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No Rule 16(f) Sanctions for Prompt Dismissal of Case Following Pretrial Conference

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Some good deeds go unpunished. The plaintiff in Allen v. Tribune N.Y. Newspaper Holdings, LLC, 246 F.R.D. 465 (S.D.N.Y. 2007), dismissed a weak case and managed not to get sanctioned as a result of dismissing it. Several hours after an initial status conference before Judge Jed S. Rakoff, plaintiffs’ voluntarily dismissed their complaint. (It must have been some initial conference.) The defendants promptly moved for sanctions under Fed.R.Civ.P. 16(f) or the inherent power of the court on the theory that “the timing of the voluntary dismissal was the result either of 1) poor preparation by plaintiffs' counsel prior to the conference or 2) bad-faith judge-shopping, and thus in either case they are entitled to fees and costs.” No doubt the defendants would rather have moved under Rule 11, but that was unavailable because the 21-day safe harbor cannot be satisfied after the offending paper has been withdrawn.

But the remaining powers didn’t fit. Judge Rakoff stressed that Rule 16(f) authorizes the imposition of sanctions on counsel or client if either "is substantially unprepared to participate in the [pretrial] conference[] or ... fails to participate in good faith,” but that the defendants claim was not based on anything that took place at the conference. Rather, it was purely inferential — that the plaintiffs must have been "’substantially unprepared’ for the pretrial conference or ‘fail[ed] to participate in good faith’ in the conference because counsel should have realized at some point before the conference was held that the case should be voluntarily dismissed.” The Court concluded:

This is not the type of conduct that Rule 16(f) is meant to address. The Tribune defendants were unable to cite any case in which Rule 16(f) was used to impose sanctions for failure to dismiss prior to the initial conference, and the Court is not aware of any such case. The Tribune defendants' complaint is not about what took place at the conference, but rather is about the fact that plaintiffs' counsel filed this case in federal court in the first instance or at least did not voluntarily dismiss the case earlier. Those facts do not warrant sanctions under Rule 16(f).

The Court also concluded that inherent power sanctions were unavailable because, in response to questions form the Court, defense counsel had admitted that counsel did not believe that defendants could satisfy the requirements of 28 U.S.C. § 1927 and: “Given this admission, it is clear that if the statute does not cover the conduct at issue it is only because the conduct does not rise to the level required for sanctions under a statute that is otherwise on point. It would not be appropriate in such circumstances for the Court to use its "inherent power" to avoid the statutory requirements.”

Who would have thought that it would be too late to file a Rule 11 motion before anything had happened in a case?

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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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