Sanctions: If Rule or Statutory Power (Including § 1927) Available, Court Should Not Invoke Inherent Power — D.C. Circuit State of Mind for § 1927 Unsettled But Clear & Convincing Proof Required — Law Firm Vicarious Liability
Animal Welfare Inst. v. Feld Entm’t, Inc., 2013 U.S. Dist. LEXIS 68522 (D.D.C. Mar. 29, 2013):
B. Inherent Authority
In addition to powers deriving from rule or statute, courts also have inherent authority to sanction litigation misconduct when a party has "acted in bad faith, vexatiously, wantonly, or for oppressive reasons." Alyeska Pipeline Service Co. v. Wilderness Society, 421 U.S. 240, 258-59 (1975) (citations omitted). Such power is governed "by the control necessarily vested in courts to manage their own affairs so as to achieve the orderly and expeditious disposition of cases." Chambers v. NASCO, Inc., 501 U.S. 32, 43 (1991). A court must "exercise caution in invoking its inherent power, and it must comply with the mandates of due process, both in determining that the requisite bad faith exists and in assessing fees." Id. at 50 (citation omitted). Accordingly, the Supreme Court has advised that courts "ordinarily should rely on the Rules rather than the inherent power" if there is bad faith misconduct that can adequately be sanctioned under applicable rules or statutes. Id. If, however, "neither the statute nor the Rules are up to the task, the court may safely rely on its inherent power." Id.
The Supreme Court's analysis in Chambers "leads to the conclusion that if statutory or rules-based sanctions powers are entirely adequate, they should be invoked, rather than the inherent power." Joseph, Sanctions: The Federal Law of Litigation Abuse, § 26(A)(1), 4th ed. (2008) (collecting cases). This Circuit has agreed. "When rules alone do not provide courts with sufficient authority to . . . prevent abuses of the judicial process, the inherent power fills the gap." Shepherd v. ABC, 62 F.3d 1469, 1474 (D.C. Cir. 1995).
In this case, there is no gap to be filled. The Court has already found sanctions warranted under Christianburg against all plaintiffs.
Footnote 12. FEI points to no authority that counsel can be sanctioned under ESA's fee shifting provision [the fee shifting provision of the Endangered Species Act ("ESA"), 16 U.S.C. § 1540(g)(4)]. To the contrary, fee awards are not available against counsel in the civil rights statutes which the courts have found analogous to the ESA. See, e.g., Amlong & Amlong, PA v. Denny's, Inc., 457 F.3d 1180, 1189 (11th Cir. 2006); Corneveaux v. CUNA Mut. Ins. Group, 76 F.3d 1498, 1508-09 (10th Cir. 1996).
And FEI has moved for sanctions against all attorneys under 28 U.S.C. § 1927. As FEI admits, the standard for a fee award under § 1927 is at least as broad as the court's authority to issue sanctions for attorney misconduct under its inherent powers. Mot. for Fees at 41-42; see also Section II.C, infra. Because the relief FEI seeks is available through rules and statutes, the Court has no "need or justification" to invoke its inherent power. Fidelity Nat'l Title Ins. Co. v. Intercounty Nat'l Title Ins Co., 412 F.3d 745, 752 (7th Cir. 2005).
C. Sanctions Against Counsel Pursuant to 28 U.S.C. § 1927
Section 1927 empowers a court to assess attorneys' fees against counsel "who so multiplies the proceedings in any case unreasonably and vexatiously. . .." 28 U.S.C. § 1927. The Circuit "has not established whether the standard [for unreasonable and vexatious conduct under section 1927] should be recklessness or the more stringent bad faith." La Prade v. Kidder Peabody & Co., Inc., 146 F.3d 899, 905 (D.C. Cir. 1998) (citations omitted).
The Court of Appeals has cautioned that the power to sanction attorneys individually "is a power which the courts should exercise only in instances of serious and studied disregard for the orderly process of justice." United States v. Wallace, 964 F.2d 1214, 1220 (D.C. Cir. 1992)(quoting Overnite Transp. Co. v. Chicago Indus. Tire Co., 697 F.2d 789, 795 (7th Cir. 1983)). Recklessness is a "high threshold . . . and in general requires deliberate action in the face of a known risk, the likelihood or impact of which the actor inexcusably underestimates or ignores." Id. at 1219-20. A finding of subjective bad faith requires "willfulness" or "deliberate intent to harm." American Hosp. Ass'n v. Sullivan, 938 F.2d 216, 221 (D.C. Cir. 1991). The bad faith must also be material to warrant sanctions; in other words, it must have occurred in an area "critical to the success of [plaintiffs'] case." Perichak v. Int'l Union of Electrical Radio & Machine Workers, 715 F.2d 78, 84 & n.9 (3d Cir. 1983); see also Ass'n of Amer. Physicians & Surgeons, Inc. v. Clinton, 187 F.3d 655, 661 (D.C. Cir. 1999). Regardless of whether the applicable standard is bad faith or recklessness, a finding of vexatiousness under § 1927 must be supported by clear and convincing evidence. Alexander v. FBI, 541 F. Supp. 2d 274, 303 (D.D.C. 2008).
"[A] sanctioned attorney must receive specific notice of the conduct alleged to be sanctionable and the standard by which that conduct will be assessed, and an opportunity to be heard on that matter." Lapidus, S.A. v. Vann, 112 F.3d 91, 97 (2d Cir. 1997); see also Felheimer, Eichen & Braverman v. Charter Tech., 57 F.3d 1215, 1225 (3rd Cir. 1995) (due process prior to sanctioning an attorney is satisfied when attorneys were "provided with sufficient, advance notice of exactly which conduct was alleged to be sanctionable[.]").
Footnote 13 For this reason alone, FEI's claim against all counsel other than Ms. Meyer and Mr. Glitzenstein is denied. Aside from a single footnote in its opening brief and single paragraph in its reply, FEI cites no specific actions by other attorneys which could be construed as providing the "specific notice" required before a § 1927 sanctions are imposed. Moreover, the chart created by FEI, purporting to be "a summary of the . . . FOFs and COLs that support . . . FEI's claims" under § 1927, only contains references to Ms. Meyer and Mr. Glitzenstein. See Mot. for Fees at 4, n.7 and at 41, n.36; see id., Ex. 6 at 9-10 (Chart Created by FEI to Show FEI's Entitlement to Fees Under 28 U.S.C. § 1927). In any event, FEI's argument lacks merit. FEI accuses the other attorneys of nothing more specific than being listed as counsel of record at various points during the litigation and signing their names to various pleadings, the significance of which is unexplained. FEI has provided no evidence, much less clear and convincing evidence, by which the Court could find they are personally liable for FEI's attorneys' fees.
Neither FEI nor the plaintiffs have acknowledged that the standard for sanctions under § 1927 in this Circuit is unsettled, nor have they suggested which standard the Court should use to analyze the attorneys' conduct. To determine whether the attorneys' conduct is sanctionable in this Circuit in light of this uncertainty, the Court examines the cases in which the Circuit has awarded sanctions under § 1927. Critical to each case was a showing that the sanctioned attorney had actual knowledge that his action was willfully disobedient or otherwise mendacious at the time he engaged in the conduct.
For example, in LaPrade v. Kidder Peabody, plaintiff's counsel filed an ex parte motion in state court to stop an ongoing arbitration, notwithstanding the fact that a federal court had ordered the arbitration to proceed and had retained jurisdiction over the underlying case pending arbitration. Plaintiff had the same counsel for all proceedings; accordingly, counsel knew of the federal court's ongoing jurisdiction. Moreover, counsel did not inform either court - state or federal - about the other court's involvement in the case. 146 F.3d 899 (D.C. Cir. 1998). Likewise, in Fritz v. Honda, counsel was sanctioned for (1) refusing to dismiss his case after being informed that service was insufficient, forcing defendant to file a motion to dismiss which he did not oppose; (2) taking discovery in federal court despite the fact that he had no intention of proceeding with federal litigation and had already filed an identical case in state court; and (3) telling his client not to appear for her deposition. 818 F.2d 924 (D.C. Cir. 1987). The remaining cases similarly demonstrate the attorney's actual knowledge that his conduct was vexatious or in bad faith at the time he engaged in the conduct. See, e.g., McLaughlin v. Bradlee, 803 F.2d 1197 (D.C. Cir. 1986) (plaintiff attorney filed a fourth lawsuit, substantially identical to three previous lawsuits he had filed and lost; he continued to file meritless motions after the court warned him he would be subject to sanctions); Reliance Ins. Co. v. Sweeney, 792 F.2d 1137 (D.C. Cir. 1986) (attorney failed to identify any disputed facts in motion for summary judgment; after losing, he appealed and again refused to identify any facts in support of his case).
Footnote 14. On the other hand, courts in this Circuit have refused to impose § 1927 sanctions for conduct which did not include actual knowledge and intentional conduct. See, e.g., United States v. Wallace, 964 F.2d at 1220 (reversing sanctions on attorney who erred by failing to subpoena witnesses for trial, resulting in a delay of proceedings, where there was no evidence that the attorney "intended to delay the trial or to not subpoena witnesses for the trial."); Alexander v. FBI, 541 F. Supp. 2d at 305 ("no evidence" that counsel "knowingly submitted false testimony" or that they acted "with an intent to mislead [the] Court.").
Applying these principles to this case, the Court finds, by clear and convincing evidence, that § 1927 sanctions against Katherine Meyer and her law firm, MGC, are warranted for her participation in Rider's response to his 2004 interrogatories.
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