Commercial Litigation and Arbitration

Sanctions Based on Misinterpretation of Substantive Law — Where Claims “Quickly and Correctly” Dismissed, They Did Not Vexatiously Multiply the Proceedings within § 1927 — Recklessness Suffices for § 1927 Sanctions in Ninth Circuit

Braunstein v. Ariz. Dep’t of Transportation, 2012 U.S. App. LEXIS 13150 (9th Cir. June 27, 2012):

Under § 1927, an attorney who unreasonably and vexatiously "multiplies the proceedings" in a case may be required to pay the excess fees and costs caused by such conduct. Unlike an award of attorneys' fees under § 1988, an award of sanctions under § 1927 "does not distinguish between winners and losers, or between plaintiffs and defendants." Roadway Express., Inc. v. Piper, 447 U.S. 752, 762 (1980). "Dilatory practices of civil rights plaintiffs are as objectionable as those of defendants." Id. "Recklessness suffices for § 1927 sanctions, but sanctions imposed under the district court's inherent authority require a bad faith finding." Lahiri, 606 F.3d at 1219.

Here, the district court concluded that Braunstein's attorneys unnecessarily multiplied the proceedings by including §§ 1981 and 1983 claims barred by state sovereign immunity under the Eleventh Amendment and by pursuing § 2000d claims after it was clear that no federal funds were involved in the challenged contract. *** [T]he district court erred when it concluded that Braunstein's § 2000d claim was "groundless" merely because federal funds were not used in the specifically challenged contract. Further, the district court quickly and correctly dismissed the claims barred by sovereign immunity at the outset of the litigation, so those claims did not vexatiously multiply the proceedings. Defendants conceded at oral argument that Braunstein's attorneys did not file repetitive motions or generate an extraordinary volume of paperwork in this case. We therefore reverse the district court's imposition of sanctions under § 1927.

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