March 01, 2015

House panel revives debate on Rule 11 sanctions

Witnesses appearing March 17 before the House Judiciary Subcommittee on the Constitution and Civil Justice offered opposing views on H.R. 758, a bill that would amend Rule 11 of the Federal Rules of Civil Procedure to require, rather than permit, the imposition of monetary sanctions against lawyers for filing non-meritorious claims.

The legislation, which is opposed by the ABA, would circumvent the Rules Enabling Act to eliminate provisions adopted in 1993 allowing parties and their attorneys to avoid sanctions by withdrawing frivolous claims within 21 days after a motion for sanctions is served. The current system, which gives judges the option to sanction parties, replaced a mandatory sanctions provision that was in place from 1983 to 1992 but had been shown to increase non-meritorious lawsuit filings rather than reduce them.

During the hearing, Robert S. Peck, president of the Center for Constitutional Litigation, emphasized that the judiciary and the legal profession overwhelmingly support the Rule 11 amendments that went into effect in 1993 and that H.R. 758, which would undo those changes, is not needed. “The case for it is weak, while experience teaches that its passage would have calamitous consequences, increasing the expanse of litigation, distracting parties and judges from the substance of cases, and slowing the progress of justice in the courts,” said Peck, who was testifying on his own behalf.

He also explained that the Rules Enabling Act, which would be bypassed by the bill, establishes a demanding process for amending the Federal Rules of Civil Procedure. Under that act, the Judicial Conference of the United States drafts proposed rules and amendments, makes them available for public comment and submits them to the U.S Supreme Court after Judicial Conference approval. The Supreme Court transmits the proposals to Congress, which retains the final authority to reject, modify or defer any rule or amendment before it takes effect.

Other witnesses supported the legislation. Elizabeth Milito, senior executive counsel of the National Federation of Independent Business Small Business Legal Center, stressed that small business owners are easy targets for lawsuits and pay more to  fight frivolous claims. The legislation, she said, “would put teeth back into” Rule 11.

Cary Silverman, testifying on behalf of the U.S. Chamber of Commerce Institute for Legal Reform, said the bill is needed to provide those who suffer real losses due to a frivolous lawsuit with an opportunity to seek reimbursement of their attorneys’ fees in court.

In a March 23 letter submitted for the hearing record, ABA Governmental Affairs Director Thomas M. Susman wrote that the ABA disagrees with the assertion by supporters that there has been a significant increase in the filing of non-meritorious litigation in the 20 years since the rule was revised to permit the discretionary imposition of sanctions.

“Our objective in opposing the enactment of H.R. 758 is not to stifle discourse over the underlying issues,” he explained. “While we do not believe that Rule 11 requires amendment, we respect that some members of Congress are deeply concerned that frivolous lawsuits are adversely affecting the administration of justice and believe that their concerns and proposed solutions deserve a full and robust examination. The best way to accomplish this is to defer to the Rules of Enabling Act process established by Congress,”  Susman concluded.

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