Robert Riffner v. PNC Bank, National Association

In the
United States Court of Appeals
For the Seventh Circuit
____________________ȱ
No.ȱ15Ȭ2142ȱ
NORTHERNȱILLINOISȱT ELECOM,ȱINC .,ȱ
Plaintiff,ȱ
andȱ
ȱ
R OBERTȱG.ȱR IFFNER ,ȱ
RespondentȬAppellant,ȱ
v.ȱ
PNCȱBANK ,ȱN.A.,ȱ
DefendantȬAppellee.ȱ
____________________ȱ
AppealȱfromȱtheȱUnitedȱStatesȱDistrictȱCourtȱforȱtheȱ
NorthernȱDistrictȱofȱIllinois,ȱEasternȱDivision.ȱ
No.ȱ1:12ȬcvȬ02372ȱ—ȱJohnȱRobertȱBlakey,ȱJudge.ȱ
____________________ȱ
A RGUEDȱJ ANUARYȱ18,ȱ2017ȱ—ȱD ECIDEDȱMARCHȱ10,ȱ2017ȱ
____________________ȱ
BeforeȱWOOD,ȱChiefȱJudge,ȱandȱP OSNERȱandȱHAMILTON,ȱCirȬ
cuitȱJudges.ȱ
HAMILTON,ȱCircuitȱJudge.ȱThisȱappealȱpivotsȱonȱtheȱproceȬ
duralȱrequirementsȱofȱFederalȱRuleȱofȱCivilȱProcedureȱ11ȱforȱ
seekingȱsanctionsȱagainstȱaȱpartyȱandȱitsȱattorneyȱforȱassertingȱ

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2ȱ No.ȱ15Ȭ2142ȱ
aȱ frivolousȱ claimȱ orȱ defense.ȱ Ruleȱ 11(c)(2)ȱ requiresȱ aȱ partyȱ
seekingȱRuleȱ11ȱsanctionsȱfirstȱtoȱserveȱaȱproposedȱmotionȱonȱ
theȱopposingȱpartyȱandȱtoȱgiveȱthatȱpartyȱatȱleastȱ21ȱdaysȱtoȱ
withdrawȱorȱcorrectȱtheȱoffendingȱmatter.ȱOnlyȱafterȱthatȱtimeȱ
hasȱpassedȱmayȱtheȱmotionȱbeȱfiledȱwithȱtheȱcourt.ȱToȱmixȱnaȬ
valȱ metaphors,ȱ theȱ partyȱ seekingȱ sanctionsȱ mustȱ firstȱ fireȱ aȱ
warningȱshotȱthatȱgivesȱtheȱopponentȱtimeȱtoȱfindȱaȱsafeȱharȬ
bor.ȱ
Inȱthisȱcase,ȱtheȱpartyȱwhoȱsoughtȱsanctionsȱfailedȱtoȱcomȬ
plyȱwithȱthatȱprocedure.ȱItȱargued,ȱhowever,ȱthatȱtwoȱlettersȱ
itȱ sentȱ containingȱ bothȱ settlementȱ demandsȱ andȱ threatsȱ toȱ
seekȱRuleȱ11ȱsanctionsȱifȱitsȱdemandsȱwereȱnotȱmetȱamountedȱ
toȱ“substantialȱcompliance”ȱwithȱRuleȱ11(c)(2)ȱandȱthusȱpreȬ
servedȱitsȱrightȱtoȱmoveȱforȱsanctionsȱafterȱtheȱdistrictȱcourtȱ
grantedȱsummaryȱjudgmentȱinȱitsȱfavor.ȱTheȱdistrictȱcourtȱacȬ
ceptedȱthatȱargumentȱandȱimposedȱsanctions.ȱNorthernȱIllinoisȱ
Telecom,ȱInc.ȱv.ȱPNCȱBank,ȱNAȱ(NITELȱII),ȱNo.ȱ12ȱCȱ2372,ȱ2015ȱ
WLȱ1943271,ȱatȱ*9ȱ(N.D.ȱIll.ȱApr.ȱ29,ȱ2015).ȱ
Weȱ reverse.ȱ Whetherȱ “substantialȱ compliance”ȱ withȱ theȱ
warningȬshot/safeȬharborȱ requirementȱ ofȱ Ruleȱ 11(c)(2)ȱ canȱ
everȱbeȱsufficientȱisȱcontroversial.ȱWeȱareȱtheȱloneȱcircuitȱtoȱ
sayȱyes.ȱCompareȱPenn,ȱLLCȱv.ȱProsperȱBusinessȱDev.ȱCorp.,ȱ773ȱ
F.3dȱ 764,ȱ 768ȱ (6thȱ Cir.ȱ 2014)ȱ (eightȱ circuitsȱ rejectȱ substantialȱ
complianceȱtheory),ȱwithȱNisenbaumȱv.ȱMilwaukeeȱCounty,ȱ333ȱ
F.3dȱ 804,ȱ 808ȱ (7thȱ Cir.ȱ 2003)ȱ (substantialȱ complianceȱ withȱ
warningȬshotȱrequirementȱwasȱsufficientȱtoȱallowȱsanctions).ȱ
Evenȱ assumingȱ substantialȱ complianceȱ isȱ sufficient,ȱ theȱ deȬ
fendant’sȱsettlementȱdemandsȱinȱthisȱcaseȱfellȱfarȱshortȱofȱsubȬ
stantialȱcompliance.ȱWeȱthereforeȱreverseȱtheȱdistrictȱcourt’sȱ
awardȱofȱsanctions.ȱ
ȱ ȱ

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No.ȱ15Ȭ2142ȱ 3
I.ȱ FactualȱandȱProceduralȱBackgroundȱ
A.ȱ Plaintiff’sȱBreachȱofȱContractȱClaimȱ
Inȱ 2007,ȱ aȱ companyȱ calledȱ Nexxtworksȱ contractedȱ withȱ
twoȱ banksȱ inȱ theȱ Chicagoȱ areaȱ toȱ upgradeȱ communicationsȱ
facilities.ȱNorthernȱIllinoisȱTelecom,ȱInc.ȱv.ȱPNCȱBank,ȱNAȱ(NITELȱ
I),ȱNo.ȱ12ȱCȱ2372,ȱ2014ȱWLȱ4244069ȱ(N.D.ȱIll.ȱAug.ȱ27,ȱ2014).ȱ
Nexxtworksȱ subcontractedȱ withȱ plaintiffȱ NITELȱ toȱ installȱ
dataȱandȱtelephoneȱcableȱatȱfourȱbankȱbranches.ȱNITELȱperȬ
formedȱtheȱwork,ȱbutȱNexxtworksȱdidȱnotȱpayȱNITELȱallȱthatȱ
itȱthoughtȱitȱwasȱowed.ȱNexxtworksȱassertedȱthereȱhadȱbeenȱ
qualityȱproblemsȱthatȱhadȱrequiredȱitȱtoȱhireȱotherȱsubcontracȬ
torsȱtoȱredoȱorȱfinishȱNITEL’sȱwork.ȱInȱ2009,ȱbeforeȱtheirȱdisȬ
puteȱwasȱresolved,ȱNexxtworksȱfiledȱforȱbankruptcyȱprotecȬ
tionȱ inȱ Floridaȱ andȱ listedȱ NITEL’sȱ claimȱ asȱ aȱ disputedȱ debt.ȱ
NITELȱfiledȱaȱproofȱofȱclaimȱforȱ$115,000,ȱbutȱtheȱbankruptcyȱ
courtȱdisallowedȱitȱbecauseȱitȱwasȱfiledȱtooȱlate.ȱ
Inȱ2012,ȱstillȱseekingȱpaymentȱforȱwhatȱitȱthoughtȱitȱwasȱ
owed,ȱ NITELȱ filedȱ thisȱ breachȱ ofȱ contractȱ suitȱ inȱ anȱ Illinoisȱ
stateȱ courtȱ againstȱ PNCȱ Bank,ȱ whichȱ byȱ thatȱ timeȱ hadȱ acȬ
quiredȱbothȱofȱtheȱoriginalȱbanksȱinȱwhoseȱbranchesȱNITELȱ
hadȱ installedȱ theȱ cables.ȱ NITELȱ soughtȱ damagesȱ ofȱ $81,300,ȱ
plusȱ lateȱ fees,ȱ attorneyȱ fees,ȱ andȱ costs.ȱ Withȱ theȱ amountȱ inȱ
controversyȱgreaterȱthanȱ$75,000,ȱPNCȱBankȱremovedȱtheȱcaseȱ
toȱ federalȱ courtȱ basedȱ onȱ diversityȱ ofȱ citizenshipȱ underȱ 28ȱ
U.S.C.ȱ§ȱ1332.ȱTheȱproblemȱforȱNITELȱwasȱthatȱitȱhadȱnoȱconȬ
tractȱwithȱPNCȱBank,ȱwhichȱmovedȱforȱsummaryȱjudgmentȱ
onȱthatȱbasis.ȱDistrictȱJudgeȱSt.ȱEveȱgrantedȱsummaryȱjudgȬ
mentȱ forȱ PNCȱ Bank.ȱ NITELȱ I,ȱ 2014ȱ WLȱ 4244069.ȱ NITELȱ didȱ
notȱappeal.ȱ
ȱ ȱ

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4ȱ No.ȱ15Ȭ2142ȱ
B.ȱ DistrictȱCourtȱRuleȱ11ȱSanctionsȱOrderȱandȱAwardȱ
Theȱ presentȱ appealȱ stemsȱ fromȱ theȱ districtȱ court’sȱ postȬ
judgmentȱawardȱofȱRuleȱ11ȱsanctionsȱagainstȱbothȱNITELȱandȱ
itsȱ lawyer,ȱ appellantȱ Riffner.ȱ Beforeȱ discoveryȱ beganȱ andȱ
againȱbeforeȱPNCȱBankȱmovedȱforȱsummaryȱjudgment,ȱPNCȱ
Bank’sȱ lawyerȱ sentȱ lettersȱ toȱ Riffnerȱ assertingȱ thatȱ NITEL’sȱ
breachȱofȱcontractȱclaimȱwasȱfrivolous.ȱBothȱlettersȱproposedȱ
toȱ settleȱ theȱ caseȱ byȱ havingȱ NITELȱ dismissȱ itsȱ suitȱ andȱ payȱ
PNCȱBankȱitsȱattorneyȱfees.ȱBothȱlettersȱconcludedȱbyȱthreatȬ
eningȱtoȱseekȱRuleȱ11ȱsanctionsȱifȱNITELȱdidȱnotȱagreeȱtoȱtheȱ
demandsȱwithinȱaȱfewȱdays.ȱRiffnerȱdidȱnotȱrespondȱtoȱthoseȱ
letters.ȱTwoȱmonthsȱafterȱfinalȱjudgment,ȱPNCȱBankȱmovedȱ
forȱsanctionsȱunderȱRuleȱ11.ȱTheȱcaseȱwasȱreassignedȱtoȱDisȬ
trictȱJudgeȱBlakey.ȱ
JudgeȱBlakeyȱawardedȱsanctionsȱagainstȱNITELȱandȱRiffȬ
ner,ȱjointlyȱandȱseverally,ȱforȱ$84,325.ȱTheȱjudgeȱheldȱthatȱtheȱ
contractȱ claimȱ wasȱ frivolousȱ andȱ assertedȱ inȱ badȱ faith.ȱ Theȱ
courtȱfoundȱ“clearȱevidenceȱthat,ȱinȱfact,ȱNITELȱknewȱNexxtȬ
worksȱ(andȱnotȱPNC)ȱwasȱcontractuallyȱobligatedȱtoȱpayȱforȱ
theȱworkȱNITELȱdidȱatȱtheȱbranches,ȱandȱevenȱaȱcursoryȱinȬ
vestigationȱwouldȱhaveȱshownȱthatȱtheȱNexxtworksȱemailȱandȱ
theȱworkȱordersȱcouldȱnotȱsupportȱaȱbreachȱofȱcontractȱclaim.”ȱ
NITELȱ andȱ Riffnerȱ bothȱ appealedȱ theȱ sanctionsȱ order,ȱ butȱ
NITELȱwasȱlaterȱdismissedȱasȱanȱappellant.ȱWeȱhaveȱbeforeȱusȱ
onlyȱRiffner’sȱappeal.ȱ
II.ȱ Analysisȱ
Weȱreviewȱaȱdistrictȱcourt’sȱgrantȱofȱRuleȱ11ȱsanctionsȱforȱ
abuseȱofȱdiscretion.ȱCooterȱ&ȱGellȱv.ȱHartmarxȱCorp.,ȱ496ȱU.S.ȱ
384,ȱ409ȱ(1990);ȱMarsȱSteelȱCorp.ȱv.ȱContinentalȱBank,ȱN.A.,ȱ880ȱ
F.2dȱ928,ȱ933ȱ(7thȱCir.ȱ1989)ȱ(enȱbanc).ȱAnȱabuseȱofȱdiscretionȱ

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No.ȱ15Ȭ2142ȱ 5
mayȱbeȱestablishedȱifȱtheȱdistrictȱcourtȱbasedȱitsȱdecisionȱonȱ
anȱerroneousȱviewȱofȱtheȱlawȱorȱaȱclearlyȱerroneousȱevaluationȱ
ofȱ evidence.ȱ Gastineauȱ v.ȱ Wright,ȱ 592ȱ F.3dȱ 747,ȱ 748ȱ (7thȱ Cir.ȱ
2010).ȱ
Riffnerȱraisesȱbothȱsubstantiveȱandȱproceduralȱobjectionsȱ
toȱtheȱdistrictȱcourt’sȱawardȱofȱsanctions.ȱTheȱsubstantiveȱarȬ
gumentsȱ areȱ notȱ persuasive,ȱ andȱ Riffner’sȱ attemptȱ toȱ walkȱ
awayȱfromȱhisȱandȱNITEL’sȱearlierȱrelianceȱonȱworkȱordersȱtoȱ
proveȱitȱhadȱcontractsȱwithȱtheȱbanksȱisȱflatlyȱcontradictedȱbyȱ
theȱrecord.1ȱTheȱdistrictȱcourtȱdidȱnotȱabuseȱitsȱdiscretionȱinȱ
findingȱthatȱtheȱbreachȱofȱcontractȱclaimȱthatȱRiffnerȱpursuedȱ
againstȱPNCȱBankȱonȱbehalfȱofȱNITELȱwasȱobjectivelyȱbaseȬ
lessȱbecauseȱNITELȱneverȱhadȱaȱcontractȱwithȱPNCȱBank.ȱ
Theȱproblemȱwithȱtheȱsanctionsȱawardȱisȱprocedural.ȱPNCȱ
BankȱsimplyȱfailedȱtoȱfollowȱtheȱrequirementsȱofȱRuleȱ11.ȱToȱ
explain,ȱweȱstartȱwithȱaȱwordȱaboutȱtheȱroleȱofȱRuleȱ11ȱinȱfedȬ
eralȱcivilȱlitigationȱandȱthenȱexamineȱtheȱamendmentsȱthatȱledȱ
toȱtheȱwarningȬshot/safeȬharborȱrequirement.ȱ
Inȱcivilȱcasesȱwithinȱourȱjurisdiction,ȱfederalȱcourtsȱexerȬ
ciseȱconsiderableȱdiscretionȱandȱgreatȱpower.ȱTheȱproperȱexȬ
erciseȱofȱthatȱpowerȱcanȱbeȱessentialȱinȱpreservingȱtheȱruleȱofȱ
lawȱ andȱ theȱ rightsȱ andȱ libertiesȱ ofȱ theȱ Americanȱ people,ȱ inȱ
casesȱlargeȱandȱsmall,ȱlandmarkȱandȱmundane.ȱWhenȱaȱplainȬ
tiffȱinvokesȱthoseȱpowersȱinȱaȱcivilȱcase,ȱitȱputsȱmachineryȱinȱ
gearȱthatȱcanȱbeȱpowerful,ȱintimidating,ȱandȱoftenȱexpensive.ȱ
ȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱ
1ȱInȱitsȱresponseȱtoȱPNCȱBank’sȱmotionȱforȱsummaryȱjudgment,ȱNITEL,ȱ
throughȱRiffner,ȱsaid:ȱ“NITEL’sȱallegationsȱagainstȱMidAmericaȱandȱNaȬ
tionalȱCityȱareȱbasedȱonȱpurportedȱworkȱordersȱforȱeachȱofȱtheȱBranches,”ȱ
andȱthatȱ“theȱWorkȱOrderȱactedȱasȱaȱcontractȱforȱtheȱworkȱdone.”ȱ

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6ȱ No.ȱ15Ȭ2142ȱ
Thoseȱpowersȱandȱmachineryȱcanȱbeȱabusedȱbyȱlitigants.ȱFedȬ
eralȱRuleȱofȱCivilȱProcedureȱ11ȱseeksȱtoȱensureȱthatȱthoseȱpowȬ
ersȱ andȱ machineryȱ areȱ engagedȱ onlyȱ toȱ addressȱ claimsȱ andȱ
defensesȱthatȱhaveȱaȱreasonableȱbasisȱinȱfactȱandȱlawȱandȱthatȱ
areȱassertedȱonlyȱforȱaȱproperȱpurpose.ȱBecauseȱRuleȱ11ȱcanȱ
affectȱsoȱpowerfullyȱtheȱabilityȱofȱpartiesȱtoȱseekȱtheȱprotecȬ
tionȱ ofȱ theȱ federalȱ courts,ȱ theȱ detailsȱ ofȱ itsȱ provisionsȱ haveȱ
longȱbeenȱcontroversial.ȱ
Inȱ theȱ currentȱ versionȱ ofȱ theȱ rule,ȱ theȱ substantiveȱ proviȬ
sionsȱareȱinȱsubsectionȱ(b):ȱ
(b)ȱRepresentationsȱtoȱtheȱCourt.ȱByȱpresentingȱ
toȱtheȱcourtȱaȱpleading,ȱwrittenȱmotion,ȱorȱotherȱ
paper—whetherȱ byȱ signing,ȱ filing,ȱ submitting,ȱ
orȱlaterȱadvocatingȱit—anȱattorneyȱorȱunrepreȬ
sentedȱpartyȱcertifiesȱthatȱtoȱtheȱbestȱofȱtheȱperȬ
son’sȱ knowledge,ȱ information,ȱ andȱ belief,ȱ
formedȱ afterȱ anȱ inquiryȱ reasonableȱ underȱ theȱ
circumstances:ȱ
(1)ȱ itȱ isȱ notȱ beingȱ presentedȱ forȱ anyȱ improperȱ
purpose,ȱ suchȱ asȱ toȱ harass,ȱ causeȱ unnecessaryȱ
delay,ȱ orȱ needlesslyȱ increaseȱ theȱ costȱ ofȱ litigaȬ
tion;ȱ
(2)ȱtheȱclaims,ȱdefenses,ȱandȱotherȱlegalȱcontenȬ
tionsȱareȱwarrantedȱbyȱexistingȱlawȱorȱbyȱaȱnonȬ
frivolousȱ argumentȱ forȱ extending,ȱ modifying,ȱ
orȱreversingȱexistingȱlawȱorȱforȱestablishingȱnewȱ
law;ȱ
(3)ȱtheȱfactualȱcontentionsȱhaveȱevidentiaryȱsupȬ
portȱ or,ȱ ifȱ specificallyȱ soȱ identified,ȱ willȱ likelyȱ

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No.ȱ15Ȭ2142ȱ 7
haveȱevidentiaryȱsupportȱafterȱaȱreasonableȱopȬ
portunityȱforȱfurtherȱinvestigationȱorȱdiscovery;ȱ
andȱ
(4)ȱ theȱ denialsȱ ofȱ factualȱ contentionsȱ areȱ warȬ
rantedȱonȱtheȱevidenceȱor,ȱifȱspecificallyȱsoȱidenȬ
tified,ȱareȱreasonablyȱbasedȱonȱbeliefȱorȱaȱlackȱofȱ
information.ȱ
Subsectionȱ(c)ȱthenȱauthorizesȱdistrictȱcourtsȱtoȱimposeȱsancȬ
tions,ȱ includingȱ monetaryȱ sanctions,ȱ againstȱ parties,ȱ attorȬ
neys,ȱandȱlawȱfirmsȱwhoȱviolateȱtheȱsubstantiveȱstandardsȱofȱ
subsectionȱ(b),ȱasȱRiffnerȱandȱNITELȱdidȱinȱthisȱcase.ȱSubsecȬ
tionȱ(c)ȱprovides:ȱ
(c)ȱSanctions.ȱ
(1)ȱInȱGeneral.ȱIf,ȱafterȱnoticeȱandȱaȱreasonableȱopȬ
portunityȱ toȱ respond,ȱ theȱ courtȱ determinesȱ thatȱ
Ruleȱ11(b)ȱhasȱbeenȱviolated,ȱtheȱcourtȱmayȱimposeȱ
anȱappropriateȱsanctionȱonȱanyȱattorney,ȱlawȱfirm,ȱ
orȱpartyȱthatȱviolatedȱtheȱruleȱorȱisȱresponsibleȱforȱ
theȱviolation.ȱAbsentȱexceptionalȱcircumstances,ȱaȱ
lawȱfirmȱmustȱbeȱheldȱjointlyȱresponsibleȱforȱaȱvioȬ
lationȱ committedȱ byȱ itsȱ partner,ȱ associate,ȱ orȱ emȬ
ployee.ȱ
(2)ȱ Motionȱ forȱ Sanctions.ȱ Aȱ motionȱ forȱ sanctionsȱ
mustȱ beȱ madeȱ separatelyȱ fromȱ anyȱ otherȱ motionȱ
andȱmustȱdescribeȱtheȱspecificȱconductȱthatȱallegȬ
edlyȱ violatesȱ Ruleȱ 11(b).ȱ Theȱ motionȱ mustȱ beȱ servedȱ
underȱRuleȱ5,ȱbutȱitȱmustȱnotȱbeȱfiledȱorȱbeȱpresentedȱtoȱ
theȱcourtȱifȱtheȱchallengedȱpaper,ȱclaim,ȱdefense,ȱcontenȬ
tion,ȱorȱdenialȱisȱwithdrawnȱorȱappropriatelyȱcorrectedȱ
withinȱ21ȱdaysȱafterȱserviceȱorȱwithinȱanotherȱtimeȱtheȱ

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8ȱ No.ȱ15Ȭ2142ȱ
courtȱsets.ȱIfȱwarranted,ȱtheȱcourtȱmayȱawardȱtoȱtheȱ
prevailingȱpartyȱtheȱreasonableȱexpenses,ȱincludingȱ
attorney’sȱfees,ȱincurredȱforȱtheȱmotion.ȱ
(3)ȱ Onȱ theȱ Court’sȱ Initiative.ȱ Onȱ itsȱ own,ȱ theȱ courtȱ
mayȱorderȱanȱattorney,ȱlawȱfirm,ȱorȱpartyȱtoȱshowȱ
causeȱwhyȱconductȱspecificallyȱdescribedȱinȱtheȱorȬ
derȱhasȱnotȱviolatedȱRuleȱ11(b).ȱ
(4)ȱNatureȱofȱaȱSanction.ȱAȱsanctionȱimposedȱunderȱ
thisȱruleȱmustȱbeȱlimitedȱtoȱwhatȱsufficesȱtoȱdeterȱ
repetitionȱofȱtheȱconductȱorȱcomparableȱconductȱbyȱ
othersȱsimilarlyȱsituated.ȱTheȱsanctionȱmayȱincludeȱ
nonmonetaryȱdirectives;ȱanȱorderȱtoȱpayȱaȱpenaltyȱ
intoȱcourt;ȱor,ȱifȱimposedȱonȱmotionȱandȱwarrantedȱ
forȱeffectiveȱdeterrence,ȱanȱorderȱdirectingȱpaymentȱ
toȱtheȱmovantȱofȱpartȱorȱallȱofȱtheȱreasonableȱattorȬ
ney’sȱ feesȱ andȱ otherȱ expensesȱ directlyȱ resultingȱ
fromȱtheȱviolation.ȱ
(5)ȱ Limitationsȱ onȱ Monetaryȱ Sanctions.ȱ Theȱ courtȱ
mustȱnotȱimposeȱaȱmonetaryȱsanction:ȱ
(A)ȱ againstȱ aȱ representedȱ partyȱ forȱ violatingȱ Ruleȱ
11(b)(2);ȱorȱ
(B)ȱonȱitsȱown,ȱunlessȱitȱissuedȱtheȱshowȬcauseȱorȬ
derȱunderȱRuleȱ11(c)(3)ȱbeforeȱvoluntaryȱdismissalȱ
orȱsettlementȱofȱtheȱclaimsȱmadeȱbyȱorȱagainstȱtheȱ
partyȱ thatȱ is,ȱ orȱ whoseȱ attorneysȱ are,ȱ toȱ beȱ sancȬ
tioned.ȱ
(6)ȱRequirementsȱforȱanȱOrder.ȱAnȱorderȱimposingȱaȱ
sanctionȱmustȱdescribeȱtheȱsanctionedȱconductȱandȱ
explainȱtheȱbasisȱforȱtheȱsanction.ȱ

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No.ȱ15Ȭ2142ȱ 9
OurȱfocusȱhereȱisȱonȱtheȱproceduralȱrequirementsȱinȱRuleȱ
11(c)(2)ȱforȱaȱparty’sȱmotionȱforȱsanctions.ȱBeforeȱfilingȱaȱmoȬ
tionȱforȱsanctions,ȱaȱpartyȱmustȱfirstȱserveȱtheȱmotionȱonȱtheȱ
challengedȱ party,ȱ andȱ theȱ motionȱ mayȱ notȱ beȱ filedȱ withȱ theȱ
courtȱforȱ21ȱdays.ȱThatȱgivesȱtheȱchallengedȱpartyȱthatȱtimeȱtoȱ
withdrawȱ orȱ correctȱ theȱ challengedȱ claim,ȱ defense,ȱ contenȬ
tion,ȱorȱdenial.ȱThisȱcombinationȱofȱaȱwarningȱshotȱandȱaȱsafeȱ
harborȱwasȱaȱcriticalȱchangeȱadoptedȱinȱtheȱ1993ȱamendmentsȱ
toȱRuleȱ11.ȱAȱlittleȱhistoryȱexplainsȱitsȱimportance.ȱ
Asȱ adoptedȱ inȱ theȱ originalȱ Federalȱ Rulesȱ ofȱ Civilȱ ProceȬ
dureȱinȱ1938,ȱRuleȱ11ȱrequiredȱattorneysȱtoȱsignȱallȱpleadingsȱ
andȱtreatedȱtheȱsignatureȱasȱaȱcertificateȱthatȱtheȱlawyerȱhadȱ
readȱ theȱ pleadingȱ andȱ that,ȱ toȱ theȱ bestȱ ofȱ theȱ lawyer’sȱ
knowledge,ȱinformation,ȱandȱbelief,ȱthereȱwasȱgoodȱgroundȱ
toȱ supportȱ itȱ andȱ itȱ wasȱ notȱ interposedȱ forȱ delay.ȱ Whileȱ theȱ
ruleȱ authorizedȱ sanctions,ȱ itȱ didȱ soȱ inȱ onlyȱ thisȱ vagueȱ lanȬ
guage:ȱ“Forȱaȱwilfulȱviolationȱofȱthisȱruleȱanȱattorneyȱmayȱbeȱ
subjectedȱtoȱappropriateȱdisciplinaryȱaction.”ȱFed.ȱR.ȱCiv.ȱP.ȱ
11ȱ(1938),ȱasȱpromulgatedȱatȱ308ȱU.S.ȱ645,ȱ676ȱ(1938).ȱTheȱfoȬ
cusȱonȱtheȱattorney’sȱsubjectiveȱknowledgeȱandȱtheȱrequireȬ
mentȱofȱwillfulȱviolationȱmeantȱthatȱsanctionsȱwereȱveryȱrareȱ
beforeȱtheȱruleȱwasȱamendedȱinȱ1983.ȱGeorgeneȱM.ȱVairo,ȱRuleȱ
11:ȱAȱCriticalȱAnalysis,ȱ118ȱF.R.D.ȱ189,ȱ190–92,ȱ205ȱ(1988).ȱ
Growingȱ impatienceȱ withȱ lawsuitsȱ andȱ litigationȱ tacticsȱ
perceivedȱasȱfrivolousȱledȱtoȱtheȱmostȱcontroversialȱamendȬ
mentȱtoȱtheȱFederalȱRulesȱofȱCivilȱProcedureȱsinceȱtheirȱadopȬ
tion,ȱtheȱ1983ȱamendmentȱtoȱRuleȱ11.ȱId.ȱatȱ190.ȱTheȱprincipalȱ
changesȱ wereȱ toȱ adoptȱ anȱ objectiveȱ standardȱ ofȱ reasonableȬ
ness,ȱtoȱimposeȱonȱcounselȱaȱpreȬfilingȱdutyȱofȱinquiry,ȱandȱtoȱ
addȱ languageȱ thatȱ theȱ courtȱ “shallȱ impose”ȱ sanctionsȱ whenȱ
theȱruleȱwasȱviolated.ȱFed.ȱR.ȱCiv.ȱP.ȱ11ȱadvisoryȱcommittee’sȱ

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10ȱ No.ȱ15Ȭ2142ȱ
noteȱtoȱ1983ȱamendment.ȱTheȱamendmentȱleftȱnoȱroomȱforȱanȱ
“emptyȱhead,ȱpureȱheart”ȱdefense.ȱ
Theȱ newlyȱ amendedȱ Ruleȱ 11ȱ quicklyȱ becameȱ aȱ favoriteȱ
weaponȱinȱlitigators’ȱbriefcases,ȱoftenȱusedȱandȱevenȱmoreȱofȬ
tenȱbrandishedȱtoȱthreaten.ȱItsȱuseȱexplodedȱinȱtheȱlateȱ1980s.ȱ
Oneȱcommentatorȱwroteȱinȱ1988ȱthatȱRuleȱ11ȱhadȱbecomeȱ“theȱ
cottageȱindustryȱofȱtheȱlitigationȱbar.”ȱVairo,ȱ118ȱF.R.D.ȱatȱ199.ȱ
Asȱitȱturnedȱout,ȱtheȱ1983ȱamendmentsȱhadȱbeenȱanȱoverȬcorȬ
rection.ȱTheȱnewȱproblemsȱledȱtoȱtheȱ1993ȱamendmentsȱatȱtheȱ
heartȱ ofȱ thisȱ appeal. 2ȱ Oneȱ unintendedȱ consequenceȱ ofȱ theȱ
threatȱofȱRuleȱ11ȱsanctionsȱwasȱthatȱ“partiesȱwereȱsometimesȱ
reluctantȱ toȱ abandonȱ aȱ questionableȱ contentionȱ lestȱ thatȱ beȱ
viewedȱasȱevidenceȱofȱaȱviolation.”ȱFed.ȱR.ȱCiv.ȱP.ȱ11ȱadvisoryȱ
committee’sȱnoteȱtoȱ1993ȱamendment. 3ȱ
ȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱ
2ȱForȱdetailedȱaccountsȱofȱtheȱproblemsȱencounteredȱafterȱtheȱ1983ȱamendȬ
ments,ȱseeȱtheȱfollowingȱsourcesȱcitedȱbyȱtheȱAdvisoryȱCommitteeȱinȱ1993:ȱ
NewȱYorkȱStateȱBarȱCommitteeȱonȱFederalȱCourts,ȱSanctionsȱandȱAttorneys’ȱ
Feesȱ(1987);ȱThomasȱWillging,ȱTheȱRuleȱ11ȱSanctioningȱProcessȱ(1989);ȱAmerȬ
icanȱJudicatureȱSociety,ȱReportȱofȱtheȱThirdȱCircuitȱTaskȱForceȱonȱFederalȱRuleȱ
ofȱCivilȱProcedureȱ11ȱ(StephenȱBurbankȱed.,ȱ1989);ȱElizabethȱWigginsȱetȱal.,ȱ
FederalȱJudicialȱCenter,ȱReportȱonȱRuleȱ11ȱ(1991).ȱTheȱ1993ȱcommitteeȱalsoȱ
citedȱ threeȱ bookȬlengthȱ analysesȱ ofȱ theȱ caseȱ law:ȱ Gregoryȱ Joseph,ȱ SancȬ
tions:ȱTheȱFederalȱLawȱofȱLitigationȱAbuseȱ(1989);ȱJeroldȱSolovy,ȱTheȱFederalȱ
LawȱofȱSanctionsȱ(1991);ȱGeorgeneȱVairo,ȱRuleȱ11ȱSanctions:ȱCaseȱLaw,ȱPerȬ
spectivesȱ andȱ Preventiveȱ Measuresȱ (1991).ȱ Aȱ recentȱ searchȱ ofȱ Westlawȱ
showedȱthatȱRuleȱ11ȱwasȱcitedȱinȱonlyȱfiveȱappellateȱdecisionsȱinȱ1978,ȱbutȱ
inȱ236ȱappellateȱdecisionsȱinȱ1988.ȱForȱdistrictȱcourts,ȱtheȱcomparableȱfigȬ
uresȱareȱ19ȱinȱ1978ȱandȱ615ȱinȱ1988.ȱ
3ȱForȱaȱbroaderȱreviewȱofȱtheȱcriticismsȱandȱprocessȱthatȱledȱtoȱadoptionȱofȱ
theȱ1993ȱamendments,ȱseeȱCarlȱTobias,ȱTheȱ1993ȱRevisionȱtoȱFederalȱRuleȱ11,ȱ
70ȱInd.ȱL.J.ȱ171,ȱ174–88ȱ(1994)ȱ

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No.ȱ15Ȭ2142ȱ 11
Theȱ1993ȱamendmentsȱpreservedȱtheȱobjectiveȱstandardȱofȱ
reasonablenessȱ andȱ theȱ enhancedȱ dutyȱ ofȱ preȬfilingȱ inquiryȱ
intoȱtheȱlawȱandȱfacts.ȱTheȱamendmentsȱsought,ȱhowever,ȱtoȱ
constrainȱtheȱimpositionȱofȱsanctionsȱandȱtoȱ“reduceȱtheȱnumȬ
berȱofȱmotionsȱforȱsanctionsȱpresentedȱtoȱtheȱcourt.”ȱId.ȱTheȱ
1993ȱamendmentsȱwereȱnumerous.ȱTheyȱincludedȱnewȱproceȬ
duralȱrequirementsȱtoȱenhanceȱdueȱprocessȱandȱfairȱuseȱofȱtheȱ
rule,ȱandȱtheyȱremovedȱtheȱ“shallȱimpose”ȱlanguageȱtoȱrestoreȱ
trialȱ judges’ȱ discretionȱ inȱ decidingȱ whetherȱ toȱ imposeȱ sancȬ
tionsȱatȱall.ȱ
OneȱofȱtheȱmostȱimportantȱchangesȱwasȱtoȱaddȱtheȱproviȬ
sionȱatȱissueȱinȱthisȱappeal,ȱtheȱwarningȬshot/safeȬharborȱproȬ
cedureȱinȱRuleȱ11(c)(2).ȱTheȱAdvisoryȱCommitteeȱexplained:ȱ
Theȱ ruleȱ providesȱ thatȱ requestsȱ forȱ sanctionsȱ
mustȱ beȱ madeȱ asȱ aȱ separateȱ motion,ȱ i.e.,ȱ notȱ
simplyȱincludedȱasȱanȱadditionalȱprayerȱforȱreȬ
liefȱcontainedȱinȱanotherȱmotion.ȱTheȱmotionȱforȱ
sanctionsȱ isȱ not,ȱ however,ȱ toȱ beȱ filedȱ untilȱ atȱ
leastȱ21ȱdaysȱ(orȱsuchȱotherȱperiodȱasȱtheȱcourtȱ
mayȱ set)ȱ afterȱ beingȱ served.ȱ If,ȱ duringȱ thisȱ peȬ
riod,ȱ theȱ allegedȱ violationȱ isȱ corrected,ȱ asȱ byȱ
withdrawingȱ (whetherȱ formallyȱ orȱ informally)ȱ
someȱ allegationȱ orȱ contention,ȱ theȱ motionȱ
shouldȱnotȱbeȱfiledȱwithȱtheȱcourt.ȱTheseȱproviȬ
sionsȱareȱintendedȱtoȱprovideȱaȱtypeȱofȱ“safeȱharbor”ȱ
againstȱmotionsȱunderȱRuleȱ11ȱinȱthatȱaȱpartyȱwillȱ
notȱ beȱ subjectȱ toȱ sanctionsȱ onȱ theȱ basisȱ ofȱ anotherȱ
party’sȱmotionȱunless,ȱafterȱreceivingȱtheȱmotion,ȱitȱ
refusesȱtoȱwithdrawȱthatȱpositionȱorȱtoȱacknowledgeȱ
candidlyȱthatȱitȱdoesȱnotȱcurrentlyȱhaveȱevidenceȱtoȱ
supportȱ aȱ specifiedȱ allegation.ȱ Underȱ theȱ formerȱ

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12ȱ No.ȱ15Ȭ2142ȱ
rule,ȱpartiesȱwereȱsometimesȱreluctantȱtoȱabanȬ
donȱ aȱ questionableȱ contentionȱ lestȱ thatȱ beȱ
viewedȱasȱevidenceȱofȱaȱviolationȱofȱRuleȱ11;ȱunȬ
derȱtheȱrevision,ȱtheȱtimelyȱwithdrawalȱofȱaȱconȬ
tentionȱwillȱprotectȱaȱpartyȱagainstȱaȱmotionȱforȱ
sanctions.ȱ
Toȱ stressȱ theȱ seriousnessȱ ofȱ aȱ motionȱ forȱ sanctionsȱ
andȱtoȱdefineȱpreciselyȱtheȱconductȱclaimedȱtoȱviolateȱ
theȱrule,ȱtheȱrevisionȱprovidesȱthatȱtheȱ“safeȱharbor”ȱ
periodȱbeginsȱtoȱrunȱonlyȱuponȱserviceȱofȱtheȱmotion.ȱ
Inȱ mostȱ cases,ȱ however,ȱ counselȱ shouldȱ beȱ exȬ
pectedȱtoȱgiveȱinformalȱnoticeȱtoȱtheȱotherȱparty,ȱ
whetherȱinȱpersonȱorȱbyȱaȱtelephoneȱcallȱorȱletȬ
ter,ȱofȱaȱpotentialȱviolationȱbeforeȱproceedingȱtoȱ
prepareȱandȱserveȱaȱRuleȱ11ȱmotion.ȱ
Id.ȱ(emphasisȱadded).ȱAȱletterȱmayȱthusȱwarnȱaboutȱimpendȬ
ingȱserviceȱofȱtheȱmotion,ȱbutȱaȱletterȱisȱnotȱaȱsubstituteȱforȱaȱ
motion.ȱ
Toȱreturnȱtoȱtheȱcaseȱatȱhand,ȱPNCȱBankȱsimplyȱdidȱnotȱ
complyȱ withȱ thisȱ warningȬshot/safeȬharborȱ requirement.ȱ Itȱ
didȱ notȱ prepareȱ andȱ serveȱ aȱ Ruleȱ 11ȱ motionȱ onȱ NITELȱ andȱ
Riffner,ȱnorȱdidȱitȱallowȱ21ȱdaysȱforȱthemȱtoȱwithdrawȱNITEL’sȱ
claims.ȱTheȱdistrictȱcourtȱconcludedȱthatȱPNCȱBank’sȱtwoȱsetȬ
tlementȱoffersȱwithȱRuleȱ11ȱthreatsȱtoȱRiffnerȱwereȱsufficientȱ
warningȱshotsȱunderȱRuleȱ11(c)(2)ȱonȱtheȱtheoryȱthatȱtheyȱsubȬ
stantiallyȱcompliedȱwithȱtheȱrule.ȱNITELȱII,ȱ2015ȱWLȱ1943271,ȱ
atȱ *4.ȱ Toȱ supportȱ theȱ substantialȱ complianceȱ approach,ȱ theȱ
courtȱcitedȱourȱdecisionsȱinȱMethodeȱElectronics,ȱInc.ȱv.ȱAdamȱ
Technologies,ȱInc.,ȱ371ȱF.3dȱ923,ȱ927ȱ(7thȱCir.ȱ2004)ȱ(dicta),ȱandȱ
MatrixȱIV,ȱInc.ȱv.ȱAmericanȱNationalȱBankȱ&ȱTrustȱCo.ȱofȱChicago,ȱ
649ȱF.3dȱ539,ȱ552–53ȱ(7thȱCir.ȱ2011).ȱ

-- 12 of 18 --

No.ȱ15Ȭ2142ȱ 13
Ourȱ lineȱ ofȱ casesȱ onȱ “substantialȱ compliance”ȱ withȱ theȱ
warningȬshotȱrequirementȱbeganȱwithȱNisenbaumȱv.ȱMilwaukeeȱ
County,ȱ333ȱF.3dȱ804,ȱ808ȱ(7thȱCir.ȱ2003),ȱwhereȱweȱconcludedȱ
thatȱwhereȱtheȱfailureȱtoȱsatisfyȱtheȱwarningȬshotȱrequirementȱ
wasȱonlyȱ“technical,”ȱtheȱmovingȱparty’sȱsubstantialȱcompliȬ
anceȱwithȱtheȱwarningȬshotȱrequirementȱentitledȱitȱ“toȱaȱdeciȬ
sionȱonȱtheȱmerits.”ȱInȱNisenbaum,ȱweȱheldȱthatȱthereȱwasȱsubȬ
stantialȱcomplianceȱwithȱRuleȱ11ȱbecauseȱtheȱdefendantsȱsentȱ
aȱ letter—ratherȱ thanȱ aȱ motion—thatȱ explainedȱ theȱ groundsȱ
forȱsanctionsȱandȱprovidedȱmoreȱthanȱ21ȱdaysȱtoȱremedyȱtheȱ
problem.ȱInsistingȱonȱaȱformalȱmotionȱseemedȱundulyȱformalȬ
istic.ȱ
InȱMatrixȱIV,ȱtheȱmovingȱpartyȱsimilarlyȱsentȱaȱletterȱthatȱ
explainedȱtheȱgroundsȱforȱtheȱsanctionsȱandȱinformedȱtheȱopȬ
posingȱpartyȱitȱwouldȱseekȱRuleȱ11ȱsanctionsȱifȱtheȱclaimȱwereȱ
notȱdismissedȱvoluntarily.ȱ649ȱF.3dȱatȱ552.ȱTheȱletterȱexplicitlyȱ
assertedȱthatȱitȱservedȱ“asȱnotice”ȱofȱtheȱparty’sȱintentionȱtoȱ
seekȱ sanctionsȱ atȱ theȱ closeȱ ofȱ theȱ case.ȱ Weȱ foundȱ thatȱ thisȱ
warningȱ alsoȱ amountedȱ toȱ substantialȱ complianceȱ withȱ theȱ
warningȬshotȱrequirement,ȱthoughȱweȱultimatelyȱdecidedȱtheȱ
caseȱonȱotherȱgrounds,ȱfindingȱthatȱtheȱsanctionsȱwereȱunwarȬ
rantedȱonȱtheȱmerits.ȱId.ȱatȱ553.ȱ
Thereȱareȱbothȱlegalȱandȱfactualȱproblemsȱwithȱthisȱtheoryȱ
ofȱ“substantialȱcompliance”ȱtoȱsaveȱtheȱsanctionsȱorderȱinȱthisȱ
case.ȱTheȱlegalȱproblemȱisȱthatȱtheȱsubstantialȱcomplianceȱtheȬ
oryȱweȱadoptedȱinȱNisenbaumȱstandsȱaloneȱandȱisȱdifficultȱtoȱ
reconcileȱwithȱtheȱexplicitȱrequirementsȱofȱtheȱRuleȱandȱtheȱ
clearȱexplanationȱfromȱtheȱAdvisoryȱCommittee.ȱNoȱotherȱcirȬ
cuitȱhasȱadoptedȱthisȱapproach.ȱSeeȱPenn,ȱLLCȱv.ȱProsperȱBusiȬ
nessȱDev.ȱCorp.,ȱ773ȱF.3dȱ764,ȱ767–68ȱ(6thȱCir.ȱ2014)ȱȱ(reviewingȱ
circuitȱsplit:ȱSecond,ȱThird,ȱFourth,ȱFifth,ȱSixth,ȱEighth,ȱNinth,ȱ

-- 13 of 18 --

14ȱ No.ȱ15Ȭ2142ȱ
andȱ Tenthȱ Circuitsȱ haveȱ rejectedȱ “substantialȱ compliance,”ȱ
andȱonlyȱSeventhȱCircuitȱhasȱadoptedȱit).ȱOurȱcolleaguesȱinȱ
otherȱcircuitsȱhaveȱbeenȱhighlyȱcriticalȱofȱtheȱterseȱtreatmentȱ
ofȱtheȱissueȱinȱNisenbaum.ȱE.g.,ȱCadleȱCo.ȱv.ȱPrattȱ(InȱreȱPratt),ȱ
524ȱ F.3dȱ 580,ȱ 587–88ȱ (5thȱ Cir.ȱ 2008)ȱ (Nisenbaumȱ didȱ notȱ adȬ
dressȱ languageȱ ofȱ Ruleȱ 11,ȱ Advisoryȱ Committeeȱ notes,ȱ orȱ
otherȱRuleȱ11ȱjurisprudence);ȱRothȱv.ȱGreen,ȱ466ȱF.3dȱ1179,ȱ1193ȱ
(10thȱCir.ȱ2006)ȱ(same).ȱAsȱtheȱNinthȱCircuitȱexplainedȱinȱBarȬ
berȱv.ȱMiller,ȱ“warningsȱwereȱnotȱmotions”ȱandȱ“theȱRuleȱreȬ
quiresȱserviceȱofȱaȱmotion.”ȱ146ȱF.3dȱ707,ȱ710ȱ(9thȱCir.ȱ1998).ȱ
Theȱ 1993ȱ amendmentȱ “deliberatelyȱ imposed”ȱ theȱ requireȬ
mentȱofȱservice.ȱId.ȱ“ItȱwouldȱthereforeȱwrenchȱbothȱtheȱlanȬ
guageȱandȱpurposeȱofȱtheȱamendmentȱtoȱtheȱRuleȱtoȱpermitȱ
anȱinformalȱwarningȱtoȱsubstituteȱforȱserviceȱofȱaȱmotion.”ȱId.4ȱ
TheȱAdvisoryȱCommitteeȱnotesȱwarnȱagainstȱtreatingȱanyȬ
thingȱlessȱthanȱformalȱserviceȱofȱaȱmotionȱasȱsufficientȱtoȱcomȬ
plyȱ withȱ theȱ warningȬshot/safeȬharborȱ requirement:ȱ “Toȱ
stressȱtheȱseriousnessȱofȱaȱmotionȱforȱsanctionsȱandȱtoȱdefineȱ
preciselyȱtheȱconductȱclaimedȱtoȱviolateȱtheȱrule,ȱtheȱrevisionȱ
providesȱthatȱtheȱ‘safeȱharbor’ȱperiodȱbeginsȱtoȱrunȱonlyȱuponȱ
serviceȱofȱtheȱmotion.ȱInȱmostȱcases,ȱhowever,ȱcounselȱshouldȱ
ȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱ
4ȱAccord,ȱStarȱMarkȱManagement,ȱInc.ȱv.ȱKoonȱChunȱHingȱKeeȱSoyȱ&ȱSauceȱ
Factory,ȱLTD,ȱ682ȱF.3dȱ170,ȱ175–76ȱ(2dȱCir.ȱ2012)ȱ(warningȱletterȱnotȱsuffiȬ
cient;ȱ ruleȱ requiresȱ serviceȱ ofȱ motionȱ toȱ triggerȱ safeȬharborȱ provision);ȱ
Ettingerȱ &ȱ Assocs.,ȱ LLCȱ v.ȱ Millerȱ (Inȱ reȱ Miller),ȱ 730ȱ F.3dȱ 198,ȱ 204ȱ (3dȱ Cir.ȱ
2013)ȱ(emphasizingȱimportanceȱofȱtheȱsafeȬharborȱprovisionȱinȱanalogousȱ
bankruptcyȱcontext);ȱBrickwoodȱContractors,ȱInc.ȱv.ȱDatanetȱEngineering,ȱInc.,ȱ
369ȱF.3dȱ385,ȱ389ȱ(4thȱCir.ȱ2004)ȱ(Ruleȱ11ȱ“thusȱestablishesȱconditionsȱprecȬ
edentȱtoȱtheȱimpositionȱofȱsanctionsȱunderȱtheȱrule.ȱIfȱthoseȱconditionsȱareȱ
notȱsatisfied,ȱtheȱRuleȱ11ȱmotionȱforȱsanctionsȱmayȱnotȱbeȱfiledȱwithȱtheȱ
districtȱcourt.”);ȱGordonȱv.ȱUnifundȱCCRȱPartners,ȱ345ȱF.3dȱ1028,ȱ1030ȱ(8thȱ
Cir.ȱ2003)ȱ(same).ȱȱ

-- 14 of 18 --

No.ȱ15Ȭ2142ȱ 15
beȱexpectedȱtoȱgiveȱinformalȱnoticeȱtoȱtheȱotherȱparty,ȱwhetherȱ
inȱpersonȱorȱbyȱaȱtelephoneȱcallȱorȱletter,ȱofȱaȱpotentialȱviolaȬ
tionȱ beforeȱ proceedingȱ toȱ prepareȱ andȱ serveȱ aȱ Ruleȱ 11ȱ moȬ
tion.”ȱByȱtreatingȱaȱmereȱwarningȱletterȱasȱsufficient,ȱaȱstandȬ
ardȱofȱsubstantialȱcomplianceȱleavesȱtheȱrecipientȱunclearȱasȱ
toȱbothȱwhetherȱtheȱopposingȱpartyȱisȱseriousȱandȱwhenȱtheȱ
21ȬdayȱsafeȬharborȱclockȱstartsȱtoȱrun.ȱ
Despiteȱtheȱcriticism,ȱthough,ȱNisenbaumȱremainsȱcontrolȬ
lingȱcircuitȱlawȱonȱthisȱpoint.ȱWeȱneedȱnotȱrevisitȱhereȱwhetherȱ
substantialȱcomplianceȱcanȱeverȱsatisfyȱtheȱwarningȬshotȱreȬ
quirementȱofȱRuleȱ11(c)(2).ȱPNCȱBank’sȱwarningȬshotȱlettersȱ
fellȱfarȱshortȱofȱevenȱtheȱgenerousȱtargetȱofȱsubstantialȱcomȬ
pliance. 5ȱ
OnȱJulyȱ31,ȱ2012,ȱbeforeȱdiscoveryȱbegan,ȱPNCȱBank’sȱlawȬ
yerȱsentȱaȱletterȱtoȱRiffnerȱofferingȱtoȱsettleȱtheȱcase.ȱTheȱletterȱ
explainedȱtheȱdefectsȱinȱtheȱbreachȱofȱcontractȱclaim.ȱWeȱasȬ
sumeȱ theȱ explanationȱ ofȱ thoseȱ defectsȱ wasȱ sufficient.ȱ Theȱ
problemsȱinȱtermsȱofȱsubstantialȱcomplianceȱwereȱthatȱtheȱletȬ
terȱdemandedȱdismissalȱofȱtheȱsuitȱwithinȱeightȱdays,ȱasȱwellȱ
asȱpaymentȱtoȱPNCȱBankȱofȱ$9,195ȱforȱitsȱfeesȱandȱcosts.ȱTheȱ
letterȱ alsoȱ demandedȱ withinȱ fiveȱ daysȱ aȱ writtenȱ responseȱ
agreeingȱtoȱtheȱdemand.ȱTheȱletterȱconcluded:ȱ“IfȱIȱdoȱnotȱreȬ
ceiveȱwrittenȱconfirmationȱbyȱthatȱdate,ȱpleaseȱbeȱadvisedȱthatȱ
PNCȱwillȱbeȱseekingȱsanctionsȱunderȱFederalȱRuleȱ11ȱagainstȱ
NITELȱandȱyourȱfirmȱ…ȱ.”ȱ
ȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱ
5ȱItȱshouldȱnotȱbeȱdifficultȱforȱaȱpartyȱwhoȱisȱseriousȱaboutȱseekingȱRuleȱ11ȱ
sanctionsȱtoȱcomplyȱwithȱRuleȱ11(c)(2).ȱPartiesȱandȱdistrictȱcourtsȱthatȱrelyȱ
onȱaȱtheoryȱofȱsubstantialȱcomplianceȱshouldȱunderstandȱthat,ȱatȱleastȱinȱ
theȱpresentȱlandscape,ȱtheyȱareȱinvitingȱpossibleȱenȱbancȱand/orȱSupremeȱ
Courtȱreviewȱofȱtheȱquestion.ȱ

-- 15 of 18 --

16ȱ No.ȱ15Ȭ2142ȱ
OnȱAprilȱ2,ȱ2013,ȱshortlyȱafterȱtheȱcloseȱofȱdiscoveryȱandȱ
beforeȱ movingȱ forȱ summaryȱ judgment,ȱ PNCȱ Bank’sȱ lawyerȱ
sentȱaȱsecondȱsettlementȱoffer.ȱItȱagainȱreviewedȱtheȱseriousȱ
problemsȱwithȱNITEL’sȱcaseȱandȱexplainedȱwhyȱtheȱsuitȱwasȱ
frivolous.ȱThisȱletterȱproposedȱdifferentȱsettlementȱterms,ȱdeȬ
mandingȱ thatȱ NITELȱ dismissȱ theȱ complaintȱ withȱ prejudiceȱ
andȱpayȱPNCȱBankȱ$24,000.ȱTheȱletterȱdemandedȱwrittenȱacȬ
ceptanceȱwithinȱsixȱdays.ȱTheȱsettlementȱproposalȱconcludedȱ
muchȱasȱtheȱearlierȱletterȱhad:ȱ“IfȱIȱdoȱnotȱreceiveȱwrittenȱconȬ
firmationȱbyȱthatȱdate,ȱpleaseȱbeȱadvisedȱthatȱPNCȱwillȱseekȱ
sanctionsȱunderȱFederalȱRuleȱ11ȱagainstȱyourȱfirmȱandȱNITEL,ȱ
forȱallȱfeesȱandȱcostsȱincurredȱbyȱtheȱbankȱinȱdefendingȱyourȱ
client’sȱbaselessȱandȱpatentlyȱfalseȱcomplaint.”ȱȱ
TheȱRuleȱ11ȱthreatsȱdidȱnotȱtransformȱPNCȱBank’sȱsettleȬ
mentȱoffersȱintoȱcommunicationsȱthatȱsubstantiallyȱcompliedȱ
withȱ theȱ Ruleȱ 11(c)(2)ȱ warningȬshot/safeȬharborȱ requireȬ
ments.ȱEvenȱifȱweȱtreatȱtheȱcriticismsȱofȱNITEL’sȱcaseȱandȱlitiȬ
gationȱtacticsȱasȱcontainingȱtheȱequivalentȱofȱaȱRuleȱ11ȱmotion,ȱ
theȱlettersȱsimplyȱdidȱnotȱofferȱNITELȱorȱRiffnerȱtheȱ21Ȭdayȱ
safeȱharborȱthatȱwasȱofferedȱinȱNisenbaumȱorȱMatrixȱIV.ȱSubȬ
stantialȱcomplianceȱrequiresȱtheȱopportunityȱtoȱwithdrawȱorȱ
correctȱtheȱchallengedȱpleadingȱwithinȱ21ȱdaysȱwithoutȱimpoȬ
sitionȱofȱsanctions.ȱNeitherȱPNCȱBankȱletterȱofferedȱthatȱopȬ
portunity.ȱPNCȱBankȱwasȱentitled,ȱifȱitȱchose,ȱtoȱhuffȱandȱpuffȱ
aboutȱRuleȱ11ȱinȱitsȱsettlementȱdemandsȱforȱdismissalȱofȱbaseȬ
lessȱclaims.ȱButȱitsȱposturingȱdidȱnotȱamountȱevenȱtoȱsubstanȬ
tialȱcomplianceȱwithȱtheȱwarningȬshot/safeȬharborȱprovision,ȱ
letȱaloneȱtoȱtheȱactualȱcomplianceȱthatȱotherȱcircuitsȱdemand.ȱ
Theȱ districtȱ court’sȱ awardȱ ofȱ sanctionsȱ againstȱ Riffnerȱ isȱ
REVERSED.ȱ

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No.ȱ15Ȭ2142ȱ 17ȱ
P OSNER ,ȱ Circuitȱ Judge,ȱ dissenting.ȱ Federalȱ Ruleȱ ofȱ Civilȱ
Procedureȱ 11(c)(2),ȱ captionedȱ “Motionȱ forȱ Sanctions,”ȱ proȬ
vides,ȱ soȱ farȱ asȱ bearsȱ onȱ thisȱ case,ȱ thatȱ suchȱ “aȱ motionȱ …ȱ
mustȱ notȱ beȱ filedȱ orȱ beȱ presentedȱ toȱ theȱ courtȱ ifȱ theȱ chalȬ
lengedȱ paper,ȱ claim,ȱ defense,ȱ contention,ȱ orȱ denialȱ isȱ withȬ
drawnȱ orȱ appropriatelyȱ correctedȱ withinȱ 21ȱ daysȱ afterȱ serȬ
viceȱ …ȱ .”ȱ Ourȱ courtȱ hasȱ heldȱ thatȱ “substantialȱ compliance”ȱ
withȱ theȱ ruleȱ isȱ sufficient.ȱ Nisenbaumȱ v.ȱ Milwaukeeȱ County,ȱ
333ȱ F.3dȱ 804,ȱ 808ȱ (7thȱ Cir.ȱ 2003);ȱ Methodeȱ Electronics,ȱ Inc.ȱ v.ȱ
AdamȱTechnologies,ȱInc.,ȱ371ȱF.3dȱ923,ȱ927ȱ(7thȱCir.ȱ2004);ȱMaȬ
trixȱIV,ȱInc.ȱv.ȱAmericanȱNationalȱBankȱ&ȱTrustȱCo.ȱofȱChicago,ȱ
649ȱF.3dȱ539,ȱ552–53ȱ(7thȱCir.ȱ2011).ȱAndȱthisȱcaseȱisȱaȱgoodȱ
exampleȱ ofȱ substantialȱ compliance,ȱ asȱ theȱ districtȱ judgeȱ
foundȱ andȱ myȱ colleaguesȱ onȱ thisȱ panel,ȱ enamoredȱ asȱ theyȱ
appearȱ toȱ beȱ ofȱ legalȱ technicalities,ȱ orȱ reluctantȱ toȱ punishȱ
misbehavingȱlawyers,ȱmiss.ȱ
Lawyerȱ Riffner,ȱ representingȱ NITEL,ȱ filedȱ thisȱ suitȱ onȱ
NITEL’sȱ behalfȱ againstȱ PNCȱ Bank,ȱ N.A.,ȱ theȱ appellee,ȱ inȱ
Februaryȱ 2012.ȱ Theȱ districtȱ judgeȱ correctlyȱ deemedȱ theȱ suitȱ
frivolous.ȱ Riffner’sȱ irresponsibleȱ conductȱ ofȱ itȱ wasȱ clearlyȱ
sanctionable.ȱPNCȱsentȱRiffnerȱaȱletterȱinȱJulyȱ2012ȱexplainȬ
ingȱinȱdetailȱtheȱlegalȱandȱfactualȱproblemsȱwithȱhisȱlawsuit,ȱ
demandingȱwithdrawalȱofȱNITEL’sȱcomplaint,ȱandȱadvisingȱ
Riffnerȱ thatȱ ifȱ itȱ wasn’tȱ withdrawnȱ PNCȱ wouldȱ seekȱ sancȬ
tionsȱagainstȱhimȱunderȱRuleȱ11.ȱThisȱplacedȱRiffnerȱonȱnoȬ
ticeȱ thatȱ ifȱ hisȱ suitȱ againstȱ PNCȱ wasȱ indeedȱ frivolous,ȱ asȱ itȱ
was,ȱ he’dȱ betterȱ withdrawȱ itȱ orȱ faceȱ Ruleȱ 11ȱ sanctions.ȱ Heȱ
didn’tȱ withdrawȱ theȱ complaint—boorishly,ȱ heȱ didn’tȱ evenȱ
respondȱtoȱtheȱletter.ȱ
Afterȱ conductingȱ furtherȱ discovery,ȱ whichȱ yieldedȱ addiȬ
tionalȱ evidenceȱ ofȱ theȱ frivolousnessȱ ofȱ NITEL’sȱ suit,ȱ PNCȱ

-- 17 of 18 --

18ȱ No.ȱ15Ȭ2142ȱ
sentȱ Riffnerȱ aȱ second,ȱ similarȱ letterȱ inȱ Aprilȱ 2013ȱ outliningȱ
theȱevidenceȱofȱitsȱfrivolousnessȱinȱdetailȱandȱthreateningȱtoȱ
fileȱ aȱ Ruleȱ 11ȱ motionȱ forȱ sanctionsȱ againstȱ himȱ ifȱ heȱ didn’tȱ
dismissȱ theȱ suit.ȱ Notȱ onlyȱ didȱ heȱ notȱ dismissȱ theȱ suit,ȱ orȱ
withdrawȱanyȱofȱtheȱchargesȱmadeȱinȱit;ȱheȱdidn’tȱevenȱreplyȱ
toȱ theȱ letter,ȱ thusȱ repeatingȱ hisȱ earlierȱ rudeness.ȱ Althoughȱ
PNCȱdidȱnotȱserveȱaȱformalȱRuleȱ11ȱmotionȱonȱRiffnerȱpriorȱ
toȱ filingȱ theȱ motionȱ withȱ theȱ court,ȱ PNC’sȱ lettersȱ wereȱ theȱ
equivalentȱofȱRuleȱ11ȱmotions,ȱandȱgaveȱRiffnerȱtwoȱopporȬ
tunitiesȱ toȱ abandonȱ orȱ atȱ leastȱ curtailȱ hisȱ frivolousȱ lawsuitȱ
withoutȱhavingȱtoȱpayȱsanctions.ȱInsteadȱheȱsignaledȱbyȱhisȱ
failureȱ toȱ answerȱ eitherȱ letterȱ thatȱ heȱ wasȱ persistingȱ inȱ hisȱ
frivolousȱsuit—thatȱheȱreallyȱwasȱaȱboor.ȱ
BecauseȱPNC’sȱlettersȱconstitutedȱsubstantialȱcomplianceȱ
withȱRuleȱ11(c)(2),ȱasȱpermittedȱbyȱtheȱcasesȱinȱthisȱcourtȱthatȱ
Iȱ citedȱ earlierȱ andȱ thatȱ theȱ majorityȱ opinionȱ doesȱ notȱ chalȬ
lenge,ȱweȱshouldȱaffirmȱtheȱdistrictȱcourt.ȱ

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