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Commercial Litigation

Eleventh Circuit Reiterates Availability of Postjudgment Rule 11 Sanctions

Eleventh Circuit Reiterates Availability of Postjudgment Rule 11 Sanctions

The Court of Appeals for the Eleventh Circuit recently reversed a district court’s denial of Rule 11 motions filed after final judgment had been entered. The Eleventh Circuit found the district court incorrectly read recent precedent as overruling earlier decisions that allowed postjudgment Rule 11 motions. In so doing, the Eleventh Circuit reiterated that simply because final judgment has been entered, this does not foreclose the availability of sanctions under Rule 11.

 The case of Huggins v. Lueder, Larkin & Hunter, LLC, Nos. No. 20-12957, 20-12959, 20-12961, 20-14320, 20-14318, 20-14319, — F. 4th —- 2022 WL 2679024 (11th Cir. July 12, 2022), was a consolidated matter that originated when the law firm Lueder, Larkin & Hunter (“Lueder”) represented a homeowners association seeking to collect delinquent fees from various homeowners, including plaintiffs Wilbur Huggins, Latonya Marbury, and Melisha Parson (“Plaintiffs”). After the homeowners association voluntarily dismissed two suits and settled a third, Plaintiffs sued Lueder, arguing in state court that its actions violated the Fair Debt Collection Practices Act (“FDCPA”). The cases were eventually removed to federal court and consolidated.

Lueder served Plaintiffs’ counsel with draft Rule 11 motions for sanctions, arguing that the FDCPA claims against it were unsubstantiated and frivolous. Over five months later—and after Plaintiffs withdrew some but not all of their claims—summary judgment was granted in favor of Lueder. Five days after final judgment, Lueder filed for Rule 11 sanctions. The district court denied Lueder’s motions, on the basis that while older Eleventh Circuit precedent allowed parties to file postjudgment Rule 11 motions, more recent precedent “altered” the rule to bar such filings. Both parties appealed, with Lueder appealing the denial of sanctions.[1]

The Eleventh Circuit began with the critical issue: whether Rule 11 motions can be filed after final judgment. The unequivocal answer, the court wrote, is yes. The court first noted that Rule 11 by its own terms does not prohibit postjudgment filings, nor has it ever. The only timing requirement in the rule’s text is the 21-day safe harbor period that gives parties time to withdraw or correct the challenged and allegedly sanctionable pleading or motion.

Once a party serves the draft Rule 11 motion—starting the 21-day safe harbor clock—there are three possibilities: (1) the receiving party withdraws or amends the challenged document, which simultaneously vindicates the proposed Rule 11 motion while also preventing it from being filed; (2) the draft Rule 11 motion is rendered redundant by the court acting on the challenged filing before the receiving party has an opportunity to withdraw or amend the offending document—which, practically speaking, results in the same thing as (1), i.e., the Rule 11 motion cannot be filed; or (3) the 21-day safe harbor period expires without any action by the offending party, allowing the serving party to file the Rule 11 motion.

The Eleventh Circuit further found nothing in Rule 11’s text suggests such a motion cannot be filed after final judgment. With the acknowledgment that a postjudgment motion that is delayed too long may be viewed as untimely, the court noted such was not the case here given Lueder filed its motion only five days after final judgment. The Eleventh then addressed its own precedent, which squarely held that Rule 11 motions can be considered even after the merits are resolved, are not barred if filed after a dismissal order or after entry of judgment, and the only restriction on these filings is compliance with the safe harbor provision.[2]

The court next addressed the idea that subsequent case law overruled prior precedent allowing postjudgment Rule 11 motions, i.e., procedure dictates that service and filing of a Rule 11 motion must occur prior to the court rejecting the offending motion or entry of final judgment.[3]

Looking at the recent caselaw, the court noted this primarily dealt with the lower court adjudicating a challenged filing before the safe harbor period elapsed, and that any discussion surrounding final judgment was ancillary. Rather, the crux was that a party cannot seek sanctions if the offending filing has already been adjudicated before the safe harbor period expires. This, the court found, was not at tension with its prior holding that postjudgment Rule 11 motions were allowed and to the extent recent decisions could be read as imposing such a limit on Rule 11 motions, the court stressed this “would be wrong,” as “[t]he text of Rule 11 includes no such requirement” and the court’s prior precedent foreclosed any reading to that effect.[4]

The Eleventh Circuit distilled its precedents as thus: first, a party may file a Rule 11 motion after final judgment so long as they comply with the rule’s other requirements; second, parties may not file for sanctions after final judgment is rendered but before the safe harbor period expires; and finally, the reconciled rule that if a party serves a Rule 11 motion at least 21 days before final judgment and waits out the 21-day safe harbor period, they may then file the motion even after judgment is entered.

Returning to the case at hand, the court found Lueder satisfied this rule: it served Plaintiffs with the proposed Rule 11 motion months before summary judgment was granted, therefore allowing Lueder to file for sanctions after final judgment as the safe harbor period elapsed. Accordingly, this case helps clarify what the Eleventh Circuit candidly admitted was “imprecise language in [its] precedent,” putting practitioners on notice that sanctions remain a possibility even after judgment is entered. This should hopefully deter frivolous filings, while also keeping the option to seek postjudgment sanctions alive for parties on the receiving end of such filings.

[1] Plaintiffs appealed the district court’s consolidated grant of summary judgment in favor of Lueder. The Eleventh Circuit affirmed the district’s court’s grant without elaboration.

[2] See Baker v. Alderman, 158 F.3d 516, 523 (11th Cir. 1998).

[3] See In re Walker, 532 F.3d 1304 (11th Cir. 2008); see also Peer v. Lewis, 606 F.3d 1306 (11th Cir. 2010).

[4] As a threshold matter, the court noted that a subsequent panel cannot overrule a prior panel’s holding and, should precedents conflict, the earlier precedent controls. Thus, had its precedents conflicted, the earlier panel’s decision that Rule 11 motions may be filed after final judgment would have prevailed. The corollary to this rule is that when precedents potentially conflict, the court’s role is to harmonize a reconciled rule if possible. The court opted for the latter here.