Opinion
Civil Action No: 04-2931 SECTION: "R" (5).
January 21, 2005
ORDER AND REASONS
The plaintiff moves the Court for a voluntary dismissal of his action. The defendant opposes the motion to dismiss pending a decision on its motion for Rule 11 sanctions. For the following reasons, the Court DENIES the defendant's motion for sanctions and GRANTS the plaintiff's motion to dismiss.
I. BACKGROUND
On October 28, 2003, Envirosource filed a suit on an open account against Mid-America Resources Corporation. Envirosource states in its complaint that jurisdiction in this Court is proper because the parties are diverse. Specifically, Envirosource is a Texas corporation and Mid-America is a Louisiana corporation. Envirosource alleges that Mid-America owes it $19,065.00.
The Court notes that Envirosource references the federal employment discrimination statutes in its complaint. ( See Pl.'s Compl. at ¶¶ 2, 3.) The Court concludes that this was likely an error because Envirosource titled its complaint "Suit on Open Account." Accordingly, all of the factual allegations relate to a suit on an open account and not a suit for employment discrimination. Furthermore, Envirosource states that venue is proper in this district, citing to 42 U.S.C. § 2000e-5(k). This provision, however, governs the awarding of attorney's fees to prevailing parties in employment discrimination suits, not venue.
On November 23, 2004, Mid-America sent Envirosource a letter via certified mail. ( See Def.'s Mot. Dismiss, Ex. B.) In the letter, Mid-America noted that Envirosource alleged (1) that diversity jurisdiction existed between the parties, and (2) that Mid-America owed it $19,065.00. Mid-America then noted that 28 U.S.C. § 1332 requires the amount in controversy to exceed $75,000.00 for diversity jurisdiction to exist. Mid-America informed Envirosource that it thought that Envirosource's complaint was contrary to section 1332. Mid-America informed Envirosource that it would seek sanctions if Envirosource did not dismiss the complaint.
On December 13, 2004, twenty days after sending its letter, Mid-America filed its motion to dismiss for lack of subject matter jurisdiction and for sanctions. On December 17, 2004, Envirosource moved the Court to voluntarily dismiss its complaint. As noted supra, Mid-America opposes Envirosource's voluntary dismissal until the Court rules on its motion for sanctions.
II. DISCUSSION
A. Legal Standard
Rule 11 provides that when an attorney submits a pleading to the court, he certifies to the best of his knowledge, information, and belief that (1) the pleading is not interposed for any improper purpose, such as harassment, unnecessary delay, or increased costs of litigation; (2) the pleading is warranted by existing law or a good faith argument for modification or reversal of existing law; and (3) the allegations and other factual contentions have evidentiary support, or if specifically so identified, are likely to have evidentiary support after a reasonable opportunity for further investigation or discovery. Fed.R.Civ.P. 11(b); Childs v. State Farm Mutual Ins. Co., 29 F.3d 1018, 1023 (5th Cir. 1994); American Airlines, Inc. v. Allied Pilots Ass'n, 968 F.2d 523, 529 (5th Cir. 1992). This means that an attorney must make a reasonable inquiry into the facts and the law underlying a paper he or she submits to the court. Mercury Air, 237 F.3d at 548. The Court may impose appropriate sanctions, including attorneys' fees and costs, on an attorney who files a pleading in violation of Federal Rule of Civil Procedure 11. See Mercury Air Group, Inc. v. Mansour, 237 F.3d 542, 548 (5th Cir. 2001). When a reasonable amount of research would have revealed that a party's position is groundless, Rule 11 sanctions are appropriate. Jordaan v. Hall, 275 F.Supp.2d 778, 787 (N.D. Tx. 2003).
Rule 11 sets out strict procedural requirements for motions for sanctions. First, the motion must comply with the safe harbor provision of Rule 11. Specifically, the Rule contains a "safe harbor" provision that directs that a motion for sanctions "shall be served as provided in Rule 5, but shall not be filed with or presented to the court unless, within 21 days after service of the motion (or such other period as the Court may prescribe), the challenged [pleading] is not withdrawn or appropriately corrected." Fed.R.Civ.P. 11(c)(1)(A). Furthermore, "[a] motion for sanctions under this rule shall be made separately from other motions or requests." Id.
B. Analysis
Mid-America's motion is procedurally defective in two respects. First, Mid-America did not comply with the "safe harbor" provision of Rule 11. This is because it did not wait the required 21 days to file the motion with the Court after service on opposing counsel. Instead, Mid-America served the motion for sanctions on Edioserve at the same time that it filed the motion with the Court. Accordingly, the Court must deny the motion. See Regal Row Fina, Inc. v. Washington Mut. Bank, 2004 WL 2826817, at *12 (N.D. Tex. Dec. 9, 2004) (denying the motion for sanctions because the movant did not wait the required 21 days before serving the motion and because the movant did not file the motion separately); Porter v. Milliken Michael, Inc., 2001 WL 1041769, at *2 (E.D. La. Sept. 7, 2001) (denying the motion for sanctions because the movant did not wait the required 21 days to serve the motion).
The Court notes that Mid-America sent a letter to Edioserve on November 23, 2004 informing Edioserve of Mid-America's intent to seek sanctions. Informal notice, however, is insufficient to trigger the "safe harbor" period of Rule 11. The Advisory Committee's 1993 revision notes recognize the role of informal notice as a courtesy to opposing counsel and explain that "counsel should be expected to give informal notice to the other party, whether in person or by a telephone call or letter, of a potential violation before proceeding to prepare and serve a Rule 11 motion." Fed.R.Civ.P. 11 advisory committee's note. The Advisory Committee's notes, however, explicitly provide that in order "[t]o stress the seriousness of a motion for sanctions and to define precisely the conduct claimed to violate the rule, the . . . `safe harbor' period begins to run only upon service of the motion." Id. See also Barber v. Miller, 146 F.3d 707, 710 (9th Cir. 1998) (noting that "[i]t would . . . wrench both the language and purpose of the amendment to the Rule to permit an informal warning to substitute for service of a motion").
Furthermore, Mid-America's motion was procedurally defective in another respect because Mid-America did not file its motion for sanctions in a separate pleading, as required by Rule 11. Instead, Mid-America included its request for sanctions with its motion to dismiss. This is another ground upon which the Court must deny the motion. Johnson v. Tuff `n' Rumble Mgmt., Inc., 2000 WL 622612, at *6 (E.D. La. May 15, 2000) (denying the motion for sanctions because it was not filed as a separate motion); Lishka v. Tidewater Svs., Inc., 1997 WL 27066, at *7 (E.D. La. Jan. 22, 1997) (denying the motion for sanctions because the movant did not wait the required 21 days before serving the motion and because the movant did not file the motion separately).
III. CONCLUSION
For the foregoing reasons, the Court DENIES the defendant's motion for sanctions and GRANTS the plaintiff's motion to dismiss.