Sanctions Vacated Due to Judge’s Erroneous View of Law — Good Quote

After losing a state court judgment, HealthNet, Inc. filed a federal action to block enforcement of that judgment. The trial judge dismissed the action and imposed sanctions on HealthNet’s counsel. The Fifth Circuit, in HealthNet, Inc. v. Wooley, 2008 U.S. App. LEXIS 14326 (5th Cir. July 8, 2008), affirmed the dismissal but overturned the sanctions:

We cannot affirm rule 11 sanctions for deficient legal inquiry and reasoning where the district court was incorrect. ***

In the end, the district court sanctioned [counsel] for not coming to the same erroneous conclusion that the court reached. It is true that [counsel’s] support for not applying article 2006 [the relevant Louisiana statute] — one unpublished district court opinion — was flimsy, but the district court's support for applying article 2006 was also unpersuasive. The other arguments presented by [counsel] were not so bad as to justify sanctions. Because the court relied on its own erroneous view of the law to sanction [counsel], it abused its discretion.

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