Commercial Litigation and Arbitration

§ 1927 Sanctions: A case may be weak, but as long as it is not without circumstantial foundation, it is not frivolous (Good Quote)

Barnhart v. Lamar Advertising Co., 2013 U.S. App. LEXIS 14174 911th Cir. July 15, 2013):

Section 1927 provides, in relevant part, that "[a]ny attorney . . . who so multiplies the proceedings in any case unreasonably and vexatiously may be required by the court to satisfy personally the excess costs, expenses, and attorneys' fees reasonably incurred because of such conduct." 28 U.S.C. § 1927. Congress designed § 1927 "to sanction attorneys who 'willfully abuse the judicial process by conduct tantamount to bad faith.'" Schwartz v. Millon Air, Inc., 341 F.3d 1220, 1225 (11th Cir. 2003) (quoting Malautea v. Suzuki Motor Co., 987 F.2d 1536, 1544 (11th Cir. 1993)). For a court to justify an award of sanctions under § 1927, three conditions must be satisfied: (1) the attorney must engage in unreasonable and vexatious conduct, (2) that conduct must have multiplied the proceedings, and (3) the amount of sanctions must bear a financial nexus to the excess proceedings. Peterson v. BMI Refractories, 124 F.3d 1386, 1396 (11th Cir. 1997).

***[T]he district court did not clearly err in finding that Barnhart and his counsel had "good grounds" to pursue this claim. (Id. at 4.) That is, counsel did not engage in unreasonable and vexatious conduct because this claim was not frivolous, and this claim did not become frivolous during the course of the litigation.

An attorney engages in unreasonable and vexatious conduct when the conduct is "so egregious that it is tantamount to bad faith." Norelus v. Denny's, Inc., 628 F.3d 1270, 1282 (11th Cir. 2010) (quoting Amlong & Amlong, P.A. v. Denny's, Inc., 500 F.3d 1230, 1239 (11th Cir. 2007)) (internal quotation marks omitted). An attorney acts in bad faith when he "knowingly or recklessly pursues a frivolous claim." Peer, 606 F.3d at 1314. Negligent conduct is not enough. Amlong & Amlong, 500 F.3d at 1241-42. "Determinations regarding frivolity are to be made on a case-by-case basis." Sullivan v. Sch. Bd. of Pinellas Cnty., 773 F.2d 1182, 1189 (11th Cir. 1985). A case may be weak, but as long as it is not "without circumstantial foundation," it is not frivolous. Hudson v. Int'l Computer Negotiations, Inc., 499 F.3d 1252, 1265 (11th Cir. 2007) (quoting Cordoba v. Dillard's, Inc., 419 F.3d 1169, 1187 (11th Cir. 2005)). When deciding if a claim is frivolous, we ask "whether th[e] evidence was so obviously deficient that [the party] and her counsel should be forced to pay . . . attorney's fees and expenses." Cordoba, 419 F.3d at 1180. Moreover, whether an attorney acts in bad faith is a question of fact that we review for clear error. See Malautea, 987 F.2d at 1544 (concluding that the district court did not clearly err in finding that the attorney had acted in bad faith).

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