United States Court of Appeals,
Eleventh Circuit.
No. 95-4607.
WORLDWIDE PRIMATES, INC., Plaintiff,
Paul Bass, Esq., Plaintiff-Appellant,
v.
Shirley McGREAL, Defendant-Appellee.
July 16, 1996.
Appeal from the United States District Court for the Southern
District of Florida. (No. 90-2056-CIV-KLR), Kenneth L. Ryskamp,
Judge.
Before COX and BARKETT, Circuit Judges, and BRIGHT*, Senior Circuit
Judge.
BARKETT, Circuit Judge.
Attorney Paul Bass appeals the imposition of sanctions against
him in the amount of $25,000 in favor of Shirley McGreal under Rule
11, Federal Rules of Civil Procedure (1993).1 We affirm.
The full factual and procedural background of this case is set
forth in Worldwide Primates, Inc. v. McGreal, 26 F.3d 1089 (11th
Cir.1994) ("Worldwide I "). Briefly, however, McGreal is an animal
rights activist, and Worldwide Primates, Inc., is a Florida
corporation engaged in the commercial wildlife trade. McGreal sent
two letters to Delta Primate Center, a client of Worldwide. The
first letter stated, in part, that Worldwide had "received very
damning criticisms from the Department of Agriculture inspectors
*
Honorable Myron H. Bright, Senior U.S. Circuit Judge for
the Eighth Circuit, sitting by designation.
1
We use Rule 11 as it read at the time the motion for Rule
11 sanctions first was denied. It has since been amended.
and has tried to undermine inspectors' authority by going over
their heads. I enclose some relevant documents." The enclosures,
in essence, verified the truth of McGreal's statements. They
included a memorandum from the United States Department of
Agriculture, which, consistent with McGreal's assertions, detailed
"major deficiencies" in Worldwide's operation, including
unsanitary, inadequate, and damaged animal cages, as well as other
deficiencies "too numerous to mention." The memorandum stated that
"[s]o far, [Worldwide President] Matthew Block has avoided
allegations of violation of the Animal Welfare Act by successfully
involving seven layers of government in this agency, by invoking
complaints, and allegations of everything from over-inspection to
bigotry."
The second letter sent by McGreal stated that "[s]hould Delta
patronize the company Worldwide Primates, we invite you to peruse
this animal dealer's notice from the Centers for Disease Control
suspending his license to import primates." Enclosed was a letter
from the United States Department of Health and Human Services,
notifying Block that "your registration to import nonhuman primates
into the United States is revoked for failure to implement
appropriate isolation and quarantine procedures." This letter
specified no fewer than 46 procedural violations.
Block took the letters to attorney Bass to discuss the
possibility of suing McGreal. Block and Bass had known each other
for about 15 years, and Bass had represented Block on numerous
occasions during that time. Block showed Bass the letters, but not
the attachments referenced in the letters that verified the truth
of the statements contained in the letters. Nor did Bass ask to
see the attachments. Bass testified that Block told him that, as
a result of the letters, Worldwide "had to do two transactions with
Delta Primates Center ... at no profit, and [had] cost [Block]
money in tying up ... facilities and precluded [him] from making
money in another endeavor." But Bass did not make any inquiry of
Block regarding these damages, such as the manner, nature or amount
of money lost.
Thereafter, without doing any further investigation into the
facts on which Worldwide's claim was predicated, Bass filed suit on
behalf of Worldwide against McGreal in state court for tortious
interference with a business relationship. Copies of both letters
were attached to the complaint, but the supporting enclosures were
not. McGreal removed the case to federal court, where it was
subsequently dismissed. The district court denied McGreal's motion
for Rule 11 sanctions. McGreal appealed, and we reversed the
denial of sanctions against Worldwide and remanded with
instructions also to consider whether sanctions would be
appropriate against Bass. On remand, the district court assessed
$25,000 in sanctions against Worldwide and $25,000 against Bass.
Bass now appeals.
An appellate court reviews all aspects of the district
court's Rule 11 determination for an abuse of discretion. Jones v.
International Riding Helmets, Ltd., 49 F.3d 692, 694 (11th
Cir.1995) (quoting Cooter & Gell v. Hartmarx Corp., 496 U.S. 384,
405, 110 S.Ct. 2447, 2461, 110 L.Ed.2d 359 (1990)).
We have previously stated that "Rule 11 stresses the need for
some prefiling inquiry." Mike Ousley Productions, Inc. v. WJBF-TV,
952 F.2d 380, 382 (11th Cir.1992). 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;
or (3) when the party files a pleading in bad faith for an improper
purpose." Jones, 49 F.3d at 694. Imposition of sanctions on the
attorney rather than, or in addition to, the client is sometimes
proper "since it may well be more appropriate than a sanction that
penalizes the parties for the offenses of their counsel." See id.
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. Id. 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 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 facts underlying the [violative document]; ... or whether
he depended on forwarding counsel or another member of the bar."
Ousley Productions, 952 F.2d at 382 (quoting Advisory Committee
Note to Rule 11, as amended in 1983).
We need not dwell on the first issue of whether Worldwide's
claim was objectively frivolous because we so found in Worldwide I.
See 26 F.3d at 1092. Likewise, we find that Bass failed to make a
reasonable inquiry into the facts on which Worldwide's claim was
predicated. Had Bass made such a reasonable inquiry, he would have
discovered that Worldwide's tortious interference claim was
frivolous.
We stated in Worldwide I that a necessary element of a claim
for tortious interference with a business relationship under
Florida law requires proof of damage to the plaintiff as a result
of the breach of the relationship. Id. at 1091. Yet Bass never
conducted any independent inquiry into whether Worldwide had been
damaged by McGreal's letters. Instead, Bass took as fact what his
long-time client Block had simply asserted: Worldwide had been
damaged by McGreal's letters because it had to "do two transactions
at no profit." Indeed, Bass apparently failed to question Block
about the damages, or obtain or examine any data to support the
assertion or ascertain what amounts, if any, had been lost. At the
time Bass filed the complaint, he apparently had no idea how he
intended to prove the elements of his claim. Nor did he attempt to
ascertain from Delta how the McGreal letters had impacted Delta's
relationship with Worldwide. Had Bass contacted Delta's president,
Dr. Peter Gerone, or any other official at Delta, he would have
learned that Gerone was already on record as having told Block that
McGreal's letters would have no effect on Delta's relationship with
Worldwide, that Gerone considered the reports to be "ancient
history," and that Gerone saw Worldwide as a legitimate importer
with whom he intended to continue the same business relationship.
Thus, even the most minimal investigation would have alerted Bass
to the lack of any damages resulting from McGreal's letters, and
that any "claim" for tortious interference against McGreal
therefore would be frivolous.
Bass argues, however, that he was under no obligation to
conduct an independent investigation of the facts underlying
Worldwide's claim before filing suit, and that he could rely on
representations made to him by his long-time client, Block. We
disagree, and hold that, under Rule 11, an attorney must make a
reasonable inquiry into both the legal and factual basis of a claim
prior to filing suit. Bass does not argue that he lacked the time
to investigate the facts, that he was forced to rely solely on
Block for information, or that he had to depend on forwarding
counsel or another attorney. See Ousley Productions, 952 F.2d at
383. Absent such extenuating circumstances, an attorney cannot
simply rely on the conclusory representations of a client, even if
the client is a long-time friend. The district court did not abuse
its discretion in entering sanctions against Bass in this case.
Accordingly, the district court's imposition of sanctions in the
amount of $25,000 against Bass is AFFIRMED.