We will all agree that a lawyer or her client should be punished if they bring a case without any basis in law or fact — a complaint in which either the facts or the law are “simply made up.” There is no social value of such cases, they inflict needless cost on a burdened system, and there is no threat if such cases are totally eradicated.
At the other extreme, we will all agree that losing a lawsuit, by itself, could not possibly be the basis for a punishment of the losing side. This would over-deter and would result in injustices as meritorious claims would go unvindicated for fear of the consequences of losing.
We might disagree in most cases in which sanctions are sought, however, that is, in the vast swath of gray between the black and white extremes.
How about where a litigant brings a claim past the statute of limitations (thus, a claim without any legal validity) based on the position that the litigant only recently “discovered” he had a legal claim?
Courts have not hesitated to find sanctionable conduct under Rule 11 for bringing claims clearly time-barred under the respective statutes of limitations. Baker v. Citizens State Bank of St. Louis Park, 661 F.Supp. 1196, 1197 (D.Minn.1987); Van Berkel v. Fox Farm and Road Machinery, 581 F.Supp. 1248, 1249–51 (D.Minn.1984); Napier v. Thirty or More Unidentified Fed. Agents, 855 F.2d 1080, 1091 (3rd Cir.1988); United States v. Gavilan Joint Community College Dist., 849 F.2d 1246, 1247, 1250–51 (9th Cir.1988); Fred A. Smith Lumber Co. v. Edidin, 845 F.2d 750, 751–54 (7th Cir.1988), quoting Dreis & Krump Mfg. v. Intern. Ass’n of Machinists, 802 F.2d 247, 255 (7th Cir.1986), (“ ‘No competent attorney who made a reasonable inquiry into the state of the law … could have thought the [pleading] had any possible merit. He should have known it was time-barred.’ ”).
But how about when a litigant or his lawyer truly has an erroneous understanding of the “discovery rule” which tolls statutes of limitation? Under this rule, a cause of action does not accrue “until the plaintiff discovers, or has reason to discover, the cause of action.” But that does not mean, of course, or that one has a legal claim into perpetuity until one “discovers” one has the legal claim. Is a litigant or his clients liable under Rule 11 if they argue otherwise?
In the recent case of Cahoon v. Abhe & Svoboda, Inc., plaintiff brought a personal injury case against his employer when the plaintiff’s lawyer knew or should have known that such a claim was barred under the workers’ compensation law. Plaintiff’s counsel was put on notice of the problem, given the “21-day safe harbor” to dismiss her complaint but she missed the deadline, purportedly because her client was inaccessible during his cancer treatments.
The Minnesota Court of Appeals, in a decision by Judge John R. Rodenberg, upheld the sanctions found by Scott County Judge Carol Hooten.
[T]he district court did not abuse its discretion in imposing sanctions on the basis that appellant’s trial counsel persisted in advancing appellant’s legal position after she knew that it was not grounded in fact or law. Even though counsel became aware by early November 2011 that the complaint had no legal basis, she waited until December 15, the date of the hearing, to dismiss the action. By that time, respondent had incurred substantial costs in filing a motion for summary judgment, filing the motion for sanctions, and preparing for the hearing.
There will never be a bright-line clearly setting apart those cases where litigants and their lawyers’ claims are SO weak or unfounded that they warrant punishment and those that are simply losing arguments.
On the other hand, it might be that the serious overwork and burdens that our courts are now laboring with might make them somewhat more receptive to requests for sanctions than they have been in recent years. If so, maybe it will be a good thing.