Federal Courts Committee
Comments on the Proposed Lawsuit Abuse Reduction Act of
2011, H.R. 966
This report was approved by the Board of the New York County Lawyers’ Association on December 12, 2011.
The New York County Lawyers’ Association (“NYCLA”) supports the position that the American Bar Association adopted on March 11, 2011 (the “ABA Letter”) with respect to Rule 11 of the Federal Rules of Civil Procedure (“Rule 11”). For the reasons set out below, NYCLA opposes legislative efforts, such as the so-called Lawsuit Abuse Reduction Act of 2011, H.R. 966 (“LARA”), which are designed to restore Rule 11 to the pre-1993 language and structure of the Rule.
LARA would revise Rule 11 to:
- Remove the existing 21-day “safe harbor” provision that requires an attorney seeking sanctions to send the draft motion to the opposing party. The motion cannot be filed with the court for 21 days, during which time the opposing party can attempt to cure the alleged Rule 11 violation.
- Make the award of fees and costs arising from a victorious Rule 11 motion mandatory and automatic. Such an award is now discretionary.
As the ABA Letter points out, little or no empirical evidence supports the need for a change in Rule 11. The proposed efforts to strengthen the sanctions associated with Rule 11, while motivated by the laudable goal of seeking to deter litigation misconduct, could result in a dramatic increase in satellite litigation over sanctions, clogging the courts with the levels of such litigation that prevailed before 1993.
In addition, NYCLA opposes the legislative imposition of changes to Rule 11 because such an attempt would short circuit the carefully balanced process contained in the Rules Enabling Act, which provides for the development of rules by the Judicial Conference, to be followed by adoption by the Supreme Court.
In addition to the foregoing points, which are contained in the ABA Letter, NYCLA also opposes the proposed legislation for several additional reasons.
First, it is NYCLA’s view that principles of judicial independence support the current discretionary regime. Inflexible mandatory rules in this area would impair judicial independence in a manner akin to the affront to judicial independence that resulted from the passage of the Federal Sentencing Guidelines.
Second, in NYCLA’s view, a more robust Rule 11 would strike hardest at civil rights and civil liberties practitioners, imposing a chilling effect on their advocacy, as considerable empirical evidence has shown.
Third, NYCLA’s belief is that the need for stronger Rule 11 sanctions is not as great today as it was in 1993. To the contrary, a number of other developments favoring civil defendants have taken place since 1993, which in some measure obviate the need for enhanced Rule 11 mechanisms.
Fourth, the current waiting period is consistent with other procedural requirements, which are designed to allow parties to retract their earlier litigation decisions, such as the meet-and-confer requirement imposed in most courts and the liberal amendment policy embodied in Fed. R. Civ. P. 15.
Adopted in 1937 and modified substantially in1983, Rule 11, from 1983 to 1993, provided for the imposition of monetary sanctions to deter perceived litigation excesses, most notably the filing of “frivolous” pleadings and court papers. Despite its worthy goal of deterring and punishing perceived litigation misconduct, the Rule generated considerable satellite litigation over sanctions, resulting in literally thousands of reported cases. To address what some perceived as the excesses of Rule 11, through the Rules Enabling Act process, the Supreme Court adopted changes to Rule 11, which imposed the “safe harbor” standard and permitted judges to exercise discretion when determining whether to impose monetary sanctions. See Fed. R. Civ. P. Advisory Committee’s Notes (1983, 1993).
Revisions to Rule 11 have been proposed throughout most of the period since the 1993 rules changes. These attempts to roll back the 1993 safe harbor and judicial discretion amendments are often defended by the perceived “crisis” in federal court litigation and the perception that the number of frivolous filings has increased in federal court since 1993.
LARA is the most recent effort to attempt to reform Rule 11. That legislation was reported from the House Judiciary Committee in July 2011, and it is expected to receive a vote by the House of Representatives before the end of this session of Congress. http://www.govtrack.us/congress/bill.xpd?bill=h112-966
THE ABA LETTER
The ABA Letter makes two principal points in opposition to enactment of the proposed Rule 11 legislation.
First, the ABA wrote that the proposed legislation “would circumvent the procedures Congress itself has established for amending the Federal Rules of Civil Procedure.”
NYCLA shares this concern. As the ABA Letter notes, the proposed legislation would short circuit the normal process for enactment of rules changes through the Advisory Committee and United States Supreme Court, pursuant to the Rules Enabling Act. This carefully balanced structure respects the separation of powers and gives respect to the structural role of each institution. Accordingly, like the ABA, NYCLA believes that any effort to circumvent this mechanism should be disfavored in the extreme.
Second, the ABA wrote that it is not aware of empirical evidence justifying the proposed changes in Rule 11. The ABA Letter states as follows:
To those who believe frivolous lawsuits have skyrocketed, it seems equally reasonable to believe that the problem will be alleviated if attorneys who violate Rule 11 know they will be sanctioned and will have to pay for resulting attorney’s fees and court costs. Unfortunately, the premise is not based on an empirical foundation, and the proposed amendments ignore lessons learned.
NYCLA’s conclusion is the same. As an initial matter, NYCLA notes that federal caseloads have been relatively stable for at least the last decade. Moreover, federal judges themselves do not perceive an increase in frivolous litigation. In a 2005 Federal Judicial Center survey, approximately 85% of responding district judges stated that they viewed groundless litigation as no more than a small problem and another 12% saw such litigation as a moderate problem. For 54% of the judges who responded, the amount of groundless litigation has remained relatively constant during their tenure on the federal bench. Only 7% indicated that the problem is now larger.
As a result, 87% of the judges preferred the existing rule to the 1983 version. Equally strong support (85%) existed for the safe harbor provision in Rule 11(c), while more than 90% opposed changing the rule to make the imposition of sanctions mandatory. Id.
Third, the ABA wrote that a rollback of Rule 11 to the standard that prevailed from 1983-1993 would result in the same problems that gave rise to the 1993 amendments, namely a potentially significant increase in satellite litigation over sanctions. The ABA stated that “by ignoring the lessons learned from 10 years of experience under the 1983 mandatory version of Rule 11, there is a real risk that the proposed changes would result in unintended adverse consequences that would encourage additional litigation and increase court costs and delays.”
NYCLA has examined the data on this point and has arrived at the same conclusion. In the years before the 1993 amendment, there was an explosion of litigation over Rule 11 sanctions. By one count, there were more than 3,000 opinions discussing Rule 11 on LEXIS before the 1993 amendment, and other studies reported hundreds of published opinions and appeals. The magnitude of the satellite litigation over Rule 11 raises the very real question of whether the Rule 11 “cure” was worse than the disease.
In addition to the sound points contained in the ABA Letter, NYCLA opposes LARA for the following additional reasons.
First, NYCLA has long been a proponent of a strong and independent judiciary and has consistently opposed measures that encroach upon judicial independence. For this reason, NYCLA looks skeptically at any legislative attempt to substitute mandatory rules on the judiciary in place of rules that previously left matters within the sound discretion of the judiciary. This reason, standing alone, would not necessarily cause NYCLA to reject LARA, but it helps to tip the scale against such legislation.
Second, in NYCLA’s view, a more robust Rule 11 would strike hardest at civil rights and civil liberties practitioners. Considerable research demonstrates that, both before and after the 1993 changes, Rule 11 sanctions are disproportionately sought and imposed in civil rights cases. In such cases, Rule 11 often had the effect of chilling creative and vigorous advocacy, often in cases where individual rights and liberties were at stake. Although civil rights cases made up 11.4% of federal cases filed during a recent period, a survey of that same period showed that 22.7% of the cases in which sanctions had been imposed were civil rights cases. The study also found that Rule 11 had a dramatic impact on the way in which civil rights plaintiffs’ attorneys practiced law, with 31% of these lawyers stating that they “decided not to assert a claim or defense that [they] felt had potential merit.”
Third, NYCLA’s belief is that the need for stronger Rule 11 sanctions is not as great today as it was in 1993. To the contrary, a number of other developments favoring civil defendants have taken place since 1993, which in some measure obviate the need for enhanced Rule 11 mechanisms. Among those developments are:
- The advent of somewhat heightened pleading standards, as set out in decisions such as Ashcroft v. Iqbal, 129 S. Ct. 1937 (2009).
- The changes to the class action rules, which permit the immediate appeal of class action certifications to the Court of Appeals. Fed. R. Civ. P. 23 (f).
- The enactment of the Public Securities Law Reform Act (PSLRA), which imposes such measures as a stay of discovery pending a motion to dismiss on the pleadings and enhanced particularity requirements for securities pleadings.
- Increased scrutiny of expert reports after the Supreme Court’s decision in Daubertv. Merrill Dow Pharm. Inc., 509 U.S. 579 (1993).
- The passage of the Class Action Fairness Act of 2005, 28 U.S.C. §§ 1332(d), 1453 (2006), which effectively gives the federal courts exclusive jurisdiction over many significant class actions.
Fourth, the current waiting period is consistent with other procedural requirements, which permit litigants to retract and correct previous litigation decisions. The Rule 11 waiting period is in the same spirit as the meet-and-confer requirements imposed, formally or informally, in most courts. In addition, the waiting period is in the same spirit as the liberal amendment policy embodied in Fed. R. Civ. P. 15. “The purpose of the meet and confer requirement is to resolve discovery matters without the court’s intervention to the greatest extent possible.” Excess Ins. Co. v. Rochdale Ins. Co., 05 Civ. 10174, 2007 WL 2900217, at *1 (S.D.N.Y. Oct. 4, 2007). So too, the Rule 11 waiting period has obviated the need for motion practice in the great preponderance of cases.
In short, while the goals of Rule 11 are commendable, the pre-1993 Rule 11 often proved to be too blunt an instrument, burdening the courts with satellite litigation and chilling the advocacy of civil rights lawyers. NYCLA believes that the cutback on judicial discretion and independence that would be entailed by mandatory Rule 11 sanctions is not justified by the empirical data, particularly in light of the other measures that have been taken that favor defendants in federal civil cases.
New York County Lawyers’ Association
Committee on the Federal Courts
Gregg Kanter, Chair
Rule 11 Subcommittee
Vincent T. Chang, Chair