Court Opinion

ID: 6938059
Source: CourtListenerOpinion
Date Created: 2022-07-24 00:47:48.304911+00
Date Added: 2024-06-11T16:07:34.569417
License: Public Domain

O’SCANNLAIN, Circuit Judge,
concurring in part and dissenting in part:
I concur in Parts I, III, and IV of the opinion; I respectfully dissent from Part II.
The court concludes that the district court’s imposition of Rule 11 sanctions should be reversed, insisting that it is appropriate for a complaint to be filed on the basis of a hunch if it is ultimately well-grounded in fact and law.
In support of its ruling, the court cites our decision in Townsend v. Holman Consulting Corp., 929 F.2d 1358 (9th Cir.1990) (en banc), which noted that a filing is frivolous if it is “both baseless and made without a reasonable and competent inquiry.” Id. at 1362. The court appears to hold that this language implicitly overrules Unioil, Inc. v. E.F. Hutton & Co., 809 F.2d 548 (9th Cir.1986), which held that “an attorney violates Rule 11 whenever he signs a pleading, motion or other paper without having conducted a reasonable inquiry into whether his paper is frivolous, legally unreasonable, or without factual foundation.” Id. at 557. Since the Townsend language which the court cites is mere dicta, I must strongly disagree with the assertion that Unioil has been overruled.
The opinion also fails to evaluate what, in fact, happened in this case. The record is devoid of any showing of pre-filing investigation by the attorneys; rather the complaint appears to have been filed solely on the basis of several news reports and interviews with personal injury attorneys who had an interest in pending litigation involving the company. Although the ease eventually stumbled upon some merit, Rule 11, properly construed, as it provided prior to 1993 (which would be appropriate under the circumstances), requires independent judgment and does not allow post-complaint information to serve as adequate justification.
While I agree that we must avoid the spawning of satellite litigation and the chilling of vigorous advocacy, we must also recall that the Supreme Court case instructing such behavior, Cooter & Gell v. Haatmarx Corp. et al, 496 U.S. 384, 110 S.Ct. 2447, 110 L.Ed.2d 359 (1990), reminds us that Rule ll’s primary function is to deter frivolous litigation. Id. at 393, 110 S.Ct. at 2454. The Rule’s central goal is what compelled the Third Circuit, in Garr v. U.S. Healthcare, Inc., 22 F.3d 1274 (3d Cir.1994), to find that “a shot in the dark is a sanctionable event, even if it somehow hits the mark.” Id. at 1279 (citing Vista Mfg., Inc. v. Trac-4 Inc., 131 F.R.D. 134, 138 (N.D.Ind.1990)). After ah, if a “lucky shot could save the signer from sanctions, the purpose of Rule 11 ‘to deter baseless filings’ would be frustrated.” Garr, 22 F.3d at 1279 (citing Cooter & Gell, 496 U.S. at 393, 110 S.Ct. at 2454).
On this issue, I would remand to the district court with instructions to evaluate counsel’s conduct in preparing and filing the complaint under the pre-1993 amendment language of Rule 11, but to separate out those matters which are covered by section 1927 and which are beyond the scope of Rule 11. Based on the present state of the record, I would be inclined to affirm the Rule 11 sanctions but to reverse the section *4381927 sanctions for the reasons expressed by the court in other parts of its opinion.