Commercial Litigation and Arbitration

Sanctions — 28 U.S.C. § 1927 — Relentless Wrongheadedness

The litany of misbehavior for which § 1927 sanctions were imposed in Cambridge Toxicology Group Inc. v. Exnicios, 495 F.3d 169 (5th Cir. 2007) was impressive:

(1) [Plaintiff’s counsel] was denied leave to amend four times; (2) to avoid the effect of these earlier denials, [plaintiff’s counsel] filed a second case in an attempt to add the same causes of action; (3) after stern warnings, [plaintiff’s counsel] filed a Reply to Counterclaim, Counterclaim, and Third-Party Demand, all of which sought to add the same parties and causes of action; (4) [plaintiff’s counsel]'s trial conduct warranted a halt to the proceedings and a stern contempt warning; (5) [plaintiff’s counsel] informed defendants' counsel after the trial that he would continue the litigation to generate more fees.

This is the litigation equivalent of the famous Churchill dictum, "Never, never, never, never give in," taken to an extreme.

The interesting item in the litany of misconduct is number (2). The Circuits are split as to whether the complaint that initiates an action is sanctionable under § 1927 because the statute punishes any lawyer who ‛so multiplies the proceedings in any case unreasonably and vexatiously“ and, the theory goes, the complaint starts the action, and it is only possible to multiply a prolonged proceeding after the complaint is filed. See generally Joseph, Sanctions: The Federal Law of Litigation Abuse § 23(A)(2) (3d ed. Supp. 2006). Cambridge, however, illustrates one of the four scenarios in which sanctions may be appropriate for the filing of a complaint — where it multiplies the proceedings of the original case. See id.

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