via Bernard v. ILLINOIS CENTRAL RAILROAD COMPANY, Dist. Court, WD Tennessee 2018 – Google Scholar
This is a wrongful termination case where the plaintiff initially filed time-barred EEOC claims. The claims were time-barred because they were not filed within 90 days of the issuance of the right to sue letter.
After the Defendant moved to dismiss those claims, the plaintiff promptly filed an amended complaint removing those claims. Therefore, Rule 11 and Section 1927 sanctions were denied:
The filings reveal that Illinois Central and Bernard conferred numerous times regarding the issues surrounding Bernard’s initial complaint. There is no indication that Bernard’s conduct was objectively unreasonable such that sanctions would be appropriate under either Rule 11 or 28 U.S.C. § 1927. Based on the parties’ discussions and Bernard’s January 3, 2018, supplementation of his Complaint with the Right to Sue letter, Illinois Central should have been aware that Bernard was not intending to pursue any claims except those arising from the 2015 EEOC Charge. It further appears that counsel were conferring during and around the holidays and various days of inclement weather which impacted business. And, it appears during this time that there was some dispute as to which attorney would be appearing on behalf of Bernard. While counsel for Bernard could have been more prompt in amending his pleadings or more clear in responding to Illinois Central’s concerns, the court declines to find that such conduct was objectively unreasonable given the circumstances.
Center for Individual Rights v. Chevaldina (S.D. Florida)
The Plaintiff is a law firm that represented Chevaldina in a copyright case. Plaintiff sued Chevaldina for legal fees after the copyright case was settled by another law firm. Plaintiff claimed that Chevaldina did not prosecute its claim for a legal fee award from the court. The law firm was suing for the failure of the plaintiff to pursue a claim for legal fees.
The law firm sought discovery from Chevaldina, but she did not produce documents. The law firm then filed a motion for a default judgment under Rule 37, which allows the court to enter a default judgment against a party that fails to participate in discovery.
Because Chevaldina was pro se, the court declined to award sanctions. It reasoned that Chevaldina did not fully understand her obligations to produce documents and denied the default judgment.
In conclusion, the court gave a pro se litigant a break in this case.
This is a fairly typical situation in litigation. The plaintiff, Redmonds Enterprise, Inc. sued CSX Transportation, Inc. for defamation and other related tort claims. The case grew out of a vandalism incident at a CSX rail yard. Redmonds alleged that a CSX employee sent an email that defamed Redmonds by blaming Redmonds for the vandalism. During discovery, it became apparent that the author of the email, Rick Omer, was not a CSX employee and there was apparently no evidence that he existed at all. Furthermore, there was no evidence that anyone at CSX sent a defamatory email to anyone about Redmonds. The court granted summary judgment in favor of CSX and dismissed the case.
CSX moved for sanctions pursuant to Rule 11 and Section 1927. The district judge denied the sanctions motion. This is the key paragraph of the opinion:
While it is a close question, it is not clear that sanctions are warranted under either Rule 11 or § 1927, although the dilatory conduct of Redmonds’ non-local counsel, Mr. Jenkins, was irresponsible, to say the least. CSX argues that sanctions should be imposed because Redmonds refused to dismiss the case after the Orner email was not uncovered during discovery. But, there is no evidence to suggest Redmonds did not have a colorable basis for filing its complaint initially. Redmonds had experienced a decline in business, and had been told this decline was attributable to a defamatory email from a CSX employee. Refusal to dismiss the complaint after discovery is not a basis for Rule 11 sanctions. See Brubaker, 943 F.2d at 1381; Simpson, 900 F.2d at 36-37. After conducting discovery, Redmonds moved to amend its complaint to reflect new evidence uncovered during discovery. Although untimely and ultimately unsuccessful, filing this motion was not entirely baseless, nor an unreasonable multiplication of this proceeding under § 1927. The conduct of Redmonds’ counsel was not as “unreasonable and vexatious” as the attorney in Salvin, who continued proceedings after his own client’s deposition revealed that there was no basis to her claims, and indeed supported his opposition to the motion for summary judgment with an affidavit in which his client contradicted her own deposition testimony. See Salvin v. American Nat. Ins. Co.,281 Fed.Appx. 222, 225-26 (4th Cir. 2016). The delay in seeking leave to amend after it became clear the Orner email could not be found was irresponsible and, as explained above, was sufficient reason to deny the motion to amend. But the court cannot say it amounted to the bad faith that is required to support sanctions under § 1927. The motion for sanctions will be denied.
This is a very typical situation in a plaintiff’s case. The plaintiff believes he or she was wronged but the lawyer is unable to prove the allegations. The lawyer had a good faith basis for filing the case but the case was ultimately dismissed for a lack of proof.
Redmonds Enterprise, Inc. v. CSX Transportation D. Maryland
The Defend Trade Secrets Act, 18 USC § 1836, was enacted in 2016. It is important because it provides federal jurisdiction for disputes over trade secrets. This allows the plaintiff (usually a company claiming that its trade secrets were stolen by the defendant) to bring its claims in federal court.
The elements for a successful claim under the DTSA are: (1) the existence of a trade secret that relates to a product or service used in, or intended for use in, interstate or foreign commerce; (2) the acquisition of the trade secret, or the use or disclosure of the trade secret without consent; and (3) the person acquiring, using, or disclosing the trade secret knew or had reason to know that the trade secret was acquired by improper means.” Arctic Energy Servs., LLC v. Neal, No. 18-cv-00108-PAB-KLM, 2018 WL 1010939, at *2 (D. Colo. Feb. 22, 2018) (citing 18 U.S.C. §1836(b)(1); 18 U.S.C. § 1839. The DTSA defines “trade secret” broadly to include “all forms and types of financial, business, scientific, technical, economic, or engineering information” so long as “the owner thereof has taken reasonable measures to keep such information secret” and “the information derives independent economic value, actual or potential, from not being generally known to,” or ascertainable by, another person. 18 U.S.C. § 1839(3). See Lowenbro Inspection v. Sommerfield, 18 CV 01943 (D. Colo. August 2018).
via Defend Trade Secrets Act – Wikipedia
A defendant who obtained dismissal of the claims against her on the ground that the diversity amount was not met. The plaintiff sued the Defendant for failing to return his dog to him. (The dog eventually ended up in a shelter in Canada).
Because the defendant did not serve her Rule 11 Sanctions motion and give the plaintiff 21 days to drop her from the case, the sanctions motion was denied.
via Barringer v. Whitworth, Dist. Court, ED Michigan 2018 – Google Scholar
The court denied a sanctions motion filed when one party moved to reconsider the judgment:
The Defendants move for sanctions against the Plaintiffs, on the ground that the Plaintiffs’ Motion for Reconsideration was “frivolous and appears vindictive” and represents the Plaintiffs’ attempt to mislead the Court. I cannot improve on the wise advice of Vice Chancellor Laster: “lawyers should think twice, three times, four times, perhaps more before seeking Rule 11 sanctions or moving for fees under the bad faith exception.” In my view, the Defendants have thought at least one time fewer here than is optimal. This entire litigation has hardly been a model of civility, or of litigants’ or judicial economy. The Motion for Sanctions is unwarranted, and is denied.
The opinion does not discuss the merits of the sanctions motion in detail, but it appears that the Chancellor was frustrated that a request for reconsideration immediately drew a request for sanctions.
via BRACE INDUSTRIAL CONTRACTING, INC. v. PETERSON ENTERPRISES INC., Del: Court of Chancery 2018 – Google Scholar
This was an ill-fated employment lawsuit filed by a former employee against his former employer. The employer obtained summary judgment in its favor. A little over a year later, the plaintiff filed a Rule 60 motion to vacate the judgment on the ground that the defense lawyer had committed fraud on the court. The Seventh Circuit found that the Rule 60 motion was filed too late. Instead, the plaintiff should have challenged the employer’s evidence at the summary judgment stage. The Seventh Circuit also affirmed the grant of Rule 11 sanctions.
We also review a district court’s grant of Rule 11 sanctions for an abuse of discretion. Northern Illinois Telecom, Inc. v. PNC Bank, N.A., 850 F.3d 880, 883 (7th Cir. 2017). To succeed, parties challenging sanctions need to show that “the district court based its decision on an erroneous view of the law or a clearly erroneous evaluation of evidence.” Id., citing Gastineau v. Wright, 592 F.3d 747, 748 (7th Cir. 2010); see also Fed. R. Civ. P. 11(c).
On appeal, attorney Davis summarizes his factual argument against the sanctions ruling this way: “It is redundant to continue discussing appeals, summary judgments, Rule 60(b) filings. The fact is that Appellant’s attorney did not rush to file a document that goes after the integrity of a fellow attorney.” As for law, he cites a 1993 district court case from Iowa that chastised the lawyer there for engaging in “bickering, haranguing, . . . general interference” and other examples of “Rambo Litigation.” See Van Pilsum v. Iowa State Univ. of Sci. & Tech., 152 F.R.D. 179, 180-81 (S.D. Iowa 1993) (adopting creative response under Rule 37 to discourage such discovery tactics). Neither of these points addresses whether or how the district court in this case abused its discretion in deciding to award sanctions against Davis personally.
We appreciate Mr. Davis’s initial hesitation before leveling fraud accusations at another lawyer. But he then went ahead and did just that, and without presenting any new evidence of fraud. He offered only inferences and innuendo drawn from the original summary judgment record. Rule 11 “requires counsel to read and consider before litigating,” which Davis claims to have done, but it also “establishes an objective test,” U.S. Bank Nat’l Ass’n, N.D. v. Sullivan-Moore, 406 F.3d 465, 470 (7th Cir. 2005) (citation omitted), that asks whether the attorney engaged in “an inquiry reasonable under the circumstances” before filing a motion. Fed. R. Civ. P. 11(b). Davis makes no effort to explain how his investigations of the facts and law underlying the Rule 60 motion he filed were reasonable. The district court awarded sanctions for having to respond to this motion, and Davis has not advanced a coherent argument that shows how this grant was an abuse of discretion. We affirm the decision of the district court imposing sanctions.
via Kennedy v. SCHNEIDER ELECTRIC, Court of Appeals, 7th Circuit 2018 – Google Scholar