Susan Mary Kamen v. American Telephone & Telegraph Co., Patricia McDonald and Carol Buckham

KEARSE, Circuit Judge,

dissenting:

I must respectfully dissent from the majority’s decision reversing the district court’s order imposing sanctions pursuant to Fed.R.Civ.P. 11. Assuming that the district court intended to impose the sanctions against plaintiff's attorney, who signed the complaint, and not against plaintiff herself, and that the order would be clarified in that respect, it appears to me that the order was not improper.

While I agree with the majority that Rule 11 did not alter the requirements of Fed.R.Civ.P. 56, I also note that the merits of the dismissal of the complaint are not directly before us, no timely appeal having been taken from that dismissal. In any event, whether or not there may have been good ground for the complaint, the district court also found sanctions applicable on the ground that the pre-complaint inquiry required by Rule 11 had not been made. I consider the factual premise for this ground unimpeachable on the record that was before the district court, and I read Eastway Construction Corp. v. City of New York, 762 F.2d 243 (2d Cir.1985), as requiring the imposition of sanctions in any case in which such a violation of Rule 11 is found.

Rule 11 provides that

[t]he signature of an attorney ... constitutes a certificate by him that ... to the best of his knowledge, information, and belief formed after reasonable inquiry it is well grounded in fact and is warranted by existing law or a good faith argument for the extension, modification, or reversal of existing law....

Fed.R.Civ.P. 11 (emphasis added). In its August 2, 1985 decision dismissing the complaint in this action, the district court had stated that there was no indication that plaintiff’s counsel had made any pre-com-plaint investigation as required by Rule 11. In its September 23, 1985 order imposing sanctions, after quoting the portion of Rule 11 italicized above, and the further provision for the imposition of sanctions for violation of the Rule, the court found that the present case constituted such a violation, stating that, under the current version of Rule 11, it is no longer permissible “for plaintiff’s counsel to commence suit first and to seek evidence supporting the plaintiff’s claims later.” Thus, I read the district court’s sanction order as finding that the complaint was not signed after a reasonable inquiry. This finding was not clearly erroneous.

The only suggestion advanced by plaintiff’s attorney that he had made any investigation whatever into the jurisdictional basis for the complaint filed in June 1985 was his description in his September 17, 1985 affirmation of what plaintiff had told him as to the organization of AT & T and the possibility of the receipt by certain divisions of federal funds and the services of federal personnel. There apparently was no other investigation. Bypassing the question of whether this information sufficed under Rule 11 (in light of (1) the then-recent Supreme Court rulings in Grove City College v. Bell, 465 U.S. 555 , *1015 104 S.Ct. 1211 , 79 L.Ed.2d 516 (1984), and Consolidated Rail Corp. v. Darrone, 465 U.S. 624 , 104 S.Ct. 1248 , 79 L.Ed.2d 568 (1984) (receipt of federal financial assistance does not make § 504 of the Rehabilitation Act applicable to entire business entity but only to the specific program or activity receiving such assistance), and (2) the fact that even the information given by plaintiff did not suggest that any of the AT & T divisions she thought received federal assistance were divisions that employed plaintiff), the inference is strong — both from the belatedness of counsel’s statements and from his silence as to the timing of his receipt of the information — that even this information was not obtained by counsel prior to filing the complaint.

There were three obvious occasions early in the lawsuit when one would have expected counsel to mention his client’s information, if he had previously been given the information. First, immediately after the complaint was filed, when defendants’ attorney informally told plaintiff’s counsel that AT & T received no federal financial assistance; second, when defendants moved to dismiss on the ground that AT & T received no federal financial assistance; and third, when the court dismissed the complaint on that ground and a motion for reconsideration could have been made. At all of these stages, counsel was silent as to the fact that plaintiff had identified certain divisions of AT & T that she thought received federal funds and the services of federal personnel. One would normally expect counsel to come forth with this information at each of these junctures; yet he came forward with it at none of them. His complete silence — until it was too late to save the complaint — as to any basis for suggesting that AT & T had received federal assistance easily supported the district court’s inference that counsel did not have that information at the time he opposed the motion to dismiss the complaint, and perforce did not have it prior to filing the complaint.

I am unpersuaded by the majority’s view that plaintiff’s opposition to defendants’ motion to dismiss on the ground that defendants’ affidavits were hearsay or con-clusory somehow validates counsel’s evident failure to have made a pre-complaint inquiry. Rather I think counsel’s election to rely on the argument that the AT & T official’s affidavit was conclusory is one of the factors that suggests that counsel had not obtained any information with which to controvert the conclusory statement. The argument that summary judgment should not be granted because the statement in question — that AT & T had not received federal financial assistance — was concluso-ry was not a particularly good one. Whether made by affidavit or by live testimony (see 6 Moore’s Federal Practice ¶ 56.22[1], at 56-1321 to 56-1324 (2d ed. 1985) (Rule 56(e) affidavit may contain any evidentiary matter to which the affiant would be permitted to testify at trial)), statements that a given event has not occurred are normally conclusory. 1 If the *1016 opposing party has some basis for believing that the event has occurred, it is to be expected that it will disclose that basis in opposition to the motion to dismiss its pleading, if only to support a Rule 56(f) request for discovery. But in plaintiffs July 29, 1985 opposition to defendants’ motion here, although discovery was requested, counsel did not mention that his client had told him of her belief that various identified AT & T divisions received federal grants and the services of federal personnel. That information, though it plainly would have been relevant to support the request for discovery, was forthcoming only a month after the complaint had been dismissed, when counsel was responding to the motion for sanctions.

Finally, nothing in counsel’s affirmation in opposition to the motion for sanctions contradicts the inference that counsel had conducted no investigation prior to filing the complaint. Although it is in that affirmation that counsel describes the information given to him by plaintiff, and the affirmation appears to be carefully crafted to give the impression that counsel had received the information prior to filing the complaint, counsel simply does not state when it was given to him. He never states that the information was given to him prior to the filing of the complaint; he never states that he relied on it in formulating the complaint; he does not list possession of that information as one of the factors that led him, immediately after filing the complaint, to refuse to credit defendants’ attorney’s informal representations that AT & T did not receive federal financial assistance. The district court, in its August 2, 1985 decision dismissing the complaint, had stated that there was no indication that any pre-complaint inquiry had been made; one would think, therefore, that in responding to the Rule 11 motion for sanctions, counsel surely would have stated clearly that he obtained plaintiff’s information prior to filing the complaint if that were true. There is, however, nothing in counsel’s affirmation to show that he did not receive the information from plaintiff until just before drafting the affirmation.

In Eastway Construction Corp. v. City of New York, we reversed a decision of the district court which denied sanctions, stating that “where strictures of the rule have been transgressed, it is incumbent upon the district court to fashion proper sanctions.” 762 F.2d at 254 n. 7. I do not understand how, in light of Eastway, we can reverse the district court for awarding sanctions in this case.

. Note that different treatments are appropriate for different types of conclusory statements, e.g., (A) conclusory statements combining fact and law, (B) conclusory statements that an event has not occurred, and (C) conclusory statements that an event that has occurred was not motivated by a particular factor. Concluso-ry statements in category A are usually impermissible even at trial. See 6 Moore’s Federal Practice ¶ 56.22[1], at 56-1312 to 56-1318. Statements in category C, though admissible at trial, are rarely sufficient on a motion for summary judgment, since where state of mind is at issue, summary judgment is rarely appropriate. See, e.g., Poller v. CBS, 368 U.S. 464, 473 , 82 S.Ct. 486, 491 , 7 L.Ed.2d 458 (1962).

Conclusory statements in category B, however, are neither inadmissible nor improper in form, since it is normally impossible to state all of the facts that show that an event did not occur. See, e.g., Dyer v. MacDougal, 201 F.2d 265, 266 (2d Cir.1952) (summary judgment upheld on basis of defendants’ affidavits “unequivocally den[ying] the utterance of the [alleged] slanders”); cf. 2A Moore’s Federal Practice ¶ 9.04, at 9-44 n. 9 (2d ed. 1985) (although Fed.R.Civ.P. 9(c) requires a defendant to deny the performance or occurrence of a condition precedent specifically and with particularity, "A denial could be in this form: Defendant denies that the plaintiff rendered proofs of loss to the defendant pursuant to the terms of the policy, or at all.”) Cross-examination, obviously, is available to explore the basis of conclusory statements made at trial; discovery may be requested to explore the basis of such statements *1016 made in an affidavit. And, of course, the statement that the event did not occur may be disputed, creating an issue of fact to be tried. The form and content of a conclusory statement that an event did not occur, however, are not impermissible.