Commercial Litigation and Arbitration

Sanctions — Due Process — Unspoken Grounds

Parties are entitled, as a matter of due process, to notice of (a) the fact that sanctions are under consideration, (b) the specific conduct for which sanctions are under consideration and (c) the type of sanctions under consideration. Joseph, Sanctions: The Federal Law of Litigation Abuse § 17(D)(1) (3d ed. 2000). The plaintiffs in Foster v. Wilson, 2007 U.S. App. LEXIS 23810 (9th Cir. Oct. 5, 2007) were served with a Rule 11 motion in which the defendant specified the reasons why it contended that sanctions should be imposed. The District Court rejected all of those reasons — but found three others it considered sufficient and imposed sanctions on those alternative grounds. Before doing so, the District Court did not issue an order to show cause identifying the specific conduct it was concerned about. The Ninth Circuit reversed the award because ‛[t]he appellants did not receive notice of those three additional grounds, and had no opportunity to be heard in opposition to them before sanctions were imposed.“ Although the Court did not cite Rule 11(c)(1)(B), which governs sua sponte sanctions and requires identification of the specific conduct at issue, it stressed that any person against whom sua sponte sanctions are imposed ‛must have been given the same notice and opportunity to respond that are required for sanctions generally.“ The Ninth Circuit did not preclude the District Court’s conducting further sanctions proceedings that satisfy due process.

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