A recent decision by the District of Minnesota provides an interesting roadmap for how defendants can use Rule 11 in defending against a frivolous class action.  In Brown v. Ameriprise Financial Services, Inc., 2011 U.S. Dist. LEXIS 101038 (D. Minn. Sept. 7, 2011), the plaintiff filed a putative class action complaint alleging purported racial discrimination.  The defendant discovered that the complaint was copied in large part verbatim from a complaint in a racial discrimination lawsuit filed against Coca-Cola back in 1998.  The plaintiff even copied allegations that were quite specific about alleged employment practices at Coca-Cola, but it turned out had no factual basis with respect to Ameriprise.  During the plaintiff’s deposition, she was unable to identify the factual basis for various allegations in the complaint, and admitted that some of them were flatly wrong.  Id. at *4-6.  Ameriprise served a Rule 11 motion, and after the plaintiff refused to withdraw the complaint within the 21-day period, sought sanctions.

A magistrate judge recommended that the defendant’s Rule 11 motion be granted and that sanctions be awarded for the attorneys’ fees the defendant expended to defend the case (the fees requested were $137,000).  Id. at *9.  The district judge agreed that sanctions were appropriate, stressing that: (1) there was no foundation for a number of the allegations in the complaint; (2) the fact that plaintiff had not moved for class certification was irrelevant because the violation occurred when the complaint was filed and the plaintiff had not availed herself of the “safe harbor” under Rule 11; and (3) the defendants’ objections to discovery were irrelevant because the plaintiff had to adequately plead a claim before being entitled to discovery.  Id. at *13-19.

The district judge, however, concluded that the ultimate sanction – dismissal of the complaint – was appropriate given the degree of malfeasance.  The court concluded that a fee award would not be a sufficient deterrent, but also that a fee award in addition to dismissal was unwarranted because the dismissal was a sufficiently stern sanction.  Id. at *26-28.  I tend to agree with the magistrate judge that a fee award would have been the more appropriate sanction – a plaintiff and his or her lawyers are likely to care less about a dismissal of a frivolous case than they would about having to reach into their pockets to cover the defendants’ fees.  A fee award also provides the defendant with some compensation from having to defend a frivolous case.  Here, Ameriprise apparently spent $137,000 to defend a case that it appears never should have been filed.

Putting the issue of the appropriate sanction aside, the key practice point I see here is that in a case that is suspected to be frivolous, it may make sense to take the named plaintiff’s deposition as early as possible and explore the factual basis for the allegations in the complaint.  Named plaintiffs in class actions typically have little to provide in documents or interrogatory answers that will be useful, so an early deposition rarely will disadvantage the defendant strategically.  Taking the plaintiff’s deposition early may demonstrate that the allegations made in the complaint were unfounded (or even copied from some other unrelated case), and might provide the grounds for a Rule 11 motion.  An early plaintiff’s deposition also prevents the plaintiff from taking discovery from the defendant and trying to use that to try to find support for allegations that had no basis to begin with.