Federal court sanctions against attorneys under 28 U.S.C. section 1927: the 11th Circuit Court of Appeals attempts to divide the standard for multiplying the proceedings in bad faith.

• Author: Waldman, Glenn J.

It is becoming increasingly common for a prevailing party in federal court to seek attorneys' fees from the losing party's attorney under a combination of Federal Rule of Civil Procedure 11, 28 U.S.C. [section] 1927, and the court's companion "inherent powers." Unlike Rule 11, though, "awards pursuant to [section] 1927 may be imposed only against the offending attorney; clients may not be saddled with such awards." (1) Rule 11 sanctions are tied to a signed filing, while [section] 1927 examines the attorney's course of conduct throughout the entire litigation. (2) Therefore, serious misconduct not necessarily involving the signing of a pleading, memorandum or motion can qualify for punishment of the attorney. Rule 11 also provides the allegedly erring attorney the "safe harbor" of a 21-day notification, (3) while [section] 1927 does not. Section 1927 misconduct is cumulative in nature, while Rule 11 misconduct is not. Inasmuch as a [section] 1927 sanctions motion may come without warning and may involve monetary sanctions much more substantial than those associated with a Rule 11 motion, this article focuses on the current legal standards applicable to [section] 1927 misconduct.

Not all questionable conduct, however, is sanctionable under [section] 1927. In the 11th Circuit, it is well settled that "this section is not a 'catch-all' provision for sanctioning objectionable conduct by counsel." (4) Section 1927 requires the touchstone of bad faith, which is more than mere negligence or lack of merit. The 11th Circuit has held that an attorney who "knowingly or recklessly pursues a frivolous claim" acts in bad faith. (5) For sanctions to be appropriate, counsel must have engaged in unreasonable and vexatious conduct; this conduct must have multiplied the proceedings, and the amount of the sanction cannot exceed the costs resulting from the conduct. (6) Sanctions are not warranted simply because counsel's general performance or particular decision making did not rise to the highest standards of the profession. (7)

Historically, the 11th Circuit has observed that the authority to level sanctions under [section] 1927 is either broader than, or equally as broad as, the authority to level sanctions under a district court's inherent powers. (8) As such, most federal decisions (and this article) focus on the standards applicable to the award of [section] 1927 sanctions because, if the sanctions are appropriate under [section] 1927, then they are also awardable under the court's inherent powers.

Section 1927 provides:

[a]ny attorney or other person admitted to conduct cases in any court of the United States or any Territory thereof 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 Cordoba v. Dillard's, Inc., 419 F.3d 419 F.3d 1169, 1178-79 (11th Cir. 2005), the 11th Circuit discussed its confusing precedent on the issue of whether [section] 1927 sanctions required a threshold finding of actual, subjective bad faith on the part of the offending attorney. On this unclarified point, the court held: "Our cases are perhaps somewhat unclear on this point: either they require subjective bad faith, which may be [objectively] inferred from reckless conduct, or they merely require reckless conduct, which is considered 'tantamount to bad faith.'" (Emphasis added.)

Almost one year following the decision in Cordoba, the 11th Circuit was presented with the opportunity, in a unique case, to resolve the admittedly unclear precedent.

The Amlong Majority Opinion

This self-described lack of clarity in Cordoba was the subject of great focus, albeit with internally mixed results, in the 11th Circuit's July 31, 2006, 100-page split decision opinion (45-page majority opinion; 52-page dissenting opinion, plus a three-page appendix) in Amlong & Amlong, P.A. v. Denny's, Inc., 457 F.3d 1180 (11th Cir. 2006). In Amlong, Ft. Lauderdale attorneys Karen Coolman Amlong, William R. Amlong, and their law firm, Amlong & Amlong, P.A., appealed from a Southern District of Florida court order (Lenard, J.) imposing substantial monetary sanctions against them (in excess of $400,000), jointly and severally, (9) under [section] 1927 for their conduct in representing Floride Norelus, a Haitian immigrant, in a Title VII sexual harassment lawsuit. (10)

The initial complaint was filed on behalf of Ms. Norelus in December 1994. According to her second amended complaint, Ms. Norelus, a former Denny's employee, alleged, inter alia, that she suffered a horrific pattern of sexual harassment, rape, and assault by two men who were managers of separate Denny's restaurants, such attacks occurring in the restaurants and in the homes of the men. After reporting the abuse to Denny's authorities, Ms. Norelus claimed that they failed to take proper remedial steps. Indeed, Ms. Norelus claimed that one of the managers retaliated against her by reducing her work hours and changing her work schedule. During the course of discovery, Ms. Norelus was deposed twice. Her first deposition spanned eight days in January and February 1996 and produced voluminous transcripts of more than 1,200 pages. Following Ms. Norelus' first deposition, and the depositions of 10 employees of Denny's, the Amlong attorneys engaged a polygraph examiner who conducted examinations of Ms. Norelus in January and April 1996. Thereafter, Ms. Norelus, with the assistance of the Amlong attorneys, produced a deposition errata sheet consisting of 63 pages and a total of 868 changes. The receipt of the errata sheet prompted the defendants to ask the district court to dismiss the case because the changes demonstrated Ms. Norelus' pervasive lies while under oath. On August 26, 1996, the district court denied that motion, but required, in part, that the deposition be reopened and that Ms. Norelus pay the cost of the second deposition. Ms. Norelus' second deposition spanned another three days in September 1996. Following that, on October 16, 1996, at the defendants' request, the district court entered another order requiring the costs of the second deposition to be paid jointly by Ms. Norelus and the Amlong attorneys. Based upon the failure to pay such costs and to otherwise comply with the district court's August 26, 1996, order, the district court dismissed the action as a sanction. Ms. Norelus took an appeal from the order of dismissal, but the 11th Circuit dismissed the appeal for failure to prosecute on May 12, 1998. In January 1997, after dismissal of the underlying suit but before the dismissal of the appeal therefrom, four of the defendants sought sanctions against Ms. Norelus and the Amlong attorneys, which the district court referred to the magistrate judge to conduct an evidentiary hearing. On...