Title: Sanctions for Nonfrivolous Complaints? Implications for the Improper Purpose Prong of Rule 11
Abstract: I. INTRODUCTION A lawsuit is filed. It states a valid claim. It possesses a legitimate basis in law and fact; it is not a frivolous action. Yet, its meets notwithstanding, this lawsuit may have been filed by someone with mixed or ulterior motives. The plaintiff, or the plaintiff's attorney, may have been inspired by more than a simple desire secure judgment on a well-grounded complaint in which the plaintiff sincerely believes.(1) Arguing that the claim has been brought for an improper purpose, the opposing party moves for sanctions. Are sanctions warranted? In 1995, the United States Court of Appeals for the Second Circuit became the most recent federal appellate court to rule on this issue. Sussman v. Bank of Israel,(2) a case of first impression for the Second Circuit, presented the following question: can a court properly impose sanctions under Federal Rule of Civil Procedure 11 (Rule 11) against a party, or an attorney, who files a nonfrivolous claim for an improper purpose?(3) In other words, can the commencement of a lawsuit, well-grounded in law and fact, nevertheless subject its filer to sanctions--ranging from mild to severe(4)--merely because the motivation underlying the suit is deemed inappropriate? The Second Circuit's examination of this issue revealed divergent views among the various circuit courts that had previously addressed the question.(5) In fact, in the absence of Supreme Court guidance, two distinctly different schools of thought had arisen.(6) The more widely-held view among the circuits (majority position) reflects the philosophy that courts must be particularly cautious about imposing sanctions for the filing of a complaint, since the complaint is the vehicle through which a party has the ability to right a legal wrong.(7) Therefore, this position holds, neither a party nor the party's attorney should be deterred by the spectre of sanctions from bringing a valid claim, even when the motives [for bringing the action] are not entirely pure.(8) The competing, albeit minority' view (minority position) holds that filing a nonfrivolous (or colorable) suit for an improper purpose is a violation of Rule 11.(9) Consequently, according to this school of thought, a legally-legitimate suit can give rise to sanctions, assuming that the existence of an improper motive can be proven.(10) At the heart of this debate lies Rule 11, a rule that sets forth grounds upon which a federal court may sanction attorneys, law firms, or parties.(11) Under the current version of Rule 11(b), any pleading, written motion, or other paper presented to a court is presumed to have met four requirements.(12) Two of those requirements, that a filing not be presented for an improper purpose and that a claim be warranted by existing law or by a nonfrivolous argument for change, are central to the circuit court split.(13) According to Rule 11(c), if either of those prongs is violated, a court may impose appropriate sanctions.(14) However, under the majority position, courts effectively disregard the improper purpose prong if the filing is a complaint and the complaint is nonfrivolous.(15) Thus, the filer of a nonfrivolous lawsuit is not to be sanctioned for bringing that suit, regardless of his purpose.(16) In contrast, the minority position authorizes a court to impose sanctions if a lawsuit is either brought for an improper purpose or based upon a frivolous argument.(17) It was into this fray that the Second Circuit entered when it considered the case of Sussman v. Bank of Israel. While the court ultimately adopted the majority position and concluded that [a] party should not be penalized for or deterred from seeking and obtaining warranted judicial relief merely because one of his multiple purposes in seeking that relief may have been improper,(18) this decision resolved only the way in which Rule 11 would be applied within the circuit. The ruling did not put to rest the larger issue: the continuing division among federal appellate courts. …
Publication Year: 1998
Publication Date: 1998-06-22
Language: en
Type: article
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