Limits and Related Authority

Limits and Related Authority

Rule 11 reaches only so far. A court may sanction under it when, after notice and a reasonable opportunity to respond, the court determines that Rule 11(b) has been violated.¹ Rule 11(b) governs what a signer certifies by presenting a paper, and Rule 11(a) requires a signature on every pleading, written motion, and other paper, from an attorney of record or from a party who is unrepresented.²

Two limits follow from that text. Conduct outside the certification needs some other basis for a sanction, and every Rule 11 sanction rests on a ruling by the district court that a higher court can review. The subsections below follow both limits. The first marks the papers that Rule 11 leaves to other rules, beginning with discovery. The second shows how an appellate court reviews a Rule 11 ruling. The third identifies what a court can use when Rule 11 cannot reach the conduct, and the fourth sets the rule beside professional discipline and tort law.

A sanctions problem therefore begins with the source of power the court invoked, because each source brings its own requirements, and a lawyer sanctioned under one source cannot assume the protections of another.

Discovery Is Excluded

Rule 11 stops at the door of discovery. It does not apply to disclosures, or to discovery requests, responses, objections, and motions under Rules 26 through 37.³ The exclusion follows the rule under which a paper is made, not the stage of the case. A summary judgment motion filed while discovery is open is still a written motion under Rule 11, and a motion to compel filed the same week is not.

Discovery has its own machinery for policing abuse, and that machinery explains the exclusion. Under the federal discovery rules, the parties appear before the court during discovery only when a problem or disagreement arises over the valid scope of an inquiry.⁴ Rule 26(g) requires a signature on every discovery document. The signature certifies that the request or response is not made for an improper purpose and is not unreasonable, and a violation can bring sanctions, including attorney fees.⁵ That certificate works like Rule 11(b): a lawyer vouches for the paper, and a sanction stands behind the vouching. Rule 37 adds sanctions aimed specifically at discovery failures.⁶ Because those rules already police the exchange of information, Rule 11 can stay focused on what a litigant presents to the court as a claim, a defense, or a motion.

A discovery hearing can draw a non-discovery paper back under Rule 11. Suppose a lawyer signs an answer that denies the client's signature on a contract. The corporation on the other side objects to some of the lawyer's document requests, and the lawyer moves to compel production. Shortly before the hearing, the client tells the lawyer that the signature is hers, yet the lawyer presses on and, at the hearing, cites the complaint and the answer to show that the requests are relevant. The lawyer never mentions the signature.⁷ The motion to compel is a discovery motion, so Rule 11 does not measure it. The answer is a pleading. By citing it at the hearing, the lawyer presented the answer to the court anew and renewed the certification, at a time when the lawyer no longer believed that the answer's facts had evidentiary support and knew that nothing supported its denial of the signature.⁸ The exclusion shields the discovery paper and leaves the pleading under Rule 11.

A problem on this boundary therefore comes down to two questions: what paper is at issue, and under which rule was it made? A disclosure, request, response, objection, or motion under Rules 26 through 37 belongs to the discovery rules, with Rule 26(g) and Rule 37 supplying the certification and the sanctions. A pleading, a written motion outside those rules, or any other paper stays under Rule 11, including a pleading that a lawyer advocates during a discovery proceeding.

Appellate Review

A Rule 11 ruling goes up on appeal under a single deferential standard. The courts of appeals review all aspects of a district court's Rule 11 determination for abuse of discretion, relying on Cooter & Gell v. Hartmarx Corp.¹⁰ That standard governs the finding that the rule was violated, the decision to sanction, and the choice of sanction.

Deference has a floor. An error of law by a district court is by definition an abuse of discretion.¹¹ The reason lies in what discretion means. A judge chooses among the options the law allows, and a judge who misreads what Rule 11 requires has misjudged the range of options, so the appellate court has no exercise of judgment to defer to. Absent legal error, the trial judge who watched the case unfold keeps the last word.

Rule 11 has a history of generating litigation about itself. The rule was first promulgated in 1937, substantially amended in 1983 to increase its effectiveness, and revamped in 1993 primarily to curb the collateral litigation that the 1983 amendments produced and to introduce a 'safe harbor' from sanctions.¹² Appellate review has had its own uncertainty. One court of appeals noted a split in its own decisions over whether the decision to award sanctions is a question of law reviewed de novo, because the rule contains mandatory language, or a decision reviewed for abuse of discretion.¹³ The opinions discussed here state the abuse-of-discretion standard for all aspects of the determination.

The floor appears in a decision vacating a lawyer's suspension. A district court had suspended a practicing lawyer from practice as a Rule 11 sanction, and the court of appeals concluded that her appeal had merit and vacated the suspension.¹⁴ The opinion states the abuse-of-discretion standard and adds that an error of law by the district court is by definition an abuse of discretion.¹⁵ That addition tells a sanctioned lawyer where to aim an appeal. One kind of legal error is to treat as sanctionable an argument that Rule 11 protects, because Rule 11(b)(2) certifies that legal contentions are warranted by existing law or by a nonfrivolous argument for extending, modifying, or reversing existing law or for establishing new law.¹⁶

A second appeal shows how far the standard reaches. A district court found that three appellants violated all three prongs of Rule 11. They failed to make a reasonable inquiry to determine that the complaint was well grounded in fact and warranted by existing law, and they filed it for an improper purpose. The court of appeals stated that it reviews all aspects of those determinations for abuse of discretion.¹⁷

Review of a sanction also differs from a plausibility challenge to a complaint. A defendant who invokes the 'plausibility standard' of Twombly, as Ashcroft and Mueller did against Iqbal's allegations when they argued that high-ranking officials tend not to be personally involved in the actions of lower-level officers, attacks the allegations themselves.¹⁸ Rule 11 asks instead whether the signer made a reasonable inquiry and filed for a proper purpose, and that is the question the district court answers and the court of appeals reviews.¹⁹

Three errors lose points on this topic. The first treats a sanctions appeal as a fresh look at the merits, when the sanctioned lawyer must show that the ruling rests on legal error or otherwise exceeds the district court's discretion. The second treats deference as immunity, which the floor on legal error refutes. The third splits the ruling into a de novo finding of a violation and a deferential choice of sanction, when the standard reaches all aspects of the determination.

Inherent Power and Section 1927

A federal court draws its power to sanction from more than one source, and Rule 11 is only one of them. The courts have an inherent power to control their dockets and the people appearing before them, a power traced to Article III itself. Congress granted courts a power to sanction attorneys when it enacted 28 U.S.C. § 1927. Several Federal Rules permit a district court to sanction parties or their attorneys when the rules' mandates are violated. Each source has its own limits and requirements.²¹ In Chambers v. NASCO, Inc., the Supreme Court held that the sanctioning scheme of the statute and the rules does not displace the inherent power to sanction bad-faith conduct.²²

Chambers began as an action to compel specific performance of a contract to convey a television station and broadcast license. The defendant, Chambers, kept trying to moot the case by conveying the station to others, despite warnings and a $25,000 fine for civil contempt.²³ The trial court described his conduct in three parts: acts of fraud, nearly all outside the courtroom, meant to deprive the court of jurisdiction; false and frivolous pleadings; and tactics of delay, oppression, harassment, and massive expense meant to wear the plaintiff down. The trial court then tested each source of power. Rule 11 governs only papers filed with a court, so it could not reach the first and third categories, and the falsity of the pleadings did not become apparent until after trial, so sanctions could not have been assessed when the papers were filed. Section 1927 applies only to attorneys, so it would not reach Chambers, and the court thought the statute too narrow to reach acts that degrade the judicial system, including attempts to deprive the court of jurisdiction, fraud, and misleading and lying to the court. The court therefore relied on its inherent power, which it called particularly appropriate when the offending parties have practiced a fraud upon the court.²⁴

The Supreme Court affirmed by a 5-4 vote, holding that federal courts have inherent authority to award sanctions for litigation abuse, including fraud, even when the conduct occurred outside the courtroom.²⁵ The Court found the inherent power broader than the other mechanisms in one respect and narrower in another.²⁶ It is broader because each of the other mechanisms reaches only certain individuals or conduct, while the inherent power extends to the full range of litigation abuses, and at the very least it must survive to fill the interstices.²⁷ Chambers shows why. The sanctions answered harm to the court as well as harm to NASCO: the fraudulent transfer of assets came before the suit was filed but after Chambers had notice of it, so the District Court was policing abuse of its own process.²⁸ The same order reached nonparties. Chambers' sister, the trustee, was reprimanded, one attorney was disbarred, and two others were suspended.²⁹ The breadth also covers oral representations and behavior in the courtroom, which Rule 11 cannot reach because it applies only to papers presented to the court.³⁰

The inherent power is narrower in culpability. The narrow exceptions to the American Rule limit a court's inherent power to impose attorney's fees as a sanction to cases of bad-faith conduct or willful disobedience of court orders, while many of the other mechanisms permit fees for conduct that merely fails a reasonableness standard.³¹ Rule 11 was the Court's own example, because it imposes an objective standard of reasonable inquiry that does not mandate a finding of bad faith. It extends even to 'good heart, empty head' conduct, which Judge Posner described in Hays as 'a new form of legal malpractice' imposing a negligence standard.³² Each source thus trades reach against culpability. Rule 11 reaches only papers but accepts carelessness, and inherent power reaches the full range of litigation conduct but demands bad faith. A careless paper falls inside Rule 11 and outside inherent power, while deliberate abuse beyond the papers falls inside inherent power and outside Rule 11.

None of this makes inherent power a free substitute for the rules. Individual rules address specific problems, and in many instances it may be improper to invoke the inherent power when a rule directly applies. A decision the Court discussed in Chambers held that a court of appeals erred by relying on inherent power and Rule 41(b), instead of Rule 37(b)(2)(iii), to dismiss a complaint for failure to comply with a discovery order, because Rule 37 dealt specifically with discovery sanctions.³³ The other sources also stay in their own lanes. The amendment to § 1927 that allows fees against an attorney says nothing about a court's power to assess fees against a party.³⁴ Several rules besides Rule 11 authorize fee sanctions for pretrial and discovery conduct, including Rules 16(f), 26(g), 30(g), 37, and 56(g). Fees are one of a range of possible sanctions under Rule 11 but mandatory under Rule 16(f), and under each rule the fees are limited to those incurred as a result of the violation, although a Rule 11 violation could conceivably warrant fees covering the entire litigation if a complaint or answer was filed in violation of the rule.³⁵ Where inherent power and Rule 11 overlap, most courts follow Rule 11's procedures in cases to which it applies.³⁶

Section 1927 reaches an attorney or other person admitted to conduct cases in a federal court who multiplies the proceedings in any case unreasonably and vexatiously, and it allows the court to require that person to satisfy personally the excess costs, expenses, and attorneys' fees reasonably incurred because of the conduct.³⁷ The statute applies only to conduct that is both unreasonable and vexatious, which effectively requires a showing of bad faith, so on culpability it sits with inherent power and apart from Rule 11. Chambers shows its limit on who may be sanctioned, because the trial court declined to use the statute against Chambers, who was not an attorney.³⁸ Courts have used the statute little, whether because they are unfamiliar with it or because sanctions are more often requested under the Federal Rules of Civil Procedure.³⁹

The three sources compare on the two questions that decide which one fits: whom and what each reaches, and how culpable the conduct must be.

• Rule 11 reaches papers presented to the court, and the court may sanction an attorney, a law firm, or a party, on a showing of an objectively unreasonable inquiry.⁴⁰
• Inherent power reaches the full range of litigation conduct by parties and lawyers, including oral statements and out-of-court abuse of the court's process, and it requires bad faith.⁴¹
• Section 1927 reaches attorneys and other persons admitted to conduct cases, only for conduct that multiplies the proceedings, and it requires conduct that is both unreasonable and vexatious.⁴²

On an exam, the facts usually announce the right source. A baseless complaint filed after careless inquiry points to Rule 11, because the conduct is a paper and no bad faith is needed. A scheme of fraud on the court, a knowing lie in open court, or abuse by a litigant who is not a lawyer points to inherent power, and the answer must add that the court needs a finding of bad faith. A run of repetitive motions by a lawyer points to § 1927, with the lawyer personally liable for the excess costs. Two errors cost points here. One assumes that Rule 11 forecloses the other sources because it is more specific, which Chambers rejected.⁴³ The other carries Rule 11's objective standard into an inherent-power analysis, where bad faith is required.

Ethics and Tort Remedies

Rule 11 is one control on frivolous litigation among several, and the others differ in who applies them and why. Under Rule 11, the judge presiding over the case decides, after notice and a reasonable opportunity to respond, whether the certification was violated, and imposes any sanction in that same case.⁴⁵ The professional-conduct rules run on a separate track. Model Rule 3.1 forbids a lawyer to bring or defend a proceeding, or to assert or controvert an issue in one, without a basis in law and fact that is not frivolous. That standard resembles Rule 11(b)(2), which certifies that legal contentions are warranted by existing law or by a nonfrivolous argument for changing it,⁴⁶ and Rule 11(b)(3), which certifies that factual contentions have evidentiary support or, if specifically so identified, will likely have it after a reasonable opportunity for further investigation or discovery.⁴⁷ A violation of the professional rule can lead to discipline from the bar, a proceeding against the lawyer's license apart from the lawsuit.

Tort law gives the adverse party little against the lawyer. In Friedman v. Dozorc, the plaintiff and amici urged the court to hold that an attorney owes a present or prospective adverse party a duty of care, breach of which would support a negligence action. The court agreed with the circuit judge and the Court of Appeals that an attorney owes no actionable duty to an adverse party.⁴⁸ Rule 11 supplies from inside the lawsuit the protection that negligence law withholds. It imposes an objective standard of reasonable inquiry that does not require bad faith, and Judge Posner called it 'a new form of legal malpractice' imposing a negligence standard.⁴⁹ An adverse party who cannot sue the opposing lawyer for negligence can still ask the court to sanction a careless filing under Rule 11.