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Rector v. Approved Federal Savings Bank

United States Court of Appeals for the Fourth Circuit · 2001 · Civil Procedure

Civil ProcedureRule 11 sanctionssafe harborwaiverjurisdictionFed. R. Civ. P. 11safe harbor21-day notice

Facts

Rector and the Trust sued Approved seeking enormous damages arising from a stock-sale agreement, and after dismissal of their claims, Approved moved for Rule 11 sanctions. Approved asserted that it had served the sanctions motion on June 11, 1999, but on appeal conceded it could not confirm service and that the motion may have been omitted from the package by clerical error; another party's counsel also stated he was not served until September 27, 1999. In opposing sanctions in the district court, Rector and the Trust argued only that they had conducted an appropriate pre-filing investigation and did not object that the motion violated Rule 11's 21-day safe harbor. They also did not raise the safe-harbor argument in their first appeal, which resulted only in a remand for recalculation of the sanction amount.

Issue

Whether Rule 11's 21-day safe harbor provision is a nonwaivable jurisdictional requirement, or instead a nonjurisdictional procedural protection that can be waived if not timely asserted. Relatedly, whether Rector and the Trust waived any objection based on noncompliance with the safe harbor provision by failing to raise it earlier.

Rule

The 21-day safe harbor provision in Fed. R. Civ. P. 11(c)(1)(A) is not jurisdictional. It is a procedural protection that may be waived if the party against whom sanctions are sought fails to timely object to noncompliance.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

In federal court in Richmond, Dana Mercer sued Blue Summit Lending, LLC on claims the district court later dismissed. Blue Summit then filed a Rule 11 motion for sanctions, but Dana opposed only on the ground that her allegations had evidentiary support and said nothing about whether she had received the motion 21 days before filing.

On appeal from the sanctions order, Dana argues for the first time that Blue Summit never complied with Rule 11's 21-day safe-harbor requirement. What is the best answer?

Explanation. The majority held that Rule 11's 21-day safe harbor is not jurisdictional. It is a procedural protection for the party facing sanctions and can be waived if not timely raised. Because Dana opposed sanctions only on the merits and failed to object to noncompliance in the district court, the objection is waived.