New York Attorneys JHA handles range the gamut of complex financial and commercial litigation and arbitration, including securities, RICO, corporate and contract disputes, credit default swaps, derivatives, and class, mass, and derivative actions. The firm also represents law firms in major disputes.

Commercial Litigation and Arbitration

New York Attorneys JHA handles range the gamut of complex financial and commercial litigation and arbitration, including securities, RICO, corporate and contract disputes, credit default swaps, derivatives, and class, mass, and derivative actions. The firm also represents law firms in major disputes.
Commercial Litigation and Arbitration
« Back to Complex Lit Blog

Rule 11 Sanctions on Client for Legally Frivolous Claims Reversed Even Though Issue First Raised on Appeal — Counsel’s Conflict below Excuses Untimely Assertion — Reassertion of Previously Dismissed Claims Sanctionable

Download PDF

Mitchel v. City of Santa Rosa, 2015 U.S. App. LEXIS 1348 (9th Cir. Jan. 28, 2015):

The district court did not err by concluding that the identified claims were legally unfounded and therefore sanctionable. See Fed. R. Civ. P. 11(b)(2). These claims attempted to re-litigate, without modification, contentions previously dismissed by the district court as lacking legal merit. The district court's assessment of the contents of Mitchel's pleadings is consistent with the record. Mitchel's contrary assertion on appeal is not persuasive.

***

Mitchel claims*** that he, as a represented party, may not be assessed a monetary sanction for advancing claims without legal support, pursuant to Rule 11(c)(5)(A). ***

[W]e conclude that his Rule 11(c)(5)(A) claim has merit, and therefore exercise [*4]  our discretion to consider the issue for the first time on appeal. See AlohaCare v. Hawaii Dep't of Human Servs., 572 F.3d 740, 744 (9th Cir. 2009).

The district court originally awarded attorney's fees to the city as Rule 11 sanctions, payable jointly and severally by Mitchel and Lewis. Rule 11(c)(5)(A) prohibits the imposition of monetary sanctions against Mitchel for his counsel's advocacy of legally deficient claims. Lewis signed the pleadings that the district court found lacking in legal support. By doing so, Lewis certified that these pleadings were legally sound. See Fed. R. Civ. P. 11(b)(2). Mitchel may not be held personally responsible for a sanctions award based on his counsel's violation of Rule 11(b)(2). "Monetary responsibility for such violations is more properly placed solely on the party's attorneys." Fed. R. Civ. P. 11(c)(5)(A) advisory committee's note (1993 amendment).

We recognize that this issue was not presented to the district court. However, a conflict of interest between Mitchel and his counsel may have prevented Mitchel a full and fair opportunity to litigate his Rule 11(c)(5)(A) claim in prior proceedings. Lewis's financial interest favored maintaining that apportionment of liability, while Mitchel's financial interest favored asserting his personal liability was barred by Rule 11(c)(5)(A). Although we do not reach any conclusions about whether conflict [*5]  interfered with the assertion of the claim, the possibility of a conflict is sufficient for us to exercise our discretion to consider this issue for the first time on appeal.

Taking the full import of Rule 11(c)(5)(A) into account, we must direct a modification of the sanction award. We therefore remand with instructions to assess the entire sum of attorney's fees as sanctions for advancing legally unsupported arguments solely against Mitchel's counsel. Mitchel and Lewis may remain jointly and severally liable only for the portion of the award based on the arbitrator misconduct claim. The parties shall bear their own costs on appeal.

Share this article:

Facebook
Twitter
LinkedIn
Email

Recent Posts

RICO: Indirect Injury Unrecoverable — Indirect Purchaser Rule Imported from Antitrust

Rule 11 Sanctions: (1) Improper Purpose of Harassment Reasonably Determined Based on Past Tactics (25 Lawsuits, 14 Ethics Complaints, and 150 FOIA Requests) As Well As Present Behavior — (2) Hearings Are Not Only Not Required to Satisfy Due Process But, If The Record Is Otherwise Adequate, Are Affirmatively Discouraged

RICO and Probate Exception to Federal Jurisdiction: Federal Jurisdiction over RICO Claim Not Barred by Probate Exception Even If the Federal Judgment May Be Binding on the Probate Proceedings (Or Vice Versa) — Calculating Damages Based on Diminution of Value of Estate ≠ Administration of the Estate — Doesn’t Matter If RICO Misconduct Includes Defendants’ Actions with Respect to The Estate

RICO: No Causation Where Harm Flowed Several Steps After the Fraudulent Acts — RICO Causation Same As Antitrust Causation

Sanctions vs. Automatic Stay: Imposition of Sanctions (Here, Inherent Power Sanctions) Is Subject to the Police Power Exception to the Automatic Stay in Bankruptcy

The Word “Include” May Be A Word of Limitation As Opposed to a Word of Enlargement, Depending on the Context

RICO — Pleading Conspiracy — Plaintiffs Must Plausibly Allege That the Defendants Knowingly Joined the RICO Conspiracy — Sparse Allegations of Knowledge of Fraud Due to Participation in a Commercial Transaction Insufficient to State RICO Conspiracy Claim Where Allegations Not Inconsistent with Ordinary Commercial Behavior — While Knowledge May Be Pled “Generally” under Rule 9(b), It Cannot Be Alleged Conclusorily and Must Satisfy the Twiqbal Plausibility Standard

Depositions: Improper to Object to Form to Straightforward Questions (Not Compound, Vague, Leading or Speculative) — Lack of Foundation Objection Improper in 30(b)(6) Deposition — Improper to “Educate” Witness During Breaks of 30(b)(6) Deposition Through Witness Calls to Knowledgeable Corporate Colleagues — Magistrate Judge May Impose Financial Sanctions

Spoliation/Sanctions: “A Party Does Not Spoliate Evidence When, Without Notice Of The Evidence’s Potential Relevance, It Destroys The Evidence According To Its Policy Or In The Normal Course Of Its Business” (Good Quote)

RICO: Fraud on Government Entities Causing Plaintiffs to Pay More for Inmate Calls Actionable on Bridge v. Phoenix Bond Analysis — Fact That Governments Had Separate Injuries As Part of the Scheme (from Reduced Commissions) Irrelevant — Plaintiffs’ Injuries Not Derivative of Governments’ — The Fraud on the Governments Was Not Too Distinct From Plaintiffs’ Injuries But Rather Necessary to Injure Plaintiffs — No Risk of Duplicative Recoveries and No Plaintiff Better Situated to Sue for Plaintiffs’ Injuries

Archives
New York Attorneys JHA handles range the gamut of complex financial and commercial litigation and arbitration, including securities, RICO, corporate and contract disputes, credit default swaps, derivatives, and class, mass, and derivative actions. The firm also represents law firms in major disputes.
New York Attorneys JHA handles range the gamut of complex financial and commercial litigation and arbitration, including securities, RICO, corporate and contract disputes, credit default swaps, derivatives, and class, mass, and derivative actions. The firm also represents law firms in major disputes.

New York Office

© 2024 Joseph Hage Aaronson LLC  
Disclaimer | Attorney Advertising Notice | Legal Notice