Brown v. Ameriprise Fin. Servs. - 276 F.R.D. 599, 2011 U.S. Dist. LEXIS 101038

Rule:

In Cooter & Gell v. Hartmarx, the U.S. Supreme Court rejected the argument that dismissal or other disposition of a plaintiff's claim strips a court of authority to impose sanctions under Fed. R. Civ. P. 11. The district court retains jurisdiction to impose sanctions notwithstanding a voluntary dismissal since a violation of Rule 11 is complete when the offending paper is filed. Indeed, baseless filing puts the machinery of justice in motion, burdening courts and individuals alike with needless expense and delay. Even if the careless litigant quickly dismisses the action, the harm triggering Rule 11's concerns has already occurred. Three years after Cooter & Gell, Rule 11 was amended to add a 21-day "safe harbor." But that amendment does not affect the Court's analysis. The 1993 amendments were procedural and merely altered the timing requirements of Rule 11. Sanctions remain appropriate under the revised rule when an offending party fails to withdraw the opposed pleading during the 21-day "safe harbor."

Facts:

Plaintiff Rosalind Brown, an African-American, commenced this action in December 2009. In her three-Count Complaint, she alleged that Defendant Ameriprise Financial Services, her former employer, had discriminated against her and other similarly situated African-American employees —numbering "at least 1000"— with respect to their terms and conditions of employment. The Complaint was both detailed and far-reaching, spanning 32 pages and 82 paragraphs, containing particularized allegations of specific (and allegedly discriminatory) policies and practices, covering conduct lasting more than a decade and concerning all levels of employment. The parties then proceeded with discovery, including class discovery, and Ameriprise took Brown’s deposition. There, she was asked to provide the foundation for many of the specific allegations in her Complaint, but often she was unable to do so. For example, paragraph 43 of the Complaint alleged that "written guidelines permit employees at lower job grades to be paid more than employees at higher grades." Yet, Brown acknowledged that she was unaware of any such "written guidelines." In addition, certain portions of Brown’s testimony contradicted some of the Complaint's class-based allegations. Following this testimony, Ameriprise began to investigate. Ultimately, it discovered that Brown’s Complaint largely parroted that in another case, in another Court, brought by different plaintiffs against a different company more than a decade earlier: Abdallah v. Coca-Cola Co. Ameriprise then wrote Brown’s counsel and asked her to dismiss the Complaint as not grounded in fact; Brown refused. Ameriprise then served (but did not file) a Motion for Sanctions under Rule 11 of the Federal Rules of Civil Procedure. After Brown maintained her refusal to dismiss the Complaint, Ameriprise filed the Motion, seeking dismissal of the Complaint and an award of fees and costs for Brown’s "detailed and precise allegations without evidentiary support and without having conducted a reasonable inquiry as required by Rule 11." Magistrate Judge Noel issued a Report and Recommendation (“R&R”) recommending that the Motion be granted in part and denied in part. After reviewing the Complaint, he concluded that "many of the factual allegations supporting Plaintiff's class claims were copied and pasted directly from the Coca-Cola Complaint." As a result, he found a clear violation of Federal Rule of Civil Procedure 11(b)(3), which requires a "reasonable inquiry" into the factual allegations in a Complaint before it is filed, to ensure that those allegations enjoy "evidentiary support." He thus recommended sanctions, i.e. the striking of all class allegations and the payment of attorneys’ fees incurred by Ameriprise defending such claims. However, he sustained Brown’s individual discrimination claims.

Issue:

Did the magistrate judge err in granting sanctions?

Answer:

No.

Conclusion:

First, Brown ignored that the class claims here were not "judicially disposed of," but rather became moot only after she failed to move for class certification. Second, and of more importance, the Supreme Court has rejected the argument that dismissal or other disposition of a plaintiff's claim strips a court of authority to impose sanctions under Rule 11. Regardless, even if the Court were precluded from imposing sanctions under Rule 11, it nevertheless enjoys the inherent power to sanction Plaintiff for "abusive litigation practices," or conduct that "abuses the judicial process." By near-wholesale copying of the allegations from a complaint against a different defendant, in a different court, in a different industry, for conduct occurring in a different decade, and adopting those assertions as her own, Brown has essentially "undermined the integrity of the judicial process by lying to the court." Inherent-power sanctions are appropriate in such circumstances. In this case, Brown — an attorney — filed a far-reaching Complaint on behalf of herself and hundreds of others, leveling serious allegations of systemic discrimination by Ameriprise, including a bevy of specific discriminatory policies and practices allegedly enforced against African-Americans. She lacked a factual foundation for many of these allegations, which were actually copied from a Complaint in a long-dismissed case in a different court against a different defendant. As noted above, this conduct undermined the integrity of the judicial process, as it was tantamount to lying to the Court. Here, by pressing claims lacking factual support, the Court is left with the impression "that [Brown’s] strategy [was] to strong-arm a settlement by in terrorem claims, rather than to vindicate [her] legal entitlements." Dismissal is appropriate for this reason, and to protect the integrity of the judicial process.