Michael T. Byrne v. Camran Nezhat, M.D. , 261 F.3d 1075 ( 2001 )

[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT FILED
U.S. COURT OF APPEALS
ELEVENTH CIRCUIT
AUGUST 14, 2001
No. 99-12623
THOMAS K. KAHN
CLERK
D.C. Docket No. 96-00096-CV-GET-1
MICHAEL T. BYRNE,
Movant-Appellant,
DEBRA MANOV,
Plaintiff-Appellant,
versus
CAMRAN NEZHAT, M.D.,
FARR NEZHAT, M.D., et. al.,
Defendants-Appellees.
Appeals from the United States District Court
for the Northern District of Georgia
(August 14, 2001)
Before TJOFLAT, BIRCH and DUBINA, Circuit Judges.
TJOFLAT, Circuit Judge:
Stripped to its essentials, this is a simple medical malpractice case. It was
brought, however, as a multi-count RICO prosecution. Suspecting that the claims
in the complaint lacked factual bases, the district court took an unusual step and
granted the defendants leave to conduct discovery for the purpose of determining
whether plaintiff’s counsel had violated Rule 11 of the Federal Rules of Civil
Procedure. The discovery was to determine whether plaintiff’s counsel had
conducted an “inquiry reasonable under the circumstances” into the factual support
for the claims presented in the complaint.1 After the court took this step, the
1
Fed. R. Civ. P. 11 states:
(b) Representations to Court. By presenting to the court (whether by signing,
filing, submitting, or later advocating) a pleading, written motion, or other paper,
an attorney or unrepresented party is certifying that to the best of the person’s
knowledge, information, and belief, formed after an inquiry reasonable under the
circumstances, –
(1) it is not being presented for any improper purpose, such as to harass or
to cause unnecessary delay or needless increase in the cost of litigation;
(2) the claims, defenses, and other legal contentions therein are warranted
by existing law or by a nonfrivolous argument for the extension, modification, or
reversal of existing law or the establishment of new law;
(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; and
(4) the denials of factual contentions are warranted on the evidence or, if
specifically so identified, are reasonably based on a lack of information or belief.
(c) Sanctions. If, after notice and a reasonable opportunity to respond, the court
determines that subdivision (b) has been violated, the court may, subject to
conditions stated below, impose an appropriate sanction upon attorneys, law
firms, or parties that have violated subdivision (b) or are responsible for the
2
plaintiff moved the court to recuse pursuant to 28 U.S.C. § 455.2 The court denied
the motion.
During the Rule 11 discovery, the court dismissed the plaintiff’s claims
against one of the defendants for failure to state a claim upon which relief could be
granted. After the discovery was completed, the defendants moved the court to
sanction the plaintiff and one of her attorneys pursuant to Rule 11, 28 U.S.C. §
1927,3 and the court’s inherent power. They contended that, with the exception of
the plaintiff’s medical malpractice claim, none of the claims presented had a
factual basis and the claims had been brought in bad faith for the sole purpose of
harassment. The court agreed. In two orders issued sixteen months apart, the court
dismissed the remainder of plaintiff’s claims, except for the malpractice claim. In
addition, it required the plaintiff and her attorney to pay the attorneys’ fees and
violation.
2
The plaintiff’s motion did not specify the subsection of section 455 on which it was
based. Only two were conceivably applicable, subsections (a) and (b)(1). Subsection (a) states:
“Any justice, judge, or magistrate of the United States shall disqualify himself in any proceeding
in which his impartiality might reasonably be questioned.” Subsection (b) states: “He shall also
disqualify himself in the following circumstances: (1) Where he has a personal bias or prejudice
concerning a party, or personal knowledge of disputed evidentiary facts concerning the
proceeding[.]” See infra note 40.
3
28 U.S.C. § 1927 states: [a]ny attorney or other person admitted to conduct cases in any
court of the United States or any Territory thereof who so multiplies 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.
3
costs incurred in defending the dismissed claims. Two months after the first order
issued, the plaintiff renewed her motion for recusal; as before, the court denied the
motion.
These consolidated appeals came after the district court issued its second
sanctions order. Appellants – plaintiff and one of her attorneys – challenge the
denials of the plaintiff’s motions for recusal, the dismissal of the plaintiff’s claims
(except the malpractice claim), and the imposition of monetary sanctions in the
form of attorneys’ fees and costs.
We organize this opinion as follows. In Part I, we recite the events that led
the defendants to seek Rule 11 sanctions early in the case. In Part II, we address
the plaintiff’s argument that the district court should have recused. In Part III, we
consider the propriety of the court’s dismissal of all but the plaintiff’s malpractice
claim as well as the court’s imposition of monetary sanctions against the plaintiff
and her attorney under Rule 11, 28 U.S.C. § 1927, and the court’s inherent power.
Finally, in Part IV, we discuss the tools a district court should use in dealing with
the types of pleadings filed by the attorneys in this case.
I.
In September 1992, Debbie Manov (“Manov”), a New Jersey resident
4
suffering from endometriosis,4 traveled to the Atlanta Center for Fertility and
Endocrinology (“the Center”)5 for corrective laparoscopic surgery. Drs. Farr
Nezhat and Camran Nezhat, two of the Center’s specialists,6 performed the surgery
at Northside Hospital (“Northside”). Prior to the surgery, the doctors told Manov
that her appendix might be infected and that, if infected, it should be removed. She
agreed. During the surgery, the doctors determined that the appendix was infected
and removed it. Following the surgery, Manov developed an infection, which
necessitated her readmission to Northside. Drs. Nezhat treated the infection with
antibiotics, which Manov claims contributed to her loss of hearing.7
In August 1994, Manov, represented by Atlanta attorney Edward Kellogg,
4
Endometriosis is “a condition in which tissue containing typical endometrial granular
and stromal elements occurs aberrantly in various locations in the pelvic cavity or some other
area of the body.” Dorland’s Illustrated Medical Dictionary (28th ed. 1994). According to
Merriam Webster's Medical Dictionary 205 (1995), endometriosis is defined as "the presence
and growth of functioning endometrial tissue in places other than the uterus that often results in
severe pain and infertility."
5
The Center is located in Atlanta, Georgia.
6
Throughout this opinion, we refer to the Nezhat defendants and the Center defendant
jointly in that (1) the Nezhats are employed by the Center, and (2) all allegations against the
Center are based solely on their conduct.
7
According to Manov, her appendix was not infected; its removal therefore constituted
negligence on the part of the Drs. Nezhat. She claims that their negligence also caused the post-
operative infection. Finally, she claims that in performing the appendectomy, the doctors only
removed part of her appendix; this caused feces to leak into her abdomen and pelvic cavity
which in turn led to an E. coli bacteria infection.
5
filed a medical malpractice suit in the Superior Court of Fulton County, Georgia.
Named as defendants were Drs. Farr and Camran Nezhat and the Center. The
alleged malpractice was the removal of a healthy appendix (during the laparoscopic
procedure) which, in turn, caused an infection requiring further hospitalization.
Shortly after filing suit, Manov consulted James Neal (“Neal”), a
Pennsylvania lawyer practicing out of his residence in Ohio. At the time, Neal and
Michael Mixson (“Mixson”), an attorney from Monroe, Georgia, were prosecuting
two other medical malpractice cases in Atlanta, both filed in December 1993, on
behalf of Mary Mullen (“Mullen”). The first lawsuit, brought against Drs. Farr and
Camran Nezhat, Dr. Earl Pennington, the Center, and Northside, was pending in
the Fulton County Superior Court.8 The second suit, brought against the members
of Northside’s board of directors in their individual capacities, was pending in the
United States District Court for the Northern District of Georgia.9 Because
8
On February 11, 1994, the defendants moved the superior court to disqualify Neal from
representing the plaintiff because he had not been granted leave to represent her pro hac vice.
The court denied the defendants’ motion and granted Neal pro hac vice status on July 12, 1995.
See infra note 9.
9
Neal petitioned the district court for admission to appear pro hac vice on January 18,
1994. The record does not indicate whether the court granted his petition at that time. What the
record does reveal is that on February 11, 1994, the defendants moved to disqualify Neal from
appearing as Mullen’s co-counsel, and that on May 1, 1994, the court denied the motion. Mullen
v. Spanier, No. 1:93-CV-2882-RHH (N.D. Ga.) (May 11, 1994). The defendants renewed their
motion to disqualify Neal on September 27, 1995. According to an order the district court issued
in Manov’s case on February 23, 1998, Neal withdrew from Mullen’s case on October 27, 1995,
before the court could rule on the defendants’ renewed motion to disqualify. Manov v. Nezhat et
6
Mullen’s cases are of central importance to the instant case, we relay the history of
her cases as follows.
In her superior court complaint, Mullen alleged that on December 18, 1991,
the Drs. Nezhat and Pennington negligently performed a bowel resection procedure
to alleviate rectal endometriosis. Mullen alleged that the procedure was
experimental, caused severe physical complications, and that it was performed
without her informed consent. Mullen’s complaint contained seven counts, each
proceeding on a tort law theory predicated on the bowel resection procedure.10 In
her district court complaint, framed in one count, Mullen alleged that members of
Northside’s board were negligent in permitting the doctors to perform an
experimental bowel resection without the patient’s informed consent.11
al., No. 1:96-CV-0096-GET (N.D. Ga.) (February 23, 1998).
10
The counts were as follows: Count I, the negligence described in the above text; Count
II, surgery performed without the patient’s informed consent; Count III, battery committed
because the surgery was performed without the patient’s informed consent; Count IV, negligence
committed by Northside when it granted the defendant physicians surgical privileges; Count V,
fraud on the part of the physicians when they induced Mullen to undergo the bowel resection by
misrepresenting or omitting material facts; Count VI, the “tort of outrage”; Count VII, punitive
damages. Counts II and III were duplicative, both alleging an unauthorized touching, i.e., a
battery. Count VII did not allege a separate cause of action; rather, it merely sought punitive
damages in the previous counts.
11
In its January 23, 1997 order granting the defendants’ renewed motion for summary
judgment, the district court described the medical services rendered to Mullen by Drs. Farr and
Camran Nezhat, Dr. Pennington, the Center, and Northside as follows:
Mullen, a California resident, was referred to Dr. Camran Nezhat
and Dr. Farr Nezhat of Atlanta for treatment of pelvic pain. In
7
By the time Manov spoke to Neal, he had amended the allegations in
Mullen’s state court suit to add two causes of action, for a total of nine.12 Counts
VIII and IX, brought against the Drs. Nezhat and the Center,13 sought
compensatory and punitive damages for violations of the Georgia RICO14 statute,
O.C.G.A. § 16-14-4. Count VIII alleged that the defendants were operating a
“criminal enterprise” and engaging in “a pattern of racketeering activity,” and that
such racketeering activity had caused Mullen injury. The “acts of racketeering”
were, among others, that the Drs. Nezhat (1) made false statements in medical
connection with his treatment of [Mullen], in December 1988, Dr.
Camran Nezhat performed video laserscopy upon [Mullen] for
treatment of endometriosis. [Mullen] subsequently returned to
Atlanta in December 1991 for further treatment by Drs. Nezhat.
She was admitted to Northside . . . and underwent the surgery that
is the basis of this action on December 18, 1991. Drs. Nezhat,
apparently with the assistance of one of the named Defendants [Dr.
Pennington], performed a bowel resection upon [Mullen]. Shortly
after the surgery, [Mullen’s] rectum and bowel prolapsed while she
was using the bathroom. [Mullen] contends that since that time,
she has had continuous medical problems as a direct result of this
surgery.
Mullen v. Spanier et al., No. 1:93-CV-2882-CC (N.D. Ga.) (January 23, 1997).
12
The information regarding Mullen’s claims is taken from the decision of the Georgia
Court of Appeals in Mullen v. Nezhat, 477 S.E. 2d 417, 419 (Ga. Ct. App. 1996), which affirmed
the partial summary judgment entered against Mullen by the Fulton County Superior Court.
13
Dr. Pennington and Northside, the other defendants in the lawsuit, were not sued in
Count VIII. We cannot determine from the record whether Pennington or Northside were named
in Count IX.
14
RICO is an acronym for Racketeer Influenced and Corrupt Organizations.
8
journal articles; (2) failed to obtain valid consent for surgical procedures from
Mullen and other patients at the Center, thereby committing aggravated battery on
the patients; (3) improperly billed insurance companies for experimental surgeries;
and (4) improperly used experimental drugs. Mullen v. Nezhat, 477 S.E. 2d 417,
419 (Ga. Ct. App. 1996). Count IX alleged aggravated battery, and federal mail
and wire fraud as acts of racketeering. Count IX asserted that the Drs. Nezhat
committed aggravated battery by failing to obtain “‘valid informed consent . . .by
fraudulently misrepresenting the true nature of their experimental surgery, [and] by
repetitively performing non-indicated unnecessary surgery’ on Mullen and other
patients, thereby ‘deliberately and maliciously causing bodily harm’ amounting to
aggravated battery.” The mail and wire fraud allegedly occurred when the
defendants “engage[ed] in experimental and non-consensual medical treatment by
implanting Estradiol pellets into ‘hundreds if not thousands of women without their
knowledge that this hormonal implant was not approved.’” Id.Apparently, Manov was impressed with the manner in which Neal was
handling Mullen’s cases, so she decided that Neal should take over her lawsuit
against Drs. Nezhat and the Center. Neal said he would take the case, but would
need to associate local counsel. Manov agreed. Neal thereafter searched the
records of the Fulton County Superior Court for the names of other attorneys who
9
had sued the Nezhats or the Center. He found one, Michael T. Byrne (“Byrne”),
one of the appellants now before us.15 In the spring of 1995, Byrne appeared as
Manov’s counsel in the state court suit, and Edward Kellogg withdrew.
Unbeknownst to Manov, the continuation of Neal’s pro hac vice status in
Mullen’s state and federal court cases was being challenged on the grounds that he
had violated the courts’ discovery rules and the Code of Professional
Responsibility by engaging in malicious and harassing conduct against the Nezhats
and the Center. These challenges began in February 1994, when the defendants in
both of Mullen’s cases moved the courts to revoke Neal’s pro hac vice status. In
each case, the court denied the motion, but nonetheless condemned Neal’s
behavior. The district court’s May 11, 1994 order stated that, although Neal’s
“conduct did not conclusively violate the Code of Professional Responsibility . . . .
[his] actions bordered on conduct unbecoming an officer of the Court.”16 The
superior court’s order, issued July 11, 1994, was more explicit. It stated that
“Neal’s communication with various counsel for Defendants borders on
unprofessional, scurrilous, and distasteful conduct. . . . [His] conduct has come as
close to the line as one could possibly come to violating the Georgia Code of
15
Byrne had litigated an employment discrimination case against the Nezhats on behalf
of a former Center employee.
16
Mullen v. Spanier, No. 1:93-CV-2882-RHH (N.D. Ga.) (May 11, 1994).
10
Professional Responsibility.”17 He communicated with defense counsel “in a
cavalier and ‘half-cocked’ manner in an effort to bully the Defendants into a quick
and favorable settlement.”18 As part of his bullying tactics, he “threatened criminal
prosecution to gain a civil advantage;19 threatened to use the media as a sounding
17
Mullen v. Nezhat, No. E-23339 (Ga. Sup. Ct) (July 11, 1994).
18
Id.19
Id. During his litigation of Mullen’s claims, Neal informed counsel for the Nezhats
that they may be subject to criminal prosecution. In a February 1, 1994 letter to their lawyers,
Neal represented that he “served as an agency special assistant to a U.S. Attorney for a number
of years . . . know[s] attorneys within the Government and know[s] . . . that medical fraud cases
are very high on the Government’s prosecution list due to health care reform concerns”
(emphasis in original). Neal’s letter implied that the Nezhats, during the course of their medical
practice, had engaged in criminal activity which could lead to a federal RICO prosecution and
the confiscation of their business assets. The chances of such a prosecution, Neal opined, would
be increased if members of the press learned of the allegations he had made on Mullen’s behalf.
After informing counsel of the risk their clients would run if they persisted in contesting
Mullen’s claims, Neal’s letter reminded counsel that they had “an awesome responsibility. If
you make a wrong decision, then things could quickly move out of all of our control.” Neal
closed his letter with the following warning: “If you make the mistake of handling this case like
any other, then all hell may break loose, to both our detriments. If you choose to ignore the risks
involved – if you choose to simply accept the denials of your clients, then we will go forward. If
we do go forward, then we will spare no expense or effort in proving our case and in making it
the largest case that we possibly can. It is on your shoulders.”
From the Spring of 1994 to June 1996, Neal sent letters to federal prosecutors, the
Federal Bureau of Investigation, and the Food and Drug Administration. Each letter accused the
Nezhats of fraud and other criminal conduct. For example, in a May 1, 1994 letter to the United
States Attorney for the Northern District of Georgia, Neal wrote: “I am writing concerning two
Iranian surgeons (brothers/Naturalized Citizens), who I have become convinced are dangerous
and amoral men, capable of and perhaps even inclined to harm Ms. Stacy Mullen, my client.”
Neal represented that the Nezhats had “committed a series of criminal maimings by deception.”
The May 1 letter was the first of several Neal directed to that United States Attorney. Neal’s
letters to the FBI contained similar allegations of criminal wrongdoing. Among other things,
Neal told the FBI that the Nezhats were preparing to move their assets “off shore.” As indicated
in the text infra, the Fulton County Superior Court eventually barred Neal from participating in
Mullen’s case against the Nezhats and the Center, and shortly thereafter, he voluntarily withdrew
from representing Mullen in her district court case against the directors of Northside.
11
board in order to gain a civil advantage; . . . engaged in activities to subvert justice;
. . . [and] threatened to be the causing agent to send some of the Defendants [i.e.,
the Nezhats] back to their home country.”20 Notwithstanding such conduct, the
court permitted Neal to continue his representation of the plaintiff because “a party
should be represented by an attorney of [her] choice whenever possible.”21
According to the defendants in Mullen’s cases, Neal failed to heed the
courts’ admonitions. They therefore renewed their motions to revoke Neal’s pro
hac vice status and to have him disqualified as co-counsel in Mullen’s cases.22 On
August 16, 1995, the superior court barred Neal from further participation in the
case. In its order, a part of which we quote in the margin, the court found that
“Neal’s continued unethical behavior, . . . despite the earlier admonitions, has
tipped the balance in favor of ensuring ethical conduct on the part of lawyers over
the right of the Plaintiff to have her chosen counsel.”23 The superior court issued a
Notwithstanding his withdrawal from Mullen’s cases, Neal’s letters to the United States
Attorney and the FBI continued unabated. In fact, Neal’s letter-writing campaign against the
Nezhats continued into the prosecution of the instant case on behalf of Manov.
20
Id.21
Id.22
The defendants renewed their motion in the Georgia Superior court on April 10, 1995
and in the district court on September 27, 1995.
23
The court balanced a party’s right to counsel of her choice against the court’s, and the
public’s, interest in “maintaining the integrity of the judicial process.” Referring to its order of
July 11, 1994, admonishing Neal about his conduct, the court described Neal’s “current conduct”
12
in these words:
Neal’s ‘informal discovery procedures’ and his continued requests
for information from Georgia Baptist Hospital and Northside
Hospital concerning allegations that Dr. Camran Nezhat engaged
in inappropriate sexual conduct with his patients. The ‘informal’
discovery procedures complained of include requests by [Neal] for
information concerning Dr. Nezhat from Stanford University
Hospital in Palo Alto, California; Millard Fillmore Hospital in
Buffalo, New York; and St. Joseph’s Hospital in Atlanta, Georgia.
The information requested by Mr. Neal was contained in various
hospitals’ credentialing files. The information was not released by
the hospitals as the information is either privileged or would not be
released without written authorization by Dr. Nezhat. See Parker
v. St. Clares Hospital, 159 A.2d 919 (1990) and Matchett v.
Superior Court, 40 Cal.3d 623, 115 Cal. Reptr. 317 (1974).
[Neal] justifies his actions by claiming that he only
requested information concerning application forms filled out by
Dr. Nezhat for the hospitals. This is simply semantics. It is clear
that Plaintiff’s counsel was attempting to subvert the system and
hopefully discover information to which he may not otherwise
have been entitled. Mr. Neal, as a former Hospital Counsel,
understands the privileges that accompany medical credential files.
However, he attempted to undermine this privilege. No where in
his letters to these institutions did he identify himself as an
attorney involved in litigation against Dr. Nezhat.
Further evidence that [Neal] knew his conduct was
deceitful comes from the fact that the same day he sent the letters
to the hospitals requesting information about Dr. Nezhat, he sent a
letter to Defendant’s counsel, Mr. Greeen, requesting that Dr.
Nezhat sign a broad authorization for the release of his credential
files at the various institutions at which he practiced. [Neal]
obviously anticipated that Dr. Nezhat would not sign such a
request and therefore, before even receiving a response to the
request for authorization. Mr. Neal was already requesting the
same information from those same hospitals, knowing of their
privileged nature. This violates Georgia Code of Professional
Responsiblity DR 1-102 (A)(4): ‘A lawyer shall not engage in
professional conduct involving dishonesty, fraud, deceit, or
misrepresentation.’ [Neal] was deceitful and dishonest in his
attempts to gain privileged and protected information in Dr.
Nezhat’s credential files.
The second activity complained of by the Defendants is
13
[Neal’s] repeated attempts to discover information concerning Dr.
Nezhat’s alleged sexual misconduct with his patients. [Neal] based
those allegations on a telephone conversation with Mr. Michael
Frick, general counsel for Georgia Baptist. In that conversation
Mr. Frick claimed there were rumors that Dr. Nezhat engaged in
sexual improprieties with his patients. In an attempt to clear up
any misunderstanding, Mr. Frick has checked the docket of the
Superior Court House of Fulton County and the records at Georgia
Baptist Hospital. He determined there was nothing on the dockets
or in the hospital records concerning any improprieties by Dr.
Nezhat. Mr. Frick also examined the file of Dr. Nezhat kept at
Georgia Baptist on Dr. Nezhat and found no complaints against
Dr. Nezhat concerning sexual misconduct. Mr. Frick has
subsequently filed an affidavit on this matter outlining the steps he
took in the course of his investigation and concluded that he was
mistaken in believing Dr. Nezhat was involved in sexual
misconduct. Further, Georgia Baptist has responded to Plaintiff’s
request for Production of Documents indicating that there are no
records at their hospital that support the allegations of sexual
misconduct.
Despite the affidavit of Mr. Frick and the response of
Georgia Baptist, [Neal] is undeterred. He has filed a Motion to
Compel directed to Georgia Baptist for documents concerning any
misconduct by Dr. Nezhat and has used the telephone conversation
with Mr. Frick as the basis for Plaintiff’s Motion to Compel in the
United States District Court action against the Board of Directors
at Northside Hospital.
[Neal] contends that he is justified in this course of action
due to his firm belief in these allegations. He has stated that these
allegations are supported by other people, but has provided no
proof of such. Mr. Neal also claims that Mr. Frick is not credible
due to his current position as Counsel for Georgia Baptist. Mr.
Frick has filed an affidavit under oath and penalty of perjury
stating that as a result of his investigations, Dr. Nezhat has not
been involved in any sexual misconduct. Further, Georgia Baptist
has stated it has no such records concerning this matter. [Neal’s]
continued attempts to gain this information in the face of such
denials is a violation of Georgia Code of Professional
Responsibility DR 7-102(A)(1): ‘(A) In representing his client, a
lawyer shall not: (1) . . . assert a position . . . or take other actions
on behalf of his client when he knows or it is obvious that such
action would serve merely to harass or maliciously injure another.’
14
second order on August 16, 1995 granting the defendants summary judgment on
Mullen’s RICO claims. Mullen, now represented solely by Mixson, appealed the
judgment.24
The defendants in Mullen’s district court case also sought Neal’s
disqualification. On September 27, 1995, they renewed their motion to revoke his
pro hac vice status. Neal promptly withdrew from the case, thereby mooting
In this case it is obvious that there is no information concerning
Dr. Nezhat’s alleged sexual misconduct. The unrelenting fashion
in which [Neal] has attempted to acquire this information is
harassing and malicious.
It is well established that: ‘The rules of disqualification of
an attorney will not be mechanically applied; rather we should
look to the facts peculiar to each case in balancing the need to
ensure ethical conduct on the part of lawyers appearing before the
court and other special interests, which include the litigants right
to freely chosen counsel.’ Stoddard v. Board of Tax Assessors,
173 Ga. App. 467 (1985). [Neal] has already received a stern
warning from this Court concerning ethical violations, particularly
conduct that could be viewed as malicious and harassing. [Neal]
was walking on thin ice when admitted pro hac vice to practice in
Georgia. Admission was explicitly conditional on Mr. Neal
following the Code of Professional Responsibility to the letter.
Mr. Neal’s continued unethical behavior in this case, despite the
earlier admonitions, has tipped the balance in favor of ensuring
ethical conduct on the part of lawyers over the right of the Plaintiff
to have her chosen counsel. Mr. Neal has left no option for this
Court other than to disqualify him as Plaintiff’s counsel.
Mullen v. Nezhat, No. E-23339 (Ga. Sup. Ct.) (August 16, 1995).
24
The Georgia Court of Appeals affirmed the summary judgment on October 22, 1996,
while the instant case was still pending. See Mullen v. Nezhat,, 477 S.E.2d 417 (Ga. Ct. App.
1996).
15
defendants’ motion.25
As Neal’s privilege to represent Mullen in her state and federal court cases
was coming to an end, Byrne, on July 13, 1995, voluntarily dismissed Manov’s
superior court lawsuit.26 Six months later, on January 12, 1996, one day before the
Georgia renewal statute would have barred refiling of Manov’s case,27 Byrne
brought Manov’s malpractice claim to the district court, filing the lawsuit now
before us.28 Although he was Manov’s lawyer, Neal neither signed the complaint
nor sought leave to appear pro hac vice.29 In addition to Drs. Farr and Camran
25
See supra note 9. Neal was replaced by Edward T.M. Garland and Robin N. Loeb of
Atlanta. On January 24, 1997, the district court granted the defendants summary judgment.
Mullen appealed, and we affirmed. See 11th Cir. R. 36-1. Mullen v. Spanier, 131 F.3d 156 (11th
Cir. 1997) (unpublished table decision).
26
While Byrne had filed an appearance as Manov’s counsel of record, Mixson is the
attorney who signed the voluntary dismissal. In a September 25, 2000 letter to this court,
Mixson indicated that he only made a brief appearance on behalf of Manov in her state court
case and did not become involved in her federal court case until after the district court’s
February 23, 1998 order sanctioning Byrne and Manov.
We note also that on April 10, 1995, the defendant renewed their motion to disqualify
Neal in Mullen’s superior court case. This motion was pending resolution when Byrne
voluntarily dismissed Manov’s superior court case.
27
See O.C.G.A. § 9-2-61.
28
Manov’s case was initially assigned to Judge Charles A. Moye, Jr. According to the
case’s docket sheet, on January 18, 1996, Judge Moye entered an “ORDER transferring [the]
case to another district judge on the regular rotation list.” That same day, the district court clerk
assigned the case to Judge G. Ernest Tidwell, who presided over the case until its conclusion. In
this opinion, in referring to the district court, we refer to Judge Tidwell.
29
In his deposition taken by the defendants pursuant to the district court’s order
permitting them to engage in Rule 11 discovery, Byrne testified that, even though both he and
16
Nezhat and the Center, the complaint named as defendants Dr. Ceana Nezhat, Ali
Nezhat,30 and Northside.
As noted above, Manov’s state court complaint contained only one count:
the medical malpractice claim. The complaint Manov filed in the district court,
however, which consisted of 78 pages and 299 paragraphs, contained eight
additional counts. Its centerpiece was Manov’s claims for damages under the state
and federal RICO statutes, O.C.G.A. § 16-14-631 and 18 U.S.C. § 1964(c),32 Counts
Neal were representing Manov, they purposely omitted Neal’s name from Manov’s complaint.
Byrne explained that they did not want Neal to become an issue in Manov’s case.
30
Drs. Farr, Camran, and Ceana Nezhat and Ali Nezhat are brothers. The physicians are
employed by the Center; Ali Nezhat is the Center’s office manager.
31
Section 16-14-6(c), “Available civil remedies,” provides: “Any person who is injured
by reason of any violation of Code Section 16-14-4 shall have a cause of action for three times
the actual damages sustained and, where appropriate, punitive damages.” Section 16-14-4,
“Prohibited activities,” provides:
(a) It is unlawful for any person, through a pattern of racketeering activity or
proceeds derived therefrom, to acquire or maintain, directly or indirectly, any
interest in or control of any enterprise, real property, or personal property of any
nature, including money.
(b) It is unlawful for any person employed by or associated with any enterprise to
conduct or participate in, directly or indirectly, such enterprise through a pattern
of racketeering activity.
(c) It is unlawful for any person to conspire or endeavor to violate any of the
provisions of subsection (a) or (b) of this Code section.
Neither Count III nor any other part of Manov’s complaint cited the subsection(s) of section 16-
14-4 the defendants allegedly violated.
32
Section 1964(c) provides, in pertinent part, that:
Any person injured in his business or property by reason of a violation of [18
U.S.C. §] 1962 of this chapter may sue therefor in any appropriate United States
District Court and shall recover threefold the damages he sustains and the cost of
the suit, including a reasonable attorney’s fee.
17
III and IX, respectively. The allegations of the two RICO counts were essentially
the same. According to Manov, each defendant was an “enterprise” which was
conducted “through a pattern of racketeering activity.”
Each count of the complaint incorporated by reference the allegations of
each preceding count.33 Count I, sounding in negligence, was brought against
Northside for failing to monitor and investigate the Nezhats’ practice of surgery at
the hospital. Count II alleged medical malpractice on the part of Drs. Farr and
Camran Nezhat. Count III sought recovery under the Georgia RICO statute against
Section 1962 contains four subsections, (a)-(d). Subsection (a) makes it a crime for anyone who
has derived income from “a pattern of racketeering activity . . . in which such person has
participated as a principal . . . to use or invest, directly or indirectly, any part of such income . . .
in acquisition of any interest in, or the establishment or operation of, any enterprise . . . engaged
in . . . interstate . . . commerce.” Subsection (b) imposes criminal liability on anyone, who
“through a pattern of racketeering activity . . . acquire[s] or maintain[s], directly or indirectly,
any interest in or control of any enterprise . . . engaged in . . . interstate . . . commerce.”
Subsection (c) makes it a crime for any person “employed by or associated with any enterprise
engaged in . . . interstate . . . commerce . . . to conduct or participate, directly or indirectly, in the
conduct of such enterprise’s affairs through a pattern of racketeering activity.” Subsection (d)
makes it a crime for anyone to conspire to violate the substantive offenses of sections 1962(a)-
(c).
Neither Count IX nor any other part of Manov’s complaint cited the subsection(s) of section
1962 the defendants allegedly violated.
33
Each count explicitly referred to one or more named defendants. For example, the
allegations appearing under the heading “Count V” focused on Dr. Farr Nezhat:
Count V – Fraud
Defendant Farr Nezhat
Because each count incorporated each preceding count, however, Count V actually sought
recovery against the defendants who had been named in one or more of the preceding counts. In
the Part III.B.2, we filter out the incorporated allegations that are obviously irrelevant to the
theory of recovery stated in the title of the count.
18
all of the defendants. Count IV alleged that Drs. Farr and Camran Nezhat
committed battery by performing an appendectomy without Manov’s consent.
Count V alleged that Dr. Farr Nezhat fraudulently misrepresented that Manov’s
appendix might be infected and require removal. Count VI alleged that the manner
in which Drs. Farr and Camran Nezhat, the Center, and Northside billed Manov
and other patients for services rendered constituted “theft by deception.” Count
VII alleged that Drs. Farr and Camran Nezhat failed to obtain Manov’s “informed
consent” to perform an appendectomy. Count VIII sought punitive damages
against all defendants.34 Count IX alleged violations of the federal RICO statute by
Drs. Farr, Camran, and Ceana Nezhat, Ali Nezhat, and the Center.
The defendants answered Manov’s complaint, asserting several affirmative
defenses, including that the complaint failed to state a claim for relief.35 On May 3,
1996, before any significant discovery had taken place, defense counsel wrote the
34
We note that a prayer for punitive damages is not an independent cause of action.
Instead, certain causes of action, such as intentional torts, may provide for the recovery of
punitive as well as compensatory damages.
35
After answering the complaint, Northside moved the court to dismiss Manov’s claims
against it pursuant to Fed. R. Civ. P. 12(b)(6). The motion was in effect a nullity since Northside
had asserted in its answer as an affirmative defense that the complaint failed to state a claim for
relief. Had Northside wished to file a Rule 12(b)(6) motion for failure to state a claim for relief,
it should have done so before filing its answer containing the same defense. See Rule 12(b) (“[a]
motion making any of these defenses shall be made before [answering the complaint].”)
Northside followed the same procedure after Manov filed an amended complaint. First, it
answered the amended complaint and asserted the affirmative defense of failure to state a claim
for relief; then, sometime later, it filed a motion which presented the same defense.
19
district court asking leave to engage in Rule 11 discovery. They contended that
Neal was Manov’s lawyer; that he had ghost-written Manov’s complaint; that
Byrne had signed it merely in his capacity as local counsel and had not conducted
the requisite pre-filing investigation of the facts underpinning the complaint’s
claims; that the complaint’s RICO allegations were similar to those Neal had made
in the Mullen cases,36 and that the superior court had barred Neal from further
participation in Mullen’s case. Counsel attached to their letter a copy of the
superior court’s August 16, 1995 orders (removing Neal from the case and granting
the defendants summary judgment on Mullen’s RICO claims), and represented that
Neal, through Byrne, was using Manov’s case as a vehicle to continue his vendetta
against the Nezhats. Counsel pointed out that Manov’s case had begun as a simple,
one-count medical malpractice case in the Fulton County Superior Court, but that
36
For instance, both Mullen’s state court complaint and Manov’s complaint in the
instant case alleged that the defendants violated the Georgia RICO statute. As incidents of
racketeering activity, both complaints alleged that the Drs. Nezhat had committed medical
journal fraud and had improperly prescribed experimental medications. Similarly, both
complaints alleged that the Drs. Nezhat failed to obtain the plaintiff’s informed consent to
perform the surgery at issue. Based on the lack of such consent, the complaints alleged that the
Drs. Nezhat committed battery when they operated on Mullen and Manov. Furthermore, both
complaints contained allegations of sexual misconduct. Mullen’s state court complaint, at
paragraph 258, alleged that Camran Nezhat had exhibited a “propensity to violence against
women.” Manov’s complaint in the instant case, at paragraph 158, alleged that “Camran Nezhat
was represented by counsel relating to matters of sexual improprieties upon patients.” Finally,
in her district court case, Mullen moved the court for a protective order on the ground that the
Drs. Nezhat were intimidating her witnesses. The district court denied the motion because there
was no evidence to support it. This intimidation-of-witnesses claim was repled in Manov’s
complaint as an incident of racketeering activity.
20
after Neal entered the picture, it became a “blunderbuss” RICO prosecution aimed
at extorting a quick settlement.
On June 5, 1996, the district court granted the defendants leave to conduct
Rule 11 discovery.37 Three weeks later, on June 26, Manov moved the court to
permit her to engage in Rule 11discovery as well. The requested discovery related
to Count I titled, “Negligence against Northside”: specifically, the allegation in
paragraph 158 stating that “Dr. [Camran] Nezhat has been represented by counsel
relating to matters of sexual imposition upon patients,”38 and Counts III and VIII,
37
The defendants’ intent to seek Rule 11 discovery was disclosed to Manov’s counsel
and the district court in the Joint Planning Report and Scheduling Order the parties filed with the
court on April 26, 1996. On May 16, 1996, Byrne responded to defense counsels’ May 3 letter,
and defense counsel replied on May 23. In ordering Rule 11 discovery, the court explained that
it was treating the May 3 letter as a motion by the defendants for leave to conduct discovery
limited to the question of whether Manov’s complaint had been filed in violation of Rule 11.
Although the court required such discovery to be completed within 45 days, it took 13 months to
complete.
38
The discovery Manov requested was in the form of interrogatories and requests for
production of documents directed to the Center, Northside, and 19 hospitals and medical
facilities. A proposed interrogatory to the 19 hospitals read as follows:
[Interrogatory No.] 5.
Have there been any incident reports or other documentation generated at your institution
concerning Camran, Farr or Ceana Nezhat:
A. That have involved the striking of nurses/physicians?
B. That have involved operating outside specialty/surgical privileges?
C. That have involved sexual contact with patients?
D. That have involved any other incident?
(emphasis added). Proposed interrogatories nos. 36 and 37 asked Northside whether it received
“any information from Georgia Baptist Hospital to the effect that Camran Nezhat has beaten a
female physician in a stairwell at Georgia Baptist Hospital . . . or concerning providing fee [sic]
vaginal examinations to employees of Georgia Baptist or was making inappropriate comments to
said individuals during vaginal examinations.” Proposed interrogatory no. 50 asked Northside
21
alleging violations of the Georgia and federal RICO statutes.
On June 28, Manov moved the court for leave to file an amended complaint.
At this time, she also filed a “Motion for an Order Directing Defendant Ceana
Nezhat to provide Sworn Testimony to this Court Within Three Days that He is a
Bona Fide Physician.39 On July 8, while the foregoing motions were pending,
whether Camran Nezhat “was ever referred to as ‘Hands On’ Nezhat . . . while he was a resident
in Buffalo.” In the Proposed Findings of Fact the defendants submitted to the court on July 10,
1997, in support of their motions for sanctions, the defendants represented that Camran Nezhat
served his residency in Buffalo, New York “twenty years ago.”
39
As indicated in the text infra, the court granted Manov’s motion for leave to amend her
complaint. Manov’s September 6, 1996 amended complaint alleged that Ceana Nezhat was not a
medical doctor, in that he “has not been awarded a medical degree.” That allegation appeared in
Count IV, “Georgia RICO,” as an act of racketeering, and in Count V, “Battery,” as part of
Manov’s claim that the appendectomy the Nezhats performed constituted a battery. In Manov’s
June 19, 1996 motion for reconsideration of the court’s June 5 order granting the defendants
leave to conduct Rule 11 discovery, Byrne represented that he had a “reasonable belief” that
Ceana Nezhat was not a physician. In Byrne’s view, as he stated on deposition, (see supra note
37), every time Ceana Nezhat “touche[d] a woman in the practice and t[old] people he [wa]s a
doctor, there [wa]s a lack of informed consent and that’s a battery under Georgia law and that
would be a felony.”
Byrne based his belief that Ceana Nezhat was not a medical doctor on the following
information obtained by Neal: On January 23, 1996, Neal wrote the Swiss Embassy in Tehran to
inquire about Ceana Nezhat’s medical training. Because the United States did not have
diplomatic relations with Iran, Neal directed his correspondence through the Swiss Embassy. In
his letter, he stated his belief that Ceana had not graduated from the University of Tehran
Medical School in 1981 and asked the Swiss Embassy to confirm this belief . Neal received four
documents in response. The first was a letter handwritten in Persian. The second, a translation
of the letter, indicated “non-attendance” at the medical school by Ceana Nezhat after the first
semester of 1978-79. The third document was a letter from Dr. G. Pourmand, Vice-Chancellor
for Research and International Relations at Tehran University of Medical Sciences and Health
Services, which, purporting to rely on information received from another part of the university,
stated that Ceana Nezhat did not complete the 1978/79 period “due to no reference,” and was not
awarded a doctoral degree in medicine. The fourth document, a Swiss Embassy transmittal
accompanying the first three, interpreted them only as stating that “Mr. Nezhat has no record of
completing his medical course at the said University” (emphasis in original).
Apparently, there is a dispute about whether the language translation contained in the
22
Manov moved the court to recuse, pursuant to 28 U.S.C. § 455(a), on the ground
that one of its law clerks, Dan McDevitt (“McDevitt”), had been formerly employed
by the law firm representing the Nezhats and the Center.40 On July 9, after
entertaining the arguments of counsel, the district court ruled on these motions. The
second document was accurate. The defendants contend – based on an unverified search and in
the face of the ambiguity created by the fourth document, which indicated that there was simply
no record of Ceana Nezhat completing his degree – that it was irresponsible for Byrne to allege
in Manov’s amended complaint that Ceana Nezhat was not a medical doctor. The lack of a
record, they submit, does not parlay into the lack of a degree; rather, in light of the
overwhelming evidence to the contrary, the allegation appears baseless. Ceana Nezhat holds a
license to practice medicine and surgery from the State of Georgia. Furthermore, the
Educational Commission for Foreign Medical Graduates (“ECFMG”), the lawfully designated
agency for investigating and determining whether foreign medical graduates can be certified to
practice medicine in the United States, certified that Ceana Nezhat satisfied all of its
requirements and successfully passed its examinations. The defendants assert that, in certifying
Ceana Nezhat, the ECFMG determined that he had a medical degree. Finally, Byrne ignored
Ceana Nezhat’s graduate work in medicine at the Nassau County Medical Center, a major
affiliate of the State University of New York at Stoney Brook, and at the University of Illinois.
In addition to using Ceana Nezhat’s purported lack of a medical degree as a basis for
Manov’s claims in Count IV and Count V of her amended complaint, the defendants contended
that, in an effort to extort a settlement, Byrne and Neal informed the media and the medical
community that Ceana Nezhat was not a physician. Northside’s counsel represented to the
district court that Manov’s attorneys had sent a copy of their motion questioning Ceana Nezhat’s
credentials to a reporter, Linda Carroll, because, hours after the motion was filed, Carroll called
Northside’s counsel to ask “How can you allow persons not a doctor to be practicing there?” In
his deposition (taken as part of the Rule 11 discovery), Byrne admitted speaking with Carroll a
“dozen or less” times about the Nezhats.
40
As indicated in note 2 supra, Manov’s motion did not specify the subsection of 28
U.S.C. § 455 on which it was based. Only two were conceivably applicable, subsections (a) and
(b)(1). In none of her submissions to the court regarding recusal pursuant to section 455 did
Manov cite subsection (b)(1) or any of the language thereof. Rather, all of her submissions cited
the language of subsection (a), specifically the words “impartiality might reasonably be
questioned.” Moreover, in her second motion for recusal, filed April 23, 1998, Manov used the
term, section “455(a).” Hence, we treat Manov’s motions as having sought the court’s recusal
pursuant to section 455(a).
23
court granted Manov leave to amend her complaint, but denied her other motions.
Two months later, on September 6, Byrne filed an amended complaint.41 The
amended complaint contained the same claims as Manov’s original complaint with
the exception of Count VI (theft by deception), Count VII (the claim that Drs. Farr
and Camran Nezhat had not obtained Manov’s informed consent prior to surgery),
and Count IX (the federal RICO claim), which had been deleted.42 On September
23, 1996, the defendants answered the complaint; their answers once again included
the affirmative defense of failure to state a claim for relief.
Four days later, on September 27, Byrne, apparently anticipating the
defendants’ motions for Rule 11 sanctions, filed a memorandum in support of
Manov’s claims.43 On October 15, Northside moved the court to dismiss Manov’s
41
Byrne styled the pleading “First Amended Complaint.” We refer to it as the amended
complaint.
42
The amended complaint consisted of 32 pages and 126 paragraphs. It rearranged and
restated in part the remaining six counts of the original complaint, so that Count I of the original
complaint became Count III, Count II became Count I, Count III became Count IV, Count IV
became Count V, Count V became Count II, and Count VIII became Count VI.
Thus, the amended complaint read as follows: Count I alleging medical malpractice by
the Center and Drs. Farr and Camran Nezhat; Count II alleging fraud by the Center and Drs. Farr
and Camran Nezhat; Count III alleging negligence by Northside; Count IV alleging violations of
Georgia RICO by all defendants; Count V alleging battery by Drs. Camran, Farr, and Ceana
Nezhat; Count VI, “Punitive Damages [Against] All Defendants.”
43
The memorandum contained 45 pages and 92 exhibits, which, Byrne represented,
constituted evidentiary support for Manov’s several claims.
24
claims against it in Counts III and IV for failure to state a claim for relief.44 On
November 5, Byrne filed a memorandum in response to Northside’s motion, and on
November 11, Byrne and Neal filed a memorandum supplementing Byrne’s
September 27 memorandum in support of Manov’s amended complaint.45 The
court granted Northside’s motion to dismiss on December 11, 1996.46 The court
dismissed Count III on the ground that it was time barred, and the claim against
Northside in Count IV on the ground that it failed to allege a violation of the
Georgia RICO statute by the hospital.47 Following this ruling, the defendants,
44
Northside’s motion merely replicated its affirmative defense of failure to state a claim
for relief and therefore was a nullity. See note 35 supra.
45
The memorandum contained 146 pages.
46
As we have noted, see notes 35 and 44 supra, Northside’s motion to dismiss for failure
to state a claim for relief was a nullity because, prior to filing its motion, Northside had answered
the amended complaint and had included therein the affirmative defense of failure to state a
claim for relief. If Northside wished the court to pass on the sufficiency of that affirmative
defense, it should have moved the district court for a judgment on the pleadings pursuant to Fed.
R. Civ. P. 12(c). We therefore treat the court as having considered Northside’s motion to
dismiss as a motion filed pursuant to Rule 12(c). As indicated in the following text, in
dismissing Count III, as time barred, the court considered a fact not alleged in the complaint, to-
wit: that Manov’s malpractice complaint in the Fulton County Superior Court did not name
Northside as a defendant. The court had to consider this fact in order to conclude that the statute
of limitations on the Count III negligence claim had run and that the claim was not saved by the
Georgia renewal statute. Because the court considered a matter outside the four corners of the
complaint, it should have treated Northside’s motion as one for summary judgment and disposed
of it as provided in Fed. R. Civ. P. 56. See Rule 12(c) (“the motion shall be treated as one for
summary judgment and disposed of as provided in Rule 56, and all parties shall be given
reasonable opportunity to present all material made pertinent to such a motion by Rule 56.”).
47
Stripped to its essentials, Count III charged Northside with negligent supervision of
the Drs. Nezhat; Count IV alleged that Northside (and the other defendants) had violated the
Georgia RICO statute. In dismissing Count III as time barred, the court considered matters
25
including Northside, continued their Rule 11 discovery.
On July 8, 1997, Northside moved the district court to sanction Manov and
Byrne pursuant to Rule 11, 28 U.S.C. § 1927, and the court’s inherent power. Two
days later, the Center and Nezhat defendants filed a similar motion. On July 14,
Manov moved the court to defer ruling on the defendants’ motions until she could
conduct “Rule 11 defense discovery.” Manov’s motion did not describe the
defensive discovery she wished to conduct. The court denied Manov’s motion on
July 30. On July 31, Manov supplemented her motion with a request that she be
granted leave to obtain (1) records pertaining to the Drs. Nezhats’ medical
credentials, (2) reports relating to appendectomies performed by the Nezhats during
1992, and (3) reports relating to bowel resection procedures performed on sixteen
patients. Manov contended that these records and reports would demonstrate that
Count IV, alleging violations of the Georgia RICO statute, had evidentiary support.
On August 6, 1997, the court denied Manov’s motion.
beyond the four corners of the amended complaint and, thus, in effect, granted Northside
summary judgment. See Fed. R. Civ. P. 12 (c). See note 46 supra.
The court dismissed Count IV on the ground that, under the Georgia RICO statute, a
corporation is not amenable to suit; rather, the plaintiff must sue the corporation’s board of
directors. Manov failed to do that. The court therefore concluded that Northside should be
dropped from Count IV.
The court did not enter final judgment for Northside until September 1, 1999, when,
pursuant to court order, “judgment [was] entered for the defendants against plaintiff on all claims
and the action [was] dismissed.”
26
On October 15, 1997, Neal, still lacking pro hac vice status but nonetheless
appearing for Manov, moved the district court to impose sanctions against two of
the Nezhats’ lawyers, Henry D. Green and David F. Walbert, pursuant to the court’s
inherent power. Neal’s motion represented that these attorneys had made “25
misrepresentations/material concealments in a May 3, 1996 letter to the Court,
which in turn resulted in unilateral [Rule 11] discovery.”48
On February 23, 1998, the court granted the defendants’ motions for
sanctions and denied Neal’s motion for sanctions. Drawing on its authority under
Fed. R. Civ. P. 11, 28 U.S.C. § 1927, and its inherent power, the court found that
Byrne’s “pre-filing investigation [did] not support the filing of a RICO claim
against the Nezhats . . . [and that] the claim against the Nezhats was brought
without a reasonable factual basis.” The court held Manov and Byrne liable for the
defendants’ attorneys’ fees and costs, the amounts to be fixed in a subsequent
order.49 The court also dismissed Manov’s amended complaint with prejudice –
48
An additional ground for the imposition of sanctions, according to Neal, was the
attorneys’ use of “German phrases and commands at the deposition of a Jewish physician.”
49
The court considered imposing sanctions against Neal (even though the defendants’
had not pressed the court to sanction Neal). In its February 23 order, the court chose not to
sanction Neal for the following reasons:
Although Neal has clearly had an involvement in this matter, Neal is not the
attorney of record. Further, Neal has not been deposed about the extent of his
involvement and the extent of his pre-filing investigation. However, due to the
grossly intemperate nature of Neal’s allegations, there is a strong suspicion that
Neal’s assumptions and suspicions are not reasonable or factually supportable.
27
save for the medical malpractice claim against the Nezhats and the Center – on the
ground that Manov had failed to establish a cognizable claim for relief. The court
did so even though the legal sufficiency of Manov’s (dismissed) claims was not
formally before it.50 Finally, on its own initiative, the court ordered Neal “not to
participate in any form or fashion” in the prosecution of Manov’s malpractice claim
against the Nezhats and the Center.51
On April 23, 1998, Manov again moved the district court to recuse pursuant
to 28 U.S.C. § 455(a). In addition to the circumstance of McDevitt’s former
employment with the lawfirm representing the Nezhats and the Center (the basis for
Manov’s first motion to recuse), Manov contended that the court’s rulings
However, Neal has not been deposed and has not had the opportunity to support
and defend his position relative to sanctions. Unlike Byrne, the discovery to
determine the extent of Neal’s investigation in this matter has been limited. Thus,
defendants have failed to make a sufficient showing to convince this court that
under the record as it now stands, Neal is subject to sanctions.
50
The defendants did not move the district court to dismiss Manov’s complaint or
amended complaint (or any of the claims therein) pursuant to Fed. R. Civ. P. 12(b)(6) for failure
to state a claim for relief. Instead, they included in their answers the affirmative defense of
failure to state a claim for relief. The sufficiency of the affirmative defense was not before the
court because (1) Manov had not moved to strike it, and (2) the court had not informed the
parties that it would consider the sufficiency of the defense on its own intiative in the context of
ruling on the parties’ respective motions for sanctions.
51
The record does not indicate whether the court directed that Neal be served a copy of
its order, or whether Neal otherwise received actual notice that the order had been entered. After
entry of the February 23 sanctions order, the defendants took Manov’s deposition regarding her
medical malpractice claim. During this deposition, she stated that she did not know that the
court had banned Neal from further participation in the case.
28
demonstrated an apparent bias against her. Thus, the court’s “impartiality might
reasonably be questioned.” The district court denied the motion on June 1, 1998.
After the district court dismissed Manov’s claims against Northside under
Rule 12(c), as part of the February 23, 1998 sanctions order, struck all of Manov’s
claims against the Nezhats and the Center except the medical malpractice claim, the
Nezhats and the Center commenced discovery on the merits of that claim. When
Manov refused to comply with a court order requiring her to provide the Nezhats
and the Center with the basis for the opinion of her medical expert, they moved on
April 21, 1998 to strike the expert from Manov’s list of witnesses.52 The court
granted the motion on May 26, 1998. This left Manov without a medical expert to
support her malpractice claim. Since Georgia law requires that a plaintiff suing for
medical malpractice produce expert testimony that the physician defendant deviated
from the pertinent standard of care, Manov had no case. Accordingly, on July 21,
1998, she moved the court to dismiss her medical malpractice claim with prejudice.
The court granted the motion.
The district court’s February 23, 1998 sanctions order required the
defendants to present “documentation” evidencing the attorneys’ fees and costs they
had incurred in defending against Manov’s claims (except her malpractice claim)
52
See generally, Fed. R. Civ. P. 26(a)(2) (pertaining to disclosure of expert testimony).
29
and conducting their Rule 11 discovery. After the defendants submitted such proof,
the court, on February 17, 1999, ordered Byrne and Manov to present evidence of
their ability to pay the fees and costs the defendants were requesting.53 Having
received their submissions, on June 24, 1999, the court entered an order setting the
amount of monetary sanctions to be levied against Byrne and Manov. The order
awarded attorneys’ fees and costs in the amounts of $50,378.22 to Northside, and
$332,500.00 to the Nezhats and the Center.54 On September 1, 1999, the court
entered final judgment for the defendants and against Manov and Byrne on all
claims and closed the case. These consolidated appeals followed.
Manov appeals (1) the two orders denying her motions to recuse pursuant to
28 U.S.C. § 455(a), (2) the court’s dismissal of her claims against Northside, (3) the
court’s dismissal of all of her claims, except her medical malpractice count, against
53
The court’s instructions were in accord with Baker v. Alderman, 158 F.3d 516 (11th
Cir. 1998) (holding that a court should take into account a party’s ability to pay when
determining the amount of monetary sanctions to be awarded).
54
Because her financial affidavits had not been notarized and were unintelligible, the
district court found that Manov failed to comply with its February 17, 1999 order. The court,
therefore, held that Manov waived her right to have the court consider her financial ability to
pay. Accordingly, the court found Manov liable for 100% and Byrne for 50% of Northside’s
fees and costs, which the court fixed at $50,378.22. Specifically, the court provided that Byrne
and Manov were jointly and severally liable to Northside for $25,189.11 and that Manov was
liable to Northside in the additional amount of $25,189.11. Similarly, the court found Manov
liable for 100% and Byrne for 50% of the Nezhats and Center’s fees and costs. It provided that
Byrne and Manov were jointly and severally liable to the Nezhats and the Center for
$166,250.00 and that Manov was liable to the Nezhats and the Center in the additional amount of
$166,250.00. The amounts awarded by the order were to be paid in equal quarterly installments
over a seven year period with interest at the rate of 7% per annum on the unpaid installments.
30
the Nezhats and the Center, and (4) the court’s imposition of monetary sanctions.
Byrne appeals the district court’s imposition of monetary sanctions as well. We
consider first Manov’s argument that the district court should have recused.
II.
Section 455(a) of the United States Code states: “Any justice, judge, or
magistrate of the United States shall disqualify himself in any proceeding in which
his impartiality might reasonably be questioned.”55 On July 8, 1996, one month
after the court ordered Rule 11 discovery, Manov moved the district court to recuse
pursuant to this statute. The court denied the motion the next day, following a
hearing on various matters.56 Manov renewed the motion on April 23, 1998, two
months after the court entered the first sanctions order. The court denied this
motion as well. Both of Manov’s motions for recusal were based on the notion that
the district court created an appearance of impartiality by having in its chambers a
law clerk, McDevitt, who had been employed by one of the law firms representing
the Nezhats and the Center in this case and in Mullen’s state court case.57 Manov’s
55
See supra notes 2 and 40.
56
At the hearing, the court considered, among other things, Manov’s motions for the
district court’s recusal; for leave to file an amended complaint; for leave to conduct Rule 11
discovery; and for an order directing Ceana Nezhat to provide sworn testimony that he was a
bona fide physician.
57
The record does not indicate when Manov’s attorneys, Byrne and Neal, learned of
McDevitt’s former employment. In their brief opposing Manov’s renewed motion to recuse, the
31
second motion added another basis for recusal – the court’s rulings against Manov
demonstrated that the court’s impartiality might reasonably be questioned. Due to
this additional alleged ground for recusal, we address the motions separately. Our
standard of review is whether the district court abused its discretion when it denied
Manov’s motions. Jaffree v. Wallace, 837 F.2d 1461, 1465 (11th Cir. 1988).
A.
At some time prior to the commencement of his law clerk’s duties with the
district court, McDevitt was employed by Sullivan, Hall, Booth & Smith, an Atlanta
law firm. The firm served as co-counsel for the Nezhats and the Center in the
instant case.58 The firm also represented the Nezhats and the Center in Mullen’s
state court case. The record does not indicate when McDevitt was employed by the
Sullivan firm or when he came to work in the district court’s chambers. All we
know is that, on January 18, 1996, when Judge Tidwell received the case on
Nezhats and the Center asserted that Manov’s counsel moved to recuse “long after” they knew
the identity of the district judge to whom the case had been assigned. Defense counsel did not,
unfortunately, provide the date on which they contend Manov’s attorneys first learned of
McDevitt’s former employment. In her reply brief, Manov refuted the contention that she knew
of the law clerk’s former employment long before she moved for recusal and claimed that she
moved for recusal as soon as she learned of it. We note that the basis for Manov’s recusal
arguments regarding McDevitt – a defense motion filed in Mullen’s state court case and signed
by McDevitt as co-counsel – was dated December 29, 1994. Nonetheless, we assume that
Manov learned of McDevitt’s former involvement in Mullen’s state court case around July 8,
1996, the date she moved for recusal.
58
Walbert & Mathis, an Atlanta law firm, also represented the Nezhats and the Center.
32
reassignment,59 McDevitt was one of his law clerks.
Judge Tidwell recognized immediately that McDevitt had worked for one of
the law firms involved in the case; therefore, he isolated McDevitt from the case
and assigned the matter to another law clerk, Nancy Chapman. On July 8, 1996,
Judge Tidwell learned from reading Manov’s motion for recusal that McDevitt,
while working as a Sullivan associate, had done some work on Mullen’s state court
case. After entertaining Manov’s motion for recusal at a hearing the next day,
Judge Tidwell said:
[I]t seems to have become both fashionable and a fad that when any
party is faced with an adverse decision that a motion to recuse follows
almost as a matter of course. In this case when the case was filed it
was assigned to my law clerk Nancy Chapman because I was aware
that Dan McDevitt had been with a firm that had some connection with
either this case or with a prior connection. Dan – I didn’t find out until
yesterday that I believe it is correct that Dan had worked on some
aspect of this case before he came to work for me. But he has not, will
not have any connection with this case. He is and has been and will be
completely and totally separated from this case.
It is not unusual for me to separate these cases. Many times law
clerks have accepted a job offer at the conclusion of the law clerk
tenure, and when that happens as similar to the situation in this case, I
merely just assign any case to be worked on to the other law clerk.
And in this case Dan has not, will not have any part, will not play any
part, has not had any input or any connection with this case since it
was filed and assigned to me or any rulings that I have made or will
make for that matter.
59
See supra note 28.
33
The record before us reveals that McDevitt’s involvement in Mullen’s state
court case was limited to the following: McDevitt, as a Sullivan associate, worked
for Henry D. Green, a Sullivan partner and co-counsel of record for the Nezhats and
the Center. In this capacity, McDevitt signed a “Brief in Support of Defendants’
Motion to Strike Plaintiff’s Supplemental Affidavits Filed after October 23, 1994.”
The brief addressed the issue of whether, under Georgia law, untimely affidavits,
filed in opposition to a motion for summary judgment, could be considered by the
court in ruling on the motion. In addition to this, McDevitt was shown, along with
Green, to have received a copy of one of the orders entered in Mullen’s state court
case.60
The test for determining whether a judge should disqualify himself under
section 455(a) is whether a reasonable person knowing all the facts would conclude
that the judge’s impartiality might reasonably be questioned. See Hepperle v.
Johnston, 590 F.2d 609, 614 (5th Cir. 1979). Stated another way, the question is
“whether an objective, disinterested, lay observer fully informed of the facts
60
An earlier order in that case, titled “Order on Defendants Motion to Deny Pro Hac
Vice Admission to Practice and Order on Motion of James J. Neal to be Admitted Pro Hac Vice
to Practice in the State of Georgia” (and granting Neal pro hac vice status), lists in a preamble to
the order the names of the attorneys for each party as follows: “[t]he Plaintiff was represented
by Attorney Michael K. Mixson and James J. Neal; the Defendants were represented by Henry
D. Green, Sidney F. Wheeler, Robert D. Roll, Stephen L. Goldner, and Susan V. Sommers.”
McDevitt’s name is not on the list.
34
underlying the grounds on which recusal was sought would entertain a significant
doubt about the judge’s impartiality.” Carter v. West Pub. Co., No. 99-11959-EE
(11th Cir. November 1, 1999). Reduced to its essentials, Manov’s argument is that,
notwithstanding the district court’s statements at the July 9 hearing, such an
observer would entertain a significant doubt as to the court’s impartiality. In other
words, the observer would either (1) doubt the court’s statement that McDevitt had
been isolated from the case from the outset, or (2) conclude that, despite such
isolation, there was a substantial likelihood that McDevitt would impart to the court
information he had gleaned while working on Mullen’s state court case, thereby
prejudicing the court against Manov.61
The record contains nothing that would cause a reasonable observer to doubt
the truth of the court’s statement that McDevitt had been, and would continue to be,
isolated from the case. Moreover, there is nothing in the record that could cause a
61
Manov’s second (renewed) motion for recusal made a similar argument. Manov
complained about the court’s refusal to allow her to depose McDevitt. Underlying her request to
depose McDevitt are the inferences (1) that Manov did not believe Judge Tidwell’s statement
that McDevitt had not worked on Manov’s case and therefore had not passed information to him
regarding Mullen’s case, and (2) that Manov and her attorneys were uninformed about the extent
of McDevitt’s involvement in Mullen’s case. Given the court’s repeated, unambiguous
statements about McDevitt’s isolation, we find no credence in Manov’s position that McDevitt
needed to be deposed to find out whether he had passed information about Mullen’s case to the
court. Moreover, Neal was Mullen’s attorney when McDevitt co-signed the December 29, 1994
Brief in Support of Defendants’ Motion to Strike Plaintiff’s Supplemental Affidavits filed after
October 23, 1994. Accordingly, Neal was aware of the extent of McDevitt’s involvement in the
Mullen litigation.
35
reasonable observer to draw the opposite conclusion – that McDevitt had been
serving, and would continue to serve, as the court’s elbow law clerk on the case.
This brings us to the second inference Manov would have us draw: McDevitt’s
mere presence in the court’s chambers created the appearance that the court was,
and would continue to be, partial to the defendants.
As an initial matter we note that “[i]f a clerk has a possible conflict of
interest, it is the clerk, not the judge who must be disqualified.” Hunt v. American
Bank & Trust Co., 783 F.2d 1011, 1016 (11th Cir. 1986). Manov contends that
because the instant case concerns a law clerk’s former employment, cases, such as
Hunt, involving a possible conflict of interest due to a law clerk’s future
employment, are inapplicable. Whereas the isolation of a law clerk when future
employment is involved alleviates the significant doubt an objective observer would
have about the court’s impartiality, Manov says that the same is not true when the
case involves former employment.62
62
Manov relies on Hall v. Small Bus. Admin., 695 F.2d 175 (5th Cir. 1983), in which a
magistrate judge’s law clerk worked on a sex discrimination case brought against her former
employer, the Small Business Administration (“SBA”). Prior to accepting the clerkship, the law
clerk had worked for the SBA during the same time period as the plaintiff. See id. at 176. The
law clerk had resigned from the SBA because she felt she was the victim of sexual
discrimination. See id. Thereafter, as the magistrate judge’s law clerk, she participated in the
pre-trial process, prepared bench memoranda, and worked on the order disposing of the case on
the merits. See id. at 176-79. While Hall mentioned the law clerk’s former employment, the
event that triggered the magistrate judge’s obligation to recuse or isolate the law clerk was her
acceptance of employment with plaintiff’s counsel while working on the case for the court. See
id. at 179. Therefore, although Manov correctly noted in her brief to the district court that the
36
We disagree for two reasons. First, we reject the underlying assumption of
Manov’s argument, namely, that when a court employs a law clerk whose former
employer appears before the court, there is a stronger basis for questioning the
court’s impartiality than when a court employs a law clerk who has accepted future
employment with a firm appearing before the court. A law clerk has little incentive
to influence a judge in an effort to “curry favor” with a former employer.
Conversely, a law clerk has a financial incentive to benefit a future employer.
Given this financial incentive, if ever a law clerk were of a mind to influence his
judge, it would likely be for the benefit of a future rather than a former employer.
Because precedent approves the isolation of a law clerk who has accepted future
employment with counsel appearing before the court (see e.g., Hunt, 783 F.2d at
1015-16) it follows that isolating a law clerk should also be acceptable when the
clerk’s former employer appears before the court.
Second, we note that a law clerk has no incentive to violate a court’s
instruction that he isolate himself from the case and thereby subject himself to
discharge. In this case, the district judge explained that, as a matter of course, he
law clerk in Hall worked for the defendant (the SBA) before her employment with the court, this
fact was not the basis for the Hall court’s decision. Hall is, therefore, inapposite. Consider that
the court of appeals explained that “[w]hether or not the law clerk actually affected the
magistrate’s decision, her continuing participation with the magistrate in a case in which her
future employers were counsel gave rise to an appearance of partiality.” Id. at 179 (emphasis
added).
37
isolates law clerks from cases involving past or future employers. The obvious
purpose of this procedure is to ensure that the appearance of impartiality does not
arise; as such, only a foolhardy law clerk would purposely circumvent the court’s
instruction by attempting to pass on information about a case. In sum, we hold that
the district court did not abuse its discretion in denying Manov’s first motion for
recusal.
B.
As noted, Manov’s second motion for recusal cited the district court’s
rulings against Manov and asserted that such rulings would lead a reasonable
observer to harbor a significant doubt about the court’s impartiality. We are not
persuaded. Precedent clearly holds that adverse rulings alone do not provide a party
with a basis for holding that the court’s impartiality is in doubt. Carlsen v. Duron,
229 F.3d 1162, No. 99-4065 (10th Cir. 2000) (unpub. disp.). Given this precedent,
Manov’s argument, that the court’s refusal to recuse was an abuse of discretion,
fails.
III.
We now turn to the remaining issues in this appeal. First, we determine de
novo whether the district court erred as a matter of law in dismissing Manov’s
claims against Northside in Counts III and IV. See Haitian Refugee Ctr. v. Baker,
38
949 F.2d 1109, 1110 (11th Cir. 1991) (“[I]f the trial court misapplies the law we
will review and correct the error without deference to that court’s determination.”).
Second, we determine whether the court abused its discretion in imposing sanctions
against Manov and Byrne, which, except for Manov’s medical malpractice claim,
included the dismissal of the remaining counts of the complaint. See United States
v. Sigma Intern., Inc., 244 F.3d 841, 852 (11th Cir. 2001) (In determining whether
the court abused its discretion we ask whether it “applie[d] the wrong legal standard
or ma[de] findings of fact that are clearly erroneous.”) (internal citations omitted).
Both of these determinations – whether the court erred as a matter of law in
dismissing the claims against Northside or abused its discretion in awarding
sanctions – are guided by the fact that the root of this litigation is the medical
malpractice claim that Manov brought against Drs. Farr and Camran Nezhat and the
Center in the Fulton County Superior Court in August 1994. Manov alleged that
she came to the Center in September 1992 for laproscopic surgery to alleviate
endometriosis. The surgery was to be performed by Drs. Farr and Camran Nezhat.
Prior to surgery, they informed her that her appendix may be infected and, if so, it
should be removed when they performed the laproscopy. Manov agreed, and
executed a consent both to the laproscopic procedure and a “possible appendectomy
and any other procedure deemed necessary.” During the laproscopic procedure, the
39
doctors decided that Manov’s appendix was infected and performed the
appendectomy. Manov contended that the appendix was not infected and that the
doctors were negligent in removing it. They were also negligent, she asserted, in
the manner in which they performed the appendectomy because they left a portion
of the appendix in her abdomen. This, in turn, caused an infection, which required
further hospitalization and caused other complications.
As our discussion unfolds, it will become clear that the allegedly botched
appendectomy and the resulting complications constitute the sum and substance of
the injury Manov suffered in this case. Every count of the complaint, including
Manov’s Georgia RICO claim, derives from the appendectomy. With this
background in mind, we address the issues posed above. We begin with the
dismissal of Manov’s claims against Northside in Counts III and IV.
A
1.
Count III alleged that Northside breached its “duty of due care to monitor and
investigate the . . . practice of surgery [by the Drs. Nezhat] at Northside.” Among
other things, Northside failed to check the Nezhats’ credentials, protect the Nezhats’
patients from experimental and unnecessary surgery, and prevent the Nezhats from
ordering nurses to perform medical procedures required by law to be performed by
40
physicians. But for such negligence, argued Manov, Drs. Farr and Camran Nezhat
would not have performed the appendectomy at issue.
The district court dismissed Count III pursuant to Rule 12(c) of the Federal
Rules of Civil Procedure as time barred.63 As noted supra, Byrne voluntarily
dismissed Manov’s state court suit against Drs. Farr and Camran Nezhat and the
Center on July 13, 1995, and refiled it in the district court on January 12, 1996, one
day before the six month period under Georgia’s renewal statute expired. O.C.G.A.
§ 9-2-61. When Byrne refiled the case in the district court, he added Northside as a
defendant.
Georgia’s renewal statue provides that when an action is commenced in state
court within the proper statute of limitations period, and the plaintiff voluntarily
63
Although Northside moved, and the district purported, to dismiss Count III pursuant to
Fed. R. Civ. P. 12(b)(6), we treat the court as having made the ruling pursuant to Rule 12(c).
See notes 46, and 47 supra. In order to conclude that the statute of limitations on Manov’s Count
III negligence claim had run and that the claim was not saved by the Georgia renewal statute, the
court considered a fact not alleged in the complaint, to-wit: that Manov’s malpractice complaint
in the Fulton County Superior Court did not name Northside as a defendant. Because it
considered a fact not alleged in the complaint, the court should have treated Northside’s motion
as one for summary judgment and disposed of it as provided by Fed. R. Civ. P. 56. Because the
court did not do so, Manov contends that we should vacate the court’s judgment on Count III and
remand the case for further proceedings so that she may “be given reasonable opportunity to
present all material made pertinent by such a motion by Rule 56.” Fed. R. Civ. P. 12(b) and (c).
The court’s error was harmless. See Denis v. Liberty Mut. Ins. Co., 791 F.2d 846, 850
(11th Cir. 1986); Boateng v. Interamerican Univ., Inc., 210 F.3d 56, 60 (1st Cir. 2000). As the
record amply demonstrates, at the time the court entertained Northside’s motion to dismiss, the
record was replete with references – some made by Manov’s counsel – to the complaint in
Manov’s state court case, to the fact that the complaint did not name Northside, and to the date
Byrne dismissed the case. In sum, Manov acknowledged, albeit tacitly, that there was no dispute
concerning the facts relating to the time-bar issue.
41
dismisses the action, the plaintiff may recommence the proceeding in federal court
within six months after the dismissal. O.C.G.A. § 9-2-61. The district court found
that the statute of limitations had expired on Manov’s negligence claim against
Northside. Under Georgia law, a plaintiff must bring a negligence action within two
years of the act giving rise to the claim. O.C.G.A. § 9-3-33. Since Manov
underwent surgery at Northside in September 1992, her negligence claim against
Northside should have been brought by September 1994. She did not bring the
claim until January 1996 – thus, it was barred by the statute of limitations. The
claim was not saved by Georgia’s renewal statute because the statute only suspends
the running of the statute of limitations against defendants named in the original
complaint. Cornwell v. Williams Bros. Lumber Co., 229 S.E.2d 551, 552 (Ga. Ct.
App. 1976); Wagner v. Casey, 313 S.E.2d 756, 758 (Ga. Ct. App. 1984).64 We agree
with the district court’s holdings that the statute of limitations had run on Manov’s
Count III claim against Northside and that the renewal statute did not save it.
Accordingly, the court did not err in dismissing the count.
2.
Count IV alleged that the defendants, including Northside, violated Georgia’s
64
Manov contends that the statute of limitations was tolled on the theory that Northside
somehow defrauded her. The district court rejected the theory as patently frivolous, and we do
as well.
42
RICO law by engaging in racketeering activity. The district court dismissed
Northside as a Count IV defendant on the ground that Northside was not capable of
committing a crime. Under Georgia law, a corporation qua corporation, cannot be
held to answer for a crime, and therefore could not violate the Georgia RICO statute.
O.C.G.A. § 16-2-22(a)(2); Cobb County v. Jones Group, 460 S.E.2d 516, 521 (Ga.
Ct. App. 1995). This is not to say that a corporation may disregard the law with
impunity. If a crime has been committed, the agents of the corporation who are
responsible are subject to prosecution. Manov’s amended complaint, however,
neither alleges nor mentions which Northside agent was responsible for Northside’s
violation of the Georgia RICO statute. We, therefore, find no error in the district
court’s dismissal of the RICO claim against Northside.65
B.
Having disposed of the first issue posed above, we turn to the second issue:
whether the district court abused its discretion when it granted both Northside’s and
the Nezhats and Center’s motions for sanctions, required Byrne and Manov to pay
the defendants’ attorneys’ fees and costs, and dismissed all but one of Manov’s
claims against the Nezhats and the Center. The district court took this action
65
Given this disposition, we defer discussion of whether Count IV alleged a RICO
violation against any defendant.
43
pursuant to three separate sources of authority: Fed. R. Civ. P. 11, 28 U.S.C. § 1927,
and the court’s inherent power.
In reviewing the award of sanctions, we first discuss these sources of
authority. After that, we examine the award of sanctions against Byrne and Manov.
Specifically, we determine whether the district court abused its discretion because,
as Manov contends, the court erred in concluding that the claims it dismissed
(against the Nezhats and the Center) lacked a factual foundation. We have already
determined that the court did not err in dismissing her claims against Northside;
hence, as to that defendant, the question is whether the court abused its discretion in
awarding Northside attorney’s fees and costs. We defer answering that question at
this juncture because the answer becomes self-evident after we examine Manov’s
complaint as a whole and find it (except for Count I) baseless.66
1.
In considering a motion for sanctions pursuant to Fed. R. Civ. P. 11,67 a court
conducts a two-step inquiry: “(1) whether the party’s claims are objectively
66
Although the district court, in handing down its February 23, 1998 sanctions order, did
not formally have before it the Nezhats and Center’s affirmative defense of failure to state a
claim for relief, see supra notes 35, 44, 46 and 47, it had to examine Manov’s claims and find
them either legally insufficient or factually unsupported in order to impose the sanctions at issue
– both the dismissal of the claims and the award of attorney’s fees and costs. Therefore, in order
to hold that the court’s action did not constitute an abuse of discretion, we must satisfy ourselves
that the dismissed counts lacked a legal or factual basis.
67
See supra note 1 for the pertinent text of Rule 11.
44
frivolous; and (2) whether the person who signed the pleadings should have been
aware that they were frivolous.” Baker v. Alderman, 158 F.3d 516, 524 (11th Cir.
1998). When filing a pleading in federal court, an attorney “certifies that he or she
has conducted a reasonable inquiry and that the pleading is well-grounded in fact,
legally tenable, and ‘is not presented for any improper purpose.’” Id. (quoting Fed.
R. Civ. P. 11(b)). Thus, if, after dismissing a party’s claim as baseless, the court
finds that the party’s attorney failed to conduct a reasonable inquiry into the matter,
then the court is obligated to impose sanctions even if the attorney had a good faith
belief that the claim was sound. Mroz v. Mroz, 65 F.3d 1567, 1573 (11th Cir. 1995).
Although typically levied against an attorney, a court is authorized to issue Rule 11
sanctions against a party even though the party is neither an attorney nor the signor
of the pleadings. See Souran v. Travelers Ins. Co., 982 F.2d 1497, 1508 n.14 (11th
Cir. 1993) (“‘Even though it is the attorney whose signature violates the rule, it may
be appropriate under the circumstances of the case to impose a sanction on the
client.’” (quoting Fed. R. Civ. P. 11 advisory committee’s note)).
The second source of authority for the sanctions levied in this case is 28
U.S.C. § 1927, which states:
[a]ny attorney or other person admitted to conduct cases in any court of
the United States or any Territory thereof who so multiplies the
proceedings in any case unreasonably and vexatiously may be required
by the court to satisfy personally the excess costs, expenses, and
45
attorneys’ fees reasonably incurred because of such conduct.
As the express language of section 1927 indicates, this sanctioning mechanism is
aimed at the unreasonable and vexatious multiplication of proceedings. Unlike Rule
11, which is aimed primarily at pleadings, under section 1927 attorneys are obligated
to avoid dilatory tactics throughout the entire litigation. Also unlike Rule 11,
“awards pursuant to § 1927 may be imposed only against the offending attorney;
clients may not be saddled with such awards.” United States v. Int’l B’hd of
Teamsters, Chauffeurs, 948 F.2d 1338, 1345 (2d Cir. 1991).
The third source of authority for the award of sanctions in this case is the
district court’s inherent power. This power is derived from the court’s need “to
manage [its] own affairs so as to achieve the orderly and expeditious disposition of
cases.” Chambers v. Nasco, Inc., 501 U.S. 32, 43, 111 S. Ct. 2123, 2132, 115 L. Ed.
2d 27 (1991). The “inherent power of a court can be invoked even if procedural
rules exist which sanction the same conduct.” Chambers, 501 U.S. at 46, 111 S. Ct.
at 2133.
One aspect of a court’s inherent power is the ability to assess attorneys’ fees
and costs against the client or his attorney, or both, when either has “acted in bad
46
faith, vexatiously, wantonly, or for oppressive reasons.”68 Id. at 45-46, 111 S. Ct. at
2133. This court has explained that “[t]he key to unlocking a court’s inherent power
is a finding of bad faith.” Barnes v. Dalton, 158 F.3d 1212, 1214 (11th Cir. 1998);
see also Mroz, 65 F.3d at 1575 (“Invocation of a court’s inherent power requires a
finding of bad faith.”). A court should be cautious in exerting its inherent power
and “must comply with the mandates of due process, both in determining that the
requisite bad faith exists and in assessing fees.” Chambers, 501 U.S. at 50, 111 S.
Ct. at 2132. Because the court’s inherent power is so potent, it should be exercised
“with restraint and discretion.”69 Id.
2.
The district court awarded sanctions against Byrne and Manov because the
claims in the amended complaint, apart from the malpractice claim, lacked either a
legal or a factual basis and because Byrne had failed to conduct a reasonable inquiry
into the factual bases of the claims. As we have concluded, the district court
68
This is sometimes referred to as the bad faith exception to the American Rule against
fee shifting. United States v. Int’l B’hd of Teamsters, Chauffeurs, 948 F.2d 1338, 1345 (2d Cir.
1991).
69
In Chambers, the Supreme Court indicated that the district court made detailed factual
findings concerning the sanctioned party’s involvement in the events of the case. See id. at 58,
111 S. Ct. at 2139. Recognizing the need for caution, some circuits require that a district court
make a particularized showing of bad faith to justify the use of its inherent power. See, e.g.,
United States v. Int’l B’hd of Teamsters, Chauffeurs, 948 F.2d 1338, 1345 (2d Cir. 1991) (citing
Oliveri v. Thompson, 803 F.2d 1265, 1272 (2d Cir. 1986) (requiring “a high degree of specificity
in the factual findings of [the] lower courts”)).
47
properly dismissed Manov’s claims against Northside. Our ensuing discussion,
therefore, concerns Manov’s claims against the Nezhats and the Center. The district
court found those claims – in Counts II, IV, V70 – lacking because “plaintiff and
plaintiff’s counsel have failed to conduct an investigation that is reasonable,
objective and proper under the circumstances before filing . . . the complaint[]; the
[complaint] [is] replete with false and baseless claims and allegations, which
plaintiff and her counsel knew or with reasonable investigation should have know
[sic] to be irresponsible and baseless.” Reading this language in the light of (1) the
defendants’ May 3, 1996 letter to the court, asserting that Byrne had not conducted
the sort of independent pre-filing investigation required by Rule 11, and (2) the
court’s June 5, 1996 order granting the defendants leave to conduct Rule 11
discovery to determine “if [Byrne had conducted an] appropriate pre-filing
investigation of the facts underlying the allegations [of the complaint],” we conclude
that the court did not dismiss Counts II, IV, and V because they failed to state claims
recognized by the law. Rather, the court dismissed those counts because the Rule 11
discovery revealed that Byrne had not conducted the requisite pre-filing
investigation to determine the truth of the factual allegations contained in Manov’s
70
As noted supra, the amended complaint contained six counts. Count VI was a claim
for punitive damages. Count VI did not state an independent cause of action; instead, it only
sought punitive damages for the preceding claims, Counts I through V.
48
complaint.
Our review of the district court’s award of sanctions necessarily begins with
an analysis of the complaint, here the amended complaint. We note that, if the facts
as pled failed to state a claim for relief, it was irrelevant whether Byrne conducted
the requisite Rule 11 pre-filing factual investigation. Identifying Manov’s claims –
in terms of their legal underpinnings – is not difficult; the heading of each count
announces whether the claim is for negligence, fraud, and so forth. The problem lies
in determining which factual allegations of the complaint relate to which cause of
action. The amended complaint, containing 6 counts, consists of 32 pages and 126
paragraphs. The amended complaint was drafted like the original complaint, in that
each of the counts following Count I incorporated by reference every paragraph, and
therefore every count, preceding it. Each count added a few paragraphs, which, in
turn, were incorporated into the next count. In drafting a complaint this way, the
pleader inevitably incorporates into a count factual allegations, and even defendants,
that are not germane to the cause of action purportedly stated in that count.
Accordingly, to determine whether a claim was legally cognizable, we must strip the
claims to their essentials, which, in this case, requires considerable weeding. Having
done so, we conclude that Count II, fraud, Count IV, Georgia RICO, and Count V,
battery were properly dismissed because they lacked factual support. Moreover,
49
even if we accept Count IV’s factual allegations as true, the count still fails because
it failed to state a cause of action.
a.
The district court had no difficulty, and neither do we, in discerning the
allegations that relate to Count I, the medical malpractice claim. Given the
circumstances set forth above surrounding the September 1992 surgery performed
by Drs. Farr and Camran Nezhat at Northside, the court properly held that Count I
stated a claim for relief.
b.
Count II – fraud on the part of Drs. Farr and Camran Nezhat and the Center –
and Count V – battery on the part of Drs. Farr, Camran, and Ceana Nezhat – are
based almost exclusively on the facts giving rise to Count I. In Count II, Manov
alleged that the defendants Nezhat obtained her consent to the appendectomy by
fraudulently misrepresenting the potential presence of endometriosis on her
appendix. In other words, the doctors knew that her appendix was healthy and lied
when they told Manov that it might be infected. Their motive for lying, Manov
alleged, was their “desire for continued financial gain at the expense of [Manov’s]
health and safety.” In Count V, Manov alleged that the above fraudulent
misrepresentation “vitiated” her consent; thus, in performing the appendectomy, the
50
doctors committed a battery.71
The district court properly found that Manov consented to the appendectomy.
Manov does not dispute that she signed a consent form agreeing to the procedure.
Thus, a contract between Manov and Drs. Farr and Camran Nezhat (the defendants
who performed the appendectomy) was formed. Mattair v. St. Joseph’s Hospital,
Inc., 234 S.E.2d 537, 598 (Ga. Ct. App. 1977). In entering into the contract, the
physicians implicitly promised to exercise the care and skill required by the medical
profession in the community. Id. Count I of the complaint alleged that the Drs. Farr
and Camran Nezhat and the Center breached this duty of care.
Under Georgia law, one who consents to a surgical procedure cannot
thereafter sue the surgeon for battery. Battery is an unlawful touching, so one who
consents to being touched cannot claim a battery. Manov, however, attempted to
circumvent this bar by contending that the physicians procured her consent through
fraud – by stating falsely that her appendix might be infected. The district court
rejected Manov’s attempt because there is nothing in the record – save a bald
assertion in her complaint – to support her allegation that the doctors knew in
71
The Count V claim against Ceana Nezhat has nothing to do with the laproscopy or
appendectomy. The count alleges that Ceana Nezhat lacked a medical degree; consequently,
when he performed a medical examination on Manov two months after the surgery, he
committed a battery. As we indicate infra, the contention that Ceana Nezhat lacked a medical
degree has no factual basis in the record.
51
advance that her appendix was healthy and should not be removed. In any event, the
doctors statements constituted reasoned medical opinions about what they might find
once the laproscopic procedure was underway. Such statements do not amount to
fraud. Cannon v. Smith, 370 S.E.2d 529, 531 (Ga. Ct. App. 1988) (“At best, [such]
allegations might establish negligence but not fraud.”). In sum, both Count II- Fraud
and Count V-Battery were nothing more than thinly veiled attempts to recast the
malpractice claim. As such, these counts were not factually supportable.
c.
Finally, we turn to the meat of Manov’s amended complaint: Count IV
alleging the violation of the Georgia RICO statute by all defendants.72 The statute
makes it “unlawful for any person”
(a) . . . through a pattern of racketeering activity or proceeds derived
therefore, to acquire or maintain, directly or indirectly, any interest in or
control of any enterprise, real property, or personal property of any
nature, including money.
(b) . . . employed by or associated with any enterprise to conduct or
participate in directly or indirectly, such enterprise through a pattern of
racketeering activity.
(c) . . . to conspire or endeavor to violate any of the provisions of subsection
(a) or (b) of the Code section.
O.C.G.A. § 16-14-4. Neither Count IV nor any other part of the amended complaint
cites which of these provisions the defendants allegedly violated. We rule out a
72
Count IV consisted of 18 pages and 60 paragraphs.
52
violation of subsection (c) because neither the count nor the amended complaint
speaks of a conspiracy. Due to the pleader’s failure to track any of the statutory
language – with the exception of the words “enterprise” and “pattern of racketeering
activity” – we cannot say with confidence whether Manov meant to allege a
violation of subsection (a) or (b) or both.
While never identifying which subsection of O.C.G.A. § 16-14-4 the
defendants allegedly violated, both the original complaint and the amended
complaint alleged that each defendant was an “enterprise” and engaged in a “pattern
of racketeering activity.” The racketeering activity pled in the amended complaint
consisted of eleven separate acts. The ensuing discussion depicts these acts in
greater detail; we list them briefly here by means of an introduction. The
racketeering acts were introduced with headings. The first was “18 U.S.C. 1341.” It
was followed by “FALSE/FRAUDULENT BILLIING,” “$200.00 INITIAL
HOSPITAL CHARGE,” “SERVICES PROVIDED BY ONLY ONE PHYSICIAN,”
“SERVICES PROVIDED BY NON-PHYSICIANS,” “SEVERITY OF
DISEASE/‘22' MODIFIERS,” “INSURANCE FORM INFORMATION,”
“ESTROPEL,” “HOSPITAL COMPLICITY,” “EVIDENCE TAMPERING,” and
“INFLUENCING WITNESSES.”
Finally, we note that Count IV incorporates by reference all prior counts;
53
therefore, it includes Count I-Malpractice, Count II-Fraud, and Count III-
Negligence by Northside. Counts II and III do double service in that Count IV
explicitly states that they also constituted acts of racketeering. Count V, the battery
count, while not incorporated by reference, nonetheless serves as the basis for an act
of racketeering as well. With these observations in mind, we examine the legal
sufficiency of Count IV, specifically, each act of racketeering.
We dispose easily of the alleged acts of racketeering that amount to nothing
more than the same fraud and battery charged in Counts II and V. Our prior
discussion of these counts demonstrates they were pled without a factual basis.
Similarly, the act of racketeering entitled “Hospital Complicity” is legally
insufficient because, as discussed supra Part III.A.2, the pleader did not identify the
Northside agent(s) responsible for the allegedly unlawful conduct.
The remaining acts of racketeering are all anchored on the federal mail fraud
statute, 18 U.S.C. § 1341. To determine if these acts of racketeering were pled with
legal or factual sufficiency, we review this circuit’s requirements for pleading mail
fraud in civil RICO cases. Mail fraud occurs when a person (1) intentionally
participates in a scheme to defraud another of money or property and (2) uses the
mails in furtherance of that scheme. See Pelletier, 921 F.2d at 1449-50; United
States v. Downs, 870 F.2d 613, 615 (11th Cir. 1989). Pelletier explains that in a
54
criminal prosecution “the government . . . is not required to show that the intended
victim was actually deceived and suffered injury. Id; United States v. Dynalectric
Co., 859 F.2d 1576 (11th Cir. 1988). A private plaintiff, however, such as Manov,
must show not only that the mail fraud statute has been violated, “but also that [she]
has suffered injury as a result of the violation.” Pelletier, 921 F.2d at 1499-50
(stating that “when the alleged predicate act is mail . . . fraud, the plaintiff must have
been a target of the scheme to defraud and must have relied to his detriment on
misrepresentations made in furtherance of that scheme”).
In that the mail fraud statute “has been interpreted by the Supreme Court and
lower courts to include a proximate cause requirement – the plaintiff’s injury must
have been proximately caused by the commission of the predicate acts.” Pelletier,
921 F.2d at 1499. This court’s restrictive view of the proximate cause requirement73
means that a plaintiff has standing to sue only if his injury flowed directly from the
commission of the predicate acts. Id; see also Gentry v. Volkswagen of America,
Inc., 521 S.E.2d 13, 19 (Ga. Ct. App. 1999). As such, a plaintiff lacks standing to
assert, as the basis for mail fraud, misrepresentations directed toward another person
73
In Pelletier, we explain that the circuit courts hold differing views on whether the
proximate cause requirement “limits damages recoverable to those caused directly by the
predicate act (e.g., by reliance on the defendant’s fraudulent representations) or to those caused
indirectly by the predicate act (e.g., by purchasing property at a price that has been artificially
inflated by a scheme to defraud).” Id. at 1499. We adhere to the more restrictive view.
55
or entity. See Johnson Enter. v. FPL Group, Inc., 162 F.3d 1290, 1313 (11th Cir.
1998); see also Gentry v. Volkswagen of America, Inc., 521 S.E.2d 13, 19 (Ga. Ct.
App. 1999) (citing Pelletier and Johnson Enterprises for the proposition that, “[t]he
question is whether the injury was directly caused by any RICO violation, not
whether the injury was reasonably foreseeable . . . In this case, the alleged
misrepresentations were directed to [a non party, not the plaintiff]. . . [Therefore,]
[t]he [plaintiff] lacks standing to pursue a RICO claim based on those
misrepresentations”).
The following analysis of the remaining acts of racketeering reveals that they
fail for either or both of the following reasons: (1) they do not state an injury to
Manov or (2) they assert injuries allegedly suffered by third persons (namely
Mullen). We consider these acts of racketeering in turn.
One alleged act of racketeering, pled in paragraphs 59-65 of the amended
complaint, was that the defendants Nezhat committed medical journal fraud. The
crux of this allegation is that the Nezhats used their medical journal articles as part
of a marketing scheme to obtain money by false pretenses. In short, the amended
complaint alleged that the defendants Nezhat used “the popular media” to advertise
falsely their credentials and success rates. In particular, it alleged that the Nezhats
falsely advertised that they developed the use of “surgery via laparoscope with a
56
picture on a television screen” and that their work produced the highest pregnancy
rates ever reported. The amended complaint further alleged that the Nezhats hired a
public relations firm to ensure that their surgical successes were published in the
popular media and that they authored a series of medical journal articles in which
they claimed to have developed new, successful procedures.
According to the amended complaint, the Nezhats’ representations to the
media and in their journal articles were false because (1) the Nezhats could not
produce a list of patients referenced in their articles without considerable effort, and
(2) potential co-authors withdrew from the articles because the Nezhats were unable
to verify patient data. Manov alleged that the Nezhats devised this marketing
scheme to entice patients to travel to Atlanta, and that they executed the scheme in
violation of the federal mail fraud statute, 18 U.S.C. § 1341. Manov alleged that she
“was attracted to Atlanta by virtue of the aforementioned scheme, which included
the use of the U.S. mails in furtherance of the scheme, and was injured thereby.”
Manov is not a victim of a fraudulent misrepresentation. She sought the
services of the Nezhats so they could surgically alleviate her endometriosis. The
Nezhats represented to Manov that they would perform surgery to rectify her
endometriosis and remove her appendix if it was infected. Any alleged injury
Manov suffered as a result of this representation would be the result of malpractice,
57
not fraud. In an attempt to recover treble damages under the Georgia RICO statute,
however, the amended complaint’s allegations about the Nezhats’ purported
misrepresentations reach far beyond her surgery to alleviate her endometriosis – the
allegations encompass utter irrelevancies. For instance, Manov’s surgery was
conducted with a laparoscope; beyond this fact, there is no connection between her
surgery and an allegation that the Nezhats falsely claimed to have invented
laparoscopic surgery.
Furthermore, claims of surgical success in medical journals and popular
magazines seem more akin to puffing than actionable misrepresentations. The label
attributed to the Nezhats’ statements, however, is unimportant because (1) none of
the alleged misrepresentations were made to Manov, and (2) the alleged
misrepresentations were unrelated to any harm suffered by Manov. Thus, insofar as
Manov’s mail fraud claim is based on medical journal and media fraud, it fails as a
matter of law because the facts do not support a prima facie case for fraud.
Finally, we note that Neal asserted this same medical journal fraud claim as an
act of racketeering in Mullen’s state court case. The Fulton County Superior Court
dismissed Mullen’s RICO claim on summary judgment, and the Georgia Court of
Appeals affirmed on October 22, 1996, shortly after Manov filed the amended
58
complaint now before us.74
Paragraphs 66-68 of the amended complaint bore the heading
“FALSE/FRAUDULENT BILLING.” None of the eleven instances of fraudulent
billing listed under this heading, however, injured Manov. The amended complaint
never specified how the supposed acts of fraudulent billing even related to Manov.
Because “a civil RICO plaintiff must show . . . that he was injured by reason of the
defendant’s acts of deception,” Pelletier, 921 F.2d at 1499, this allegation fails as a
matter of law.
Paragraphs 69-71 of the amended complaint bore the heading “$200.00
INITIAL HOSPITAL CHARGE.” While these paragraphs alleged an injury to
Manov in that she contends she was billed for a service she did not receive, this
claim fails as an act of racketeering, because the allegations did not demonstrate how
the billing constituted mail fraud. “When the alleged predicate act is mail . . . fraud,
the plaintiff must have been a target of the scheme to defraud and must have relied to
his detriment on misrepresentations made in furtherance of that scheme.” Tom’s
Amusement Co., Inc. v. Total Vending Serv., 533 S.E.2d 413, 419 (Ga. Ct. App.
2000) (citing Pelletier, 921 F.2d at 1499). The amended complaint neither alleged
that Manov was a target of the Nezhats’ scheme to defraud patients by billing an
74
See supra note 12.
59
initial hospital charge, nor that Manov relied on the misrepresentation to her
detriment and suffered harm as a result. In fact, in her deposition (taken during Rule
11 discovery), she admitted that regarding “the monies she was charged for the
services that were performed by the Nezhats, . . . she was not out of pocket for any
of those medical services.” Furthermore, Manov’s allegations that Mullen and a
Judy Glatzer, another Nezhat patient, may have been billed an initial hospital charge
for care they did not receive is of no moment. A plaintiff lacks standing to seek
damages for mail fraud perpetrated on another person or entity. See Johnson Enter.
v. FPL Group, Inc., 162 F.3d 1290, 1313 (11th Cir. 1998).
Paragraphs 72-73 of the amended complaint bore the heading “SERVICES
PROVIDED BY ONLY ONE PHYSICIAN.” Manov believed that only Dr. Farr
Nezhat was present for one of her surgeries, but she received a bill for the services of
both Drs. Farr and Camran Nezhat. The district court found that there was no factual
basis for this allegation and that Byrne would have realized that the claim was
frivolous had he conducted a reasonable investigation. But, whether or not there was
a factual basis, the allegation was flawed because it failed to include the elements of
fraud. Paragraphs 72 and 73 are not saved by Manov’s assertion that Mullen also
believes that she was billed for the services of both Drs. Farr and Camran Nezhat
when only one of them was present at her surgery. As explained above, Manov
60
lacks standing to bring a claim based on an alleged misrepresentation to a third
party. See Johnson Enter. v. FPL Group, Inc., 162 F.3d 1290, 1313 (11th Cir. 1998).
Paragraphs 74-75 of the amended complaint bore the heading “SERVICES
PROVIDED BY NON-PHYSICIANS.” These paragraphs alleged that the Center
routinely billed for physician services when the services were actually “performed
by a non-physician, such conduct in violation of 18 U.S.C. 1341 (Mail Fraud),
O.C.G.A. § 16-8-3 (Theft by Deception), and O.C.G.A. §16-5-23 (Battery).” Manov
based this allegation on her lawyers’ belief that Ceana Nezhat had not been awarded
a medical degree.75 Because he was not a licensed physician, the amended complaint
asserted that his vaginal examination of Manov two months after her appendectomy
constituted a battery.76
We agree with the district court that this allegation was frivolous because it
lacked a factual basis. Moreover, it typified the harassing, bad faith nature in which
Manov’s attorneys prosecuted this case. Cf. Pelletier, 921 F.2d at 1514 (stating that
Rule 11 sanctions are warranted when a party files a pleading in bad faith for an
improper purpose). The factual inadequacies aside, the allegation was legally
75
See supra note 39. Manov also alleges that the defendants forced nurses to perform
artificial inseminations, a procedure they claim Georgia law authorizes only physicians to
perform.
76
We note that Manov repeats this allegation in Count V as another instance of battery
committed by the Drs. Nezhat.
61
frivolous because the simple battery alleged in this case was not, and could not have
been, an act of racketeering.
The amended complaint cited simple battery, O.C.G.A. § 16-5-23, as an act of
racketeering. Simple battery is a misdemeanor. O.C.G.A. § 16-5-23(b). While
Georgia RICO’s definition of racketeering activity includes a crime “in Article 2 of
Chapter 5, relating to bodily injury” (O.C.G.A. § 16-14-3(9)(A)(v)), the precatory
language at the beginning of the definition clearly states that racketeering activity
constitutes “any crime which is chargeable by indictment” (O.C.G.A. § 16-14-3(9)).
At issue, then, is whether “chargeable by indictment” means must be charged by
indictment or may be charged by indictment. Article 2 of Chapter 5 of Georgia’s
statutory code contains seven assault and battery laws. Some of these laws are
misdemeanors (such as the simple battery alleged in this case), and some are
felonies.77 The reference in the definition of racketeering activity to “the laws in
Article 2 of Chapter 5" (O.C.G.A. § 16-4-3(9)(A)(v)) seems to indicate that a
violation of any of “the laws in Article 2 of Chapter 5" constitutes racketeering
77
Article 2 of Section 5 of Georgia’s statutory code lists the following crimes: 16-5-20
Simple Assault (a misdemeanor with exceptions), 16-5-21 Aggravated Assault (a felony), 16-5-
22 Conviction of assault with intent to commit a crime if the intended crime is actually
committed, 16-5-23 Simple battery (a misdemeanor unless against a person who is 65 years of
age or older, in a public transit vehicle, against a police officer, against a family member, against
a person licensed as a long term or health care professional), 16-5-23.1 Battery (a misdemeanor
with exceptions), 16-5-24 Aggravated battery (a felony), 16-5-25 Opprobrious or abusive
language as justification for simple assault or simple battery.
62
activity without regard to whether the violation is a misdemeanor or a felony.
Consider that all crimes, including misdemeanors, may be charged by indictment.
O.C.G.A. § 17-7-71. Felonies, however, must be charged by indictment unless the
right to an indictment is waived. O.C.G.A. § 17-7-70. If “chargeable by
indictment” means may be charged by indictment, every crime would constitute
racketeering activity. We do not think the scope of Georgia RICO is so broad.
The Georgia Supreme Court has held that misdemeanors are not included in
the definition of racketeering activity. In Clark v. Security Life Insur. Co., 509
S.E.2d 602, 605 (Ga. 1998), it stated:
O.C.G.A. § 16-14-3(9)(A) meticulously defines ‘racketeering activity’
by reference to specific state and federal statutes. O.C.G.A. § 16-14-
3(9)(B) provides that ‘racketeering activity’ shall also include various
crimes punishable as federal or state crimes by imprisonment for more
than one year. Violations of the insurance code, which are
misdemeanors, are not included in this definition.
(emphasis added). Although interpreting the catch-all provision in the definition of
racketeering activity, O.C.G.A. § 16-4-3(9)(B), Clark clearly evidences the Georgia
Supreme Court’s unwillingness to import misdemeanor conduct into the definition
of racketeering activity.
The [Georgia] General Assembly enacted RICO
“to impose sanctions against [the] subversion of the economy by
organized criminal elements and to provide compensation to private
persons injured thereby. It is not the intent of the General Assembly
that isolated incidents of misdemeanor conduct be prosecuted under this
63
chapter but only an interrelated pattern of criminal activity, the motive
or effect of which is to derive pecuniary gain.”
Sevcech v. Ingles Markets, Inc., 474 S.E.2d 4, 6 (Ga. Ct. App. 1996) (second
alteration in original) (citing O.C.G.A. § 16-14-2(b)). Finally, Georgia RICO’s
version of a catch-all provision, which makes out-of-state and federal offenses acts
of racketeering, requires that the offenses be felonies, i.e., crimes “chargeable under
the laws of the United States or any of the several states and . . . punishable by
imprisonment for more than one year.” O.C.G.A. § 16-14-3(9)(B).
Pretermitting the question of whether Georgia RICO’s definition of
racketeering activity includes the misdemeanor of simple battery,78 we find that
Georgia RICO does not include the type of isolated, simple battery alleged in this
case. See Larson v. Smith, 391 S.E.2d 686, 688 (Ga. Ct. App. 1990) (stating that
“[i]t is not the intent of the General Assembly that isolated incidents of misdemeanor
conduct be prosecuted under [this chapter] but only an interrelated pattern of
criminal activity, the motive or effect of which is to derive pecuniary gain”) (first
alteration in original) (emphasis added). The amended complaint did not indicate
that Ceana Nezhat committed this alleged battery on Manov on more than one
occasion. Moreover, the amended complaint failed to state a claim under Georgia
78
Such a determination is not necessary to our decision and is better left to the Georgia
courts.
64
RICO because it alleged an isolated instance of simple battery rather than an
interrelated pattern of activity intended to derive pecuniary gain.79
The other alleged acts of racketeering were similarly flawed. Consider
paragraphs 76-79 of the amended complaint which bore the heading “SEVERITY
OF DISEASE/ ‘22' MODIFIERS.”80 In these paragraphs, Manov alleged that the
procedure to remove her healthy appendix was labeled with a 22 modifier code prior
to surgery. Byrne, in his deposition, explained that 22 modifier codes were used on
insurance forms for surgery if, after the surgery in question, the surgeon determined
that a higher bill was justified because the surgery was more complex than usual.
Manov also alleged that Mullen’s surgical procedure was labeled with a 22 modifier
code. This conduct did not constitute an act of racketeering under Georgia RICO for
two reasons. First, the use of a 22 modifier code to describe Manov’s surgery did
not injure Manov, and, under Pelletier, a plaintiff must suffer a direct injury as a
result of a defendant’s violation of the mail fraud statute. 921 F.2d at 1499. Second,
the use of a 22 modifier code in Mullen’s case caused Manov no harm, and, under
79
We note that all of the alleged incidents of racketeering activity are similarly deficient;
as such, plaintiff has failed to allege an “interrelated pattern of activity intended to derive
pecuniary gain.”
80
The amended complaint does not allege which Georgia or federal law was violated by
the use of a “22 MODIFIER CODE” or by the following act of racketeering, “INSURANCE
FORM INFORMATION.” Giving Manov the benefit of the doubt, we assume that the amended
complaint alleged that these acts were part of a mail fraud scheme.
65
Johnson Enterprises, a plaintiff lacks standing to assert a misrepresentation made to
another person. See 162 F.3d at 1313.
Paragraphs 80-81 of the amended complaint bore the heading “INSURANCE
FORM INFORMATION.” Manov alleged that the Nezhat defendants submitted
forms to insurance companies indicating that patients had not pre-paid for services
even though some patients, such as Manov, had pre-paid for services. Nowhere did
the amended complaint indicate how this was an intentional misrepresentation upon
which Manov relied to her detriment; nowhere did it allege that Manov was harmed
by this practice. This allegation, therefore, was insufficient (1) because the
complaint failed to allege the elements of fraud, see Tom’s Amusement Co., Inc. v.
Total Vending Servs., 533 S.E.2d 413, 419 (Ga. Ct. App. 2000) (explaining that
when the alleged predicate act is mail fraud, the plaintiff must allege that he was a
target of the scheme to defraud and that he relied to his detriment on
misrepresentations made in furtherance of that scheme), and (2) because it failed to
allege harm to Manov, see Pelletier, 921 F.2d at 1499 (“A civil RICO plaintiff must
show . . . that he was injured by reason of the defendant’s acts of deception.”).
Finally, paragraphs 111-116 of the amended complaint bore the heading
“INFLUENCING WITNESSES.” The thrust of this allegation was that the Nezhat
defendants had persuaded a physician not to testify about the Nezhats’ medical
66
journal fraud. The physician, Dr. Harry Reich, would have testified that “Camran
Nezhat could not produce patient data to verify [his] claims that he had
laparoscopically treated 42 ectopic pregnancies, with no complications.”81
Assuming that Dr. Reich would have produced such testimony, we fail to
comprehend its relevance here.
The final acts of racketeering bear the headings “ESTROPEL” and
“EVIDENCE TAMPERING.” Like the other acts of racketeering, these acts fail for
want of a showing that they somehow injured Manov.
In conclusion, we concur with the district court that Count IV lacked a basis in
fact. More importantly, it also lacked a legal basis. The court, therefore, had no
alternative but to strike the count as frivolous.
3.
Having distilled Manov’s amended complaint to its essentials, we find that it
remains what it was when Manov first brought suit in the Fulton County Superior
Court: a garden variety medical malpractice claim. By expanding her case to include
the RICO charge and the other baseless claims discussed above, Byrne subjected
81
According to the amended complaint, the Nezhats had intimidated expert witnesses in
cases brought against them by others. Once again, Manov failed to demonstrate how such
conduct injured her. Moreover, these allegations are clearly nothing more than an attempt to
reassert the witness intimidation arguments made by Neal in Mullen’s federal court case in a
motion for a protective order. The federal court denied the motion for protective order because
Mullen had no evidence to support her claims. See supra note 36.
67
himself to sanctions. Pelletier, 921 F.2d at 1514 (stating that sanctions are proper
“(1) when a party files a pleading that has no reasonable factual basis; (2) when a
party files a pleading that is based on a legal theory that has no reasonable chance of
success and that cannot be advanced as a reasonable argument to change existing
law; and (3) when a party files a pleading in bad faith for an improper purpose”).
Byrne’s professional responsibilities in this case required him to perform a
reasonably thorough and objective investigation of the facts before asserting them as
the bases for these causes of action. Byrne did not speak to a single person, apart
from Neal, who had actual knowledge regarding the facts that purportedly supported
the fraud charges. What is more, Byrne failed to research the law. Had he done so,
he would have learned that Manov’s RICO claims were doomed to failure. Byrne’s
responsibility to act with professional judgment only after a thorough, reasonable,
and objective investigation of the claims at issue was heightened (1) because
Mullen’s RICO claims were pending appeal of an adverse summary judgment ruling
and (2) because of the extraordinary nature of the RICO allegations in this case. See
id. at 1522 (emphasizing that “[p]articularly with regard to civil RICO claims,
plaintiffs must stop and think before filing them”). In short, we affirm the district
68
court’s imposition of monetary sanctions against Byrne pursuant to Rule 11.82
Not only were sanctions justified under Rule 11, but the record is replete with
instances of bad faith and dilatory tactics – thereby justifying sanctions under 28
U.S.C. § 1927 and the court’s inherent power. Before he filed the case at hand,
Byrne was aware of the orders issued by the judges presiding over Mullen’s state
and federal cases, which, collectively, labeled Neal’s conduct as “deceitful and
dishonest,” “unethical,” “malicious and harassing,” and “unbecoming of an officer
of the court.” We find it telling that even though Byrne knew that Neal “was
walking on thin ice when admitted [by the Fulton County Superior Court] pro hac
vice to practice in Georgia”, that the superior court had disqualified Neal from
participating in Mullen’s case, and that the judge in Mullen’s federal court case was
82
Upon reviewing the history of this case as it was presented to the district court,
including defendants’ request for Rule 11 discovery and Manov’s response, we find that the
district court did not abuse its discretion in directing Rule 11 discovery at the outset of the case,
particularly since the court envisioned that discovery would be completed in forty-five days.
Due in large part to Manov’s attorneys’ dilatory tactics, discovery was not completed, however,
until over one year later. Rule 11 sanctions “normally will be determined at the end of
litigation,” but “the timing of sanctions rests in the district judge’s discretion.” Baker v.
Alderman, 158 F.3d 516, 523 (11th Cir. 1998).
Similarly, the court properly denied Manov’s July 14 and 31, 1997 motions to engage in
limited Rule 11 discovery. Specifically, Manov’s discovery requests sought discovery of (1) the
appendectomy surgeries performed by Drs. Nezhat and the Center during 1992; (2) the Center’s
records of sixteen patients who had bowel resection surgeries; (3) discovery as to the
authenticity of the medical credentials of Drs. Farr, Camran, and Ceana Nezhat; and (4) the
depositions of the defendant doctors. In that Manov’s requests were neither relevant to
defendants’ motions for sanctions nor related to Rule 11, the district court properly denied the
motions.
69
on the brink of doing so when Neal withdrew from the case, Byrne got involved in
the case and continued to advance Neal’s arguments. Moreover, shortly after filing
Manov’s case, Byrne was forewarned that Rule 11 sanctions were looming. Despite
concerns expressed by the defendants and the court regarding the baseless
allegations in the complaint, Byrne realleged and repled most of those allegations in
the amended complaint, thereby forcing the defendants to respond to the same
claims a second time.
Any doubt as to the meritless nature of the Georgia RICO count was removed
when the Georgia Court of Appeals affirmed the summary judgment dismissal of
Mullen’s RICO claims. See Mullen v. Nezhat, 223 Ga. App. 278, 477 S.E.2d 417(Ga. Ct. App. 1996). Manov’s Georgia RICO count was essentially a repleading of
Mullen’s RICO claims that the Fulton County Superior Court had rejected. At the
time Byrne filed the complaint in this case, the summary judgment in Mullen’s case
had been appealed to the Georgia Court of Appeals. When Byrne filed Manov’s
amended complaint on September 6, 1996, the Georgia court had the appeal under
advisement. Very disturbing to us is that Byrne failed to notify the district court
after the Georgia Court of Appeals affirmed the summary judgment dismissal a few
70
weeks later on October 22, 1996, effectively gutting his client’s RICO claim.83 See
Atwood v. Singletary, 105 F.3d 610, 612 (11th Cir. 1997) (explaining that in the
context of establishing in forma pauperis status, “a party is responsible for
reaffirming all contentions in papers filed before the court and informing the court of
any changes in circumstances that would render a contention meritless”). Further, he
neither withdrew the claim nor sought leave to file a repleader. Instead, he
continued to prosecute the RICO claim with vigor until the court disposed of the
claim in its February 23, 1998 order granting the defendants’ motions for sanctions.
Pressing on with Manov’s RICO claim after the Georgia Court of Appeals’ adverse
decision in Mullen is but one of the acts of bad faith Byrne committed during the
course of this litigation. Given such conduct, we would be remiss if we did not
affirm the district court’s imposition of monetary sanctions against Byrne under
section 1927 and the court’s inherent power as well as under Rule 11.
The conclusion is inescapable that, with the exception of Manov’s medical
83
Defense counsel notified the district court of the court of appeals’ decision on
November 6, 1996. The canons of ethics required that Byrne, himself, inform the court. The
Fourth Circuit described the duty of candor in United States v. Shaffer Equipment Co., 11 F.3d
450, 457 (4th Cir. 1993), “as that duty attendant to the attorney’s role as an officer of the court
with a ‘continuing duty to inform the Court of any development which may conceivable affect
the outcome of litigation.’ . . . ‘Thus, attorneys are expected to bring directly before the Court all
those conditions and circumstances which are relevant in a given case. . . . we are confident that
a general duty of candor to the court exists in connection with an attorney’s role as officer of the
court.’” (internal citations omitted).
71
malpractice claim – which the district court’s sanctions order left undisturbed –
Byrne filed a frivolous lawsuit, in bad faith, for the purpose of extorting a settlement
from the defendants. As a willing participant in Neal’s continuing vendetta against
the Nezhats, Byrne abused the judicial process. As such, sanctions against Byrne
were wholly warranted.
C.
1.
We turn now to the award of sanctions against Manov. The district court’s
February 23, 1998 order granted both Northside’s and the Nezhats and Center’s
motions for sanctions against Byrne and Manov, finding them jointly and severally
liable for attorneys’ fees and costs, and dismissed the remaining claims (except the
malpractice claim) in the amended complaint. As in the award of sanctions against
Byrne, the district court cited Rule 11, 28 U.S.C. § 1927, and its inherent power as
the authority for the sanctions against Manov. In this subpart, we address the
monetary sanctions imposed against Manov. In subpart 3, we consider the dismissal
of her claims.
While the district court did not consider Manov’s conduct separately from
Byrne’s conduct, it thoroughly analyzed each of the counts of the amended
complaint. The court concluded from its analysis that the amended complaint (apart
72
from the malpractice claim) was filed in violation of Rule 11, because there was “no
factual or legal basis for the claims” against Northside, and that “had Byrne
conducted the reasonable, open-minded investigation required of him, he should
have concluded that the Georgia RICO claims against the Nezhats and the Center
fell beyond the scope of what could be properly pled within the confines of Rule
11.”84
Sanctions against Manov under Rule 11 were proper if she knew or should
have known that the allegations in the complaint were frivolous. See Worldwide
Primates, Inc. v. McGreal, 26 F.3d 1089, 1093 (11th Cir. 1994) (remanding the case
to impose an appropriate sanction because the client pursued the claim “when it
knew, or should have known, that its claim was legally and factually baseless”).
That Manov was a represented party, not an attorney, does not insulate her from
sanctions under Rule 11. A client may be sanctioned under Rule 11 even if the
client did not sign the frivolous pleadings. See Souran v. Travelers Ins. Co., 982
F.2d 1497, 1508 n.14 (11th Cir. 1993) (“‘Even though it is the attorney whose
signature violates the rule, it may be appropriate under the circumstances of the case
to impose a sanction on the client.’” (quoting Fed. R. Civ. P. 11 advisory
84
The court made similar comments in disposing of Manov’s other counts against the
Nezhats and the Center.
73
committee’s note)). Rule 11 does not permit sanctioning a client, however, when the
basis for the sanction is that the pleading was legally frivolous.85 See, e.g., Shrag v.
Simpson, 141 F.3d 1185 (10th Cir. 1998) (unpublished table decision) (stating “such
legal matters as the frivolousness of a claim or the impropriety of a discovery
request, which are ‘peculiarly [within] the province of lawyers,’ would not, without
specific findings implicating knowing participation, support Rule 11 sanctions
against a party” (citing White v. General Motors Corp., 908 F.2d 675, 686 (10th Cir.
1990)). Typically, sanctions are levied against a client when he misrepresents facts
in the pleadings. See id. (“[A] knowing factual misrepresentation warrants
sanction.”). A client is also subject to sanctions when it is clear that he is the
“mastermind” behind the frivolous case. See, e.g., Pelletier, 921 F.2d 1465(discussing the client’s scheme to institute frivolous litigation to extort settlement
and noting that the client was skilled in the law).
The defendants contend that Manov’s deposition testimony contradicted the
allegations in the complaint, that her amendments to her deposition demonstrated
that she was trying to change her testimony, and that she continued to rely on Neal
85
Fed. R. Civ. P. 11(c)(2)(A) provides that “Monetary sanctions may not be awarded
against a represented party for a violation of subdivision (b)(2)”; subdivision (b)(2) provides “the
claims, defenses, and other legal contentions therein are warranted by existing law or a
nonfrivolous argument for the extension, modification, or reversal of existing law or the
establishment of new law.”
74
after she learned of his disqualification in Mullen’s state court case. Even if these
allegations and other like-styled arguments set forth by the defendants are true, they
do not indicate that Manov knew the complaint filed on her behalf was factually or
legally baseless. Further, there is no evidence in the record indicating that Manov
provided false information to her attorneys, thereby facilitating a factually
groundless complaint. See Calloway v. Marvel Entm’t Group, 854 F.2d 1452, 1474-
75 (2d Cir. 1988) (noting that a factual misrepresentation is an example of wrongful
conduct for which a party may be sanctioned in addition to, or instead of, counsel)
rev’d on other grounds, Pavelic & LaFlore v. Marvel Entm’t Group, 493 U.S. 120,
110 S. Ct. 456, 107 L. Ed. 2d 438 (1989); see also Elliott v. M/V Lois B., 980 F.2d
1001, 1007 (5th Cir. 1993) (affirming a sanction against a party for
misrepresentations in the pleadings).
There is no indication that Manov was anything but truthful in relaying to
counsel facts about her surgeries and post-operative complications. The
inadequacies in the RICO and other counts in the amended complaint stemmed
directly from her attorneys. The district court recognized that Neal and Byrne, not
Manov, were responsible for the frivolous complaint. For example, consider the
court’s reasoning regarding the RICO claim brought against Northside:
[p]laintiff’s counsel did not have any specific factual support for the
RICO claims against Northside prior to the time the original and
75
amended complaints were filed. This is evidenced by plaintiff’s
testimony, which indicates that plaintiff’s counsel was the author of the
RICO claim against Northside. Plaintiff testified that she was not even
aware that racketeering allegations had been included in the complaint.
Plaintiff admitted that she did not understand the meaning of
‘racketeering.’ Plaintiff has no personal knowledge to support the
allegations that Northside knowingly permitted the Nezhats to perform
‘unnecessary, unwarranted, non-consensual and experimental surgeries’
on patients for Northside’s own benefit. Further, plaintiff has no
personal knowledge that any nurses at Northside committed battery.
Further, plaintiff admits that no Northside agent, employee or
representative ever touched her or performed treatment on her without
consent. Finally, plaintiff admits that she has no personal knowledge of
any criminal activity committed by an officer, board member, or other
individual in a managerial capacity at Northside. . . . It was the decision
of plaintiff’s counsel in this matter to file this action and to radically
expand the scope of the allegations far beyond those pled by plaintiff’s
original attorney.
Similarly, the court stated the following regarding the Nezhats and the Center’s
motion for sanctions:
Byrne did not have any evidence to support a claim against the Nezhats
for RICO. Byrne did not talk to a single person – and apparently did
not even have second hand knowledge through Neal – of anyone who
had actual knowledge regarding the matters at issue here who had
ventured the view that there were facts to support the charge of fraud.
The fact that the alleged ‘scheme’ is unsupported by any evidence
should have led reasonable counsel to the conclusion that no scheme
existed. It should also have caused Byrne to be put on notice that
further inquiry was required, particularly in light of the past
adjudications and demonstration of Neal’s past behavior. . . . Therefore,
had Byrne conducted a reasonable, objective and open-minded
investigation, . . . he should have concluded that the claim for Georgia
RICO fell beyond the scope of what could be properly pled within the
confines of Rule 11. It was the decision of plaintiff’s counsel in this
matter to file this action and to radically expand the scope of the
76
allegation far beyond those pled by plaintiff’s original attorney, in order
to take advantage of what Byrne had hoped would be more expansive
discovery, among other reasons. Further, because plaintiff and
plaintiff’s counsel have acted with bad faith86 in pursuing this RICO
claim against the Nezhats, this court is authorized pursuant to 28 U.S.C.
§ 1927 and the inherent power of this court to GRANT defendants’
motion for sanctions. Accordingly, the defendants have complied with
all of the appropriate requirements in order to establish their entitlement
to Rule 11 sanctions.
Implicit in the district court’s reasoning is the understanding that Manov’s attorneys,
not Manov, were responsible for the frivolous claims and pleadings. Accordingly,
insofar as the monetary sanctions levied against Manov were based on the court’s
authority under Rule 11, they cannot be upheld.
The district court’s failure to specify her sanctionable conduct is not what
gives rise to our conclusion that the court abused its discretion in imposing monetary
sanctions on Manov under Rule 11. See, e.g., White, 908 F.2d at 681(explaining
that “[w]hile the court’s method of imposing sanctions was not optimal, neither was
it an abuse of discretion, [because t]he court’s findings and conclusions, which we
have extensively quoted, were detailed enough to assist in appellate review, help
assure the litigants [] that the decision was the product of thoughtful deliberation,
and [] enhance[] the deterrent effect of the ruling.”) (final alteration in original);
Independent Fire Ins. Co. v. Lea, 979 F.2d 377, 379 (5th Cir. 1992) (noting that the
86
We address the court’s finding of bad faith on the part of Manov in Part III.C.2, supra.
77
trial court “clearly identified the many grounds and circumstances on which it felt
that actions taken by [one of the clients] failed to satisfy the requirements of Rule
11; but no where did the Trial Court identify any similar actions as having been
taken by [the other clients]”). The reason we cannot affirm the Rule 11 monetary
sanctions against Manov is that to do so based on the district court’s reasoning or the
evidence in the record before us would be to impose strict or vicarious liability,
neither of which is warranted under Rule 11. See Independent Fire Ins. Co. v. Lea,
979 F.2d at 379 (“There is nothing in the express language of Rule 11 that all parties
at interest on a particular side of a given lawsuit shall be subject to sanctions on a
pro rata or joint and several liability or in solido basis; and we do not think that the
basic policies of ‘deterrence and education’ behind Rule 11 require an interpretation
of the Rule which creates such forms of vicarious liability.”); Southern Leasing
Partners, Ltd. v. McMullan, 801 F.2d 783, 789 (5th Cir. 1986) (“Rule 11 is not a rule
of strict liability.”).
The court expressly stated that “it was the decision of plaintiff’s counsel to
expand this litigation beyond the scope of that pled by her original attorney in state
court”; as such, it is clear that Manov was not involved in the management of her
case or the decisions that resulted in the actions the court found improper under Rule
11. See Independent Fire Ins. Co., 979 F.2d at 379 (explaining that “[w]hile Rule 11
78
. . . does contemplate that sanctions can be levied against a ‘represented party’, we
are constrained to hold under the facts of this case that the ‘represented party’
against which sanctions are levied must be a party who had some direct personal
involvement in the management of the litigation and/or the decisions that resulted in
the actions which the court finds improper under Rule 11”). Moreover, the court’s
statements demonstrate that, unlike the client in Pelletier, 921 F.2d 1465, Manov
was not the mastermind behind the frivolous litigation. See also In re Big Rapids
Mall Assocs. v. Mutual Life Ins. Co., 98 F.3d 926, 932 (6th Cir. 1996).87 In sum,
because “Rule 11 directs that the sanction should fall upon the individual responsible
for the filing of the offending document,” Chevron, USA, Inc. v. Hand, 763 F.2d
1184, 1187 (10th Cir. 1985), we cannot affirm the Rule 11 monetary sanctions
against Manov.88
87
In Big Rapids, the Sixth Circuit reviewed the bankruptcy court’s conclusion “that ‘the
attorneys and clients shared responsibility for the litigation strategy.’” 98 F.3d at 932. As in the
instant case, the bankruptcy court in Big Rapids imposed sanctions jointly and severally on the
clients and the attorneys. While in the instant case the court did not detail the client’s (Manov’s)
conduct and the court in Big Rapids failed to detail the attorneys’ conduct, this difference is of
no moment. Big Rapids stands for the general proposition that Rule 11 is not a rule of vicarious
liability. See id. (“Without any findings to support the imposition of sanctions on appellants, the
bankruptcy ruling amounts to vicarious liability on the part of appellants for the perceived
unreliability of their clients’ testimony.”). Like the court in Big Rapids, we find “no facts to
support a conclusion of ‘shared responsibility’” to justify the award of Rule 11 sanctions against
Manov. Id.88
A line of cases holds that dismissal of a case for an attorney’s neglect does not unfairly
prejudice the client because the client is responsible for the actions of his attorney. These cases
have been used to support the general proposition that a client is liable for the actions of his
attorney. Most case law in this area stems from Link v. Wabash R.R. Co., 370 U.S. 626, 82 S.
79
2.
Although we find that monetary sanctions against Manov were not justified
under Rule 11, the award of these sanctions may still be affirmed if the sanctions
were proper under the court’s inherent power.89 As explained supra Part III.B.1, a
federal court may resort to its inherent power to sanction an attorney or a party for
bad faith conduct. “A finding of bad faith is warranted where an attorney [or a
client] knowingly or recklessly raises a frivolous argument, or argues a meritorious
claim for the purpose of harassing an opponent. A party also demonstrates bad faith
by delaying or disrupting the litigation or hampering enforcement of a court order.”
Ct. 1386, 8 L. Ed. 2d 734 (1962), in which the district court dismissed the client’s case because
the client’s attorney failed to attend a scheduled pretrial conference. Link reasoned:
[T]here is certainly no merit to the contention that dismissal of petitioner’s claim
because of his counsel’s unexcused conduct imposes an unjust penalty on the
client. Petitioner voluntarily chose this attorney as his representative in the
action, and he cannot now avoid the consequences of the acts or omissions of his
freely selected agent. Any other notion would be wholly inconsistent with our
system of representative litigation, in which each party is deemed bound by the
acts of this lawyer-agent and is considered to have “notice of all facts, notice of
which can be charged upon the attorney.”
Id. at 633-34, 82 S.Ct. at 1390 (citation omitted). We agree with the Eighth Circuit that “[t]he
principle enunciated by the Supreme Court [in Link] simply does not apply in a Rule 11 sanction
context. Otherwise every award against an attorney under Rule 11 could also be assessed against
the client.” Kirk Capital Corp. v. Bailey, 16 F.3d 1485, 1492 (8th Cir. 1994).
89
We note that 28 U.S.C. § 1927 does not authorize sanctioning a client, such as Manov.
We presume, therefore, that the district court relied on the authority derived from its inherent
power to sanction Manov and the authority of both section 1927 and its inherent power to
sanction Byrne.
80
Barnes, 158 F.3d at 1214 (11th Cir. 1998) (citing Primus Automotive Fin. Servs.,
Inc. v. Batarse, 115 F.3d 644, 649 (9th Cir. 1997)). In its February 23, 1998
sanctions order, the district court discussed each defendant’s motion separately but it
reached virtually the same legal conclusion: “because plaintiff and plaintiff’s
counsel have acted with bad faith in pursuing [these] claim[s], this court is
authorized pursuant to 28 U.S.C. § 1927 and the inherent power of this court to grant
. . . defendants’ motion for sanctions.” Because a finding of bad faith is “the key to
unlocking the inherent power,” we consider each of the district court’s findings that
Manov acted in bad faith.
a.
In granting Northside’s motion for sanctions, the district court repeatedly
emphasized that
Plaintiff’s counsel did not have any specific factual support for the
RICO claims against Northside prior to the time the original and
amended complaints were filed. This is evidenced by plaintiff’s
testimony, which indicates that plaintiff’s counsel was the author of the
RICO claim against Northside. Plaintiff testified that she was not even
aware that racketeering allegations had been included in the complaint.
Plaintiff also admitted that she did not understand the meaning of
‘racketeering.’ . . . It was the decision of plaintiff’s counsel in this
matter to file this action and to radically expand the scope of the
allegations far beyond those pled by plaintiff’s original attorney.
The district court went on to support its finding of bad faith by listing the following
81
egregious acts: (1) plaintiff’s counsel brought a negligence claim one-and-a-half
years after the statute of limitations had run; (2) plaintiff’s counsel argued that the
statute was tolled as a result of Northside’s fraudulent acts even though the
complaint failed to allege any fraudulent acts on the part of Northside; (3) plaintiff’s
counsel had no evidence that Northside had engaged in any racketeering activity; (4)
plaintiff was not aware at the time of filing that her counsel had alleged a RICO
claim; (5) plaintiff’s counsel repled and repeated the frivolous arguments in the
amended complaint, forcing Northside to respond to the amended complaint and
renew its motion to dismiss – in this regard plaintiff and plaintiffs’s counsel
unreasonably and vexatiously multiplied this action. Despite its cognizance that
plaintiff’s counsel, not plaintiff, were behind both the baseless RICO allegations and
the untimely filing of the negligence claim against Northside, the district court
summarily stated that “Northside has shown that plaintiff and plaintiff’s counsel
have acted with bad faith so as to recover sanctions pursuant to section 1927 and the
inherent power of the court.” The court concluded that “sanctions are proper under
the court’s inherent power because plaintiff and plaintiff’s counsel have abused the
judicial process by using the court as a vehicle to continue Neal’s pursuit of the
Nezhats.”
b.
82
The district court followed similar reasoning in granting the Nezhats and the
Center’s motion for sanctions. Regarding the Georgia RICO claim, the district court
stated: “It was the decision of plaintiff’s counsel in this matter to file this action and
to radically expand the scope of the allegations far beyond those pled by plaintiff’s
original attorney, in order to take advantage of what Byrne had hoped would be
more expansive discovery, among other reasons.” After emphasizing that it was
plaintiff’s counsel who expanded the scope of this litigation, the district court stated
that plaintiff’s counsel and plaintiff acted in bad faith in pursuing the RICO claim
against the Nezhats. Therefore, according to the court, it was authorized under 28
U.S.C. § 1927 and the inherent power of the court to sanction plaintiff and her
counsel.
Similarly, regarding Manov’s battery count it stated:
had Byrne conducted a reasonable, objective and open-minded
investigation required by the professional responsibility of an attorney,
counsel should have concluded that the claim of battery fell beyond the
scope of what could be properly pled within the confines of Rule 11.
Further, it was the decision of plaintiff’s counsel in this matter to file
this action and to radically expand the scope of the allegation far
beyond those pled by plaintiff’s original attorney. Finally because
plaintiff and plaintiff’s counsel have acted with bad faith in pursuing
this battery claim against Camran, Farr and Ceana Nezhat, this court is
authorized pursuant to 28 U.S.C. § 1927 and the inherent power of this
court to grant . . . defendants’ motion for sanctions.
Again, regarding Manov’s fraud count, the district court stated:
83
[n]o evidence has been presented that the Nezhats made fraudulent
misrepresentations to plaintiff or that the Nezhats concealed material
information. Thus, plaintiff’s counsel has no reasonable factual bases
upon which to bring a claim against the Nezhats for fraud. Further,
plaintiff’s fraud claim is objectively frivolous because counsel has no
evidence of fraudulent activity on behalf of the Nezhats. Finally,
because plaintiff and plaintiffs’s counsel have acted with bad faith in
pursuing this fraud claim against Camran, Farr and Ceana Nezhat, this
court is authorized pursuant to 18 U.S.C. § 1927 and the inherent power
of this court to grant . . . defendants’ motion for sanctions.
c.
The above analysis of the asserted bases for sanctioning Manov evidences a
distinct and erroneous trend in the district court’s reasoning. As a sanction against
Manov and Byrne, the court awarded attorney’s fees and dismissed all but the
malpractice count. To justify these sanctions, the court cited Byrne’s conduct from
which it inferred bad faith. Then, the court summarily stated that both Byrne and
Manov acted in bad faith. To support its findings of bad faith and otherwise
sanctionable conduct, the court impermissibly relied solely on the actions of counsel.
See Primus Automotive Financial Servs. Inc., 115 F.3d at 650 (citing Martin v.
Brown, 63 F.3d 1253, 1256 (3d Cir. 1995) (explaining that “any sanctions imposed
against [an attorney] should be based solely on his ‘own improper conduct without
considering the conduct of the parties or any other attorney’”) (quoting Martin v.
Brown, 63 F.3d 1252, 1265 (3d. Cir. 1995)). Sanctionable conduct by a party’s
84
counsel does not necessarily parlay into sanctionable conduct by a party. See
Donaldson v. Clark, 819 F.2d 1551, 1557 n.6 (11th Cir. 1987) (explaining that it is
advisable to avoid a sanction that penalizes the parties for the offenses of their
counsel); M.E.N. Co. v. Control Fluidics, Inc., 834 F.2d 869, 873 (10th Cir. 1987)
(“Where sanctions are concerned, . . . we have cautioned that ‘[i]f the fault lies with
the attorneys, that is where the impact of the sanction should be lodged.’” (citation
omitted)).
While bad faith is the “key to unlocking the court’s inherent power,” Barnes,
158 F.3d at 1214, a court must do more than conclude that a party acted in bad faith;
it should make specific findings as to the party’s conduct that warrants sanctions.90
90
The Sixth Circuit explained the ideal inquiry undertaken by a district court when
deciding to implement sanctions:
[W]hat information about the client’s business did the attorneys have? Was the
information verified? How involved had these attorneys been in their client’s
business? For how long? Were other professionals, such as accountants, or
bankers consulted? What independent investigation, if any, did the attorneys
undertake prior to the filing? What did their clients tell them? Were they
justified in believing what their clients told them? Did a time problem exist when
a decision to file was made? What was the business (and legal) sophistication of
the clients and the attorneys? These along with a myriad of other factual details
would be crucial to have in hand before determining whether the action taken or
not taken by the attorneys prior to filing . . . was or was not reasonable.
In re Big Rapids Mall Assocs., 98 F.3d at 930. In the case before us, the district court conducted
this type of extensive review of Byrne’s pre-filing investigation. As to Manov, however, the
district court’s analysis is flawed in that
[t]he court merely stated that ‘misrepresentations’ existed in various pleadings
made to ‘improperly or abusively delay and hinder the [defendant].” . . . The court
did not identify these “misrepresentations’ nor the pleadings containing them, and
no facts in the record exist to reflect that appellants knew or should have known
that there were any misrepresentations.
85
This is not a case in which sanctions can be upheld despite the lack of specificity in
the district court’s order. See generally Barber v. Int’l Bhd,778 F.2d 750, 756 (11th
Cir. 1985) (“‘In some cases if [the trial court] fails to make a finding on a particular
fact it has been assumed that . . . [it] impliedly made a finding consistent with [the]
general finding.’” (quoting Charles Alan Wright & Arthur R. Miller, Federal
Practice and Procedure § 2579 at 712-13 (1971)); Clinkenbeard v. Central S.W. Oil
Corp., 526 F.2d 649 (5th Cir. 1976)). Unless the evidence on the issue of bad faith
is uncontroverted, a district court should examine a party’s conduct and make
findings on that issue.
d.
Nothing in the record indicates that Manov knew that a baseless claim had
been brought on her behalf or that she was pursuing the Nezhats for a harassing or
other impermissible purpose. See Barnes, 158 F.3d at 1214 (“A finding of bad faith
is warranted where an attorney [or a client] knowingly or recklessly raises a
frivolous argument, or argues a meritorious claim for the purpose of harassing an
opponent. A party also demonstrates bad faith by delaying or disrupting the
litigation or hampering enforcement of a court order.”). In fact, the minimal
findings regarding Manov in the February 23, 1998 sanctions order directly
Id.86
undermined any conclusion of bad faith on her part. The court stated that “plaintiff
testified that she was not even aware that racketeering allegations had been included
in the complaint. Plaintiff also admitted that she did not understand the meaning of
‘racketeering.’ . . . It was the decision of plaintiff’s counsel in this matter to file this
action and to radically expand the scope of the allegations far beyond those pled by
plaintiff’s original attorney.” The district court’s statement that Manov was not even
aware that racketeering allegations had been included in the complaint precludes the
conclusion that she knowingly or recklessly filed a frivolous claim. As such, the
court’s findings that Manov acted in bad faith are clearly erroneous.
Not only does the court’s own statement undermine a conclusion of bad faith,
but its failure to specify Manov’s sanctionable conduct renders us unable to affirm.
This was brought to the court’s attention in plaintiff’s March 12, 1999 Response to
Submission of Nezhat Defendants and Northside Hospital Regarding Baker v.
Alderman, 158 F.3d 516 (11th Cir. 1998).91 Manov argued that the court never
made a finding that she herself participated in any wrongdoing. The court
91
See supra note 53, explaining that Baker requires a court to consider a party’s ability
to pay when fashioning an award of monetary sanctions. We note that in her March 9, 1998
motion for reconsideration of the court’s order awarding sanctions, Manov did not argue that the
district court failed to specify her misconduct. The court denied her motion on June 1, 1998.
Manov’s argument regarding the district court’s failure to specify wrongdoing on her part was
not brought to the court’s attention until her March 5, 1999 response to the court’s February 17,
1999 order directing Manov and Byrne to comply with Baker by submitting financial
information on their respective abilities to pay monetary sanctions.
87
acknowledged plaintiff’s argument in its June 24, 1999 order setting the amount of
monetary sanctions to be awarded.
[T]he court made specific findings regarding plaintiff’s
personal wrongdoing in its February 23, 1998 sanctions
order. Not only does it appear that plaintiff has made
several false assertions in affidavits, depositions and sworn
statements filed with the court, see Nezhat Defendants
Proposed Findings of Fact [docket number 109-11], pages
151-76, but incredibly, plaintiff continues to rely on
attorney Neal for counsel despite this court’s specific
admonitions regarding his involvement in this litigation.
Irrespective of the overwhelming evidence of
unprofessional conduct by Neal, plaintiff has never
disavowed either her relationship with him or his conduct.
These above quoted statements demonstrate that the court considered plaintiff’s
argument and rejected it. The statements also constitute an attempt to clarify or
issue the following findings: (1) plaintiff made false statements in documents filed
with the court and (2) plaintiff continued to rely on Neal after he was barred from
the case. Finally, the court’s statements demonstrate that it relied on a portion of the
Defendants’ Proposed Findings of Facts.
e.
At first glance, it seems as if the district court, in its June 24, 1999 order,
“cured” the failure of its February 23, 1998 sanctions order to cite Manov’s
sanctionable conduct. We must, nonetheless, reverse because the findings set forth
88
in the June 24 order are irrelevant and could not serve as a basis for sanctions.
Consider the finding that Manov made several false assertions in affidavits,
depositions, and sworn statements filed with the court. Even if we accept this
finding as true, false statements alone do not indicate bad faith. Without a “smoking
gun” statement from the plaintiff, i.e., “I know my claim is frivolous and I am
pursuing this claim to harass the defendants,” a district court makes a determination
of bad faith by drawing inferences from the conduct before it. Standing alone, a
false or inconsistent statement in a deposition does not compel the conclusion of bad
faith. A false statement can be evidence of bad faith, if, for instance, there is other
evidence in the record indicating that the statement was made for a harassing or
frivolous purpose. The record in this case, however, does not yield the inference that
Manov knew her claim was frivolous or that she sought to harass the Nezhats. For
instance, in their Proposed Findings of Fact, the defendants asserted (and the district
court implicitly adopted)92 that Manov was happy with the Nezhats after her surgery
because her pain had subsided. As defendants pointed out, an underlying premise of
this case is that she was unhappy with the care she received from the Nezhats. Even
if viewed as “false,” this latter statement is not evidence that Manov knew her claim
92
In its June 24, 1999 order, the district court explicitly refers to pages 151-76 of the
Defendants’ Proposed Findings of Fact to support its finding that Manov made false assertions in
statements filed with the court.
89
was frivolous and therefore acted in bad faith in pursuing the Nezhats.93
f.
The district court also found that Manov acted in bad faith because she
continued to rely on Neal despite the court’s specific admonition regarding his
involvement in the litigation.94 Once again, standing alone, the finding that Manov
relied on Neal does not compel the inference that she knew her claim was frivolous
or that she was pursuing her claim for a harassing purpose.95 In her deposition,
93
That Manov did not knowingly make false assertions to further this baseless litigation
is evident from the following example cited in the Defendants’ Proposed Findings of Fact. One
aspect of her lawyers’ theory of the case is that in their medical journal articles, the Nezhats
concealed complications, such as those in Manov’s and Mullen’s surgeries. At her lawyers’
behest, Manov executed an affidavit stating that the Nezhats reported an absence of
complications in 100 consecutive appendectomies. Her counsel prepared the affidavit which
stated, “They must have forgotten about me.” At her deposition, counsel for the Nezhats
informed Manov that the article claiming that the Drs. Nezhat had encountered no complications
in their last 100 appendectomies was published one year before her surgery. Upon learning of
this discrepancy, she said she was unaware of the date of the article, acknowledged that it was
impossible for her to be included in the article, and admitted that this argument should not have
been presented to the court. Rather than demonstrating a bad faith attempt to pursue frivolous
litigation, this example demonstrates that Manov was unaware of the frivolous nature of the
claims made on her behalf and that she was not pursuing the Nezhats in bad faith.
94
Given Neal’s repeated unethical and unprofessional behavior, the district court took
the proper course in barring him from “participating in any form or fashion” in the case.
95
This case is unlike Baker, 158 F.3d 516 (a case decided under the pre-1993
amendments to Rule 11), in which the plaintiff argued that he should not have been sanctioned
because he relied on the advice of his attorney and never signed any papers filed with the court.
In Baker, we noted that while the district court stated that “ignorance of the law is no excuse,” it
did not respond to plaintiff’s argument that he relied on the advice of counsel. Id. at 526. We
affirmed the district court based on its findings that “Plaintiff should have believed the pleadings
he filed were not well-grounded in facts and law.” Id. The plaintiff had also read important
documents filed by the defendants informing him his case was frivolous. Moreover, the plaintiff
knew that “the Second District Court of Appeal[] ruled on [his case and that] the Florida
90
Manov indicated that she wanted Neal to represent her because she believed that he
cared about her, that he listened to her, and that he had her best interests in mind.
She stated, “I think from my dealing with him he’s a very caring person, genuine and
trying to do the right thing for people.” This demonstrates that Manov relied on
Neal because he was nice to her rather than because she wanted to join a vexatious
pursuit of the Nezhats. Indeed, her deposition revealed that she did not believe that
whatever the Nezhats had done was so bad that they should be driven out of
business. She expressly stated that ruining the Nezhats was not the goal or purpose
of her suit. Even the Defendants’ Proposed Findings of Fact, upon which the court
relied, stated that Manov was nothing but a pawn in Neal’s zealous pursuit against
the Nezhats.96 Despite this clear evidence regarding Manov’s role in this litigation,
the district court repeatedly concluded that Manov acted in bad faith.
g.
Moreover, instead of supporting the conclusion of bad faith, the Defendants’
Proposed Findings of Fact, upon which the district court relied, further evidence that
Supreme Court denied hearing, and so did [the federal district court] in its order granting
summary judgment to Defendants.” Id.96
Unlike Chambers v. Nasco, Inc., 501 U.S. 32, 111 S. Ct. 2123, 115 L. Ed. 2d 27(1991), in which the district court found that the sanctioned plaintiff was the strategist behind the
fraud committed on the court, in this case the district court did not find, and the record does not
demonstrate, that Manov was the mastermind behind the baseless claims.
91
Manov was unaware of the frivolous and vexatious nature of this litigation.
Consider the following statements from the Defendants’ Proposed Findings of Fact:
(1) none of Manov’s lawyers informed her that Neal had been disqualified from
Mullen’s case in Fulton County Court or that Neal had been found unethical,
malicious, relentless, harassing, and to be conducting a vendetta against the Nezhats;
(2) in Manov’s April 27, 1998 deposition, she stated she was unaware that the
district court had ordered Neal not to participate “in any form or fashion in this
case”;97 (3) Manov was never shown a copy of the complaint before it was filed in
the district court; (4) Manov’s lawyers told her that the racketeering allegations
would be supported by Mullen’s allegations – no one informed Manov that Mullen’s
allegations had been dismissed on summary judgment and that the Georgia Court of
Appeals affirmed the dismissal; (5) Manov had not been told that the medical journal
allegations in her complaint had been dismissed on summary judgment in Mullen’s
state court case; (6) Manov’s lawyers did not inform her that the witness
intimidation claims made in her case had been rejected in Mullen’s federal court
case; (7) Manov did not know that Neal never appeared as counsel of record in her
case.
97
During this deposition, the parties telephoned the district court, informing it that
Manov had testified that she had not been shown the court’s order instructing Neal not to
participate in the case.
92
It is clear from the record – indeed, from the Defendants’ Proposed Findings
of Fact upon which the district court relied – that Manov’s lawyers did not inform
her of developments in her case.98 Because she was kept uninformed about her case,
it is hard to say that she knowingly filed and continued to prosecute the case in bad
faith. Finally, we emphasize that even if the limited findings in the June 24, 1999
sanctions order yield an inference of bad faith, this inference is undermined by the
court’s only findings as to Manov in the February 23, 1998 sanctions order – the
findings that Manov was unaware of the RICO allegations pled on her behalf and
that she did not know the meaning of the term “racketeering.”
3.
Although monetary sanctions against Manov pursuant to Rule 11 and the
court’s inherent power were not proper, the court’s dismissal of all counts except her
malpractice claim was justified. As noted in Part I of this opinion, the district court
entered its sanctions orders without explicitly passing on the sufficiency of the
Nezhats and the Center’s affirmative defense of failure to state a claim for relief.
The court determined that some of the counts of the complaint – Count IV, Georgia
98
In M.E.N. Co., 834 F.2d at 873-74, the Tenth Circuit remanded the case for specific
findings as to the attorneys’ misconduct, and advised the district court that if it found that the
attorneys failed to communicate with their clients during the course of litigation, particularly if
they failed to inform their clients of critical matters in court orders, the district court should
consider discipline and possible referral to state licensing authorities.
93
RICO and Count II, fraud – lacked factual support, and that one count – battery –
should be dismissed because the deposition testimony of record, coupled with the
count’s allegations, demonstrated that the count was both legally and factually
frivolous. That the court considered the adequacy, as well as the frivolity, of
Manov’s claims is evident from its decision not to dismiss the malpractice claim, as
it was pled with a legal and factual basis. Moreover, our review of the complaint,
particularly the RICO count, reveals that Manov’s claims are insufficient as a matter
of law, see supra Part III.B.c. As such, the court did not err in dismissing all but the
malpractice count of the complaint.99
IV.
99
While in their answer the Nezhats and the Center asserted as an affirmative defense
that the complaint failed to state a claim for relief, we recognize that such defense was not before
the court when it entered the first sanctions order. That is, these defendants had not moved the
court pursuant to Fed. R. Civ. P. 12 (c) for a judgment on the pleadings, which would have
required the court, in light of the above affirmative defense, to determine whether any of the
counts were legally cognizable. This is of no moment, however, because a court may dismiss a
complaint sua sponte assuming the court exercises caution. See Clorox Co. v. Proctor & Gamble
Commercial Co., 228 F.3d 24, 30 (1st Cir. 2000) (stating that “it is occasionally appropriate for a
district court to note the inadequacy of the complaint and, on its own initiative, dismiss the
complaint [,] a court may not do so without at least giving plaintiffs notice of the proposed action
and affording them an opportunity to address the issue.”) (alteration in original)(internal citation
omitted)). Given the numerous hearings, motions, and voluminous memoranda filed by both
sides regarding the adequacy of the complaint, we find that the parties knew the court was
considering the complaint’s sufficiency. Even if the parties did not have such knowledge, we
could still find that the court properly treated the claims as if ruling on a Rule 12(c) motion
because reversal of a sua sponte dismissal without notice may not be “mandated if amendment
[of the complaint] would be futile or if it is patently obvious that the plaintiff could not prevail.”
Wyatt v. City of Boston, 35 F.3d 13, 15 n.1 (1st Cir. 1994). It is patently obvious, given the
legal and factual inadequacies of the complaint, that Manov could not prevail. Accordingly,
reversal of the district court’s order dismissing the claims is not warranted.
94
This case began in the Fulton County Superior court as an ordinary medical
malpractice case. When the plaintiff switched lawyers, so did the scope and tenor of
the case. Instead of simple medical malpractice, the case burgeoned into a broad-
based RICO prosecution. The plaintiff’s new lawyers were determined that the
defendants would either settle or suffer professional ruin. They used every tool they
could conceive of to extort settlement: going to the press, the United States Attorney,
and even the FBI. The defendants refused to cave in. The case dragged on for three
and a half years ending in the dismissal of the plaintiff’s claims – including her
malpractice claim – and the imposition of close to $400,000 in monetary sanctions
against the plaintiff and one of her lawyers. One must ask, “how could it take so
long and cost so much to dispose of such a case?” We would be remiss if we
concluded this opinion without explaining how this could happen, and, more
importantly, how it could have been avoided.
A.
Manov’s original complaint contained 78 pages, 299 paragraphs, 139
subparagraphs, and nine counts. Counts II through IX incorporated by reference all
antecedent paragraphs, such that Count IX was an amalgamation of everything in the
complaint. To say that the allegations of the complaint were vague and ambiguous –
leaving the reader to guess at precisely what the plaintiff was claiming – is an
95
understatement.100 Nonetheless, the district court treated Manov’s complaint as
having stated, in each count, a claim for relief. Manov’s amended complaint was
just as vague and ambiguous as the initial complaint. The court, however, continued
to treat Manov’s claims against the Nezhats and the Center as legally cognizable and
sufficiently pled, even after it granted Northside’s motion to dismiss Count III and
struck Northside from Count IV. In fact, the claims against the Nezhats and the
Center remained undisturbed for two years, until the court passed on their
sufficiency in granting the defendants’ motions for sanctions.101
B.
Rule 12(e) of the Federal Rules of Civil Procedure states:
If a pleading to which a responsive pleading is permitted is so vague or
ambiguous that a party cannot reasonably be required to frame a
responsive pleading, the party may move for a more definite statement
before interposing a responsive pleading. The motion shall point out
the defects complained of and the details desired. If the motion is
granted and the order of the court is not obeyed . . . the court may strike
the pleading to which the motion was directed or make such order as it
deems just.
100
For example, and as our previous discussion reveals, neither the federal nor the state
RICO count of Manov’s initial complaint cited the provision(s) of the RICO statute on which the
count was based. The amended complaint, which contained only the Georgia RICO count, had
the same deficiency.
101
Manov filed her initial complaint on January 12, 1996. She filed her amended
complaint on September 6, 1996. The district court issued its first sanctions order on February
23, 1998.
96
The complaints in this case were “so vague and ambiguous that [the
defendants] [could] not reasonably be required to frame a responsive pleading.”
None of the defendants, however, moved the court to order the plaintiff to file a
more definite statement; instead, the defendants simply answered the complaints. In
their answers, they responded to the numbered paragraphs of the complaints,
admitting or denying the allegations thereof, and then asserted a variety of
affirmative defenses. With minor exception, none of the affirmative defenses
responded to a particular count of the complaint; rather, the affirmative defenses
addressed the complaint as a whole, as if each count was like every other count.
Northside’s answer to the amended complaint asserted twenty-six affirmative
defenses, most of which were pled in one sentence. They included “estoppel,”
“statute of limitations,” “failure to state a claim for relief,” “consent,” “accord and
satisfaction,” “payment and release,” “waiver,” that the Georgia RICO statute is
“unconstitutionally vague,” and that plaintiff’s claim for punitive damages
“violate[ed] the Eighth, Thirteenth, and Fourteenth Amendments of the Constitution
of the United States of America.” The Nezhats and the Center’s answer was pled in
a similar fashion; their affirmative defenses totaled fourteen and mimicked many of
Northside’s defenses.
Although the defendants’ affirmative defenses were comprehensible in a
97
literal sense, because they addressed the amended complaint as a whole they were, as
a practical matter, as vague and ambiguous as the amended complaint. By
eschewing a Rule 12(e) motion for a more definite statement and choosing to answer
the amended complaint in this fashion, the defendants in effect joined the plaintiff in
setting the stage for the immense and unnecessary expenditure of resources evident
in this case.102
We have labeled pleadings such as Manov’s complaints and the defendants’
answers “shotgun” pleadings. See, e.g., Malguta v. Samples, No. 00-12540 (11th
Cir. July 13, 2001); Ebrahimi v. City of Huntsville Bd. of Ed., 114 F.3d 162, 168
(11th Cir.1997) (per curiam); Cesnik v. Edgewood Baptist Church, 88 F.3d 902, 905
(11th Cir.1996); Anderson v. Dist. Bd. of Trs. of Cent. Fla. Comm. Coll., 77 F.3d
364, 366-67 (11th Cir.1996); Pelletier v. Zweifel, 921 F.2d 1465, 1517-18 (11th Cir.
1991); Fullman v. Graddick, 739 F.2d 553, 557 (11th Cir. 1984). Unless the court
requires a repleader – under Rule 12(e) or on its own initiative – a shotgun complaint
leads to a shotgun answer. Where, as here, each count incorporates every antecedent
allegation by reference, the defendant’s affirmative defenses are not likely to
respond to a particular cause of action but, instead, to the complaint as a whole.
102
The parties wasted their own resources as well as the resources of the district court
and this court.
98
Such disjointed pleadings make it difficult, if not impossible, to set the boundaries
for discovery. Hence, discovery disputes are inevitable.103 Resolving them can be
time-consuming. If the court does not intervene and require the parties to narrow the
issues, the discovery disputes continue unabated – until a motion for summary
judgment or a pretrial conference brings them to a halt. At that point, the court is
confronted with the time-consuming tasks it avoided earlier – rearranging the
pleadings and discerning whether the plaintiff has stated a claim, or claims, for
relief, and whether the defendant’s affirmative defenses are legally sufficient.104 If
the court performs these tasks, it will have to strike all of the allegations of the
complaint and answer that are insufficient, immaterial, or impertinent105 – so that,
when the tasks are finished, the complaint consists of a “short and plain statement of
the claim,” or claims, for relief, and the answer states “in short and plain terms the
[defendant]’s defenses to each claim asserted.” Fed. R. Civ. P. 8(a) and (b).106
103
Lawyers being compensated by the hour may have little incentive to curb the use of
shotgun pleadings and the discovery disputes that inevitably result.
104
In short, the court must do what the litigants have not done as required by Rules 8
and 10(b) of the Federal Rules of Civil Procedure.
105
Fed. R. Civ. P. 12(f), which is a codification of part of the district court’s inherent
power to manage pending litigation, states, in pertinent part: “[u]pon the court’s own initiative at
any time, the court may order stricken from any pleading any insufficient defense or any
redundant, immaterial, impertinent, or scandalous matter.”
106
It is obvious that the “judicial work that results from shotgun pleadings is far more
time consuming than the work required up front to prevent the case from proceeding beyond the
pleadings until the issues are reasonably well defined. Johnson Enter. v. FPL Group, Inc., 162
99
Unfortunately, many district judges opt to do nothing; they simply let the case
proceed to trial on the pleadings as they stand. They do so for two reasons. First,
given a day-certain trial date, the case may settle. Second, narrowing the issues by
effectively rearranging the pleadings in the style required by Rules 8 and 10, and
then striking the insufficient claims and defenses, may render superfluous much of
the parties’ discovery. If that happens, the judge is effectively reversing his earlier,
albeit tacit, position that the pleadings were legally sufficient, and saying to the
parties: “You have needlessly expended time and money, and I allowed it.”
Consequently, it is unlikely that the issues will be narrowed to the point that only the
meritorious claims and defenses remain. If the case does not settle, it proceeds to
trial with the issues unnarrowed. There, the potential for error – and an unjust result
and a subsequent appeal – is considerable.
Litigating a case framed by shotgun pleadings obviously harms one or both of
the parties.107 Why, then, would a lawyer engage in shotgun pleading? Plaintiffs file
shotgun complaints and include frivolous claims to extort the settlement of a
F.3d 1290, 1333 (11th Cir. 1998).
107
In a case framed by shotgun pleadings, the transaction costs are disproportionately
high. Such costs may cause the plaintiff or the defendant to settle an open and shut claim or
defense, thereby watering down the litigant’s rights. And, if the case proceeds to trial without a
careful delineation of the issues, the potential for an unjust result is heightened, further diluting
the litigant’s rights.
100
meritorious claim; worse yet, they file shotgun complaints to extort the settlement of
unmeritorious claims, as demonstrated in this case. Extortion cuts both ways.
Depending on his financial resources, a defendant may use a shotgun answer to
obtain a settlement that waters down a meritorious claim. In either situation, the
extorted settlement provides a financial benefit to the “prevailing” party and a
windfall in the form of fees for the “prevailing” lawyer.108
In addition to watering down the rights of the parties to have valid claims
litigated efficiently – whether the plaintiff’s or the defendant’s – shotgun pleadings
wreak havoc on the judicial system. Cases framed by shotgun pleadings consume an
inordinate amount of a court’s time. As a result, justice is delayed, if not denied, for
litigants who are standing in the queue waiting to be heard. Their impression of the
court’s ability to take care of its business can hardly be favorable. As the public
becomes aware of the harm suffered by the victims of shotgun pleading, it, too,
cannot help but lose respect for the system. Moreover, the consequence of a trial
court’s inability, or apparent unwillingness, to halt the use of shotgun pleadings may
prompt parties to turn to non-judicial forums to resolve their disputes.109
108
It goes without saying that a plaintiff with a solid case does not need to file a shotgun
complaint. By the same token, a defendant with a strong defense need not file a shotgun answer.
109
Another consequence of judicial tolerance of shotgun pleadings is that the transaction
costs generated by such pleadings may effectively close the court house doors to some citizens
whose rights can be enforced only in a United States district court.
101
Shotgun pleadings, if tolerated, harm the court by impeding its ability to
administer justice. The time a court spends managing litigation framed by shotgun
pleadings should be devoted to other cases waiting to be heard. “[W]ast[ing] scarce
judicial and parajudicial resources . . . impedes the due administration of justice”
and, in a very real sense, amounts to obstruction of justice. United States v.
Silverman, 745 F.2d 1386,1395 (11th Cir. 1984). See also United States v. Essex,
407 F.2d 214, 218 (6th Cir. 1969). Although obstruction of justice is typically
discussed in the context of criminal contempt, the concept informs the rules of law –
both substantive and procedural – that have been devised to protect the courts and
litigants (and therefore the public) from abusive litigation tactics, like shotgun
pleadings.110 If use of an abusive tactic is deliberate and actually impedes the
110
From the time they were established, Article III courts have had an assortment of
“inherent powers,” all derived from the common law. While never specified in the Constitution
or legislative enactments, these powers assisted courts in exercising their enumerated judicial
powers, such as managing their cases and courtrooms. See United States v. Kouri-Perez, 187
F.3d 1, 7 (1st Cir. 1999). “These implicit powers include the judicial authority to sanction
counsel for litigation abuses which threaten to . . . disrupt its efficient management of the
proceedings. Chambers, 501 U.S. 32, 43, 111 S. Ct. 2123, 2132 (1990) (noting that inherent
district court powers include the authority to ‘control admission to its bar and to discipline
attorneys who appear before it’); Roadway Express, Inc. v. Piper, 447 U.S. 752, 766, 100 S. Ct.
2455, 65 L.Ed.2d 488 (1980) (‘The power of a court over members of its bar is at least as great
as its authority over litigants.’).” Id.Some of these inherent powers are made explicit by the enactment of procedural,
disciplinary, and ethical rules. Id. For instance, 18 U.S.C. § 401 codified a court’s implicit
power to hold litigants in criminal contempt: “[a] court . . . shall have power to punish by fine or
imprisonment, at its discretion, such contempt of its authority, and none other, as – (1)
Misbehavior of any person in its presence or so near thereto as to obstruct the administration of
justice; . . . (3) Disobedience or resistance to its lawful writ, process, order, rule, decree, or
command.” 28 U.S.C. § 1927 authorizes the imposition of costs and fees upon counsel “who so
102
orderly litigation of the case,111 to-wit: obstructs justice, the perpetrator could be
cited for criminal contempt.112
multiplies the proceedings in any case unreasonably and vexatiously.” Likewise, the Federal
Rules of Civil Procedure include provisions authorizing courts to punish counsel for abuse in
pleading and discovery. For instance, the following rules provide for the imposition of
attorney’s fees as a sanction: Fed. R. Civ. P. 11 (certification requirement for papers), 16(f)
(pretrial conferences), 26(g) (certification requirement for discovery requests), 30(g) (oral
deposition), 37 (sanctions for failure to cooperate with discovery), 56(g) (affidavits
accompanying summary judgment motions). See also Chambers v. Nasco, Inc., 501 U.S. 32, 42
n.8 (1990). Although they differ by context, sanctioning mechanisms are similar in that they are
all rooted in the same basic goals – protecting the court and the public from litigation which
impedes the administration of justice.
Besides being aimed at redressing obstruction of justice, sanctioning mechanisms are also
similar in that
[i]n each instance, the sanctions are punitive in nature, see Horn,
29 F.3d at 765 n.13 (‘[C]ontempt . . . continues to serve essentially
‘the same purpose’ as do sanctions imposed under the supervisory
power.’) (citation omitted), in that the court intends to penalize
counsel for an earlier failure to conform to some threshold of
professional conduct imposed by court order, statute or rule. See,
e.g., Peterson v. BMI Refractories, 124 F.3d 1386, 1395 (11th Cir.
1997) (noting that 28 U.S.C. § 1927 is ‘penal in nature’); Cooper
v. Salomon Bros., 1 F.3d 82, 85 (2d Cir. 1993) (‘Rule 11 sanctions
are often punitive or aimed at deterrence.’); Hamilton v. Ford
Motor Co., 636 F.2d 745, 747 (D.C. Cir. 1980) (‘The principal
purpose of Rule 37(b) is punitive, not compensatory.’).
Id. In short, rules and procedures designed to redress obstruction of justice are “designed not
only to protect participants in judicial proceedings but also to prevent miscarriages of justice.”
United States v. Walasek, 527 F.2d 676, 680 (3d Cir. 1975).
111
We note that to convict a person of criminal contempt, it is not necessary to establish
“that the defendant harbored the specific purpose of obstructing the due administration of justice;
all [that] has to [be] establish[ed] is that the defendant should have reasonably forseen that the
natural and probable consequences of the success of his scheme would achieve precisely that
result.” Silverman, 745 F.2d at 1393. “An ordinary lawyer engaging in the conduct [the
defendant] was charged with here would know [what] would come to pass [and that these
consequences] would adversely impinge upon the due administration of justice.” Id. at 1395.
112
“In considering appropriate sanctions for attorney misconduct, the district court has
an array of options, ranging from criminal contempt to non-contempt measures.” Kouri-Perez,
103
C.
As the district court stated in its February 23, 1998 order granting the
defendants’ motions for sanctions, the plaintiff and her lawyers “abused the judicial
process” when they invoked the court’s jurisdiction for the purposes of extorting a
settlement from the defendants and, in the process, ruining the Nezhats’ professional
reputations. The defendants, of course, were aware of these purposes from the
outset; the Nezhats, in particular, had been suffering the same abuse in Mullen’s
state court lawsuit. Unsure of what course to take to bring an end to the litigation,
and thus the abuse, the defendants’ lawyers turned to the court. After answering the
plaintiff’s complaint, they wrote a letter to the court describing their plight and
suggesting that the court consider allowing them to conduct Rule 11 discovery to
determine whether Byrne had conducted a pre-filing “inquiry reasonable under the
circumstances” into the facts of the case, as required by Rule 11(b). In pursuing this
187 F.3d at 8 (citing Eash v. Riggens Trucking, Inc., 757 F.2d 557, 564 (3d Cir. 1985) (noting
that district judges have “a[] wide range of tools to promote efficiency in their courtrooms”)).
See note 115 (discussing procedural, disciplinary, and ethical rules, such as 18 U.S.C. § 401, 28
U.S.C. § 1927, Fed. R. Civ. P. 11, 16, 26, 30, 37, and 56, which codify aspects of the court’s
inherent power to address litigation abuses). Because its potency necessitates that it be used
with restraint and discretion, there are often “sound grounds for not invoking the court’s
criminal-contempt power.” Kouri-Perez, 187 F.3d at 8. “[T]here is much to be said for
deploying the least extreme sanction reasonably calculated to achieve the appropriate punitive
and deterrent purposes.” Id. “[T]he criminal contempt power is to be reserved for conduct that
bespeaks of criminal mens rea (i.e., intentional or reckless conduct) and has been proven beyond
a reasonable doubt, whereas non-contempt sanctions usually suffice in circumstances involving
‘less culpable states of mind.’” Id.104
course, defense counsel chose not to employ the tools provided by the Rules of
Procedure, such as Rules 12(e) and (f), for stripping a complaint of bogus claims and
scandalous allegations. The court, in turn, allowed itself to be guided by counsels’
suggestion and similarly chose to allow the shotgun pleading to stand. Foregoing
use of the tools provided by the Rules, the court granted the defendants leave to
discover whether Byrne had investigated the factual underpinnings of his claims as
required by Rule 11.
D.
The importance of using the Rules to uncover bogus claims and defenses,
thereby reducing the parties’ dispute to its bare essentials, cannot be
overemphasized. As we have stated on several occasions over the past twelve years,
if, in the face of a shotgun complaint, the defendant does not move the district court
to require a more definite statement, the court, in the exercise of its inherent power,
must intervene sua sponte and order a repleader.113 Implicit in such instruction is the
notion that if the plaintiff fails to comply with the court’s order – by filing a
113
Discharging this duty ensures that the issues get defined at the earliest stages of
litigation. The district court “should [strike] the complaint[] and instruct[] counsel to replead
the[] case[] – if counsel could in good faith make the representations required by Fed. R. Civ. P.
11(b).” Cramer v. Florida, 117 F.3d 1258, 1263 (11th Cir. 1997) citing Ebrahimi v. City of
Huntsville Bd. of Ed., 114 F.3d 162 (11th Cir.1997) (per curiam); Cesnik v. Edgewood Baptist
Church, 88 F.3d 902, 905 (11th Cir.1996); Anderson v. Dist. Bd. of Trs. of Cent. Fla. Cmty.
Coll., 77 F.3d 364, 366-67 (11th Cir.1996); Pelletier v. Zweifel, 921 F.2d 1465, 1517-18 (11th
Cir. 1991); Fullman v. Graddick, 739 F.2d 553, 557 (11th Cir. 1984).
105
repleader with the same deficiency – the court should strike his pleading or,
depending on the circumstances, dismiss his case and consider the imposition of
monetary sanctions.114
District court intervention in this fashion accomplishes several objectives.
First, it conserves judicial and parajudicial resources and thereby benefits litigants
standing in the queue waiting to be heard.115 Second, it curtails the need for satellite
litigation under Rule 11, 28 U.S.C. § 1927, or the court’s inherent power. Third, it
minimizes counsel’s and his client’s exposure to a criminal contempt citation.
Fourth, it limits the potential for post-litigation tort actions for abuse of process or
114
The same duty to intervene sua sponte applies whether the court is faced with a
shotgun complaint or a shotgun answer.
115
In Malguta v. Samples, No. 00-12540 (11th Cir. July 13, 2001), a panel of this court
reviewed a case exemplifying the waste of judicial resources shotgun pleadings are capable of
producing. Because the litigation and subsequent district court order dismissing the complaint
pursuant to Fed. R. Civ. P. 12(b)(6) were spawned by a shotgun complaint, the panel declined to
parse through the incoherent complaint to determine whether it stated a claim for relief. Instead,
taking its lead from our decision in Cesnik v. Edgewood Baptist Church, 88 F.3d 902, 910 (11th
Cir. 1996), the panel vacated the judgment and remanded the case to the district court with the
instruction that it strike the complaint and require the plaintiff to replead his case. The panel
explained: “[w]e are unwilling to address and decide serious constitutional issues on the basis of
this complaint. . . . [T]oleration of complaints such as this one ‘does great disservice to the
administration of civil justice’” (citing Johnson Enter. v. FPL Group, Inc., 162 F.3d 1290, 1332
(11th Cir. 1998)).
After hearing oral argument and wading through the voluminous record in this case, our
first thought was to return the case to the district court and instruct it to narrow the issues by
ordering the plaintiff to redraft the complaint so that it conformed with the pleading requirements
of Fed. R. Civ. P. 8 and 10. However, given the vast resources the parties and the district court
had invested in the case thus far, as well as the need to bring this bitter controversy to an end, we
opted to perform this narrowing exercise ourselves and conclude this torturous case.
106
malicious prosecution.116 Fifth, early sua sponte intervention – coupled with the
imposition of punitive measures when the use of abusive litigation tactics is
deliberate – operates as both a specific and a general deterrent. And, finally, early
sua sponte intervention will ensure public confidence in the court’s ability to
administer civil justice.
V.
For the reasons we have stated, the imposition of monetary sanctions against
Byrne is AFFIRMED; the court’s dismissal of the claims against Northside and the
claims against the Nezhats and the Center (except Count I which Manov voluntarily
dismissed) is AFFIRMED; and the imposition of monetary sanctions against Manov
is VACATED.
SO ORDERED.
116
A district judge who tolerates shotgun pleading effectively leaves to the tort law the
job of redressing the abuse. A suit for abuse of process or malicious prosecution may
compensate the injured party. The tort law is not aimed, however, at redressing the injury to the
court and the judicial system as a whole. While successful completion of a meritorious abuse of
process or malicious prosecution claim is predicated on the misuse of the judicial system, these
torts only vindicate the court’s integrity indirectly. As such, they should not be viewed as a
viable alternative to the court’s inherent power or ability to impose sanctions under Rule 11.
Unlike the tort law, these tools are aimed directly at redressing the harm suffered by the judicial
system.
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108