Edward Orlett v. Cincinnati Microwave, Inc., James L. Jaeger

BOYCE F. MARTIN, Jr., Circuit Judge,

concurring.

While I concur with the bulk of the majority’s opinion and the outcome, I disagree with the majority’s analysis on two points. First, I have personal doubts as to the propriety of the majority’s holding that rejects Mesh’s class action certification defense. Mesh argues that the class action certification he sought earlier in the proceedings mitigates the “bad faith” claim against him. Admittedly, another panel of this court resolved the class certification issue on the first appeal in this case; Judge Edwards, not I, sat with Judge Wellford and Judge Nelson on that appeal. How *421 ever, even though ultimately the class was properly deemed “not certified,” this does not necessarily mean that Mesh’s bad faith defense is without merit.

My second point of difference with the majority concerns our directions to the district court on the subject of the Rule 11 sanctions. As discussed by the majority, the district court determined its own standard of frivolity and imposed sanctions, using a legally unsupported theory. This was legal error and I wholeheartedly agree with the majority’s analysis to that effect. The district court failed to take into account the deterrent effect of the Rule 11 sanctions and consequently ignored the overriding intent of Rule 11. Compensation to a harmed party is a secondary goal of Rule 11. See Jackson, 875 F.2d at 1229. However, I believe the majority has inadequately instructed the district court as to the current interpretation of Rule 11 sanctions and, more importantly, the emphasis that should be given to considering non-monetary as well as monetary sanctions;

A recent survey of five federal district courts by the Federal Judicial Center revealed that Rule 11 issues arise -in two to three percent of all cases. Federal Judicial Center Directions: Special Issue on Rule 11, p. 3 (Nov. 1991). The Advisory Committee commented on the conflicting views of district judges toward monetary versus non-monetary sanctions:

The Advisory Committee expressed concern that the size of monetary sanctions might over-deter lawyers making them reluctant to assert marginally well-founded contentions for fear of a large sanction. They also questioned whether non-monetary sanctions would serve the deterrent purpose of the rule and at the same time fall evenly on lawyers of different financial means.

Id. at p. 17. Nonetheless, the FJC expressed a preference in its report for non-monetary sanctions, concluding that there was too much emphasis on monetary sanctioning by district judges and not enough emphasis on non-monetary sanctioning. Id. at pp. 5, 18, and 38. The committee found that “fee awards had become the norm and that non-monetary sanctions have been used too rarely.” Id. at 38.

District courts are permitted wide discretion under Rule 11 to make “appropriate sanctions.” This discretion, however, should not be expressed in the form of monetary sanctioning that greatly outweighs other forms of sanctioning. The FJC demonstrates its concern in this regard in the proposed Amendment to Rule 11. The proposed Amendment emphasizes that monetary awards should be statutorily limited to what is sufficient to deter comparable conduct by persons similarly situated and that, much more often than is the case now, non-monetary awards should be used over monetary awards. Id. at 38-39 (“The Committee notes underscore the availability of non-monetary sanctions (e.g. reprimand or censure, educational programs, referral to disciplinary authorities) ... ”).

Application of Rule 11 sanctions as suggested by Judge Rubin would have a disastrous, inhibitory effect on the evolution of law. Rule 11 was enacted to deter frivolity, not to deter attorneys from “pursuing reasonable arguments for the application of existing law as well as for changes in the law.” Id. at p. 27. Our system of law would stagnate and cease to develop if people were sanctioned for legitimately attempting to define legal limits and promote progressive legal change. A case like Brown v. Board of Education could never occur in such a climate of repression. Rule 11 is designed to help keep dispute resolution on track. It should not be used to impede the opportunity to utilize the court system to solve problems. District courts must apply Rule 11 even-handedly, by resolving each case on its merits. Fixed or rigid formulas that fail to take into account the individual issues and facts of each case are contrary to our system of law. Courts must necessarily consider non-monetary as well as monetary sanctions in any Rule 11 analysis. Judge Rubin has always been in the forefront of innovation; however, innovation must be tempered by fairness. Under the present prevailing interpretation of *422 Rule 11 sanctions, he has misconstrued his discretion under the Rule.