Tuesday, July 24, 2012
Panel Orders Reconsideration of Sanctions Against Attorney
Statute Allows Judge to Consider Lawyer’s Claimed Inbility to Pay, Ninth Circuit Says
By KENNETH OFGANG, Staff Writer
A federal statute authorizing monetary sanctions awards against attorneys who press vexatious claims does not preclude consideration of a lawyer’s claimed inability to pay, the Ninth U.S. Circuit Court of Appeals ruled yesterday.
The panel threw out a $362,000 award against San Francisco sole practitioner Gregory Haynes and sent the case back for reconsideration.
The award arose from a suit in which Haynes’ client, Cheryl Cotterill was taken into custody and hospitalized for 10 days as a result of a psychotic episode. She claimed that she was detained against her will and by use of excessive force, and sued the City and County of San Francisco, the University of California, and a host of local officials, including the mayor, the police chief, and the public defender.
Claims Thrown Out
After a protracted battle, all of the plaintiff’s claims were thrown out by U.S. District Judge Jeffrey S. White of the Northern District of California. The defense moved for attorney fees and costs, and a magistrate judge recommended that Haynes be assessed the fees and costs incurred by the defendants after certain key depositions were taken.
He made the recommendation under 28 U.S.C. § 1927, which says that “[a]ny attorney . . .who so multiplies the proceedings in any case unreasonably and vexatiously may be required by the court to satisfy personally the excess costs, expenses, and attorneys’ fees reasonably incurred because of such conduct.”
In opposing the recommendation, Haynes declared that he had no assets and his net income for the several preceding years was less that $20,000 per year. But White held that irrelevant, citing Shales v. General Chauffeurs, Sales Drivers and Helpers Local Union No. 330 (7th Cir. 2009) 557 F.3d 746.
Sister Circuits Split
`The Seventh Circuit reasoned that frivolous and vexatious litigation is similar to an intentional tort, so the sanctions can only be measured by the amount of the opposing party’s loss. But the Second Circuit held otherwise in Oliveri v. Thompson, 803 F.2d 1265 (2d Cir. 1986) 1281, and Judge Stephen Reinhardt, writing for the Ninth Circuit, said the latter opinion was more persuasive.
The judge acknowledged that Haynes’ conduct had been “incompetent and unprofessional.” But he agreed with the attorney, who represented himself on appeal, that the use of the permissive “may” in the text of the statute, and the general rule that a district court has broad discretion when it comes to sanctions, support a conclusion that the judge has discretion to consider a variety of factors, including the attorney’s impecuniousness, in setting the amount of the award.
The statutory language, he wrote, suggests that the law may have multiple policy goals, including both compensation and deterrence. “In any case, imposing sanctions in an amount many times greater than the attorney will ever be able to pay may in some instances represent only a futile gesture that does little either to compensate victims or to deter future violators,” the judge said.
White’s reliance on Shales to conclude that he had no authority to consider Haynes’ claim of inability to pay was an abuse of discretion, Reinhardt concluded. Judges Richard Clifton and N. Randy Smith concurred.
The panel yesterday separately filed an unpublished memorandum rejecting Haynes’ other challenges to the sanctions. Haynes, the court said, should have realized that none of his clients’ claims had any merit, was at a minimum “reckless” in pursuing them, and was on notice that his client was sanctionable.
The case is Haynes v. City and County of San Francisco, 10-16327.
Copyright 2012, Metropolitan News Company