Unpublished Disposition, 842 F.2d 335 (9th Cir. 1986)

MEMORANDUM^* 

The trial judge imposed Fed. R. Civ. P. 11 sanctions on the law firm of Nieman, Billet, Albala & Levine ("NBAL") for filing a motion for a continuance which was not well grounded in fact. The sanctions were imposed because "the defendants had full knowledge that they would be unavailable until late November, 1986." The judge did not have adequate facts upon which he could base the sanctions. Additionally, NBAL's rights to procedural due process under the Fifth and Fourteenth Amendments were violated because the sanctions were imposed without notice or a meaningful opportunity to be heard. We therefore reverse the district court's imposition of sanctions upon NBAL.

ANALYSIS

An order imposing sanctions solely upon counsel, a nonparty to the underlying action, is immediately appealable as a final order. Unioil, Inc. v. E.F. Hutton & Co., 809 F.2d 548, 556 (9th Cir. 1986).

In reviewing a Rule 11 sanction, which involves a question of whether specific conduct violated the rule, a de novo standard is appropriate. Golden Eagle Distributing Corp. v. Burroughs Corp., 801 F.2d 1531, 1538 (9th Cir. 1986). "If there is any dispute as to factual determinations concerning the conduct, the determinations would be reviewed under a clearly erroneous standard. Since the district court has wide discretion in determining what sanctions should be imposed for violation of the Rule, however, the appropriateness of the sanctions must be reviewed under an abuse of discretion standard." Id. (citation omitted).

First, the judge imposed sanctions on NBAL because he concluded that in October, 1985 when the May 27, 1986 trial date was set, NBAL was aware that the Osbournes would be unable to attend. However, NBAL was not the Osbournes' counsel in October; NBAL became the Osbournes' counsel in February, 1986.

Second, the judge imposed sanctions because he concluded that NBAL knew when it filed the motion for a continuance that the Osbournes would be unavailable on that date. There was no showing that the defendants would not have shown up for the continuance trial or would have sought another continuance. Moreover, it is undisputed that the Osbournes would be on tour in Japan on May 27. A continuance was therefore necessary.

Sanctions for Rule 11 violations are appropriate so long as the sanctions are imposed in accordance with due process. Donaldson v. Clark, 819 F.2d 1551, 1557 (11th Cir. 1987) (en banc). Due process under the Fifth and Fourteenth Amendments requires that the parties whose rights will be affected are entitled to be heard at a meaningful time and in a meaningful manner. Fuentes v. Shevin, 407 U.S. 67 (1972).

The judge imposed sanctions on NBAL without ever giving it a chance to respond. The plaintiffs' attorney only sought sanctions against the defendants, not against NBAL. NBAL thus did not attempt to contest allegations that were never made. Furthermore, the judge did not alert NBAL that sanctions were to be imposed upon it and, therefore, deprived NBAL of an opportunity to brief or orally argue the issue. No hearing was held.

Next, NBAL made a motion for reconsideration of the imposition of sanctions. However, the reconsideration hearing was conducted pursuant to Fed. R. Civ. P. 60(b), which requires defendant to meet a higher standard of proof than Rule 11. Additionally, NBAL was not allowed to orally argue its position. NBAL was denied due process. It had no opportunity to be heard concerning the motion for sanctions, as it did not know that sanctions were being considered against it, nor was NBAL notified prior to the imposition of sanctions. Finally, NBAL had no meaningful opportunity to be heard concerning the reconsideration motion because of the higher standard of proof.

The district court's imposition of sanctions is therefore REVERSED.