Vol. 76, No. 11, November 2003

Supreme Court Orders

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• Order 03-01
• Order 03-06

Lawyer Regulation System Procedures

In the matter of amendments to Supreme Court Rules Chapter 22 Procedures for the Lawyer Regulatory System.

Order 03-01

On Sept. 18, 2003, the court held a public hearing on the petition filed Jan. 24, 2003, by the Office of Lawyer Regulation, seeking to amend Supreme Court Rules 22.04, 22.11, 22.25, 22.30, 22.40, and 22.42 relating to procedures for the lawyer regulation system.

IT IS ORDERED that, effective Jan. 1, 2004, Supreme Court Rules Chapter 22 is amended as follows:

Section 1. 22.04 (1)  of the supreme court rules is amended to read:

22.04 (1) The director may refer a matter to a district committee for assistance in the investigation. A respondent has the duty to cooperate specified in SCR 21.15 (4) and 22.03 (2) in respect to the district committee. The committee may subpoena and compel the production of documents specified in SCR 22.03 (7) (8) and 22.42.

Section 2. 22.11 (2) of the supreme court rules is amended to read:

22.11 (2) The complaint shall set forth only those facts and misconduct allegations for which the preliminary review panel determined there was cause to proceed and may set forth the discipline or other disposition sought. Facts and misconduct allegations arising under SCR 22.22 may be set forth in a complaint without a preliminary review panel finding of cause to proceed.

Section 3. 22.25 (8) of the supreme court rules is amended to read:

22.25 (8) Allegations of malfeasance against the director, retained counsel, a member of a district committee, a member of the preliminary review committee, a member of the board of administrative oversight, a special investigator, a member of the special preliminary review panel, or a referee shall be referred by the director to the supreme court for appropriate action.

Section 4. 22.40 (3) of the supreme court rules is amended to read:

22.40 (3) The director may provide relevant information to a district attorney or U.S. attorney where there is substantial evidence of an attorney's possible criminal conduct.

Section 5. 22.42(2) of the supreme court rules is amended to read:

22.42 (2) In any disciplinary proceeding before a referee, the director, or the director's counsel, a special investigator acting under SCR 22.25, and the respondent or counsel for the respondent may require the attendance of witnesses and the production of documentary evidence. The use of subpoenas for discovery in a matter pending before a referee shall be pursuant to an order of the referee. The issuance of subpoenas service, enforcement or challenge to any subpoena issued under this rule shall be governed by ch. 885, 1997 stats., except as otherwise provided in this chapter.

Section 6. 22.42 (2m) of the supreme court rules is created to read:

22.42 (2m) (a) The director may issue a subpoena under this chapter to compel the attendance of witnesses and the production of documents in Wisconsin, or elsewhere as agreed by the witnesses, if a subpoena is sought in Wisconsin under the law of another jurisdiction for use in a lawyer discipline or disability investigation or proceeding in that jurisdiction, and the application for issuance of the subpoena has been duly approved or authorized under the law of that jurisdiction.

(b) In a lawyer discipline or disability investigation or proceeding in this jurisdiction, the director, special investigator, or respondent may apply for the issuance of a subpoena in another jurisdiction, under the rules of that jurisdiction when the application is in aid or defense of the investigation or proceeding, and the director, special investigator, or respondent could issue compulsory process or obtain formal prehearing discovery under this chapter.

IT IS FURTHER ORDERED that no action was taken on the petition to amend SCR 22.30.

IT IS FURTHER ORDERED that notice of this amendment of Supreme Court Rules Chapter 22 be given by a single publication of a copy of this order in the official state newspaper and in an official publication of the State Bar of Wisconsin.

Dated at Madison, Wis., this 9th day of October, 2003.

By the court: Dawn Sturdevant Baum, Chief Deputy Clerk of Supreme Court

Rules of Civil Procedure

In the matter of the repeal of Wis. Stat. § 802.05, and Wis. Stat. § 814.025, and the adoption of Rule 11 of the Federal Rules of Civil Procedure in lieu thereof as amended Wis. Stat. § 802.05.

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Order 03-06

On July 8, 2003, the American Board of Trial Advocates (ABOTA), Wisconsin Chapter; the Civil Trial Counsel of Wisconsin (CTCW); the Wisconsin Academy of Trial Lawyers (WATL); and the Litigation Section of the State Bar of Wisconsin filed a petition seeking repeal of Wis. Stat. § 802.05, and Wis. Stat. § 814.025, and the adoption of Rule 11 of the Federal Rules of Civil Procedure in lieu thereof as amended Wis. Stat. § 802.05.

IT IS ORDERED that a public hearing on the petition shall be held in the Supreme Court Room in the State Capitol, Madison, Wis., on Dec. 19, 2003, at 9 a.m.

IT IS FURTHER ORDERED that the court's conference in the matter shall be held promptly following the public hearing.

IT IS FURTHER ORDERED that notice of the hearing be given by publication of a copy of this order and of the petition in the official state newspaper once each week for three consecutive weeks and in an official publication of the State Bar of Wisconsin not more than 60 days nor less than 30 days before the date of the hearing.

Dated at Madison, Wis., this 19th day of September, 2003.

By the court: Cornelia G. Clark, Clerk of Supreme Court

Petition

The American Board of Trial Advocates (ABOTA), Wisconsin Chapter,¹ the Civil Trial Counsel of Wisconsin (CTCW),² the Wisconsin Academy of Trial Lawyers³ and the Litigation Section of the State Bar of Wisconsin,⁴ hereby file this Joint Petition requesting that the Supreme Court of Wisconsin, pursuant to its Rule making powers under and pursuant to § 751.12, Wis. Stats., repeal § 802.05, Wis. Stats. and § 814.025, Wis. Stats., and in lieu thereof adopt as new § 802.05, Wis. Stats., the provisions of Rule 11 of the Federal Rules of Civil Procedure, in its entirety, together with the 1993 Federal Advisory Committee Notes to that Rule. Your Petitioners further request that this Petition be set down for a public hearing before the entire Supreme Court at the earliest convenient date, consistent with the letter and spirit of § 751.12, Wis. Stats.

Basis for Petition

When adopted, §§ 802.05 and 814.025, Wis. Stats., were patterned after the original Rule 11 of the Federal Rules of Civil Procedure (FRCP 11). Both this Court and the Wisconsin Court of Appeals have looked to the decisions of federal courts in interpreting and applying these statutes. See, e.g., Jandrt v. Jerome Foods, 227 Wis. 2d 531, 549, 597 N.W.2d 744 (1999); Riley v. Isaacson, 156 Wis. 2d 249, 255, 456 N.W.2d 619 (Ct. App. 1990). However, there have been no substantive changes in the Wisconsin rules since they were adopted in 1977. By contrast, FRCP 11 has undergone substantial revision, most recently in 1993. As reflected by the Federal Advisory Committee Notes those 1993 amendments "were intended to remedy problems that have arisen in the interpretation and application of the 1983 revisions of the rule."

Your petitioners do not believe that there are any unique aspects of Wisconsin practice that would justify a departure from the approach taken by the federal courts under current FRCP 11, as amended in 1993. By adopting current FRCP 11, as amended in 1993, Wisconsin attorneys and the judiciary would 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.

Moreover, the experience of the federal courts with "frivolous claims" litigation has been extensive. This experience has led to the identification of many problems that led directly to the 1993 revisions of FRCP 11, and Wisconsin should avail itself fully of that experience by adopting current FRCP 11. Although Wisconsin has not had the same breadth of experience with frivolous claim litigation, the same problems can be anticipated over time, and it simply makes sense to take full advantage of the federal experience. Rather than attempting to engraft sections of FRCP 11 onto existing Wisconsin statutes, both the Bench and Bar will benefit significantly by simply replacing the outmoded statutes which were after all based on a predecessor of FRCP 11 with the current version of FRCP 11, as amended in 1993.

Among the significant changes made by the 1993 revisions to FRCP 11, which argue strongly in favor of adopting FRCP 11, as amended in 1993, as the rule in Wisconsin in lieu of current §§ 802.05 & 814.025, Wis. Stats., are the following:

1. Present Wisconsin § 814.025 (1) makes the award of costs and attorney fees mandatory upon a finding of frivolousness. FRCP 11 (c), as amended in 1993, leaves the imposition of a sanction to the discretion of the trial court. Further, and more importantly, FRCP 11, as amended in 1993, limits the sanction to that which is sufficient to deter the conduct. While the federal courts may impose a financial sanction under FRCP 11, as amended in 1993, a preference is expressed for payment into court, rather than to the opposing party and then, only to the extent necessary to deter similar conduct. As observed by the 1993 Advisory Committee Note, the focus under FRCP 11, as amended in 1993, is expressly shifted from compensation of the opposing party to deterrence of prohibited conduct. In this way, our frivolous action law will not be the occasion for carrying on vexatious litigation as a form of "tit for tat" satellite litigation, which benefits no one and consumes precious judicial resources needlessly. Also, changing the focus from compensation to deterrence further discourages using the threat of a "frivolous pleading" motion as a litigation tactic to secure a perceived advantage in settlement or other matters.

2. Present Wisconsin rules do not provide a "safe harbor" which would permit a party to withdraw a frivolous pleading, thereby avoiding a sanction. FRCP 11, as amended in 1993, provides for a 21 day "safe harbor" period, which begins with the notification by an opposing party of an intent to file a FRCP 11 motion. Thus, implicit in FRCP 11, as amended in 1993, is the requirement that a party seeking sanctions act promptly when the basis for such a request becomes known. Delayed filing may not only be considered untimely but should lead a court to deny or significantly limit compensatory costs and attorney fees incurred during the delay. As the Federal Advisory Committee noted in 1993, an award of costs/fees "should not provide compensation for services that could have been avoided by an earlier disclosure of evidence or an earlier challenge to the groundless claim or defense."

3. Another laudatory provision of FRCP 11, as amended in 1993, recognizes that there are times when a certain amount of additional investigation and/or discovery may be required to develop evidentiary facts that support an allegation in a pleading, be it a complaint or an answer or some other pleading. Under FRCP 11 (b), as amended in 1993, an allegation of fact will not be considered "frivolous" if it "has evidentiary support or, if specifically so identified, [is] likely to have evidentiary support after a reasonable opportunity for further investigation or discovery." The absence of such a provision could have a chilling effect on the filing and pursuit of "cutting edge" litigation as well as on the assertion of an aggressive defense to litigation.

4. FRCP 11, as amended in 1993, specifically excepts discovery disputes from its application. This is good, since the problem of frivolous actions is categorically different from discovery disputes. Indeed, a substantial body of law has developed under current WRCP 804.01 to 804.12, and there is no need to "fix what isn't broken." Moreover, current discovery practice has engendered expectations and reliance by the trial bar and courts which should not be disturbed lightly. Your petitioners are not aware of dissatisfaction with the current discovery sanction rules which would justify a departure from current practice.

5. FRCP 11, as amended in 1993, does not contain an itemization of factors which may justify the imposition of sanctions.⁵ Rather, the rule as amended in 1993 emphasizes the purpose of deterrence and requires that the trial court explain the basis for any sanction imposed. This is a good thing, since it will result in clarity and guidance to practitioners and will establish a clear basis for appellate review.

First Prayer of the Petitioners

YOUR PETITIONERS RESPECTFULLY ASK THE SUPREME COURT TO ACT IN ITS RULE MAKING CAPACITY UNDER § 751.12, WIS. STATS., AS FOLLOWS:

SECTION 1: Repeal in its entirety the provisions of § 802.05, Wis. Stats., by striking the following language from the Wisconsin Statutes:

SECTION 2: Repeal in its entirety the provisions of § 814.025, Wis. Stats., by striking the following language from the Wisconsin Statutes:

SECTION 3: Adopt in its entirety the provisions of Rule 11 of the Federal Rules of Civil Procedure, as amended in 1993, by incorporating same into the Wisconsin Statutes as revised § 802.05, Wis. Stats.:

802.05. Signing of Pleadings, Motions, and Other Papers; Representations to Court; Sanctions.

(a) Signature. Every pleading, written motion, and other paper shall be signed by at least one attorney of record in the attorney's individual name, or, if the party is not represented by an attorney, shall be signed by the party. Each paper shall state the signer's address and telephone number, if any. Except when otherwise specifically provided by rule or statute, pleadings need not be verified or accompanied by affidavit. An unsigned paper shall be stricken unless omission of the signature is corrected promptly after being called to the attention of the attorney or party.

(b) Representations to Court. By presenting to the court (whether by signing, filing, submitting, or later advocating) a pleading, written motion, or other paper, an attorney or unrepresented party is certifying that to the best of the person's knowledge, information, and belief, formed after an inquiry reasonable under the circumstances,

(1) it is not being presented for any improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of litigation;

(2) the claims, defenses, and other legal contentions therein are warranted by existing law or by a nonfrivolous argument for the extension, modification, or reversal of existing law or the establishment of new law;

(3) the allegations and other factual contentions have evidentiary support or, if specifically so identified, are likely to have evidentiary support after a reasonable opportunity for further investigation or discovery; and

(4) the denials of factual contentions are warranted on the evidence or, if specifically so identified, are reasonably based on a lack of information or belief.

(c) Sanctions. If, after notice and a reasonable opportunity to respond, the court determines that subdivision (b) has been violated, the court may, subject to the conditions stated below, impose an appropriate sanction upon the attorneys, law firms, or parties that have violated subdivision (b) or are responsible for the violation.

(1) How Initiated.

(A) By Motion. A motion for sanctions under this rule shall be made separately from other motions or requests and shall describe the specific conduct alleged to violate subdivision (b). It shall be served as provided in Rule 5, but shall not be filed with or presented to the court unless, within 21 days after service of the motion (or such other period as the court may prescribe), the challenged paper, claim, defense, contention, allegation, or denial is not withdrawn or appropriately corrected. If warranted, the court may award to the party prevailing on the motion the reasonable expenses and attorney's fees incurred in presenting or opposing the motion. Absent exceptional circumstances, a law firm shall be held jointly responsible for violations committed by its partners, associates, and employees.

(B) On Court's Initiative. On its own initiative, the court may enter an order describing the specific conduct that appears to violate subdivision (b) and directing an attorney, law firm, or party to show cause why it has not violated subdivision (b) with respect thereto.

(2) Nature of Sanction; Limitations. 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. Subject to the limitations in subparagraphs (A) and (B), 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 incurred as a direct result of the violation.

(A) Monetary sanctions may not be awarded against a represented party for a violation of subdivision (b)(2).

(B) Monetary sanctions may not be awarded on the court's initiative unless the court issues its order to show cause before a voluntary dismissal or settlement of the claims made by or against the party which is, or whose attorneys are, to be sanctioned.

(3) Order. When imposing sanctions, the court shall describe the conduct determined to constitute a violation of this rule and explain the basis for the sanction imposed.

(d) Inapplicability to Discovery. Subdivisions (a) through (c) of this rule do not apply to disclosures and discovery requests, responses, objections, and motions that are subject to the provisions of WRCP 804.01 to 804.12.

Second Prayer of the Petitioners

YOUR PETITIONERS FURTHER RESPECTFULLY RECOMMEND THAT THE SUPREME COURT, AGAIN PURSUANT TO ITS POWERS UNDER § 751.12, WIS. STATS.:

SECTION 4: Adopt the 1993 Federal Advisory Committee Notes to Rule 11 of the Federal Rules of Civil Procedure. References to "Rule 11" in these notes should be understood as referring to new § 802.05, Wis. Stats.:

1993 Amendments

Purpose of revision. This revision is intended to remedy problems that have arisen in the interpretation and application of the 1983 revision of the rule. For empirical examination of experience under the 1983 rule, see, e.g., New York State Bar Committee on Federal Courts, Sanctions and Attorneys' Fees (1987); T. Willging, The Rule 11 Sanctioning Process (1989); American Judicature Society, Report of the Third Circuit Task Force on Federal Rule of Civil Procedure 11 (S. Burbank ed., 1989); E. Wiggins, T. Willging, and D. Stienstra, Report on Rule 11 (Federal Judicial Center 1991). For book length analyses of the case law, see G. Joseph, Sanctions: The Federal Law of Litigation Abuse (1989); J. Solovy, The Federal Law of Sanctions (1991); G. Vairo, Rule 11 Sanctions: Case Law Perspectives and Preventive Measures (1991).

The rule retains the principle that attorneys and pro se litigants have an obligation to the court to refrain from conduct that frustrates the aims of Rule 1. The revision broadens the scope of this obligation, but places greater constraints on the imposition of sanctions and should reduce the number of motions for sanctions presented to the court. New subdivision (d) removes from the ambit of this rule all discovery requests, responses, objections, and motions subject to the provisions of Rule 26 through 37.

Subdivision (a). Retained in this subdivision are the provisions requiring signatures on pleadings, written motions, and other papers. Unsigned papers are to be received by the Clerk, but then are to be stricken if the omission of the signature is not corrected promptly after being called to the attention of the attorney or pro se litigant. Correction can be made by signing the paper on file or by submitting a duplicate that contains the signature. A court may require by local rule that papers contain additional identifying information regarding the parties or attorneys, such as telephone numbers to facilitate facsimile transmissions, though, as for omission of a signature, the paper should not be rejected for failure to provide such information.

The sentence in the former rule relating to the effect of answers under oath is no longer needed and has been eliminated. The provision in the former rule that signing a paper constitutes a certificate that it has been read by the signer also has been eliminated as unnecessary. The obligations imposed under subdivision (b) obviously require that a pleading, written motion, or other paper be read before it is filed or submitted to the court.

Subdivisions (b) and (c). These subdivisions restate the provisions requiring attorneys and pro se litigants to conduct a reasonable inquiry into the law and facts before signing pleadings, written motions, and other documents, and prescribing sanctions for violation of these obligations. The revision in part expands the responsibilities of litigants to the court, while providing greater constraints and flexibility in dealing with infractions of the rule. The rule continues to require litigants to "stop and think" before initially making legal or factual contentions. It also, however, emphasizes the duty of candor by subjecting litigants to potential sanctions for insisting upon a position after it is no longer tenable and by generally providing protection against sanctions if they withdraw or correct contentions after a potential violation is called to their attention.

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. For example, an attorney who during a pretrial conference insists on a claim or defense should be viewed as "presenting to the court" that contention and would be subject to the obligations of subdivision (b) measured as of that time. Similarly, if after a notice of removal is filed, a party urges in federal court the allegations of a pleading filed in state court (whether as claims, defenses, or in disputes regarding removal or remand), it would be viewed as "presenting" and hence certifying to the district court under Rule 11 those allegations.

The certification with respect to allegations and other factual contentions is revised in recognition that sometimes a litigant may have good reason to believe that a fact is true or false but may need discovery, formal or informal, from opposing parties or third persons to gather and confirm the evidentiary basis for the allegation. Tolerance of factual contentions in initial pleadings by plaintiffs or defendants when specifically identified as made on information and belief does not relieve litigants from the obligation to conduct an appropriate investigation into the facts that is reasonable under the circumstances; it is not a license to join parties, make claims, or present defenses without any factual basis or justification. Moreover, if 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. Subdivision (b) 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. That summary judgment is rendered against a party does not necessarily mean, for purposes of this certification, that it had no evidentiary support for its position. On the other hand, if a party has evidence with respect to a contention that would suffice to defeat a motion for summary judgment based thereon, it would have sufficient "evidentiary support" for purposes of Rule 11.

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.

The changes in subdivisions (b)(3) and (b)(4) will serve to equalize the burden of the rule upon plaintiffs and defendants, who under Rule 8(b) are in effect allowed to deny allegations by stating that from their initial investigation they lack sufficient information to form a belief as to the truth of the allegation. If, after further investigation or discovery, a denial is no longer warranted, the defendant should not continue to insist on that denial. While sometimes helpful, formal amendment of the pleadings to withdraw an allegation or denial is not required by subdivision (b).

Arguments for extensions, modifications, or reversals of existing law or for creation of new law do not violate subdivision (b)(2) provided they are "non-frivolous." This establishes an objective standard, intended to eliminate any "empty-head pure-heart" justification for patently frivolous arguments. However, the extent to which a litigant has researched the issues and found some support for its theories even in minority opinions, in law review articles, or through consultation with other attorneys should certainly be taken into account in determining whether paragraph (2) has been violated. Although arguments for a change of law are not required to be specifically so identified, a contention that is so identified should be viewed with greater tolerance under the rule.

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. See Manual for Complex Litigation, Second, § 42.3. 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. The court has significant discretion in determining what sanctions, if any, should be imposed for a violation, subject to the principle that the sanctions should not be more severe than reasonably necessary to deter repetition of the conduct by the offending person or comparable conduct by similarly situated persons.

Since the purpose of Rule 11 sanctions is to deter rather than to compensate, the rule provides that, if a monetary sanction is imposed, it should ordinarily be paid into court as a penalty. However, under unusual circumstances, particularly for (b)(1) violations, 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. Accordingly, the rule authorizes the court, if requested in a motion and if so warranted, to award attorney's fees to another party. 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 of the certification requirement. If, for example, a wholly unsupportable count were included in a multi-count complaint or counterclaim for the purpose of needlessly increasing the cost of litigation to an impecunious adversary, any award of expenses should be limited to those directly caused by inclusion of the improper count, and not those resulting from the filing of the complaint or answer itself. 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. In cases brought under statutes providing for fees to be awarded to prevailing parties, the court should not employ cost shifting under this rule in a manner that would be inconsistent with the standards that govern the statutory award of fees, such as stated in Christiansburg Garment Co. v. EEOC, 434 U.S. 412 (1978).

The sanction should be imposed on the persons whether attorneys, law firms, or parties who have violated the rule or who may be determined to be responsible for the violation. The person signing, filing, submitting, or advocating a document has a nondelegable responsibility to the court, and in most situations is the person to be sanctioned for a violation. Absent exceptional circumstances, a law firm is to be held also responsible when, as a result of a motion under subdivision (c)(1)(A), one of its partners, associates, or employees is determined to have violated the rule. Since such a motion may be filed only if the offending paper is not withdrawn or corrected within 21 days after service of the motion, it is appropriate that the law firm ordinarily be viewed as jointly responsible under established principles of agency. This provision is designed to remove the restrictions of the former rule. Cf. Pavelic & LeFlore v. Marvel Entertainment Group, 493 U.S. 120 (1989) (1983 version of Rule 11 does not permit sanctions against law firm of attorney signing groundless complaint).

The revision permits the court to consider whether other attorneys in the firm, co-counsel, other law firms, or the party itself should be held accountable for their part in causing a violation. When appropriate, the court can make an additional inquiry in order to determine whether the sanction should be imposed on such persons, firms, or parties either in addition to or, in unusual circumstances, instead of the person actually making the presentation to the court. For example, such an inquiry may be appropriate in cases involving governmental agencies or other institutional parties that frequently impose substantial restrictions on the discretion of individual attorneys employed by it.

Sanctions that involve monetary awards (such as a fine or an award of attorney's fees) may not be imposed on a represented party for causing a violation of subdivision (b)(2), involving frivolous contentions of law. Monetary responsibility for such violations is more properly placed solely on the party's attorneys. With this limitation, the rule should not be subject to attack under the Rules Enabling Act. See Willy v. Coastal Corp., __ U.S. __ (1992); Business Guides, Inc. v. Chromatic Communications Enter. Inc., __ U.S. __ (1991). This restriction does not limit the court's power to impose sanctions or remedial orders that may have collateral financial consequences upon a party, such as dismissal of a claim, preclusion of a defense, or preparation of amended pleadings.

Explicit provision is made for litigants to be provided notice of the alleged violation and an opportunity to respond before sanctions are imposed. Whether the matter should be decided solely on the basis of written submissions or should be scheduled for oral argument (or, indeed, for evidentiary presentation) will depend on the circumstances. If the court imposes a sanction, it must, unless waived, indicate its reasons in a written order or on the record; the court should not ordinarily have to explain its denial of a motion for sanctions. Whether a violation has occurred and what sanctions, if any, to impose for a violation are matters committed to the discretion of the trial court; accordingly, as under current law, the standard for appellate review of these decisions will be for abuse of discretion. See Cooter & Gell v. Hartmarx Corp., 496 U.S. 384 (1990) (noting, however, that an abuse would be established if the court based its ruling on an erroneous view of the law or on a clearly erroneous assessment of the evidence).

The revision leaves for resolution on a case-by-case basis, considering the particular circumstances involved, the question as to when a motion for violation of Rule 11 should be served and when, if filed, it should be decided. Ordinarily the motion should be served promptly after the inappropriate paper is filed, and, if delayed too long, may be viewed as untimely. In other circumstances, it should not be served until the other party has had a reasonable opportunity for discovery. Given the "safe harbor" provisions discussed below, a party cannot delay serving its Rule 11 motion until conclusion of the case (or judicial rejection of the offending contention).

Rule 11 motions should not be made or threatened for minor, inconsequential violations of the standards prescribed by subdivision (b). They should not be employed as a discovery device or to test the legal sufficiency or efficacy of allegations in the pleadings; other motions are available for those purposes. Nor should Rule 11 motions be prepared to emphasize the merits of a party's position, to exact an unjust settlement, to intimidate an adversary into withdrawing contentions that are fairly debatable, to increase the costs of litigation, to create a conflict of interest between attorney and client, or to seek disclosure of matters otherwise protected by the attorney client privilege or the work product doctrine. As under the prior rule, the court may defer its ruling (or its decision as to the identity of the persons to be sanctioned) until final resolution of the case in order to avoid immediate conflicts of interest and to reduce the disruption created if a disclosure of attorney-client communications is needed to determine whether a violation occurred or to identify the person responsible for the violation.

The rule provides that requests for sanctions must be made as a separate motion, i.e., not simply included as an additional prayer for relief contained in another motion. The motion for sanctions is not, however, to be filed until at least 21 days (or such other period as the court may set) after being served. If, during this period, the alleged violation is corrected, as by withdrawing (whether formally or informally) some allegation or contention, the motion should not be filed with the court. These provisions are intended to provide a type of "safe harbor" against motions under Rule 11 in that a party will not be subject to sanctions on the basis of another party's motion unless, after receiving the motion, it refuses to withdraw that position or to acknowledge candidly that it does not currently have evidence to support a specified allegation. Under the former rule, parties were sometimes reluctant to abandon a questionable contention lest that be viewed as evidence of a violation of Rule 11; under the revision, the timely withdrawal of a contention will protect a party against a motion for sanctions.

To stress the seriousness of a motion for sanctions and to define precisely the conduct claimed to violate the rule, the revision provides that the "safe harbor" period begins to run only upon service of the motion. In most cases, however, counsel should be expected to give informal notice to the other party, whether in person or by a telephone call or letter, of a potential violation before proceeding to prepare and serve a Rule 11 motion.

As under former Rule 11, the filing of a motion for sanctions is itself subject to the requirements of the rule and can lead to sanctions. However, service of a cross motion under Rule 11 should rarely be needed since under the revision the court may award to the person who prevails on a motion under Rule 11 whether the movant or the target of the motion reasonable expenses, including attorney's fees, incurred in presenting or opposing the motion.

The power of the court to act on its own initiative is retained, but with the condition that this be done through a show cause order. This procedure provides the person with notice and an opportunity to respond. The revision provides that a monetary sanction imposed after a court-initiated show cause order be limited to a penalty payable to the court and that it be imposed only if the show cause order is issued before any voluntary dismissal or an agreement of the parties to settle the claims made by or against the litigant. Parties settling a case should not be subsequently faced with an unexpected order from the court leading to monetary sanctions that might have affected their willingness to settle or voluntarily dismiss a case. Since show cause orders will ordinarily be issued only in situations that are akin to a contempt of court, the rule does not provide a "safe harbor" to a litigant for withdrawing a claim, defense, etc., after a show cause order has been issued on the court's own initiative. Such corrective action, however, should be taken into account in deciding what if any sanction to impose if, after consideration of the litigant's response, the court concludes that a violation has occurred.

Subdivision (d). Rules 26(g) and 37 establish certification standards and sanctions that apply to discovery disclosures, requests, responses, objections, and motions. It is appropriate that Rules 26 through 37, which are specially designed for the discovery process, govern such documents and conduct rather than the more general provisions of Rule 11. Subdivision (d) has been added to accomplish this result.

Rule 11 is not the exclusive source for control of improper presentations of claims, defenses, or contentions. It does not supplant statutes permitting awards of attorney's fees to prevailing parties or alter the principles governing such awards. It does not inhibit the court in punishing for contempt, in exercising its inherent powers, or in imposing sanctions, awarding expenses, or directing remedial action authorized under other rules or under 28 U.S.C. § 1927. See Chambers v. NASCO, __ U.S. __ (1991). Chambers cautions, however, against reliance upon inherent powers if appropriate sanctions can be imposed under provisions such as Rule 11, and the procedures specified in Rule 11 notice, opportunity to respond, and findings should ordinarily be employed when imposing a sanction under the court's inherent powers. Finally, it should be noted that Rule 11 does not preclude a party from initiating an independent action for malicious prosecution or abuse of process."

WHEREFORE, your petitioners pray for the foregoing relief and in addition pray that this petition be set down for a public hearing before the entire supreme court at the earliest convenient date, consistent with the letter and spirit of § 751.12, Wis. Stats.

American Board of Trial Advocates, Wisconsin Chapter: Don C. Prachthauser, President

Civil Trial Counsel of Wisconsin: Bernard T. McCartan, President

State Bar of Wisconsin, Litigation Section: Michael L. Eckert, Chair

Wisconsin Academy of Trial Lawyers: Lynn R. Laufenberg, President

¹The Wisconsin Chapter of the American Board of Trial Advocates (ABOTA). ABOTA is a national organization of trial attorneys whose membership is comprised equally of attorneys concentrating in representation of plaintiffs and defendants in civil litigation. ABOTA's national headquarters is located at 16633 Ventura Blvd., Suite 730, Encino, CA, 91436; (818) 501-3250. Contact: Ms. Beverly Halpern.

²The Civil Trial Counsel of Wisconsin (CTCW) is an organization of more than 500 Wisconsin trial lawyers and professionals dedicated to the defense of individuals and businesses in civil litigation, to the maintenance of an equitable civil justice system, and to the improvement of professional standards in the legal community. CTCW's headquarters is located at 1123 N. Water St., Milwaukee, WI 53202. Contact: Ms. Jane Svinicki, Executive Director.

³The Wisconsin Academy of Trial Lawyers (WATL) is a voluntary bar organization of trial lawyers organized for the purpose of securing and protecting the rights of individual persons, and dedicated to the promotion of the fair, prompt, and efficient administration of justice in the state of Wisconsin. WATL's headquarters is located at 44 E. Mifflin St., Madison, WI 53703-2897; (608) 257-5741. Contact: Ms. Jane Garrott, Executive Director.

⁴The Litigation Section is a section of the State Bar of Wisconsin whose 2,050 members include attorneys involved in litigation in Wisconsin's state and federal courts. The section is composed of civil plaintiffs' attorneys and civil defense attorneys. The State Bar headquarters is located at 5302 Eastpark Blvd., Madison, WI 53718-2101. Contact: Mr. Mike Eckert, Chair of the Litigation Section, or Ms. Debra Sybell, Government Relations Coordinator; (608) 250-6128.

⁵The 1993 Federal Advisory Committee Notes does contain examples and case citations which may be useful, however, and this is one of the reasons that your Petitioners suggest the adoption of same in Wisconsin. Your petitioners believe that it is important to consider adding to the Advisory Notes a statement emphasizing that among those factors which may be considered in imposing sanctions are the following: 1) Whether the alleged frivolous conduct was a 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. 3) Whether the attorney or party has engaged in similar conduct in other litigation.

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