A party may file a motion for sanctions, even after entry of final judgment, as long as the 21-day safe harbor has elapsed before the filing of the Rule 11 motion, the Eleventh Circuit said.
In her July 12 opinion, Circuit Judge Britt C. Grant had the unenviable task of explaining away a prior Eleventh Circuit decision that was either wrong, dicta or employed “imprecise language.”
A group of homeowners sued a law firm in district court under the federal Fair Debt Collection Practices Act. Believing that the complaint was frivolous, the law firm served the homeowners’ counsel with a draft of a Rule 11 motion for sanctions. The homeowners did not withdraw the complaint either before or after the 21-day safe harbor under Rule 11.
Eventually, the district court granted summary judgment in favor of the law firm. Five days later, the law firm filed a Rule 11 motion for sanctions. Citing language in a 2008 Eleventh Circuit opinion, Gwynn v. Walker (In re Walker), 532 F.3d 1304 (11th Cir. 2008), the district court dismissed the Rule 11 motion, believing that the appeals court had ruled that a motion for sanctions may not be filed after final judgment.
Indeed, the district court had good reason to dismiss. Walker said “that service and filing of a motion for sanctions ‘must occur prior to final judgment or judicial rejection of the offending’ motion.” Id. at 1309.
Judge Grant set the record straight. The Eleventh Circuit originally settled the issue 10 years earlier in Baker v. Alderman, 158 F.3d 516 (11th Cir. 1998). Ruling that a sanctions motion filed less than 30 days after final judgment was timely, Baker held that a sanctions motion is collateral to the main action and “may be filed and considered even after the merits are resolved,” Judge Grant said. Id. at 532.
Before explaining away Walker, Judge Grant said that nothing in the text of Rule 11 “suggests” that a sanctions motion must be filed before judgment. She cited two federal practice treatises for the same proposition.
Why not follow Walker, the more recent of the two Eleventh Circuit opinions? Logic would seem to suggest that later authority is more compelling.
Not so, said Judge Grant. When “prior panel precedents conflict, we follow the earlier precedent — not the later,” she said.
Why is that? A panel, Judge Grant said, cannot overrule a prior one’s holding, even if it’s convinced that the earlier opinion is wrong. “When deciding Walker we thus were not free to alter our approach to Rule 11, even if we wanted to,” she said.
Judge Grant spent several pages attempting to explain why Walker was not wrong, merely misunderstood. This writer is not convinced. The quotation from Walker could have been rejected as nonbinding dicta.
Judge Grant reversed the denial of the Rule 11 motion and remanded to the district court. Reiterating Baker, she held that a party may “file for Rule 11 sanctions after final judgment, so long as it has complied with the other requirements,” such as the 21-day safe harbor allowing withdrawal of the offending pleading.
Nota Bene
The opinion by Judge Grant mentions another notable feature of Rule 11. If the court dismisses the offending pleading before expiration of the 21-day safe harbor, the sanctions motion will fail because the offending party was not given the full 21 days to withdraw the pleading.
A party may file a motion for sanctions, even after entry of final judgment, as long as the 21-day safe harbor has elapsed before the filing of the Rule 11 motion, the Eleventh Circuit said.
In her July 12 opinion, Circuit Judge Britt C. Grant had the unenviable task of explaining away a prior Eleventh Circuit decision that was either wrong, dicta or employed “imprecise language.”
A group of homeowners sued a law firm in district court under the federal Fair Debt Collection Practices Act. Believing that the complaint was frivolous, the law firm served the homeowners’ counsel with a draft of a Rule 11 motion for sanctions. The homeowners did not withdraw the complaint either before or after the 21-day safe harbor under Rule 11.