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Commercial Litigation and Arbitration

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Pro Se Litigant Subject to Inherent Power Sanctions for Maintaining Identical Legal Position Rejected in Earlier Case without Reasonable Arguments to Justify Reiteration

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Palmer v. Comm’r of Internal Revenue, 2012 U.S. App. LEXIS 24293 (10th Cir. Nov. 27, 2012):

The Commissioner asks that we impose $8,000 in sanctions on Palmer for maintaining a frivolous appeal. According to the Commissioner, we have already rejected Palmer's arguments as frivolous in his prior proceeding before this court, and further sanctions are appropriate to convey to Palmer that wasteful litigation is not without cost.

"This court has the inherent power to impose sanctions that are necessary to regulate its docket, promote judicial efficiency, and deter frivolous filings." Mann, 477 F.3d at 1150 (10th Cir. 2007). See also F.R.A.P. 38 ("If a court of appeals determines that an appeal is frivolous, it may . . . award just damages and single or double costs."). The court's power to impose sanctions applies equally to pro se litigants. Kyler v. Everson, 442 F.3d 1251, 1253 (10th Cir. 2006) ("[P]ro se litigants are subject to the same minimum litigation requirements that bind all litigants and counsel before all federal courts.").

We hold that sanctions are warranted in light of our previous order denying Palmer's identical arguments and his failure to present any reasonable legal arguments before this court. Sanction awards for frivolous tax appeals "are to be determined on a case-by-case basis." Wheeler v. C.I.R., 538 F.3d 773, 783 (10th Cir. 2008). In addition to providing "an effective sanction for the bringing of a frivolous appeal," sanction awards "serve as an effective deterrent to the bringing of future frivolous appeals, and . . . recompense the government for at least the direct costs of the appeal." Id. (quoting Casper v. C.I.R., 805 F.2d 902, 906-07 (10th Cir. 1986)). In Palmer's prior proceeding before this court, we reduced the Commissioner's requested sanctions from $8,000 to $4,000, noting that the case did not "present a situation in which the court or Commissioner were 'inundated' with a 'myriad of claims.'" Palmer, 2012 WL 1949326, at *2 (quoting Stearman v. Comm'r, 436 F.3d 533, 539 (5th Cir. 2006)). However, as evidenced by this appeal, the reduced sanction award of $4,000 did not serve as an effective deterrent to Palmer from bringing subsequent frivolous appeals to this court. When a taxpayer repeatedly engages in frivolous litigation to avoid paying lawful income taxes, this court has imposed the Commissioner's requested sanction award in full, especially if the taxpayer was undeterred by prior monetary sanctions. See, e.g., Ford v. Pryor, 552 F.3d 1174, 1180 (10th Cir. 2008); Kyler, 442 F.3d 1251; Williamson v. Sena, 230 F. App'x 815, 817 (10th Cir. 2007). In light of Palmer's repeatedly frivolous appeals, we grant the Commissioner's motion for sanctions in the full amount of $8,000.

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1) Rule 11 Sanctions: “No First Amendment Exception to a Rule 11 Violation” — “[T]he First Amendment Covers Novel, Nonfrivolous Arguments, But Many Frivolous Arguments Are Also Novel” (Good Quotes) — Frivolous To Continue To Make Rejected Novel Arguments; (2) FRAP 38 Sanctions: District Court In Best Position to Set Sanctions, Attorney’s Fees and Costs

3 Prerequisites for Inherent Power and § 1927 Sanctions in Second Circuit: (1) Bad Faith, (2) Conduct That Is Entirely Without Color [Thus, An Ill-Motivated Colorable Position Appears to Be Protected in the Second Circuit], and (3) Improper Purpose— “To Gain A Strategic Advantage” Is An Improper Purpose — Due Process Satisfied by Opponent’s Motion and Multiple Court Conferences, After Which Target Was Allowed to Submit Additional Letters

Inherent Power Sanctions — Untimeliness as Laches — Laches Properly Applied to Deny Sanctions Motion — Note Waived Defenses to Laches

Rule 37(c)(1) Sanctions: Substantial Justification or Harmless Error (Ninth Circuit Factors) — Erie: When State Supreme Court Has Not Squarely Addressed an Issue, Circuit Must Predict How It Would Rule, Using Intermediate Appellate Decisions, Decisions from Other Jurisdictions, Statutes, Treatises And Restatements for Guidance

(1) Appellate Review of Inherent Power Sanctions (7th Circuit): Factual Findings Reviewed for Clear Error, Choice of Sanction for Abuse of Discretion — 4-Element Test for Reversal; (2) Sanctions and Class Actions: Monetary Sanctions Properly Imposed on Defendants for Improper Communications with Class Members (Represented Parties) — “[I]f The Class And The Class Opponent Are Involved In An Ongoing Business Relationship, Communications From The Class Opponent To The Class May Be Coercive” (Good Quote); (3) Monetary Sanctions under Goodyear v. Haeger: If Same Fact-Gathering Would Have Been Conducted Absent The Misconduct, No But-For Causation — But Only “Rough Justice” Required, “Not Accountant-Like Precision” (Good Quote) — Once Misconduct Is Clear, Time Spent Ferreting It Out Compensable under Goodyear; (4) Goodyear Did Not Overrule Long-Standing Rule That Courts May Impose Modest Civil Monetary Sanctions to Curb Litigation Abuse; (5) Appellate Jurisdiction Lacking Where Sanctioned Attorney Fails to File Notice of Appeal and Lawyer’s Intent to Appeal Not Apparent from Client’s Notice; (5) Rule 11 Improper Purpose — Party May Have Many Purposes for Pursuing Claim — As Long As Claim Is Supported by Good Faith Belief in the Merits, “A Parallel Reason Does Not Violate Rule 11” — To Deny A Motion for Sanctions, The District Court Need Not Address Every Argument: “Arguments Clearly Without Merit Can, And For The Sake Of Judicial Economy Should, Be Passed Over In Silence” (Good Quote); Non-Monetary Sanction on Counsel: Complete Twice The Required Amount Of Professional Responsibility Hours For Her Next Continuing Legal Education Cycle Imposed By The State Bar

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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.

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