Opinion ID: 169789
Heading Depth: 4
Heading Rank: 4

Heading: Procedural and Due Process Challenges

Text: M s. Allen asserts several procedural and due process claims challenging the sanction; we consolidate these for review. Although Rule 11(c)(1)(B) does authorize a court to impose monetary sanctions on its own initiative, it may not do so without first follow ing the prescribed procedure: “issuance of a show cause 3 She does include what she asserts is plaintiff’s affidavit, but it is neither signed nor attached to any summary judgment pleading. 4 M s. Allen completed a transcript order form and the court reporter complied with her obligation to complete and file the transcript with the district court, see 10th Cir. R. 10.1(B) and (C), but M s. Allen never filed that transcript with this court as part of her record on appeal, see 10th Cir. 10.1(A) and 30.1(A )(1). -11- order specifically describing the conduct implicating the rule, followed by a reasonable opportunity for the party/attorney so advised to demonstrate how she has not violated the rule.” Hutchinson v. Pfeil, 208 F.3d 1180, 1184 (10th Cir. 2000). M s. Allen first contends that, because the order to show cause mentioned an sanction paid to defendant as attorneys’ fees under Rule 11(c)(1)(B), not a sanction paid into court, the show cause order did not satisfy Rule 11(c)(1)(B)’s requirements and she was denied due process. W e disagree; the show cause order provided her adequate notice under Rule 11(c)(1)(B). The order to show cause referenced Rule 11(c)(1)(B), which was, as previously noted, the legal basis of the magistrate judge’s recommendation and the court’s ultimate sanction. Rule 11(c)(2) states that the nature of the Rule 11 sanction may include either a sanction paid into court or a sanction paid to the opposing party in payment of attorneys’ fees. Although there are procedural differences, 5 we find no substantive legal difference between a Rule 11 sanction paid into court and a Rule 11 sanction paid to the opposing party for its attorneys’ fees and costs. Because the analysis of whether M s. Allen’s conduct was subject to sanction under the rule 5 W e have held that “R ule 11(c)(2) prohibits a court acting on its own initiative from ordering payment of a monetary penalty to an opposing party.” Hutchinson, 208 F.3d at 1184 (citing cases). A court-initiated sanction may be paid only to the court. Johnson v. Waddell & Reed, Inc., 74 F.3d 147, 152 n.3 (7th Cir. 1996). -12- was the same, the order to show cause was entirely sufficient to enable M s. Allen to prepare a defense. See L.B. Foster Co. v. Am. Piles, Inc., 138 F.3d 81, 89 (2d Cir. 1998) (stating that party to be sanctioned is “entitled to notice of the provision under which sanctions are sought, in order that he be forewarned as to the standard under which his conduct is to be evaluated.”). Furthermore, and most significantly, the magistrate judge gave M s. Allen full notice and opportunity to respond to the proposed change of ordering the proposed sanction be paid into court rather than to defendants: it notified her of the proposed change at the Rule 11 hearing and allowed her to file a supplemental brief addressing this precise issue before recommending a sanction. M s. Allen had still further opportunity to defend against the sanction in her objections to the recommendation. Thus, we find that the sanction award did not violate Rule 11(c)(1)(B)’s procedural requirements or M s. Allen’s due process rights. Second, M s. Allen contends the show cause order did not comply with the requirement in Rule 11(c)(1)(B) to describe the specific conduct that appears to violate Rule 11, and thus, violated her due process rights. W e disagree. The district court’s referral order made clear that it was considering sanctions under Rule 11 because M s. Allen had failed to “engage in any serious or meaningful research to support any cause of action” before she signed and filed the complaint. Aplt. App. at 42. It authorized the magistrate judge to issue a show cause order incorporating by reference the wrongdoing outlined in the initial -13- R& R. Id; see also Clark, 460 F.3d at 1008 (upholding Rule 11(c)(1) order to show cause that incorporates the summary judgment orders detailing the court’s objections to counsel’s conduct). The order to show cause first cited to the R&R, though it did not use the “incorporate by reference” phrase. The R& R had expressly recommended a sanction be imposed on M s. Allen because the “case never had any factual or legal basis.” Aplt. App. at 20. The show cause order further described the specific conduct said to violate Rule 11, namely, the district court’s finding that the “claims are frivolous and groundless and should not have been made or pursued on the facts - existing or lacking - demonstrated in the record.” Id. at 44 (quoting district court order, id. at 42). Thus, the referral order and order to show cause clearly informed M s. Allen that sanctions were being considered against her on the basis that she signed the complaint in this case without conducting a reasonable inquiry into the law and facts underlying the pleading or motion. See Rule 11(b). M oreover, the record demonstrates that, in response to the Rule 11 show cause order, M s. Allen presented a defense on precisely that ground. She argued in her Rule 11 pleadings that she had conducted what she believed to be a reasonable inquiry into the law and facts. And, although M s. Allen failed to provide a transcript of the R ule 11 hearing, it is clear from the magistrate judge’s description of the hearing that the subject of that hearing was the research and investigation into the evidence and applicable law that M s. Allen conducted prior -14- to signing the complaint. Thus, we conclude that the order to show cause did inform M s. Allen of the specific conduct for which the sanctions were being sought such that she was able to prepare a defense.