Court Finds Sanctions Aren’t Meant for Firms

     PASADENA, Calif. (CN) – Federal law doesn’t allow for sanctions against law firms – only individual attorneys, the Ninth Circuit ruled Thursday.
     Armen Kiramijyan, an attorney with Kaass Law in Glendale, Calif., filed a 2012 complaint for a client against 10 defendants, including Wells Fargo Bank. The complaint contained allegations related to adverse information the defendants had reported to credit agencies.
     A federal judge dismissed the complaint, and Wells Fargo moved to recover $11,000 in attorneys’ fees from the law firm, arguing that the lawsuit had been filed in bad faith and was frivolous. The district court awarded the bank $8,000 in attorneys’ fees.
     Kaass appealed the sanctions award, arguing that sanctions can be legally awarded against individual attorneys but not against an entire law firm.
     The Circuit agreed with Kaass and reversed the court’s decision.
     Reviewing the text of the federal statute at issue, Circuit Judge Milan Smith said in the panel’s 12-page opinion that its “specificity and precision” – which allows for sanctions only against “attorneys” or “other persons admitted to conduct cases” – was “designed to exclude sanctions against a law firm.”
     “We believe that if Congress had intended to permit federal courts to impose sanctions against law firms, it would have included an express authorization to do so in the statute,” he wrote.
     The panel concluded that the district court abused its discretion and vacated the sanctions order against the law firm.
     Neither side could be immediately reached for comment on Thursday.

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