Raylon, LLC v. Complus Data Innovations, Co. et al, 6-09-cv-00355 (TXED May 4, 2015, Order) (Davis, J.)
Thursday, May 7, 2015
Rule 11 Violation Warrants Disgorgement of Plaintiff’s Counsel’s Profits Plus 50%
Following remand, the court granted in part defendants' motion for Rule 11 sanctions and sanctioned plaintiff's counsel $450,000, calculated from a disgorgement of counsel's profits plus 50%. "If the worst result that one could expect when filing a frivolous lawsuit is that one might not profit from the venture, then one is not deterred from attempting the pursuit. A disgorgement sanction alone has no greater deterrent effect than the risk that any plaintiff’s attorney takes when embarking on a non-frivolous case under a pure contingency fee arrangement. . . . The Court recognizes that although this sanction is relatively severe by typical Rule 11 standards, the sanction amounts to significantly less than the approximately $1.4 million in fees and expenses requested and incurred by Defendants in this case."