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United States v. Northrop Corp.

filed: December 12, 1991; As Amended January 21, 1992.


Appeal from the United States District Court for the Central District of California; David V. Kenyon, District Judge, Presiding; D.C. No. CV-87-07288-KN.

Before: Sneed, Beezer, and Trott, Circuit Judges.


Leo Barajas, Patricia Meyer, and their attorney, Phillip Benson, appeal the district court's imposition on them of sanctions under Fed. R. Civ. P. 11 for filing a motion for default judgment in their False Claims Act case against the Northrop Corporation. We review for abuse of discretion, Cooter & Gell v. Hartmax Corp., 110 L. Ed. 2d 359, 381-82 (1990); Townsend v. Holman Consulting Group, 914 F.2d 1136, 1143-44 (9th Cir. 1990) (en banc), modified on other grounds, reh'g en banc denied, 929 F.2d 1358 (9th Cir. 1991), and we affirm.*fn1

The False Claims Act provides: "the defendant shall not be required to respond to any complaint filed under this section until 20 days after the complaint is unsealed and served upon the defendant pursuant to Rule 4 of the Federal Rules of Civil Procedure." 31 U.S.C.A. ยง 3730(b)(3) (West Supp. 1991). Here, although Northrop received a copy of the complaint, it was never served with the complaint. Benson filed the default motion despite clear statutory language to the contrary.

Rule 11 states:

The signature of an attorney or party constitutes a certificate by the signer that the signer has read the pleading, motion, or other paper; that to the best of the signer's knowledge, information, and belief formed after reasonable inquiry it is well grounded in fact and is warranted by existing law or a good faith argument for the extension, modification, or reversal of existing law. . . . If the pleading, motion, or other paper is signed in violation of this rule, the court, upon motion or upon its own initiative, shall impose upon the person who signed it, a represented party, or both, an appropriate sanction, which may include . . . a reasonable attorney's fee.

Fed. R. Civ. P. 11 (emphasis added).

This circuit's "cases have established that sanctions must be imposed on the signer of a paper if . . . the paper is 'frivolous.' The word 'frivolous' does not appear anywhere in the text of the Rule; rather it is a shorthand that this court has used to denote a filing that is both baseless and made without reasonable and competent inquiry." Townsend, 914 F.2d at 1140 (citation omitted). "The standard [of frivolousness] is objective." Id. (citation omitted). "The central purpose of Rule 11 is to deter baseless filings in the District Court. . . ." Cooter & Gell, 110 L. Ed. 2d at 374.

In his brief, as in the district court, Benson cites cases which do not support his argument that receipt of a complaint amounts to service under Fed. R. Civ. P. 4. Volkswagenwerk v. Schlunk, 486 U.S. 694 (1988), deals with service of process on a foreign corporation under the Hague Service Convention. Id. at 696. Mennonite Board of Missions v. Adams, 462 U.S. 791 (1983), deals with constitutionally mandated notice under Mullane v. Central Hanover Bank & Trust, 339 U.S. 306 (1950). Id. at 795. Call Carl, Inc. v. BP Oil Corporation, 391 F. Supp. 367 (D. Md. 1975), rev'd on other grounds, 554 F.2d 623 (4th Cir. 1977), cert. denied, 434 U.S. 923 (1977), deals with service on a corporation's subsidiary. Id. at 379.

Benson maintains that Northrop never responded to the employees' complaint; any litigation conducted by Northrop was in response to the government's complaint. Thus the case of Broadcast Music, Inc. v. M.T.S. Enterprises, 811 F.2d 278 (5th Cir. 1987), on which Benson relies, is also inapposite. Broadcast Music affirmed a default judgment against a defendant who had not properly been served under Fed. R. Civ. P. 4, id. at 280-81, because the defendant's attorney "was served with appropriate pleadings [other than process] every step of the way. . . . attended a pretrial conference . . . negotiated towards a settlement . . . was served with a motion for continuance, in which he or his partner was specifically mentioned as [the defendant's] attorney. . . . [and because] his office accepted service of deposition subpoenas. . . ." Id. at 280.

Other cases which contain language endorsing a liberal interpretation of Fed. R. Civ. P. 4 deal with motions to dismiss for inadequate service, not motions for default judgment against defendants improperly served. See, e.g., Borzeka v. Heckler, 739 F.2d 444 (9th Cir. 1984); United Food & Comm'l Wkrs. Union v. Alpha Beta Co., 736 F.2d 1371 (9th Cir. 1984). The policies in cases such as Borzeka and United Food cut against Benson because they favor reaching the merits of a dispute.

There is no legitimate legal basis for Benson's motion; in the shorthand of this circuit, the motion was "frivolous," and warrants sanctions. Rule 11 allows the district court in its discretion to impose sanctions on an attorney, a party, or both. Fed. R. Civ. P. 11. The district court did not abuse its discretion in imposing sanctions on Barajas and Meyer as well as on Benson.

Each side shall bear its own appellate costs. Fed. ...

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