After the plaintiff’s deposition revealed that her claim was meritless, defense counsel wrote a letter requesting that the action be withdrawn. Plaintiff’s counsel declined. Litigation proceeded through summary judgment, for which the plaintiff unsuccessfully advanced a new theory of liability supported by an affidavit in which the plaintiff contradicted her deposition testimony. The Fourth Circuit affirmed monetary sanctions against counsel under 28 U.S.C. § 1927 for unreasonably and vexatiously multiplying the proceedings in Salvin v. Am. Nat’l Ins. Co., 2008 U.S. App. LEXIS 12385 (4th Cir. June 10, 2008):

The district court found that Hennessy [counsel] had actual notice that [his client] Salvin's remaining breach of contract claim was rendered meritless by the admissions made in Salvin's deposition testimony. The court noted that the content of the summary judgment opposition submitted by Hennessy confirmed his "awareness that the plaintiff's deposition had indicated that her lawsuit was meritless"; rather than arguing the sole theory approved by the court's partial dismissal order, the opposition advanced a new breach of contract theory based on facts not pled in the complaint.... The district court's finding that Hennessy knew Salvin's claim lacked merit ... is sufficient to support a determination that Hennessy acted in bad faith under either an objective or a subjective standard.

...By refusing to voluntarily dismiss the case once its lack of merit became evident, Hennessy protracted the litigation. [Defendant] ANICO was forced to continue with its discovery obligations, file a summary judgment motion, and respond to Hennessy's opposition to that motion. And, as the district court noted, "[t]he brief in response to [ANICO's] motion for summary judgment is emblematic of the unreasonableness and vexatiousness employed by Mr. Hennessy" because it failed to address the altered records theory at issue, raised new theories based on factual allegations not pled in the complaint, and was based on a new affidavit by Salvin in which she contradicted her earlier deposition testimony....

Finally, we consider Hennessy's contention, raised at oral argument, that upholding the fee award in this case would have a chilling effect on the efforts of plaintiffs' attorneys to zealously pursue their clients' cases. We appreciate the concern expressed by Hennessy, but we respectfully disagree with him. We recognize that Hennessy was put in a tough position because he filed the case based on his client's version of events at the time, only to have the client give a different story — one that defeated the case — when faced with questions, under oath, from opposing counsel. But Hennessy's proper course of action was clear: rather than protract the litigation, he should have voluntarily dismissed the case when ANICO's counsel requested that he do so. As we have said, "litigants and their counsel are not free . . . to disregard evidence that comes to light in discovery and to continue to press their case without any reasonable belief" that the case has merit. Blue v. U.S. Dept. of the Army, 914 F.2d 525, 537 (4th Cir. 1990). Indeed, there is nothing novel in recognizing that an attorney can face sanctions "for pursuing a case after it becomes clear that the case is without merit." Id. Nothing in these principles or in our application of § 1927 in this case will prevent any plaintiff's attorney from zealously pursuing a meritorious case.