Case Name: AMLONG & AMLONG, P.A., Karen Coolman Amlong, et al., Interested Parties-Appellants, v. DENNY'S, INC., T.W. Services, Inc., et al., Defendants-Appellees
Court: United States Court of Appeals for the Eleventh Circuit
Jurisdiction: United States
Decision Date: 2006-07-31
Citations: 500 F.3d 1230
Docket Number: No. 04-14499
Parties: AMLONG & AMLONG, P.A., Karen Coolman Amlong, et al., Interested Parties-Appellants, v. DENNY’S, INC., T.W. Services, Inc., et al., Defendants-Appellees.
Judges: Before HULL, MARCUS and HILL, Circuit Judges.
Reporter: Federal Reporter 3d Series
Volume: 500
Pages: 1230–1276

Head Matter:
AMLONG & AMLONG, P.A., Karen Coolman Amlong, et al., Interested Parties-Appellants, v. DENNY’S, INC., T.W. Services, Inc., et al., Defendants-Appellees.
No. 04-14499.
United States Court of Appeals, Eleventh Circuit.
July 31, 2006.
As Amended Oct. 10, 2006.
As Amended Sept. 17, 2007.
George Cochran, The University of Mississippi, Law Ctr., University, MS, for Appellants.
Jon K. Stage, Stearns, Weaver, Miller, Weissler, Alhadeff & Sitterson, P.A., Ft. Lauderdale, FL, Joan M. Canny, Stearns, Weaver, Miller, Weissler, Alhadeff & Sit-terson, P.A., Averill G. Marcus, Averill G. Marcus, P.A., Miami, FL, A. Hinda Klein, Conroy, Simberg, Ganon, Krevans, Abel, Lurvey, Morrow & Schefar, Hollywood, FL, for Appellees.
Before HULL, MARCUS and HILL, Circuit Judges.

Opinion:
MARCUS, Circuit Judge:
Karen Coolman Amlong, William R. Am-long, and their law firm, Amlong & Am-long, P.A., appeal from a district court order imposing sanctions in excess of $400,000, under 28 U.S.C. § 1927, for their conduct in representing a Title VII plaintiff in a sexual harassment lawsuit. After thorough review, we conclude that the district court committed reversible error when, after referring the issue of sanctions to a magistrate judge for an evidentiary hearing and Report and Recommendation, the district court discarded numerous findings of fact and credibility determinations made by the magistrate judge and substituted its own findings of fact on bad faith, without conducting any evidentiary hearing. The district court also abused its discretion in ordering the Amlongs to pay 10 percent back interest on a portion of the sanctions, and we, therefore, reverse that portion of the sanctions award too.
I.
The basic facts in the case are these: In May 1994, a former client introduced Miami attorney Debra Valladares to the plaintiff in this Title VII case, Floride Norelus, a Haitian immigrant. Norelus told Valla-dares that she had suffered a horrific pattern of sexual harassment, rape, and assault at the hands of Asif Jawaid, the manager of a Denny's restaurant where she worked. According to Norelus's second amended complaint, Jawaid repeatedly forced her to have oral, vaginal, and anal sex with him in the Denny's restaurant and at his home. Norelus claimed that when she refused Jawaid's sexual demands, Jawaid assigned her unpleasant duties or otherwise punished her. She added that the manager, Jawaid, extracted sexual favors in exchange for job advantages, refused to file paperwork reflecting her alien status, and threatened to report her to the immigration authorities. Nore-lus also said Jawaid forced her to have sex with his roommate, Raheel Hameed, at their home and at another Denny's restaurant that Hameed managed. On one occasion, Norelus recounted, Jawaid and Ha-meed took her to their home, restrained her, repeatedly raped her, and penetrated her vagina with an object. Norelus stated that she informed Denny's authorities of the abuse, but they failed to take proper remedial steps. Jawaid allegedly retaliated by reducing Norelus's work hours and changing her work schedule.
Attorney Valladares met with Norelus, along with Valladares's former client, David Hill, and two of Norelus's brothers, for three hours. During this meeting, according to Valladares's testimony during the sanctions hearing conducted by the magistrate judge, one of Norelus's brothers told Valladares that Jawaid had personally confessed to having abused Nore-lus. Valladares said she also visited the two Denny's restaurants where Norelus claimed to have been abused. Valladares said a Denny's employee told her (in Valla-dares's words) that Jawaid "definitely had a thing for [Norelus] and that she was like his property," and a Denny's patron told Valladares he had seen Jawaid mistreat Norelus. Neither individual, however, confirmed having witnessed sexual misconduct of the kind that Norelus alleged.
Valladares then sought assistance from another Miami attorney, Joseph Cham-brot, and the two lawyers later sought out the Amlongs, who are well known South Florida Title VII lawyers. Working from a sample complaint the Amlongs provided from another case, Valladares and Cham-brot filed Norelus's initial complaint in the United States District Court for the Southern District of Florida on December 19, 1994. The Amlongs' role was limited at that point, but in January 1995, they assumed formal representation of Norelus. The Amlong firm filed Norelus's first amended complaint in the district court on July 27, 1995, and then a second amended complaint on December 27, 1995. The Amlong firm assigned primary client contact responsibilities to a first-year associate, Lisa Stern (now Lisa Stern Taylor).
In the course of the pre-trial discovery process, Norelus was deposed over some eight days in January and February 1996. Taylor attended all the sessions, and Robin Hankins, another Amlong firm associate, attended some of them. Norelus had only limited facility with English, so an interpreter translated the questions into Haitian French Creole and translated No-relus's answers back into English. The language difficulties were not the only ob stacle in the deposition; Norelus's behavior was highly emotional and erratic. Sometimes she answered questions sarcastically or otherwise failed to respond properly. Until her lawyers instructed her to correct her testimony, Norelus lied about matters related to her immigration status. Among other things, she claimed that she did not know Lavictore Remy, the person whose name she had falsely used to secure employment. Taylor, the Amlong associate, told the defendants that this testimony was false, and she instructed Norelus to tell the truth. Norelus then admitted that in fact, Lavictore Remy was a relative. The plaintiffs first deposition produced a voluminous transcript of more than 1200 pages.
Amlong associates Taylor and Hankins also attended the February 1996 depositions of ten Denny's employees. Notably, none of these witnesses corroborated No-relus's story. Hankins reported back to Karen Amlong and expressed doubts about the case, but Amlong decided to press on with the case. In her testimony at the evidentiary hearing conducted by the magistrate judge, citing her extensive experience in Title VII cases, Amlong explained that the absence of corroborating witness testimony was not unusual in cases of sexual harassment and assault, because such abuse often occurs outside the presence of witnesses. Moreover, Amlong said some of the witnesses' depositions contained inconsistencies of them own suggesting that the witnesses' testimony might not contain the whole story. Thus, for example, Am-long observed that Denny's manager Ja-waid denied ever having had any physical relationship with Norelus, but some witnesses suggested Jawaid and Norelus might have had a consensual sexual relationship. Amlong said she hoped to exploit these inconsistencies at trial to cast doubt on the witnesses' veracity and draw out unrevealed facets of the story.
Nevertheless, Amlong testified, in order to test the veracity of the plaintiffs account of rape and sexual abuse, the firm retained the services of George Slattery, an experienced and respected polygraph examiner, to polygraph Norelus. The first of these examinations took place in January 1996, coinciding with Norelus's first deposition. Karen Amlong said that she wanted to conduct the examination earlier, but Norelus had become pregnant, and Slattery refused to administer a polygraph examination during her first trimester. The second polygraph examination took place on April 29,1996. Slattery unambiguously concluded, after each examination, that Norelus was telling the truth about her core allegations of sexual abuse, rape, and assault. Norelus also received treatment from a Creole-speaking psychologist, Dr. Astrid Schuth-Aine, who advised the Amlongs that Norelus appeared to suffer from post-traumatic stress disorder.
Karen Amlong testified that despite the problems with Norelus's testimony she remained convinced that Norelus was telling the truth. Amlong also observed that her ethical duties prevented her from withdrawing her representation. Amlong decided to press on with the suit. Accordingly, after Norelus's deposition, on Karen Amlong's instructions, Taylor reviewed the deposition testimony with Norelus and prepared an errata sheet. Taylor testified that she read the questions in English and another person translated. For reasons of cost, according to Taylor, they did not use a professional interpreter — at one point Norelus's brother translated, and at another point a friend of Norelus's translated. Taylor recorded the reasons Norelus provided for each change.
The process produced an unusually long errata sheet — some 63 pages detailing a total of 868 changes to Norelus's deposition testimony. Some of the changes were inconsequential or even harmed Norelus's case. For instance, at one point in the deposition the defense attorney had shown Norelus a time card that appeared to undermine her story. At that time, Norelus claimed she could not confirm the time card's authenticity because the card was not , signed. When the defense attorney pressed the point, Norelus testified that she could not recall whether she usually signed her time cards. On the errata sheet, however, Norelus changed her testimony so that she admitted unequivocally that she did not always sign her time cards. Other changes on the errata sheet, however, appeared to improve Norelus's case measurably by adding details that Norelus had not provided when she was deposed. Thus, for example, the testimony as reflected on the errata sheet provided details about Jawaid's and Hameed's cars and the route to their house, details that Norelus had previously said she could not recall.
After receiving the errata sheet, the defendants asked the district court to dismiss the case, arguing that the extent of the changes in the errata sheet demonstrated that Norelus had told numerous lies under oath. On August 26, 1996, the district court denied the motion, observing that, although the errata sheet raised doubts about the truth of Norelus's story, dismissal is only appropriate when "the plaintiffs lie is established beyond doubt." The trial court wrote: "In the instant action, it is unclear to the Court at this juncture whether Plaintiffs original or revised version of the facts constitutes the truth. Therefore, dismissal is an inappropriate remedy." The court did, however, grant the defendants' alternative request that it reopen Norelus's deposition and order No-relus to pay the costs of reopening the deposition. The district court also directed Norelus to file an appendix detailing any changes made to her testimony in her errata sheet or her second deposition.
Norelus's second deposition spanned three days in September 1996. Her behavior was again erratic and at times inappropriate. Finally, after one particularly insolent answer, the defendants' attorneys adjourned the deposition. On October 16, 1996, at the defendants' request, the district court entered another order specifying that the costs of reopening the deposition were jointly .payable by Norelus and her attorneys. This order made no findings of fact or conclusions of law regarding the Amlongs' conduct. Then, on December 11, 1996, the district court dismissed the action as a sanction to punish Norelus for her failure to comply with the August 26, 1996, order. Specifically, the court noted, Norelus had not paid the costs of reopening the deposition and had not filed the requested appendix. The plaintiff took an appeal from the order of dismissal, but this Court dismissed the appeal for failure to prosecute on May 12,1998.
After the dismissal of the suit, in January 1997, four of the defendants, Meos Corp., T.W. Services, Inc., Denny's, Inc., and Jawaid, sought sanctions against No-relus and the Amlongs. Pursuant to Title 28, § 636(b)(1) of the U.S.Code, the district court referred the sanctions motions to a magistrate judge to conduct an evi-dentiary hearing, make findings of fact and conclusions of law, and file a Report and Recommendation. On February 5, 1998, after conducting an extensive hearing, the magistrate judge issued a Report and Recommendation. The magistrate judge recommended that the court assess attorney's fees against the plaintiff, Norelus, under 42 U.S.C. § 2000e-5(k), which permits recovery of attorney's fees from parties in civil rights actions. However, the magistrate judge squarely recommended that no sanctions, including attorney's fees, be imposed on Norelus's attorneys. The magistrate judge made factual findings that the Amlongs' conduct throughout the litiga tion, including their filing of the errata sheet, was motivated by a legitimate desire to present their client's case truthfully and accurately. He concluded that the Am-longs' conduct did not amount to bad faith conduct justifying sanctions under 28 U.S.C. § 1927.
Meos Corp., T.W. Services, Inc., Denny's, Inc., and Jawaid objected to the magistrate judge's Report and Recommendation and asked the district court judge to impose sanctions on the Amlongs notwithstanding the magistrate judge's many findings of fact. In a March 21, 2000, order, the district court judge sustained the objections based on her review of the hearing transcript, but notably, without having heard any testimony herself. The district court rejected the magistrate judge's factual findings and legal conclusions.
The district court concluded that sanctions against the Amlongs were warranted on the basis of four separate sources of judicial authority: 42 U.S.C. § 2000e-5(k); 28 U.S.C. § 1927; Rule 26(g) of the Federal Rules of Civil Procedure; and the court's inherent powers. The district court found — contrary to what the magistrate judge had found — -that the Amlongs had failed to adequately investigate the plaintiffs claims. The district court further found that the errata sheet the Am-longs filed after Norelus's first deposition was not designed to ensure that Norelus's testimony was accurate, as the magistrate judge had found, but rather was a dishonest effort to cover up weaknesses in the plaintiffs case.
The district court concluded that by the time the Amlongs filed the errata sheet, it had become clear that Norelus's suit was not grounded in fact, and continuing the lawsuit past that point amounted to bad faith. The district court ordered the Am-longs to pay the costs that Meos, T.W. Services, Inc., Denny's, Inc., and Jawaid had incurred in the litigation starting from the date the Amlongs filed the errata sheet. The district court expressly said that the amount payable would include the "fees, costs and expenses associated with the sanctions motions, evidentiary hearing and objections." In addition, because the Amlongs had not yet paid the costs of reopening the plaintiffs deposition as required by the district court's October 16, 1996, order, it again directed the Amlongs to pay that amount and added 10 percent back interest as an additional sanction.
Thereafter, a magistrate judge calculated attorney's fees according to the district judge's instructions. The district judge issued an order adopting the magistrate judge's recommendations with modifications. The district court's order required the Amlongs to pay $18,599.76 to cover attorney's fees and costs incurred in reopening Norelus's deposition, as required by the court's October 16, 1996, order. The order further imposed an additional 10 percent interest on the $18,599.76 amount. Finally, and most significantly, the order required the Amlongs personally to pay a total of $389,789.07 to cover attorney's fees and costs the defendants had incurred after the filing of the errata sheet, as required by the court's March 21, 2000, order. This appeal followed.
II.
We review a district court's sanctions order for abuse of discretion. The same standard applies whether sanctions were imposed under any of the four provisions the district court invoked in this case. See, e.g., Schwartz v. Millon Air, Inc., 341 F.3d 1220, 1225 (11th Cir.2003) (court reviews sanctions under 28 U.S.C. § 1927 for abuse of discretion); Malautea v. Suzuki Motor Co., 987 F.2d 1536, 1545 (11th Cir.1993) (court reviews sanctions under Rule 26(g) for abuse of discretion); Barnes v. Dalton, 158 F.3d 1212, 1214 (11th Cir.1998) (court reviews sanctions under inherent powers for abuse of discretion); Sayers v. Stewart Sleep Ctr., Inc., 140 F.3d 1351, 1353 (11th Cir.1998) (court reviews sanctions under 42 U.S.C. § 2000e-5(k) for abuse of discretion).
"The application of an abuse-of-discretion review recognizes the range of possible conclusions the trial judge may reach." United States v. Frazier, 387 F.3d 1244, 1259 (11th Cir.2004) (en banc). "[W]hen employing an abuse-of-discretion standard, we must affirm unless we find that the district court has made a clear error of judgment, or has applied the wrong legal standard." Id. (citing Maiz v. Virani, 253 F.3d 641, 662 (11th Cir.2001)). A decision that is contrary to the law plainly is an abuse of discretion. See Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 405, 110 S.Ct. 2447, 110 L.Ed.2d 359 (1990) ("A district court would necessarily abuse its discretion if it based its ruling on an erroneous view of the law . ").
A.
First, we address the largest component of the sanctions levied against the plaintiffs Title VII attorneys: the district court's March 21, 2000, order requiring the Amlongs to pay $389,739.07 to cover the attorney's fees and costs that Meos Corp., T.W. Services, Inc., Denny's, Inc., and Ja-waid incurred in defending the suit after June 20, 1996, the date the Amlongs filed the errata sheet.
We begin with the legal standard that governs the imposition of sanctions in this case. The district court grounded its sanctions order on four broad sources of authority: 42 U.S.C. § 2000e-5(k); 28 U.S.C. § 1927; Rule 26(g) of the Federal Rules of Civil Procedure; and the court's inherent powers. When a district court cites multiple sources of authority for issuing sanctions, the appellate court's basic task in reviewing the sanctions is to determine whether the sanctions were permissible under at least one of those sources of authority. See Chudasama v. Mazda Motor Corp., 123 F.3d 1353, 1365 (11th Cir.1997). If any one of the sources of authority invoked by the district court provides a sound basis for the sanctions, we must affirm the sanctions order. But if sanctions are not valid under any of the sources of authority, the appellate court must reverse the sanctions award.
Appellants contend, and appellees do not dispute, that § 2000e-5(k) and Rule 26(g) clearly could not have supported the district court's award of sanctions. The appellants are correct. The Title VII attorney's fees provision, 42 U.S.C. § 2000e-5(k), could not have supported these sanctions, because the provision authorizes attorney's fees only against litigants, not against counsel. Roadway Express, Inc. v. Piper, 447 U.S. 752, 761, 100 S.Ct. 2455, 65 L.Ed.2d 488 (1980) (noting that § 2000e-5(k) "makes [no] mention of attorney liability for costs and fees" and there is no indication that Congress intended the provision "to control the conduct of litigation"); Durrett v. Jenkins Brickyard, Inc., 678 F.2d 911, 915 (11th Cir.1982) ("[Section 2000e-5(k)] contemplates assessments of attorney's fees against losing parties, not against counsel." (citing id.)).
Rule 26(g) of the Federal Rules of Civil Procedure also could not have supported the sanctions award, because that rule only authorizes sanctions traceable to specific discovery abuses. See Chudasama v. Mazda Motor Corp., 123 F.3d 1353, 1373 n. 45 (11th Cir.1997) (noting that Rule 26(g) did not authorize an order requiring a defendant to pay all the costs incurred in the discovery dispute because the defendant's discovery abuses were only partly to blame for the delay in the litigation). In this case, the district court issued sanctions for the Amlongs' decision to proceed vexatiously and in bad faith with a merit-less suit, not for any specific discovery violation.
That leaves two sources of authority to consider: 28 U.S.C. § 1927, and the court's inherent powers. We have observed that a district court's authority to issue sanctions for attorney misconduct under § 1927 is either broader than or equally as broad as the district court's authority to issue a sanctions order under its inherent powers. See Cordoba v. Dillard's, Inc., 419 F.3d 1169, 1178 n. 6 (11th Cir.2005). Therefore, we only examine whether the sanctions imposed here were a proper exercise of the discretion granted to the court under § 1927. If the sanctions were permissible under § 1927, then they were proper, and there is no need to examine whether the sanctions were also permissible under the court's inherent powers. On the other hand, if the sanctions amounted to an abuse of the district court's discretion under § 1927, they necessarily amounted to an abuse of the court's discretion under its inherent powers, because the court's inherent power to issue sanctions for vexatious conduct by attorneys does not reach further than § 1927.
Title 28, § 1927 states:
§ 1927. Counsel's liability for excessive costs
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.
28 U.S.C. § 1927. As a panel of this Court observed in Peterson v. BMI Refractories, 124 F.3d 1386 (11th Cir.1997), the plain language of the statute imposes three essential requirements for an award of sanctions under § 1927:
First, the attorney must engage in "unreasonable and vexatious" conduct. Second, that "unreasonable and vexatious" conduct must be conduct that "multiplies the proceedings." Finally, the dollar amount of the sanction must bear a financial nexus to the excess proceedings, i.e., the sanction may not exceed the "costs, expenses, and attorneys' fees reasonably incurred because of such conduct."
Id. at 1396.
We have consistently held that an attorney multiplies proceedings "unreasonably and vexatiously" within the meaning of the statute only when the attorney's conduct is so egregious that it is "tantamount to bad faith." Avirgan v. Hull, 932 F.2d 1572, 1582 (11th Cir.1991); see also Schwartz v. Millon Air, Inc., 341 F.3d 1220, 1225 (11th Cir.2003) (" 'Bad faith' is the touchstone.").
The Amlongs argue, however, that "bad faith" in this context means subjective bad faith — that is, deliberate wrongdoing, such as proceeding with claims the attorney knows for a fact are false or frivolous. In other legal contexts, the term "bad faith" usually refers to deliberate fraud or misconduct. See Black's Law Dictionary 149 (8th ed.2004) (defining "bad faith" as "[djishonesty of belief or purpose"); cf. United States v. Foxman, 87 F.3d 1220, 1223 n. 2 (11th Cir.1996) (interpreting references to "bad faith" delay in criminal prosecutions to mean situations where "the government acted to delay an indictment, hoping that the delay . would prejudice the defense"). But it is clear from the statutory language and the case law that for purposes of § 1927, bad faith turns not on the attorney's subjective intent, but on the attorney's objective conduct. The term "unreasonably" necessarily connotes that the district court must compare the attorney's conduct against the conduct of a "reasonable" attorney and make a judgment about whether the conduct was acceptable according to some objective standard. The term "vexatiously" similarly requires an evaluation of the attorney's objective conduct. See Christiansburg Garment Co. v. EEOC, 434 U.S. 412, 421, 98 S.Ct. 694, 54 L.Ed.2d 648 (1978) (noting, in the course of interpreting 42 U.S.C. § 2000e-5(k), that "the term 'vexatious' in no way implies that the plaintiffs subjective bad faith is a necessary prerequisite to a fee award against him"), Black's Law Dictionary 1596 (8th ed.2004) (defining "vexatious" as "without reasonable or probable cause or excuse; harassing; annoying").
Indeed, other circuits, too, have found that the phrase "unreasonably and vexatiously" demands an objective analysis and that § 1927 does not require a malicious intent or a bad purpose. For example, in Cruz v. Savage, 896 F.2d 626 (1st Cir.1990), the First Circuit stated, "The attorney need not intend to harass or annoy by his conduct nor be guilty of conscious impropriety to be sanctioned. It is enough that an attorney acts in disregard of whether his conduct constitutes harassment or vexation . " Id. at 632. Similarly, in Knorr Brake Corp. v. Harbil, Inc., 738 F.2d 223 (7th Cir.1984), the Seventh Circuit noted that a court "need not find that the attorney acted because of malice" to issue sanctions against the attorney. Id. at 227 (footnote omitted). The Tenth Circuit in Braley v. Campbell, 832 F.2d 1504 (10th Cir.1987), explicitly said that the statute demands an objective analysis. Id. at 1512 (holding that "the proper standard under . § 1927 is that excess costs, expenses, or attorney's fees are imposable against an attorney personally for conduct that, viewed objectively, manifests either intentional or reckless disregard of the attorney's duties to the court."). The Sixth Circuit in Jones v. Continental Corp., 789 F.2d 1225 (6th Cir.1986), observed that "28 U.S.C. § 1927 authorizes a court to assess fees against an attorney for 'unreasonable and vexatious' multiplication of litigation despite the absence of any conscious impropriety." Id. at 1230. But see, e.g., Oliveri v. Thompson, 803 F.2d 1265, 1273 (2d Cir.1986) (holding that sanctions are appropriate under § 1927 only if "the attorney's actions are so completely without merit as to require the conclusion that they must have been undertaken for some improper purpose").
Other courts also have determined that "reckless" conduct is sufficient to justify sanctions under § 1927. See, e.g., Estate of Blas ex rel. Chargualaf v. Winkler, 792 F.2d 858, 860 (9th Cir.1986) (stating that sanctions under § 1927 require a finding of bad faith, but a showing of either "recklessness or bad faith" is adequate to support such a finding); Manax v. McNamara, 842 F.2d 808, 814 (5th Cir.1988) (holding that "recklessness, bad faith, or improper motive" can support a finding of unreasonable and vexatious conduct). These observations also prescribe an objective analysis, because reckless conduct simply means conduct that grossly deviates from reasonable conduct. See Schwartz, 341 F.3d at 1227 (describing recklessness as "a gross deviation from conduct that might be reasonable in the circumstances"); W. Page Keeton et ah, Prosser and Keeton on the Law of Torts § 34 (5th ed.1984) (stating that although the term "recklessness" seems to suggest a certain state of mind, recklessness usually "can be proved only by the conduct and the circumstances," and "an objective standard must of necessity in practice be applied"); Black's Law Dictionary 1298-99 (8th ed. 2004) ("Reckless conduct is . a gross deviation from what a reasonable person would do."). Determining whether conduct is reckless necessarily involves comparing the conduct objectively against the conduct of a reasonable attorney.
The terminology and explanation that we have employed in the past is wholly consistent with the idea that sanctions under § 1927 are measured against objective standards of conduct. In Schwartz v. Millon Air, Inc., we stated that sanctions are permissible "where an attorney knowingly or recklessly pursues a frivolous claim." 341 F.3d at 1225 (emphasis added). Thus, objectively reckless conduct is enough to warrant sanctions even if the attorney does not act knowingly and malevolently. In Malautea v. Suzuki Motor Co., 987 F.2d 1536 (11th Cir.1993), we found that an attorney's conduct was "tantamount to bad faith" when he "either carelessly or deliberately" covered up evidence. Id. at 1544.
In short, a district court may impose sanctions for egregious conduct by an attorney even if the attorney acted without the specific purpose or intent to multiply the proceedings. That is not to say the attorney's purpose or intent is irrelevant. Although the attorney's objective conduct is the focus of the analysis, the attorney's subjective state of mind is frequently an important piece of the calculus, because a given act is more likely to fall outside the bounds of acceptable conduct and therefore be "unreasonabl[e] and vexatious[ ]" if it is done with a malicious purpose or intent.
It is also, by now, clear that negligent conduct, standing alone, will not sup port a finding of bad faith under § 1927— that is, an attorney's conduct will not warrant sanctions if it simply fails to meet the standard of conduct expected from a reasonable attorney. Thus, in Schwartz, we wrote:
[Section 1927] is not a "catch-all" provision for sanctioning objectionable conduct by counsel . For sanctions under section 1927 to be appropriate, something more than a lack of merit is required. The statute was designed to sanction attorneys who "willfully abuse the judicial process by conduct tantamount to bad faith."
"Bad faith" is the touchstone. Section 1927 is not about mere negligence. A determination of bad faith is warranted where an attorney knowingly or recklessly pursues a frivolous claim or engages in litigation tactics that needlessly obstruct the litigation of non-frivolous claims.
Schwartz, 341 F.3d at 1225.
Thus, an attorney's conduct must be particularly egregious to warrant the imposition of sanctions — the attorney must knowingly or recklessly pursue a frivolous claim or needlessly obstruct the litigation of a non-frivolous claim. If the attorney's misconduct meets this high standard, the district court may order the attorney to pay the "costs, expenses, and attorneys' fees reasonably incurred" because of the attorney's misconduct — that is, the excess costs that the attorney's multiplication of proceedings has added to the cost of the litigation. See 28 U.S.C. § 1927; Peterson v. BMI Refractories, 124 F.3d 1386, 1396 (11th Cir.1997) (explaining that sanctions under § 1927 "must bear a financial nexus to the excess proceedings").
B.
With this background, we turn to the district court's decision to impose sanctions and the procedures it employed in making its determination.
Plainly, an attorney threatened with sanctions under § 1927 is entitled to a hearing. Reynolds v. Roberts, 207 F.3d 1288, 1302 (11th Cir.2000). In this case, the district court designated a magistrate judge to conduct the necessary evidentiary hearing pursuant to 28 U.S.C. § 636(b)(1), which permits a district court to refer matters to a magistrate judge to hold hearings and supply the court with proposed findings of fact and recommendations for disposition. Pursuant to this order of reference, the magistrate judge conducted an evidentiary hearing over four days involving the testimony of six witnesses, including four of the plaintiffs attorneys, who each testified at length about their conduct of the suit, and George Slat-tery, the polygrapher who twice examined the plaintiff. When reduced to transcript form, the evidentiary hearing consumed some 505 pages.
After hearing the evidence and receiving filings from the parties, as we have noted, the magistrate judge submitted a detailed Report and Recommendation including extensive findings of fact and conclusions of law. Based on the testimony at the evi-dentiary hearing, the magistrate judge made several findings of fact regarding the Amlongs' conduct. First, the magistrate judge unambiguously found as a fact that throughout the litigation, the Amlongs had "genuinely believed that plaintiffs claims were meritorious despite plaintiffs inability to testify completely and truthfully about several aspects of her case." Second, the magistrate judge found that Karen Amlong, an experienced Title VII attorney, "personally met with plaintiff on more than one occasion and satisfied herself that plaintiff was telling the truth" (emphasis added). He accepted Amlong's explanation that she "was not surprised or particularly concerned that the sexual harassment activities alleged in this case were not observed by others [because] 'they seldom are in this type of case.' " Third, the magistrate judge found as a fact that "[plaintiff's counsel also did not ignore plaintiffs propensity to exaggerate or lie during her deposition," noting that the plaintiffs ordered two polygraph examinations by George Slattery, a certified polygraph examiner, in order to further test the plaintiffs veracity.
The magistrate judge then made a number of explicit findings of fact relating to the errata sheet, which, the defendants claimed, made the attorneys' bad faith readily apparent. He wrote:
First, the preparation of the errata sheet and the procedures used to do so . was improper and should not have occurred. ' Second, the numerous changes listed in the errata sheet . illuminated plaintiffs difficulty or inability to relate a consistent account of events underlying her claims. Third, the errata sheet revealed to defendant's attorneys and the Court that plaintiffs testimony was highly suspicious and required further exploration through reopened discovery.
However, the preparation of the errata sheet revealed other things. First and foremost, the care and detail in which that document was prepared by plaintiffs attorneys reveal their grave concern to tell an accurate story in this case. While many of the changes might have bolstered plaintiffs case, submission of this voluminous document clearly did not, and left plaintiff open to renewed challenges concerning her credibility. Also, the errata sheet demonstrates, at least in part, the difficulty plaintiff had in dealing with the discovery process including her deposition,
(emphasis added).
The magistrate judge also determined that the Amlongs should not be faulted for the plaintiffs conduct, because they "did the best they could with a most difficult client and did not try to prolong the case or multiply these proceeding^] to gain a tactical advantage over their adversaries. Prolonging this case, by extending plaintiffs deposition and exposing plaintiff to further cross-examination, only hindered counsel's ability to win the case."
Overall, the magistrate judge concluded that the Amlongs acted for good and honest reasons, and that them conduct did not amount to bad faith under an objective test. He found expressly that the Am-longs' conduct did not demonstrate either subjective bad faith or objective bad faith. He stated, "the undersigned finds no evidence of bad faith, improper motive or reckless disregard of duty which would justify § 1927 sanctions against plaintiffs attorneys in this case. Nor does the undersigned find[] that plaintiffs counsel sought to or willfully abused the judicial process by conduct tantamount to bad faith" (citations omitted).
The district court flatly rejected the magistrate judge's findings, saying they were contrary to the record. The district judge then went on to make factual findings of her own, notably without any additional hearing, but based on her own independent interpretation of the transcript and record. The district court found that the errata sheet would have put any reasonable attorney on notice that the plaintiffs testimony "may be incred[ible]," and from the time they filed the errata sheet, "counsel for Plaintiff were on notice of the baseless nature of the claims . and had an obligation to investigate their client's testimony and the supporting evidence." The district court found that Karen Am-long and William Amlong were chiefly responsible for the conduct of the case. The district court further found that the Am-longs failed to "conduct a reasonable investigation of the facts" alleged in the plaintiffs complaint and her subsequent amended complaints. The district court judge called attention to the fact that the Amlongs had not interviewed fact witnesses other than the plaintiff and had not ordered transcripts from the depositions of the other witnesses. Finally, and most significantly for our purposes, the district court found that the Amlongs filed the errata sheet with the court not for the legitimate purpose of correcting misstatements and inaccuracies, as the magistrate judge had found, but in an effort to cover up flaws and inconsistencies in the plaintiffs account of events. The district court determined that the errata sheet demonstrated "unreasonable, vexatious behavior that unnecessarily multiplied these proceedings."
The district court's rejection of the magistrate judge's findings in this manner violated the governing statute, 28 U.S.C. § 636(b)(1), as it has been interpreted by our case law. When a district court refers a matter to a magistrate judge to conduct an evidentiary hearing and make findings of fact, the district court is required to make a "de novo determination." Id. In making its determination, the district court is generally free to employ the magistrate judge's findings to the extent that it sees fit — the court may adopt the magistrate judge's findings in whole, in part, or not at all. Thus, in United States v. Raddatz, 447 U.S. 667, 100 S.Ct. 2406, 65 L.Ed.2d 424 (1979), the Supreme Court made clear that § 636(b)(1) permits the district court to adopt the credibility findings made by a magistrate judge without conducting a new hearing before making a final determination. However, in a footnote, the Supreme Court remarked that there may be one exception to this rule. The statute may not permit a district court to reject a magistrate judge's findings regarding the credibility of testifying witnesses without holding a new hearing where it could observe the demeanor of the witnesses:
[W]e assume it is unlikely that a district judge would reject a magistrate's proposed findings on credibility when those findings are dispositive and substitute the judge's own appraisal; to do so without seeing and hearing the witness or witnesses whose credibility is in question could well give rise to serious questions which we do not reach.
Id. at 681 n. 7, 100 S.Ct. 2406.
Our cases since Raddatz have unambiguously and repeatedly observed that a district court may not reject a magistrate judge's factual and credibility findings in this manner. In United States v. Marshall, 609 F.2d 152 (5th Cir.1980), the former Fifth Circuit stated, "[I]t would be a rare case in which a district judge could resolve credibility choices contrary to the recommendations of the magistrate without himself having had an opportunity to see and hear the witnesses testify." Id. at 155. Again, in Louis v. Blackburn, 630 F.2d 1105 (5th Cir.1980), a panel of the former Fifth Circuit held that when a criminal defendant's constitutional rights are at stake, "the district judge should not enter an order inconsistent with the credibility choices made by the magistrate without personally hearing the live testimony of the witnesses whose testimony is determinative." Id. at 1109 (emphasis added). The former Fifth Circuit extended this principle to civil cases in Calderon v. Waco Lighthouse for the Blind, 630 F.2d 352, 356 (5th Cir.1980). In Calderon, a panel of the Court said that in some cases a district court might be able to reject a magistrate judge's findings based on a transcript alone, but, notably, if the witnesses' demeanor was important to the magistrate judge's determination, the district court would have to hold a new evidentiary hearing and take testimony before rejecting the magistrate judge's findings. Id. Most recently, in United States v. Cofield, 272 F.3d 1303 (11th Cir.2001) (per curiam), relying in part on Marshall and Black-bum, we reaffirmed the principle that "generally a district court must rehear the disputed testimony before rejecting a magistrate judge's credibility determinations." Cofield, 272 F.3d at 1306.
The district court's order in this case flatly violated the rule. The magis trate judge made clear that his findings turned on his evaluation of the credibility and believability of the testimony given at the evidentiary hearing; indeed, he stated that his findings were based on "hearing the testimony from plaintiffs counsel concerning their representation of plaintiff in this case." The magistrate judge's evaluation required him to make finely tuned assessments of various witnesses' credibility as they testified about their states of mind, beliefs, motivations, and actions at each critical stage of the litigation. It is clear that the witnesses' demeanor and credibility at the evidentiary hearing played a critical role in the magistrate judge's findings about the Amlongs' purpose and intent and his conclusion regarding their objective conduct. The demean- or of the witnesses at the evidentiary hearing plainly influenced the magistrate judge's determinations about whether the Amlongs and the plaintiffs other attorneys arranged the polygraph examinations as a stratagem for creating a facade of diligence or, rather, as a genuine effort to discern whether the plaintiff was telling the truth.
The Amlongs retained George Slattery, the polygraph examiner, who testified that he had performed evaluations in a wide range of cases for an impressive range of law firms, judges, prosecutor's offices, defense attorneys and public defender agencies at both the state and federal levels, as well as state and federal law enforcement agencies. Slattery insisted that when he performs services for attorneys involved in civil litigation, his results are not swayed by what the attorneys hope to see. He added that he had evaluated other Amlong clients in the past and had reported his conclusions to the Amlongs even when he suspected falsehoods.
Three of the plaintiffs attorneys, Debra Valladares, Joseph Chambrot, and Karen Amlong, also testified at length about the polygraph examination. Chambrot, for example, testified that the reason the plaintiffs lawyers agreed to have Norelus polygraphed was "[t]o avoid being here [in sanctions proceedings]. To know that we have, you know, a valid cause of action. To avoid misrepresenting to the court or having, you know, the bulk of the case just being a lie." Chambrot said he trusted in Slattery's determination because Slattery was "somebody who I believe, you know, is really credible and who's truly independent. Mr. Slattery doesn't care one way or the other the outcome of this case." Plainly, the magistrate judge credited this too in finding no bad faith.
Witness testimony from the plaintiffs lawyers also was crucial to the magistrate judge's evaluation of several other key aspects of the case. Lisa Stern Taylor, the Amlong associate who had the most direct contact with the plaintiff, testified about the instructions she received from the Am-longs and the procedures she followed in preparing the errata sheet that the district court later found to be the most salient and concrete indicium of the Amlongs' bad faith. Taylor's demeanor in testifying influenced the magistrate judge's acceptance of Taylor's explanation of her actions. Thus, Taylor testified expressly that the errata sheet was intended to present the facts accurately, and not to put a false or misleading sheen on the plaintiffs story:
Q [William Amlong] Okay. What instructions, if any, had you been given by Ms. Amlong and/or me concerning the preparation of the errata sheet?
A Just by Ms. Amlong to please go to the court reporter's office with Ms. Nor-relus [sic] and have her go through the deposition and to prepare an errata sheet and to make sure that every time there was a change that I listed a reason for it because that's what the Rules required, I believe.
Q When you changed the testimony, at whose suggestion did you change the testimony?
A Any testimony that I changed was made because my client told me that whatever she was telling me was the accurate response.
Taylor emphatically stated that she had not suggested any changes Norelus should make in her testimony, and had not seen any indication that Norelus's brother or friend had suggested any such changes.
Karen Amlong's testimony also strongly influenced the magistrate judge's findings. Amlong described the firm's handling of the lawsuit in detail from start to finish. Amlong stressed that her assessment of Norelus's veracity was consistent with the conclusions reached by four other attorneys, William Amlong, Valladares, Cham-brot, and Taylor; the polygrapher, Slat-tery; and Dr. Astrid Schutt-Aine, the psychologist who examined Norelus and diagnosed her with post-traumatic stress disorder. Amlong said her assessment of the plaintiff also relied in no small part on her own interactions with Norelus, and her many years of experience litigating cases of serious sexual harassment.
Karen Amlong explained how the firm handled Norelus's false statements about the plaintiffs fraudulent use of her relative's name and identification this way:
[Karen Amlong] We were concerned, however, because there were some issues of Ms. Norrelus using the Social Security number of her aunt, there were some inconsistencies that had come out in the testimony during these depositions and Ms. Stern had called us when she realized that Ms. Norrelus had lied, and I believe it was about using her aunt's Social Security number or her name, the alias.
She [Taylor] had called us from the depositions and we said, "You have got to go in there and set the record straight."
After our conversation with Ms. Han-kins about these other depositions—
Q [William Amlong] When you told Ms. Stern to go in and set the record straight, is that your understanding of the Florida Bar Rules of Professional Responsibility and what they require as candor toward the tribunal?
A Yes, it is, and when Ms. Stern realized that she had stated a mistruth she had no option except to go back in and set the record straight.
We were concerned, nonetheless, about what may have been a cultural difference; is it okay to just use somebody else's name or Social Security number?
So we called Ira Kurzban, who has had — he's an attorney in town who has worked extensively with Haitian clients
Based on our conversation with Mr. Kurzban, we were convinced that our client, based on all the evidence — my own assessment of her, her passing the polygraph examination, Ms. Stern's assessment of her after several days of deposition testimony — that even though she may have lacked candor on peripheral issues, on the central issues of this case she was telling the truth, and just because somebody came into the country illegally doesn't mean that she can be raped and exploited, and that does not take that away from her.
(emphasis added).
The language and cultural difficulties Amlong alluded to in this exchange also were a recurring problem throughout the litigation, according to the attorneys' testimony. The plaintiffs lawyers testified that Norelus spoke only fragmentary English, although her English improved during the course of the litigation. Taylor testified that on several occasions during the deposition, Norelus told the interpreter her translations were incorrect, until at one point the interpreter responded with a brusque remark. Once, the plaintiff apparently used a Creole idiom, "tous les jours," to communicate that Jawaid forced her to perform oral sex "many times" or "all the time," but the interpreter translated the idiom literally as "every day," thus changing the details of the plaintiffs story. Even the defendants adverted to language difficulties — in an apparent effort to discount the import of the polygraph examinations, they elicited testimony from a translator who suggested that Slattery, the polygraph examiner, had used flawed Creole translations. Amlong testified that throughout the litigation, Norelus proved a "difficult client because of language barriers and because of the degree to which she had been traumatized," but Norelus's behavior in the reopened deposition improved as Norelus's English improved, she became more comfortable with the process, and the defense attorneys became less aggressive. The magistrate judge was plainly troubled by the reported language and cultural difficulties. Indeed, he found that the errata sheet showed "the difficulty plaintiff had in dealing with the discovery process including her deposition."
As for the production of the errata sheet, Amlong specifically said, "[TJhe idea [was] not to hide things from people, but to make full disclosure, and we weren't trying to hide anything from defense counsel, we were trying to tell them what the story was so that they could prepare themselves." She said, "This was our way of attempting to set the record straight." From a tactical perspective, Amlong added, it would have been easier to proceed to trial without filing the errata sheet, but "I felt that [filing the errata sheet] was the appropriate thing to do . [W]e were trying to do the best job we could to present as honestly as we could what the truth was."
In short, the magistrate judge was called on to find basic facts and draw delicate inferences about the judgments the Amlongs made, and the actions they took based on those judgments, at various stages of the litigation. His evaluation was undeniably influenced by the extensive testimony taken at the evidentiary hearing over four days in 1997. Indeed, the raw transcript of the hearing could not have captured the nuances of the testimony or the demeanor of the witnesses in a way that would have fairly allowed the district court to make a reliable determination that the magistrate judge was wrong in finding facts and choosing to believe the witnesses.
More particularly, the magistrate judge chose to believe Slattery's and the attorneys' representations that the polygraph examinations were a genuine effort to discern the truth, not a fraudulent attempt to create a false veneer of diligence. The magistrate judge chose to credit the attorneys' statements that they had believed the plaintiffs core allegations throughout the litigation. He interpreted the filing of the errata sheet as having been motivated by the plaintiffs lawyers' "grave concern to tell an accurate story," just as Amlong and Taylor had stated in their testimony. The attorneys testifying at the evidentiary hearing attributed some of the apparent irregularities in the litigation to the plaintiffs emotional instability and substantial language and cultural barriers. The magistrate judge accepted this testimony, finding that the Amlongs "did the best they could with a most difficult client and did not try to prolong the case or multiply these proceeding^] to gain a tactical advantage."
The district court judge unequivocally rejected the magistrate judge's factual findings and conclusions of law regarding both the Amlongs' subjective intent and their objective conduct. After directly quoting the magistrate judge's conclusions, the district court stated, "The Court finds these conclusions to be based on an incorrect standard, incorrect interpretation of law, and not based on the record" (emphasis added). The district court never explained how it thought the magistrate judge had misstated or misapplied the law, but the statement that the magistrate judge's conclusions were "not based on the record" clearly indicated that it was discarding his factual findings, including his critical credibility determinations, along with his legal conclusions. To find that the magistrate judge's findings were "not based on the record" was to say that the testimony told a completely different story.
Later in her order, the district court judge specifically found as a fact that an improper purpose lay behind the Amlongs' production of the errata sheet. Whereas the magistrate judge had concluded that the Amlongs had submitted the errata sheet for the legitimate purpose of advancing the truth, the district court saw the evidence another way:
Plaintiffs counsel undertook efforts to "repair the damage" Plaintiffs deposition caused, and filed the Errata Sheet in an effort to bolster testimony . In contrast to [Karen Amlong's] testimony, . the Court's close examination of the 868 errata changes indicates a concerted effort to provide factual support to an otherwise meritless case . Coupled with the complete lack of supporting evidence in this case, the nature and quantity of entries on the Errata Sheet — which bolstered inconsistencies or covered up falsities, and thereafter the Plaintiffs inability to factually support the errata changes at the subsequent deposition — demonstrate bad faith and willful disregard for the judicial process by Karen Amlong, Esq., William Amlong, Esq., and Amlong & Amlong P.A.
This language was nothing less than a direct repudiation of the testimony that Amlong and her former colleague, Lisa Stern Taylor, gave at the evidentiary hearing, and, more importantly, the magistrate judge's abiding belief in the veracity of that testimony. While the magistrate judge was convinced, based on his hearing of the testimony, that the Amlongs prepared the errata sheet to cleanse the record of contamination and error and bring the court closer to the truth, the district court judge, who had not heard a single word of the testimony, concluded that the Amlongs were trying to breathe new life into a dead case for fraudulent or malevolent reasons. The district judge could not have interpreted the errata sheet as a way to "repair the damage," "bolster testimony," and "cover[ ] up falsities" without necessarily rejecting Karen Amlong's statement and, notably, the magistrate judge's finding that the Amlongs only wanted to "set the record straight" and present a truthful record. Quite simply, the two factual interpretations are impossible to reconcile in any practical sense — -where one sees diligence and fair play, the other sees underhanded scheming and malevolence. The district judge's analysis necessarily and expressly rejected the magistrate judge's credibility findings.
In a subsequent order denying the Amlongs' motion for reconsideration of the sanctions imposed, the district court again confirmed that it could make its own factual determinations based on the hearing transcript without taking the magistrate judge's findings into account at all. Norelus v. Denny's Inc., No. 94-2680-CIV-LENARD, slip op. at 6-7 (S.D. Fla. June 30, 2000) (order denying reconsideration). The district court made no mention of adopting the magistrate judge's credibility findings. Indeed, the district court expressly rejected the Amlongs' argument that the court "could not make factual findings contrary to those of the Magistrate Judge unless the Court first held an evidentiary hearing." The court cited Raddatz for the proposition that the governing statute, 28 U.S.C. § 636(b)(1), generally allows a district court to make its own findings without a hearing. While this was a correct statement of the general rule, the district court failed to take note of our precedents establishing an important exception to the rule: a district court may not override essential, demeanor-intensive fact finding by a magistrate judge without hearing the evidence itself or citing an exceptional justification for discarding the magistrate judge's findings.
Rejecting credibility findings made by a magistrate judge without holding a new hearing is permissible only when there is an "articulable basis for rejecting the magistrate's original resolution of credibility." Marshall, 609 F.2d at 155. The district court in this case did not cite any such articulable basis, nor is any such justification otherwise evident in this record. A determination of a lawyer's bad faith is particularly sensitive to demeanor and other intangible cues often not reflected in a transcript.
Discarding the magistrate judge's credibility findings without rehearing the relevant testimony amounted to an impermissible shortcut that rendered the result invalid and an abuse of discretion. Cf. Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 405, 110 S.Ct. 2447, 110 L.Ed.2d 359 (1990) ("A district court would necessarily abuse its discretion if it based its ruling on an erroneous view of the law . "). Whether the Amlongs' objective conduct amounted to bad faith was a mixed question of law and fact. The Amlongs' intent and purpose at each stage of the litigation was a major factor in evaluating their conduct objectively. The district court judge's factual determination that the Amlongs had either intentionally avoided learning the truth or had intentionally prolonged the proceedings was an integral part of her determination that the Amlongs' objective conduct reached the level of bad faith.
We are, therefore, constrained to reverse the district court's March 21, 2000, order to the extent that it required the Amlongs to pay the costs the defendants incurred because of the continuation of litigation past June 20, 1996. On remand, the district court need not conduct a new hearing. It may accept the magistrate judge's basic findings of fact and then reach its own determination as to whether the lawyers' conduct was objectively unreasonable and vexatious. Alternatively, the district court may, if it so chooses, conduct its own hearing as a prelude to making a new determination. Our holding is simply this: the district court abused its discretion and clearly erred when it squarely rejected the magistrate judge's findings of fact and credibility determinations and substituted its own, without hearing so much as a single witness at a sanctions hearing. We do not mean to imply that it would have been an abuse of discretion for the district court to have imposed sanctions even in the absence of subjective bad faith. That issue is simply not before us today.
III.
The second component of the sanctions the district court imposed on the Amlongs was an order to pay $18,599.76 in fees and costs incurred in reopening Nore-lus's deposition. The Amlongs argue that the district court acted improperly in imposing this sanction as well.
The district court initially imposed this sanction on Norelus alone in its August 26, 1996, order, under the court's inherent powers. The district court then made the Amlongs jointly and severally liable for this sanction in an October 16, 1996, order clarifying its earlier order. In its March 21, 2000, order, the district court found that the plaintiff and the Amlongs had failed to pay fees and costs for reopening the deposition. The court again ordered the Amlongs to pay those fees and costs and ordered the Amlongs to pay 10 percent back interest as an additional sanction for the Amlongs' failure to pay the costs earlier.
The Supreme Court has stated that "[bjecause of their very potency, inherent powers must be exercised with restraint and discretion." Chambers v. NASCO, Inc., 501 U.S. 32, 44, 111 S.Ct. 2123, 115 L.Ed.2d 27 (1991). With this in mind, we have held that before a court can impose sanctions on an attorney under its inherent powers, it must make a finding of bad faith. Thomas v. Tenneco Packaging Co., 293 F.3d 1306, 1320 (11th Cir.2002) ("[B]efore a court can impose sanctions against a lawyer under its inherent power, it must find that the lawyer's conduct 'constituted or was tantamount to bad faith.' " (quoting Durrett v. Jenkins Brickyard, Inc., 678 F.2d 911, 918 (11th Cir.1982))); In re Mroz, 65 F.3d 1567, 1575 (11th Cir.1995); see also Roadway Express, Inc. v. Piper, 447 U.S. 752, 767, 100 S.Ct. 2455, 65 L.Ed.2d 488 (1980) (noting that "[a] specific finding as to whether counsel's conduct in this case constituted or was tantamount to bad faith . would have to precede any sanction under the court's inherent powers").
The district court did not make any valid finding of bad faith that could have supported this component of the sanctions. The district court did not make a finding of bad faith conduct by the Amlongs either in its August 26, 1996, order requiring Norelus to pay the fees and costs associated with reopening the deposition, or in its October 16, 1996, order making the Am-longs jointly and severally liable for the costs.
The March 21, 2000, order also did not render the sanctions valid. As we have already explained, in concluding in its March 21, 2000, order that the Amlongs' conduct amounted to bad faith for pur poses of § 1927, the district court improperly discarded the findings of fact made by the magistrate judge and substituted its own. As we also explained, the threshold of bad faith conduct for purposes of sanctions under the court's inherent powers is at least as high as the threshold of bad faith conduct for sanctions under § 1927. See Cordoba v. Dillard's Inc., 419 F.3d 1169, 1178 n. 6 (11th Cir.2005). So sanctions that are impermissible under § 1927 are also impermissible under a district court's inherent powers. We are, therefore, also constrained to find that neither the August 26, 1996, order originally imposing the sanctions, the October 16, 1996, order making the sanctions jointly payable by the Amlongs, or the March 21, 2000, order repeating the sanctions order contained a valid imposition of sanctions under the court's inherent powers. Accordingly, we reverse the portion of the March 21, 2000, order that required the Amlongs to pay the costs of reopening the deposition.
The final remaining component of the challenged sanctions is the district court's order requiring the Amlongs to pay 10 percent back interest on the $18,599.76 amount. The court imposed this as an additional sanction on the Amlongs for having failed to comply with the October 16, 1996, order. However, the district court never determined that the Amlongs had failed to comply with the October 16, 1996, order in bad faith. Accordingly, the order to pay back interest also was necessarily an abuse of discretion and must be reversed.
REVERSED AND REMANDED.
. Judge Hill's dissent suggests that subjective intent is irrelevant to a determination of objective bad faith, although he appears to agree that subjective bad faith, if proved, can support a finding of objective bad faith. We agree that subjective bad faith is not necessary to a finding of objective bad faith, and that the absence of subjective bad faith does not excuse objectively blameworthy conduct. But a determination of whether an attorney's conduct was objectively reckless, or tantamount to bad faith, may be aided by an examination of the attorney's state of mind. Thus, in this case the lawyer's purpose in filing the errata sheet was explored at considerable length both by the magistrate judge, after taking testimony, and by the district judge, who took no testimony herself. Indeed, the district court in this case felt obliged to justify its determination of objective bad faith by finding as a fact not just reckless conduct, but also that the Amlongs submitted the errata sheet "in an effort to bolster testimony," "repair the damage," and "cover[] up falsities." As we note later, see infra note 5, a finding of a cover-up or concealment is fact-specific and was essential to the ultimate legal determination. In Schwartz v. Millon Air, Inc., for example, we reversed sanctions against attorneys who had litigated false claims based on the representations of an Ecuadorean attorney. We noted that "[n]o one contends that [the appellant attorneys] were actually aware of the fraud," thus suggesting that the very same series of litigation maneuvers, if accompanied by a bad purpose, might have been inexcusable and sanctionable. Schwartz, 341 F.3d at 1226; see also Miles v. Dickson, 387 F.2d 716, 717 (5th Cir.1967) (per curiam) (reversing a district court's imposition of attorney's fees based on a conclusion that "the plaintiffs' attorneys acted in good faith, upon written authorization from their clients" and "the facts and circumstances do not present such an extreme case as would permit the court to tax the costs against the attorneys"); cf. Dreiling v. Peugeot Motors of Am., Inc., 768 F.2d 1159, 1166 (10th Cir.1985) (taking note of a threatening letter an attorney sent to the defendant in the course of determining whether pressing claims against the defendant was unreasonable and vexatious); McCandless v. Great Atl. & Pac. Tea Co., 697 F.2d 198, 201 (7th Cir.1983) (stating that relevant factors in finding bad faith include "reasons for filing the suit and whether the attorney was aware of the meritlessness of the action"). An attorney's knowledge and intent at each step in the drama may be relevant to the ultimate legal determination that the conduct is objectively reckless, or that bad faith is evident.
The dissent, citing Souran v. Travelers Insurance Co., 982 F.2d 1497 (11th Cir.1993), also argues that our case law categorically bars any consideration of an attorney's knowledge, motive, or state of mind in evaluating her objective conduct. We disagree. Souran involved Rule 11 sanctions. Id. at 1506-07. While many of the same general principles apply to sanctions under Rule 11 and sanctions under § 1927, Rule 11 and § 1927 are distinct sources of authority. They are aimed at addressing different kinds of misconduct, are different in scope, and are governed by quite different legal standards. See, e.g., Byrne v. Nezhat, 261 F.3d 1075, 1106 (11th Cir.2001) (noting that Rule 11 "is aimed primarily at pleadings" and addresses the conduct of both parties and attorneys, while § 1927 addresses "dilatory tactics throughout the entire litigation" and is focused solely on attorney conduct); Chambers v. NASCO, Inc., 501 U.S. 32, 47, 111 S.Ct. 2123, 115 L.Ed.2d 27 (1991) (noting that Rule 11 permits attorney's fees "for conduct which merely fails to meet a reasonableness standard," in contrast to a court's inherent powers, which require a higher showing). Rule 11 cases do not dispose of the issues arising under § 1927. Moreover, the quoted portion of Souran — a brief parenthetical quoting language from a Vanderbilt Law Review student note. — plainly was not essential to the Court's holding; it was dicta. In fact, the Court in Souran reversed the district court's imposition of Rule 11 sanctions based on a finding that the attorney's conduct was objectively reasonable.
. (b)(1) Notwithstanding any provision of law to the contrary—
(A) a judge may designate a magistrate judge to hear and determine any pretrial matter pending before the court, except a motion for injunctive relief, for judgment on the pleadings, for summary judgment, to dismiss or quash an indictment or information made by the defendant, to suppress evidence in a criminal case, to dismiss or to permit maintenance of a class action, to dismiss for failure to state a claim upon which relief can be granted, and to involuntarily dismiss an action. A judge of the court may reconsider any pretrial matter under this subparagraph (A) where it has been shown that the magistrate judge's order is clearly erroneous or contrary to law.
(B) a judge may also designate a magistrate judge to conduct hearings, including evidentiary hearings, and to submit to a judge of the court proposed findings of fact and recommendations for the disposition, by a judge of the court, of any motion excepted in subparagraph (A), of applications for posttrial relief made by individuals convicted of criminal offenses and of prisoner petitions challenging conditions of confinement.
(C) the magistrate judge shall file his proposed findings and recommendations under subparagraph (B) with the court and a copy shall forthwith be mailed to all parties.
Within ten days after being served with a copy, any party may serve and file written objections to such proposed findings and recommendations as provided by rules of court. A judge of the court shall make a de novo determination of those portions of the report or specified proposed findings or recommendations to which objection is made. A judge of the court may accept, reject, or modify, in whole or in part, the findings or recommendations made by the magistrate judge. The judge may also receive further evidence or recommit the matter to the magistrate judge with instructions.
28 U.S.C. § 636(b)(1) (footnote omitted).
. In her testimony at the evidentiary hearing, Amlong explained that the firm usually has its associates take extensive notes at witnesses' depositions so that the firm does not have to order — and pay for — transcripts from all of the witnesses' depositions prior to trial.
. In Bonner v. City of Prichard, 661 F.2d 1206 (11th Cir.1981) (en banc), this Court adopted as binding precedent all of the decisions of the former Fifth Circuit handed down prior to the close of business on September 30, 1981. Id. at 1209.
. The dissent nevertheless concludes that the district court "adopted the magistrate's findings of fact." Dissenting Op. at 1260-61. We are unable to read the district court's sanctions opinion that way. In the first place, the district court expressly told us in its sanctions order that the magistrate judge's determinations were "not based on the record," Norelus v. Denny's Inc., No. 94-2680-CIV-LENARD, slip op. at 20 n.9 (S.D.Fla. Mar. 21, 2000) (sanctions order). Moreover, and more important, the district court plainly found facts dramatically different from those found by the magistrate judge when it wrote that the Amlongs had filed the errata sheet "in an effort to bolster testimony," "to 'repair the damage,' " and, most notably, to "cover[] up falsities." Norelus v. Denny's Inc., No. 94-2680-CIV-LENARD, slip op. at 32-33 (S.D.Fla. Mar. 21, 2000) (sanctions order). This is not language even remotely consonant with the notion that Karen Amlong proceeded with an "empty head, but a pure heart," as the dissent would have it. To file an errata sheet in an effort to "cover[] up" a client's false testimony quite simply means to file the document knowingly and consciously in order to deliberately convey the false and misleading impression that a client's core testimony was true, when in fact the lawyer knew it to be false. See Webster's Third New International Dictionary 524 (2002) (noting that "cover up" means "to conceal something illicit, blameworthy, or embarrassing from notice: prevent one from being censured for error, laxity, or omission"). Indeed, the district court tells us that the Amlongs proceeded in "willful disregard for the judicial process" (emphasis added). This kind of fact finding goes far beyond a finding of recklessness. To do so without hearing a word of testimony, and in the face of the magistrate judge's contrary findings of fact and credibility determinations, undeniably constituted legal error.