WHEN ATTORNEYS MAY BE ASSESSED THEIR OPPONENT'S FEES: THE STING OF FRCP I I

Attitudes of the judiciary concerning misuse of the legal system by attorneys have dramatically shifted in recent years.' Federal judges are examining the conduct of lawyers much more strictly2 and are "taking more power [in] enforcing . . . the obligations of coun~el . "~ A 1985 American Bar Association survey concluded that an increasing number of sanctions are being ordered against trial lawyers,' including payment of the opposing counsel's fees.5 This trend can largely be attributed to the greater role federal district judges are permitted in policing counsel misconduct through the amendment to Rule 11 of the Federal Rules of Civil Procedure.= Rule 11 makes attorneys accountable for the legiti- macy of motions they file or papers they sign.' This article will first briefly examine the methods used in the past by the courts to tax attor-

1 . Ogden, Misuse of Legal Proceedings: Legal and Ethical Consequences of Frivo- lous Liligation, L.A. Daily Report, May 16, 1986, at 10, col. l .

2 . Id.; see also Sanctions: Rule 11 and Other Powers, 1986 A.B.A. LIT. SEC., FED. PROC. COMM. 3.

3. DeBenedictis, Study Finds Use of Federal Sanctions on the Rise, L.A. Daily Re- port, Oct. 18, 1985, at 3, col. 1 (quoting William Robinson, attorney who surveyed the Ninth Circuit for the study).

4. Sanctions: Rule I 1 and Other Powers, supra note 2, at 3. 5. DeBenedictis, supra note 3, at 3. 6. See id. 7 . Federal Rule of Civil Procedure 11. Signing of Pleadings, Motions, and Other

Pleadings. Every pleading, motion and other paper of a party represented by an attor- ney shall be signed by at least one attorney of record . . . The signature of an attorney . . . constitutes a certificate by him that he has read the pleading, motion, or other paper; that to the best of his knowledge, information, and belief formed after reasona- ble inquiry it is well grounded in fact and is warranted by existing law or a good faith argument for the extension, modification, or reversal of existing law, and that it is not interposed for any improper purpose, such as to harass, or to cause unnecessary delay or needless increase in the cost of litigation . . . If a pleading, motion, or other paper is signed in violation of this rule, the court, upon motion or upon its own initiative, shall impose upon the person who signed it, a represented party, or both, an appropriate sanction, which may include an order to pay to the other party or parties the amount of the reasonable expenses incurred because of the filing of the pleading, motion, or other paper, including a reasonable attorney's fee. [Hereinafter cited as FRCP 11 as amended].

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ney fees of one lawyer to his adversary at law. Next, the changes made in Rule 11 by its 1983 amendment will be examined, along with how these changes have been interpreted by the federal bench. Finally, a plea is extended to the legal profession to see Rule 11 for what it is - only a minimum standard.

11. THE AMERICAN RULE AND ITS EXCEPTIONS

In 1796, the United States Supreme Court formulated what has become known as the "American rulewe- generally, a prevailing party in a lawsuit may not recover his attorney fees.9 Though this rule is still the foundational principle,lO numerous exceptions have been created both statutorilyll and through the common law.I2 Before 1983, the ex- plicit statutory exceptions, 28 U.S.C. 192713 and 42 U.S.C. 1988,'' were considered the most effective methods of obtaining the reversal of fees.15 Rule 11 in its amended form now "provides a somewhat more expansive standard for the imposition of attorneys' fees."16

111. THE OLD RULE 11 AND ITS FLAWS

Rule 11 has not always been so potent. Though early cases con-

8. Arcambel v. Wiseman, 3 U.S. (3 Dall.) 306 (1796). 9. Mallor, Punitive Attorneys' Fees For Abuses of the Judicial System, 61 N.C.L. REV.

613 (1986); Nemeroff v. Abelson, 620 F.2d 339, 348 (2d Cir. 1980); Aleyska Pipeline v. Wilderness Soc'y, 421 U.S. 240 (1974).

10. See Mallor, supra note 9, at 616. 11. Eastway Construction v. City of New York, 762 F.2d 243, 252 (2d Cir. 1985). 12. See generally Johnson & Cassady, Frivolous Lawsuits and Defensive Responses

to Them- What Relief is Available, 36 Ah. L. REV. 927 (1985); Comment, Sanctions Imposed by Courts on Attorneys Who Abuse the Judicial Process, 44 U. CHI. L. REV. 619 (1977).

13. 28 U.S.C. 5 1927 (1982). Any attorney or other person admitted to conduct cases in any court

of the United States or any Territory thereof who so multiplies the pro- ceedings in any case as to increase costs unreasonably and vexatiously may be required by the court to satisfy personally excess costs, expenses, and attorneys' fees reasonably incurred because of such conduct.

14. 42 U.S.C. 5 1988 (1982). In any action or proceeding to enforce a provision of sections 1981,

1982, 1983, 1985, and 1986 of this title, title IX of Public Law 92-318, or title VI of the Civil Rights Act of 1964, the court, in its discretion, may allow the prevailing party, other than the United States, a reasonable attorney's fee as part of the costs.

15. Nemeroff, 620 F.2d at 348. 16. Eastway Construction, 762 F.2d at 253.

The Sting of FRCP 11 171

tend that the original 1936 version created "strict accountability" for attorneys,17 in reality, the rule had only a de minimus effect on actual conduct.lB Rule 11, from its 1936 drafting until 1983, had several crucial flaws which prevented it from being an effective tool of the courts.

The most disabling of these flaws was the lack of a stringent ob- jective standard. The rule stipulated that the pleading be signed by the attorney, only if, according to his "knowledge, information and belief, there [was] good ground to support it."le If there was such a ground in the lawyer's mind, there was no need to go outside the "four corners of the pleading.'f20 Furthermore, disciplinary sanctions, beyond a strik- ing of the pleading, could be imposed only if the attorney had willfully violated the r~ le .2~ The smallest amount of subjective good faith pro- vided a "safe harbor" for the attorney.22

Other textual infirmities contributed to the rule's ineffectiveness. The rule's precatory language left the imposition of sanctions for viola- tions completely to the judge's discretion: "an attorney may be sub- jected to appropriate disciplinary action."23 Such language also fails to mention any specific sanction which a judge may impose. Also, under the old rule the only improper purpose for introducing a pleading was delay.24 Clearly, the original draft of Rule 11 was defective. It was im- perative that the objective as well as the modus operandi of the rule be reconsidered.

IV. THE AMENDMENT

In 1983, the Advisory Committee on Civil Rules, recognizing that Rule 11 had been ineffective in discouraging groundless pleadings,25 drafted a revision of the rule. The amendment gave the rule considera- ble bite by imposing an affirmative duty upon counsel to investigate a motion or pleading before it is 0ffered.~6 The sufficiency of that investi-

17. United States v. American Surety Co. of New York, 25 F. Supp. 225, 226 (E.D.N.Y. 1938).

18. 5 C. WRIGHT & MILLER, FEDERAL PRACTICE & PROCEDURE 5 1333 (1969). 19. FRCP 11 as amended, 28 U.S.C. app. 540, 540-41 (1982). 20. Carter, History and Purpose of Rule 77 , 54 FORDHAM L. REV. 4 (1985). 21. Original text of FRCP 11. 22. Eastway Construction, 762 F.2d at 253. 23. Original text of FRCP 11 (emphasis added). 24. See id. 25. Carter, supra note 20, at 4. 26. Advisory Committee's note to 1983 Amendment of Rule 11, Moore's Federal

Practice, Federal Rules Pamphlet 110-1 1 (1987).

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gation is now to be judged by an objective standard, reasonableness under the circumstance^.^^ Accordingly, the federal bench was quick to revise the way it looked at requests for Rule 11 sanction^.^^ Assertions by an attorney "that he had acted in good faith, or that he was person- ally unaware of the groundless nature of an argument or claim" were no longer ex~nerating.~~

The revised text made it clear that judges were no longer to be hesitant in employing Rule 11. The precatory language of the prior rule was rejected in favor of mandatory provisions. Upon violation of the rule, the court, by request or by its own initiative, shall impose sanc- tions.30 Though the judge may choose the appropriate sanction, the Rule 11 language reminds him that the ruling "may include an order to pay to the other party or parties the amount of the reasonable ex- penses incurred because of the filing of the pleading, motion, or other paper, including a reasonable attorney's fee."al

Finally, the scope of Rule 11's application has been broadened in two specific areas. Whereas, the "old" Rule 11 applied only to im- proper use of pleadings,32 the amendment requires that motions and other papers bear the same level of legit imac~.~~ Also, delay is no longer the only improper purpose for which a pleading may be intro- duced. Pleadings, motions, or other papers submitted to harass or to needlessly increase litigation expenses now command Rule 11 sanction^.^^

V. THE APPLICATION OF RULE 11 IN RECENT CASES

The attorney must make the required "reasonable inquiry" by de- termining that a pleading is "well grounded in fact and is warranted by existing law" or at least, that it presents a justifiable request for a change in present law.a5 Recent cases in which attorneys have been assessed their opponents' fees illustrate what judges consider to be a reasonable inquiry and what that inquiry should uncover regarding fac-

27. Id.; Eastway Construction, 762 F.2d at 253. 28. 762 F.2d at 253. 29. Id. 30. FRCP 11 as amended, Advisory Committee's Note to 1983 Amendment of

Rule 11, supra note 26, at 113. 31. FRCP 11 as amended (emphasis added). 32. Original text of FRCP 11. 33. FRCP 11. 34. Id. 35. Id.

The Sting of FRCP 11 173

tual grounding and legal foundation. Pleadings lacking sufficient factual grounding resulted in Rule 11 pu-

nitive awards of attorney's fees in Florida Monument Builders v. All Faiths Memorial garden^,^^ Wold v. Minerals Engineering CO.,~' and Van Berkel v. Fox Farm and Road Ma~hinery.~~ Florida Monument Build- ers stands for the proposition that if an attorney draws a complaint against multiple defendants, he should make sure each defendant is im- plicated by conducting separate inquir ie~.~~ The attorney in Florida Monument Builders was sanctioned for failing to make "independent investigation[sl" before filing conspiracy charges against fifty defend- a n t ~ . ~ ~ Had the attorney even taken the time to examine public docu- ments on file at the state capital, he would have discovered the suits were gro~ndless.~' In Wold, the attorneys hastily filed a Motion to Dis- qualify before conducting the mandatory reasonable inquiry. Rule 11 sanctions were levied when the court found that "[nlo personal inter- views of knowledgeable witnesses were conducted, and the limited telephone inquiries did not meaningfully address the relevant facts."42 Finally, Van Berkel held that an attorney can no longer blindly base his claim on the client's unverified statements, especially if facts arise that may put those statements into question.43 The attorney in Van Berkel filed what would have been a well-grounded suit had it not been outside the statute of limitations. The attorney's client had given him a contrived date as the date of injury. The fabricated date would have put the action well within the tort statute of limitations. The court or- dered the plaintiff's attorney to pay the defense attorney's fees, main- taining that a reasonable inquiry should have uncovered the discrep- ancy between the client's statements and medical records.44 A "minimal investigati~n"~~ is the initial hurdle to be cleared if an attorney is to shield himself from Rule 11 sanctions.

However, a competent factual inquiry must be followed by an equally competent legal inquiry. The rule is applied with the same con-

36. 605 F. Supp. 1324 (S.D. Fla. 1984). 37. 575 F. Supp. 166 (D. Colo. 1983). 38. 581 F. Supp. 1248 (D. Minn. 1984). 39. 605 F. Supp. at 1326. 40. Id. 41. Id. 42. 575 F. Supp. at 167. 43. 581 F. Supp. 1248. 44. Id. at 125@51. 45. Id. at 1250.

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viction against pleadings, motions and papers filed when unwarranted "by existing law, or a good faith argument for the extension, modifica- tion or reversal of existing law."4e In Lepucki v. Van Wormer,47 the court made it clear that it would not tolerate an attorney's use of a baseless claim as a soapbox to advocate eccentric personal philoso- phie~.~a In Lepucki, the attorney for the plaintiff sought an injunction proscribing his client's employer from paying his client's wages in paper currency; since it was no longer backed by gold and, therefore, not "real."4e In a caustic opinion, the court not only taxed the plaintiff's attorney with his opponent's fees per Rule 11, but added on all remain- ing defense costs under the authority of 28 U.S.C. 1927.50

In Cannon v. Loyola University of Chicago, the attorney was sanc- tioned for his total lack of respect for the legal doctrine of res judicata. After lawsuits against seven different defendants were dismissed, the attorney reinstated new suits against all seven defendants. He alleged different grounds for recovery but based the suits upon the same un- derlying fact s i tuat i~n.~~

Finally, in Rodgers v. Lincoln, the attorney found that he could not hide his frivolous claims among those which are arguably legitimate.s2 The court imposed one-third of opponent's fees on the plaintiff's attor- ney for the institution of "far-fetched" claims, though the other claims filed in the same pleading were not completely without merit.53 The unmeritorious claims were cited by the court as completely ignoring established legal precedent^.^^

One should not conclude from the above holdings that the courts will apply Rule 11 capriciously or injudiciously. The Advisory Committee stalwartly maintains that the amended rule is "not intended to chill an attorney's enthusiasm or creativity in pursuing factual or legal theo- r i e ~ . " ~ ~ The courts seem to recognize the importance of an attorney's creative freedom and have rejected requests for Rule 11 sanctions

46. FRCP 11. 47. Lepucki v. Van Wormer, 765 F.2d 86 (7th Cir. 1985). 48. Id. at 89. 49. Id. at 87. 50. Id. at 87. (Of course, Hyde appealed because "there are no dollars and a

court can enter judgment only in dollars, no court can enter a valid judgment today."). 51. 609 F. Supp. 1010 (N.D. 111. 1985). 52. 771 F.2d 194 (7th Cir. 1985). 53. Id. at 205. 54. Id. 55. Advisory Committee's Note on Rule 11, supra note 25.

The Sting of FRCP 11 175

when they. can discern any "reasonable basis" for the attorney's

VI. RULE 11: ONLY THE MINIMUM STANDARD

Rule 11, as it presently exists, is clearly superior to the 1936 ver- sion. Certainly, if district courts continue to diligently enforce its dic- tates, flagrant violators will either change their tactics or be sanctioned. Yet, it is extremely naive to think that Rule 11 is some sort of judicial cure-all. Penalties will be imposed only upon breach of a "minimum standard of professional resp~nsibil ity."~~ We must realize the greatest safeguard against abuse of our judicial process is the integrity of our

To bring about any real change, priorities must be realigned. Though the duty owing to one's client is indeed to be cherished and defended in a free society, it is not a justification for a Machiavellian approach to the practice of law. The attorney sanctioned in Van Berkel for improperly signing pleadings sought to defend his actions by pro- testing that he "had an ethical duty to [his] client."59 The trial court sagaciously responded that "[Oln the contrary, Mr. Schmidt had a pro- fessional duty to dismiss a baseless law suit . . . Attorneys are officers of the court and their first duty is to the administration of justice."60 It is an insult to sign and submit a pleading before a reasonable inquiry has determined whether a factual or legal grounding exists,

[Blecause it evidences disdain for the public, whose claims lie dor- mant because frivolous suits have diverted away scarce judicial re- sources, disdain for adversaries, who must expend time and money to defend against meritless attacks, and disdain for clients, whose trust is rewarded with legal bills, dismissals, and court-imposed ~anctions.~~

Unscrupulous, lazy, or incompetent attorneys will soon learn that Rule 11 is no longer the hollow warning it used to be. However, for those

56. Leema Enterprises v. Willi, 582 F. Supp. 255, 257 (S.D.N.Y. 1984); accord Rubin v. Buckman, 727 F.2d 71, 73 (3d Cir. 1984).

57. Lepucki, 765 F.2d at 87. 58. Id. 59. Van Berkel, 581 F. Supp. 1251. 60. Id. 61. Lepucki, 765 F.2d at 87.

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of the legal profession who may never face Rule 11 sanctions, let us embrace a higher standard.

Bart G. Harmon