Rule 11 Sanctions Are Not to be Imposed for Minor Alleged Offenses

Moeck v. Pleasant Valley School District, 844 F.3d 387 (3d Cir. 2016).  Motions for sanctions under Federal Rule of Civil Procedure 11 are not favored because, as Judge Shwartz pointed out in her opinion in this case today, Rule 11 sanctions “are 1) in derogation of the general American policy of encouraging resort to the courts for peaceful resolution of disputes, 2) tend to spawn satellite litigation counter-productive to efficient disposition of cases, and 3) increase tensions among the litigating bar and between [the] bench and [the] bar.”  In today’s case, defendants filed two Rule 11 motions based on alleged false statements in plaintiffs’ pleadings and in plaintiffs’ Rule 56.1 statement that was filed in response to defendants’ motion for summary judgment.  Plaintiffs moved to stay the Rule 11 motions until after a decision on summary judgment.

Before ruling on summary judgment, the District Court denied the Rule 11 motions.  Thereafter, defendants won summary judgment.  They appealed the denial of their sanctions motions.  Plaintiffs did not appeal the grant of summary judgment against them.  Applying the abuse of discretion standard of review that applies to rulings on Rule 11 motions, Judge Shwartz affirmed the District Court’s decision to deny sanctions.

Defendants first argued, based on a local rule, that because plaintiffs had not opposed the Rule 11 motions, those motions should have been treated as unopposed.  The District Court had not done that.  Judge Shwartz found that it was proper not to treat the motions as unopposed.  “Although Plaintiffs did not specifically file a brief in opposition to that Rule 11 motion, …. Plaintiffs in essence asserted that the fact-sensitive issues raised in [defendants’] sanctions motions would best be evaluated at the summary judgment stage and accordingly opposed consideration of the Rule 11 motion on that basis.”

On the merits, there was no abuse of discretion by the District Court in denying the Rule 11 motions.  Though “Some discrepancies exist between the complaints and Plaintiffs’ submissions in opposition to [a] summary judgment motion, on the one hand, and facts elicited through discovery, on the other, but Plaintiffs’ pleadings have a factual basis and are not patently unmeritorious or frivolous.”  Some of the alleged falsehoods were about minute or “immaterial” issues of fact, and Judge Shwartz cited the Advisory Committee comment to Rule 11 that states that “Rule 11 motions should not be made or threatened for minor, inconsequential violations ….”  Other alleged misrepresentations occurred during discovery, and Rule 11 does not apply to discovery, according to Rule 11(d) and caselaw.

Finally, Judge Shwartz, quoting the District Court, noted that counsel in this case had filed numerous motions, including “numerous motions for sanctions, motions for discovery and even a motion to disqualify counsel.”  Rule 11 motions should “conserve rather than misuse judicial resources.”  Thus, “the District Court did not  err in noting that Defendants’ Rule 11 motions were, essentially, a waste of judicial resources.”

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