July 11, 2011 civil procedure

Does the Proposed Congressional Amendment to Rule 11 Solve a Problem or Create One?

By Charles S. Fax

In its current form, Rule 11 of the Federal Rules of Civil Procedure dates from 1993. The process that produced the present rule illustrates the workings of the Judicial Conference at its best. Rule 11, from its adoption in 1937 until 1983, required that an attorney or pro se party sign each paper filed in court; that the paper not be interposed for delay; and that there be “good ground to support it” to the best of the signer’s “knowledge, information and belief.” While a violation of any of these requirements theoretically was sanctionable in the court’s discretion, the rule was rarely used to regulate lawyers’ conduct. One analyst found fewer than 20 reported decisions addressing the rule between 1938 and 1976, and even fewer where sanctions were imposed.

The 1983 amendments to Rule 11, intended to put teeth into the rule, reduce unnecessary costs, and quell perceived litigation abuses, in fact did the opposite. The new rule had two major modifications. First, it broadened the import of the filer’s signature, which certified that the paper was being filed (a) in good faith; (b) for a proper purpose; and (c) that the claims and defenses were supported by existing law or a non-frivolous argument for modifying the law and  by existing evidence or the likelihood that such evidence would be forthcoming in discovery, as applicable. Second, if a court found a violation, sanctions, usually in the form of attorney fees and expenses, were made mandatory. Aggressive lawyers saw the new rule as an in terrorem tool for fee shifting. Tactical Rule 11 motions proliferated, whether warranted or not. In less than 10 years, the new rule generated over 7,000 reported decisions [PDF] and countless unreported decisions.

Under the Rules Enabling Act, the Judicial Conference is responsible for proposing new rules and amendments to the Supreme Court, which are then subject to approval by the Court and become law if approved and not subsequently vetoed by Congress. The conference took note of the explosion of sanctions litigation under the 1983 rule. Several studies were conducted; comments were obtained from the bench and bar; and hearings were held. In 1992, the Judicial Conference Advisory Committee on the Federal Rules recommended that Rule 11 be amended again to eliminate the abuses caused by the 1983 amendments.

Two key changes were adopted in 1993. First, sanctions became discretionary. Second, a “safe harbor” provision was created, whereby a party seeking Rule 11 sanctions was required to give the adverse party notice and the opportunity to withdraw the objectionable paper without penalty. The 1993 amendments have worked well. As one commentator [PDF] has noted: “[w]hile lawyers are still sanctioned for wrongful conduct under Rule 11, there is no longer a scourge of frivolous Rule 11 motions being filed. At the same time, this drop off in meritless Rule 11 motion practice has not been accompanied by an increase in groundless litigation practices.”

Enter Congress. Asserting that frivolous federal civil litigation is increasing (although empirical evidence is to the contrary), in March 2011, several legislators introduced the Lawsuit Abuse Reduction Act of 2011 (S. 533 and H.R. 996) to amend Rule 11 by eliminating the safe harbor provision and reinstating mandatory monetary sanctions. Many commentators and organizations, among them the American Bar Association [PDF] (ABA), have recognized that this could generate the very abuses that the new legislation purports to reduce, given the experience of 1983–1993, and have registered their unqualified opposition to the bill.

As important as is their substantive critique of the legislation, the comments of the ABA and others emphasize a procedural point that should be obvious to Congress—the Rules Enabling Act is the best means of ensuring that any modification of the rules achieves its intended purpose. Rather than subject the rules to the vicissitudes of political partisanship and invective, Congress should employ the analytical tool that it created, the “balanced and inclusive [Judicial Conference deliberative and investigative] process . . . [that] assure[s] that amendment of the Federal rules occurs only after a comprehensive review is undertaken [PDF].” The Rules Enabling Act works well, as exemplified by the judicial system’s experience with the 1993 amendments to Rule 11. It should be used.

Charles S. Fax is an associate editor for Litigation News.

Keywords: litigation, civil procedure, Rule 11, Federal Rules of Civil Procedure, Rules Enabling Act

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