Commercial Litigation and Arbitration

Sanctions — Timeliness of Motion — Rule 11 vs. Inherent Power

The moving defendant in Tojas v. Theobald, 2007 U.S. Dist. LEXIS 62321 (E.D.N.Y. Aug. 23, 2007), did not file his Rule 11 motion until after he had prevailed on the merits at trial. At that point, it was impossible for the plaintiff to withdraw any allegedly frivolous claims. That meant that the plaintiff could not, by definition, take advantage of the 21-day safe harbor of Rule 11(c)(1)(A). Therefore, in accordance with well-established precedent, the District Judge Denis R. Hurley denied the Rule 11 motion as untimely. The interesting wrinkle is that the defendant also sought sanctions under the court’s inherent power, and there is no similar safe harbor from inherent power sanctions. The Court noted that the challenged conduct was clearly covered by Rule 11, a prominent factor militating against inherent power sanctions, under the Supreme Court’s decision in Chambers v. NASCO, Inc., 501 U.S. 32 (1991), which holds that, "when there is bad-faith conduct in the course of litigation that could be adequately sanctioned under the Rules, the court ordinarily should rely on the Rules rather than the inherent power." Judge Hurley reasoned that: ‛Defendant could have utilized Rule 11 earlier in the litigation. His failure to do so, together with his failure to make any dispositive motions in this case, call into question the merits of the argument he now advances.“ Inherent power sanctions also denied.

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