Opinion ID: 3034129
Heading Depth: 3
Heading Rank: 3

Heading: The Community Bank of Nevada

Text: On January 27, 2003, Community Bank filed a motion for sanctions under Rule 11, but failed to serve a copy on Levinson until February 3, 2003. The district court denied this motion on March 4, 2003. Community Bank concedes that it failed to satisfy the safe harbor provision with respect to this motion. On May 15 and 16, 2003, Community Bank re-filed its Rule 11 motion with the court and served a copy on Levinson, respectively. Levinson argues that Community Bank failed to satisfy the safe harbor provision. We agree and reverse the district court’s award of Rule 11 sanctions to Community Bank. [9] Despite the fact that one of its co-defendants had served Levinson with a motion seeking Rule 11 sanctions on March 18, 2002, Community Bank waited over ten months before taking any action to seek sanctions against Levinson. When deciding a motion for sanctions under Rule 11, a district court should consider when the opposing counsel was served with the motion. “Ordinarily the motion should be served promptly after the inappropriate paper is filed, and, if delayed too long, may be viewed as untimely.” Fed. R. Civ. P. 11 advisory committee’s notes to 1993 amends. It is hard to view Community Bank’s service of its May 2003 motion as timely when the underlying complaint was filed over a year earlier on February 7, 2002. In addition, by the time Community Bank served Levinson with its motion for sanctions, on February 3, 2003, over five months had passed since Levinson’s withdrawal as the Holgates’ attorney. At this point, Levinson essentially had no power to correct the offending paper or to counsel the Holgates to withdraw it. [10] Community Bank argues that even if it did not independently satisfy safe harbor, it satisfied the requirement by LEVINSON v. BALDWIN 13749 styling its motion for sanctions as a joinder to Baldwin’s properly filed Rule 11 motion. We disagree. One purpose of the safe harbor requirement is to provide parties with proper notice of the allegations against them and an adequate opportunity to cure the alleged deficiencies. Fed. R. Civ. P. 11 advisory committee’s notes to 1993 amends. (“Explicit provision is made for litigants to be provided notice of the alleged violation and an opportunity to respond before sanctions are imposed.”). We are not convinced that a party receives sufficient notice of the allegations against him when only one of several co-defendants indicates its intention to seek sanctions. When Baldwin originally served Levinson with his Rule 11 motion, Levinson would have considered the fact that the other defendants had not filed motions in deciding on his response. By the time the Newell defendants filed their motion, however, Levinson would have realized that the situation had become more serious. Of course, at this time Levinson still served as counsel to the Holgates and could advise them concerning the motion. Had Levinson known that all of the defendants were seeking sanctions against him based on the filing of the Holgates’ complaint, he may well have taken more serious steps to convince the Holgates to withdraw the complaint or otherwise find a way to correct the complaint within the meaning of Rule 11. We hold that the district court clearly erred in determining that Community Bank had complied with the safe harbor requirements despite the fact that it failed to provide Levinson with independent notice of its intent to seek sanctions and the required 21 days in which to cure the alleged problem. On remand, the district court may wish to reapportion the amount of sanctions awarded to Baldwin and the Newell defendants. The defendants collectively sought over $100,000 in costs, which they documented for the district court, but the district court opted to impose only $12,000 in sanctions against Levinson based on its conclusion that this amount was sufficient to deter Levinson from filing frivolous complaints in the future. See Fed. R. Civ. P. 11(c)(2) (limiting Rule 11 13750 LEVINSON v. BALDWIN sanctions “to what is sufficient to deter repetition of [the challenged] conduct or comparable conduct by others similarly situated”). The district court awarded $3,000 in sanctions to Baldwin, $5,000 to the Newell defendants, and $4,000 to Community Bank. On remand, the district court should consider whether the $8,000 in sanctions awarded to Baldwin and the Newell defendants, which we affirm, is sufficient to deter Levinson or others like him. III. The District Court Did Not Err in Denying Sanctions Against All Defendants Levinson appeals the district court’s refusal to impose sanctions under Rule 41(a) and Rule 11 against all defendants except Baldwin. Specifically, Levinson argues that each of the defendants should be sanctioned for failing to cite “adverse” authority in their sanctions motions. This argument must fail, as we have held that imposing Rule 11 sanctions for the failure to cite adverse authority would be unduly burdensome to even “a diligent lawyer.” Golden Eagle Distrib. Corp. v. Burroughs Corp., 801 F.2d 1531, 1542 (9th Cir. 1986). Accordingly, the district court did not abuse its discretion by denying the award of sanctions to Levinson. Additionally, Levinson argues that Community Bank should be sanctioned for: (1) failing to provide him with adequate safe harbor when it filed for Rule 11 sanctions; (2) citing unpublished Ninth Circuit dispositions in a reply brief; and (3) multiplying the litigation by opposing plaintiffs’ motion for voluntary dismissal, in violation of 28 U.S.C. § 1927. The appropriate remedy for Community Bank’s failure to satisfy safe harbor is a denial of its request for Rule 11 sanctions against Levinson. See Radcliffe, 254 F.3d at 788-89. With respect to Community Bank’s citation to unpublished opinions, Community Bank remedied this problem through errata filed with the court on June 25, 2003, within the 21-day safe harbor period. The district court did not err when it determined that sanctions based on this error were not warranted. LEVINSON v. BALDWIN 13751 See Fed. R. Civ. P. 11 advisory committee’s notes to 1993 amends. (noting that “a party will not be subject to sanctions on the basis of another party’s motion unless, after receiving the motion, it refuses to withdraw that position or to acknowledge candidly that it does not currently have evidence to support a specified allegation”). Lastly, Levinson’s claim that Community Bank multiplied the litigation and therefore should be sanctioned under 28 U.S.C. § 1927 lacks merit. “Invocation of a federal court’s inherent power to sanction requires a finding of bad faith.” Miller v. Cardinale (In re Deville), 361 F.3d 539, 548 (9th Cir. 2004) (quoting Fellheimer, Eichon & Braverman v. Charter Technologies, 57 F.3d 1215, 1225 (3d Cir. 1995)). From the instant the complaint was filed naming it as a defendant, Community Bank attempted to have the case dismissed. Therefore, the district court did not err when it found that Levinson failed to show that Community Bank acted in bad faith to multiply this litigation.