Category: Sanctions For Frivolous Lawsuits

Don’t Sue the Court Reporter


In Karageorge v. Urlacher, 18 C 3146 (ND IL) the plaintiff was engaged in state court litigation with the father of her child. She then filed a federal lawsuit against Urlacher, his lawyers and the court reporter. She alleged that the court reporter had altered a transcript. Karageorge was pro se, but the district court dismissed the case and granted the court reporter’s motion for Rule 11 sanctions.

It is completely understandable that the child custody proceedings were extremely upsetting to Karageorge. But even considering her pro se status, Karageorge’s distress in connection with those proceedings did not give her license to file a lawsuit making factually dubious and legally unsupportable allegations against a court reporter, forcing her to spend time and money fighting the suit. As the court explained in its dismissal order, Karageorge’s legal theories against Miyuskovich were clearly meritless, Doc. 49 at 2; in fact, Karageorge did not even bother to defend them. Karageorge’s factual allegations against Miyuskovich were neither tested nor debunked in discovery or at summary judgment or trial, but that is only because this case did not make it past the pleading stage. On their face, Karageorge’s factual allegations were extraordinarily farfetched, and given the chance to present supporting evidence in her response to Miyuskovich’s sanctions motion, Karageorge presented none, confirming that they were groundless. Under these circumstances, Rule 11 sanctions are warranted. See Fed. R. Civ. P. 11(b)(2)-(3); Bell v. Vacuforce, LLC, 908 F.3d 1075, 1080-81 (7th Cir. 2018) (affirming sanctions against a party that sought relief based on an “infirm factual foundation”) (internal quotation marks omitted);

Edward X. Clinton, Jr.

Wrongful Discharge Case Dismissed Due to Rule 37 Violations


In February 2019, the Fourth Circuit affirmed the dismissal of all claims in the case Rangarajan v. John Hopkins University, 917 F.3d 218 (2019) a rare published opinion affirming Rule 37 sanctions.

Rangarajan was a nurse practitioner at Johns Hopkins before she was terminated. She sued for wrongful discharge and discrimination. During discovery she certified that her production was complete and Johns Hopkins moved for summary judgment. That’s when things got out of hand.

After discovery closed in September 2016 as directed in the district court’s scheduling order, Johns Hopkins filed a motion for summary judgment in both consolidated actions, based on the record that discovery had produced. Johns Hopkins contended that summary judgment in its favor was justified by “overwhelming evidence that Ms. Rangarajan did not satisfy the basic requirements of her job[ ] and that there were legitimate, non-discriminatory and non-retaliatory reasons for any adverse employment action that she allegedly suffered.”

In response to Johns Hopkins’ motion for summary judgment, Rangarajan took a number of steps to expand, embellish, alter, and recast her deposition testimony. First, she submitted a 51-page errata sheet to her deposition, proposing hundreds of edits to her testimony and justifying many of the changes by claiming that the court reporter had intentionally altered both the transcript and the audio 223*223 and video recording of her deposition. She stated:

The Court Reporters’ Office has informed me that they edited my video, audio and typed deposition transcripts. It is clear that key testimony is deleted, altered, cloned from various sound bites etc., to accomplish two things. 1. Change the testimony 2. To induce grammar mistakes thus making me sound as if I am speaking broken English.

She also sent an ex parte letter to the district court for the district judge’s “eyes only,” claiming similarly that the court reporter improperly edited her deposition.

Second, in support of her opposition to the summary judgment motion, Rangarajan filed a 54-page Declaration in which she introduced new allegations, attached 19 exhibits that had never before been produced during discovery, and revised testimony that allegedly contradicted her deposition testimony. While the district court did not find the Declaration to be “diametrically opposed” to Rangarajan’s statements in the deposition, it nonetheless concluded that reliance on the Declaration “would render the taking of [Rangarajan’s] deposition essentially useless.” Rangarajan’s opposition to Johns Hopkins’ motion for summary judgment was grounded mainly on her Declaration and not the evidence produced during discovery. As the district court noted, while Rangarajan cited her deposition testimony only 3 times in her opposition, she cited her subsequently filed Declaration “over 750 times.”

In addition, the newly disclosed exhibits revealed major failures by Rangarajan to produce documents requested of her during discovery. For instance, several exhibits — screenshots of Rangarajan’s emails — revealed her computer’s entire display showing retained copies of emails in two inboxes labeled “Jhmi” and “Jhmi 1,” and one of those inboxes contained 8,612 emails, most of which had never been produced during discovery; Rangarajan had only produced 1,658 documents during discovery.

Somehow Rangarajan filed four highly similar cases against Johns Hopkins. The District Court dismissed all of the lawsuits as Rule 37 sanctions and as sanctions for Rangarajan’s attempts to undermine the summary judgment process by changing her deposition testimony.

The Fourth Circuit affirmed the dismissal of the four lawsuits as a Rule 37 sanction. Part of the explanation is included here:

When reviewed it its totality, the record in this case reveals a totally dysfunctional performance by Rangarajan and her counsel, but mostly by her, as she acknowledged in her brief that “[t]hough [I] was, in fact, represented by an attorney, the court was well aware that [I] was in many ways acting without the benefit of counsel.”

To begin, Rangarajan commenced four actions, when only one was proper and would have sufficed, repeatedly reasserting claims that the district court had dismissed. After the district court denied her motion to replead qui tam claims in the first action, she nonetheless repleaded 228*228 them in the third action, and when the district court dismissed the third action, she refiled the same claims in the fourth action.

In the course of discovery, Rangarajan flagrantly failed to produce thousands of documents, several of which were core documents relating to her claims. She later produced some of those documents for the first time during the summary judgment process, because she thought she needed them to make her points. Also, after giving a daylong deposition, she sought to undermine and recant her testimony in a long, 54-page Declaration that, as the district court found, rendered her deposition essentially useless. Finally, she challenged the transcription of her deposition, claiming it was deliberately altered and recreated by the court reporter, a conclusion that the district court found to be conclusively false. In short, she rendered virtually useless the entire discovery process, in which the parties had invested substantial time and money.

During summary judgment, which required additional expenditures of time and money, Rangarajan relied almost exclusively on her Declaration, which had not been made part of the discovery record and which was often inconsistent with her deposition testimony, placing the summary judgment practice on an untenable and virtually useless footing.

In addition to these specifics, it was also apparent throughout the entire proceedings that, while Rangarajan was represented by an attorney, she refused to follow his advice and engaged in inappropriate actions, such as communicating arguments directly to the court ex parte and including substantive matters in her errata sheet. And the district court attributed this dysfunction between attorney and client to Rangarajan personally, a finding that Rangarajan has not disputed. As the court stated:

It [was] [Rangarajan] who continue[d] the attempt to support the unsupportable contention that the court reporting service made hundreds of alterations to her deposition video and transcript. It is clear that it was [Rangarajan] who authored the embellished narrative contained in her Declaration. It was [Rangarajan] who failed to turn over to her counsel documents that were clearly responsive to discovery requests and it [was] [Rangarajan] who misrepresented the amount of emails from her work email account that were stored on her home computer.

This opinion is an outlier because of the repeated violations of the rules by the plaintiff. I am also amazed that this behavior was tolerated by any attorney and, if anyone presented a situation remotely similar to this one, I would encourage the lawyer to withdraw from the case. Indeed, the lawyer is quite lucky he did not face professional sanctions or other consequences due to the failure to control his client.

Ed Clinton, Jr.

Tax Protestor’s Claim For Refund Nets Rule 11 Sanctions


Shawn K. Weiler sued the IRS for refunds for taxes he paid. Weiler v IRS, 17 cv 2226 (N.D. Ohio Eastern Division). The IRS moved for summary judgment and sanctions. The motion for summary judgment was granted and the Magistrate Judge also awarded Rule 11 sanctions for the filing of a frivolous pleading.

Mr. Weiler claimed that the Constitution does not permit the imposition of an income tax. He contended that (1) the Sixteenth Amendment does not authorize a direct, non-apportioned income tax; (2) the federal income tax is an improper excise tax that cannot be levied in this case; and (3) Weiler is not subject to income tax because he is not a governmental employee.

The IRS responded that these arguments have been rejected numerous times by U.S. Courts and are, in fact, frivolous.

The IRS also requested the imposition of Rule 11 sanctions against Weiler.

Under Rule 11, a party signing a pleading attests to the court that, to the party’s knowledge, information, and belief, formed after reasonable inquiry under the circumstances, the claims and legal contentions are warranted by existing law or by a nonfrivolous argument for extending, modifying, or reversing existing law. By its own terms, Rule 11 applies to pro se litigants as well as to attorneys.

Once a pleading is found by the court to have violated Rule 11, the Rule itself states that the court “shall impose on the person who signed it, . . . an appropriate sanction,” which may include paying the reasonable expenses incurred by the opposing party as a result of filing the action. District courts have broad discretion in tailoring an appropriate and reasonable sanction. Courts should seek to “impose a sanction limited to that which is sufficient to deter repetition of future conduct, either by the offending party or by others similarly situated.”

Here, Weiler certainly violated Rule 11 in filing this action. He has asserted a taxprotestor claim of the sort that federal courts have uniformly rejected in clear language for years. And numerous federal courts have imposed Rule 11 sanctions in similar tax protestor cases.

Therefore, because Weiler asserted a manifestly frivolous claim that did nothing more than burden the courts and the government with addressing claims that he knew, or should have known, to be completely without merit, I recommend the imposition of sanctions consisting of $1,000 payable to the Clerk of Court.

(Footnotes Omitted)

Comment: the federal courts deal with a significant amount of tax protestor litigation. Here, the tax protestor presented legal theories that have been rejected by the courts for many, many years and was sanctioned as a result.

Ed Clinton, Jr.

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