Hays v. Sony Corp. of America

Brief Fact Summary.

Plaintiffs sued Defendant, alleging violations of state and federal copyright laws in connection with a word processing manual Plaintiffs had created. The district court dismissed the complaint, and imposed sanctions on Plaintiffs’ counsel.

Synopsis of Rule of Law.

Determining whether to impose sanctions under Federal Rule of Civil Procedure 11 requires an objective determination of whether the sanctioned party acted reasonably under the circumstances.

Facts.

Plaintiffs  created a manual for students on how to operate certain word processors. Their school district subsequently had Defendant modify the manual for use with its word processors. Thereafter, Plaintiffs registered their manual with the copyright office, and sued Defendant in federal district court alleging violations of state and federal copyright laws in connection with the Defendant’s alleged appropriation, for profit, of the manual. The district court dismissed the complaint, and imposed sanctions on Plaintiffs’ counsel.

Issue.

Was the imposition of Rule 11 sanctions against Plaintiffs’ counsel warranted and appropriate?

Held.

Yes. In awarding sanctions under Rule 11, the district court made clear that the problem was that the suit had not been pursued effectively. The district court appropriately awarded Defendant percentages of fees incurred at various times during the litigation.

Discussion.

Rule 11 required an objective determination of whether Plaintiffs’ counsel’s conduct was reasonable under the circumstances. In the Rule 11 context, a lawyer, by failing to inquire whether claims are plausible, can impose unnecessary costs on his or her adversary, other litigants, and the court. In this case, the district judge clarified that the problem was that the suit had not been pursued effectively and the sanctions award, calculated in percentages of fees incurred at different points during the litigation, was appropriate.