TOOLE

UNITED STATES DISTRICT COURT FOR THE

NORTHERN DISTRICT OF FLORIDA

PENSACOLA DIVISION

SQUARE RING, INC.,

Plaintiff,

vs. Case No.: 3:24cv491/MCR/ZCB

DEAN O’NEILL TOOLE, et al.,

Defendants.

/

ORDER

This matter is before the Court on a “Motion for Rule 11 Sanctions”

filed by Defendants Dean O’Neill Toole, Island Fights Championships,

Inc., Ryan Toole, and Ryan Toole, Inc. (Doc. 32). Plaintiff has responded

in opposition. (Doc. 33). For the reasons below, Defendants’ motion will

be granted.

I. Background

On October 11, 2024, Plaintiff commenced this action by filing a

complaint. (Doc. 1). Defendants moved to dismiss the complaint. (Doc.

12). In lieu of responding to the motion to dismiss, Plaintiff filed an

amended complaint. (Doc. 19). The amended complaint contained seven

counts: (1) a request for a declaratory judgment stating that Defendant

Dean Toole constitutes a “promoter” under the Ali Act, 15 U.S.C. §

6301(9); (2) a violation of the federal RICO statute, 18 U.S.C. §§ 1962,

1964; (3) breach of contract; (4) tortious interference with contract; (5)

tortious interference with prospective economic advantage; (6) injunctive

relief under the contract terms; and (7) injunctive relief under the federal

RICO statute. (Doc. 19 at 20-32).

Defendants moved to dismiss the amended complaint. (Docs. 21,

34). In addition to the motion to dismiss, some of the Defendants moved

for sanctions under Rule 11. (Doc. 32). Plaintiff responded in opposition

to all three motions. (Docs. 28, 33, 37). The District Judge granted the

motions to dismiss without prejudice to Plaintiff filing a second amended

complaint within fourteen days.1 (Doc. 38 at 33). At that time, the

District Judge “express[ed] no opinion on the merits of the pending

motion for sanctions,” which remained pending. (Id. at 21 n.13).

On December 23, 2025, the District Judge referred the motion for

sanctions to the undersigned for “further proceedings, if necessary, and

disposition by order.” (Doc. 40 at 1). Although a hearing is not required,

the Eleventh Circuit has said that it is “prudent” for a district court “to

hold a hearing before imposing sanctions.” Baker v. Alderman, 158 F.3d

1 Plaintiff did not file a second amended complaint.

516, 526 (11th Cir. 1998). Thus, the undersigned held a hearing on

February 6, 2026. The matter is now ripe for resolution.

II. Discussion

A. Sanctions are warranted

According to the Eleventh Circuit, three circumstances warrant

sanctions under Rule 11: “(1) when a party files a pleading that has no

reasonable factual basis; (2) when the party files a pleading that is based

on a legal theory that has no reasonable chance of success and that

cannot be advanced as a reasonable argument to change existing law;

and (3) when the party files a pleading in bad faith for an improper

purpose.” Didie v. Howes, 988 F.2d 1097, 1104 (11th Cir. 1993). An

“objective standard” of reasonableness governs, which requires a court to

determine whether the conduct was reasonable under the circumstances

that existed when the pleading was filed. Baker v. Alderman, 158 F.3d

516, 524 (11th Cir. 1998). A district court has “broad discretion” in

determining whether to impose Rule 11 sanctions. Fox v. Acadia, 937

F.2d 1566, 1569 (11th Cir. 1991).

Here, the Court finds that Plaintiff’s amended complaint contained

objectively frivolous claims, and Plaintiff’s counsel should have known

they were frivolous. More specifically, the Court finds that Plaintiff’s

claim seeking a declaratory judgment under the Ali Act (Count 1) and

Plaintiff’s civil RICO claim (Count 2) were based on legal theories with

no reasonable chance of success and were not reasonably advanced to

seek a change in the law.

1. Ali Act claim (Count 1)

Looking first to the Ali Act claim, the statute makes clear that only

three categories of people may seek to enforce the statute: (1) the

Attorney General of the United States (15 U.S.C. § 6309(a)); (2) the “chief

law enforcement officer of any State” (15 U.S.C. § 6309(c)); and (3) a

“boxer who suffers economic injury as a result of a violation of any

provision of this chapter” (15 U.S.C. § 6309(d)). In this case, there is no

dispute that Plaintiff was neither the Attorney General of the United

States, the chief law enforcement officer of a State, nor a boxer. Thus, as

the District Judge concluded in granting the motions to dismiss, Plaintiff

lacked the ability to bring a claim under the Ali Act. (Doc. 38 at 4 n.3,

23-24).

Given the clear and unambiguous statutory language, Plaintiff’s

claim for declaratory judgment under the Ali Act was based on a legal

theory that had no reasonable chance of success. Indeed, the District

Judge concluded that the Plaintiff’s attempt to obtain a declaratory

judgment under the Ali Act was “nothing more than a misguided attempt

to bootstrap its state law claims into federal court.” (Doc. 38 at 26). The

Court would also note that this is not a situation where Plaintiff

advanced a reasonable argument to change existing law.

Rule 11 was “not intended to chill innovative theories and vigorous

advocacy that bring about vital and positive changes to the law[.]” United

States v. Milam, 855 F.2d 739, 744 (11th Cir. 1988) (cleaned up). But

sanctions are warranted when the “plain language” of a statute forecloses

the relief that a party seeks to obtain. Baker, 158 F.3d at 524. Or put

another way, “[c]ourts do not hesitate to impose sanctions where a claim

is plainly foreclosed by statutory language.” No Straw, LLC v. Stout

Street Financing, No. 2:12-cv-0182, 2013 WL 12109452, at *3 (N.D. Ga.

May 15, 2013).

In the current case, Plaintiff’s attempt to bring a claim for

declaratory judgment under the Ali Act was foreclosed by the plain

statutory language, which provides a private cause of action (as opposed

to a government enforcement action) for only one class of people—boxers.

And Plaintiff by all accounts is not a boxer. This is not a situation where

the statute provided wiggle room or spoke in ambiguous terms. Nor is it

a situation where there was a statutory void that needed to be filled by

the courts. The Ali Act is crystal clear on who may bring a cause of action

under the statute. And Plaintiff’s attempt to bring a claim under the Ali

Act contradicted that clear statutory language. Plaintiff’s “decision to

proceed on a theory that was specifically precluded by the statute and

unsupported by case law was unreasonable.” Fox, 937 F.2d at 1571

(affirming Rule 11 sanctions where the plaintiff advanced a theory that

was precluded by statute). Accordingly, sanctions are warranted under

Rule 11 because Plaintiff’s Ali Act claim was not supported by existing

law or by a nonfrivolous argument for modifying, reversing, or extending

existing law.

2. RICO claim (Count 2)

The Court will now turn to Count 2, which alleged a federal civil

RICO claim against Defendants under 18 U.S.C. §§ 1962, 1964. (Doc. 19

at 22-23). “A private plaintiff suing under the civil provisions of RICO

must plausibly allege six elements: that the defendants (1) operated or

managed (2) an enterprise (3) through a pattern (4) of racketeering

activity that included at least two predicate acts of racketeering, which

(5) caused (6) injury to the business or property of the plaintiff.” Cisneros

v. Petland, Inc., 972 F.3d 1204, 1211 (11th Cir. 2020). Here, the District

Judge found dismissal was warranted because Plaintiff had failed to

plausibly allege “[e]ach of these basic ingredients” of a RICO claim. (Doc.

38 at 13). The District Judge further noted that the amended complaint

had a “paucity of factual allegations” in support of the RICO claim. (Id.

at 13 n.7).

The question today for Rule 11 purposes is whether the RICO claim

was objectively frivolous because it was based on a legal theory that had

no reasonable chance of success. The answer to that question is yes. As

mentioned above, one of the requirements of a RICO claim is the

commission of at least two predicate acts of racketeering. “An act of

racketeering activity, commonly known as a ‘predicate act,’ includes any

of a long list of state and federal crimes.” Hyundai Motor Am. Corp. v.

EFN W. Palm Motor Sales, LLC, 641 F. Supp. 3d 1321, 1332 (S.D. Fla.

2022). That long list is found in 18 U.S.C. § 1961(1).

In the amended complaint, Plaintiff alleged Defendants committed

three predicate acts of racketeering: (1) money laundering, in violation of

18 U.S.C. § 1956; (2) wire fraud, in violation of 18 U.S.C. § 1343; and (3)

violations of the Ali Act, 15 U.S.C. § 6301. (Doc. 19 at 18). The problem

for Plaintiff is that there was no objectively reasonable legal basis for

identifying two of the three identified violations of the law as RICO

predicates.

Looking first at the Ali Act, it is not a RICO predicate. That is

pellucidly clear. The RICO predicates are listed in 18 U.S.C. § 1961(1),

and the Ali Act is nowhere on that list. There is no way that Plaintiff’s

counsel could have reasonably believed that a violation of the Ali Act

qualified as a RICO predicate. Thus, the allegation that the Ali Act was

one of the RICO predicates committed by Defendants was frivolous.

Now, let’s look at the wire fraud RICO predicate allegation. Wire

fraud is one of the RICO predicates listed in 18 U.S.C. § 1961(1). But

Plaintiff’s counsel had no objectively reasonable basis for believing that

Defendants’ alleged conduct constituted wire fraud. According to the

amended complaint, Defendants committed wire fraud by transmitting

false representations via wire to the Florida Boxing Commission in order

to obtain licenses and permits that they were not entitled to receive.

(Doc. 19 at 18). Such a theory of wire fraud (i.e., fraudulent statements

to obtain licenses and permits from a government agency), however, was

rejected by the Supreme Court approximately twenty-five years ago. See

Cleveland v. United States, 531 U.S. 12, 26-27 (2000) (holding that for

purposes of the wire and mail fraud statutes a government license or

permit is not “property”). And the principle underlying Cleveland was

reaffirmed just five years ago. See Kelly v. United States, 590 U.S. 391,

400-01 (2020).

By claiming that Defendants committed the RICO predicate of wire

fraud based on a legal theory that was squarely foreclosed by Supreme

Court precedent, Plaintiff advanced a claim that had no reasonable

chance of success. Additionally, Plaintiff’s counsel should have known

the claim had no reasonable chance of success. If Plaintiff’s counsel had

conducted research regarding wire fraud before making such an

allegation in the amended complaint, then he would have discovered the

Cleveland rule and realized the conduct allegedly committed by

Defendants was not wire fraud under 18 U.S.C. § 1343.2 See Hale v. Bay

Cnty. Sch. Bd., No. 5:17cv265, 2019 WL 3064121, at *6 (N.D. Fla. Mar.

2 This is not a situation where an attorney acknowledged the existence of

binding precedent and advanced a good faith argument that challenged

the correctness of that binding precedent.

25, 2019) (imposing sanctions and stating that “proceeding in the face of

an easily located, squarely binding precedent shows recklessness”); see

also Espinoza v. Galardi South Enterps., Inc., 772 F. App’x 768, 771 (11th

Cir. 2019) (referring to arguments “foreclosed plainly by established

binding precedent” as “clearly frivolous”). Accordingly, Plaintiff’s

allegation that wire fraud was one of the RICO predicates committed by

Defendants not supported by existing law or by a nonfrivolous argument

for modifying, reversing, or extending existing law.

Because Plaintiff’s amended complaint contained frivolous

allegations that counsel should have known were frivolous, sanctions

against Plaintiff’s counsel are warranted under Rule 11.3 The Court does

not make that determination lightly, as it no way relishes or enjoys

sanctioning lawyers. Indeed, it is one of the worst parts of being a judge.

But when an attorney’s conduct warrants sanctions under the rules, it is

the Court’s duty to impose them.

3 The Court notes that Plaintiff’s counsel submitted letters from two

attorneys in support of his opposition to Defendants’ Rule 11 motion.

(Docs. 33-3, 33-4). The Court finds the letters to be entirely

unpersuasive.

B. The amount of sanctions

Having determined that Rule 11 sanctions are warranted, the

Court will now address what those sanctions will be. Defendants argue

that as a sanction Plaintiff’s counsel should be required to pay all the

reasonable attorney’s fees and costs Defendants’ incurred in defending

this case. As explained below, the Court rejects that argument because

such a hefty sanction is not necessary for effective deterrence.

According to Rule 11, the sanction for a violation “must be limited

to what suffices to deter repetition of the conduct or comparable conduct

by others similarly situated.” Fed. R. Civ. P. 11(c)(4). The rule further

provides that the “sanction may include nonmonetary directives; 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 part or

all of the reasonable attorney’s fees” and costs resulting from the

violation. Id. The language of the rule demonstrates that the “primary

goal of the sanctions is deterrence.” Sussman v. Salem, Saxon, and

Nielsen, P.A., 150 F.R.D. 209, 213 (M.D. Fla. 1993). The primary goal is

“not to compensate the opposing party for all of its costs in defending.”

Yurus v. Variable Annuity Life Ins. Co., No. 4:01cv17, 2006 WL 2131309,

at *1 (N.D. Fla. July 28, 2006).

Because the primary goal is deterrence rather than compensation,

the Advisory Committee notes explain that “if a monetary sanction is

imposed, it should ordinarily be paid into court as a penalty.” Fed. R.

Civ. P. 11, advisory committee notes to 1993 amendments.4 Only in

“unusual circumstances” should the sanction be the payment of

attorney’s fees and costs incurred by the opposing party. Id.; see also 5A

Wright & Miller’s Fed. Prac. & Proc. § 1336.3 (4th ed. 2025) (recognizing

that the Advisory Committee Notes provide that “monetary penalties

should ordinarily be paid into the court except under unusual

circumstances when they should be given to the opposing party” (cleaned

up)). A court imposing a sanction under Rule 11 must ensure that the

sanction is “calibrated to the least severe level necessary to serve the

deterrent purposes of the rule.” 5A Wright & Miller’s Fed. Prac. & Proc.

§ 1336.3 (4th ed. 2025). Put another way, the “amount of sanctions is

4 “Although not binding, the interpretations in the Advisory Committee

Notes are nearly universally accorded great weight in interpreting

federal rules.” Horenkamp v. Van Winkle and Co., Inc., 402 F.3d 1129,

1132 (11th Cir. 2005) (cleaned up).

appropriate only when it is the minimum that will adequately serve to

deter undesirable behavior.” Sussman, 150 F.R.D. at 216. Given the

wide variety of possible sanctions and the need to tailor sanctions to the

circumstances of each case, courts have “significant discretion in

determining what sanctions, if any, should be imposed for a violation.”

Fed. R. Civ. P. 11, Advisory Committee notes to 1993 amendments; see

also Fox v. Acadia State Bank, 937 F.2d 1566, 1571 (11th Cir. 1991) (“In

a given case a wide range of sanctions will fall within a district court’s

discretionary powers under Rule 11.”).

Having considered the facts and circumstances of the current case,

and keeping front and center the principle that the sanctions imposed

must be no more than necessary to serve the goal of deterrence, the Court

believes the appropriate sanctions in this case are as follows: (1) a

monetary penalty of $5,000 to be paid to the Clerk of Court; and (2) the

payment of $3,000 to Defendants’ counsel as reimbursement for travel

expenses and the time spent in connection with the Rule 11 hearing that

was held in this matter. These sanctions are levied against, and shall be

paid by, Plaintiff’s counsel, John S. Wirt.

In determining that these sanctions are sufficient but not greater

than necessary to serve Rule 11’s primary purpose of deterrence, the

Court considered that Plaintiff’s counsel has been an attorney for

approximately thirty-five years and has never before faced sanctions.

Moreover, Plaintiff’s counsel has no disciplinary history with the Florida

State Bar. Plaintiff’s counsel appeared to be genuinely mortified by the

entire experience of facing sanctions in this case. The current situation

seems to be an isolated incident that was precipitated by the fact that

Plaintiff’s counsel (who was also an owner of Plaintiff Square Ring, Inc.)

was too personally invested in this matter and lost his objectivity. During

the hearing on Defendants’ motion, Plaintiff’s counsel acknowledged as

much.

Put simply, the Court does not believe that this is the “unusual

circumstance” where “deterrence may be ineffective” unless the sanction

requires the payment of the attorney’s fees and costs incurred by the

opposing party. Fed. R. Civ. P. 11, advisory committee notes to 1993

amendments.5 The Court believes it is unlikely that Plaintiff’s counsel

5 As the Eleventh Circuit has recognized, “Rule 11 does not create an

absolute entitlement to even reasonable attorney’s fees if the court

will be a recidivist violator of Rule 11. And the Court is confident that

the sanctions imposed in this case are sufficient but not greater than

necessary to fulfill Rule 11’s primary purpose of deterrence.

III. Conclusion

For the reasons above, Defendants’ “Motion for Rule 11 Sanctions”

(Doc. 32) is GRANTED. Plaintiff’s counsel, John S. Wirt, must: (1) pay

to the Clerk of Court for the Northern District of Florida the amount of

$5,000 as a monetary penalty; (2) pay to Defendants’ counsel (Robert A.

Stok) the amount of $3,000 as reimbursement for travel expenses and the

time spent in connection with the Rule 11 hearing that was held in this

matter; and (3) make such payments within fourteen days of this Order.

SO ORDERED this the 25th day of February 2026.

s/

Zachary C. Bolitho

United States Magistrate Judge

determines that the rule’s central goal of deterrence may be achieved by

a lesser sanction.” Fox, 937 F.2d at 1571.