Sua sponte imposition of sanctions on attorneys; FedRCivP 11(b) & (c)(3); 28 USC § 1927; Jones v Illinois Cent RR Co; Whether appellants-attorneys knew or reasonably should have known that claims were frivolous or that their litigation tactics would needlessly obstruct the litigation; League of Indep Fitness Facilities & Trainers, Inc v Whitmer (Unpub 6th Cir); The fees & costs awarded

The court affirmed the district court’s sua sponte imposition of sanctions under Rule 11 as well as § 1927 against appellants-attorneys, concluding that the complaint was “haphazard” and that the claims lacked any “evidentiary support and were not warranted by existing law.” Appellants represented several clients who sued various state and local officials relating to business closures during the COVID-19 pandemic. In the merits litigation, the district court dismissed the complaint for failure to state a claim, and the court affirmed. A hearing was held and even though Rule 11 (c)(2) sanctions were unavailable, the district court granted sanctions sua sponte under Rule 11(c)(3) where it concluded that appellants had failed to make “‘even a modest effort to conduct legal research before they filed the Complaint or their futile effort to oppose the Motions to Dismiss,’” and that “‘[t]he number and extent of their errors infected the entire case . . . .’” On appeal, the court found that the district court could order sanctions sua sponte under Rule 11 (c)(3) “because, before doing so, it correctly ‘order[ed] . . . counsel “to show cause why conduct specifically described in the order has not violated Rule 11(b).”’” Appellants were given the opportunity to explain why they should not be sanctioned. And it agreed with the district court’s characterization of the complaint as “‘haphazard — at points, incomprehensibly so — and was littered with factual and legal errors.’” The court concluded that appellants “repeatedly made bare, conclusory, and unsupported arguments.” As to § 1927, it determined that “frivolous claims abounded in this case[,]” and that appellants “reasonably should have known based on the legal-research obligations owed to the court by members of the bar, that their claims had no legal basis.” The court agreed with the district court’s observations that its unpublished case, League, “‘was practically a mirror to the facts and legal issues in this case’” and that the court’s “application of the law there to indoor fitness facilities is ‘pertinent to the case here.’” Even though that case was unpublished and not dispositive, appellants’ failure to discuss it, even after defendants called it to their attention, “‘fell short of the obligations owed by a member of the bar’ and reflected the unreasonable multiplication of proceedings whose legal and factual bases were implausible from the start.”