Requests for sanctions are becoming more and more commonplace and warrant developing risk management protocols. Whether it is a letter sent pursuant to Federal Rule of Civil Procedure (“FRCP”) 11 or a state law equivalent, the threat of sanctions should not be taken lightly. Prior to initiating a lawsuit or asserting a claim, the factual and legal basis for doing so needs to be properly vetted. This Article discusses FRCP 11 and frivolous litigation letters from a practice and risk management perspective to provide practitioners with a helpful refresher for the New Year.
FRCP 11
Distilled to its essence, FRCP 11 requires that a lawyer conduct an analysis of the factual and legal basis for a motion or pleading. The lawyer’s signature certifies to the court that the lawyer (1) reviewed the papers, (2) performed a reasonable inquiry as to the contents, (3) is satisfied that the facts and law are sufficient, and (4) is not submitting the papers in bad faith or for an improper purpose. See Fed. R. Civ. P. 11(b)(1)-(4); see also In re Keegan Management Co. Sec. Litig., 78 F.3d 431 (9th Cir. 1996) (reversing imposition of sanctions where the “lower court based its decision on … on plaintiffs’ attorneys’ subjective knowledge at the time they filed the complaint[…] while it is true that reckless filings may be sanctioned, and nonfrivolous filings may also be sanctioned, reckless nonfrivolous filings, without more, may not be sanctioned.”). A party may move for sanctions under FRCP 11 only after providing the other party with notice of the deficiency – or frivolity of the papers - and a reasonable opportunity to respond. “Threatening sanctions casually or as a matter of course has no place among officers of the court—again, except in the most egregious cases and, then, only as a last resort.” Harrison Prosthetic Cradle Inc. v. Roe Dental Lab’y, 608 F.Supp.3d 541, 550 (N.D. Oh. 2022).
In many cases, a client’s interests can be best served by the early use of a letter warning of a FRCP 11 violation and leveraging the risk of facing potential sanctions or paying attorneys’ fees if there is not a course correction. Such a communication should provide the adversary with the facts as you understand them and the prevailing law or legal theory that you expect to advance. The communication should also clearly spell out why the adversary’s pleading or motion is deficient and offer them an opportunity to correct any misunderstandings or to rectify the deficiency.
Likewise, a similar form of communication can be used as a defense against a motion for sanctions under FRCP 11 or claims for malicious prosecution. For example, a plaintiff might send a letter to the defendant setting forth the essential facts and law on which the plaintiff relies. The letter also includes a request that the defendant confirm whether the parties can agree on the letter’s contents or, if not, for the defendant to identify what is disputed and why. If the defendant fails to respond, then the plaintiff can later point to this absence of a response to defend against a potential FRCP 11 motion or claim for malicious prosecution.
State Law Equivalents – Frivolous Litigation Letters
At the state level, many jurisdictions have adopted court rules modeled after FRCP 11 to deter frivolous litigation and provide sanctions against offenders. See e.g., N.J. Ct. R. 1:4-8; N.J.S.A. 2A:15-59.1 (Frivolous Litigation Statute); 42 Pa C.S. §2503 (Right of Participants to Receive Counsel Fees). Like FRCP 11, these state law equivalents are rooted in principles aimed at curbing litigation commenced for an improper purpose or to needlessly increase the cost of litigation. Available forms of relief under such rules and statutes typically include a sanction against the offending party, award of reasonable attorneys’ fees, or both.
In New Jersey, for example, courts have awarded sanctions in the form of attorneys’ fees for pleadings deemed frivolous. See e.g., Tagayun v. Americhoice of N.J., 446 N.J. 570 (App. Div. 2016) (affirming sanctions and finding “the filing of an amended complaint by both plaintiffs asserting the same claims that had just been dismissed was frivolous”); Masone v. Levine, 382 N.J. Super. 181 (App. Div. 2005) (affirming sanctions against law firm in legal malpractice case where the law firm relied on an affidavit of merit lacking in factual basis). In Pennsylvania, courts have awarded attorneys’ fees “because the conduct of another party in commencing the matter or otherwise was arbitrary, vexatious or in bad faith.” 42 Pa.C.S. §2503(9). See e.g., Scalia v. Erie Ins. Exch., 878 A. 2d 114 (Pa. Super. Ct. 2005)(affirming trial court’s award of attorneys’ fees to an insurer pursuant to 42 Pa.C.S. § 2503(9) because the insureds knew there was no factual or legal basis for their suit as the insured wife’s guilty plea to insurance fraud amounted to an admission of dishonest and fraudulent conduct in filing of insurance claim).
Have a Process in Place
Unfortunately, the threat of frivolous litigation sanctions can often be used by overzealous adversaries as a leverage tactic. Regardless, lawyers and law firms should have a formal process in place to vet such threats objectively to avoid the risks posed by the possibility of sanctions, which could potentially carry a significant award of attorneys’ fees and costs.
The Bottom Line
Lawyers can and should treat correspondence threatening potential sanctions with due consideration and the seriousness with which the issue requires. Used properly, frivolous litigation letters can be an important tool. Take the time now to review your jurisdiction’s frivolous litigation statute or court rule, and brush up on FRCP 11 for federal matters that you are handling so you can be prepared if you receive one.
Reprinted with permission from the December 5, 2024 edition of The Legal Intelligencer © 2024 ALM Global Properties, LLC. All rights reserved. Further duplication without permission is prohibited, contact 877-256-2472 or reprints@alm.com.