(The Return of) Ignatz, by Sam Heldman

Wednesday, August 14, 2002

Eleventh Circuit If you read law.com, and saw this story about the Eleventh Circuit's affirmance of a huge Rule 11 sanction, you may be wondering "why didn't Sam mention that obviously important case? what's the use of his site anyway?". The answer is that the case is about four weeks old, and it came out before I even started blogging. Fortunately, I can cut and paste the synopsis I wrote for our lawfirm's website at the time:

Oxford Asset Mgmt v. Jaharis (July 16, 2002) gets our vote for the scariest case yet this year. The Court affirms the Rule 12(b)(6) dismissal of a securities fraud case, with a discussion that seems to our eyes to stray far from the traditional standard for such dismissals; the Court considers various "facts" outside the pleadings, and painstaking picks apart the case rather than asking whether there are any conceivable facts that could allow plaintiffs to prevail. Maybe this is something special about securities cases under the recent statute limiting those cases, rather than a more general trend towards a more aggressive dismissal of cases in general; we hope so. Then, to top it off, the Court (for the most part) affirms a Rule 11 attorneys' fee award against the plaintiffs and their counsel, on the grounds that their factual allegations were without substantial support (BUT ISN'T THIS INCONSISTENT WITH THE WHOLE POINT OF RULE 12, WHICH IS THAT THE ALLEGATIONS MUST BE TAKEN AS TRUE? IF THAT'S THE BASIS ON WHICH THE CASE WAS DISMISSED, HOW COULD IT BE A PROPER RULE 12 DISMISSAL???). And how much was the award, you ask? Get this: ABOUT HALF A MILLION DOLLARS, FOR ALMOST 2000 HOURS OF WORK, ON A CASE THAT DIDN'T GET PAST A MOTION TO DISMISS! (We'd love to have a client that would pay us for that many hours on a case that only gets that far, but have never heard of such a thing!) Meanwhile, the Court takes the opportunity to make some bad dicta about attorneys' fee awards, which some future courts will use against prevailing plaintiffs. What a scary case.

posted by sam 7:04 AM 0 comments


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