Commercial Litigation and Arbitration

Sanctions — Due Process Notice Requirement Unsatisfied Where Court Relied on Warnings and Sanctions Imposed in Earlier Case Because Earlier Judge Did Not Deal with the Specific Conduct in the Current Case

Truong v. Nguyen, 2012 U.S. App. LEXIS 23827 (2d Cir. Nov. 20, 2012):

"Due process requires that courts provide notice and opportunity to be heard before imposing any kind of sanctions." Schlaifer Nance & Co. v. Estate of Warhol, 194 F.3d 323, 334 (2d Cir. 1999) (citation and internal quotation marks omitted). Specifically, "[a]t a minimum, the notice requirement mandates that the subject of a sanctions motion be informed of," inter alia, "the source of authority for the sanctions being considered." Id. We have observed that this requirement is fulfilled by the identification of the relevant Federal Rule of Civil Procedure or statute that warrants imposition of a sanction. Id. at 334-35 (finding that a motion for sanctions that focused "chiefly on Rule 11 as the basis for sanctions" but that "also invoked and set forth the standards for sanctions under the District Court's inherent power and 28 U.S.C. § 1927 as well," was sufficient to provide "notice of the source of authority for the requested sanctions").

Here, the district court did not provide adequate notice to Truong prior to imposing either leave-to-file or financial sanctions, as it did not inform him, in the present proceeding, that it was considering imposing sanctions prior to imposing them. Although the district court found that Truong was on notice because another judge in the Southern District of New York had previously imposed leave-to-file sanctions, see Vishipco Line v. Charles Schwab & Co., No. 02 Civ. 7823 (SHS), 2003 WL 1345229, at *9-10 (S.D.N.Y. Mar. 19, 2003), and had previously warned Truong that "any further harassing or vexatious litigation by him [would] be subject to sanction," Vitranschart, Inc. v. Levy, No. 00 Civ. 3618 (SHS), 2000 WL 1239081, at *11 (S.D.N.Y. Aug. 31, 2000), neither prior order notified Truong of the need to "prepare a defense" against the imposition of sanctions based on his "specific conduct" in the present proceeding, see Schlaifer Nance & Co., 194 F.3d at 334. Moreover, the district court did not notify Truong of the relevant authority under which it was considering imposing sanctions. Id.

We also conclude that the district court's leave-to-file injunction--which bars Truong from filing any lawsuit on any claim in any court against any party without first obtaining, in writing, the express permission of the court in which he wishes to proceed--is too broad. See Bd. of Managers of 2900 Ocean Ave. Condo. v. Bronkovic, 83 F.3d 44, 45 (2d Cir. 1996) (per curiam) ("[Filing] injunctions must be appropriately narrow."); see also In re Martin-Trigona, 737 F.2d 1254, 1262-63 (2d Cir. 1984).

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