541-47 (1991)). Sanctions may be imposed either on motion or sua sponte. On its own, the Court may order an attorney, law firm, or party to show cause why such conduct specifically described in the order has not violated Rule 11(b). Fed. R. Civ. P. 11(c)(3).[3] If the Court determines that Rule 11(b) has been violated, the Court may impose an appropriate sanction on the attorney, law firm, or party responsible for the violation. Fed. R. Civ. P. 11(c)(1). The central purpose of court-imposed sanctions is to “deter baseless filings in district court.” Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 393 (1990).

Here, Pia’s admitted lack of diligence in investigating critical factual contentions represented to this Court is simply inexcusable. This matter has already concluded pursuant to the dismissal order, see [Dkt. No. 279]; [Dkt. No. 283], and there was no Rule 11 motion for sanctions. The Court is thus limited to imposing a nonmonetary sanction or a monetary penalty payable to the court. This Memorandum Opinion and Order shall serve as a public reprimand to Joseph G. Pia and an Order to him to submit a $1,000 fine payable to the Clerk of this Court within 30 days.

Comment: this decision is unusual because it puts the blame for a false statement in an affidavit squarely on the shoulders of the lawyer, not the client who signed the affidavit. This decision is an important reminder to be careful and prudent in practicing law. Don’t let a client say something that is not true – to the best of your ability.

Ed Clinton, Jr.

The Clinton Law Firm, LLC

A link to the decision is posted here. SyncPoint Imaging, LLC v. Nintendo of America, Inc.

Court Awards 9,000,000 for filing and refusing to drop hundreds of frivolous lawsuits


This is a decision awarding in excess of $9,000,000 in sanctions against two law firms that filed 1250 frivolous “Engle Progeny” product liability actions. Engle Progeny cases are injury lawsuits against tobacco companies. The sanctions were awarded pursuant to Rule 11 and 28 U.S.C. Section 1927.

The first award was of Rule 11 sanctions for 588 complaints filed for litigants who were deceased. The explanation:

The complaints filed in the 588 Actions were objectively frivolous. As the Eleventh Circuit observed, “any lawyer worth his salt knows [that] a dead person cannot maintain a personal injury claim.” In re Engle Cases, 767 F.3d at 1086-87. The complaints listing the 588 Pre-Deceased Plaintiffs alleged only a personal injury action— using the present or future tense in referring to the “Smoking Plaintiffs,” and asserting that they “have and will suffer” as a result of their disease. (E.g., Edwin Moody et al. v. R.J. Reynolds Tobacco Co., Case No. 3:08-cv-155-J-32HTS, Doc. 2, Complaint at ¶ 1.10). Nowhere did the complaints suggest that the smoker had died, and nowhere did they assert an alternative wrongful death or survival action. To the contrary, the concluding allegation in each complaint stated that each plaintiff’s injuries “are permanent and continuing and as such will be suffered into the future.” (E.g., id. at ¶ 11.1). These allegations were demonstrably false.

The complaints in the 588 Actions were also frivolous because Counsel lacked authorization to file or maintain them. “Perhaps the most basic factual contentions implicit in a complaint are that the plaintiff consents to the filing of suit and prays for the relief requested.” In re Deep Vein Thrombosis, No. MDL-04-1606 VRW, 2008 WL 2568269, at *1 (N.D. Cal. Jun. 24, 2008). The dead plaintiffs obviously could not have authorized Counsel to bring lawsuits on their behalf. Nor did Counsel have authorization from the Pre-Deceased Plaintiffs’ estates or their survivors because Counsel pled the complaints as personal injury actions on behalf of the Pre-Deceased Plaintiffs themselves. Therefore, “the most basic factual contention implicit” in the 588 personal injury complaints, i.e., that the plaintiff authorized and prayed for the relief requested, was untrue.

The court also awarded Section 1927 Sanctions for claims from nonsmokers and plaintiffs who did not live in Florida.

In the cases discussed below, the Court determines that Counsel multiplied the proceedings unreasonably and vexatiously by maintaining frivolous complaints in bad faith. Between 2011 and 2013, the Court learned that Counsel had filed dozens of Frivolous Actions (in addition to the 588 Actions). Counsel brought these Frivolous Actions without authorization or on behalf of non-smokers, people who never lived in Florida, and plaintiffs with previously adjudicated claims. The fatal defects in these actions surfaced not through voluntary disclosures from Counsel, but through alerts from Defendants, the hard work of the Temporary Special Master, and from the returned Court Questionnaires. Before the Court Questionnaire process, Counsel vigorously opposed any suggestion that someone should interview or question the plaintiffs. Counsel’s intransigence forced the Court to order Wilner to mail the Court Questionnaires to 2,661 plaintiffs and to have the Temporary Special Master review the results. The questionnaire process was time-consuming but necessary. It accomplished what Counsel would not: the identification of hundreds of frivolous cases, and the segregation of viable from non-viable claims.

In some of these cases, Counsel knew or must have known that a fundamental defect existed. As to others, Counsel acted with reckless indifference. Counsel insisted on maintaining cases without having bothered to obtain the plaintiff’s authorization, without having any basis for asserting that the plaintiff was even a smoker, and without knowing whether the alleged smoker ever lived in Florida (as required by Engle III). Moreover, Counsel’s resistance to the questionnaires and false assurances appeared calculated to prevent the discovery of such frivolous cases. At the very least, counsel’s behavior “grossly deviate[d] from reasonable conduct.” Amlong, 500 F.3d at 1240.

Counsel’s actions demonstrated a pattern of obfuscation and deception, which frustrated the Court’s efforts to rid the Engle Docket of frivolous cases and to promptly and fairly resolve the cases that had merit. Counsel’s maintenance of frivolous suits forced the Court to expend valuable resources—in terms of time, money, and manpower—to cope with the swollen Engle Docket. It also delayed the resolution of meritorious claims. As a result, sanctions are appropriate for the “excess costs” and “expenses . . . incurred because of [counsel’s] conduct.” 28 U.S.C. § 1927.

The court awarded a total of $9,164,404.12 against the two law firms that maintained the frivolous lawsuits.

Source: IN RE ENGLE CASES, Dist. Court, MD Florida 2017 – Google Scholar

Federal Courts Can Award Sanctions Sua Sponte


This very short opinion informs a lawyer that he may be sanctioned under Rule 11 because he allegedly made a false statement of fact to a district judge. The opinion does not contain any findings of fact, but it suggests that the attorney retain counsel for the sanctions hearing.

Source: SEDILLO ELECTRIC v. COLORADO CASUALTY INSURANCE COMPANY, Dist. Court, D. New Mexico 2017 – Google Scholar