Amorosa v. GENERAL ELECTRIC COMPANY

Background

The court had dismissed this private securities action in an opinion and order entered June 6, 2023. The Private Securities Litigation Reform Act required the court, at the end of a private securities action, to make findings about each party’s and attorney’s compliance with Rule 11(b) of the Federal Rules of Civil Procedure. The court therefore invited motions seeking Rule 11 sanctions.

The defendants moved for sanctions against Plaintiff Dominic F. Amorosa, a lawyer who represented himself in the action until the court dismissed it and the sanctions motion was initiated. They identified three grounds: Amorosa allegedly used allegations from the operative complaint in a related class action and from an order memorializing a settlement with the Securities and Exchange Commission; he continued pursuing claims that had previously been dismissed in the related class action and in his own case; and he pursued claims that the defendants argued were time barred.

Rule 11 standard

Rule 11 imposes a duty on an attorney to make a reasonable inquiry into whether a pleading is legally and factually supportable before signing it. The court stated that Rule 11 also applies to self-represented litigants. Because sanctions can discourage legitimate legal creativity and advocacy, the standard is high. Sanctions require objectively unreasonable conduct, and the frivolousness of the action must have been patently obvious to an attorney familiar with the law. The court must resolve doubts in favor of the person who signed the filing.

Court’s analysis

The court identified the alleged wholesale copying as the defendants’ strongest argument. It had previously found that Amorosa’s use of allegations from the related class action, including allegations from confidential witnesses with whom he had not spoken, and from the Securities and Exchange Commission settlement order did not satisfy his personal, nondelegable duty to validate the truth and legal reasonableness of his filings.

Nevertheless, the court noted that several decisions could be read to allow litigants to use allegations drawn from other complaints. Those decisions did not save Amorosa’s claims, but they prevented the court from finding that it should have been patently obvious that the action was frivolous.

The court also rejected the defendants’ other two grounds for sanctions. Regarding the previously dismissed claims, the court credited Amorosa’s explanation that he believed he had to continue asserting those claims to preserve issues for appeal. Regarding the allegedly time-barred claims, the court found that Amorosa had offered a non-frivolous, although unsuccessful, theory explaining why he believed the claims were timely. The court again concluded that it could not find the action obviously frivolous under the Rule 11 standard.

Disposition

Judge Jesse M. Furman declined to impose sanctions and denied the defendants’ motion. The court expressly warned Amorosa that sanctions may be appropriate if he files additional suits of this nature, meaning suits based nearly entirely on allegations drawn from sources outside his personal knowledge or claims with the same legal deficiencies identified in the court’s orders. The Clerk of Court was directed to terminate ECF No. 40.