Zuk v. Eastern Pennsylvania Psychiatric Institute of the Medical College of Pennsylvania

Brief Fact Summary.

Plaintiff sued Defendant for copyright infringement. Defendant filed a motion to dismiss the case and moved for sanctions against Plaintiff and his attorney.

Synopsis of Rule of Law.

Sanctions under 28 U.S.C. § 1927 are not proper when there is no showing of bad faith. Sanctions under Rule 11 are proper when counsel fails to adequately inquiry into both the facts and the law before filing a lawsuit.

Facts.

Dr. Zuk (Plaintiff), represented by Benjamin Lipman (Appellant), sued Eastern Pennsylvania Psychiatric Institute (Defendant) for copyright infringement of tapes filmed by Plaintiff while working for Defendant. Defendant filed a motion to dismiss and a motion for sanctions and attorney’s fees.

Issue.

Did the District Court abuse its discretion when awarding attorney’s fees and sanctions against Appellant under Rule 11, 17 U.S.C. § 505, and 28 U.S.C. § 1927?

Held.

Yes, only sanctions under Rule 11 were appropriate. The District Court’s order against the Appellant is vacated and the case is remanded.

Discussion.

The Court first determined that under 17 U.S.C. § 505, the District Court had discretion to order attorney’s fees against Plaintiff, but not Appellant. Next, the Court determined that it was not proper for the District Court to award sanctions under 28 U.S.C. § 1927 against Appellant because Appellant did not multiply the proceeding, was not given notice of the sanctions with an opportunity to defend, and there was no finding of bad faith. Finally, the Court determined that it was proper for the District Court to impose sanctions against Appellant under Rule 11 for failure to reasonably inquire into the facts and law before filing the lawsuit. The Court remanded the case with instructions on determining the appropriate sanctions.