Arbitration

7th Circuit Affirms $80K Sanction: If Lawyer Can’t Pay, Bankruptcy Is Next Step

Known for his sometimes-blistering views on attorney competency issues, Judge Frank Easterbrook of the Chicago-based 7th U.S. Circuit Court of Appeals takes something of a kindly tone, initially, in an opinion today upholding an $80,000 sanction against an impoverished attorney.

But, writing on behalf of a three-judge panel, Easterbrook nonetheless finds that a lawyer who pursued litigation over a labor union election based on a number of "fanciful" allegations is responsible for the defendants' legal costs.

An argument by attorney James Gordon Banks that he has only $2,000, his clothing, his watch and his wedding band—and no malpractice insurance—is irrelevant to a claim for sanctions for vexatious litigation under 28 U.S.C. § 1927, the judge explains. Although a lawyer's ability to pay is properly taken into account in a sanctions award under Rule 11 of the Federal Rules of Civil Procedure, it is not considered under Section 1927 because the fee-shifting statute essentially makes vexatious litigation a type of intentional tort.

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