Cooter & Gell v. Hartmarx Corp. - 496 U.S. 384, 110 S. Ct. 2447 (1990)

Rule:

District courts may enforce Fed. R. Civ. P. 11 even after a plaintiff has filed a notice of dismissal under Fed. R. Civ. P. 41(a)(1). As a violation of Rule 11 is complete when a paper is filed, a voluntary dismissal does not expunge a Rule 11 violation. In order to comply with Rule 11's requirement that a court shall impose sanctions if a pleading, motion, or other paper is signed in violation of Rule 11, a court must have the authority to consider whether there has been a violation of the signing requirement regardless of the dismissal of an underlying action. Nothing in the language of Rule 41(a)(1)(i), Rule 11, or other statute or Federal Rule terminates a district court's authority to impose sanctions after such a dismissal. 

Facts:

A retailer of men's clothing filed an antitrust complaint against a manufacturer of men's clothing, alleging a nationwide conspiracy to fix prices and to eliminate competition. The manufacturer, alleging that the retailer's allegations had no basis in fact, moved to dismiss the complaint and moved for sanctions under Rule 11 of the Federal Rules of Civil Procedure, which (1) requires that an attorney who signs a pleading filed in a Federal District Court must, after a reasonable inquiry, have formed a belief that the pleading is well grounded in fact and legally tenable, and (2) provides that if a pleading is signed in violation of this requirement, the District Court shall impose upon the attorney or the attorney's client an "appropriate sanction," which may include an order to pay the other party's expenses, including a reasonable attorney's fee, incurred "because of the filing" of the pleading After the retailer voluntarily dismissed the complaint, pursuant to Rule 41(a)(1)(i) of the Rules, which authorizes voluntary dismissal of an action at any time before service by the adverse party of an answer or of a motion for summary judgment, the United States District Court for the District of Columbia imposed, under Rule 11, monetary sanctions against the retailer and the law firm that had represented the retailer in its antitrust action. The United States Court of Appeals for the District of Columbia Circuit, affirming the District Court's imposition of Rule 11 sanctions, held that (1) the retailer's voluntary dismissal of the antitrust complaint did not divest the District Court of jurisdiction to rule upon the Rule 11 motion, (2) the District Court had properly held that the retailer's law firm had violated Rule 11, and (3) a party who successfully defended a Rule 11 award on appeal was entitled to recover its attorney's fees incurred on that appeal. The Court of Appeals remanded the case to the District Court for determination of the amount of reasonable attorney's fees that the manufacturer had incurred on appeal and for entry of an appropriate award.

Issue:

Did the voluntary dismissal of the retailer's complaint deprive the District Court of jurisdiction to impose Rule 11 sanctions?

Answer:

No.

Conclusion:

The Supreme Court affirmed the decision of the appeals court in part and reversed in part. The Court held that the lower court's imposition of Fed. R. Civ. P. 11 sanctions after the retailer had voluntarily dismissed its complaint was proper and that the appropriate standard of review of Rule 11 sanctions was abuse of discretion. The lower court was permitted to enforce Rule 11 even after the retailer filed a Fed. R. Civ. P. 41(a)(1) notice of dismissal based on the lower court's jurisdiction that was invoked by the filing of the underlying complaint. The lower court had jurisdiction to consider collateral issues, such as Fed. R. Civ. P. 11 sanctions, after the underlying action was no longer pending. The court held that Rule 11 did not authorize the award of attorney fees incurred on appeal of a Rule 11 sanction.