Amicus Curiae Brief — Business Guides, Inc. v. Chromatic Communications Enterprises, Inc.

(3) FILED

20

No. 89-1500 AUS oe

JOSEPH F. SPANIOL, JJ

In The =

Supreme Court of the United States

October Term, 1990

BUSINESS GUIDES, INC..,

Petitioner,

v.

CHROMATIC COMMUNICATIONS ENTERPRISES, INC.

and MICHAEL SHIPP,

Respondents

ON WRIT OF CERTIORARI TO THE UNITED STATES

COURT OF APPEALS FOR THE NINTH CIRCUIT

BRIEF AMICUS CURIAE OF PUBLIC CITIZEN

URGING REVERSAL

Alan B. Morrison

(Counsel of Record)

Public Citizen Litigation Group

2000 P Street, NW, Suite 700

Washington, D.C. 20036

(202) 785-3704

Attorney for Amicus Cunae

Public Citizen

a

CASILLAS PRESS, INC.. ITI) K STREET. NW. WASHINGTON D.C teens

BEST AVAILABLE COPY

1)

QUESTION PRESENTED

May a district court utilize Rule 11 of the Federal Rules of

Civil Procedure to require a party that was found to have acted

negligently, but not in bad faith, to pay the attorneys’ fees

of the other side, in light of the prohibition in the Rules Enabling

enlarge, or modify any substantive right?’’

(ui)

TABLE OF CONTENTS

Page

a i

badass ceccccccesccetccccscese HY

TABLE OF AUTHORITIES............................ iv

INTEREST OF AMICUS CURIAE...................... l

STATEMENT OF THE CASE....................c0cc05. 2

SUMMARY OF THE ARGUMENT....................... 4

EE EIS 5

(iv)

TABLE OF AUTHORITIES

Cases: Page

Alyeska Pipeline Services Co. v. Wilderness Society,

os ce cue cceseesseoves et passim

Diamond v. Am-Law Publishing Corp.,

6 cn cocceesecéesesésecuses 8

Gaiardo v. Ethyl Corp.,

i a. oc sacecne tecebeseesboeet 8

INS v. Chadha,

EIT ER en Sone e mee 4

Kaiser Aluminum & Chem. Co. v. Bonjorno,

as i es cece eeeneens 7

Lieb v. Topstone Industries, Inc.,

ee, i, . vcccscpnnepeeseeessenees 8

Marek v. Chesney,

EE a eee ae 7

McCulloch v. Albert E. Price, Inc.,

rr er D . nn ccccceeseotesessceeet %

Miller v. Florida,

CE ere eee 5

Sun Oil Co. v. Wortman,

th i dcp ccegueesecocesseseeresesessuns 5

Zambrano v. City of Tustin,

885 F.2d 1473 (Sth Cir. 1989)..............0 cee eeee 9, 11

(Vv)

Page

Statutes and Rules

NI I Seenonecnscsvccedduticcecoccencencseccis 7

WP PE MN bus bc cbbcccuesdéunséseveccceesan tcl 2

IANS Ea epee iy Unie 5, 8

SP dbuskesdistscdestenddictescsccrcu 4

Pe Me Secccccensescvnsecceteeéoeenecucu. ll

adescncivincevcdcedsesankdasiit 4,5,9

BP EE MI Bide sndccedssonédeondecececs Wenn 7

Pe ivinccadccecvececcoccceses. dui: 12, 13

OR 7

DD is SI Sokd di dircccdevecdccecdeskdcucse 7

Rule 11, Federal Rules of Civil Procedure............. passim

Rule 37, Federal Rules of Civil Procedure................ 10

Rule 68, Federal Rules of Civil Procedure............. 11, 12

Legislative History

H.R. Rep. No. 422, 99th Cong., Ist Sess. (1966)...... 12, 13

H.R. Rep. No. 889, 100th Cong., 2d Sess. (1988)......... 13

130 Cong. Rec. 28,164 (1984).......................... 12

130 Cong. Rec. 28,165 (1984).......................... 12

134 Cong. Rec. 10,441 (1988)...........__- ee

(vi)

d

Miscellaneous

Burbank, Proposals To Amend Rule 68 — Time To

Abandon Ship, 19 U. Mich. J.L. Ref. 425 (1986).........

Burbank, Sanctions in the Proposed Amendments to

the Federal Rules of Civil Procedure: Some Questions

About Power, 11 Hofstra L. Rev. 997 (1983)............

Moore, Federal Practice and Procedure

ere ie Di ed cack asevecen es

a

In The

Supreme Court of the United States

October Term, 1990

No. 89-1500

BUSINESS GUIDES, INC..,

Petitioner,

Vv.

CHROMATIC COMMUNICATIONS ENTERPRISES, INC.

and MICHAEL SHIPP, °

Respondents.

ON WRIT OF CERTIORARI TO THE UNITED STATES

COURT OF APPEALS FOR THE NINTH CIRCUIT

BRIEF AMICUS CURIAE OF PUBLIC CITIZEN

URGING REVERSAL

INTEREST OF AMICUS CURIAE

This brief is filed with the consents of the parties, which

are being filed with this brief. Public Citizen is a non-profit

organization with approximately 95,000 members throughout

the United States. It actively litigates in federal courts as a

party, and its attorneys provide no-cost representation to both

individuals and organizations who generally cannot afford to

proceed without the legal assistance which is provided by

Public Citizen's attorneys. Although Public Citizen has had vir-

tually no cases of its own in which sanctions were sought

against itself, its clients, or its attorneys, its attorneys have

2

been called upon to represent a number of other individuals

and organizations against whom sanctions have been sought

or imposed. Public Citizen is interested in this case because

fee-shifting of the sort devised by the lower courts will substan-

tially discourage individuals and organizations from seeking to

vindicate their rights in the federal courts. In our view the

question of whether fee-shifting should be permitted is one

that Congress has reserved to itself, and the merits of that

issue should be decided in the legislative arena, rather than

through the rulemaking process.

STATEMENT OF THE CASE

This is an action under the Federal Copyright Act, 17 U.S.C.

§ 501, based on a claim that respondents had copied peti-

tioner’s guide to computer products and services. After the

complaint and a request for a temporary restraining order were

that the method used by petitioner to determine whether

respondents and others were copying its guide was flawed.

The explanativn for this error is set forth in detail in the

briefs of the parties and will not be repeated. The essential

points are that the error was unintentional, as the tner of fact

specifically found, and that petitioner was merely negligent in

the manner in which it compiled and presented its evidence

to the district court. There was no finding, contrary to

respondents’ suggestion in its Opposition to Certiorari at 2,

that there was perjury in the sense that petitioner's employees

knowingly made false statements of fact. When petitioner's

denied the motion for the temporary restraining order and in-

itiated a process that eventually led to monetary sanctions of

$13,865.66 being imposed against petitioner under Rule 11

of the Federal Rules of Civil Procedure. That sum represented

3

the entire amount of respondents’ attorneys’ fees for oppos-

ing the temporary restraining order in the district court. In

addition, the court ordered the case dismissed as a further

sanction for violating Rule 11. While sanctions were also

respondents withdrew that part of their motion after the law

firm went into bankruptcy.

Despite the absence of any finding of bad faith on the part

of petitioner, the district court awarded attorneys’ fees against

petitioner, applying the same standard of adequate investiga-

tion that is applied when Rule 11 sanctions are sought against

a member of the Bar. The court of appeals affirmed, relying

principally on what it believed to be the clear language of Rule

11. Although the Rule draws no explicit distinction between

the standard by which attorneys are to be judged, and the

standard that applies to their clients, it also imposes a duty

only on the person who signs a pleading which is rarely the

chent.

However, the court of appeals reversed the portion of the

sanctions order based on oral representations in the district

court as outside the scope of Rule 11. Because it did ‘“‘not

know the impact this will have on the monetary award or

and remanded the case to allow the district court to recon-

sider its choice of sanctions in hght of the rulings of the court

of appeals. On remand, the district court sua sponte affirme4

the sanctions order in its entirety, including the order of

dismissal. In the meantime, the petition for wrt of certiorari

was filed in this case with respect to the attorneys’ fees sanc-

tions issue. However, no appeal was filed from the final order

of dismissal, and therefore it appears that the validity of that

order is not directly before this Court.

4

SUMMARY OF ARGUMENT

The district court ordered petitioner to pay more than

$13,000 in legal fees incurred by respondents in defending

against petitioner's request for a temporary restraining order

in this copyright action. It did not find that petitioner had acted

in bad faith or with an improper purpose, but only that its of-

ficers and employees were negligent in the manner in which

they gathered eviaence to support its infringement claim. In

awarding fees, the court did not rely on any statute, but sole-

ly on Rule 11 of the Federal Rules of Civil Procedure.

The question presented is whether a court may impose fee-

shifting against a client under Rule 11 in these circumstances.

For the reasons set forth in petitioner’s brief, we agree that,

properly construed, Rule 11 does not allow for fee-shifting (or

any other similar sanctions) against a client that is represented

by counsel under the facts of this case. In this brief, amicus

offers another, entirely separate reason to support reversal:

to construe Rule 11 as the Ninth Circuit did would raise very

serious questions under the Rules Enabling Act, 28 U.S.C.

§ 2072, because provisions for fee-shifting involve substan-

tive rights which may not be abridged, enlarged, or modified

by the Federal Rules.

Under the Court’s decision in Alyeska Pipeline Services Co.

v. Wilderness Society, 421 U.S. 240 (1975), the question of

whether fee-shifting should be allowed, including which par-

ties may benefit from it, and on what terms and conditions,

is one for Congress and not the courts. Whether to alter the

burdens of litigation from the usual American Rule is precise-

ly the kind of policy decision that Congress has reserved to

itself because fee-shifting affects not merely the manner in

which a case is litigated, but is intended to give an advantage

to one side or the other in the litigation process itself. To con-

strue Rule 11 as authorizing the courts to create new rules

vu

for fee-shifting would be to allow the judicial branch to usurp

Congress’ role, a particularly problematic result here because

Congress has already struck its own balance under the

Copyright Act when it decided to provide for a limited form

of fee-shifting in 17 U.S.C. § 505. If the ruling below is upheld,

it will, in effect, mean that Rule 11 —a procedural rule — can

alter a substantive statute, precisely what section 2072 forbids.

ARGUMENT

IF RULE 11 WERE READ TO AUTHORIZE FEE-

SHIFTING IN THIS CASE, IT WOULD VIOLATE THE

RULES ENABLING ACT.

The district court relied on its authority to impose sanctions

under Rule 11, and there is no doubt that it ordered the peti-

tioner, the client, to pay all of the attorneys’ fees and expenses

of respondents, the defendants. It did not find bad faith on

the part of petitioner, only negligence on the part of its

employees. If Rule 11 is read to authorize such fee-shifting,

then the Rule is invalid because it would ‘‘abridge, enlarge,

or modify,’’ the ‘‘substantive rights’’ of the parties, in con-

travention of the Rules Enabling Act, 28 U.S.C. § 2072. To

be sure, the line between substance and procedure varies from

context to context, Sum Oil Co. v. Wortman, 486 U.S. 717,

726 (1988), and ‘‘might sometimes prove elusive.’’ Miller v.

Flonda, 482 U.S. 423, 433 (1987). But this Court’s decision

in Alyeska Pipeline Service Co. v. Wilderness Society, 421 U.S.

240 (1975) (‘‘Alyeska’’), makes it clear that decisions about

whether to award attorneys’ fees, to which party or parties,

and under what circumstances, are matters of substantive

policy that are the sole province of the legislature — in this

case Congress, because the provision of attorneys’ fees is an

integral part of the substantive rights that are at issue in this

case under the federal copyright laws.

6

At issue in Alyeska was the authority of the federal courts

to award attorneys’ fees to private plaintiffs in an environmental

action arising under federal laws, on the theory that they were

acting as private attorneys general. In his opinion for seven

members of the Court, Justice White began with a recognl-

tion that, under the American Rule, each side ordinarily bears

its own attorneys’ fees. Reviewing the history of both federal

statutes on fee-shifting and the common law, the opinion con-

cluded that the only judicially recognized exceptions were for

cases producing a common fund, cases involving a common

benefit to a small or discrete group, and cases involving bad

faith, none of which arguably applied there. The Court did not

dispute that there were sound policy reasons to support a

private attorney general exception to the American Rule, but

it declined to adopt such an exception, finding that a task for

Congress. :

In the view of amicus, Alyeska virtually controls the out-

come of this case. Admittedly, Alyeska involved a case where

a party asked the courts to create the fee-shifting in their ad-

judicative capacity, whereas here this Court was acting in its

capacity as a rulemaker when it promulgated Rule 11.

However, those differences are immaterial because the

reasons why this Court refused to create a private attorney

general exception in Alyeska apply fully to the creation of a

fee-shifting exception through Rule 11.

Thus, this Court began its discussion in Alyeska by noting

that it was being asked to ‘‘reallocate the burdens of litiga-

tion’’ and to do so ‘‘without legislative guidance, | 421 U.S.

at 247, precisely what respondents claim is authorized under

Rule 11 here. The Court subsequently observed that Con-

gress has chosen to provide for fee-shifting under a number

of different federal statutes, although not the ones at issue

in Alyeska. Id. at 260. These statutes are, the Court noted,

by no means identical, since some make awards mandatory

7

(antitrust, 15 U.S.C. § 15), others make fee-shifting the

general rule (civil rights, 42 U.S.C. § 2000a-3(b) and § 2000e-

5(k)), and others make fee-shifting available in exceptional

cases (patents, 35 U.S.C. § 285). Jd. at 261. Furthermore,

the Court noted, some statutes allow for recovery by prevailing

parties, some are limited to prevailing plaintiffs, and some are

for prevailing parties, but with different standards for plain-

tiffs and defendants. Jd. at 263-64. Thus, as the Court observ-

ed, ‘‘{uJnder this scheme of things, it is apparent that the cir-

cumstances under which attorneys’ fees are to be awarded

and the range of discretion of the courts in making those

awards are matters for Congress to determine.’’ Jd. at 262.

Beyond the difficulties in line drawing, and in finding an ap-

propriate set of guidelines under each federal statute, the Court

refused to award fees because that ‘‘would make major in-

roads on a policy matter that Congress has reserved for itself.’’

Id. at 269. In each of these situations, the Court concluded,

“it is not for us to invade the legislative province by

redistributing litigation costs in the manner suggested by

respondents and followed by the Court of Appeals.’’ Jd. at

271. Indeed, just last term, the Court in Kaiser Aluminum

& Chem. Co. v. Bonjorno, 110 S. Ct. 1570, 1576 (1990), rely-

ing on Alyeska, reiterated that ‘‘the allocation of the costs ac-

cruing from litigation is a matter for the legislature, not the

courts.’’ And, as Justice Brennan succinctly stated in his dis-

sent in Marek v. Chesney, 473 U.S. 1, 35 (1984), the ‘‘right

to attorney’s fees is ‘substantive’ under any reasonable defini-

tion of that term.”’

All of the policy reasons that compelled this Court in Alyeska

to leave to Congress the job of deciding when and under what

circumstances fee-shifting should be allowed apply equally

whether the Court is acting in its adjudicative or rulemaking

capacity. Accordingly, for the reasons given in Alyeska, Rule

11 should be construed, as petitioner urges, not to allow fee-

8

shifting based on negligence, contrary to the ruling of the

courts below. See also Gaiardo v. Ethyl Corp., 835 F.2d. 479,

483 (3rd Cir. 1987) (Rule 11 ‘‘should not be viewed as a

general fee-shifting device,’’ which was intended to effect ‘‘a

major change in the American Rule’’).

The foregoing analysis applies to all cases in federal courts,

but there is another reason why Rule 11 cannot be read to

allow fee-shifting here. This is a copyright case, and Congress

has already undertaken the very balancing on fee-shifting which

Rule 11 is alleged to cover, when it included a special at-

torneys’ fees provision for copyright cases in 17 U.S.C. § 505.

Indeed, the predecessor of the current provision was specifical-

ly cited by this Court in note 33 in Alyeska. Under the balance

struck by Congress, the person holding the copyright is

generally, but not always, awarded attorneys’ fees, whereas

the alleged infringer is sometimes, but rarely, awarded them,

see, e.g., McCulloch v. Albert E. Price, Inc., 823 F.2d 316,

323 (9th Cir. 1987); Diamond v. Am-Law Publishing Corp.,

745 F.2d 142, 148 (2d Cir. 1984), although some courts have

adopted a more even-handed approach. See, e.g., Lieb v.

Topstone Industries, Inc., 778 F.2d 151, 155 (3rd Cir. 1986).

Yet, according to respondents and the lower courts here, trial

judges have the power under Rule 11 to come up with a dif-

ferent balance, under which copyright holders could be made

to pay fees under circumstances in which they presently would

not have to pay them under the Copyright Act.?

In a recent case, the Ninth Circuit overturned a district court

that had imposed a sanction of attorneys’ fees, albeit not under

\While there has been no determination of respondents’ nght to receive

attorneys’ fees under the Copyright Act, it is a fair inference that they

do not believe that they are entitled to such fees since they did not seek

fees under that Act below. Whether, in fact, section 505 authorizes fees

in this case is not before the Court since it was never raised below. It

is also an issue on which amicus takes no position.

9

Rule 11, against an attorney who was negligent in not obtain-

ing admission to the district court in which his case was pen-

ding. Zambrano v. City of Tustin, 885 F.2d 1473 (1989). In

so ruling, the Court followed precisely the approach advocated

by amicus here, id. at 1481-82, but then attempted to

distinguish Rule 11 in a footnote (n.26), on the ground that

this Court was required to send the proposed Rule to Con-

gress for six months before it became effective. Although we

agree with the basic analysis in Zambrano, we believe that

the footnote is fundamentally mistaken because it is directly

contrary to INS v. Chadha, 462 U.S. 919 (1983). In Chadha,

this Court specifically distinguished the report and wait pro-

visions of the Federal Rules from the legislative veto set aside

there, finding the former to be permissible, because it altered

nothing without a duly approved statute, whereas the veto

alone altered the rights of affected persons. Jd. at 935 n.9.

Since Rule 11, like almost all Federal Rules, became effec-

tive simply by the passage of time, the distinction offered by

the Ninth Circuit cannot stand, but its basic point regarding

the impact of Alyeska further supports our analysis.

Although this case arises under federal, rather than state

law, the result would be the same even if this were a state

law case, albeit for an additional reason. Thus, the same limita-

tions on substantive rules apply under section 2072 whether

the substantive law is state or federal, but another statute,

the Rules of Decision Act, 28 U.S.C. § 1652, imposes a fur-

ther limit on the power of federal courts to impose their policy

judgments on litigants who appear before them when the

substantive law is state, not federal. In fact, in note 31 at page

258 in Alyeska, this Court commented on the possible dif-

ference between federal and state law regarding attorneys’

fees, but appeared to conclude that there was none because

in both situations fee-shifting ‘‘reflects a substantive policy

of the state’’ that federal courts are not free to alter, citing

10

J. Moore, Federal Practice and Procedure, 54.77, pp. 1712-

1713 (2d Ed. 1974).

This analysis might be thought to call into question the validi-

ty of other provisions, such as Rule 37, which albw attorneys’

fees to be imposed against clients. We do not bdieve that our

analysis requires that result for several reasons. First, those

Rules do not allow for general fee-shifting of tle entire cost

of litigation, but only permit it for fees resulting fmm an isolated

event or a series of related events that are pat of a larger

litigation. Second, and perhaps most significarly, the basis

for imposing fees in those circumstances is condut very similar

to, if not identical with, conduct found to be vexatious or in

bad faith, for which there is a long recognizedexception to

the American Rule and for which no separate Congressional

authorization is needed. The principal differencebetween the

bad faith exception recognized in Alyeska and Rile 37 is that,

instead of providing for full fee-shifting for the entire case,

Rule 37 allows fee-shifting only for particular discrete portions

of the case. Indeed, it is entirely possible forone party to

prevail on a Rule 37 sanctions motion, receive: modest fee

award, then lose the case on the merits, and, f fee-shifting

is involved, have to pay fees for the remainder f the lawsuit

to the party that was assessed fees under Ru2 37.

In any event, the only issue that this Court mst decide is

whether fee-shifting is allowable under Rule 11 when the pay-

ment will come from a client represented by an ttorney, and

when no bad faith is involved. If the Court agres that fee-

shifting is not permitted against represented paries based on

negligence alone, it might be possible to recover he fees from

that party’s attorneys, at least where such relieis sought in

a timely manner and not abandoned, as happend here. We

recognize, as the Ninth Circuit did in Zambran, that even

that kind of fee-shifting may be forbidden, althoun the special

i]

relationship between a court and the members of its Bar may

allow greater leeway than with clients. On the other hand,

in 28 U.S.C. § 1927, Congress has legislated in the area of

imposing fees and costs on attorneys, and there is some basis

to believe that it did not intend to go beyond the limited cir-

cumstances provided there in allowing fee-shifting. See Bur-

bank, Sanctions in the Proposed Amendments to the Federal

Rules of Civil Procedure: Some Questions About Power, 11

Hofstra L. Rev. 997 (1983). But whatever the outcome there,

the case for not allowing fee-shifting between clients under

Rule 11 is so clearly dictated by the proper application of

Alyeska that the Court should not back away from forbidding

such fee-shifting, simply because the result is less clear where

fees are sought from the attorney.

Finally, while we are reluctant to rely too heavily on

legislative history of a Congress subsequent to the one that

passed the version of the Rules Enabling Act that was in place

in 1983 when amended Rule 11 became effective, we believe

that there is substantial, confirmatory evidence that Congress

clearly does not intend for this Court, in its rulemaking capaci-

ty, to write fee-shifting rules. For example, Congress has ex-

pressed concern over proposed amendments to Rule 68, which

requires a prevailing plaintiff who has declined an offer of set-

tlement less favorable than the ultimate judgment to pay post-

offer costs. In 1983, the Civil Rules Advisory Committee

sought an even greater incentive for parties to settle by pro-

posing that expenses and attorneys’ fees be added to the

shifted costs. Representative Robert Kastenmeier, Chairman

of the Subcommittee on Courts, Civil Liberties and the Ad-

ministration of Justice, which is the principal committee in Con-

gress dealing with the rulemaking process, wrote the Civil

Rules Committee that such an amendment, if promulgated,

‘“would have crossed the line from procedural to substantive.”’

130 Cong. Rec. 28,164 (1984).

12

In 1984, the Advisory Committee modified its Rule “ pro-

by labeling this fee-shifting arrangement ‘‘sanctions.

sag he he Kastenmeier made it clear that he was

still uneasy about the changes. In a letter to Judge Frank

Johnson, the new Chairman of the Civil Rules Committee, he

again expressed ‘‘reservations about whether any of the pro-

posed modifications should be statutory or through the rules

process.’’ See Burbank, Proposals To Amend Rule 68 — Time

To Abandon Ship, 19 U. Mich. J.L. Ref. 425, 440 (1986). He

concluded that ‘‘my tentative feeling is that legislation to modify

Rule 68 should be introduced, thereby squarely placing all

issues on the legislative platter.’’ Jd. The full House Judiciary

Committee supported this position, stating that we [w]hatever

the rulemaking power with respect to sanctions for litigation

conduct generally, that power does not extend to the altera-

tion of a scheme of remedial rights fashioned by Congress as

essential to the enforcement of substantive law. 42 U.S.C.

1988 contains one such scheme.’’ H.R. Rep. No. 422, 99th

Cong., 1st Sess. 13 (1985).

Congress further affirmed its view that attorneys’ fees mat-

ters ms to be left to the legislature, not to the rulemaking

process, when it amended the Rules Enabling Act in 1988.

Representative Kastenmeier, in introducing an earlier version

of the legislation, had stated that, in the wake of Alyeska,

‘‘Congress conferred a substantive right by enacting the Civil

Rights Attorney Fee Award Act.’’ 130 Cong. Rec. 28,165

(1984). A later House Judiciary Committee Report commented

that the legislation did not grant the Supreme Court power

‘‘to promulgate rules regarding matters, such as limitations

and preclusion, that necessarily and obviously define or limit

rights under the substantive law.”’ H.R. Rep. No. 422, 99th

Cong., 1st Sess. 21 (1985). The report continued: The pro-

tection extends beyond rules of substantive law, narrowly

defined, however. At the least, it also prevents the applica-

13

tion of rules, otherwise valid, where such rules would have

the effect of altering existing remedial rights conferred as an

integral part of the applicable substantive law scheme, federal

or state, such as arrangements for attorney’s fees under 42

U.S.C. 1988.” Id. at 21-22. This report was incorporated by

reference in the final House report on the 1988 bill. H.R. Rep.

No. 889, 100th Cong., 2d Sess. 29 (1988), reprinted in 1988

U.S. Code Cong. & Admin. News 5982, 5989-90.

The Chief Justice also acknowledged the boundaries of the

Court’s rulemaking powers during the 1988 Rules Enabling

Act deliberations. In a letter to Representative Peter Rodino,

Chairman of the House Judiciary Committee, Chief Justice

Rehnquist assured Congress that the Judicial Conference and

its committees were ‘‘keenly aware of the special responsibility

they have in the rules process and the duty incumbent upon

them not to overreach their charter.’’ 134 Cong. Rec. 10,441

(1988). He declared that the advisory committees should be

‘circumspect in superseding procedural statutes’’ and that

‘“we will undertake to identify such situations when they arise

so that the Congress will have every opportunity to examine

these instances on the merits as part of your review.’’ Jd.

None of these references, standing alone or in combination

with the 1988 reenactment of the Rules Enabling Act, would

suffice to establish that Rule 11 could not be used as a fee-

shifting device, as the lower courts did here. But as confir-

matory evidence, showing that Congress agreed with Alyeska

and the premises that underlay it, this legislative history should

reassure the Court that the creation of new fee-shifting ex-

ceptions to the American Rule is a matter for Congress (or

the states), but not the rulemaking process.

14

CONCLUSION

For the forgoing reasons, the Court should construe Rule ~

11 not to authorize fee-shifting in this case, or in the alter-

native it should conclude that, if Rule 11 does permit such fee-

shifting, it is in violation of the Rules Enabling Act.

Respectfully submitted,

Alan B. Morrison

(Counsel of Record)*

Public Citizen Litigation Group

2000 P Street, NW Suite 700

Washington, D.C. 20036

(202) 785-3704

Attorney for Amicus Curiae

Public Citizen

August 20, 1990

“The extensive assistance of Mark Izeman, a second year stu-

dent at New York University School of Law, is gratefully

acknowledged.