Cross-appeals from an order of the United States District Court for the Eastern District of New York, Mishler, J., imposing a $5,000 sanction on an attorney for bringing and maintaining a civil rights lawsuit deemed meritless. Reversed.
Before NEWMAN, PIERCE, and PRATT, Circuit Judges.
Most lawyers who litigate in our federal courts perform their function at a commendable level of professionalism, advancing claims and defenses with the zeal of a trained advocate, but properly tempering enthusiasm for a client's cause with careful regard for the obligations of truth, candor, accuracy, and professional judgment that are expected of them as officers of the court. Because, we suppose, in a system as large and diverse as our federal court system, it is inevitable that a few attorneys will occasionally fall short in these professional obligations, sanctions against attorneys play a limited but necessary role in the administration of our civil justice system. Severe forms of misconduct have traditionally been subject to contempt citations, review by bar association grievance committees, and in extreme cases, suspension or disbarment. In recent years, however, increasing attention has been focused upon lesser sanctions as a means of fine-tuning our litigation system to weed out some of its abuses and to improve its dispute-resolving function.
At issue on this appeal is one of those lesser sanctions--regarding an offending attorney to pay his adversary's attorneys' fee as part of the damage caused by asserting and continuing to litigate frivolous claims. Specifically, we are called upon to decide whether the district court's award of $5,000 in attorneys' fees against plaintiff's attorney for instituting and maintaining the underlying § 1983 action on behalf of an arrestee against three Suffolk County police officers, their commissioner, the district attorney, and the county itself, was proper when imposed under 28 U.S.C. § 1927 and rule 11 of the Federal Rules of Civil Procedure.
The sanctioned attorney, Arthur V. Graseck, Jr., has appealed, contending (a) that the award under § 1927 was unsupported by specific findings of subjective bad faith and improper purpose, (b) that rule 11 was improperly applied to the continuation of a property initiated claim after the attorney should have known it was not well grounded in fact, (c) that the district court should have considered the deterrent effect of its decision on the few attorneys in Suffolk County who have been willing to represent unpopular plaintiffs in civil rights cases, (d) that the district court improperly ignored defendants' failure to seek earlier dismissal of the allegedly frivolous claim, and (e) that an evidentiary hearing was required before imposing the sanction.
In opposing the main appeal the county contends that the district court properly sanctioned attorney Graseck under § 1927 and rule 11. By a cross-appeal the county also contends that the district court erred in reducing their attorneys' actual expense of $51,112.50 to the $5,000 sanction imposed, a reduction made because the district court found, after a hearing, that Graseck was unable to pay a higher sum.
Mindful of the marked increase in incidents that have prompted sanctions against attorneys by the district courts as well as by this court, and acutely aware that we must not "stifle the enthusiasm or chill the creativity that is the very lifeblood of the law", Eastway Construction Corp. v. City of New York, 762 F.2d 243, 254 (2d Cir. 1985), we addressed the important issues presented, first taking up by way of background the underlying routine "drug bust" that precipitated both plaintiff's civil rights claim and defendants' desire to impose sanctions on plaintiff's attorney for bringing that claim.
A. Facts Underlying The Section 1983 Claim.
Many of the underlying facts are undisputed. On August 26, 1982, plaintiff Oliveri was arrested by three Suffolk County police officers acting undercover in a "buy and bust" operation with a twist: it had no "buy". Oliveri's arrest was forcible, the degree of force being in dispute. When arrested, Oliveri had no drugs in his possession. Taken to police headquarters at Hauppauge, New York, Oliveri was charged with attempted criminal sale of a controlled substance, heroin, in violation of sections 110.00 and 220.41 of the Penal Law of the State of New York, the asserted basis for the charge being that Oliveri had offered to sell detective Joseph Thompson one ounce of heroin for $1,000.
Oliveri was held in custody for six days until September 1 when he was released on his own recognizance by a judge of the Suffolk County District Court. Two weeks later the charges were dismissed on motion of an assistant district attorney. A representative of the district attorney's office had offered to dismiss the charges if Oliveri would release the county and its employees of any liability for the arrest and prosecution. Oliveri refused, but the charge was dismissed anyway.
B. Facts Related By Client Oliveri To Attorney Graseck.
Since the sanction under consideration on this appeal was imposed on attorney Graseck, our factual focus must be on the information available to him at the relevant times. We begin, therefore, with what Oliveri told Graseck before the complaint was prepared and filed. According to Oliveri, on the night of his arrest he arrived at about 7:30 p.m. at McTee's Bar in Hauppauge where he met a man who identified himself as "Jay" (defendant Cseh, a Suffolk County police officer acting undercover). Oliveri had no money, but for a period of at least two hours "Jay" plied Oliveri with drinks. As Oliveri became drunk, their small talk turned to drugs, and eventually "Jay" took Oliveri outside to introduce him to a friend who was seeking to purchase heroin. The friend (defendant Thompson, who, like Cseh, was a Suffolk County police officer acting undercover) engaged in a conversation with Oliveri after which Oliveri left to make a phone call, borrowing 30 cents from "Jay" for that purpose.
After he left the phone booth and while walking away from the undercover officers, Oliveri's arm was grabbed and pinned behind his back. The person who grabbed him then lifted him off the ground in a chokehold, carried him seventy-five feet across a parking lot, and smashed his face against the trunk of a car, causing his mouth, gums, and lips to bleed. Defendant Thompson told Oliveri he was going to spend 25 years to life in jail if he did not tell Thompson "where he could go bust somebody for drugs." Oliveri said he did not know where he could do that. According to Oliveri, he was then beaten by three or four police officers and taken away in the car to be arraigned.
C. Attorney Graseck's Own Investigation.
Graseck had extensive experience in criminal and civil rights cases in Suffolk County largely with indigent defendants, many of them members of minority groups. To him, Oliveri's story of arbitrary and brutal conduct by Suffolk County police officers had a familiar ring. Before filing the complaint at issue here, however, Graseck not only interviewed Oliveri at length, but he also obtained a copy of his eligibility questionnaire from the Legal Aid Society, which had represented Oliveri after his arrest. Graseck also obtained copies of the police and court records relating to Oliveri's arrest, incarceration, and release.
Speaking to Oliveri, Graseck noticed that he spoke slowly and often repeat himself. To Graseck, Oliveri appeared emotionally disturbed. Hospital records that Graseck later obtained confirmed that Oliveri suffered from prior brain damage.
Based on his interview with Oliveri, his familiarity with other cases against Suffolk County police officers, and his review of documents, Graseck prepared and filed the complaint. Against police officers Thompson, Giammatteo, and Cseh, Graseck asserted claims and unconstitutional arrest and excessive force. Against Thompson, who signed the felony complaint, he charged malicious prosecution. Against Commissioner Dilworth and the County of Suffolk, he claimed a failure to train, supervise, and discipline the three officers. Against District Attorney Henry, the complaint sought an injunction barring the practice of seeking a release of civil rights claims as a condition for dismissal of criminal charges.
For lack of funds Graseck did not depose the defendants. He did serve written interrogatories, some of which were not fully answered until shortly before trial. Included in defendants' response to the interrogatories were two pieces of evidence that were to prove critical to the trial court's imposition of sanctions. One was two photographs of Oliveri that defendants represented had been taken approximately one hour after his arrest. The other was a transcript and tape recording of the conversation between Oliveri and officer Thompson that led up to his arrest. According to the defendants, this evidence completely negated Oliveri's claims.
The photographs, which were of Oliveri from approximately the waist up, revealed no obvious sign of physical abuse. The tape recording, according to defendants, established conclusively that Oliveri offered to sell heroin to Thompson, thereby providing probable cause for the arrest and felony complaint and eliminating the possibility of any unconstitutional arrest and prosecution.
Defendants Dilworth, Henry, and Suffolk County were represented by the County Attorney's office. The individual police officers were represented by separate counsel, selected by the officers but paid by the county, in order to avoid a potential conflict of interest problem condemned by this court in Dunton v. County of Suffolk, State of New York, 729 F.2d 903, 908 (2d Cir. 1984). Defendants deposed Oliveri.
F. Defendants' Last Minute Motions and The Trial.
After the jury was sworn, but before opening statements, defendants moved for summary judgment dismissing all claims, relying on the tape recording, the photographs, and Oliveri's deposition. Although the district judge denied defendants' motion as untimely, he did dismiss the claim against District Attorney Henry on the ground that Oliveri, who had refused to sign the release requested by the D.A.'s office, lacked standing to bring the claim. Simultaneously, Graseck voluntarily withdrew the claims against Suffolk County and Police Commissioner Dilworth. The remaining claims of false arrest and excessive force against the three police officers, and malicious prosecution against officer Thompson proceeded to trial.
Not surprisingly, when the police officers testified at trial to the events leading to Oliveri's arrest, their version contrasted sharply with the story initially told by Oliveri to Graseck and repeated in his trial testimony. According to the officers, Oliveri was observed, on April 24, two days before his arrest, by officer Giammatteo at a shopping center, Giammatteo's suspicion was aroused when he observed Oliveri approaching and trying to speak with various groups of young people, many of whom turned away when Oliveri began to speak. Later that evening officers Giammatteo and Cseh observed Oliveri at McTee's Bar. A possible drug sale was mentioned, and Oliveri allegedly agreed to meet with the undercover officers the following night to consummate the transaction. Although Oliveri did not show up at the appointed time, he was observed later that evening arriving and leaving McTee's without incident.
The encounter that led to the arrest began at approximately 8:00 p.m. on the following day, April 26. According to the officers, Oliveri repeatedly assured them that he could obtain heroin and offered to sell one ounce to Thompson for $1,000, thereby supplying the requisite probable cause for his arrest. Oliveri resisted the arrest, the officers testified, and they employed only the force necessary to subdue him and effect the arrest.
By special verdicts the jury found for defendants, determining specifically that the arrest was based on probable cause, that none of the defendants had used excessive force either in making the arrest or while plaintiff was in custody, and that defendant Thompson had not signed the felony complaint maliciously.
After dismissing the jury, the trial court commented that:
this plaintiff [Oliveri], in my opinion, he lied, committed perjury beyond a reasonable doubt and if I thought that he was a normal individual I might very well have this record sent to the United States Attorney for possible prosecution. There is something wrong with this plaintiff and he may very well be a danger to the community as well as to himself, but there is no question in my mind, that he committed perjury.
Mind you, in my humble opinion, if there were no tape of the proof of what went on that would have been enough but to have them on tape and when it was argued that he spoke the same way on August 26 on the tape as he did when he testified in his slow and holding manner, when the tape was played I had forgotten the tempo. There was no question he was negotiating like a real drug dealer, no hesitation there.
On direction of the court the clerk entered judgment ...