Category: Sanctions For Frivolous Lawsuits

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

Federal Attack on Foreclosure Judgment Merits Rule 11 Sanctions 


A district judge in the Northern District of Illinois has awarded sanctions to several banks who were sued in a federal case arising out of a state court foreclosure judgment. Plaintiff lost the state case and the state court entered a judgment of foreclosure in favor of banks who held mortgage liens on the property.

Because the state court issued a final judgment adverse to plaintiffs, plaintiffs’ counsel violated Rule 11 by filing a federal action to stop the foreclosure. Plaintiffs should have known their legal position was frivolous because federal courts in such cases, abstain from proceeding under the Rooker-Feldman doctrine. Plaintiffs’ counsel was sanctioned in the amount of $20,000.

Source: MOMO ENTERPRISES, LLC v. BANCO POPULAR OF NORTH AMERICA, Dist. Court, ND Illinois 2017 – Google Scholar

Court Denies Poorly Argued Sanctions Motion


The case was filed in the New Jersey state courts and was removed to federal court. The district court granted a motion to remand the case back to the New Jersey courts. Even after remand, the Defendants sought sanctions for the assertion of what they believed were frivolous claims. The Defendant did not identify any particular pleadings that were filed in federal court that were frivolous. Therefore, it denied the motion.

The explanation: “Defendant does not point to a particular federal filing that forms the basis of its claims for sanctions. Instead, it refers to Plaintiffs’ state court filings, see Def. Sanctions Br. at 7 (referring to Plaintiffs’ arguments opposing Defendant’s motion to dismiss in state court), as well as representations made during discovery, see id.at 8 (referring to statements from Plaintiffs’ depositions). Defendant also highlights Plaintiffs'”refusal to withdraw these claims.” See id. at 8. However, the complained of conduct is not sufficient to demonstrate that Plaintiffs affirmatively advocated their positions in federal court. Since any doubt is resolved in favor of Plaintiffs, and since Defendant did not point to an affirmative pleading or other filing in federal court on which sanctions should be based, the Court will not impose sanctions on Plaintiffs. Therefore, Defendant’s motion for sanctions is denied.”

If you are seeking sanctions, be as precise as possible as to what conduct was sanctionable. Otherwise your motion may meet the same fate that this one did.

Source: MAKWANA v. MEDCO HEALTH SERVICES, INC., Dist. Court, D. New Jersey 2017 – Google Scholar

Sanctions Denied Where Party Conducted A Pre-Filing Investigation


This was a Fair Debt Collection Practices Act case in which the Plaintiff sued three defendants. Ultimately, the defendants all obtained summary judgment.

One defendant filed a motion for Rule 11 sanctions. She argued that she had sold her interest in the company defendant and was not a proper defendant. She claimed that once the plaintiff was informed of that fact, he had a duty to drop her from the case.

The district court did not agree. First, it concluded that the party, Tauriac, did not meet the requirements of the Rule 11 safe harbor in that she failed to give 21 days notice before seeking sanctions. Second, the District Court concluded that the plaintiff had done a sufficient pre-filing investigation to warrant the inclusion of Tauriac in the complaint. The plaintiff had obtained documentation that appeared to contradict Tauriac’s claims. The court denied the sanctions motion.

The opinion is thoughtful and thorough and discusses all the factors to determine if sanctions were appropriate.

Source: Seamans v. HOFFMAN, SWARTZ AND ASSOCIATES, INC., Dist. Court, ND Illinois 2017 – Google Scholar

Failure to Promptly File a Motion to Compel Waives Discovery Issue


This is a case where a party waited until after discovery closed to file a motion to compel. The court denied the motion on the basis of the unreasonable delay. It also denied a Rule 37 sanctions motion on the basis that the party did not timely move to compel. The lesson is obvious: where there are discovery disputes, you must get moving.

Unreasonable Delay:

First, Plaintiffs’ motion to compel and for sanctions is untimely. Coleman v. Starbucks, No. 6:14-cv-527-Orl-22TBS, 2015 WL 2449585, at *8 (M.D. Fla. May 22, 2015) (“While there is no local or federal rule setting a precise deadline for the filing of a motion to compel, it is clear that any such motion must be filed within a `reasonable’ time period.”) (citation omitted); Wane v. Loan Corp., 926 F. Supp. 2d 1312, 1319 (M.D. Fla. 2013) (denying Rule 37 sanctions of striking the affidavit partly because the plaintiffs did not file a motion to compel when they realized the information was missing). Here, Plaintiffs received Defendants’ responses to the First Request for Production on February 10, 2016 and the McCarthy affidavit was dated September 22, 2016, yet filed the present motion nearly one year later, and after the discovery deadline passed. Plaintiffs do not explain nor acknowledge the delay in their filing.

By virtue of failing to address a discovery violation when the movant first learns of the issue, a party risks waiving the issue. United States v. Stinson, No. 6:14-cv-1534-Orl-22TBS, 2016 WL 8488241, at *5 (M.D. Fla. Nov. 22, 2016); see also Coleman, 2015 WL 2449585, at *8 (“[W]aiver principles apply in the discovery context just as they do in other aspects of litigation.”) (citations omitted). “The court’s decision whether or not to find waiver is discretionary.” Stinson, 2016 WL 8488241, at *5 (citing Woods v. DeAngelo Marine Exhaust, Inc., 692 F.3d 1272, 1279 (Fed. Cir. 2012)). In considering the timeliness of a motion to compel or for sanctions, the Court considers “such factors as when the movant learned of the discovery violation, how long he waited before bringing it to the court’s attention, and whether discovery has been completed.” Id. at *5 (citing Long v. Howard Univ.,561 F. Supp. 2d 85, 91 (D.D.C. 2008)). Here, Plaintiffs received Defendants’ discovery responses on February 10, 2016, waited one year to file the instant motion, and filed the motion after the discovery deadline. Similarly, Plaintiffs received Defendants’ response related to their obligation under the Court’s FLSA Scheduling on October 21, 2015, yet waited over one year to file the instant motion.

Rule 37 Sanctions Were Also Denied

The court denied Rule 37 sanctions because no motion to compel was filed during the discovery period:

Here, Plaintiffs did not file a motion to compel prior to filing the instant motion. As noted, the entirety of Plaintiffs’ argument is dedicated to seeking sanctions, primarily the sanction of default judgment. See Doc. 121. To the extent Plaintiffs seek sanctions for Defendants’ deficient responses to Plaintiffs’ First Request for Production, sanctions would be improper in light of Plaintiffs’ failure to precede their request with a motion to compel. Indeed, Plaintiffs did not confer with Defendants or place Defendants on notice of their alleged deficient responses until they emailed a copy of the instant motion to Defendants’ counsel on February 9, 2017. Doc. 126-5.

In imposing sanctions under Rule 37, the court may consider “the unsuitability of another remedy, the intransigence of a party, and the absence of an excuse.” Watkis v. Payless ShoeSource, Inc., 174 F.R.D. 113, 116 (M.D. Fla. 1997). The Eleventh Circuit held, however, that “the severe sanction of a dismissal or default judgment is appropriate only as a last resort, when less drastic sanctions would not ensure compliance with the court’s orders.” Malautea v. Suzuki Motor Co., Ltd.,987 F.2d 1536, 1542 (11th Cir. 1993) (citations omitted). Hence, “[v]iolation of a discovery order caused by simple negligence, misunderstanding, or inability to comply will not justify a Rule 37 default judgment or dismissal.” Id. (citation omitted). In other words, “[d]ismissal will not be upheld if a party’s failure to comply is due to inability rather than willfulness, bad faith or disregard of responsibilities.” Aztec Steel Co. v. Florida Steel Corp., 691 F.2d 480, 481 (11th Cir. 1982) (citation omitted). “When a party demonstrates a flagrant disregard for the court and the discovery process, however, dismissal is not an abuse of discretion.” Id. (citation omitted).

To the extent Plaintiffs seek sanctions on Defendants’ failure to comply with the Court’s FLSA Scheduling Order, the Court finds sanctions are unwarranted.

Source: Goers v. LA ENTERTAINMENT GROUP, INC., Dist. Court, MD Florida 2017 – Google Scholar

Another Reminder That A Request For Sanctions Must Be Filed As its Own Motion


You cannot include a sanctions request in your brief on another issue. You have to file and serve a separate motion. That gives the other side time to comply with the safe harbor (21 days to withdraw the challenged pleading) and requires you to focus on relevant issues in your brief.

Source: GINGILOSKI v. COMMERCIAL RECOVERY SERVICES, Dist. Court, ED Michigan 2017 – Google Scholar

Lawyer Had A Factual Basis For His Arguments – Sanctions Denied


Plaintiffs won a verdict of $544,276.14 against a real estate promoter. Plaintiffs alleged that they were fraudulently induced to enter into a transaction. After the verdict, they sought sanctions against Defendants’ counsel, accusing him of making “blatant[ly] false statements regarding the bank accounts and real estate properties.” The court denied the sanctions motion on the ground that the lawyer had proceeded in good faith and had a reasonable basis for his arguments.

After the verdict, plaintiffs sought sanctions against Defendants’ counsel, accusing him of making “blatant[ly] false statements regarding the bank accounts and real estate properties.” The court denied the sanctions motion on the ground that the lawyer had proceeded in good faith and had a reasonable basis for his arguments.

Comment: I’m not a fan of this type of sanctions motion – when you win a verdict, you should have the sense to walk away gracefully.

Source: RUI HE v. ROM, Dist. Court, ND Ohio 2017 – Google Scholar