Have you ever been infuriated by a frivolous case filed against your client? Forced to respond to a legal argument of such utterly dubious logic that it left you speechless (for example, opposing counsel recently argued that my client’s claim was premature . . . but also time-barred; so the lawsuit was, at the same time, too early and too late)? Opposing counsel using endless bad-faith discovery tactics to disrupt your client’s business and tie up its employees in disputes? Litigants with marginal claims often get away with filing meritless suits, making unsupported arguments, or conducting overbroad discovery in the hopes of grinding down an opponent’s resolve. There are creative ways, however, to protect your client from bad-faith tactics and apply pressure to litigants or their counsel in the place that generally matters most to them: their pocketbook.
At the Outset
Sanctions for the initial pleading. Rule 11 of the Federal Rules of Civil Procedure (and state court analogues) requires that pleadings, motions, and other papers be signed by an attorney who certifies that (1) the filing is not for an improper purpose; (2) the filing is warranted by law and is nonfrivolous; and (3) factual contentions have evidentiary support or will likely have evidentiary support after discovery. Sanctions for violating the rule “may include nonmonetary directives; an order to pay a penalty into court; or, if imposed on motion and warranted for effective deterrence, an order directing payment to the movant of part or all of the reasonable attorney’s fees and other expenses directly resulting from the violation.” Rule 11 sanctions do not, however, apply to discovery; instead, Rule 37 would be the operative procedural vehicle for sanctions related to discovery violations.
Most courts strictly apply the requirements of Rule 11, however, and it is inadvisable to take any shortcuts if you are seriously seeking sanctions against an opponent. Rule 11 provides:
A motion for sanctions must be made separately from any other motion and must describe the specific conduct that allegedly violates Rule 11(b). The motion must be served under Rule 5, but it must not be filed or be presented to the court if the challenged paper, claim, defense, contention, or denial is withdrawn or appropriately corrected within 21 days after service or within another time the court sets.
Making a request for Rule 11 sanctions within the body of another motion or an opposition does not satisfy the rule. Nor does sending a letter threatening Rule 11 sanctions. The motion must be served on the offending party, but not filed, to allow the perpetrator 21 days’ safe harbor to withdraw the violative filing. These strict requirements are frequently glossed over or ignored, leading courts to deny the request for sanctions. See, e.g., Bohnenstiehl v. Wright Med. Grp., Inc., 2014 WL 319652, at *4 (E.D. Mo. Jan. 29, 2014) (motion for Rule 11 sanctions denied where defendants did not file a separate motion or comply with the safe harbor provision).
Fee shifting. While the American Rule—i.e., that each party is responsible for paying its own attorney fees regardless of the outcome—is alive and well in the United States, there are jurisdictions that have, through state statute, created fee-shifting incentives to encourage settlement.
For example, Florida has enacted Florida Statute 768.79, which provides:
In any civil action for damages filed in the courts of this state, if a defendant files an offer of judgment which is not accepted by the plaintiff within 30 days, the defendant shall be entitled to recover reasonable costs and attorney’s fees incurred by her or him . . . from the date of filing of the offer if the judgment is one of no liability or the judgment obtained by the plaintiff is at least 25 percent less than such offer. . . .
Making such an offer in conjunction with a Florida Rule of Civil Procedure 1.442 offer of settlement can result in the plaintiff being responsible for the defense’s attorney fees and costs from the outset of the case. Notably, courts frequently have discretion to reduce or deny the award of attorney fees and costs based on various factors, such as the reasonableness and good faith of the offer and the reasonableness of the rejection of the offer based on what was known at the time. Hendrix v. Evenflo Co., 2011 WL 1299874, at *2 (N.D. Fla. Mar. 31, 2011) (denying defendant’s motion for attorney fees and costs under section 768.79 following successful Daubert ruling and summary judgment because $5,000 offer was not reasonable in light of the fact it was undisputed two-week-old infant had been in car accident where the child’s Evenflo car seat had separated from its base—similar to other recalled Evenflo car seats—and infant had signs of a brain injury).
During the Litigation
Sanctions for ongoing misconduct during the litigation. If opposing counsel is driving up your client’s costs with baseless and excessive disputes, 28 U.S.C. § 1927 (Counsel’s liability for excess costs) provides:
Any attorney or other person admitted to conduct cases in any court of the United States or any Territory thereof who so multiplies the proceedings in any case unreasonably and vexatiously may be required by the court to satisfy personally the excess costs, expenses, and attorneys’ fees reasonably incurred because of such conduct.
Sanctions under section 1927 can involve “situations in which counsel have acted recklessly, counsel raised baseless claims despite notice of the frivolous nature of these claims, or counsel otherwise showed indifference to statutes, rules, or court orders.” Kotsilieris v. Chambers, 966 F.2d 1181, 1184–85 (7th Cir. 1992). “If a lawyer pursues a path that a reasonably careful attorney would have known, after appropriate inquiry, to be unsound, the conduct is objectively unreasonable and vexatious.” Kapco Mfg. Co. v. C & O Enters., 886 F.2d 1485, 1491 (7th Cir. 1989). Generally, at least objective bad faith is required, which occurs when “an attorney knowingly or recklessly pursues a frivolous claim or engages in litigation tactics that needlessly obstruct the litigation of non-frivolous claims.” Eldredge v. EDCare Mgmt., Inc., 766 F. App’x 901, 907 (11th Cir. 2019).
For example, in a product liability action involving breast implants, plaintiffs’ counsel were sanctioned for filing a motion to compel and for sanctions that argued that the defendant had failed to comply with the court’s order to produce certain complaint files related to specific adverse events. In fact, the defendant had produced the required complaint files. But finding those complaint files unhelpful, plaintiffs’ counsel instead argued that the defendant should have been required to produce all complaint files from the year in question. Plaintiffs’ counsel ignored the defendant’s protestations that it had complied fully with the court’s order during a pre-filing meet and confer. Only after they filed the motion did plaintiffs’ counsel obtain a transcript of a hearing that confirmed the defendant had complied with its obligation, but plaintiffs’ counsel still did not withdraw the motion. Instead, they doubled down, arguing that despite their misinterpretation of the order, the defendant did not satisfy “the spirit” of the court’s order. In granting the defendant’s motion for sanctions under section 1927, the court held, “Prudent attorneys who had conducted a minimally reasonable pre-filing review would never have filed that motion, and they would never had persisted with that motion upon conceding that it was premised on a misunderstanding of what the court had required of [the defendant] in the October 2019 order.” Gravitt v. Mentor Worldwide LLC, 2021 WL 5564862, at *2 (N.D. Ill. Nov. 29, 2021).
Unlike Rule 11, section 1927 does not have a safe harbor provision. And unlike Rule 11, which is triggered by the signing of a pleading, section 1927 regulates attorneys’ conduct throughout the litigation and can be cumulative.
Proportionality. Proportionality is a welcome concept to many drug and medical device manufacturers when it comes to conducting discovery. Generally, the burden of discovery is largely borne by corporate defendants, while plaintiffs might produce little to no information in discovery. After the 2015 amendments, courts and litigants must now consider the various Rule 26(b) factors pertaining to proportionality when crafting discovery:
- the importance of the issues at stake in the action;
- the amount in controversy;
- the parties’ relative access to relevant information;
- the parties’ resources;
- the importance of the discovery in resolving the issues; and
- whether the burden or expense of the proposed discovery outweighs its likely benefit.
For example, in the situation described above in Gravitt v. Mentor Worldwide LLC, the district court considered a document request by the plaintiffs for the defendant manufacturer to produce individual complaint files for certain adverse events. The defendant had already produced voluminous aggregate and summary reports of those adverse events for all relevant years and argued that the production of thousands of individual complaint reports that would have to be redacted of patient information and information identifying the sources of adverse event reports would be unduly time-consuming and expensive; redaction alone would cost hundreds of thousands of dollars. It was also duplicative of discovery already produced and therefore not important to the issues in the case. The plaintiffs argued that they needed the individual complaint files to confirm the accuracy of the defendant’s aggregate and summary data, given that their claim was based on a failure to report adverse events accurately.
The district court compromised by allowing the plaintiffs to seek one year of individual complaint reports for certain adverse events, to compare those data against the aggregate and summary data already produced, and ordered the plaintiffs to pay for the cost of redacting those complaint files. If there were material discrepancies between the individual complaint files and the summary and aggregate data, the plaintiffs would be given leave to seek additional years of individual complaint files and the defendant would have to pay for redactions.
The court’s solution was a reasonable one that recognized and respected both parties’ proportionality concerns.
At the End
Costs. When a defendant prevails on summary judgment or at trial, filing a bill of costs is good practice to recoup at least some portion of the defendant’s expenses incurred in litigating the case. Rule 54(d)(1) provides that “[u]nless a federal statute, these rules, or a court order provides otherwise, costs—other than attorney’s fees—should be allowed to the prevailing party.” Federal courts have generally upheld the award of costs to prevailing parties unless an exception applies, such as indigency or fraud or misconduct of the prevailing party.
Categories of taxable costs under 28 U.S.C. § 1920 can include fees of the clerk and marshal; fees for service of summons and subpoena; transcript costs including hearing, trial, and deposition transcripts, including video; witness fees; costs of court-appointed experts; costs of interpreters; and copy fees, which has been broadly interpreted to include the costs of obtaining a plaintiff’s medical records in a case alleging injury due to a defective drug or medical device, as well as the costs of converting and processing electronically stored information for production, like TIFF conversion, branding, and optical character recognition costs. See Africano v. Atrium Med. Corp., 2022 WL 1989450, at *5–10 (June 6, 2022) (granting defendant’s bill of costs for more than $50,000 following defense verdict in medical device case).
When faced with blatantly meritless claims and bad-faith discovery tactics, defendants have numerous fee-shifting provisions available under state or federal law. Swift and decisive responses to such ploys not only compensate your client for fees and costs unnecessarily incurred but can deter future unscrupulous conduct.
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