Category: Rule 11 Sanctions

Can you file a Rule 11 Motion After Judgment Is Entered?


Rule 11 contains a number of procedural requirements. You must serve the motion for sanctions 21 days before you file it to give the other party an opportunity to withdraw the pleading. One question that has received different answers is whether ot not you can file a motion for sanctions after final judgment is entered.

The case, Blue Heron Commercial Group, Inc. v. Lee Webber, 18-cv-467 (MD Florida June 20, 2019) holds that the motion for sanctions must be filed before final judgment is entered. It is noteworthy that the defendants obtained summary judgment against Blue Heron before they filed the sanctions motion.

As to the timeliness of a Rule 11 motion, the Eleventh Circuit has analyzed Rule 9011 of the Federal Rules of Bankruptcy Procedure, which is “substantially identical” to Rule 11, and “agree[d] with the Second, Fourth, and Sixth Circuits that the service and filing of a motion for sanctions must occur prior to final judgment or judicial rejection of the offending motion.” In re Walker, 532 F.3d 1304, 1309 (11th Cir. 2008)(emphasis added)(quotation and citation omitted). The Eleventh Circuit in Walker thus affirmed the bankruptcy court’s denial of a motion for sanctions because the “motion for sanctions was filed after the offending motion had been denied.” Id.

Here, although it is undisputed that Defendants complied with Rule 11’s safe harbor provision, the Court finds that Defendants’ Motion for Sanctions is due to be denied because Defendants filed the motion after the Court granted summary judgment, entered final judgment, and disposed of Blue Heron’s alleged frivolous pleading. Id. Defendants, however, contend that Walker is inapplicable under the instant facts because, unlike this case, the movant in Walker sought sanctions prior to the conclusion of the 21-day safe harbor provision. The Court does not find that distinction to be determinative in this case because, although the court discussed the safe harbor provision in its analysis, the Eleventh Circuit in Walker did not ultimately base its ruling on the movant’s failure to satisfy the safe harbor provision. Walker, 532 F.3d at 1309. Rather, as discussed above, the court affirmed the bankruptcy court’s denial of sanctions because the “motion for sanctions was filed after the offending motion had been denied.” Id.

The Seventh Circuit follows a different rule, allowing a motion for sanctions to be filed after judgment.

The Blue Heron court also declined to award sanctions under its inherent powers on the ground that the arguments raised by Blue Heron were not frivolous.

The issue as to whether you must file a sanctions motion before judgment is entered is an unsettled question of law. The rules in one circuit may differ from the rules in another circuit. Someday the Supreme Court may resolve this conflict.

Ed Clinton, Jr.

http://www.clintonlaw.net

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.

 

Fifth Circuit Upholds Denial of Rule 11 Sanctions – despite false allegations in Complaint


The case is titled, Mr. Mudbug Incorporated v. Bloomin’ Brands, Inc., (5th Cir. 18-30626). Mr. Mudbug sued Bloomin and its claims were dismissed. The underlying dispute was a claim by Mr. Mudbug that Bloomin had breached the parties’ food supply contract. The district court dismissed the claims. Bloomin then moved for Rule 11 sanctions on the ground that some of the allegations in the complaint were false and that the lawyer who signed the complaint had not done a sufficient investigation of the matter. The district court denied the motion for sanctions and the Fifth Circuit affirmed. Its reasoning:

BBI’s Rule 11 motion was based on the theory that some factual assertions in MMI’s complaint had no evidentiary support and were wholly false. The district court did not definitively determine if MMI had violated Rule 11. Instead, it denied the motion because even if MMI had violated Rule 11, it thought that the dismissal of MMI’s claims was already sufficient to deter future misconduct. BBI now argues that dismissing frivolous claims with no evidentiary support—a result that is already accomplished on the merits—is not an adequate deterrent and therefore does not fulfill the purposes of Rule 11.

BBI’s position has some logic to it. But we cannot say that the district court abused its discretion by denying the Rule 11 motion on the grounds that dismissal was a sufficient sanction. While we have noted that dismissal is “better grounded, not on misconduct [under Rule 11], but on the merits under Rules 12, 41, 55, and 56,” we have also held in the same case that “district courts may theoretically still dismiss baseless claims or defenses as sanctions” under Rule 11. Thomas v. Capital Sec. Servs., Inc., 836 F.2d 866, 878 (5th Cir. 1988) (en banc). As we have never outlawed dismissal as an appropriate sanction under Rule 11, the district court’s denial of BBI’s Rule 11 motion was not based on an erroneous view of the law and was consequently not an abuse of discretion. BBI may feel that further sanctions are justified, but the district court found otherwise. Its decision is entitled to deference.

Federal Court Sanctions Attorney For Time-Barred Lawsuit


The case is Doe v. Albuquerque Public Schools, 18 cv 85 (D. New Mexico April 3, 2019). Plaintiff claimed that she was raped by one of the defendants when she was a student. The rape claim was alleged under 42 USC Section 1983. Unfortunately for the plaintiff the her claims were time-barred and the court entered judgment for the defendants.

Because the Defendant did not comply with the Rule 11 safe harbor (giving 21 days to the other side to withdraw the pleading), the Rule 11 motion was denied.

The court, however, elected to award sections pursuant to 28 U.S.C. §1927 because it should have been clear to the lawyer for plaintiff that the claims were time-barred. The court explained its ruling in this passage of the opinion:

The Court agrees with Defendant’s counsel that Plaintiff’s counsel failed to stop, think and investigate before filing the complaint, and the Court finds that sanctions under 28 U.S.C. §1927 are appropriate in order to deter such a cavalier approach to litigation. The Court is guided in particular by the heinous nature of the alleged acts, and acknowledges the damaging effect such acts can have on victims in general.

The complaint in this case alleges horrendous acts of sexual abuse perpetrated by Defendant upon the Plaintiff which occurred approximately twenty years ago but allegedly were only discovered by Plaintiff in 2014 through therapy. While the Court is mindful of the damage that can be done to victims of sexual abuse, the Court also acknowledges that there are occasions when defendants are falsely accused in these types of cases. Under these circumstances, Plaintiff’s counsel was obliged to exercise vigilance and thoroughness before filing a complaint of this nature, but instead, counsel forged ahead without caution or care and filed a complaint on behalf of an anonymous Plaintiff accusing Defendant Beems of terrible conduct that supposedly happened many years ago but surfaced for the first time in 2018 when the complaint was filed as a public document.

In bringing these federal claims and in failing to adequately examine the claims before filing the case, counsel for Plaintiff has shown an indifference to the law that saddled the opposing party, Mr. Beems, with unproven allegations that may follow him for years. This is not to say that Plaintiff’s claims were frivolous, but they do not need to be frivolous to warrant sanctions under §1927. See Mark Ind., Ltd. v. Sea Captain’s Choice, Inc., 50 F.3d at 732. Unmindful of the possible consequences, Plaintiff’s counsel proceeded to include federal claims in the complaint without seriously examining them to see whether they were viable even on threshold timeliness issues. In doing so and in continuing to pursue these claims, Plaintiff’s counsel’s zealousness in representing his client gave way to recklessness, which in turn led to conduct that is proscribed by §1927.

Ed Clinton, Jr.

The Clinton Law Firm

Sanctions Awarded For Frivolous Counterclaim

In Patent Infringement Lawsuit, Sanctions Claims Fall Flat


The case is Dynamic Applet Technologies, LLC v. Mattress Firm, Inc. 17-cv-860 (E.D. Texas March 26, 2019).  Dynamic sued Mattress Firm for patent infringement. Mattress Firm filed counterclaims. Both sides moved for sanctions. Mattress Firm argued that Dynamic’s patent infringement claims were frivolous and brought in bad faith and merited Rule 11 sanctions. Dynamic moved for sanctions against Mattress Firm.

The Court, noting that it had not issued any dispositive rulings on any motions, denied both sanctions motions. The court found that there were non-frivolous claims of patent infringement asserted in the complaint. The explanation follows:

With respect to Defendants’ Motion for Sanctions (Dkt. 90) and Plaintiff’s Responsive Motion for Sanctions (Dkt. 96), there is nothing before the Court to indicate that sanctions under Federal Rule of Civil Procedure 11 are justified here. Rule 11 is inappropriate if there is a good faith basis to assert even a single claim of a patent. View Eng’g, Inc. v. Robotic Vision Sys., Inc., 208 F.3d 981, 986 (Fed. Cir. 2000) (“Rule 11 . . . must be interpreted to require the law firm to . . . apply the claims of each and every patent that is being brought into the lawsuit to an accused device and conclude that there is a reasonable basis for a finding of infringement of at least one claim of each patent so asserted.”). The Court finds that Plaintiff’s overall pre-suit inquiry was reasonable and its conduct does not cross the Rule 11 sanctions threshold whereby “no reasonable litigant could believe it would succeed” on the merits. Raylon, LLC v. Complus Data Innovations, Inc., 700 F.3d 1361, 1368 (Fed. Cir.2012)iLor, LLC v. Google, Inc., 631 F.3d 1372, 1378 (Fed. Cir. 2011). Applying the same standard to Plaintiff’s Responsive Motion for Sanctions (Dkt. 96), the Court finds that Defendants have likewise not violated Rule 11. The Court is not charged with determining which party’s position is correct, but rather, is charged with determining whether a motion crosses the threshold of frivolousness such that no reasonable litigant could believe it would succeed. See Raylon v. Complus Data, 700 F.3d at 1368. Accordingly, no sanctions will be awarded to either party at this time. If appropriate, the parties may refile a motion for sanctions after the Court rules on the pending dispositive motions.

In other words, one party would have to obtain dismissal of one of the other party’s claims before it could move for sanctions. The sanctions motions here may prove meritorious at a later date if the court actually finds that one of the claims is frivolous or unfounded.

Ed Clinton, Jr.

The Clinton Law Firm