Wisconsin Lawyer
Vol. 79, No. 2, February
2006
Frivolous Sanction Law in Wisconsin
The repeal of Wis. Stat. section 814.025 restores full judicial
discretion, equity, and fair play when attorneys seek and resist
sanctions for frivolous claims.
by Janine P. Geske & William C. Gleisner III
n March
31, 2005, in Supreme Court Order (SCO) 03-06, the Wisconsin Supreme
Court repealed the frivolous action rules contained in Wis. Stat.
sections 802.05 and 814.025, effective July 1, 2005, and replaced them
with new Rule 802.05.1 This article briefly
discusses the history of the frivolous action law in Wisconsin and the
dissenting justices' objections to the new rule.2 The article also discusses several important
considerations relative to seeking and resisting sanctions enforcement
actions under new Rule 802.05, including: 1) whether the frivolous
action rule should be applied retroactively to actions already pending
as of July 1, 2005; and 2) what sanctions can and should be imposed for
violating the rule.
The History of Frivolous Action Law in Wisconsin
The frivolous action rules in former Wis. Stat. sections 802.05 and
814.025 were adopted in 1978. Under former section 802.05, a trial court
had discretion to impose a sanction on finding that a party had filed a
petition, motion, or other paper in bad faith, but that section provided
little guidance as to the nature or extent of any possible sanction.
Under former section 814.025, once a court made a finding of
frivolousness under that section, the section required the court to
award the party that moved for such a finding its costs and reasonable
attorney fees. As a consequence, the Wisconsin Supreme Court concluded
in Jandrt v. Jerome Foods Inc.3
that it had to uphold an award of $716,081 in costs and attorney fees
against a Milwaukee law firm pursuant to section 814.025. In evaluating
the reasonableness of an award of alleged costs and attorney fees, the
Jandrt court further instructed trial courts that awards under
section 814.025 could "fully compensate" an aggrieved party for its
alleged harm because of a finding of frivolousness under the section. As
the supreme court stated in Jandrt:
Janine P.
Geske, Marquette 1975, a former associate justice of the
Wisconsin Supreme Court, is a Distinguished Professor of Law at the
Marquette University Law School.
William C. Gleisner
III, Marquette 1974, an attorney practicing in Milwaukee,
coauthored an amicus curiae brief submitted to the Wisconsin Supreme
Court on behalf of the Wisconsin Academy of Trial Lawyers in Jandrt v.
Jerome Foods Inc., which was the landmark decision under previous
sections 802.05 and 814.025.
Geske and Gleisner coauthored "The Effect of Jandrt on Satellite
Litigation" in the May 2000 Wisconsin Lawyer in which they suggested
that Wisconsin ought to consider adopting Federal Rule of Civil
Procedure 11, as amended in 1993.transactions.
"Because the circuit court properly found that the Previant firm
frivolously continued the underlying action, and we affirm,
sanctions in this case are mandatory. See Wis. Stat. §
814.025(1) ... The Previant firm argues that while the sanction is
mandatory, the amount awarded is not reasonable and is contrary to the
purpose of Wis. Stat. § 814.025 which it believes is to deter
litigants and attorneys from commencing or continuing frivolous actions
and to punish those who do so. While we agree with the Previant firm
that deterrence and punishment are the underlying purposes of §
814.025, ... we are less convinced that compensation is not an
appropriate consideration. Certainly, deterrence and punishment of an
attorney or party who maintains a frivolous action is not inconsistent
with fully compensating an opposing party for the costs and
attorneys fees required to defend a frivolous action."4
The Jandrt decision and the court's interpretation of former
sections 802.05 and 814.025 generated controversy and calls for reform,
which eventually led to the filing of petitions to and the holding of
hearings before the Wisconsin Supreme Court. The criticisms centered on
the fact that Wisconsin's frivolous action rules had not changed since
their adoption in the mid 1970s although Rule 11 of the Federal Rules of
Civil Procedure (FRCP 11), on which the Wisconsin rules were modeled,
had undergone changes, the most significant of which occurred in
1993.
The Wisconsin Judicial Council first sought reform in a petition
filed in October 2000, asking that the supreme court consider several
proposed changes to the frivolous action rules, including the
introduction of a 14-day "safe harbor" provision. Under that provision,
no action or sanction could be imposed on a party charged with the
frivolous filing of a court document, if the party withdrew the filing
within 14 days of service of a motion on the party so charged.
While the Judicial Council did not call for adopting FRCP 11, as
amended in 1993, a 2001 filing of the Wisconsin Academy of Trial Lawyers
in support of the Judicial Council's petition did call for its adoption.
Following a November 2001 hearing on the Judicial Council's petition,
the supreme court in SCO 99-07 denied the Judicial Council's petition on
Jan. 29, 2002.
On July 8, 2003, joint petition 03-06 was filed with the supreme
court seeking repeal of sections 802.05 and 814.025 and asking the court
to adopt FRCP 11, as amended in 1993, by means of enacting amended Rule
802.05. This petition had wide support from both the plaintiffs' bar and
the defense bar, as evidenced by coauthorship of the petition by the
Wisconsin chapter of the American Board of Trial Advocates, the Civil
Trial Counsel of Wisconsin, the State Bar Litigation Section, and the
Wisconsin Academy of Trial Lawyers. The petition asserted that when
first adopted, sections 802.05 and 814.025 were patterned after the
original FRCP 11, and that from time to time Wisconsin appellate courts
have looked to federal court decisions in interpreting and applying
these statutes. The joint petition noted that in Jandrt, the
Wisconsin Supreme Court did in fact look to federal decisions
interpreting FRCP 11 (albeit decisions interpreting FRCP 11 before its
amendment in 1993). The joint petition also noted that there
had been no substantive changes in the Wisconsin rules governing
frivolous filings since they were adopted in 1978, but that FRCP 11 had
undergone substantial revision, most notably in 1993. As stated in the
Federal Advisory Committee Notes to FRCP 11, the 1993 amendments "were
intended to remedy problems that have arisen in the interpretation and
application of the 1983 revisions of the rule."
Joint petition 03-06 further argued that there were no unique aspects
of Wisconsin practice that would justify departing from the approach
taken by the federal courts under FRCP 11, as amended in 1993. The
petition also argued that by adopting FRCP 11, as amended in 1993,
Wisconsin attorneys and courts would be able to look to applicable
decisions of federal courts since 1993 for guidance in interpreting and
applying the mandates of FRCP 11 in Wisconsin.
Joint petition 03-06 recommended adopting the 1993 Federal Advisory
Committee Notes to FRCP 11 to guide the bench and bar in arriving at
reasonable interpretations of a Wisconsin version of FRCP 11. Those
notes specified in part that "[FRCP 11, as amended in 1993] does not
attempt to enumerate the factors a court should consider in deciding
whether to impose a sanction or what sanctions would be appropriate in
the circumstances; but, for emphasis, it does specifically note that a
sanction may be nonmonetary as well as monetary. Whether the improper
conduct was willful, or negligent; whether it was part of a pattern of
activity, or an isolated event; whether it infected the entire pleading,
or only one particular count or defense; whether the person has engaged
in similar conduct in other litigation; whether it was intended to
injure; what effect it had on the litigation process in time or expense;
whether the responsible person is trained in the law; what amount, given
the financial resources of the responsible person, is needed to deter
that person from repetition in the same case; what amount is needed to
deter similar activity by other litigants: all of these may in a
particular case be proper considerations."
Supreme Court Order 03-06
On Dec. 19, 2003, the supreme court held a public hearing on joint
petition 03-06 and, at a subsequent public administrative conference,
tentatively voted to approve the petition. The petition was again the
subject of a supreme court public administrative conference on Nov. 16,
2004. On March 31, 2005, the court filed SCO 03-06.5 It is very important to note that the supreme
court adopted SCO 03-06 on a 4-3 vote.
Supreme Court Order 03-06 repeals Wis. Stat. sections 802.05 and
814.025, effective July 1, 2005, and adopts in their place a Wisconsin
version of FRCP 11, as amended in 1993.
Supreme Court Order 03-06 consists of a main order entered by four
justices and strenuous dissents by three justices. The dissents to the
order are considered below, but first it is important that all
practitioners understand how SCO 03-06 will affect their practices. A
discussion of the substance of new Rule 802.05 follows.
The Safe Harbor
New Rule 802.05 provides a "safe harbor" of 21 days for litigants,
within which time counsel accused of frivolous conduct can escape
sanctions if he or she withdraws an offending document. In other words,
a party who wishes to seek sanctions may immediately serve a motion for
sanctions on an offending party. However, that motion cannot be
filed or presented to the court for 21 days after service.
Any party who seeks to file the motion or otherwise present the motion
to the court before the expiration of 21 days (such as by seeking a
hearing date during that time) risks being found in direct violation of
Rule 802.05(3)(a).
Judicial Discretion in Awarding Sanctions
for Frivolous Conduct
Gone from new Rule 802.05 is the suggestion that an aggrieved party
can automatically use frivolous action rules to secure full compensation
for the actual costs and attorney fees incurred due to allegedly
frivolous conduct. New Rule 802.05 provides circuit courts with wide
discretion in determining that an act is frivolous and ample guidance
and suggestions as to how circuit courts can narrowly tailor sanctions
to correct specific misconduct. New Rule 802.05(3)(b) provides in part
that: "[a] sanction imposed for violation of this rule shall be limited
to what is sufficient to deter repetition of such conduct or comparable
conduct by others similarly situated. ... The sanction may consist of,
or include, directives of a nonmonetary nature, 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. ..."
The flexibility in determining the scope of possible remedial
responses is reinforced by the SCO 03-06 majority's comments to new Rule
802.05: "Factors that the court may consider in imposing sanctions
include the following: (1) Whether the alleged frivolous conduct was
part of a pattern of activity or an isolated event; (2) Whether the
conduct infected the entire pleading or was an isolated claim or
defense; and (3) Whether the attorney or party has engaged in similar
conduct in other litigation. Sanctions authorized under s. 802.05(3) may
include an award of actual fees and costs to the party victimized by the
frivolous conduct."
Judicial flexibility in responding to allegedly frivolous conduct is
also emphatically underscored in the 1993 Federal Notes that are set
forth in SCO 03-06:
"The court has available a variety of possible sanctions to impose
for violations, such as striking the offending paper; issuing an
admonition, reprimand, or censure; requiring participation in seminars
or other educational programs; ordering a fine payable to the court;
referring the matter to disciplinary authorities (or, in the case of
government attorneys, to the Attorney General, Inspector General, or
agency head), etc. ... The rule does not attempt to enumerate the
factors a court should consider in deciding whether to impose a sanction
or what sanctions would be appropriate in the circumstances; but, for
emphasis, it does specifically note that a sanction may be nonmonetary
as well as monetary. Whether the improper conduct was willful, or
negligent; whether it was part of a pattern of activity, or an isolated
event; whether it infected the entire pleading, or only one particular
count or defense; whether the person has engaged in similar conduct in
other litigation; whether it was intended to injure; what effect it had
on the litigation process in time or expense; whether the responsible
person is trained in the law; what amount, given the financial resources
of the responsible person, is needed to deter that person from
repetition in the same case; what amount is needed to deter similar
activity by other litigants: all of these may in a particular case be
proper considerations."
Limited Permission to Make Factual Contentions that Lack
Evidentiary Support
New Rule 802.05 specifically allows parties and their counsel ample
opportunity to conduct discovery to shore up allegations and defenses in
complaints, answers, and counterclaims. Rule 802.05(2) specifies:
"(c) The allegations and other factual contentions
stated in the paper have evidentiary support or, if specifically so
identified, are likely to have evidentiary support after a reasonable
opportunity for further investigation or discovery.
"(d) The denials of factual contentions stated in
the paper are warranted on the evidence or, if specifically so
identified, are reasonably based on a lack of information or
belief."
It appears clear that plaintiffs' counsel in particular will want to
be very careful to denote with specificity the paragraphs in a complaint
that "are likely to have evidentiary support after a reasonable
opportunity for further investigation or discovery." Defense counsel
will want to be equally as careful to denote with specificity those
paragraphs in an answer that are "reasonably" based on a lack of
information or belief.
Regarding a certification that evidentiary support for an allegation
in a complaint or a paragraph in an answer will require further
discovery, it is important to note just what the 1993 Federal Notes
anticipated in this regard. According to the 1993 Notes:
"[I]f evidentiary support is not obtained after a reasonable
opportunity for further investigation or discovery, the party has a duty
under the rule not to persist with that contention. [The Rule] does not
require a formal amendment to pleadings for which evidentiary support is
not obtained, but rather calls upon a litigant not thereafter to
advocate such claims or defenses. The certification is that there is (or
likely will be) `evidentiary support' for the allegation, not that the
party will prevail with respect to its contention regarding the fact.
... Denials of factual contentions involve somewhat different
considerations. Often, of course, a denial is premised upon the
existence of evidence contradicting the alleged fact. At other times a
denial is permissible because, after an appropriate investigation, a
party has no information concerning the matter or, indeed, has a
reasonable basis for doubting the credibility of the only evidence
relevant to the matter. A party should not deny an allegation it knows
to be true; but it is not required, simply because it lacks
contradictory evidence, to admit an allegation that it believes is not
true." 6
In the case of plaintiffs' attorneys, the "certification" referred to
in the above quote from the 1993 Advisory Notes is to the requirement in
Rule 802.05(2) that when allegations in a complaint are specifically
identified as lacking evidentiary support, the plaintiffs' attorney must
in effect "certify" that such evidentiary support will likely be
established after a reasonable opportunity has been afforded for further
investigation or discovery. In the case of defense attorneys, the
"certification" is to the requirement in Rule 802.05(2)(d) that when
denials of factual contentions are specifically identified as not
warranted by the facts, the defense attorney must in effect "certify"
that they are nonetheless "reasonably based on a lack of information and
belief."
Importance of 1993 Federal Advisory
Committee Notes
It is important to emphasize that while the majority in SCO 03-06 did
reproduce the 1993 Federal Advisory Committee Notes to FRCP 11, it
supplied them "for information purposes only." The SCO 03-06 majority
nevertheless emphatically signaled that the 1993 Advisory Committee
Notes should be given a good deal of respect:
"FRCP 11 has ... undergone substantial revision, most recently in
1993. The court now adopts the current version of FRCP 11, pursuant [to]
its authority under s. 751.12 to regulate pleading, practice and
procedure in judicial proceedings. The court's intent is to simplify and
harmonize the rules of pleading, practice and procedure, and to promote
the speedy determination of litigation on the merits. In adopting the
1993 amendments to FRCP 11, the court does not intend to deprive a party
wronged by frivolous conduct of a right to recovery; rather, the court
intends to provide Wisconsin courts with additional tools to deal with
frivolous filing of pleadings and other papers. Judges and
practitioners will now be able to look to applicable decisions of
federal courts since 1993 for guidance in the interpretation and
application of the mandates of FRCP 11 in Wisconsin."7
Because they have been reproduced as part of new Rule 802.05, the
1993 Federal Advisory Committee Notes bear careful study, despite their
inclusion for "information purposes only." One of the points made in the
1993 Notes relates to the scope of the subject matter covered by
Wisconsin's version of FRCP 11 in Rule 802.05:
"The rule applies only to assertions contained in papers filed with
or submitted to the court. It does not cover matters arising for the
first time during oral presentations to the court, when counsel may make
statements that would not have been made if there had been more time for
study and reflection. However, a litigant's obligations with respect to
the contents of these papers are not measured solely as of the time they
are filed with or submitted to the court, but include reaffirming to the
court and advocating positions contained in those pleadings and motions
after learning that they cease to have any merit."
Most important, the 1993 Notes make it crystal clear that the 1993
version of FRCP 11 was intended to remove much of the incentive for
satellite litigation, that is, ancillary litigation undertaken to punish
an attorney responsible for a frivolous filing for the purpose of
obtaining full compensation for the harm done by frivolous conduct.
Consider the following language from the 1993 Notes in light of the
facts of the Jandrt decision:
"Under unusual circumstances ... deterrence may be
ineffective unless the sanction not only requires the person violating
the rule to make a monetary payment, but also directs that some or all
of this payment be made to those injured by the violation. ... Any such
award to another party, however, should not exceed the expenses and
attorneys' fees for the services directly and unavoidably caused by
the violation ... The award should not provide compensation for services
that could have been avoided by an earlier disclosure of evidence or an
earlier challenge to the groundless claims or defenses. Moreover,
partial reimbursement of fees may constitute a sufficient deterrent with
respect to violations by persons having modest financial resources."
[Emphasis added.]
The Dissents to Order 03-06
Three justices dissented from the entry of SCO 03-06. Justice Prosser
wrote a dissent in which he underscored his objection to the action of
the majority in repealing section 814.025 on the grounds that the
supreme court had thus "obliterated a validly enacted statute" of the
Wisconsin Legislature and eliminated the substantive rights of victims
of frivolous conduct.
Justice Roggensack penned a much longer dissent, in which Justices
Prosser and Wilcox joined, setting forth in detail the reasons for her
belief that the majority was in error when it entered SCO 03-06. Justice
Roggensack wrote: "I dissent for two reasons. First, this court does not
have the power under either a statute or the constitution to repeal
§ 814.025, because it is a substantive law that was duly created by
acts of the legislature. Second, while this court has the power to
revise § 802.05 in certain instances because it began as a Supreme
Court rule, the revisions made by the majority are contrary to the
interests of the public."8
In Justice Roggensack's view Rule 814.025 granted to victims of
frivolous lawsuits substantive relief, which could not be disposed of by
a supreme court order. Justice Roggensack maintained that to allow the
supreme court to repeal section 814.025 amounts to a violation of the
separation of powers under the Constitution. Justice Roggensack also
stated that new Rule 802.05 "does much to protect lawyers, but it does
so at the expense of protecting the public from the expenses incurred in
needless litigation."
Justice Roggensack acknowledged the "valid concerns" about access to
justice raised by the dissent in Jandrt, but argued that those
concerns could have been addressed without the wholesale revision of
Rule 802.05 or the repeal of Rule 814.025.
Practical Problems: Should New Rule 802.05 Apply
Retroactively?
Practical challenges will arise from attempting to enforce this rule
in Wisconsin circuit courts. The first issue is whether new Rule 802.05
should apply retroactively to cases that were pending when it became
effective on July 1, 2005. Research strongly suggests that it should
apply retroactively.9
First, the supreme court did not repeal either section 802.05 or
section 814.025 and then replace them with a rule located outside of the
Code of Civil Procedure. New Rule 802.05 was made part of the Code of
Civil Procedure. Furthermore, the recreation is based on and clearly
derived from Rule 11 of the Federal Rules of Civil Procedure. As the SCO
03-06 majority stated:
"The court now adopts the current version of FRCP 11, pursuant to its
authority under s. 751.12 to regulate pleading, practice and
procedure in judicial proceedings. The court's intent is to
simplify and harmonize the rules of pleading, practice and procedure,
and to promote the speedy determination of litigation on the
merits."10
New Rule 802.05 is not a statute enacted by the legislature.
Therefore, the rule's retroactivity is not subject to the holdings in
Martin v. Richards, Neiman v. American National Property, or
Matthies v. Positive Safety Manufacturing,11 all of which address in some measure the issue
of whether the legislature intended a statute to apply retroactively. It
is interesting to note, however, that even retroactive legislation
enjoys a presumption of constitutionality.12
New Rule 802.05 was developed by the supreme court following lengthy
public hearings and after lengthy deliberations that spanned two years.
This new rule represents a thoughtful analysis of FRCP 11, as amended in
1993, and is intended to eliminate perceived unfair aspects of previous
sections 802.05 and 814.025. The public and interested organizations
were permitted to submit materials, briefs, and arguments to the court
before the new rule was adopted. The rule is clearly intended to
streamline and modernize proceedings concerning frivolity and bring them
into conformity with procedures that now exist in the federal arena
pursuant to FRCP 11, as amended in 1993. In the words of the SCO 03-06
majority, "Judges and practitioners will now be able to look to
applicable decisions of federal courts since 1993 for guidance in the
interpretation and application of the mandates of FRCP 11 in
Wisconsin."
Wisconsin cases do not appear to have directly addressed the issue of
amendments to the Rules of Civil Procedure. The Fifth Circuit Court of
Appeals, however, has held that "[a]mendments to the Federal Rules of
Civil Procedure should be given retroactive application to the maximum
extent possible,"13 and a federal district
court held that "[i]n determining whether the retrospective application
of [a] rule is `just and practicable,' [courts are] guided by the
principle that to the maximum extent possible ... amended Rules should
be given retroactive application...."14
The U.S. Supreme Court addressed the issue of amendments to rules of
civil procedure in Landgraf v. USI Film Products15 and concluded:
"Changes in procedural rules may often be applied in suits arising
before their enactment without raising concerns about retroactivity. ...
We noted the diminished reliance interests in matters of procedure. 337
U.S., at 71, 69 S. Ct., at 952-953. Because rules of procedure regulate
secondary rather than primary conduct, the fact that a new procedural
rule was instituted after the conduct giving rise to the suit does not
make application of the rule at trial retroactive. Cf. McBurney v.
Carson, 99 U.S. 567, 569, 25 L. Ed. 378 (1879). ... While we have
strictly construed the Ex Post Facto Clause to prohibit
application of new statutes creating or increasing punishments after the
fact, we have upheld intervening procedural changes even if application
of the new rule operated to a defendant's disadvantage in the particular
case." 16
As the Fourth Circuit noted in Altizer v. Deeds, "[t]he
Supreme Court has upheld procedural changes even where they work to the
disadvantage of defendants in pending cases. See ... Collins v.
Youngblood, 497 U.S. 37... (1990); Beazell v. Ohio, 269
U.S. 167, 46 S.Ct. 68, 70 L.Ed. 216 (1925)."17
New Rule 802.05 did not arise from a specific decision of the
Wisconsin Supreme Court within the context of a pending case. However,
with respect to such decisions, the supreme court has established that
retroactive application of a procedural decision in a civil action is
ordinarily to be favored. As the court has noted, "Wisconsin generally
adheres to the doctrine that retroactive application of judicial
decisions is the rule, not the exception."18 As the court stated further in Bradley,
in the case of civil procedure rules "retroactive application is
presumed."19
Even when a procedural rule results from the decision in a particular
case, the preferred course is to apply the rule retroactively. In
Harper v. Virginia Department of Taxation,20 the U.S. Supreme Court held:
"When this Court applies a rule of federal law to the parties before
it, that rule is the controlling interpretation of federal law and must
be given full retroactive effect in all cases still open on direct
review and as to all events, regardless of whether such events predate
or postdate our announcement of the rule."21
Wisconsin appellate courts have taken a similar approach to new
procedural rules developed in the course of litigation. Our courts refer
to the concept of "sunbursting," which is a term used for prospective
application of a rule developed within the common law as well as changes
in the way that courts interpret statutes. According to In re
Thiel:22 "[L]imiting a new rule to
prospective application only or `sunbursting' is appropriate only if
there is a compelling judicial reason to limit its application to future
litigants."23
Appropriate Sanctions Under New Rule 802.05
As noted in SCO 03-06, "Judges and practitioners will now be able to
look to applicable decisions of federal courts since 1993 for guidance
in the interpretation and application of the mandates of FRCP 11 in
Wisconsin." Since the amendment of FRCP 11 in 1993, courts have
repeatedly stated that the basic principle under FRCP 11 is that the
least severe sanction adequate to deter misconduct is the one that
should be imposed. According to the court in White v. Camden City
Board of Education:24
"Any sanction imposed under Rule 11 `should be calibrated to the
least severe level necessary to serve the deterrent purpose of the
Rule,' Zuk v. Eastern Pa. Psychiatric Inst. of the Med. College of
Pa., 103 F.3d 294, 301 (3d Cir. 1996) (citing 5A Charles Alan
Wright & Arthur R. Miller, Federal Practice & Procedure
§ 1336 (2d ed. Supp. 1996)), and may include monetary sanctions,
reprimands, orders to undergo continuing legal education, and referrals
to disciplinary authorities, see Zuk, 103 F.3d at 301."25
In Zuk v. Eastern Pennsylvania Psychiatric Institute, the
court stated that: "[t]he 1993 revision ... makes clear that the main
purpose of Rule 11 is to deter, not to compensate. Accordingly, it
changes the emphasis in the types of sanctions to be ordered. It
envisions as the norm public interest remedies such as fines and
reprimands, as opposed to the prior emphasis on private interest
remedies. Thus, the Advisory Committee Notes state that any monetary
penalty `should ordinarily be paid into the court' except `under unusual
circumstances'... Any sanction imposed should be calibrated to the least
severe level necessary to serve the deterrent purpose of the Rule. In
addition, the new Rule 11 contemplates greater use of nonmonetary
sanctions, including reprimands, orders to undergo continuing education,
and referrals to disciplinary authorities."26
According to Leuallen v. Borough of Paulsboro: "Thus, an
`appropriate' sanction may be `a warm-friendly discussion on the record,
a hard-nosed reprimand in open court, compulsory legal education,
monetary sanctions, or other measures appropriate to circumstances.' The
sanction must be the least severe sanction adequate to meet the
purpose of the sanctions and must be tailored to the particular
facts of each case."27
In a similar vein, the court in Augustine v. Adams stated:
"`[T]he primary purpose of sanctions is to deter attorney and litigant
misconduct, not to compensate the opposing party for its costs in
defending a frivolous suit.' White, 908 F.2d at 684. The amount
of sanctions must be the minimum amount necessary to deter
future violations."28 It is true that
courts must take an offending party's ability to pay into consideration
in imposing FRCP 11 sanctions, but not in the same way a court or jury
would do when assessing punitive damages. According to Kassab v.
Aetna Industries:
"The principal goal of Rule 11 sanctions is deterrence, with
compensation to the party forced to litigate an improperly filed claim
being a secondary aim. Orlett v. Cincinnati Microwave, Inc., 954
F.2d 414, 419 (6th Cir. 1992); see also Danvers v. Danvers, 959
F.2d 601, 605 (6th Cir. 1992). A claim for a party's total costs
requires an investigation into the reasonableness of those costs.
Orlett, 954 F.2d at 419; see also, Bodenhamer, 989
F.2d at 217 (`the amount of the sanction must be reasonable');
Danvers, 959 F.2d at 605 (`because deterrence is the
primary goal, the minimum necessary to deter the sanctioned party is the
proper award, even if this amount does not fully compensate the moving
party') (emphasis in original). Before awarding a party's total
costs and fees as sanctions, the district court should consider the
offending party's ability to pay, want of diligence, and the amount
necessary and effective to bring about deterrence."29
It is very important to emphasize that "compensable fees under Rule
11 should be limited to those incurred as a result of the offensive
pleading; a blanket award of all fees incurred during litigation is not
authorized under Rule 11."30 Courts have
emphasized that under FRCP 11, as amended in 1993, the imposition of
sanctions is very much a function of educating the bar. In
Shepherdson v. Nigro, the court admonished counsel to exercise
more care in future cases.31
Courts should very carefully scrutinize claims for attorney fees
under FRCP 11 to determine whether the fee requests are reasonable and
whether the fees were incurred as a result of the allegedly frivolous
conduct. In Elsman v. Standard Fed. Bank, the court stated:
"A claim for a party's total costs requires an investigation into the
reasonableness of those costs. Orlett v. Cincinnati Microwave,
Inc., 954 F.2d 414 (6th Cir. 1992). Before awarding a party's total
costs and fees as sanctions, the district court should consider the
offending party's ability to pay, want of diligence, and the amount
necessary and effective to bring about deterrence. Id. Compensable
fees under Rule 11 should be limited to those incurred as a result of
the offensive pleading. See Bodenhamer Bldg. Corp. v. Architectural
Research Corp., 989 F.2d 213, 217 (6th Cir. 1993). Further, when
granting Rule 11 attorney fees on remand, the district court must
review such costs with exacting scrutiny; a blanket award of all fees
incurred during litigation is not authorized under Rule 11."32
However, as the Elsman court makes clear, while courts
should carefully and strictly review an award of actual and reasonable
attorney fees, such an award is not precluded in an appropriate
case.33
Dismissal is a legitimate FRCP 11 sanction34 and in and of itself is a very strong and severe
sanction.35
Conclusion
The 1993 Federal Advisory Committee Notes make it very clear that the
touchstone of new Rule 802.05 should be equity and the proportionality
of response to an allegedly frivolous act. This is a refreshing
development in the jurisprudence of Wisconsin, and one that can and
should lead to an increase in civility in our litigational process. We
hope that Wisconsin practitioners and judges take the time to study both
the text of new Rule 802.05 and the 1993 Federal Advisory Committee
Notes. Those Notes provide rich insight into the spirit of FRCP 11, as
amended in 1993. Moreover, counsel will discover that the case law that
has come down under FRCP 11, as amended in 1993, serves to underscore
the 1993 Notes.
Although the 1993 Federal Advisory Notes have been reproduced
following new Rule 802.05 only for information purposes, it is well to
remember that the SCO 03-06 court majority stated: "Judges and
practitioners will now be able to look to applicable decisions of
federal courts since 1993 for guidance in the interpretation and
application of the mandates of FRCP 11 in Wisconsin." Full judicial
discretion, equity, and fair play have now been returned to frivolous
sanction practice in Wisconsin, and this development can only serve the
best interests of the judiciary, the bar, and the general public.
Endnotes
1The text of Supreme Court Order
03-06, including dissents, was published in the May 2005 Wisconsin
Lawyer and can be found online at www.wisbar.org/wl/2005/05/orders.
2Justices Prosser, Wilcox,
and Roggensack dissented to SCO 03-06. Chief Justice Abrahamson and
Justices Bradley, Crooks, and Butler supported the rule change.
3Jandrt v. Jerome Foods
Inc., 227 Wis. 2d 531, 597 N.W.2d 744 (1999). The Jandrt
majority correctly noted that a finding against a lawyer or client
pursuant to former section 802.05 permitted a court discretion to
determine what sanction, if any, should be imposed against the offending
party.
4Id. at 576-77 (emphasis
added).
5See supra note 1.
6Order 03-06.
7Order 03-06 (emphasis added).
8Order 03-06, Roggensack dissent,
at ¶ 7.
9Because new Rule 802.05 is a rule
and not a statute enacted by the legislature, the authors believe that
an issue of retroactivity could only arise if a case were actually
pending on July 1, 2005, the date 802.05 became effective, and, even
then, only if a motion were already pending as of that date.
10Order 03-06 (emphasis
added).
11Martin v. Richards,
192 Wis. 2d 156, 531 N.W.2d 70 (1995); Neiman v. American Nat'l
Prop., 2000 WI 83, 236 Wis. 2d 411, 613 N.W.2d 160; Matthies v.
Postive Safety Mfg., 2001 WI 82, 244 Wis. 2d 720, 628 N.W.2d
842.
12Martin, 192 Wis. 2d at
200-01.
13Long v. Simmons, 77
F.3d 878, 879 (5th Cir. 1996). See also Skoczylas v. Federal Bureau
of Prisons, 961 F.2d 543, 546 (5th Cir. 1992).
14Wilson v. City of Atlantic
City, 142 F.R.D. 603, 605 (D.N.J. 1992) (quoting Atlantis Dev.
Corp. v. United States, 379 F.2d 818, 823 (5th Cir. 1967)).
15Landgraf v. USI
Film Prods., 511 U.S. 244 (1994).
16Id. at 275 dn. 28.
17Altizer v. Deeds, 191
F.3d 540, 546 (4th Cir. 1999).
18State ex rel.
Brown v. Bradley, 2003 WI 14, ¶ 16, 259 Wis. 2d 630, 658
N.W.2d 427.
19Id. ¶ 13.
20Harper v. Virginia Dep't of
Taxation, 509 U.S. 86 (1993).
21Id. at 97.
22In re Thiel, 2001 WI
App 52, 241 Wis. 2d 439, 625 N.W.2d 321.
23Id. ¶ 11.
24White v. Camden City Bd. of
Educ., 251 F. Supp. 2d 1242 (D.N.J. 2003).
25Id. at 1248-49.
26Zuk v. Eastern Pa. Psych.
Inst., 103 F.3d 294, 301 (3d Cir. 1996).
27Leuallen v. Borough of
Paulsboro, 180 F. Supp. 2d 615, 621 (D.N.J. 2002) (emphasis
added).
28Augustine v. Adams, 88
F. Supp. 2d 1166, 1174 (D. Kan. 2000).
29Kassab v. Aetna
Indus., 265 F. Supp. 2d 819, 823 (E.D. Mich. 2003) (emphasis
added).
30Id. at 823 (citing
Bodenhamer Bldg. Corp. v. Architectural Research Corp., 989
F.2d 213, 217 (6th Cir. 1993)).
31Shepherdson v. Nigro,
179 F.R.D. 150, 152-53 (E.D. Pa. 1998). See also Pickern v. Pier 1
Imports (U.S.) Inc., 339 F. Supp. 2d 1081, 1090-91 (E.D. Cal.
2004).
32Elsman v. Standard Fed.
Bank, 238 F. Supp. 2d 903, 910 (E.D. Mich. 2003) (emphasis
added).
33Id.
34Marina Management v. Vessel
My Girl, 202 F.3d 315, 325 (D.C. Cir. 2000); Jiminez v. Madison
Area Tech. College, 321 F.3d 652, 657 (7th Cir. 2003).
35Williams v. Board of
Educ., 155 F.3d 853, 857 (7th Cir. 1998).
Wisconsin
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