“Does the fact that an amended complaint (or answer) contains an allegation that is apparently contrary to an earlier iteration of the same pleading render the later pleading a sham? The answer is: not necessarily.” So writes Chief Circuit Judge Alex Kozinski in PAE Gov’t Servs. v. MPRI, Inc., 2007 U.S. App. LEXIS 29221 (9th Cir. Dec. 18, 2007). A separate sanctions inquiry is necessary before remedial or punitive acion may be taken by the court. Mere inconsistency is insufficient. “The district court has no free-standing authority to strike pleadings simply because it believes that a party has taken inconsistent positions in the litigation. Rather, the district court's powers are generally limited to those provided by the Federal Rules of Civil Procedure.”

The PAE Court noted that the Federal Circuit had reached the opposite conclusion in in Bradley v. Chiron Corp., 136 F.3d 1317, 1326 (Fed. Cir. 1998), but that no other court of appeals had followed Bradley. It concluded:

The short of it is that there is nothing in the Federal Rules of Civil Procedure to prevent a party from filing successive pleadings that make inconsistent or even contradictory allegations. Unless there is a showing that the party acted in bad faith—a showing that can only be made after the party is given an opportunity to respond under the procedures of Rule 11—inconsistent allegations are simply not a basis for striking the pleading.

Elsewhere the opinion observes that frivolousness is also sufficient to support the sanction and that sanctions powers other than Rule 11 may be invoked.