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Commercial Litigation and Arbitration

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Sanctions — No Private Right of Action for Rule 11 / § 1927 Violation

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The plaintiff in Kraus Indus. v. Moore, 2007 U.S. Dist. LEXIS 68869 (W.D. Pa. Sept. 18, 2007), filed a state court action for defamation, disparagement, and intentional infliction of emotional distress. After the defendants removed the action, the plaintiff filed an Amended Complaint, one count of which sought sanctions for the defendants’ alleged violation of Rule 11, 28 U.S.C. § 1927, and state sanctions powers. Held:

1. Rule 11. ‛As a general matter, the Court finds that Federal Rule of Civil Procedure 11 does not provide for a separate and distinct cause of action“ (citation omitted). District Judge Nora Barry Fischer noted that recognizing a cause of action would be irreconcilable with the procedural requirements built into Rule 11(c) since 1993 — the separate motion requirement and the 21-day safe harbor (not to suggest that a private right of action existed under the Rule prior to 1993).

2. § 1927. ‛28 U.S.C. § 1927 does not create a separate and distinct cause of action. See Raymark Industries, Inc. v. Baron, \No. CIV. 96-7625, 1997 WL 359333, *7 (E.D. Pa. June 23, 1997) (agreeing with Defendants' argument that § 1927 does not provide an independent cause of action); Wilson v. Bush, 2006 WL 692305, at *3 (M.D. Ga. March 15, 2006) (citing Durrett v. Jenkins Brickyard, Inc., 678 F.2d 911, 914 n. 3 (11th Cir. 1982) (finding that 28 U.S.C. § 1927 does not create an independent cause of action, but that a party seeking § 1927 relief should do so through an attorney fee petition, not a counterclaim); Carbajal-Ramierez v. Bland Farms, Inc., 234 F.Supp.2d 1353, 1354-55 (S.D. Ga. 2001) (same)."

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New York Attorneys JHA handles range the gamut of complex financial and commercial litigation and arbitration, including securities, RICO, corporate and contract disputes, credit default swaps, derivatives, and class, mass, and derivative actions. The firm also represents law firms in major disputes.
New York Attorneys JHA handles range the gamut of complex financial and commercial litigation and arbitration, including securities, RICO, corporate and contract disputes, credit default swaps, derivatives, and class, mass, and derivative actions. The firm also represents law firms in major disputes.

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