Legal Ethics

9th Circuit Says Court Can Consider Ability to Pay, Orders Rehearing re $360K Attorney Sanction

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Before imposing a financial penalty that a lawyer might not be able to pay, a federal district court can consider the impact on the attorney, a federal appeals court has ruled, giving a California lawyer—who said he made less than $20,000 annually—another chance to make his case for a reduction in a sanction of over $360,000 for pursuing frivolous litigation.

The San Francisco-based 9th U.S. Circuit Court of Appeals said it is remanding the Gregory Melvin Haynes matter because it appears that the district judge who sanctioned him under 28 U.S.C. § 1927 mistakenly thought the court had no discretion to consider the attorney’s financial situation. However, the district court has discretion to do so—just as it has discretion to hold a lawyer accountable, as it did in Haynes’ case, for the opposing side’s litigation costs, explained the appeals court in a Monday opinion (PDF).

Haynes, who had sued the city and county of San Francisco as well as a number of individuals over a psychotic woman’s involuntary hospitalization, engaged in “a wide variety of incompetent and unprofessional actions,” the 9th Circuit noted.

“We now hold that a district court may reduce Sec. 1927 sanctions award in light of an attorney’s inability to pay. Because the district court appeared to believe that it was without discretion to reduce the sanctions award on this ground, and accordingly failed to consider whether to exercise that discretion, we remand for further proceedings,” the appeals court wrote.

It said this is the first time the issue has been considered in the 9th Circuit, which is following the same approach previously adopted by the New York City-based 2nd U.S. Circuit Court of Appeals. The Chicago-based 7th U.S. Circuit Court of Appeals takes a different view of the issue, Trial Insider notes.

“We do not suggest by this holding that when the district court decides to reduce an amount on account of a sanctioned attorney’s inability to pay, it must reduce the amount to that which it determines that the attorney is capable of satisfying,” the opinion continues. “Just as it is within the discretion of the district court to decide whether to reduce the amount at all, the amount to which the sanction will be reduced is equally within the court’s discretion.”

Hat tip: Courthouse News.

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