International Technologies Marketing, Inc. v. Verint Systems, Ltd., No. 19-1031 (2d Cir. 2021)
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A court need not wait until it is defrauded before it may impose monetary sanctions on a party who knowingly prosecutes a frivolous claim in bad faith. That remains true even if the misbehaving litigant made only a single misrepresentation to the court.
In this contract dispute, plaintiff appealed the district court's dismissal of its breach of contract claim and denial of its request for leave to file a fourth amended complaint. Defendant cross-appealed the denial of the district court's motion for sanctions related to plaintiff's misrepresentations to the district court during the litigation.
The Second Circuit vacated the district court's order denying sanctions and remanding for further proceedings. The court concluded that the district court misconstrued the court's precedent regarding the court's inherent power to impose sanctions – which makes clear that even a single bad-faith filing may warrant monetary sanctions, regardless of whether that conduct actually misled the court. The court affirmed in all other respects in a separately filed summary order.
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