The Sixth Circuit recently shed light on a district court’s discretion to award sanctions under 28 U.S.C. § 1927 in an unpublished opinion, Meathe v. Ret, Case Nos. 12-2479, 12-2507. In Meathe v. Ret, the plaintiff filed shareholder suit which the defendants sought to dismiss on summary judgment. The plaintiff then moved to amend his complaint. In opposition to the plaintiff’s motion to amend, the defendants requested sanctions against plaintiff’s counsel under 28 U.S.C. § 1927, but did not file a separate sanctions motion. Section 1927 states that “[a]ny attorney . . . who so multiples 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.” The district court dismissed the case by denying plaintiff’s motion to amend and granting defendants’ motion for summary judgment, but did not address defendants’ request for sanctions.
The Sixth Circuit affirmed the district court’s “well-reasoned opinion” dismissing the case, but held that the district court “should have addressed the defendants’ request for sanctions” and “exercised its discretion in that regard.” The Court found that the issue of sanctions was squarely before the district court (albeit without a motion), and “close enough to warrant at least some discussion.” Specifically, the Court held that a separate motion requesting Section 1927 sanctions was not required – and that Rule 11 cases requiring a separate motion were not applicable. Because of the district court’s “espoused skepticism of the meritoriousness and propriety of the case,” the Sixth Circuit remanded to the district court to determine whether sanctions should be imposed against plaintiff’s counsel.
It will be interesting to see whether this case has any lasting impact on the practice of sanctions, but it does seem to place a burden on the district courts to address such arguments even if they are not formally raised by motion. Perhaps influencing the Sixth Circuit here was the overall merits (or lack thereof) to the case, which may have dictated this result. But the case certainly sends the message to district judges that it may avoid a remand by addressing sanctions squarely in these types of scenarios.