Francine Richardson, Plaintiff,andjeffrey Friedman, Appellant, v. Bonanza Casino; Little Bonanza Inc., a Nevada Corporation;russell G. Sheltra, Jr., Individually and Doingbusiness As Bonanza Casino, Defendants-appellees, 141 F.3d 1178 (9th Cir. 1998)

Appeal from the United States District Court for the District of Nevada Howard D. McKibben, District Judge, Presiding.

Before BOOCHEVER and KLEINFELD, Circuit Judges, and WILSON, District Judge.^** 

MEMORANDUM^* 

Appellant Jeffrey Friedman appeals from the District Court's imposition of sanctions in the amount of $5,000. Orders imposing Rule 11 sanctions are reviewed for an abuse of discretion. Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 405, 110 S. Ct. 2447, 110 L. Ed. 2d 359 (1990).

The primary basis for the District Court's award of sanctions was Friedman's decision to name Russell Sheltra and other individuals as defendants. As an employee and shareholder of Bonanza, Inc., Sheltra cannot be individually liable for Bonanza's Title VII violations. See Miller v. Maxwell's Int'l, Inc., 991 F.2d 583, 587-88 (9th Cir. 1993). When this case was filed in 1995, however, individual liability for business partners was still an open question. Compare Yaba v. Cadwalader, Wickersham & Taft, 896 F. Supp. 552 (S.D.N.Y. 1995) (partners not individually liable), with Ruich v. Ruff, Weidenaar & Reidy, Ltd., 837 F. Supp. 881 (N.D. Ill. 1993) (partners can be liable as "employers"). Friedman relied on Washoe County business records indicating Sheltra and others had filed a fictitious business name statement as principals doing business as Bonanza Casino. Appellees concede that Sheltra was listed, albeit incorrectly, as a partner at the time the suit was filed. Based on his reliance on official county records, Friedman was not required to comply with Appellees' requests to dismiss Sheltra without evidence that he had been improperly named--evidence which Appellees refused to provide. In this context, Friedman's refusal to drop Sheltra from the complaint was not objectively unreasonable. See Rachel v. Banana Republic, Inc., 831 F.2d 1503, 1508 (9th Cir. 1987).

REVERSED