Sanctions — Withdrawal of Offending Paper as Evidence of Meritlessness

One of the reasons that the 21-day safe harbor was introduced in the 1993 amendment to Federal Rule of Civil Procedure 11 was to encourage parties to withdraw sanctionable papers or positions without litigation. That has proved generally effective under Rule 11. But this safe harbor does not govern non-Rule 11 sanctions motions, as reflected in the Sixth Circuit’s opinion in Parrott v. Corley, 2008 U.S. App. LEXIS 2377 (6th Cir. Jan. 28, 2008) (unpublished (whatever that means now)). Plaintiff’s counsel was sanctioned under 28 U.S.C. § 1927 for unreasonably and vexatiously multiplying the proceedings by contesting the defendant’s motion to compel arbitration and simultaneously pursuing a motion for a preliminary injunction on claims it should have known were arbitrable. In affirming a $6,500 sanction, the Sixth Circuit held that: “The district court was within its discretion to find that Plaintiff’s voluntary dismissal on the eve of the hearing served as ‘evidence that Plaintiff’s counsel knew or should have known that resistance to arbitration ... was frivolous.’”

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