In February, 2001, Pennsylvania Senators James Gerlach (R-Chester) and Robert Thompson (R-Chester) proposed legislation to create a new cause of action under Title 42 of the Pennsylvania Consolidated Statutes (Judiciary and Judicial Procedure) for the filing of a frivolous lawsuit. SB 406, part of a larger package of proposed tort reform, passed the Senate 47-0 in June, 2001, and later passed the House, with amendments, in December, 2001, by a margin of 143-50. In its last proposed version, SB 406 allowed a party in a pending civil action to file a separate action alleging that a complaint, counterclaim or joinder complaint was frivolous.
The Pennsylvania legal community mounted a challenge to SB 406, with the Pennsylvania Bar Association taking the lead. On November 30, 2001, the PBA adopted a resolution officially opposing the legislation. Specifically, therein, the PBA argued that 42 Pa.C.S.A. § 8351, which provides an independent cause of action for wrongful use of civil proceedings, was a sufficient deterrent to the filing of frivolous litigation and that any additional remedy for frivolous filing should be through amendment to Rule 1023 of the Pennsylvania Rules of Civil Procedure. The PBA later reached an agreement with the Senate that SB 406 would be held back awaiting Supreme Court reaction to its proposed amendments to Rule 1023. These proposed amendments effectively mirrored Rule 11 of the Federal Rules of Civil Procedure.
On April 22, 2002, the Pennsylvania Supreme Court adopted new Rules 1023.1 through 1023.4 of the Rules of Civil Procedure, as recommended by the PBA, and rescinded former Rule 1023. New Rule 1023.1, a state version of Federal Rule 11, sets forth more rigorous standards than did former Rule 1023. Rule 1023.1 requires that "every pleading, written motion, and other paper directed to the court be signed by at least one attorney of record in the attorney's individual name" or by the pro se litigant himself. Signature acts to certify that the attorney or pro se litigant conducted an "inquiry reasonable under the circumstances" and to the best of that attorney or party's knowledge, information or belief:
- it [the filing at issue] is not being presented for any improper purpose, such as to harass or cause unnecessary delay or needless increase in the cost of litigation;
- 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;
- the factual allegations have evidentiary support, or, if specifically so identified, are likely to have evidentiary support after a reasonable opportunity for further investigation or discovery; and
- the denials of factual allegations are warranted on the evidence or, if specifically so identified, are reasonably based on a lack of information or belief. Pa.R.C.P. 1023.1 (c).
Thus, there is an affirmative obligation on the part of the filing party to conduct a "reasonable" pre-filing inquiry to ensure that the filing has a basis in law and fact. The new standard created by Rule 1023.1 stands in contrast to former Rule 1023, which merely required that documents be submitted to the court in subjective "good faith." Rue 1023.1 requires the challenging party to show that it was objectively unreasonable under the circumstances for the filing party to submit the challenged document. Bad faith is no longer required before sanctions may be imposed.
In its explanatory comment to the new Rule, the Supreme Court has set forth objective criteria to be evaluated to determine the reasonableness of the inquiry undertaken by the filing party. Such criteria include:
- how much time for investigation was available to the signer;
- whether the signer had to rely on a client for information as to the facts underlying the pleading, motion, or other paper;
- whether the pleading, motion, or other paper was based on a plausible view of the law; and
- whether the signer depended on forwarding counsel or another member of the bar. See Pa.R.C.P. 1023.1, Explanatory Comment.
The reasonableness of the signer's conduct is to be determined based on the circumstances present at the time the document was filed. This is intended to avoid "chill[ing] an attorney's enthusiasm or creativity in pursuing factual or legal theories." See Pa.R.C.P. 1023.1, Explanatory Comment. A claim or defense is not frivolous under the new Rule if it is based on a plausible view of the law, but needs further evidentiary support that can only be obtained through discovery. However, the claim or defense will be considered frivolous if, after such discovery, insufficient evidentiary support is obtained and the claim or defense is not abandoned. On this, the Court notes in the Explanatory Comments:
This rule recognizes that sometimes a litigant may have good reason to believe that a claim or defense is valid but may need discovery, formal or informal, to gather and confirm the evidentiary basis for the claim or defense. If evidentiary support is not obtained after a reasonable opportunity for further investigation or discovery, the party has a duty under the rule not to persist with that contention. Rule 1023.1(c) does not require a formal amendment to pleadings for which evidentiary support is not obtained, but rather calls upon a litigant not thereafter to advocate such claims or defenses. Rule 1023.1, Explanatory Comment.
Under these new criteria, Pennsylvania has now potentially joined the ranks of active sanction jurisdictions.
Sanctions and Safe Harbors
Before any sanctions will be imposed for a violation of Rule 1023.1, the moving party must prove that it gave notice of its intent to file a motion for sanctions and opportunity to the filing party to withdraw or modify the challenged filing. In its explanatory comment, the Court states:
These provisions are intended to provide a type of "safe harbor" against motions under Rule 1023.1 in that a party will not be subject to sanctions under Rule 1023.1 on the basis of another party's motion unless, after receiving the motion, it refuses to withdraw that allegation or contention or to acknowledge that it does not currently have evidence to support it. The timely withdrawal of an allegation or contention will protect a party against a motion for sanctions. Rule 1023.1, Explanatory Comment.
This "safe harbor" provision gives the filing party 28 days to withdraw or amend the challenged filing before a sanctions motion can even be filed, and sanctions ultimately imposed.
Under the new Rules, sanctions can be imposed on either motion by a party under Rule 1023.2 or sua sponte by the court under Rules 1023.3. If requested pursuant to motion by a party, the request for sanctions must be made prior to entry of final judgment by the court in the matter. See Rule 1023.2.
According to the Supreme Court, "the motion should be served promptly after the inappropriate paper is filed, and, if delayed too long, may be viewed as untimely. In other circumstances, it should not be served until the other party has had a reasonable opportunity for discovery. Given the 'safe harbor' provisions . . . a party cannot delay serving its Rule 1023.1 motion until the conclusion of the case (or judicial rejection of the offending contention)." Rule 1023.1, Explanatory Comment.
Sanctions for a violation of Rule 1023.1 are limited "to that which [are] sufficient to deter repetition of such conduct or comparable conduct by others similarly situated." Rule 1023.4. Suggested sanctions under the Rule include:
- directives of a nonmonetary nature, including the striking of the offensive litigation document or portion of the litigation document;
- an order to pay a penalty into court; or
- if imposed on motion and warranted for effective deterrence, and order directing payment to the movant of some or all of the reasonable attorneys' fees and other expenses incurred as a direct result of the violation.
Rule 1023.4, Rule 1023.2(b), and Rule 1023.4(a)(2)(iii) do authorize the court to impose attorneys' fees and reasonable costs, if warranted. Although, the Court is quick to note that "th[ese] rule[s are] not  fee-shifting rule[s] per se although the award of reasonable attorney's fees may be an appropriate sanction in a particular case." Rule 1023.1(d), Note. Thus, the moving party is not entitled to attorneys fees as a matter of course, and "any such award . . . should not exceed the expenses and attorney's fees for the services directly and unavoidably caused by the violation . . ." Rule 1023.1, Explanatory Note. Sanctions may also be imposed jointly upon the firm who employs the person who signed and filed the offensive document.
In determining whether to impose a given sanction, which is discretionary, the court may consider:
- whether the improper conduct was willful or negligent;
- whether it was part of a pattern of activity or an isolated event;
- whether it infected the entire pleading or only one particular count or defense;
- whether the person has engaged in similar conduct in related litigation;
- whether it was intended to injure;
- what effect it had on the litigation process in time or expense;
- whether the responsible person is trained in the law;
- what amount is needed to deter that person from repetition in the same case; and
- what amount is needed to deter similar activity by other litigants. See Rule 1023.1, Explanatory Comment.
Sanctions are only intended to deter similar future conduct and, on occasion, reimburse the moving party for fees and costs. They are not intended as a coup for the moving party. Indeed, the explanatory notes suggest that, as a general rule, any monetary sanctions be paid directly to the court. See Rule 1023.1, Explanatory Comment.
The Court has admonished that Rule 1023.1 sanctions only be requested for significant violations of Rule 1023.1, and "not . . . for minor, inconsequential violations of the standards prescribed by subdivision (c)." Rule 1023.1, Explanatory Comment. The Court further notes that Rule 1023.1 motions:
should not be employed as a discovery device or to test the legal sufficiency or efficacy of allegations in the pleadings, . . . [or] to emphasize the merits of a party's position, to exact unjust settlement, to intimidate an adversary into withdrawing contentions that are fairly debatable, to increase the costs of litigation, to create a conflict of interest between an attorney and client, or to seek disclosure of matters otherwise protected by the attorney-client privilege or the work-product doctrine. Rule 1023.1, Explanatory Comment.
Furthermore, the court may defer ruling on a sanctions motion until after resolution of the underlying case "in order to avoid immediate conflicts of interest and to reduce the disruption created if a disclosure of attorney-client communications is needed to determine whether a violation occurred or to identify the person responsible for the violation." Id.
With the adoption of Rule 1023.1, et seq., sanctions practice for frivolous filings should now be consistent in both the federal and state courts in Pennsylvania. While the new Rules of Civil Procedure do not grant defendants carte blanche to collaterally attack a frivolous filing as would have SB 406, they have provided a needed mechanism in Pennsylvania to attack such claims.