Inability to Pay a Factor in Lawyer Sanctions

9th Circuit CourthouseFederal trial judges have the power to reduce monetary sanctions against misbehaving lawyers if the attorney in question doesn’t have the ability to pay.  The decision will be good news for California attorney Gregory Haynes, who was sanctioned $360,000 by U.S. District Judge Jeffrey White, for “continued pursuit of plaintiff’s claims, after it was clear that the claims were frivolous and in bad faith,” the 9th U.S. Circuit Court of Appeals held.

Haynes argued he could not possibly pay such an award because his “net income for several preceding years was less than $20,000 per year.”

Judge Stephen Reinhardt said the panel found a district judge may reduce sanctions “in light of an attorney’s inability to pay.”

The clarification comes because White refused to reduce the award believing he did not have discretion to do so based on ability to pay alone, according to the court.

The appeals court joins the New York-based 2nd Circuit in the decision,  and rejects a conflicting holding by the Chicago-based 7th Circuit.

Haynes got into hot water while representing Cheryl Cotterill in a state court lawsuit for involuntary detention after she was hospitalized for 10 days because of a psychotic episode, the court states.

Haynes raised constitutional questions of excessive force and unlawful detention claims, as well as state claims.  The case was transferred to federal court by the defendants, the city of San Francisco and a host of public officials.

“In the proceedings before the district court, Haynes engaged in a wide variety of incompetent and unprofessional actions,” Reinhardt wrote.   “All of Cotterill’s claims were ultimately dismissed with prejudice, but not before both sides had taken numerous depositions, engaged in multiple discovery disputes and participated in various other proceedings,” he wrote.

The defendants want their expenses covered.  White adopted a magistrate’s recommendation of sanctions against Haynes of $360,000.

The panel ordered the case back to Judge White to reconsider the sanctions in light of Haynes inability to pay and consider reducing the award.  But this may not be everything Haynes hopes it will be.

Reinhardt also said, “We do not suggest by this holding that when the district court decides to reduce an amount on account of a sanctioned attorney’s inability to pay, it must reduce the amount to that which it determines that the attorney is capable of satisfying.”

Judges Richard Clifton and N. Randy Smith joined in the decision.

Case:  Haynes v. City and County of San Francisco, No. 10-16327

 

 

 

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