FILED United States Court of Appeals Tenth Circuit UNITED STATES CO URT O F APPEALS September 19, 2007 FO R TH E TENTH CIRCUIT Elisabeth A. Shumaker Clerk of Court
In re:
SA RA ALLEN , No. 06-1429 Attorney-Appellant. (D.C. No. 02-CV-00997-JLK-M EH) (D . Colo.)
OR D ER AND JUDGM ENT *
Before H E N RY and A ND ER SO N, Circuit Judges, and BROR BY, Senior Circuit Judge.
Attorney-Appellant Sara Allen, counsel for plaintiffs in a 28 U.S.C. § 1983
suit, appeals the district court’s imposition of a monetary sanction against her
pursuant to Federal Rule of Civil Procedure 11. The district court granted
summary judgment in favor of defendants in the § 1983 action. It then directed
the magistrate judge to consider whether sanctions were appropriately assessed
against M s. Allen for filing a frivolous suit. Following a hearing, the magistrate
judge recommended the imposition of a $3,000 sanction against M s. Allen under
* After examining the briefs and appellate record, this panel has determined unanimously that oral argument would not materially assist the determination of this appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is therefore ordered submitted without oral argument. This order and judgment is not binding precedent, except under the doctrines of law of the case, res judicata, and collateral estoppel. It may be cited, however, for its persuasive value consistent w ith Fed. R. App. P. 32.1 and 10th Cir. R. 32.1. Rule 11(c)(1)(b). The district court adopted that recommendation. W e conclude
that the district court did not abuse its discretion in imposing sanctions against
M s. Allen under Rule 11.
I. BACKGROUND
The record on appeal submitted by M s. Allen does not include the
complaint, or any of the pleadings, motions, or responses in the underlying
litigation. Thus, the following summary is taken from the district court orders.
As relevant to this appeal, plaintiff Elizabeth Flores retained M s. Allen to file a
§ 1983 civil rights lawsuit. 1 M s. Flores alleged that she and her children were
removed from her residence because of her race and in violation of her civil
rights, and she named as defendants the municipality of Log Lane Village,
Colorado, and many of its employees and elected officials in their official and
individual capacities. The defendants moved for sum mary judgment. Plaintiff’s
first response w as rejected because it did not com ply with the district court’s
instructions concerning summary judgment motions. The next response relied
entirely on an affidavit by plaintiff, and made no mention of her deposition
testimony. The magistrate judge struck this affidavit, finding that it was a “sham
1 M s. Flores and her children were all named plaintiffs, but for convenience, we refer only to M s. Flores as the plaintiff. The original complaint also included numerous other plaintiffs who alleged claims unrelated to M s. Flores’s claims; these claims were settled or dismissed prior to the disposition of M s. Flores’s claims and are not relevant to this appeal.
-2- affidavit,” submitted in an attempt to create “sham” issues of fact. The magistrate
judge noted that the affidavit completely ignored, and at times differed from or
contradicted, plaintiff’s deposition testimony.
A. First Report and Recommendation
The magistrate judge issued a report and recommendation (the R& R) that
summary judgment be granted in favor of defendants, concluding that M s. Flores
had presented no factual basis for the bringing of the law suit. The magistrate
judge found that the undisputed evidence was as follows: A Department of
Human Services investigator, not named as a defendant, conducted a home
welfare check of M s. Flores’s home, accompanied by two defendants, the Log
Lane Village M ayor and Chief of Police. M s. Flores allowed the three to enter
her home. The investigator determined that M s. Flores’s home was unsafe, filthy,
open to the elements, and not habitable, particularly by young children. This
decision was made solely by the investigator; no evidence was presented that any
defendant had any personal participation in this decision. M s. Flores agreed to
leave the residence, and she voluntarily signed a “safety plan” agreement with the
Department of Human Services, in which she agreed to leave the home, place the
children in another home, make repairs to her residence, and not allow anyone
into the home until it was brought up to code.
The magistrate judge concluded that plaintiff had pointed to no evidence in
the record that would even tend to satisfy her burden, in light of the defendants’
-3- qualified immunity defense, to show that (1) the actions of the defendants
violated any federal constitutional or statutory right, and (2) that such right was
clearly established. As noted, plaintiff and her children left voluntarily and by
signed agreement, and there was no evidence suggesting any personal
participation by any defendant in the events at issue, an essential element of a
§ 1983 claim against individual defendants. Plaintiff admitted in her deposition
that she had no facts to support her claim that she was removed because of her
race. Finally, the magistrate judge found no evidence to support plaintiff’s claim
that Log Lane V illage had a policy, custom or practice of condoning w arrantless
entries into homes. Thus, it recommended summary judgment be granted in favor
of defendants. The district court adopted the recommendation to grant summary
judgment in favor of defendants.
B. Procedural Background of the Rule 11 Sanction
In its R& R, the magistrate judge recommended that the defendants be
awarded their fees and costs under 43 U .S.C. § 1988, to be assessed against
M s. Allen “because plaintiff’s case always w as groundless and frivolous.” Aplt.
App. at 18. In support of this recommendation, the magistrate judge stated that
the undisputed evidence, alw ays in possession of plaintiff and her counsel,
demonstrated that plaintiff left her home voluntarily and by signed agreement
with a non-defendant, and that plaintiff failed to show that the allegations in her
-4- complaint were supported by any credible evidence or that any credible evidence
ever existed that would support a claim against defendants.
The district court found that plaintiff failed to adduce any evidence or
competent legal theory in support of her claims against defendants, and that her
claims were “frivolous and groundless and should not have been made or pursued
on the facts - existing or lacking - demonstrated in the record.” Id. at 42. It
declined to aw ard fees under § 1988. Nevertheless, it found that the groundless
suit was “a failure principally of [M s. Allen] to engage in any serious or
meaningful research” before initiating the suit. Id. Thus, it referred the sanction
issue back to the magistrate judge for consideration of whether fees should be
assessed against counsel under Rule 11(c) or 28 U.S.C. § 1927. 2 The district
court stated that if the magistrate judge recommended a sanction under Rule 11,
the recitation of misconduct in the R& R could be incorporated by reference for
purposes of providing notice under Rule 11(c)(1)(B). Id. at 42. The magistrate
judge did issue an order to M s. Allen to show cause why an award of fees should
not be assessed against her under Rule 11(c)(1)(b), and as support, it cited to the
R&R.
M s. Allen filed a response and a motion to dismiss the show cause order.
She contended, in part, that attorney fees could only be paid under Rule 11 by
2 Sanctions were never recommended under § 1927.
-5- appropriate motion by opposing counsel, and could not be awarded under Rule 11
sua sponte by the court. The magistrate judge conducted an evidentiary hearing
on the show cause order. M s. Allen did not include a transcript of that hearing in
her record on appeal. Following the hearing, the magistrate judge ordered
supplem ental briefing as to whether it could impose sanctions under Rule
11(c)(1)(B), to be paid to the court, rather than attorney fees paid to defendants,
and whether the legal analysis of a sanction differed from an attorney fee award.
Following supplemental briefing, the magistrate judge concluded that there
was some ambiguity in the case law as to whether attorneys’ fees could be sua
sponte awarded by the court under Rule 11(c)(1)(B), but that the Rule 11(c)(1)(B)
sanction could be paid to the court. It recommended a sanction of $3,000 be
imposed on M s. Allen under Rule 11(c)(1)(B), paid into the court. As support, it
first cited the district court’s prior ruling that plaintiff “fail[ed] to adduce any
evidence or competent legal theory to support her claims against Defendants,”
which the district court characterized as “a failure principally of her counsel to
engage in any serious or meaningful research to support any cause of action.”
Aplt. App. at 42, 105. Based on the testimony at the Rule 11 hearing, the
magistrate judge concluded that M s. Allen did not conduct objectively reasonable
research prior to filing suit and had not demonstrated an objective basis for the
claims presented in the case. Id. at 105. Following consideration of M s. Allen’s
objections, the district court adopted that recommendation.
-6- II. ANALYSIS
M s. Allen raises six issues on appeal: (1) she did not violate Rule 11;
(2) the court failed to follow the procedural requirements of Rule 11; (3) she was
denied procedural due process; (4) the court failed to apply the proper standard;
(5) the court failed to make findings of fact; and (6) the court exceeded its
jurisdiction. W e review each contention in turn, below, although in a slightly
different order than presented by M s. Allen.
A. Standard of Review
W e review a district court’s decision to impose Rule 11 sanctions against
an attorney for abuse of discretion. Roth v. Green, 466 F.3d 1179, 1187
(10th Cir. 2006), petition for cert. filed, 75 USLW 3623 (U.S. M ay 9, 2007)
(N o. 06-1490). “H owever, any statutory interpretation or other legal analysis
which provides the basis for the award is reviewable de novo.” Corneveaux v.
CUNA M ut. Ins. Group, 76 F.3d 1498, 1508 (10th Cir. 1996) (citations and
quotation omitted).
B. M erits
A violation of Rule 11 occurs when a pleading is presented for any
improper purpose; contains claims or contentions not warranted by existing law or
by a nonfrivolous argument for extension or reversal of existing law; contains
allegations or factual contentions that lack evidentiary support; or contains
denials of factual contentions that are not warranted on the evidence. Rule
-7- 11(b)(1)-(4). See also Clark v. United Parcel Serv., Inc., 460 F.3d 1004, 1008
(8th Cir. 2006), cert. denied, 127 S.Ct. 2043 (2007). Rule 11(c)(1)(B) provides
that, “[o]n its own initiative, the court may enter an order describing the specific
conduct that appears to violate [Rule 11(b)] and directing an attorney, law firm,
or party to show cause why it has not violated” the rule. A sanction imposed
under Rule 11 “may consist of, or include . . . an order to pay a penalty into court,
or, if imposed on motion and warranted for effective deterrence, an order
directing payment to the movant of some or all of the reasonable attorneys’ fees
and other expenses incurred as a direct result of the violation.” Rule 11(c)(2).
1. Jurisdiction
Because it may be dispositive, we first address the jurisdictional challenge.
M s. Allen asserts that, follow ing its grant of summary judgment to defendants,
the district court had jurisdiction only over the specific issue in its referral to the
magistrate judge, which she narrowly frames as consideration of a sanction under
Rule 11 payable as attorney fees. Because the magistrate judge ultimately
recommended the Rule 11 sanction be paid into court, not as attorney fees to
defendants, M s. Allen contends the magistrate judge exceeded the scope of the
referral and, consequently, the district court lacked jurisdiction to impose the
sanction. W e can find no basis in the law to support this argument.
The Supreme Court has consistently held that federal courts retain
jurisdiction over issues, such as sanctions, that are collateral to the merits, even
-8- after the underlying litigation has terminated. In Cooter & Gell v. Hartmarx
Corp., 496 U.S. 384 (1990), it held:
It is well established that a federal court may consider collateral issues after an action is no longer pending. . . . Like the imposition of costs, attorney’s fees, and contempt sanctions, the imposition of a Rule 11 sanction is not a judgment on the merits of an action. Rather, it requires the determination of a collateral issue: whether the attorney has abused the judicial process, and, if so, what sanction would be appropriate. Such a determination may be made after the principal suit has been terminated.
Id. at 395-96 (citations omitted). In Willy v. Coastal Corp., 503 U.S. 131, 138
(1992), the Court held that, even where a federal court lacked subject matter
jurisdiction over the underlying action, it retained jurisdiction to impose Rule 11
sanctions for abuses of the judicial process.
M s. Allen cites no authority, nor can we find any, for her assertion that a
district court that chooses to refer a postjudgment sanction issue to a magistrate
judge for initial consideration and recommendation, somehow loses jurisdiction to
impose a sanction if the resulting recommendation was not squarely described in
the referral order. M oreover, the district court rejected M s. Allen’s argument
(albeit without discussion) that the magistrate judge’s recommendation had
exceeded the scope of its referral order. The district court’s referral order
referenced Rule 11(c), the legal basis of the magistrate judge’s recommendation
and the court’s ultimate sanction. M s. Allen suggests no substantive legal
difference under Rule 11 between a sanction paid into court and a sanction paid to
-9- defendant as attorney fees. See Rule 11(c)(2) (stating that sanction under Rule 11
may include penalty paid into court or, by motion, an order directing payment to
the movant of reasonable attorneys’ fees). In short, the referral order directed the
magistrate judge to make a recommendation as to whether M s. Allen engaged in
conduct sanctionable under Rule 11, the magistrate judge did so, and we conclude
that its recommendation that the resulting sanction should properly be paid to the
court under Rule 11(c)(1)(B), rather than to the defendants, is well within the
scope of the referral.
2. Fact Finding
M s. Allen claims that the district court failed to make factual findings. To
the contrary, the magistrate judge’s Rule 11 recommendation, adopted by the
district court, clearly made the factual finding, based on the evidentiary hearing,
that M s. Allen had not conducted an objectively reasonable inquiry into the law or
the facts of the case prior to filing suit, and had not demonstrated an objective
basis for the claims presented in the case. Aplt. A pp. at 105.
3. Violation of Rule 11
M s. Allen challenges the finding that she violated Rule 11. She does not,
however, provide an adequate record on appeal to permit appellate review of this
claim. As noted, the record on appeal does not include the complaint, the
-10- summary judgment pleadings and exhibits, 3 or the transcript of the Rule 11
hearing. 4 Absent these documents, this court cannot review the district court’s
findings that M s. Allen failed to present any evidence or competent legal theory
in support of her complaint, and failed to engage in objectively reasonable
research prior to initiating the suit. See Scott v. Hern, 216 F.3d 897, 912
(10th Cir. 2000) (court must affirm when evidentiary record before appellate
court is insufficient to permit an assessment of appellant’s claim of error);
United States v. Vasquez, 985 F.2d 491, 495 (10th Cir. 1993) (holding that failure
to file transcript precludes review of evidentiary rulings or claims concerning
sufficiency of the evidence). W e therefore affirm the district court’s substantive
findings that M s. Allen’s conduct violated Rule 11.
4. Procedural and Due Process Challenges
M s. Allen asserts several procedural and due process claims challenging the
sanction; we consolidate these for review. Although Rule 11(c)(1)(B) does
authorize a court to impose monetary sanctions on its own initiative, it may not
do so without first follow ing the prescribed procedure: “issuance of a show cause
3 She does include what she asserts is plaintiff’s affidavit, but it is neither signed nor attached to any summary judgment pleading. 4 M s. Allen completed a transcript order form and the court reporter complied with her obligation to complete and file the transcript with the district court, see 10th Cir. R. 10.1(B) and (C), but M s. Allen never filed that transcript with this court as part of her record on appeal, see 10th Cir. 10.1(A) and 30.1(A )(1).
-11- order specifically describing the conduct implicating the rule, followed by a
reasonable opportunity for the party/attorney so advised to demonstrate how she
has not violated the rule.” Hutchinson v. Pfeil, 208 F.3d 1180, 1184 (10th Cir.
2000).
M s. Allen first contends that, because the order to show cause mentioned an
sanction paid to defendant as attorneys’ fees under Rule 11(c)(1)(B), not a
sanction paid into court, the show cause order did not satisfy Rule 11(c)(1)(B)’s
requirements and she was denied due process. W e disagree; the show cause order
provided her adequate notice under Rule 11(c)(1)(B). The order to show cause
referenced Rule 11(c)(1)(B), which was, as previously noted, the legal basis of
the magistrate judge’s recommendation and the court’s ultimate sanction. Rule
11(c)(2) states that the nature of the Rule 11 sanction may include either a
sanction paid into court or a sanction paid to the opposing party in payment of
attorneys’ fees. Although there are procedural differences, 5 we find no
substantive legal difference between a Rule 11 sanction paid into court and a Rule
11 sanction paid to the opposing party for its attorneys’ fees and costs. Because
the analysis of whether M s. Allen’s conduct was subject to sanction under the rule
5 W e have held that “R ule 11(c)(2) prohibits a court acting on its own initiative from ordering payment of a monetary penalty to an opposing party.” Hutchinson, 208 F.3d at 1184 (citing cases). A court-initiated sanction may be paid only to the court. Johnson v. Waddell & Reed, Inc., 74 F.3d 147, 152 n.3 (7th Cir. 1996).
-12- was the same, the order to show cause was entirely sufficient to enable M s. Allen
to prepare a defense. See L.B. Foster Co. v. Am. Piles, Inc., 138 F.3d 81, 89
(2d Cir. 1998) (stating that party to be sanctioned is “entitled to notice of the
provision under which sanctions are sought, in order that he be forewarned as to
the standard under which his conduct is to be evaluated.”). Furthermore, and
most significantly, the magistrate judge gave M s. Allen full notice and
opportunity to respond to the proposed change of ordering the proposed sanction
be paid into court rather than to defendants: it notified her of the proposed
change at the Rule 11 hearing and allowed her to file a supplemental brief
addressing this precise issue before recommending a sanction. M s. Allen had still
further opportunity to defend against the sanction in her objections to the
recommendation. Thus, we find that the sanction award did not violate Rule
11(c)(1)(B)’s procedural requirements or M s. Allen’s due process rights.
Second, M s. Allen contends the show cause order did not comply with the
requirement in Rule 11(c)(1)(B) to describe the specific conduct that appears to
violate Rule 11, and thus, violated her due process rights. W e disagree. The
district court’s referral order made clear that it was considering sanctions under
Rule 11 because M s. Allen had failed to “engage in any serious or meaningful
research to support any cause of action” before she signed and filed the
complaint. Aplt. App. at 42. It authorized the magistrate judge to issue a show
cause order incorporating by reference the wrongdoing outlined in the initial
-13- R& R. Id; see also Clark, 460 F.3d at 1008 (upholding Rule 11(c)(1) order to
show cause that incorporates the summary judgment orders detailing the court’s
objections to counsel’s conduct). The order to show cause first cited to the R&R,
though it did not use the “incorporate by reference” phrase. The R& R had
expressly recommended a sanction be imposed on M s. Allen because the “case
never had any factual or legal basis.” Aplt. App. at 20. The show cause order
further described the specific conduct said to violate Rule 11, namely, the district
court’s finding that the “claims are frivolous and groundless and should not have
been made or pursued on the facts - existing or lacking - demonstrated in the
record.” Id. at 44 (quoting district court order, id. at 42). Thus, the referral order
and order to show cause clearly informed M s. Allen that sanctions were being
considered against her on the basis that she signed the complaint in this case
without conducting a reasonable inquiry into the law and facts underlying the
pleading or motion. See Rule 11(b).
M oreover, the record demonstrates that, in response to the Rule 11 show
cause order, M s. Allen presented a defense on precisely that ground. She argued
in her Rule 11 pleadings that she had conducted what she believed to be a
reasonable inquiry into the law and facts. And, although M s. Allen failed to
provide a transcript of the R ule 11 hearing, it is clear from the magistrate judge’s
description of the hearing that the subject of that hearing was the research and
investigation into the evidence and applicable law that M s. Allen conducted prior
-14- to signing the complaint. Thus, we conclude that the order to show cause did
inform M s. Allen of the specific conduct for which the sanctions were being
sought such that she was able to prepare a defense.
5. Rule 11 Standard
Finally, M s. Allen contends that the district court applied the incorrect
standard of review because the Rule 11 sanctions apply only to sanctionable
conduct at the time an attorney signs the pleading, motion or other paper, see
Rule 11(b), yet the initial R& R recommended sanctions under § 1988 based on
M s. Allen’s conduct throughout the litigation. This claim of error completely
ignores (1) the subsequent district court referral order, which rejected the § 1988
recommendation and cited instead M s. Allen’s “failure . . . to engage in any
serious or meaningful research” before initiating suit, Aplt. App. at 42, and (2)
the finding in the magistrate judge’s subsequent recommendation, based on the
Rule 11 hearing, that M s. Allen failed to conduct an objectively reasonable
inquiry into the law or the facts prior to signing the complaint, id. at 105.
Clearly, the magistrate judge and district court applied the correct Rule 11
standards.
-15- III. CONCLUSION
The judgment of the district court is AFFIRMED.
Entered for the Court
Robert H. Henry Circuit Judge
-16-