Sua Sponte Sanctions Under Rule 11 May Not Include an Award of Attorneys’ Fees to Opposing Counsel — Notice of Potential Rule 11 Sanctions ≠ Due Process Notice of Potential Inherent Power Sanctions

From Wright v., 2011 U.S. App. LEXIS 9133 (10th Cir. May 4, 2011):

“The relevant section of Rule 11 states that a ‘sanction may include nonmonetary directives; an order to pay a penalty into court; or, if imposed on motion and warranted for effective deterrence, an order directing payment to the movant of part or all of the reasonable attorney's fees and other expenses directly resulting from the violation.’ Rule 11(c)(4) (emphasis added). In Hutchinson v. Pfeil, 208 F.3d 1180, 1184 (10th Cir. 2000), we stated that this rule [then numbered 11(c)(2)] ‘prohibits a court acting on its own initiative from ordering payment of a monetary penalty to an opposing party.’ It is undisputed that the district court was acting sua sponte in imposing sanctions in this case. Accordingly, as a matter of law, under Rule 11 the court could not order the payment of attorney's fees to; it could only order nonmonetary sanctions or a penalty to be paid into court. This error of law necessarily constitutes an abuse of discretion. ***

[A]lthough the court cannot impose sanctions under its inherent powers without providing notice and an opportunity to respond, see Chambers v. NASCO, Inc., 501 U.S. 32, 50 (1991); Roadway Express, Inc. v. Piper, 447 U.S. 752, 767 (1980), it appears that the first mention of the court's inherent powers was in the February 12, 2009, written sanctions order. Notice of possible Rule 11 sanctions does not necessarily also constitute notice of sanctions under the court's inherent powers. Cf. Hutchinson, 208 F.3d at 1185 (stating that the pursuit of sanctions under 28 U.S.C. § 1927 did not constitute notice of possible sanctions under Rule 11).

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