November 2012 Vol. 9, No. 3

9.3.6

Attorney Sanctions

Case:

Haynes v. City and County of San Francisco (9th Cir. 2012) 688 F.3d 984

Issue:

Did the district court abuse its discretion when it failed to take into account  an attorney’s ability to pay when imposing sanctions under 28 U.S.C. §1927 for the opposing  attorneys’ fees and costs in a meritless lawsuit?

Holding:

Yes.  “[A] district court may, in its discretion, reduce the amount of a §1927 sanctions award, and may do so, among other reasons, because of the sanctioned attorney’s inability to pay.  We do not suggest by this holding that when the district court decides to reduce an amount on account of a sanctioned attorney’s inability to pay, it must reduce the amount to an amount it determines the attorney is capable of satisfying.  Just as it is within the discretion of the district court to decide whether to reduce the amount at all, the amount to which the sanction will be reduced is equally within the court’s discretion.”  (688 F.3d at 988.)

Finding the question to be one of first impression for the Ninth Circuit, the district court looked to the Seventh Circuit which had previously compared a § 1927 violation to an intentional tort, where a tortfeasor’s assets play no part in damages, only the victim’s loss. (Id. at 987, citing Shales v. General Chauffeurs, Sales Drivers and Helpers Local Union No. 330 (7th Cir. 2009) 557 F.3d 746, 749.)  The Ninth Circuit found fault with the reasoning and conclusion of the district court, noting that damages for an intentional tort are determined as a matter of fact, while the district court has discretion to award and determine the amount of a §1927 sanction.  (688 F.3d at 988-989.)

The Court of Appeals adopted the reasoning of the Second Circuit in a similar case, holding that it is within the district court’s discretion to consider a violating attorney’s ability to pay a § 1927 sanction. (Id. at 987, citing Oliveri v. Thompson (2d Cir. 1986) 803 F.3d 1265, 1281.)

Note:

The Court also pointed out that, while a sanctions award may be less than the total excess costs and expenses incurred by the opposing party, the award may in no case be more than the total costs and expenses incurred by the opposing party.  (688 F.3d at 987.)

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