The plaintiff in Brabahm v. O’Reilly Auto., Inc., 2008 U.S. App. LEXIS 8230 (5th Cir. April 16, 2008) brought a malicious prosecution and abuse of process claim alleging that the prior criminal proceedings that the defendant had instigated had been dismissed with prejudice. That was incorrect; they had simply been rendered “inactive” after the parties settled their dispute and prosecutors chose not to proceed. The defendant served a Rule 11 motion. During the 21-day safe harbor period, plaintiff’s counsel attempted to address the issue by correcting the underlying facts and staying the litigation in the interim, but he did not amend the complaint. The trial judge issued sanctions but the Fifth Circuit reversed, reasoning that counsel’s actions effectively withdrew the offending assertion even though that was not actually done:

Waide asserts that his efforts to stay the action or in the alternative to dismiss Brabham's claim without prejudice were sufficient. We agree. In this motion requesting the stay, Waide conceded that Brabham's case had only been made inactive and that the disposition did not qualify as a termination in Brabham's favor for purposes of the malicious prosecution claim. He sought the stay so that he could attempt to obtain a dismissal with prejudice below, and he conceded that if he were unsuccessful, Brabham's claim should be dismissed. These admissions effectively withdrew the assertion in the complaint that Brabham's criminal case already had been dismissed with prejudice. For this reason, we hold that Waide did effectively withdraw the erroneous statement within 21 days as required by Rule 11. Since the district court's assessment of sanctions was based on the erroneous conclusion that Waide had not withdrawn the false allegation in the complaint, it was an abuse of discretion.