Sanctions — Due Process Demands More Specific Notice for Client Than for Lawyer — Bad Faith for Inherent Power Sanctions Is Judged by an Objective Standard
Dial HD, Inc. v. ClearOne Commc’ns, 2013 U.S. App. LEXIS 19241 (11th Cir. Sept. 18, 2013):
First, we find unavailing Bowers's argument that he did not receive adequate notice of the district court's intent to use its inherent power to impose sanctions. A district court may impose sanctions using its inherent power "if in the informed discretion of the court . . . the Rules are [not] up to the task." Peer v. Lewis, 606 F.3d 1306, 1315 (11th Cir. 2010) (quotation omitted). Before imposing sanctions under a district court's inherent powers, the district court must make a finding of bad faith. In re Mroz, 65 F.3d 1567, 1575 (11th Cir. 1995). The court must make specific findings as to the party's conduct that warrants sanctions. In re Porto, 645 F.3d 1294, 1304 (11th Cir. 2011) (addressing a bankruptcy court's imposition of sanctions). Bad faith is an objective standard that is met if the party's conduct was objectively reckless, or outside of the bounds of acceptable conduct. Amlong & Amlong, 500 F.3d at 1241 (addressing sanctions pursuant to 28 U.S.C. § 1927).
When a court imposes sanctions under its inherent power, "[d]ue process requires that the attorney (or party) be given fair notice that his conduct may warrant sanctions and the reasons why. Notice can come from the party seeking sanctions, from the court, or from both." Mroz, 65 F.3d at 1575 (citation omitted). In the context of Rule 11 sanctions, we've said that "due process will demand more specific notice" for a client than for an attorney. Donaldson v. Clark, 819 F.2d 1551, 1560 (11th Cir. 1987). The sanctioned party must have an opportunity to respond, orally or in writing, but the district court need not hold a separate hearing before imposing sanctions. Id. "[T]he timing and content of the notice . . . will depend upon an evaluation of all the circumstances and an appropriate accommodation of the competing interests involved." Id. at 1558.
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