Amorosa v. GENERAL ELECTRIC COMPANY

Background

The court had dismissed this private securities lawsuit in an opinion entered June 6, 2023. The Private Securities Litigation Reform Act requires a district 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. Rule 11 requires a signer to make a reasonable inquiry into whether a filing has adequate factual and legal support.

Defendants moved for Rule 11 sanctions against Plaintiff Dominic F. Amorosa, a lawyer who represented himself without counsel until the court dismissed the action and the sanctions motion began. Defendants relied on three grounds: Amorosa allegedly copied allegations from the complaint in a related class action and from an order documenting a Securities and Exchange Commission settlement; he pursued claims that had previously been dismissed in the related class action and in his own case; and he pursued claims that were time barred.

Court’s analysis

The court stated that Rule 11 sanctions require a high showing. Sanctions may be imposed only when the attorney’s conduct was objectively unreasonable and it should have been plainly obvious to a lawyer familiar with the law that the action was frivolous. Courts must resolve doubts in favor of the person who signed the filing.

The court identified the copying allegations as Defendants’ strongest argument. It had previously said that Amorosa had a personal, nondelegable duty to verify the truth and legal reasonableness of his filings. The court also noted, however, that some 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 plainly obvious that the action was frivolous.

The court also rejected the other two grounds for sanctions. Regarding the previously dismissed claims, the court accepted Amorosa’s explanation that he believed he needed to continue asserting them to preserve issues for appeal. Regarding the allegedly late claims, the court found that Amorosa had offered a non-frivolous, although unsuccessful, theory that the claims were timely.

Ruling

Judge Jesse M. Furman declined to impose sanctions and denied Defendants’ motion. The court expressly warned Amorosa that sanctions might be appropriate if he brought additional suits based almost entirely on allegations from sources outside his personal knowledge or on claims with the same legal defects identified in the court’s orders. The Clerk of Court was directed to terminate ECF No. 40.