Sanctions — Abuse-of-Discretion Review Is Not Toothless

From Judge Sloviter’s dissent (on the issue of sanctions only) in Brubaker Kitchens Inc. v. Brown, 2008 U.S. App. LEXIS 11046 (3d Cir. May 21, 2008):

I do not disagree with the majority that our standard of review of the District Court's imposition of sanctions is abuse of discretion. But that standard does not emasculate the courts of appeals in appeals of sanctions. "A district court abuses its discretion when it misinterprets Rule 11 or clearly errs in assessing the evidence." CTC Imps. & Exps. v. Nigerian Petroleum Corp. , 951 F.2d 573, 577 (3d Cir. 1991) (citing Cooter & Gell v. Hartmarx Corp. , 496 U.S. 384, 405, 110 S. Ct. 2447, 110 L. Ed. 2d 359 (1990)). This court has not hesitated to review, and to reverse, the imposition of sanctions when it has been convinced that the district courts abused their discretion. See, e.g., Schering Corp. v. Vitarine Pharm., Inc., 889 F.2d 490, 500 (3d Cir. 1989) (imposition of sanctions was abuse of discretion where plaintiffs adequately investigated the basis of their assertions); Mary Ann Pensiero, Inc. v. Lingle, 847 F.2d 90, 95 (3d Cir. 1988) (reversing entry of sanctions because "[a] requirement that counsel, before filing a complaint, secure the type of proof necessary to withstand a motion for summary judgment would set a pre-filing standard beyond that contemplated by Rule 11"). The same is true of the other courts of appeals. See, e.g., Krim v. BancTexas Group, Inc. , 99 F.3d 775, 777-80 (5th Cir. 1996) (entry of sanctions was abuse of discretion where plaintiff had no practical alternative to discovery to uncover facts); Hadges v. Yonkers Racing Corp. , 48 F.3d 1320, 1329-30 (2d Cir. 1995) (imposition of sanctions was abuse of discretion where attorney reasonably relied upon client's representations); Smith v. Our Lady of the Lake Hosp., Inc. , 960 F.2d 439, 444-46 (5th Cir. 1992) (entry of sanctions for alleged failure to reasonably investigate claim was an abuse of discretion); Fed. Sav. & Loan Ins. Corp. v. Molinaro, 923 F.2d 736, 739 (9th Cir. 1991) ("claims of conspiracy . . . were not so groundless as to warrant the imposition of sanctions").

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