Opinion ID: 6350113
Heading Depth: 3
Heading Rank: 2

Heading: Sanctions Against the Buchalter Law Firm

Text: Whether a district court may sanction a law firm under Rule 37 is a question we have not addressed before now. Because it involves the interpretation of a federal rule, we also review this question de novo. BDT Prods., 602 F.3d at 749–50. We start with the text of Rule 37(d). See Walker v. Armco Steel Corp., 446 U.S. 740, 750 n.9 (1980). It states:
(A) Motion; Grounds for Sanctions. The court where the action is pending may, on motion, order sanctions if: (i) a party or a party’s officer, director, or managing agent—or a person designated under Rule 30(b)(6) or 31(a)(4) fails, after being served with proper notice, to appear for that person’s deposition; or (ii) a party, after being properly served with interrogatories under Rule 33 or a request for inspection under Rule 34, fails to serve its answers, objections, or written response. (B) Certification. A motion for sanctions for failing to answer or respond must include a certification that the movant has in good faith conferred or attempted to confer with the party failing to act in an effort to obtain the answer or response without court action. (2) Unacceptable Excuse for Failing to Act. A failure described in Rule 37(d)(1)(A) is not excused on the ground that the discovery sought was objectionable, unless the party failing to act has a pending motion for a protective order under Rule 26(c). (3) Types of Sanctions. Sanctions may include any of the orders listed in Rule 37(b)(2)(A)(i)–(vi). Instead of or in addition to these sanctions the court must require the party failing to act, the attorney advising the party, or both to pay the reasonable expenses, including attorney’s fees, caused by the failure, unless the failure was substantially justified or other circumstances make an award of expenses unjust. Fed. R. Civ. P. 37(d). So when a failure to comply with a discovery rule or order occurs, the court must require the party failing to act, “the attorney advising that party, or both to pay the reasonable expenses.” Fed. R. Civ. P. 37(b)(2)(C), (d)(3) (emphasis added); see also Fed. R. Civ. P. 37(a)(5)(A) (“[T]he court must, after giving an opportunity to be heard, require the party or deponent whose conduct No. 21-3516 NPF Franchising, LLC, et al. v. SY Dawgs, LLC, et al. Page 16 necessitated the motion, the party or attorney advising that conduct, or both to pay the movant’s reasonable expenses incurred in making the motion[.]” (emphasis added)). Rule 37 makes no mention of a party’s law firm but explicitly lists a party and a party’s attorney. The canon of expressio unius est exclusio alterius—the express mention of one thing excludes others—thus supports the view that Rule 37 does not provide for sanctions against a law firm. See Chevron U.S.A. Inc. v. Echazabal, 536 U.S. 73, 81 (2002). This reasoning also tracks the Supreme Court’s reasoning in a prior case about sanctions. In Pavelic & LeFlore v. Marvel Entertainment Group, the Court considered whether sanctions were permissible against a law firm under an earlier version of Rule 11.13 493 U.S. 120, 121 (1989). Pointing to the rule’s language that sanctions were permitted only against “the person who signed” the offending document, the Court concluded that a law firm cannot be the one to sign papers, so the rule must mean that sanctions are only permitted against the individual signer. Id. at 124–25. The Court explained that Rule 11 departed from common-law assumptions of delegability, partnership, and agency, and it noted that “[w]here the text establishes a duty that cannot be delegated, one may reasonably expect it to authorize punishment only of the party upon whom the duty is placed. We think that to be the fair import of the language here.” Id. at 125. Likewise, reading Rule 37 to allow sanctions against a party and its attorney, but not the law firm, aligns with how we treat sanctionable entities in other areas of the law. For example, for sanctions under 28 U.S.C. § 1927—when a party prolongs proceedings “unreasonably and vexatiously”—we have held that such sanctions may be imposed only “on individual attorneys, and not law firms.” BDT Prods., 602 F.3d at 757. We explained that “[e]ven if firms can admittedly be personified in a literary sense through briefs, there is no reason to consider a law firm a ‘person’ under the statute. More importantly, law firms are not ‘admitted’ to ‘conduct cases’ in court.” Id. at 751. 13 Note that Rule 11 was amended in 1993 to expressly allow sanctions for law firms. Fed. R. Civ. P. 11(c)(1) (“If, after notice and a reasonable opportunity to respond, the court determines that Rule 11(b) has been violated, the court may impose an appropriate sanction on any attorney, law firm, or party that violated the rule or is responsible for the violation. Absent exceptional circumstances, a law firm must be held jointly responsible for a violation committed by its partner, associate, or employee.” (emphasis added)). No. 21-3516 NPF Franchising, LLC, et al. v. SY Dawgs, LLC, et al. Page 17 Like § 1927 and the old Rule 11, Rule 37 makes no mention of law firms. And it confines liability to “the party failing to act, the attorney advising the party, or both” for a failure to appear for a deposition or serve written responses. Fed. R. Civ. P. 37(d)(3). We thus hold that Rule 37 does not allow for sanctions against a law firm, unless it is a party, and reverse the district court’s judgment in part. While we cannot sustain sanctions against the Buchalter Law Firm under Rule 37, the district court could impose sanctions against the firm pursuant to its inherent authority. To sanction in this manner, the district court must find that the party litigated “in bad faith, vexatiously, wantonly, or for oppressive reasons.” Big Yank Corp. v. Liberty Mut. Fire Ins. Co., 125 F.3d 308, 313 (6th Cir. 1997) (quoting Alyeska Pipeline Serv. Co. v. Wilderness Soc’y, 421 U.S. 240, 247 (1975)). The district court could also impose sanctions “in the interest of justice.” Ray A. Scharer & Co. v. Plabell Rubber Prods., Inc., 858 F.2d 317, 320 (6th Cir. 1988). In a footnote in its opinion, the district court expressed an inclination to impose sanctions under its inherent authority if not for its mistaken belief that it could sanction the law firm under Rule 37. Mem. Op. re Def.’s Mot. for Fees & Costs, R. 262, PageID 6438 n.3. We remand to the district court to determine whether it deems sanctions against the Buchalter Law Firm to be appropriate under the district court’s inherent power. See BDT Prods., 602 F.3d at 756.