Also known as: reasonable inquiries
Written by attorneys — see sources below.
An investigation or examination that a person or entity undertakes before certifying the accuracy of a disclosure or response or before making a determination about corporate interests. The inquiry must be calibrated to the information available and the stakes involved so that the resulting certification or decision rests on a good-faith factual foundation.
Shareholders of Cedar Mutual file a derivative suit alleging self-dealing in a reinsurance deal. The board appoints a committee of independent directors that retains counsel and an actuary, interviews witnesses, and reviews regulatory files before concluding that continued litigation would harm policyholder confidence. The court grants the motion to dismiss because the committee reached its conclusion after a reasonable inquiry.
In a whistleblower suit against Liberty Pharmaceuticals, defense counsel interviews project managers and searches active email systems before signing responses that state no additional responsive documents exist. The certification rests on the reasonable inquiry counsel performed into known sources of information.
River Therapeutics receives a request to admit facts about archived trial data. Counsel reviews active files and employee statements, then answers that after reasonable inquiry the company lacks sufficient information to admit or deny the matter because the archives are not readily accessible.
An attorney files a motion containing factual assertions based solely on a client's unverified oral statement. The court examines whether the attorney conducted a reasonable inquiry into readily available records before signing the paper.
In August 1983, G. Russell Chambers, the sole shareholder and director of Calcasieu Television and Radio, Inc., which operated television station KPLC-TV in Lake Charles, Louisiana, entered into a purchase agreement to sell the station's facilities and broadcast license to NASCO, Inc., for $18 million. The agreement required both parties to file the necessary documents with the Federal Communications Commission no later than September 23, 1983. By late August, Chambers had changed his mind and tried to talk NASCO out of consummating the sale, but NASCO refused. On September 23, Chambers, through counsel, informed NASCO that he would not file the necessary papers with the FCC. On Friday, October 14, 1983, NASCO's counsel informed Chambers' counsel that NASCO would file suit the following Monday in the United States District Court for the Western District of Louisiana seeking specific performance of the agreement and a temporary restraining order. On Sunday, October 16, 1983, Chambers and his attorney created a trust with Chambers' sister as trustee and his three adult children as beneficiaries, directed the president of CTR to execute warranty deeds conveying the two tracts at issue to the trust for a recited consideration of $1.4 million, and recorded the deeds early Monday morning before the suit was filed. The trustee had not signed the deeds, no consideration had been paid, and CTR remained in possession. Later that morning, NASCO's counsel appeared in district court to file the complaint and seek the TRO; when the district judge inquired about possible sales to third parties, counsel made no mention of the recordation. Within the next few days, Chambers' attorneys prepared a leaseback agreement so that CTR could remain in possession. The district court granted a preliminary injunction and entered a second TRO. Chambers then refused to allow NASCO to inspect CTR's corporate records in defiance of the injunction, resulting in a $25,000 civil contempt fine assessed against him personally. Undeterred, Chambers proceeded with a series of meritless motions and pleadings and delaying actions. At the status conference nine days before the April 1985 trial date, the District Judge again warned counsel that further misconduct would not be tolerated. Finally, on the eve of trial, Chambers and CTR stipulated that the purchase agreement was enforceable and that Chambers had breached the agreement on September 23, 1983, by failing to file the necessary papers with the FCC. At trial, the only defense presented by Chambers was the Public Records Doctrine. In the interlude between the trial and the entry of judgment, the District Court prepared its opinion. Chambers sought to render the purchase agreement meaningless by seeking permission from the FCC to build a new transmission tower for the station and to relocate the transmission facilities to that site, which was not covered by the agreement. Only after NASCO sought contempt sanctions did Chambers withdraw the application. Undeterred, Chambers convinced CTR officials to file formal oppositions to NASCO's pending application for FCC approval of the transfer of the station's license, in contravention of both the District Court's injunctive orders and its judgment on the merits. The district court entered judgment on the merits in NASCO's favor. Chambers' motions to stay the judgment pending appeal were denied. The Court of Appeals for the Fifth Circuit found the appeal frivolous, imposed appellate sanctions under Federal Rule of Appellate Procedure 38, and remanded for determination of further sanctions. On remand, NASCO moved for sanctions invoking the district court's inherent power, Federal Rule of Civil Procedure 11, and 28 U.S.C. § 1927. After full briefing and a hearing, the district court assessed $996,644.65 in attorney's fees and expenses against Chambers under its inherent power. The Court of Appeals affirmed.
View caseA party objects to producing electronically stored information on accessibility grounds. The court evaluates whether the objecting party performed a reasonable inquiry into the burden and cost of retrieval before certifying the response.
Shady Grove Orthopedic Associates, P.A., provided medical care to Sonia E. Galvez for injuries she suffered in an automobile accident. As partial payment for that care, Galvez assigned to Shady Grove her rights to insurance benefits under a policy issued in New York by Allstate Insurance Co. Shady Grove tendered a claim for the assigned benefits to Allstate, which under New York law had 30 days to pay the claim or deny it. Allstate apparently paid, but not on time, and it refused to pay the statutory interest that accrued on the overdue benefits at two percent per month. Shady Grove filed this diversity suit in the Eastern District of New York to recover the unpaid statutory interest. Alleging that Allstate routinely refuses to pay interest on overdue benefits, Shady Grove sought relief on behalf of itself and a class of all others to whom Allstate owes interest. The individual claim was worth roughly $500, which fell far short of the amount-in-controversy requirement for individual suits under 28 U.S.C. § 1332(a). The District Court dismissed the suit for lack of jurisdiction. It reasoned that N.Y. Civ. Prac. Law Ann. § 901(b), which precludes a suit to recover a penalty from proceeding as a class action, applies in diversity suits in federal court despite Federal Rule of Civil Procedure 23. Concluding that statutory interest is a penalty under New York law, it held that § 901(b) prohibited the proposed class action.
View caseA state trooper stops a vehicle and observes items suggesting criminal activity. Before extending the search, the officer makes a reasonable inquiry into whether the driver poses an immediate threat, satisfying the threshold for further action.
In a rural area of Michigan one evening shortly after midnight, Deputies Howell and Lewis observed a car traveling erratically and at excessive speed. The officers observed the car turning down a side road, where it swerved off into a shallow ditch. The officers stopped to investigate. Long, the only occupant of the automobile, met the deputies at the rear of the car, which was protruding from the ditch onto the road. The door on the driver's side of the vehicle was left open. Deputy Howell requested Long to produce his operator's license, but he did not respond. After the request was repeated, Long produced his license. Long again failed to respond when Howell requested him to produce the vehicle registration. After another repeated request, Long, who Howell thought appeared to be under the influence of something, turned from the officers and began walking toward the open door of the vehicle. The officers followed Long and both observed a large hunting knife on the floorboard of the driver's side of the car. The officers then stopped Long's progress and subjected him to a Terry protective patdown, which revealed no weapons. Long and Deputy Lewis then stood by the rear of the vehicle while Deputy Howell shined his flashlight into the interior of the vehicle, but did not actually enter it. The purpose of Howell's action was to search for other weapons. The officer noticed that something was protruding from under the armrest on the front seat. He knelt in the vehicle and lifted the armrest. He saw an open pouch on the front seat, and upon flashing his light on the pouch, determined that it contained what appeared to be marihuana. After Deputy Howell showed the pouch and its contents to Deputy Lewis, Long was arrested for possession of marihuana. A further search of the interior of the vehicle, including the glovebox, revealed neither more contraband nor the vehicle registration. The officers decided to impound the vehicle. Deputy Howell opened the trunk, which did not have a lock, and discovered inside it approximately 75 pounds of marihuana. The Barry County Circuit Court denied Long's motion to suppress the marihuana taken from both the interior of the car and its trunk. He was subsequently convicted of possession of marihuana. The Michigan Court of Appeals affirmed Long's conviction, holding that the search of the passenger compartment was valid as a protective search under Terry. The Michigan Supreme Court reversed. The court held that the sole justification of the Terry search, protection of the police officers and others nearby, cannot justify the search in this case. The marihuana found in Long's trunk was considered by the court below to be the fruit of the illegal search of the interior, and was also suppressed. The Supreme Court granted certiorari to consider the authority of a police officer to protect himself by conducting a Terry-type search of the passenger compartment of a motor vehicle during the lawful investigatory stop of the occupant of the vehicle.
View caseThe corporation must demonstrate that a qualified group of directors or a special committee conducted a good-faith investigation into the allegations and concluded that continued litigation is not in the corporation's best interests. The inquiry must be reasonable in scope given the claims and available information.
No. The rule requires only a reasonable inquiry calibrated to the facts known at the time, the nature of the claims, and practical burdens. Counsel need not pursue every conceivable source when interviews and active-system searches yield no leads to additional materials.
A party may do so only after stating that it has made reasonable inquiry and that the information it knows or can readily obtain is insufficient to enable it to admit or deny. The answer must fairly respond to the substance of the request.
…armed and presently dangerous, where in the course of investigating this behavior he identifies himself as a policeman and makes reasonable inquiries, and where nothing in the initial stages of the encounter serves to dispel his reasonable fear for his own or others' safety, he is entitled for the protection of himself and others in the…