Opinion ID: 783938
Heading Depth: 4
Heading Rank: 1

Heading: Reliance on the September 25 Letter in the UDRP proceedings

Text: 76 The district court sanctioned Cello for its representation that it filed the arbitration proceedings because Storey engaged in a `new act of cybersquatting.' Storey, 182 F.Supp.2d at 366. Although, as discussed above, the legal contention in this statement has more validity than the district court recognized, the district court was understandably troubled by the factual contention in this statement. In a letter of April 13, 2001 submitted to the district court, counsel for Cello stated that the September 25 Letter was the basis for the arbitration, yet neither Cello's answer nor Cello's UDRP complaint mentions it. In its motion for summary judgment, Cello's counsel likewise contended that Cello commence[d] its arbitration predicated upon the September 25 Letter. 19 (Def.'s Mem. Supp. Summ. J. at 13) (emphasis added). These representations communicate more than the subjective reason for the commencement of the arbitration, as Cello now attempts to construe the statements on appeal; they incorrectly state that the September 25 Letter was a relevant fact in the UDRP Administrative Proceeding. 77 Although these statements are highly suspect, they cannot serve as the basis of the sanctions imposed by the district court: Rule 11 contains a notice requirement, and Cello did not receive proper notice of the impending sanctions with regard to these statements. The text of Rule 11 requires that a party's motion initiating the sanctions process shall describe the specific conduct alleged to violate subdivision (b). Fed.R.Civ.P. 11(c)(1)(A). Alluding to the due process rights of any person potentially subject to any kind of sanctions, this Circuit has explained that: 78 At a minimum, the notice requirement mandates that the subject of a [Rule 11] sanctions motion be informed of: ... [ inter alia ] the specific conduct or omission for which the sanctions are being considered so that the subject of the sanctions motion can prepare a defense. Indeed, only conduct explicitly referred to in the instrument providing notice is sanctionable. 79 Schlaifer Nance & Co., 194 F.3d at 334 (internal citation omitted). This notice requirement permits the subjects of sanctions motions to confront their accuser and rebut the charges leveled against them in a pointed fashion. Moreover, when Rule 11 sanctions are initiated by the motion of a party, it gives the subject the opportunity to withdraw the potentially offending statements before the sanctions motion is officially filed. See Fed.R.Civ.P. Rule 11(c)(1)(A) (providing a safe harbor by requiring the motion for sanctions to be served twenty-one days before it can be filed with the court). 80 Storey's Memorandum in Support of Plaintiff's Motion for Sanctions, the instrument providing notice here, references only a frivolous answer denying the material allegations of the complaint as the predicate for the imposition of sanctions under Rule 11. Storey's sanctions motion makes no direct reference to the September 25 Letter, and, as the district court itself noted, there is no mention of the September 25 Letter in Cello's answer. 20 See Storey, 182 F.Supp.2d at 359. Accordingly, we conclude that Cello did not receive the requisite notice that sanctions might be imposed because of its contention that the September 25 Letter was the factual predicate of the UDRP Administrative Proceeding.