R. 11 Sanctions and Serving “the Motion”

The following question is one I taught in Civil Procedure earlier this semester:

May a motion for Rule 11 sanctions be granted when the moving party fails to serve the motion on the nonmoving party prior to filing?

In my class, I taught that R.11(c)(2) prohibits a party from filing a R.11 motion for sanctions without first serving “the motion” on the non-moving party (and waiting 21 days).

  • My students: What if we the moving party provides notice by sending an email to say that they are planning to file a motion and explaining the reasons?
  • Crouch: No, the rule says that you have to serve “the motion;” not just provide notice of your concern.

In Khan v. Hemosphere, Inc., the Federal Circuit disagreed with my analysis of the rule. In particular, the court held that the Khans were sufficiently “on notice of [defendants’] intent to seek sanctions” based upon a series of letters sent to the Khans indicating that a sanctions-motion was coming. Thus, although the Khans were not served with “the motion” they were sufficiently on notice.

Khan Petition for Rehearing: In their petition, the Khans argue that the Federal Circuit’s “conclusion that warning letters of the type at issue here can take the place of the ‘motion’ required by Rule 11(c)(2) breaks sharply with the text of the Rule, and with every other Court of Appeals to consider the issue—including the Seventh Circuit.” Here, the 7th Circuit is important because this case arose in Illinois and the regional circuit’s law should apply to this non-patent related issue.  The 7th Circuit is also important because it is an outliner in allowing “substantial compliance” with the R. 11 rather than sticking to “the motion” rule. The 7th Circuit’s approach appears to have begin with a flippant ruling by Judge Easterbrook in Nisenbaum v. Milwaukee County, 333 F.3d 804, 808 (7th Cir. 2003). In that case the court decided without any analysis that “substantial compliance” with the notice requirement is sufficient.

In its decision, the Federal Circuit cited to Matrix IV, Inc. v. Am. Nat’l Bank & Tr. Co., 649 F.3d 539, 552–53 (7th Cir. 2011), which stated that “a letter informing the opposing party of the intent to seek sanctions and the basis for the imposition of sanctions” was sufficient.  In its petition for rehearing, Khan explains that the Matrix IV statement was dicta and insufficient to overcome other 7th Circuit decisions which require the to-be-sanctioned-party an “opportunity to withdraw or correct the challenged pleading within 21 days without imposition of sanctions.”  Khan argues that the 21-day opportunity was not given here.

Wright & Miller suggest that informal notice as provided here is insufficient:

Note that informal notice—rather than formal service—of a potential violation is insufficient to trigger the beginning of the twenty-one day safe harbor period. The Advisory Committee Note explains that although informal notice does not trigger the safe harbor period, it usually is expected that informal notice will be given before a party prepares and serves a formal motion under Rule 11 for sanctions.

§ 1337.2Procedural Aspects of Rule 11 Motions—The Safe Harbor Provision, 5A Fed. Prac. & Proc. Civ. § 1337.2 (4th ed.).

I hope the Khans win here, otherwise I’ll be forced to change my syllabus.

23 thoughts on “R. 11 Sanctions and Serving “the Motion”

  1. 7

    I concur with Prof. Crouch’s opinion and that the Fed. Cir. is in error with the majority rule of FRCP rule 11 interpretation. What the Fed Circuit is now saying is certainly not what I was taught in law school or Barbri. When Rule 11 was first created, the 21 day safe harbor provision was considered essential to reduce the amount of frivolous filings and litigious seeking of sanctions. The Fed. Circuit’s interpretation goes against the legislative intent and text of the Rule. Should the Fed. Circuits interpretation hold then expect every litigator to send out an informal email threatening Rule 11 sanctions for every complaint filed.

  2. 6

    I suspect the Khans’ counsel are eyeing a cert petition that would ask the Supreme Court to reject the Seventh Circuit’s “outlier” position.

    The petition to the Federal Circuit acknowledges that the Seventh Circuit allows for “substantial compliance” in the form of warning letters. It argues in the panel rehearing section that even under the Seventh Circuit’s standard, as applied and explained in a 2017 case these warning letters are insufficient. Assuming the petition is right on the law, it’s not a bad argument. Maybe the panel will go for it. But it’s fairly fact-specific, unclear whether it’s the same argument the Khans actually made to the panel, and seems like a longshot for panel rehearing.

    The en banc part of the petition seems to ignore that the Federal Circuit has to follow the Seventh Circuit’s. It argues that the Federal Circuit has created a circuit split. But if I’m reading it properly the petition can only make that argument by bootstrapping from its panel rehearing argument that the Federal Circuit has gone further than the Seventh Circuit. If the Federal Circuit has actually faithfully applied the Seventh Circuit’s outlier position, then either the Seventh Circuit or the Supreme Court needs to clean this up. The Federal Circuit can’t (I don’t think) reject the Seventh Circuit’s precedent because the Seventh is on the wrong side of a split. En banc rehearing seems highly unlikely, but if any judges write separately to say “we’re bound to follow the Seventh Circuit, but the Seventh Circuit might be wrong,” that would help any cert petition the Khans would file.

    Setting aside the appellate procedure angle, the post and the petition both make a good argument that FRCP 11 requires service of the actual motion, not just “substantial compliance” in the form of warning letters, and that that part of the panel decision is wrong. Between the FedCir, 7thCir, and SupCt, perhaps someone should fix it.

    1. 6.1

      “I suspect the Khans’ counsel are eyeing a cert petition that would ask the Supreme Court to reject the Seventh Circuit’s “outlier” position.”

      They are their own counsel, which is the principal reason they’re now in the position that they’re in. And based on their behavior thus far, they do not seem to have a sufficient grasp of the legal system to be aware that this argument is available, let alone to cogently present this argument.

      But maybe you can convince them to hire you as counsel, contingent on payment of a sizeable retainer.

      1. 6.1.1

        My understanding is that they were pro se until after the Federal Circuit panel decided their appeal and after PatentlyO posted about it about a month ago.

        Since then, they’ve gotten real lawyers who’ve filed a real rehearing petition, and it’s quite good. link to patentlyo.com It may be too late for the Khans, but it’s a solid effort and might work.

        1. 6.1.1.1

          Nice keeping track and posted update, dcl – thank you.

          1. 6.1.1.1.1

            Thanks. I hadn’t noticed until now that this post isn’t explicit about the Khans getting counsel.

            This is the PatentlyO post from August about the panel decision in August. link to patentlyo.com Two people decided to proceed pro se in patent litigation against 300+ defendants–in district court and on appeal. The Federal Circuit decision paints a pretty good picture of pro se plaintiffs who were in over their heads at every step, pressed forward anyway, and received predictable results. That was August.

            Sometime after that, the Khans got real counsel to file a rehearing petition at the Federal Circuit, and that’s what I understand this post to be about. The rehearing petition isn’t trying to get the Khans back into court on their patent claims. It’s just trying to get them off the hook for the $96,000 in attorney fees they were ordered to pay as a sanction. It’s an interesting civ pro angle, an interesting (to me) appellate procedure angle, and also an obvious illustration about the dangers of pro se litigation. Like the other case about the prisoner in New Jersey, I appreciate PatentlyO highlighting and digging into these sorts of cases.

  3. 5

    The ends do not justify the means. How anyone feels about the Khans is immaterial.

    The fact is that they were denied their due process rights.

    But does the CAFC care enough to make right that which is wrong?

    Don’t count on it.

  4. 4

    Even though a unique to the 7th Circuit “flippant ruling by Judge Easterbrook” interpreting FRCP 11, is not the Fed. Cir. stuck with it for a case from that Circuit until someone takes it to the Sup. Ct?

  5. 3

    I think your syllabus is safe, Dennis. This is a non-precedential opinion, and for good reason — it’s clearly contrary to well-established, black-letter law.

    But I don’t see rehearing being granted. It seems pretty clear the conduct in question was sanctionable (whether under Rule 11, the inherent authority of the court, or otherwise). So, right result, wrong reason.

    More importantly, the petition for rehearing appears to contain no statement or suggestion that the Khans would have modified their conduct or done anything at all in response to a properly served copy of the motion. So, no harm, no foul.

    I’m curious why counsel for the moving parties failed to properly serve the motions; that was a change we all had to get used to when Rule 11 was amended in 1993. Yes, the formality is a PITA, but it’s a formality that shows the court the movant has put the proper effort into the matter and is not wasting the court’s time.

    It also would have saved the money and time wasted on addressing the matter on appeal. Perhaps an object lesson in doing the job right the first time.

    1. 3.1

      The rule says what Dennis says it says, and he properly interpreted it. But it’s dumb and only benefits deliberate miscreant attorneys at the expense of the parties that are harmed by the sanctionable behavior.

      1. 3.1.1

        And what then, sir, what then, after you have mowed down all the laws in your pursuit of the Devil, what then when you finally track him down and he turns on you – you with no laws left to protect yourself, what then?

        (Paraphrasing, of course)

        1. 3.1.1.1

          It will be okay. We are a nation where the rule of law means law binds some and does not protect them, and protects some but dopes not bind them.

          1. 3.1.1.1.1

            You rather miss the point.

            This is sure-fire path to NOT being OK.

            Alas, those who do not learn from history are bound to repeat it.

        2. 3.1.1.2

          I’ve no idea what your histrionics have to do with the case at bar. “Reasonable notice” is usually sufficient for an honest or unintentional offender to correct his error. Requiring litigants to bear the burden and delay of a motion just to give the offender a chance to take advantage of Rule 11’s “free pass” is excessive.

          “I shouldn’t be sanctioned because they sent me only a detailed letter outlining my rule violations, rather than an actual motion, and gave we 21 days to correct them,” is not a genuine defense, even if it is a legal one.

          1. 3.1.1.2.1

            You are engaging in that “Ends justify the Means” thinking again, and need to elevate your game.

            1. 3.1.1.2.1.1

              I am merely thinking of the ends and considering what means are required to achieve them. The Rules do not exist for their own sake, but to accomplish their aims. This Rule, as written, fails.

              1. 3.1.1.2.1.1.1

                The Ends do not justify the Means.

                You do not like the Means?

                Then deal appropriately with changing those Means.

                Your path is the path to utter destruction under the false guise of “but the Ends.”

  6. 2

    These are the same pro se plaintiffs who pi$$ed off the same panel of judges earlier this year, leading to the panel’s decision in August to dismiss the case with prejudice. Now the same two guys are – surprise, surprise – getting socked with attorneys’ fees. I strongly suspect that they deserve this result, but the panel’s route to allow that seems like a stretch.

  7. 1

    I’m not an attorney, but isn’t it a violation by the court itself of the non-movant’s procedural due process rights for the court to consider a motion for sanctions, without the court also notifying the non-movant of the actual basis being considered for those sanctions? Either the court itself can do it, or it can delegate the responsibility to the officer of the court (i.e., the movant attorney) in the best position to provide that notice. But until the motion is filed, there is no “actual basis” that the court is considering.

    1. 1.1

      Yep. Court can award sanctions on its own without a motion. But the rule requires first an order to “show cause” as to why sanctions are inappropriate. Then, after providing an opportunity to respond, the court can award R11 sanctions.

      1. 1.1.1

        It is true that courts generally can award Rule 11 sanctions on its own. However, there is an exception for attorney fees (the only type of sanction imposed in this case). Rule 11 attorney fees can be imposed only on motion, as per Rule 11(c)(4).

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