Federal
appellate courts are split over whether money sanctions issued against an attorney
can be reduced when he cannot afford to pay. The question has also split
conservative and liberal thought leaders, in unexpected ways. The Supreme Court,
which recently decided another costs case, could be asked to resolve the split.
Under 28
U.S.C. § 1927, an attorney “who so multiplies the proceedings in any case
unreasonably and vexatiously may be required by the court to satisfy personally
the excess costs, expenses, and attorneys’ fees reasonably incurred because of
such conduct.”
Chief Judge
Frank Easterbrook of the U.S. Court of Appeals for the 7th Circuit, a respected
conservative jurist, has at least two suggestions for errant attorneys who cannot
afford to pay: Take it up with the bankruptcy court and possibly find a new
career.
In 2009,
Easterbrook, writing for a unanimous three-judge panel in Shales
v. General Chauffeurs Local Union No. 330, explained that a § 1927
violation “is a form of intentional tort….Damages depend on the victim’s loss,
not the wrongdoer’s resources.” If the attorney cannot pay the sanction, he
could seek relief in bankruptcy. Further, if the attorney “is poor because
people are not willing to pay much, or at all, for his services, then he should
turn from the practice of law to some other endeavor where he will do less
harm.”
Last month,
9th Circuit Judge Stephen Reinhardt, who has been called a “liberal lion,” rejected
the 7th Circuit’s conclusion in Haynes
v. City & County of San Francisco. The statute says that the court
“may” require an attorney to pay costs, not “must” or “shall”—a clear signal to
Reinhardt and the other two panel members that the lower court has discretion
to order and adjust costs. He noted that the 2nd Circuit also adopted this
“plain meaning” in Oliveri
v. Thompson, a 1986 case.
Ordering
“sanctions in an amount many times greater than the attorney will ever be able
to pay” can be “a futile gesture that does little” to make victims whole, Reinhardt
reasoned.
Ironically,
the Reinhardt and Easterbrook approaches could be seen as an ideological swap,
with the liberal Reinhardt playing the role of textualist and the conservative
Easterbrook looking for context outside the words.
While costs will
never grab the headlines in the way that affirmative action, same-sex marriage,
and other cases in the Supreme Court’s current inbox will, they have gotten the
Court’s attention as a day-to-day part of litigation that affects many people.
In May, the
Supreme Court decided a costs case involving a different statute. Taniguchi
v. Kan Pacific Saipan, Ltd. clarified that costs awarded for
interpreters include only oral translation expenses. Like the pending attorney-costs
split, Taniguchi also involved a
split between the 7th and 9th Circuits—resolved in the 7th Circuit’s favor. (This
column previously highlighted Taniguchi.)
Before the attorney-costs
issue can reach the Supreme Court, though, there may be a rehearing en banc.
The
sanctioned attorney has indicated that he intends to seek rehearing. Although he
won on the possible reduction of costs (to be determined on remand by the
district court), the 9th Circuit opinion also said that he “engaged in a wide
variety of incompetent and unprofessional actions.” The circuit issued a
separate unpublished memorandum
opinion to that effect.
The 9th
Circuit has set an October deadline for his petition.
