Inherent Power Sanctions — Standards for Bad Faith Are Necessarily Stringent, and a Party Should Not Be Penalized for Maintaining an Aggressive Litigation Position (Good Quote) — How Frivolous Must an Argument Be to Suggest Bad Faith?

Fortune v. Taylor Fortune Grp, LLC, 2015 U.S. App. LEXIS 13788 (5th Cir. Aug. 4, 2015):

We next consider Fortune Louisiana's motion for sanctions.

"[F]ederal courts possess inherent power to assess attorney's fees and litigation costs when the losing party has 'acted in bad faith, vexatiously, wantonly or for oppressive reasons.'" Batson v. Neal Spelce Assocs., Inc., 805 F.2d 546, 550 (5th Cir. 1986) (quoting F.D. Rich Co. v. United States ex rel. Indus. Lumber, 417 U.S. 116, 129 (1974)). "The essential element in triggering the award of fees is . . . the existence of 'bad faith' on the part of the unsuccessful litigant." Id. (quoting Hall v. Cole, 412 U.S. 1, 6 (1973)). "The standards for bad faith are necessarily stringent," and "[a] party should not be penalized for maintaining an aggressive litigation posture." Id.

While we agree that the Fortunes' choice-of law argument lacks merit, it is not so frivolous as to suggest the presence of bad faith. Accordingly, we deny Fortune Louisiana's motion for sanctions.

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