Supreme Court of the United States
BUSINESS GUIDES, INC.
CHROMATIC COMMUNICATIONS ENTERPRISES, INC.
Decided February 26, 1991
Justice O’Connor, For the Court
|Topic: Judicial Power*||Court vote: 5–4|
Click any Justice for detailJoining O'Connor opinion: Justice BLACKMUN Chief Justice REHNQUIST Justice SOUTER Justice WHITE
|Citation: 498 U.S. 533||Docket: 89–1500||Audio: Listen to this case's oral arguments at Oyez|
* As categorized by the Washington University Law Supreme Court Database
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Justice O'CONNOR delivered the opinion of the Court.
In this case, we decide whether Rule 11 of the Federal Rules of Civil Procedure imposes an objective standard of reasonable inquiry on represented parties who sign pleadings, motions, or other papers.
Business Guides, Inc., a subsidiary of a leading publisher of trade magazines and journals, publishes directories for 18 specialized areas of retail trade. In an effort to protect its directories against copying, Business Guides deliberately plants in them bits of false information, known as "seeds." Some seeds consist of minor alterations in otherwise accurate listings -transposed numbers in an address or zip code, or a misspelled name -while others take the form of wholly fictitious listings describing nonexistent businesses. Business Guides considers the presence of seeds in a competitor's directory to be evidence of copyright infringement. *
On October 31, 1986, Business Guides, through its counsel Finley, Kumble, Wagner, Heine, Unterberg, Manley, Myerson, and Casey (Finley, Kumble), filed an action in the United States District Court for the Northern District of California against Chromatic Communications Enterprises, Inc., claiming copyright infringement, conversion, and unfair competition, and seeking a temporary restraining order (TRO). The TRO application was signed by a Finley, Kumble attorney and by Business Guides' president on behalf of the corporation. Business Guides submitted under seal affidavits in support of the application. These affidavits charged Chromatic with copying, as evidenced by the presence of 10 seeds in Chromatic's directory. One affidavit, that of sales representative Victoria Burdick, identified the 10 listings in Business Guides' directory that had allegedly been copied, but did not pinpoint the seed in each listing.
A hearing on the TRO was scheduled for November 7, 1986. Three days before the hearing, the District Judge's law clerk phoned Finley, Kumble and asked it to specify what was incorrect about each listing. Finley, Kumble relayed this request to Business Guides' Director of Research, Michael Lambe. This was apparently the first time the law firm asked its client for details about the 10 seeds. Based on Lambe's response, Finley, Kumble informed the court that Business Guides was retracting its claims of copying as to three of the seeds. The District Court considered this suspicious, and so conducted its own investigation into the allegations of copying. The District Judge's law clerk spent one hour telephoning the businesses named in the "seeded" listings, only to discover that 9 of the 10 listings contained no incorrect information.
Unaware of the District Court's discovery, Finley, Kumble prepared a supplemental affidavit of Michael Lambe, identifying seven listings in Chromatic's directory and explaining precisely what part of each listing supposedly contained seeded information. Lambe signed this affidavit on the morning of the November 7 hearing. Before doing so, however, Lambe crossed out reference to a fourth seed that he had determined did not in fact reflect any incorrect information, but which Finley, Kumble had not retracted.
At the hearing, the District Court, based on its discovery that 9 of the original 10 listings contained no incorrect information, denied the application for a TRO. More importantly, the judge stayed further proceedings and referred the matter to a Magistrate to determine whether Rule 11 sanctions should be imposed. The Magistrate conducted two evidentiary hearings, at which he instructed Business Guides and Finley, Kumble to explain why 9 of its 10 charges of copying were meritless. Both claimed it was a coincidence. Doubting the good faith of these representations, the Magistrate recommended that both the law firm and the client be sanctioned. See App. to Pet. for Cert. 64a-75a.
Later, claiming to have uncovered the true source of the errors, the parties asked for and received a third hearing. Business Guides explained that, in compiling its "master seed list," it had departed from its normal methodology. Usually, letters and numbers were transposed deliberately and recorded on the seed list before the directory was published. In this case, the company had compiled the master seed list after publication by looking for unintended typographical errors in the directory. To locate such errors, sales representative Victoria Burdick had compared the final version of the directory against initial questionnaires that had been submitted to Business Guides by businesses that wanted to be listed. When Burdick discovered a disparity between a questionnaire and the final directory, she included it on the seed list. She assumed, without investigating, that the information on the questionnaires was accurate. As it turned out, the questionnaires themselves sometimes contained transposed numbers or misspelled names, which other employees had corrected when proofreading the directory prior to publication. Consequently, many of the seeds appearing on the master list contained no false information. The presence of identical listings in a competitor's directory thus would not indicate copying, but rather accurate research.
The Magistrate accepted this explanation, but determined that sanctions were nonetheless appropriate. Id. at 48a. First, he found that Business Guides, in filing the initial TRO application, had "failed to conduct a proper inquiry, resulting in the presentation of unreasonable and false information to the court." Id. at 53a. The Magistrate did not recommend that Finley, Kumble be sanctioned for the initial application, however, as the firm had been led to believe that there was an urgent need to act quickly, and thus relied on the information provided by its sophisticated corporate client. Id. at 54a-55a. Next, the Magistrate recommended that both Business Guides and Finley, Kumble be sanctioned for having failed to inquire into the accuracy of the remaining seeds following Michael Lambe's discovery, based on only a few minutes of investigation, that 3 of the 10 were invalid. Id. at 55a-56a. Finally, the Magistrate recommended that both the law firm and its client be sanctioned for their conduct at the first two evidentiary hearings. Instead of investigating the cause of the errors in the seed list, Business Guides and Finley, Kumble had relied on a "coincidence" defense. Id. at 51a. The Magistrate determined that
[n]o reasonable person would have been satisfied with these explanations.... Finley, Kumble and Business Guides did not need this court to point out the blatant errors in the logic of their representations.
Id. at 59a.
The District Court agreed with the Magistrate, stating:
The standard of conduct under Rule 11 is one of objective reasonableness. Applying this standard to the circumstances of this case, it is clear that both Business Guides and Finley Kumble have violated the Rule.
119 F.R.D. 685, 688-689 (ND Cal.1988). The court reiterated the Magistrate's conclusion that: (1) Business Guides violated Rule 11 by filing the initial TRO application; (2) Business Guides and Finley, Kumble violated the Rule by failing to conduct a reasonable inquiry once they were put on notice of several inaccuracies; and (3) Business Guides and Finley, Kumble violated the Rule in their arguments to the Magistrate at the first two evidentiary hearings. Id. at 689. Rather than impose sanctions at that time, the District Court unsealed the proceedings and invited Chromatic to file a motion requesting particular sanctions. Id. at 690.
Chromatic brought a motion for sanctions against both Business Guides and Finley, Kumble. It later moved to withdraw the motion with respect to Finley, Kumble, after learning that the law firm had recently dissolved and that all proceedings against the firm were stayed under § 362 of the Bankruptcy Code. 121 F.R.D. 402, 403 (ND Cal.1988). The District Court accepted this withdrawal and issued its ruling without prejudice to Chromatic's right to pursue sanctions against Finley, Kumble at a later date. Ibid.
Before ruling on the motion for sanctions against Business Guides, the District Court made additional fact findings. It observed that, of the 10 seeds that had originally been alleged to be present in Chromatic's directory, only one actually contained false information. Ibid. This seed was a wholly fictitious listing for a company that did not exist. Chromatic denied that it had copied this listing from Business Guides' directory; it offered an alternative explanation -that Business Guides had "planted" the fake listing in Chromatic's directory. A Business Guides employee had requested a copy of Chromatic's directory, filled out a questionnaire providing information about the nonexistent company, and mailed this questionnaire to Chromatic, intending that the company publish the false listing in its directory. Id. at 403-404. Business Guides did not deny the truth of these charges, and the District Court found that petitioner's silence amounted to a "tacit admission." Id. at 404. In light of this finding, the court had no choice but to conclude that "Business Guides' entire lawsuit has no basis in fact.... [T]here was, and is, no evidence of copyright infringement." Ibid.
The court then ruled on Chromatic's motion for sanctions. Citing "the rather remarkable circumstances of this case, and the serious consequences of Business Guides' improper conduct," it dismissed the action with prejudice. Id. at 406. Additionally, it imposed $13,865.66 in sanctions against Business Guides, the amount of Chromatic's legal expenses and out-of-pocket costs. Id. at 405.
The Court of Appeals for the Ninth Circuit affirmed the District Court's holdings that Business Guides was subject to an objective standard of reasonable inquiry into the factual basis of papers submitted to the court, and that Business Guides had failed to conduct a reasonable inquiry before (1) signing the initial TRO application, and (2) submitting Michael Lambe's supplemental declaration. 892 F.2d 802, 811 (1989). The court relied on the plain language of Rule 11, which
draws no distinction between the state of mind of attorneys and parties.... On the contrary, the rule, by requiring any 'signer' of a paper (attorney or party) to conduct a 'reasonable inquiry,' would appear to prescribe similar standards for attorneys and represented parties.
Id. at 809 (emphasis original). The Court of Appeals reversed, however, the District Court's holding that oral representations and testimony before the Magistrate violated Rule 11. Id. at 813. Because it reversed one of the three bases on which Business Guides had been sanctioned, the Court of Appeals vacated the order of sanctions and remanded to the District Court for reconsideration. Id. at 813-814. We granted certiorari to determine whether the Court of Appeals properly held Business Guides to an objective standard of reasonable inquiry. 497 U.S. 1002 (1990). Subsequently, the District Court issued an order reaffirming the dismissal and monetary sanctions. App. to Pet. for Cert. 1a-2a.
"We give the Federal Rules of Civil Procedure their plain meaning." Pavelic & LeFlore v. Marvel Entertainment Group, 493 U. S. 120, 493 U. S. 123 (1989). As with a statute, our inquiry is complete if we find the text of the Rule to be clear and unambiguous. Rule 11 provides in relevant part:
The signature of an attorney or party constitutes a certificate by the signer that... to the best of the signer's knowledge, information, and belief formed after reasonable inquiry it is well-grounded in fact.... If a pleading, motion, or other paper is signed in violation of this rule, the court... shall impose upon the person who signed it... an appropriate sanction.
(Emphasis added). Thus viewed, the meaning of the Rule seems plain: a party who signs a pleading or other paper without first conducting a reasonable inquiry shall be sanctioned. Business Guides argues, however, that the Rule's meaning is not so clear when one reads the full text. Accordingly, we reproduce below the full text of Rule 11, adding bracketed numbers before each sentence to clarify the discussion that follows:
 Every pleading, motion, and other paper of a party represented by an attorney shall be signed by at least one attorney of record in the attorney's individual name, whose address shall be stated.  A party who is not represented by an attorney shall sign the party's pleading, motion, or other paper and state the party's address.  Except when otherwise specifically provided by rule or statute, pleadings need not be verified or accompanied by affidavit.  The rule in equity that the averments of an answer under oath must be overcome by the testimony of two witnesses or of one witness sustained by corroborating circumstances is abolished.  The signature of an attorney or party constitutes a certificate by the signer that the signer has read the pleading, motion, or other paper; that to the best of the signer's knowledge, information, and belief formed after reasonable inquiry it is well-grounded in fact and is warranted by existing law or a good faith argument for the extension, modification, or reversal of existing law, and that it is not interposed for any improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of litigation.  If a pleading, motion, or other paper is not signed, it shall be stricken unless it is signed promptly after the omission is called to the attention of the pleader or movant.  If a pleading, motion, or other paper is signed in violation of this rule, the court, upon motion or upon its own initiative, shall impose upon the person who signed it, a represented party, or both, an appropriate sanction, which may include an order to pay to the other party or parties the amount of the reasonable expenses incurred because of the filing of the pleading, motion, or other paper, including a reasonable attorney's fee.
We find nothing in the full text of the Rule that detracts from the plain meaning of the relevant portion quoted initially. Rule 11 is "aimed at curbing abuses of the judicial system." Cooter & Gell v. Hartmarx Corp., 496 U. S. 384, 496 U. S. 397 (1990). To this end, it sets up a means by which litigants certify to the court, by signature, that any papers filed are well-founded. The first three sentences of the Rule explain in what instances a signature is mandatory. Sentence  states that, where a party is represented by counsel, the party's attorney must sign any motion, pleading, or other paper filed with the court. Sentence  provides that, where a party is proceeding pro se, the unrepresented party must sign the documents. Sentence  acknowledges that, in some situations, represented parties are required by rule or statute to verify pleadings or sign affidavits. Sentence  explains that certification by signature replaces some older forms of oath and attestation.
The heart of Rule 11 is sentence , which explains in detail the message conveyed by the signing of a document. A signature certifies to the court that the signer has read the document, has conducted a reasonable inquiry into the facts and the law and is satisfied that the document is well-grounded in both, and is acting without any improper motive. See 5A C. Wright & A. Miller, Federal Practice and Procedure § 1335, pp. 57-58 (2d ed. 1990) (hereinafter Wright & Miller). This sentence, by its terms, governs any signature of "an attorney or party," thereby making it applicable not only to signatures required by sentences , , and , but also to signatures that are not required, but nevertheless present.
The certification requirement now mandates that all signers consider their behavior in terms of the duty they owe to the court system to conserve its resources and avoid unnecessary proceedings.
Id. at 21, § 1331 (emphasis added). The final two sentences describe the means by which the Rule is enforced. Sentence  dictates that, where a required signature is missing and the omission is not corrected promptly, the document will be stricken. Sentence  requires that sanctions be imposed where a signature is present but fails to satisfy the certification standard.
Business Guides proposes an alternative interpretation of the text. As mentioned, sentence  indicates that a party who is represented by counsel is not itself required to sign most papers or pleadings; generally, only the signature of the attorney is mandated. Business Guides concludes from this that a represented party may, if it wishes, sign a document, but that this signature need not comply with the certification standard described in sentence . Because a client's signature is not normally required by Rule 11, the occasional presence of one cannot run afoul of the Rule. In short, Business Guides maintains that a represented party is free to sign frivolous or vexatious documents with impunity, because its signature on a document carries with it no additional risk of sanctions.
This reading is inconsistent with both the language and the purpose of Rule 11. As an initial matter, it is not relevant that represented parties rarely sign filed documents, because Business Guides did sign in this case. Indeed, it was required to do so. Rule 65(b) of the Federal Rules of Civil Procedure provides specifically that a TRO application must be accompanied by an affidavit or verified complaint that sets forth the facts. A TRO application is thus one of the situations provided for in sentence , where a party's verification or signed affidavit is mandatory. Even if Business Guides had not been required to sign the TRO application, but did so voluntarily, the language of Rule 11 would still require that the signature satisfy the certification requirement. Sentence  may not require a represented party to sign papers and pleadings, but neither does it prohibit a represented party from attesting to the merit of documents filed on its behalf. "When a party is represented by counsel, it is unnecessary, but not improper, for the represented party to sign as well." Wright & Miller § 1333, at 47. Accordingly, sentence  declares that the signature of a party conveys precisely the same message as that of an attorney:
The signature of an attorney or party constitutes a certificate by the signer that the signer has read the pleading, motion, or other paper; that... it is well-grounded in fact and is warranted by existing law.
(Emphasis added). It seems plain that the voluntary signature of a represented party, no less than the mandatory signature of an attorney, is capable of violating the Rule.
The only way that Business Guides can avoid having to satisfy the certification standard is if we read "attorney or party" as used in sentence  to mean "attorney or unrepresented party." Only then would the signature of a represented party fall outside the scope of the Rule. We decline to adopt this unnatural reading, as there is no indication that this is what the Advisory Committee intended. Just the opposite is true. Prior to its amendment in 1983, sentence  referred solely to "[t]he signature of an attorney" on a "pleading." The 1983 amendments deliberately expanded the coverage of the Rule. Wright & Miller § 1331, at 21. Sentence  was amended to refer broadly to "[t]he signature of an attorney or party " on a "pleading, motion, or other paper " (emphasis added). Represented parties, despite having counsel, routinely sign certain papers -declarations, affidavits, and the like -during the course of litigation. Business Guides, for example, submitted to the District Court no fewer than five signed papers in support of its TRO application. The amended language of sentence  leaves little room for doubt that the signatures of the "party" on these "other papers" must satisfy the certification requirement.
Had the Advisory Committee intended to limit the application of the certification standard to parties proceeding pro se, they would surely have said so. Elsewhere in the text, the Committee demonstrated its ability to distinguish between represented and unrepresented parties. Sentence  refers specifically to "a party represented by an attorney," while sentence  applies to "[a] party who is not represented by an attorney" (emphasis added). Sentence , however, draws no such distinction; it lumps together the two types of parties. By using the more expansive term "party," the Committee called for more expansive coverage. The natural reading of this language is that any party who signs a document, whether or not the party was required to do so, is subject to the certification standard of Rule 11.
Leading scholars are in accord. Professors James Wm. Moore and Jo Desha Lucas, authors of Moore's Federal Practice, state:
The current Rule places an affirmative duty on the attorney or party to investigate the facts and the law prior to the subscription and submission of any pleading, motion or paper.... The rule applies to attorneys, parties represented by attorneys, and parties who appear pro se.
2A J. Moore & J. Lucas, Moore's Federal Practice 11.02, pp. 11-15 to 11-17, (2d ed. 1990) (footnotes omitted). Professors Charles Alan Wright and Arthur R. Miller describe in their treatise on Federal Practice and Procedure "seven major alterations" of Rule 11 practice occasioned by the 1983 amendments, one of which is that
the range of people covered by the certification requirement... has been expanded. Now, all signers, not just attorneys, are on notice that their signature constitutes a certification as to the contents of the document.
Wright & Miller, § 1331, at 21.
The expansion of the scope of the certification requirement to include non-attorney signers was accomplished by changing 'signature of an attorney' in the fifth sentence of the rule to 'signature of an attorney or party.'
Id. at 21-22, n. 54 (emphasis added).
In addition to being the most natural reading, it is an eminently sensible one. The essence of Rule 11 is that signing is no longer a meaningless act; it denotes merit. A signature sends a message to the district court that this document is to be taken seriously. This case is illustrative. Business Guides sought a TRO on the strength of an initial application accompanied by five signed statements to the effect that Chromatic was pirating its directory. Because these documents were filed under seal, the District Court had to determine the credibility of the allegations without the benefit of hearing the other side's view. The court might plausibly have attached some incremental significance to the fact that Business Guides itself risked being sanctioned if the factual allegations contained in these signed statements proved to be baseless. Business Guides asks that we construe Rule 11 in a way that would render the signatures on these statements risk-free. Because this construction is at odds with the Rule's general admonition that signing denotes merit, we are loath to do so absent a compelling indication in the text that the Advisory Committee intended such a result. Because we find no such indication, compelling or otherwise, we conclude that the word "party" in sentence  means precisely what it appears to mean.
The dissent contends that this conclusion is inconsistent with our decision last Term in Pavelic & LeFlore. See post, at 498 U. S. 556, 498 U. S. 562 -564. Just the opposite is true; our decision today follows naturally from Pavelic & LeFlore. We held in Pavelic & LeFlore that Rule 11 contemplates sanctions against the particular individual who signs his or her name, not against the law firm of which that individual is a member, because
the purpose of Rule 11 as a whole is to bring home to the individual signer his personal, nondelegable responsibility... to validate the truth and legal reasonableness of the papers filed.
493 U.S. at 493 U. S. 126. This is entirely consistent with our decision here that a represented party who signs his or her name bears a personal, nondelegable responsibility to certify the truth and reasonableness of the document. The dissent agrees that a party proceeding without the benefit of legal assistance bears this responsibility, but insists that a party represented by counsel -even one whose signature is mandatory -is absolved from any duty to vouch for the truth of papers he or she signs because he or she has delegated this responsibility to counsel. See post at 498 U. S. 556.
The dissent's dichotomy between represented and unrepresented parties is particularly troubling, given that it has no basis in the text of the Rule. Sentence  refers to "[t]he signature of an attorney or party " (emphasis added). We emphasized in Pavelic & LeFlore that this Court will not reject the natural reading of a rule or statute in favor of a less plausible reading, even one that seems to us to achieve a better result. 493 U.S. at 493 U. S. 126 -127. Yet Justice KENNEDY proposes that we construe "party" to mean "unrepresented party" -notwithstanding the Advisory Committee's ability, demonstrated only three sentences earlier, to distinguish between represented and unrepresented parties -because he thinks it unwise to punish clients. See post at 498 U. S. 556 -558.
The dissent also criticizes us for treating the signatures of Business Guides' president and director of research as signatures of the company. Justice KENNEDY suggests that this is "in square conflict" with our holding in Pavelic & LeFlore that " the person who signed'" was the individual attorney, not the law firm. Post, 498 U. S. 563. The dissent overlooks an important distinction. In Pavelic & LeFlore, we relied in part on Rule 11's unambiguous statement that papers must be signed by an attorney "in the attorney's individual name." 493 U.S. at 493 U. S. 125 (emphasis omitted). A corporate entity, of course, cannot itself sign anything; it can act only through its agents. It would be anomalous to determine that an individual who is represented by counsel falls within the scope of Rule 11, but that a corporate client does not, because it cannot itself sign a document. In any event, the question need not be resolved definitely here; Business Guides concedes that it did not raise this argument in the courts below. Brief for Petitioner 35, n. 38.
Having concluded that Rule 11 applies to represented parties, we must next determine whether the certification standard for a party is the same as that for an attorney. The plain language of the Rule again provides the answer. It speaks of attorneys and parties in a single breath and applies to them a single standard:
The signature of an attorney or party constitutes a certificate by the signer that the signer has read the pleading, motion, or other paper; that to the best of the signer's knowledge, information, and belief formed after reasonable inquiry it is well-grounded in fact and is warranted by existing law or a good faith argument for the extension, modification, or reversal of existing law, and that it is not interposed for any improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of litigation.
As the Court of Appeals correctly observed: "[T]he rule draws no distinction between the state of mind of attorneys and parties." 892 F.2d at 809. Rather, it states unambiguously that any signer must conduct a "reasonable inquiry" or face sanctions.
Business Guides devotes much of its brief to arguing that subjective bad faith, not failure to conduct a reasonable inquiry, should be the touchstone for sanctions on represented parties. It points with approval to Rule 56(g) of the Federal Rules of Civil Procedure, which appears to subject affidavits in the summary judgment context to a subjective good faith standard. This argument is misdirected, as this Court is not acting on a clean slate; our task is not to decide what the rule should be, but rather to determine what it is. Once we conclude that Rule 11 speaks to the matter at issue, our inquiry is complete. See Pavelic & LeFlore, 493 U.S. at 493 U. S. 126. As originally drafted, Rule 11 set out a subjective standard, but the Advisory Committee determined that this standard was not working. See Cooter & Gell, 496 U.S. at 496 U. S. 392 -393. Accordingly, the Committee deleted the subjective standard at the same time that it expanded the rule to cover parties. See 5A Wright & Miller, at 58-60, § 1335. That the Advisory Committee did not also amend Rule 56(g) hardly matters. Rather than fashion a standard specific to summary judgment proceedings, the Committee chose to amend Rule 11, thereby establishing a more stringent standard for all affidavits and other papers. Even if we were convinced that a subjective bad faith standard would more effectively promote the goals of Rule 11, we would not be free to implement this standard outside of the rulemaking process. "Our task is to apply the text, not to improve upon it." Pavelic & LeFlore, supra, 493 U.S. at 493 U. S. 126.
Nor are we convinced that, as a policy matter, represented parties should not be held to a reasonable inquiry standard. Quite often it is the client, not the attorney, who is better positioned to investigate the facts supporting a paper or pleading. This case is a perfect example. Business Guides brought the matter to Finley, Kumble and requested the law firm to obtain an immediate injunction against Chromatic. Given the apparent urgency, the District Court reasoned that the firm could not be blamed for relying on the factual representations of its experienced corporate client. Rather, the blame -and the sanctions -properly fell on Business Guides:
This case illustrates well the dangers of a party's failure to act reasonably in commencing litigation. Here Business Guides, a sophisticated corporate entity, hired a large, powerful and nationally known law firm to file suit against a competitor for copyright infringement. This competitor happened to be a one-man company operating out of a garage in California. Two years later, after extensive time and effort on the part of the court, the various counsel for Business Guides, as well as various counsel for Business Guides' counsel, it turns out there was no evidence of infringement. The entire lawsuit was a mistake. In the meantime, the objects of this lawsuit have spent thousands of dollars of attorney's fees and have suffered potentially irreparable damage to their business. This entire scenario could have been avoided if, prior to filing the suit, Business Guides simply had spent an hour, like the court's law clerk did, and checked the accuracy of the purported seeds.
121 F.R.D. at 405.
Where a represented party appends its signature to a document that a reasonable inquiry into the facts would have revealed to be without merit, we see no reason why a District Court should be powerless to sanction the party in addition to, or instead of, the attorney. See Wright & Miller § 1336, at 104. A contrary rule would establish a safe harbor such that sanctions could not be imposed where an attorney, pressed to act quickly, reasonably relies on a client's careless misrepresentations.
Of course, represented parties may often be less able to investigate the legal basis for a paper or pleading. But this is not invariably the case. Many corporate clients, for example, have in-house counsel who are fully competent to make the necessary inquiry. Other party litigants may have a great deal of practical litigation experience. Indeed, Business Guides itself is no stranger to the courts; it is a sophisticated corporate entity that has been prosecuting copyright infringement actions since 1948. App. 105-106. The most that can be said is that the legal inquiry that can reasonably be expected from a party may vary from case to case. Put another way, "what is objectively reasonable for a client may differ from what is objectively reasonable for an attorney." 892 F.2d at 810. The Advisory Committee was well aware of this when it amended Rule 11. Thus, the certification standard, while "more stringent than the original good faith formula," is not inflexible. "The standard is one of reasonableness under the circumstances " (emphasis added). Advisory Committee's Note to Fed.Rule Civ. Proc. 11, 28 U.S.C.App., p. 576. This formulation "has been embraced in all thirteen circuits." Wright & Miller § 1335, at 61-62. This is a far more sensible rule than that proposed by Business Guides, which would hold parties proceeding pro se to an objective standard, while applying a lesser subjective standard to represented parties. As noted by the Court of Appeals,
We fail to see why represented parties should be given the benefit of a subjective bad faith standard whereas pro se litigants, who do not enjoy the aid of counsel, are held to a higher objective standard.
892 F.2d at 811.
Giving the text its plain meaning, we hold that it imposes on any party who signs a pleading, motion, or other paper -whether the party's signature is required by the Rule or is provided voluntarily -an affirmative duty to conduct a reasonable inquiry into the facts and the law before filing, and that the applicable standard is one of reasonableness under the circumstances.
One issue remains: Business Guides asserts that imposing sanctions against a represented party that did not act in bad faith violates the Rules Enabling Act, 28 U.S.C. § 2072. The Act authorizes the Court "to prescribe general rules of practice and procedure," but provides that such rules "shall not abridge, enlarge, or modify any substantive right." Business Guides argues that Rule 11, to the extent that it imposes on represented parties an objective standard of reasonableness, exceeds the limits of the Court's power in two ways: (1) it authorizes fee shifting in a manner not approved by Congress; and (2) it effectively creates a federal tort of malicious prosecution, thereby encroaching upon various state law causes of action.
We begin by noting that any Rules Enabling Act challenge to Rule 11 has a large hurdle to get over. The Federal Rules of Civil Procedure are not enacted by Congress, but "Congress participates in the rulemaking process." Wright & Miller § 1332, at 40, and n. 74, citing Amendments to the Rules of Civil Procedure for the United States District Courts, H.R. Doc. No. 54, 98th Cong., 1st Sess., 3-25 (1983). Additionally, the Rules do not go into effect until Congress has had at least seven months to look them over. See 28 U.S.C. § 2074. A challenge to Rule 11 can therefore succeed
only if the Advisory Committee, this Court, and Congress erred in their prima facie judgment that the Rule... transgresses neither the terms of the Enabling Act nor constitutional restrictions.
Hanna v. Plumer, 380 U. S. 460, 380 U. S. 471 (1965).
This Court's decision in Burlington Northern R. Co. v. Woods, 480 U. S. 1 (1987), presents another hurdle. There, the Court considered the Act's proscription against interference with substantive rights and held, in a unanimous decision, that
Rules which incidentally affect litigants' substantive rights do not violate this provision if reasonably necessary to maintain the integrity of that system of rules.
Id. at 5 (emphasis added). There is little doubt that Rule 11 is reasonably necessary to maintain the integrity of the system of federal practice and procedure, and that any effect on substantive rights is incidental. See id. at 8. We held as much only last Term in Cooter & Gell:
It is now clear that the central purpose of Rule 11 is to deter baseless filings in District Court, and thus, consistent with the Rule Enabling Act's grant of authority, streamline the administration and procedure of the federal courts.
496 U.S. at 496 U. S. 393.
Petitioner's challenges do not clear these substantial hurdles. In arguing that the monetary sanctions in this case constitute impermissible fee-shifting, Business Guides relies on the Court's statement in Alyeska Pipeline Service Co. v. Wilderness Society, 421 U. S. 240, 421 U. S. 247 (1975), that, in the absence of legislative guidance, courts do not have the power "to reallocate the burdens of litigation" by awarding costs to the losing party in a civil rights suit; they have only the power to sanction a party for bad faith. See id. at 421 U. S. 258 -259. The initial difficulty with this argument is that Alyeska dealt with the courts' inherent powers, not the Rules Enabling Act. Rule 11 sanctions do not constitute the kind of fee-shifting at issue in Alyeska. Rule 11 sanctions are not tied to the outcome of litigation; the relevant inquiry is whether a specific filing was, if not successful, at least well-founded. Nor do sanctions shift the entire cost of litigation; they shift only the cost of a discrete event. Finally, the Rule calls only for "an appropriate sanction" -attorney's fees are not mandated. As we explained in Cooter & Gell: "Rule 11 is not a fee-shifting statute.... A movant under Rule 11 has no entitlement to fees or any other sanction.'" 496 U.S. at 496 U. S. 409, quoting American Judicature Society, Rule 11 in Transition, The Report of the Third Circuit Task Force on Federal Rule of Civil Procedure 11, p. 49 (Burbank, reporter 1989).
Also without merit is Business Guides' argument that Rule 11 creates a federal common law of malicious prosecution. We rejected a similar claim in Cooter & Gell. But see 496 U.S. at 496 U. S. 411 -412 (STEVENS, J., dissenting). The main objective of the Rule is not to reward parties who are victimized by litigation; it is to deter baseless filings and curb abuses. See id. at 496 U. S. 393, 496 U. S. 409. Imposing monetary sanctions on parties that violate the Rule may confer a benefit on other litigants, but the Rules Enabling Act is not violated by such incidental effects on substantive rights. See Woods, supra, 480 U.S. at 480 U. S. 5, 480 U. S. 8. Additionally, we are confident that District Courts will resist the temptation to use sanctions as substitutes for tort damages. This case is a good example. Chromatic asked that the sanctions award include consequential damages, but the District Court refused. "[W]hile sympathetic to [Chromatic's] plight," the court was "not persuaded that such compensation is within the purview of Rule 11." 121 F.R.D. at 406. In the event that a District Court misapplies the Rule in a particular case, the error can be corrected on appeal.
But misapplications do not themselves provide a basis for concluding that Rule 11 was the result of... distinct errors in prima facie judgment during the development and promulgation of the rule.
Wright & Miller § 1332, at 40.
In sum, we hold today that Rule 11 imposes an objective standard of reasonable inquiry on represented parties who sign papers or pleadings. We have no occasion to determine whether or under what circumstances a nonsigning party may be sanctioned. The District Court found that Business Guides failed to conduct a reasonable inquiry before signing the initial TRO application and before submitting the signed declaration of its Director of Research, Michael Lambe. Consequently, the District Court imposed $13,865.66 in sanctions against Business Guides and dismissed the action with prejudice. The Court of Appeals affirmed each of these rulings. For the reasons stated herein, the judgment of the Court of Appeals is
* Given the posture of this case, we have no occasion to consider whether the information contained in such a directory would actually be copyrightable. See Feist Publications, Inc. v. Rural Telephone Serv. Co., cert. granted, post, p. 808 (1990).
Header photo: United States Supreme Court. Credit: Patrick McKay / Flickr - CC.