Brown v. Ameriprise Financial Services, Inc.
276 F.R.D. 599, 2011 WL 3920362, 2011 U.S. Dist. LEXIS 101038 (2011)
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Rule of Law:
Under Federal Rule of Civil Procedure 11, filing a complaint containing numerous, specific factual allegations copied verbatim from an unrelated lawsuit without a reasonable pre-filing inquiry constitutes sanctionable conduct. A court has broad discretion to impose the severe sanction of dismissal with prejudice to deter such misconduct, particularly when the baseless allegations appear designed to extract an 'in terrorem' settlement.
Facts:
- Rosalind Brown, an African-American, was formerly employed by Ameriprise Financial, Inc.
- Brown, through her attorneys, prepared a class-action complaint alleging systemic racial discrimination by Ameriprise against her and a putative class of at least 1,000 other African-American employees.
- The complaint contained highly detailed and specific allegations about Ameriprise's employment policies, such as salary disparities and promotion denials.
- A subsequent investigation revealed that large portions of the complaint's specific factual allegations were copied verbatim from a complaint filed over a decade earlier in a different federal court against a different company, The Coca-Cola Company.
- The complaint filed against Ameriprise contained a typographical error ('mangers' instead of 'managers') and an inappropriate reference to plural 'Named Plaintiffs' that were identical to those in the original Coca-Cola complaint.
- During her deposition, Brown was unable to provide an independent factual basis for many of the specific, copied allegations against Ameriprise, admitting, for example, that she was unaware of the 'written guidelines' alleged in her own complaint.
Procedural Posture:
- Plaintiff Rosalind Brown filed a three-count class-action complaint against her former employer, Ameriprise Financial, Inc., in the U.S. District Court for the District of Minnesota.
- After Brown’s deposition revealed a lack of knowledge regarding many specific allegations, Ameriprise discovered that the complaint was largely copied from an earlier, unrelated case.
- Ameriprise’s counsel requested that Brown voluntarily dismiss the complaint, but her counsel refused.
- Ameriprise served a motion for Rule 11 sanctions on Brown, providing the 21-day 'safe harbor' period for her to withdraw the complaint.
- When Brown again refused to withdraw the complaint, Ameriprise filed the motion with the court, seeking dismissal with prejudice and an award of attorney's fees.
- The motion was referred to a Magistrate Judge, who issued a Report and Recommendation (R&R) finding a Rule 11 violation.
- The Magistrate Judge recommended striking the class-based claims and awarding Ameriprise fees incurred in defending those claims, while allowing Brown’s individual claims to proceed.
- Brown filed objections to the Magistrate Judge's R&R, bringing the matter before the District Judge for de novo review.
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Issue:
Does filing a complaint containing extensive, verbatim allegations copied from an unrelated case, without a reasonable inquiry into their factual basis, warrant the sanction of dismissal with prejudice under Federal Rule of Civil Procedure 11?
Opinions:
Majority - Kyle, J.
Yes. Filing a complaint that copies extensive, specific, and unsupported factual allegations from an unrelated case warrants dismissal with prejudice. The court found the copying from the Coca-Cola complaint to be 'extensive and indisputable.' The violation of Rule 11 was not the act of copying itself, but the copying of specific, detailed factual allegations regarding policies and procedures without any evidentiary foundation for applying them to the defendant, Ameriprise. This conduct violates the core requirement of Rule 11(b)(3) that a party conduct a 'reasonable inquiry' to ensure factual contentions have 'evidentiary support' before filing. The court rejected the plaintiff's argument that she was waiting for discovery, stating that a plaintiff must have a basis for a claim before filing, as discovery is not a tool 'to find a cause of action.' While the magistrate judge recommended the lesser sanction of striking class claims and awarding fees, this court determined that dismissal with prejudice was the appropriate sanction. The primary purpose of Rule 11 is not compensation, but deterrence. The plaintiff's conduct undermined the integrity of the judicial process, and a lesser sanction would not sufficiently deter unscrupulous litigants from filing baseless class actions to coerce 'in terrorem settlements.' Citing precedent from the Eighth Circuit, the court concluded that such malfeasance justifies the 'ultimate sanction' of dismissal.
Analysis:
This case serves as a stark reminder of the serious obligations imposed by Federal Rule of Civil Procedure 11 on both attorneys and the parties they represent. The court's decision emphasizes that 'copy-and-paste' pleading, particularly when it involves specific factual allegations rather than general legal theories, is a perilous practice that can lead to case-dispositive sanctions. By choosing dismissal over monetary sanctions, the court underscored that the primary function of Rule 11 is deterrence against abusive litigation tactics, not merely compensating the wronged party. This ruling reinforces the principle that a complaint is not a ticket for a 'fishing expedition' through discovery; a reasonable factual basis must exist prior to filing, thereby strengthening the gatekeeping function of the pleading stage.
