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CORPORATE PRINTING CO. v. NEW YORK TYPOGRAPHICAL U

February 1, 1995

THE CORPORATE PRINTING COMPANY, INC., Plaintiff(s), against NEW YORK TYPOGRAPHICAL UNION NO. 6, Defendant(s).


The opinion of the court was delivered by: SONIA SOTOMAYOR

 SONIA SOTOMAYOR, U.S.D.J.

 ORDER AND OPINION

 By Opinion and Order dated July 14, 1994 (the "Opinion"), I confirmed an Opinion and Interim Arbitration Award dated July 1, 1993 of Impartial Arbitrator John E. Sands (the "Award") in favor of Respondent, New York Typographical Union No. 6 (the "Union"). The Corporate Printing Company, Inc. v. New York Typographical Union, 1994 U.S. Dist. LEXIS 9728, 1994 WL 376093 (S.D.N.Y. July 14, 1994) (hereinafter, the "Opinion"). In the Opinion, I stated that the baseless nature of Petitioner Corporate Printing Company, Inc.'s ("CPC") challenge to the Award appeared to warrant the imposition of sanctions. Id. at *17-19. I reserved decision on the question of sanctions, however, pending further briefing and an accounting by Respondent of its attorneys fees and costs. Id. at *19-20. I held oral argument on the sanctions question generally and in particular on the question of against whom sanctions should be imposed, i.e., CPC, the firm retained to represent it, or the attorney who signed the pleadings at issue.

 Petitioner CPC and its attorneys now move for reconsideration of my decision confirming the Award, and urge me not to impose sanctions. In the alternative, CPC and its attorneys ask that I limit sanctions to a verbal reprimand.

 For the reasons discussed below, Petitioner's motion to reconsider the confirmation of the Award is denied. Respondent's motion for sanctions against counsel who signed the pleadings in this action is granted, but Respondent's request that I retain jurisdiction over the parties future conduct is denied as moot.

 BACKGROUND

 Familiarity with the Opinion is presumed and the following is only a brief recitation of those facts relevant to the matter before me.

 The Printer's League, which at the time included CPC, and the Union entered into a collective bargaining agreement effective October 4, 1975 (the "1975 Agreement"). The 1975 Agreement was scheduled to terminate in October 1985, but was modified in 1983. CPC was the sole printer-employer who did not join the 1983 accord.

 The disagreement relevant to the instant action concerns CPC's wage and benefits obligations under the 1975 Agreement, in light of CPC's withdrawal from the Printers League in 1977, and CPC's subsequent refusal to adopt the 1983 modification. The sections of the 1975 Agreement at issue are referred to as the "Special Agreement." The Special Agreement ensured "income" and other benefits for certain named employees (the "guaranteed employees") so long as those employees remained members of the bargaining unit. In 1986, however, CPC unilaterally changed the wages and benefits of the guaranteed employees.

 CPC and the Union have been involved in litigation and arbitration spanning several years, during which time CPC has vigorously contested its responsibilities under the 1975 Agreement. A fuller description of this history is contained in the Opinion. Id. at *1-3, *7-8. Following completion of the arbitration, the Award was issued in favor of the Union. In the Award, Arbitrator Sands found that the income guarantee in the Special Agreement was clear and unambiguous, and that the income guarantee survived the original 1985 expiration date of the 1975 Agreement and that CPC's unilateral changes in wages and benefits in 1986 violated the Special Agreement. The Award at 22-24, Exhibit A to the Verified Petition to Vacate Arbitration Award (hereinafter "Petition at Ex. A").

 In confirming Arbitrator Sands's Award, I rejected CPC's claims that the Award violated public policy, or that the Award did not draw its essence from the collective bargaining agreement. Opinion at *13-17. Moreover, I found that CPC's arguments in support of its Petition to Vacate the Award were meritless and the Petition was brought in bad faith, thereby warranting sanctions. Id. at *17-19. Subsequent to the Opinion, the parties stipulated to the sum of $ 20,000 as the measure of reasonable attorneys' fees incurred by the Union in opposing Petitioner's Petition to Vacate the Award. Respondent's Memorandum In Support of Costs, p.2 n.1. The stipulation was made without prejudice to CPC's claim that sanctions against it or its attorneys are unwarranted.

 DISCUSSION

 The Scope of Sanctions

 Generally, sanctions are permissible under Rule 11 of the Federal Rules of Civil Procedure ("Rule 11"), 28 U.S.C. § 1927 ("§ 1927"), and the court's "inherent power". See U.S. v. Int'l Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America, AFL-CIO, 948 F.2d 1338, 1344 (2d Cir. 1991); see also Oliveri v. Thompson, 803 F.2d 1265 (2d Cir. 1986), cert. denied sub nom. Suffolk County v. Graseck, 480 U.S. 918, 94 L. Ed. 2d 689, 107 S. Ct. 1373 (1987). Although these three sources for sanctions apply different standards, all turn on a finding that a party has abused the judicial system.

 Under the "inherent power" doctrine, attorneys' fees can be imposed when the losing party has continued an action "in bad faith, vexatiously, wantonly, or for oppressive reasons." Oliveri, 803 F.2d at 1272 (citations omitted). Similarly, § 1927 permits the imposition of sanctions upon any person who unreasonably multiplies proceedings. Id. at 1273. The "inherent power" doctrine and § 1927 both require a showing of "bad faith". Int'l Brotherhood of Teamsters, 948 F.2d at 1345. Prior to its amendment in 1993 (hereinafter "old Rule 11") *fn1" , Rule 11 permitted sanctions to be imposed upon the signor of a pleading that was either interposed in bad faith or frivolously. Oliveri, 803 F.2d at 1275.

 Whether conduct should be sanctioned is measured by the standard in effect at the time of the conduct to be sanctioned. Knipe v. Skinner, 19 F.3d 72 (2d Cir. 1994); First Interregional Equity Corporation v. Haughton, 1994 U.S. Dist. LEXIS 9477, 1994 WL 364038 (S.D.N.Y. July 13, 1994); Kraemer Export Corporation v. Peg Perego U.S.A., Inc., 1994 U.S. Dist. LEXIS 3071, 1994 WL 86357 (S.D.N.Y. March 17, 1994). Because the conduct in question here occurred prior to Rule 11's 1993 amendment, old Rule 11 applies. Nevertheless, even if a violation of old Rule 11 has occurred, the mandatory application of sanctions is no longer required because the Second Circuit has recognized the right of district courts to apply the discretion permitted under the 1993 amendment of Rule 11. Knipe, 19 F.3d at 75, 78 (under pre-amendment Rule 11 the imposition ...


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