Exaggeration of Counsel’s Class Action Experience Draws Rule 11 Sanction

New York District Court Judge Shira A. Scheindlin found class counsel’s allegation that they were experienced and competent was false because they could not provide any case in which they were certified as class counsel or recovered monetary relief for class member. As a result, the court found that class counsel violated Rule 11. The court declined to award attorney fees as a sanction, however, finding that the public reprimand was a sufficient deterrent.

The Rule 11 motion followed the court’s dismissal with prejudice of plaintiffs’ second amended complaint against defendant debt servicers and lenders who allegedly obtained state court debt collection judgments against them using false affidavits, misleading evidence and other improper litigation tactics. Plaintiffs sought to certify a class consisting of all persons in the United States who were brought to court by defendants and had their money “stolen” from them using illegal tactics. The Rule 11 motion argued that plaintiffs’ substantive allegations lacked any factual support, that plaintiffs’ counsel had a pattern of filing meritless suits, and that plaintiffs’ counsel falsely claimed to be experienced and competent class counsel.

The court agreed that plaintiffs’ allegations lacked any factual support. The court further agreed that plaintiffs’ counsel had a history of filing arguably meritless suits. Finally, the court agreed that counsel’s claim that they were experienced and adequate class counsel was false. The court observed that counsel could not provide any instance in which they were certified as class counsel or recovered monetary relief for class member.

While finding the conduct in this case “troubling,” the court could not find evidence of bad faith. The court also observed that plaintiffs’ counsel had not been subject to previous Rule 11 sanctions. Exercising its discretion under Rule 11 so as not to chill an attorney’s zealous advocacy, the court declined to award monetary sanctions. Instead, the court entered a public reprimand against counsel to deter similar conduct in the future.

Shetiwy v. Midland Credit Management, Case No. 1:12-cv-07068 (S.D. NY July 29, 2014).

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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