Congress is currently considering revision Rule 11 sanctions, including:
Removing the existing 21 day “safe harbor” provision which requires that you send your motion to the opposing party and give them 21 days to remedy the alleged Rule 11 violation before filing the motion with the Court; and
Making an award of fees and costs related to a winning Rule 11 motion automatic, instead of discretionary.
The Federal Bar Association (of which I am a member) has published a call for comment that sets out both sides of the issue well. It follows below. I can understand the inclination to make fees and costs automatic, but the 21 day “safe harbor” serves a valuable gatekeeping role. It avoid clogging the federal courts with Rule 11 motions that could be fixed with notice of the alleged deficiency.
Proposed Amendments in H.R. 966
The H.R. 966 bill would repeal amendments that the Judicial Conference of the United States proposed for adoption effective in 1993, thereby in part reinstating an earlier version of Rule 11 that had been in force between 1983 and 1993. It would also add a new provision for punitive monetary sanctions to be paid into court.
Under the bill, there would no longer be a “safe harbor” provision that allows an adverse party to withdraw or modify a challenged pleading or other paper before a sanctions motion can be filed or otherwise presented to the court. See Fed. R. Civ. P. 11(c)(2). That safe harbor clause was adopted effective in 1993.
The bill would also provide that sanctions awards would once again be mandatory, rather than discretionary, in cases where a court has found that a pleading or other paper was signed without adequate factual or legal grounds. Sanctions had been mandatory from 1983 to 1993. The bill would specify that, in addition to any other sanctions the court might impose, “the sanction shall consist of an order to pay to the party or parties the amount of the reasonable expenses incurred as a direct result of the violation, including reasonable attorneys’ fees and costs.”
In doing so, the bill would repeal the current provision in Rule 11(c)(2) that that fees and costs “may” be awarded “if warranted.” In place of that provision, the bill would further authorize punitive monetary awards, to be paid into the court, “if warranted for effective deterrence.”
Testimony Supporting and Opposing the H.R. 966 Bill
According to testimony on behalf of the National Federation of Independent Business and the U.S. Chamber Institute for Legal Reform, the changes are necessary because frivolous lawsuits and staggering litigation costs are creating a climate of fear for America’s small businesses. In their view, the current “safe harbor” means that preparing a motion for sanctions may serve only to increase the costs for the moving party – which is, generally, the defendant. And even if a plaintiff does not withdraw his or her claims for relief, and even if the court finds them to be frivolous, the discretionary nature of the current sanctions provision means that the court may choose not to impose any sanction other than dismissing the case. These trade associations also believe that the current version of Rule 11 discourages judges from imposing sanctions for the purpose of compensating defendants for their attorney’s fees and costs.
In opposition to the H.R. 966 bill, a professor at the University of Houston Law Center has testified that the 1993 amendments of Rule 11 were adopted in the face of studies suggesting that the 1983 version of Rule 11 was deterring the filing of meritorious cases. Additionally, in practice, civil rights and employment discrimination plaintiffs were impacted the most severely under the earlier version of Rule 11 as adopted in 1983. Studies also showed that plaintiffs had been the targets of sanctions far more often than defendants, even though the terms of Rule 11 apply to all pleadings and other papers – including a defendant’s answer containing denials and affirmative defenses. Scholars and practitioners had noted that the 1983 version actually increased costs and delays by encouraging “the Rambo-like use of Rule 11 by too many lawyers,” and that the resulting increase in sanctions-oriented motions practice had led to a breakdown of civility and professionalism. This professor cited a 1991 study by the Federal Judicial Center, which revealed that few judges polled thought the then-current 1983 version of the rule was “very effective” in deterring groundless pleadings. In a 2005 survey of 278 district judges polled by the Federal Judicial Center, more than 80% of the judges said that “Rule 11 is needed and it is just right as it stands now.”
Call for Comment and Proposals from the Federal Litigation Bar
The Committee on Federal Rules of Civil Procedure and Trial Practice seeks your comments. Comments may be submitted concerning any of the proposed revisions contained in the H.R. 966 bill; or concerning any other proposals to modify Rule 11; or concerning whether to retain the text of Rule 11 as currently in force. We also welcome any other proposals that are germane to the application or purposes of Rule 11. Upon request, we will handle any comment as confidential. Anonymous comments will also be accepted.
Rob Kohn and John McCarthy are co-chairs of the Committee on Federal Rules of Civil Procedure and Trial Practice. Kohn is also the Secretary and Treasurer of the Federal Litigation Section; and McCarthy is Chapter President of the Southern District of New York chapter of the FBA. Kohn may be reached at rkohn@kohnlawgroup.com. McCarthy may be reached at jmccarthy@sgrlaw.com.
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