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Keywords

contractattorneydiscriminationdue process
litigationattorneylawyerdiscoverypleamotiondiscriminationdue processgood faith

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Szabo Food Service, Inc. v. Canteen Corp., 823 F.2d 1073, 56 USLW 2029, 8 Fed.R.Serv.3d 273

Facts

Szabo Food Service, Inc. held a contract to supply food at the Cook County Jail until November 1986, when the contract was put up for bids. Szabo formed a joint venture with a minority-owned firm to enhance its bid, but Canteen Corp. submitted a lower bid and was awarded the contract. Szabo filed a complaint alleging racial discrimination and violations of due process, but later dismissed the case voluntarily before Canteen could respond. Canteen sought attorney fees as a sanction under Rule 11, claiming Szabo's complaint was frivolous.

Canteen says that during the discovery in the state suit it became convinced that Szabo-Digby had filed the federal suit either knowing that it could not prevail or without performing the pre-filing investigation required by Fed.R.Civ.P. 11.

Issue

Whether the district court had the authority to award attorney fees to Canteen under Rule 11 after Szabo voluntarily dismissed its complaint.

Szabo-Digby's complaint contained three kinds of claims: that the Board engaged in racial discrimination, that the Board violated the due process clause, and that the Board violated state and local laws.

Rule

Rule 11 requires that attorneys certify that their filings are well grounded in fact and law, and not interposed for any improper purpose. A violation of Rule 11 can result in sanctions, including the award of attorney fees.

Rule 11 provides that the presence of an attorney's signature on a complaint is a certificate that he has read the pleading …; that to the best of his 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, and that it is not interposed for any improper purpose, such as to harass or to cause any unnecessary delay or needless increase in the cost of litigation.

Analysis

The court determined that Szabo's due process claim was frivolous, as it lacked a legitimate property interest in the contract and failed to acknowledge existing law. The court emphasized that Szabo's complaint did not meet the standards set by Rule 11, which requires reasonable inquiry into the facts and law before filing. The court concluded that Szabo's actions imposed unnecessary costs on Canteen and the judicial system.

The due process argument in this case is frivolous on an objective standard; it is therefore not “warranted by existing law” within the meaning of Rule 11.

Conclusion

The appellate court affirmed the finding that Szabo's due process claim was frivolous and that Canteen was entitled to attorney fees under Rule 11. The case was remanded for the district court to consider the appropriate amount of fees.

We take Rule 11 and its counterpart Fed.R.App.P. 38 seriously and expect district judges, lawyers, and litigants to do the same.

Who won?

Canteen Corp. prevailed in the case because the appellate court found that Szabo's claims were frivolous and warranted sanctions under Rule 11.

Canteen filed a motion asking the district court to award it attorneys' fees as a sanction under Rule 11; it also sought fees as a “prevailing party” under 42 U.S.C. § 1988.

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