United States Court of Appeals,
Eleventh Circuit.
No. 93-8989.
Richard JONES, Gail Jones, Plaintiffs,
Barry L. Roseman, Appellant,
v.
INTERNATIONAL RIDING HELMETS, LTD., Defendant-Cross-Defendant-
Appellee,
A. Plastino & Sons, Ltd., aka Plastino & Sons, Ltd., aka
Plastino, Inc. Augustino Plastino, Soyo International Ltd.,
Defendants-Cross-Defendants,
Miller's Harness Inc., Defendant-Cross-Claimant, Appellee.
April 6, 1995.
Appeal from the United States District Court for the Northern
District of Georgia. (No. 1:91-cv-1533-ODE), Orinda D. Evans,
District Judge.
Before DUBINA, Circuit Judge, RONEY and ESCHBACH*, Senior Circuit
Judges.
DUBINA, Circuit Judge:
Appellant Barry L. Roseman ("Roseman"), attorney for the
plaintiffs Gail and Richard Jones ("the plaintiffs"), appeals the
district court's order imposing Rule 11 sanctions against him in
this products liability action brought by the plaintiffs against
International Riding Helmets, Ltd. ("IRH").
I. BACKGROUND
The plaintiffs sued IRH and four other defendants for
negligence and breach of warranty. They alleged that their child,
Jessica, suffered head injuries in a 1989 horseback riding accident
*
Honorable Jesse E. Eschbach, Senior U.S. Circuit Judge for
the Seventh Circuit, sitting by designation.
despite wearing a helmet. They further alleged that the defendants
manufactured or distributed the helmet in question, and they sought
damages. The plaintiffs' lawyer was Roseman, who signed and filed
a complaint on behalf of the plaintiffs on July 5, 1991.
IRH eventually moved for summary judgment. It argued that
because the helmet in question was manufactured in 1985, and
because IRH was not incorporated until 1986, it could not have
manufactured the helmet. IRH submitted documents to demonstrate
that it started doing business in 1986 and was not related to any
prior corporate entity.
The plaintiffs never responded to IRH's motion. Accordingly,
1
the district court entered summary judgment for IRH. IRH then
moved for sanctions under Rule 11 of the Fed.R.Civ.P. It alleged
that Roseman filed the complaint despite knowing that IRH was not
a proper party to the action. Moreover, it argued that the
plaintiffs knew or should have known that the helmet was
manufactured before 1986, and that IRH could not be held liable for
the helmet as a matter of law. In summary, IRH asserted that the
complaint was not well-grounded in fact, and it sought
reimbursement for the costs incurred during discovery and in
seeking sanctions.
Roseman responded that his pre-filing investigation was
"superlative." (R2-34 at 7). Specifically, he alleged that
statements by four individuals supported a reasonable belief that
the helmet could have been manufactured in 1986, and thus,
1
The district court separately resolved the plaintiffs'
claims against the remaining defendants.
manufactured by IRH.
The district court, however, found that Roseman did not
actually believe that the helmet was manufactured in 1986 when he
signed the complaint.2 In support of its findings, the district
court noted that Roseman never sought discoverable information for
helmets manufactured that year. The court also found that a
reasonable investigation, such as reviewing IRH's certificate of
incorporation, would have shown that IRH was not a proper party if
the helmet was made before 1986. In its findings, the district
court concluded that Rule 11 obligated counsel to conduct a
reasonable inquiry as to whether IRH was a proper party, that
counsel failed to conduct such an inquiry, and that sanctions were
mandatory under the circumstances.
Based upon the itemized list of costs and fees incurred
between July 1, 1991, and March 31, 1992, the district court
awarded IRH a total of $16,415.94. This amount included costs
incurred in connection with a deposition and in filing the motion
for Rule 11 sanctions. The court ordered that Roseman be
personally responsible for payment in order to deter him from
conducting future litigation in a similar manner.
The plaintiffs declined to appeal the entry of judgment
against them. Roseman, however, timely filed a pro se notice of
appeal from the sanctions order. IRH responded by seeking
sanctions under Fed.R.App.P. 38.
II. STANDARD OF REVIEW
2
Jones v. International Riding Helmets, Ltd., 145 F.R.D.
120, 123 (N.D.Ga.1992).
An appellate court reviews all aspects of the district
court's Rule 11 determination for an abuse of discretion. Cooter
& Gell v. Hartmarx Corp., 496 U.S. 384, 405, 110 S.Ct. 2447, 2461,
110 L.Ed.2d 359 (1990). A district court would necessarily abuse
its discretion if it based its ruling on an erroneous view of the
law or on a clearly erroneous assessment of the evidence. Id.
III. ANALYSIS
We begin by noting that Fed.R.Civ.P. 11 has been amended since
the actions forming the basis of this appeal were conducted. 3 We
are, however, bound to apply the Rule in effect at the time the
events herein took place.
Roseman contends that the district court abused its
discretion in imposing Rule 11 sanctions for Roseman's failure to
make a reasonable inquiry prior to the filing of the plaintiffs'
complaint. While he concedes that he knew of IRH's 1986
incorporation date, he argues that he was unsure at the time he
filed the complaint whether the helmet was purchased in 1985 or
1986.4 First, Roseman asserts that plaintiff Gail Jones indicated
before the complaint was filed that the helmet might have been
3
Rule 11 was amended effective December 1, 1993. Under the
1993 amendment,
... a litigant's obligations with respect to the
contents of these papers are not measured solely as of
the time they are filed with or submitted to the court,
but include reaffirming to the court and advocating
positions contained in those pleadings and motions
after learning that they cease to have any merit.
Fed.R.Civ.P. 11 Advisory Committee's Note.
4
The complaint itself does not specify the date the helmet
was manufactured.
purchased in 1986. Second, the retailer who sold the helmet told
the plaintiffs' investigator that she generally buys from two
manufacturers, Lexington Safety and "Helmets International."
According to Roseman, the retailer might have meant "International
Riding Helmets, Ltd." rather than "Helmets International." Third,
Roseman refers to an interview with a "confidential informant"
conducted prior to the filing of the complaint who was "99% sure"
that the helmet was manufactured by IRH.
The district court rejected these arguments, stating that
"[d]espite the effort by Plaintiffs' counsel to show that an
investigation took place, the court is unable to accept counsel's
assertion that he was uncertain as to the helmet's date of
purchase." Jones, 145 F.R.D. at 123. First, the district court
noted that each of the plaintiffs' interrogatories and requests for
production focused on the period from January 1, 1980, to December
31, 1985. Id. Second, the district court cited a specific request
for production seeking "documents concerning insurance coverage
that might exist for an injury occurring in 1989 resulting from a
defectively manufactured helmet purchased in Mississippi in 1985."
Id. (emphasis added). Thus, the district court found that "at the
time the Plaintiffs served their complaint, they knew that the time
period for possible liability ranged from 1980 to 1985, rather than
1986. Given this conclusion, the court must find that Plaintiffs'
claim against International was objectively frivolous." Id. at
124. According to the district court, therefore, the record
"conclusively established" that IRH was not in existence when the
helmet entered the market. Id.
Rule 11 sanctions are proper "(1) when a party files a
pleading that has no reasonable factual basis; (2) when the party
files a pleading that is based on a legal theory that has no
reasonable chance of success and that cannot be advanced as a
reasonable argument to change existing law; and (3) when the party
files a pleading in bad faith for an improper purpose." Souran v.
Travelers Ins. Co., 982 F.2d 1497, 1506 (11th Cir.1993) (quoting
Pelletier v. Zweifel, 921 F.2d 1465, 1514 (11th Cir.), cert.
denied, 502 U.S. 855, 112 S.Ct. 167, 116 L.Ed.2d 131 (1991)). The
text of Rule 11 permits sanctions only if the objectionable court
paper is "signed in violation of this rule." Id. at 1507.
Accordingly, the court's inquiry focuses only on the merits of the
pleading gleaned from facts and law known or available to the
attorney at the time of filing. Id. at 1508 (citations omitted)
(emphasis added). "The court is expected to avoid using the wisdom
of hindsight and should test the signer's conduct by inquiring what
was reasonable to believe at the time the pleading, motion, or
other paper was submitted." Id. at 1507 (quoting Fed.R.Civ.P. #
11, Advisory Committee Note).
In this circuit, a court confronted with a motion for Rule 11
sanctions first determines whether the party's claims are
objectively frivolous—in view of the facts or law—and then, if they
are, whether the person who signed the pleadings should have been
aware that they were frivolous; that is, whether he would have
been aware had he made a reasonable inquiry. McGuire Oil Co. v.
Mapco, Inc., 958 F.2d 1552, 1563 (11th Cir.1992). If the attorney
failed to make a reasonable inquiry, then the court must impose
sanctions despite the attorney's good faith belief that the claims
were sound. Id. The reasonableness of the prefiling inquiry may
depend on such factors as how much time for investigation was
available to the signer; whether he had to rely on a client for
information as to the underlying facts; and whether the paper was
based on a plausible view of the law. Donaldson v. Clark, 819 F.2d
1551, 1556 (11th Cir.1987) (en banc). The reasonableness of the
inquiry may also depend on the extent to which factual development
requires discovery. Mapco, 958 F.2d at 1563.
The law is not clear whether the failure to seek discovery
regarding certain claims can establish that a complaint was not
well-founded. Certain pre-filing statements cited by Roseman
suggest that a reasonable basis existed for believing that the
helmet was manufactured in 1986; however, Roseman's post-filing
actions—specifically, the dates specified in his discovery
requests—suggest that he may not have held this belief. Thus, if
his post-filing actions are not relevant to whether a reasonable
basis existed for filing the complaint, then the district court may
have abused its discretion in awarding sanctions.
As previously noted, the question of the propriety of a
pleading for purposes of Rule 11 is determined at the time the
pleading is filed. Research fails to uncover any case law on the
issue of whether a district court may examine an attorney's
post-filing actions, such as the formulation of discovery requests,
to determine whether the attorney reasonably believes that the
pleading was well-founded when it was filed. The most closely
analogous case is Childs v. State Farm Mut. Auto. Ins. Co., 29 F.3d
1018 (5th Cir.1994). In that case, the Fifth Circuit held that
significant evidence gathered by the defendants during discovery
suggesting that the accident at issue was staged "became a factor
in the district court's determination of whether, under the
circumstances, [the plaintiffs' counsel] had conducted a reasonable
inquiry into the facts supporting the claim." Id. at 1025. In
this circuit, the closest statement addressing this issue appeared
in Souran, 982 F.2d at 1507 n. 12, where we stated in a footnote
that the district court's exclusive focus on the complaint for Rule
11 sanctions was "troubling" in light of its examination of
post-complaint discovery to determine if the complaint was
well-grounded.
In our view, the district court did not abuse its discretion
in awarding Rule 11 sanctions under the facts of this case. The
prohibition against using hindsight to determine whether a pleading
had a reasonable basis when filed is intended to protect parties
who file pleadings which appear well-grounded when filed, but which
discovery or subsequent investigation revealed to be meritless.
The present situation, however, is distinguishable. This is not a
case where discovery later revealed that there was no reasonable
basis for the complaint. Rather, in this case, the formulation of
the plaintiffs' discovery requests, and the specific dates in those
requests, reveal that Roseman did not believe that the complaint
against IRH was well-grounded at the time he signed the pleading.
Roseman concedes that he knew that IRH was incorporated in 1986.
His later actions reveal that he also knew that the helmet was
manufactured in 1985 and therefore could not have been made by IRH.
Nevertheless, he signed the complaint, specifying no specific date
of purchase, and sued IRH. Roseman's conduct is particularly
egregious in light of his failure to respond to several requests
for dismissal and a motion for summary judgment filed by IRH. The
Fifth Circuit in Childs suggests that such post-filing information
is a factor in determining whether a reasonable inquiry was
conducted prior to the filing of the complaint. We agree and hold
that the district court here properly considered Roseman's
post-filing actions in determining whether Rule 11 sanctions were
appropriate.
Finally, Roseman makes several policy arguments asserting that
sanctioning his conduct would undermine the ability to plead in the
alternative, would fail to deter "genuine bad faith," would
encourage disingenuous discovery requests, and would deter
legitimate filings. These arguments are meritless. Affirming the
sanctions imposed in this case will not prevent a plaintiff from
suing multiple defendants and relying on discovery to determine
which defendant is responsible for his injury. That is not what
happened in this case. The sanctions here were imposed against an
attorney who knew that IRH could not have produced the defective
product, but nevertheless filed a vague complaint and then pursued
discovery that clearly revealed his belief that IRH was not
responsible for the injury. In sum, we are unpersuaded that
Roseman's policy arguments are sufficient to reverse the district
court's award of sanctions against him. For the foregoing reasons,
we affirm the district court's order imposing sanctions against
Roseman.
AFFIRMED.