USCA1 Opinion

[Systems note: Appendix available from Clerk's Office.]

UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
_____________________
No. 92-2030
ROBERTO NAVARRO-AYALA, ET AL.,
Plaintiffs, Appellees,
v.
RAFAEL HERNANDEZ-COLON, GOVERNOR
OF THE COMMONWEALTH OF PUERTO RICO, ET AL.,
Defendants, Appellants.
____________________
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
[Hon. Hector M. Laffitte, U.S. District Judge]
___________________
____________________
Before
Breyer, Chief Judge,
___________
Torruella and Boudin, Circuit Judges.
______________
____________________
Carlos A. Del

Valle Cruz with

whom Ramirez

& Ramirez, Jorge

_________________________
__________________ ______
Perez Diaz, Secretary of Justice, Commonwealth of Puerto Rico,
__________
Anabelle Rodriguez, Solicitor General, Commonwealth of Puerto Ri
___________________
were on brief for appellants.
Carlos Garcia Gutierrez with whom Armando Cardona Acaba, Pue
________________________
_____________________
___
Rico Legal Services, Inc., and Luis M. Villaronga were on brief
_________________________
___________________
appellees.
____________________
August 20, 1993
____________________

BREYER, Chief Judge.

___________
appeals
after

a $500

sanction

finding that he had

Rules of

Civil Procedure.

sanction upon a motion

Kenneth Colon, an

that the

attorney,

district court

violated Rule 11
The district

imposed

of the Federal
court based

that Colon signed, on behalf

the

of the

Commonwealth of Puerto Rico, which asked the court to reduce

the compensation paid
the

to a special master.

After reviewing

motion and the record, we find no violation of Rule 11.

We conclude that the

sanction is without basis in

law, and

reverse the order imposing it.

I
Background
__________
The

sanction

litigation seeking
health system.

arose

to reform

in

the

context of

part of Puerto

lengthy

Rico's mental

See, e.g., Navarro-Ayala v. Hernandez-Colon,

___ ____ _____________
_______________

956 F.2d 348 (1st Cir. 1992).

In 1974, a

group of patients

at Rio Piedras Hospital filed suit, claiming that conditions

there

violated

district

the federal

court entered

parties, which

Special Master
compliance

court

reforms and

In 1977,

agreed upon

the

by the

sets standards

for

In 1985, the district court appointed a

who, assisted

with the

began to

a Stipulation,

prescribes

care and treatment.

Constitution.

by

Stipulation.

interpret

a staff,
In

was to

1987, the

the Stipulation

monitor
district

as applying

to

other hospitals

in Puerto

Rico (at least

insofar as

treated patients transferred from Rio Piedras).

Master

began

compliance

to

monitor

with the

treatment

Stipulation

The Special

conditions

at, at

they

and

least, one

seek
other

hospital.
In late 1991, this court held that the Stipulation
applied
view,

only to conditions
the

parties

elsewhere.

had

at Rio Piedras;
not

agreed

to

in the court's
its

application

Navarro-Ayala v. Hernandez-Colon, 951 F.2d 1325,

_____________
_______________

1346 (1st Cir. 1991) ("Navarro I"). The court's opinion also
_________
observed that

Rio Piedras

Hospital seemed

to be

close to

achieving full compliance with the Stipulation's conditions.

Id. at 1329
___

n.3.

the district

About one

month later, in

court reappointed the Special

January 1992,
Master, and his

monitoring staff, to serve until the end of the year.

In
motion,
this

signed by

appeal.

reconsider its
Master,

February

to

The

1992,

attorney Colon,
motion

January
reduce

the

the

Commonwealth
that is the

asked the

reappointment, to reduce the

of

the

of the
term

the

subject of

district

1992 reappointment
length

filed

court

to

Special
of

that

level of compensation paid the

Master and his staff, and to relieve the Commonwealth of the

-33

burden of paying for

in advance.

a year's worth of

monitoring services

After considering and rejecting the motion, the

district court decided that its signer had violated Rule 11.
The

district

court

ordered

sanction

of

$500.

The

sanctioned attorney, Kenneth Colon, now appeals.

II
Review of the Sanction Order
____________________________
Under

Rule 11

signature on a motion

(in relevant part),

paper certifies that "to the

the signer's knowledge, information

reasonable inquiry,
and

an attorney's

[the motion]

is warranted by existing

best of

and belief formed after

is well grounded

law or a

in fact

good faith argument

for the extension, modification, or reversal of existing law

. . ."

Fed. R. Civ.

P. 11.

The

that the signer of the motion paper

duty

to undertake

holding,

we

must

familiarity with

district court concluded

before us failed in his

reasonable inquiry.
take

account of

that

In

reviewing that
court's

relevant context, and "apply

greater

an abuse-of-

discretion standard."
U.S.

384, 399

Cooter & Gell

_____________

(1990).

Nantucket, Inc.,
________________

838

Applying that standard,

See also
_________
F.2d

600,

v. Hartmarx Corp., 496

______________
Muthig v.
______

Brant Point
____________

603

Cir.

we have found

(1st

1988).

no lawful basis

for

applying a sanction in this case.

-44

The reader can most easily understand why we reach

this conclusion

by examining attorney Colon's motion paper,

attached to this

opinion as an Appendix.

Just what

about this paper, one might rightly ask, that would

Rule 11?
motion

The

asks the

Master to a
year.
opinion

document makes three

district

requests.

court to

term shorter than

is it
violate

First,

reappoint the

the

Special

an additional (nearly)

full

It relies on the fact that our then-recent Navarro I

_________
both

1)

limited

the

Stipulation's

scope

to

conditions at Rio Piedras

Piedras' conditions
those reasons,

as close

it

claims

to compliance.

the motion asserts that

under the Stipulation

year than the

Hospital, and 2) referred

may be less

the

parties'

implications of Navarro I
_________

In light

of

the Master's duties

extensive in the

district court had previously

that

to Rio

briefs

coming

thought.

And,

discussing

the

(scheduled for submission in mid-

March) would clarify the more limited scope

of those future

duties.
Second, the motion asks
require

the Commonwealth

monitoring services,
given

to "prepay[]"

for such payment

that "the need for

not been defined."

the district court not to

a year's

worth of

would be "premature"

and extent of

these services has

It adds that there "is no reason why the

-55

required

monitoring

services cannot

be

compensated after

________
their

performance .

53(a) of the
federal
master's

. . ."

As

authority, it

Federal Rules of Civil

courts

broad

authority

compensation.

Procedure, which gives

to

See
___

cites Rule

structure

Fed.

R.

Civ.

special
P.

53(a)

(compensation shall be paid "as the court may direct").

Third,

the

motion

opposes

compensation for the Special Master

the court-approved
presents

budget.

chart

Commonwealth

The

which

compensates

rates

of

and staff set forth

motion, in an

says,
its

the

in

Appendix A,

effect,

judges,

in

that

inferior

the

judicial

officers, and comparable health care personnel at much lower

rates of

pay.

And the motion,

makes clear that

in referring to Rule 53(a),

the district court has

wide discretion to

set the proper amount of compensation.

See Fed. R. Civ. P.

___

53(a) (compensation "shall be fixed by the court").

The
primarily

upon

reduction

in

district
the

court

motion's

compensation.

based its
third
The

Rule

request,
January

11

finding

seeking
1992

order

reappointing the Special Master provided for compensation at

the following hourly rates:
Special Master
Special Master's assistant
-66

$100.00
30.00

Psychiatrist
Psychologist
Social worker
Occupational therapist
Quality assurance director
The

appellant's

motion in

75.00
75.00
60.00
25.00
25.00

opposition

set

forth (in

Appendix A) a different

and much lower set of

at

the

which,

it

said,

Commonwealth

its

hourly rates

paid

comparable

employees:
Superior Court judge
Superior Court law clerk
Psychiatrist
Psychologist
Social worker
Occupational therapist
Quality assurance director
The district
The

court took objection to

court said that this

that many

had

failed to make a

actual pay of such

A's pay

this latter schedule.

schedule did not

___

health care professionals

employ actually receive.

$27.00
10.00
11.20
11.20
9.80
7.90
7.90

in the

reflect the pay

Commonwealth's

The court said further

that Colon

reasonable prefiling inquiry into the

____________________________

professionals before suggesting Appendix

scales, which

were "drastically below

the staff's

current

rates."

added, were

These

suggested

pay

scales, the

"insulting to the professionals

court

on the Special

Master's staff."
In

our

view, the

record

district court's conclusion that

does

not support

Rule 11 required

the

attorney

-77

Colon to make a further inquiry.

of

Rule 11's inquiry

are baseless.
that "to the

See
___

For one thing, the object

requirement is to

Fed. R. Civ. P. 11

best of the

avoid filings that

(signature certifies

signer's knowledge

after reasonable inquiry, [the motion] is

_________________________
fact and
____

. . .

formed

well grounded in
________________

is warranted" by law) (emphasis added);

_____________________

Cooter &
________

Gell, 496 U.S. at 393 ("the central purpose of Rule 11 is to

____
deter

baseless

filings").

Here, the

inquiry

that

the

district court believed the appellant should have made would

not
___

have

shown the

unwarranted,
would

simply

motion

or without
have

to be

baseless

adequate factual

weakened,
________

without

(i.e. legally

grounding).

It

destroying,

the

Commonwealth's argument.
More specifically, the inquiry would have shown 1)
that the motion's Appendix A accurately reflects an official
Commonwealth pay scale, set by its central personnel agency,
for

permanent health
_________

Commonwealth

hires

care professionals,
many

(perhaps

but 2)

most)

that the

health

care

professionals, not as permanent employees, but under special

contractual arrangements at higher rates.

In light of that

showing,

found

the

Commonwealth

difficult, but not

claim for

might

have

at all impossible,

lower compensation
-88

on the

it

to proceed with
basis of

more
its

Appendix A.

The

legal standards

governing special

master compensation

leave much to the district court's discretion.

P.

53(a).

staffs'
and

And, an

effort to

Fed. R. Civ.

tie the Special

Master and

compensation more directly to judicial compensation

to

an

"official"

(though

frequently

skirted)

Commonwealth pay scale is plausible, and within the realm of

reasonable argument, even if that argument eventually
not

carry the day.

Cf. Newton v. Consolidated Gas Co., 259

___ ______
____________________

U.S. 101, 105 (1922)

be

"liberal, but

would

(special master's compensation

not exorbitant";

salaries "for

should
judicial

officers performing similar duties are valuable guides," but

a "higher rate of compensation is generally necessary").
For
set

forth

another thing, the

more

practices did not

motion paper's failure to

complete account

of

Commonwealth

impose significant additional

pay

costs upon

the opposing party. See, e.g., Unioil, Inc. v. E.F. Hutton &
___ ____ ____________
_____________
Co.,
___

809 F.2d 548, 557 (9th Cir. 1986) (cost of foreseeable

response by

opposing parties relevant for

determining what

constitutes reasonable inquiry), cert. denied,

____________
(1987);

Jerold

Litigation
__________

S.

2.04 at

responding to filing
that must

Solovy

et al.,

2-18 (1991)

Sanctions in Federal
______________________
(magnitude of

affects thoroughness of

be performed).

484 U.S. 822

That party, the

burden in

investigation
Special Master,

-99

and the Master's staff, all had ready access to the relevant
compensation-related facts and quickly
court's attention.

Of

cost the opposing party

normally

brought them to

course, presenting these

some time and effort.

does not require one

forth the facts that support the other side's

Continental Air Lines, Inc. v.
____________________________
Far East, Ltd., 109
______________
11

facts did

But

party to uncover

the

Rule 11

and to set

position. Cf.
___

Group Systems International

___________________________

F.R.D. 594, 598 (C.D. Cal.

1986) (Rule

does not impose general duty to call all important facts

to court's attention).
Finally, the
contains no

significant false statement

harmed the other side.

because

motion, read fairly and

the district

that significantly

We emphasize the word

court

found one

as a whole,

"significant"

sentence

literally

false.

That sentence

says that the "rates of pay"

for the

Master's

staff "outpace by a factor of

rates of

pay

System."

This statement is not literally false, if one uses

the

of their

"official"

comparison;

pay

in

characterize

characterization."
would

not

counterparts in

scale

light of
it

matter,

6 or more to 1, the

as

the Public

for permanent
actual

pay

practices, we

"overstatement"

But were
for

it
Rule

employees

or

Health

as

would

"one-sided

literally inaccurate,
11

it

neither

penalizes

an overly literal

reading of

-1010

overstatement

nor authorizes

each

statement.

factual

Forrest Creek Assoc., Ltd.

____________________________

v.

McLean Sav. and Loan Ass'n, 831 F.2d 1238, 1244-45 (4th Cir.
__________________________
1987) (Rule 11 "does not extend to isolated factual
committed in good faith, so long as the pleading as a
remains

`well

grounded

in

fact.'");

Gregory P.

errors,
whole
Joseph,

Sanctions: The Federal Law of Litigation Abuse

_________________________________________________
133-34 (1989)
paper

as

("The focus of .
whole,

. . Rule [11]

not individual

phrases

9(D)

at

is the court
or

of context. .

sentences

construed separately or

taken out

. .

[A]t

some level of analysis,

every unsuccessful litigation paper

contains an unsupported allegation or flawed argument").

The

district

justifications for
the

motion

"bilking,"

provided

its sanctions.

paper,
(2)

court

(1)

should

should
not

several

It said that
not

have

have
called

used
the

other

Colon, in
the

word

payments

"burdensome" without first investigating the actual "effects

of these payments on the Department of Health's budget," (3)
should

not have said the litigation was in the "final stage

of proceedings" without asking government officials "if full

compliance

and an

end to this

case were in

fact close at

hand," and (4) should not have asked to change the budgeting
-1111

process without

first finding

out "how the

Special Master

had been paid in the past."

In our view, these
Rule

11

sanction,

together.

(1)

pejorative and,

argument

We

concede that

standard
meet.

concede

the

unjustified)

are

not

of

"bilking"

is

without
that

appropriate (and usually

But to find support for
a single, rather
is

few lawyers

aware

all

obvious point

pejorative,

that

or

cheating,

appellant's use of

of perfection
We

word

implies

without pejoratives.

(albeit

separately

the

judge is more

Rule 11 sanction in

mild

as it

We also

made to a

works better)

whether considered

insofar

justification.

circumstances do not justify a

any

to

impose

or judges

reason

or

would

authority

suggesting that Rule 11 imposes such a standard.

(2)
Master's
where,

The

motion

paper

budget "burdensome,"

but

does
we

call
do

the

not

understand

or how, Rule 11 forbids such a characterization.

one disputes that the

total amount of the Special

court-approved budget

is $171,000.

suggests

Special

that

insignificant;
consultation
attorney Colon

the
nor
with

Nothing in

Commonwealth
do

we

understand

government

to change

found

officials

Master's
the record

this

either

amount

how further

would

the characterization, or
-12-

No

have

led

how the

12

use of

the word "burdensome" made

a significant difference

to the litigation.
(3) Neither do we understand
would forbid
as

in

attorney Colon to characterize

the "final

Navarro I
_________

stage of

proceeding."

curtailed the scope

observed that "conditions"

.

. in compliance."

would soon

significantly

limiting
Thus

the

argument, reasonable

further

file a
the

government officials

opinion in
and also

in its

made clear that the

brief arguing in

Special

statement

"inquiry"

Our

at Rio Piedras may be "largely .

not, help convince a court.

how

the litigation

of the Stipulation

The motion paper

Commonwealth

activity.

how, or why, Rule 11

Master's

seems

to

context, that might,

further

to

an

or might
make clear

consultation

would have shown the

lacked adequate "ground[ing] in fact."

monitoring

amount

The record does not

or

favor of

with

argument to have

(4)
motion

We agree

paper, in

with

the district

requesting that

"monitoring services

compensated after their performance," does

of the fact

Master

Nonetheless,

we

budget funds
only
do

(on a

after
_____

not

see

how

performed
the

be

provided for

monthly basis)

he

the

not take account

that the current budgeting system

disbursement of
Special

court that

to the

services.

motion's

possible

-1313

misstatement can justify

a sanction.

Read fairly, and

in

context, the paper's request indicates that the Commonwealth

objected
monitoring
turn

to

having

budget

for

services in advance, a
___________

out to have been

statement

to

unnecessary.

reflects a minor,

budgeting process, and one

year's

portion of
At

worth

of

which might

worst, the paper's

technical confusion

about the

which apparently caused no harm.

(After all, the opposing party, the Special

Master, and the

court,

all

understood,

current budgeting
Ltd.,
____

and

worked.)

could

readily

explain,

how

See Forrest Creek Associates,

___ __________________________

831 F.2d at 1244-45; Joseph, Sanctions

_________

9(D) at 133-

34.

In sum,
found a

the district

few isolated

that further inquiry

overstated.

instances

could have

of noncritical

statements

might have shown

That further inquiry

motion's requests

to have been

make that inquiry

did not

party some

court, at most,

to be inaccurate

would not have shown

baseless.

unfairly impose

special litigation

And,

the

failure to

upon the

cost or burden.

or

other

This

case

differs significantly from the kinds

of cases in which this

court has upheld

a district court's

imposition of Rule

sanctions.

Muthig,
______

Cf.
___

838 F.2d

-1414

at

605 (no

11

reasonable

inquiry

where

counsel

clients

facts

that

intentional

could

would

infliction

have
have

of

readily
shown

emotional

learned

their

from

claim

distress

lacked

validity); Ryan v. Clemente, 901 F.2d 177, 179-81 (1st

____
________
1990)

(sanctioning harmful allegation

(1st

the contrary); Cruz v.

____
Cir.

1990)

bringing and

(sanctioning

Cir.

that state officials

failed to investigate illegal scheme where

showed

for

available record

Savage, 896 F.2d 626, 632-34

______
attorney

for

unreasonably

pursuing nine frivolous claims, including some

with either no supporting

evidence or where record directly

contradicted claim); Bay State Towing Co. v. Barge American

_____________________
______________
21, 899 F.2d 129, 131 (1st Cir. 1990) (no reasonable inquiry
__
where extensive

record contains

nothing to suggest

why or

how a person could have believed most of filing's claims).We

do not see

how the district court

undertake the

"reasonable inquiry"

could find a failure

that Rule 11

The order of the district court is

Reversed.
________

NOTE:

See Slip Opinion for copy of Appendix.

to

requires.

-1515