Commercial Litigation and Arbitration

Denial of § 1927 Sanctions Because of Plaintiff’s Poor Financial Condition = Abuse of Discretion

From Hall v. Liberty Life Assur. Co. of Boston, 595 F.3d 270 (6th Cir. 2010):

The district court in this case was critical of Hall's attorney, noting that the Plan "has been forced to spend an inordinate amount of time and money defending against repeated meritless motions filed by [Hall] in an attempt to have a second, third, or further bite at the apple in the litigation of her benefits claim." Yet the district court declined to award the Plan attorney fees "given Plaintiff's purported financial situation."

That reason does not support the denial of fees. The rationale for the district court's decision — Hall's "purported financial situation" — is an improper basis for denying fees under § 1927 because the statute authorizes the imposition of sanctions only on "any attorney or other person admitted to conduct cases." 28 U.S.C. § 1927; see also Rentz[ v. Dynasty Apparel Indus., Inc., 556 F.3d 389, 395-96 (6th Cir. 2009)] (observing that fees under § 1927 may be imposed only on parties' attorneys, rather than on the parties themselves). No other reason was offered to support the denial of the Plan's request for attorney fees. Under an abuse-of-discretion standard, we cannot uphold the district court's reliance solely on a factor irrelevant to the § 1927 inquiry.

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