Commercial Litigation and Arbitration

§ 1927 Sanctions Awardable for Objectively Unreasonable Conduct Manifesting a Reckless Disregard of Counsel’s Duties to the Court (10th Circuit)

Biax Corp. v. Nvidia Corp., 2015 U.S. App. LEXIS 3082 (Fed. Cir. Feb. 24, 2015):

In addition to asking for fees under 35 U.S.C. § 285, the defendants also asked for fees from Dorsey under 28 U.S.C. § 1927. Section 1927 provides:

Any attorney or other person admitted to conduct cases in any court of the United [*15]  States or any Territory thereof 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.

The district court denied this basis for the fee award. It found that Dorsey did not "exceed[] the bounds of zealous advocacy." J.A. 22. The defendants appeal that denial.

Under Tenth Circuit law, an assessment of fees under § 1927 is appropriate "only in instances evidencing a serious . . . disregard for the orderly process of justice." Braley v. Campbell, 832 F.2d 1504, 1512 (10th Cir. 1987) (quoting Dreiling v. Peugeot Motors of Am., Inc., 768 F.2d 1159, 1165 (10th Cir. 1985)). Attorney conduct that is "objectively unreasonable" and manifests "either intentional or reckless disregard of the attorney's duties to the court" is sanctionable. Hamilton v. Boise Cascade Express, 519 F.3d 1197, 1202 (10th Cir. 2008) (quoting Braley, 832 F.2d at 1512). The defendants have not argued that making an objectively reasonable argument could support sanctions under § 1927, and the district court did not abuse its discretion by deciding to deny fees under § 1927. The denial of fees under § 1927 is affirmed for the same reasons we reverse the award of fees under 35 U.S.C. § 285--because § 1927 is inapplicable when the lawyer puts forth only objectively reasonable arguments in the absence of bad faith. Therefore, we need [*16]  not address whether the "unreasonabl[e] and vexatious[]" standard of § 1927 under Tenth Circuit law is more stringent than the "exceptional" standard of § 285.

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