Pacific Legal Foundation v. Kayfetz Brief of Amici Curiae

    No. 92-1544

In The
Supreme Court of the United States

October Term, 1992

Pacific Legal Foundation ,

Pa u l  Kay fetz; Victor A moroso;
Diana  Lopez Farnsw orth; Doris Elaine LeM ie u x ; 

Jack Bow en  McClellan; William Nim a n ; 
Orville Schell; M argueritte Harris; Judith Weston;

AND BOLINAS COMMUNITY PUBLIC UTILITY DISTRICT,

Petition for Writ of Certiorari to the 
United States Court of Appeals 

for the Ninth Circuit

BRIEF OF AMICI CURIAE 
NEW ENGLAND LEGAL FOUNDATION 
and ATLANTIC LEGAL FOUNDATION 

IN SUPPORT OF PETITIONER

Petitioner,
v.

Respondents.

Of Counsel;
Martin Kaufm an  
Douglas Foster 
Atlantic Legal Foundation 
205 E. 42nd St. 9th FI. 
New York, NY 10017 
(212) 573-1960

Stephen S. Ostrach  
(Counsel of Record) 

Patrick w . Hanifln 
New England Legal 

Foundation 
150 Lincoln Street 
Boston, MA 02111 
(617) 695-3660



MOTION FOR LEAVE TO FILE BRIEF AMICI CURIAE

Pursuant to Rule 36.1 of the Rules of the Supreme Court, 
the New England Legal Foundation ("NELF”) and the Atlantic 
Legal Foundation ("ALF") move this Court for leave to file its 
brief amicus curiae (bound with this motion) in support of the 
petition for writ of certiorari.

NELF is a not-for-profit public interest legal organization. 
Since its founding in 1977, NELF’s mission has been to use 
litigation to promote free market values and to protect the 
economic rights and freedoms of New England’s citizens. NELF 
locates and litigates, without charging a fee, precedent-setting cases 
involving individual and corporate economic and property rights 
and unconstitutional or illegal government regulation of economic 
activity. NELF is funded by tax-deductible contributions from 
businesses, charitable foundations and individuals.

ALF is a public interest law organization whose mandate 
is to present balanced articulation of the public interest in cases that 
involve issues of law that are likely to have broad impact beyond 
the interests of the particular litigants, or that have public policy 
implications or are of significance in the development of principles 
of constitutional law. ALF has appeared before this Court, lower 
federal courts in several circuits, and state courts in many states as 
counsel for parties, intervenors, and amici in numerous cases 
involving issues of public interest, public policy and constitutional 
law. ALF represents individuals, civic and business organizations, 
small businesses, and on rare occasion, sizeable enterprises, in 
litigation, always without charging legal fees.

Because, like Petitioner Pacific Legal Foundation, NELF 
and ALF are engaged in litigating novel of theories of law which 
often depend for their success on persuading the courts to change 
prior law, Amici fear that the decision below, if allowed to stand, 
will create a risk that they, too, could be sanctioned for activities 
which are fully protected by the First Amendment.

NELF and ALF have requested the consent of the parties 
to the filing of their amicus brief in support of the petition for 
certiorari. The Petitioner, Pacific Legal Foundation, has consented, 
as evidenced by the letter from its counsel, Sidley & Austin, 
attached to the filing letter enclosed herewith. The Respondents 
have declined to give its consent.



.Amici believes that it will present arguments in favor of 
granting certiorari which will not be presented by the parties to this 
action. Amici offer a broader perspective as to how the decision 
of the courts below will affect the practice of public interest law 
and the First Amendment rights of non-profit public interest 
organizations engaged in law reform litigation.

For the foregoing reasons, NELF and ALF pray that this 
Court grant their motion for leave to file the accompanying brief 
amici curiae.
DATED: Boston, Massachusetts: April 19, 1993.

Respectfully submitted,
New England Legal Foundation 
By its attorneys,

Stephen S. Ostrach 
(Counsel of Record)

Patrick w . FIanifin
New England Legal Foundation
150 Lincoln St.
Boston, MA 02111 
(617) 695-3660



No. 92-1544

In The
Supreme Court of the United States

October Term, 1992

Pacific Legal Foundation ,

Pa u l  Kayfetz; Victor a m o r o so :
D iana Lopez Farnsworth; Doris Elaine leMieux; 

Jack Bowen McClellan; William Niman; 
Orville Schell; Margueritte Ha rris; Judith Weston;

AND BOLINAS COMMUNITY PUBLIC UTILITY DISTRICT,

Petition for Writ of Certiorari to the 
United States Court of Appeals 

for the Ninth Circuit

BRIEF OF AMICI CURIAE 
NEW ENGLAND LEGAL FOUNDATION 
and ATLANTIC LEGAL FOUNDATION 

IN SUPPORT OF PETITIONER

Petitioner,
v.

Respondents.

Of Counsel:
Martin Ka ufm an  
Douglas Foster 
Atlantic Legal Foundation 
205 E. 42nd St. 9th FI. 
New York, NY 10017 
(212) 573-1960

Stephen S. Ostrach 
(Counsel of Record) 

Patrick W. Hanifin 
New England Legal 

Foundation 
150 Lincoln Street 
Boston, MA 02111 
(617) 695-3660



TABLE OF CONTENTS

INTEREST OF AMICI ..............................................................  1

STATEMENT OF THE C A SE ..................................................  2

SUMMARY OF ARGUMENT..................................................  3

REASONS FOR GRANTING THE WRIT .............................  3
I. FIRST AMENDMENT PRINCIPLES REQUIRE A COURT

to Apply Specific Rules before  resorting  to 
V ague "Inherent Powers" to Sanction  a Non- 
Profit Organization Litigating a  Public

Interest Ca se ......................................................................  3
A. Public Interest Litigation is Political Speech

Protected by the First Amendment...................  3
B. The Government Can Restrict Public Interest

Litigation Only by Specific Regulations Tightly- 
Focused on Misconduct Unprotected by the 
Constitution...........................................................  4

C. A Court Should Use Its "Inherent Powers" to
Sanction Misconduct in Public Interest 
Litigation Only as a Last Resort.........................  5

D. The Misconduct Alleged in this Case was
Attorney Misconduct Which Could Have Been 
Sanctioned Under Rule 11 and 28 U.S.C. 
§1927................................................................... 9

II. U nless Re v e r se d , the d e c isio n  b e l o w  W ill

Ha v e  a  Chilling  Effect o n  P u b l ic  Interest

litigation  N a tio n w id e ......................................................  12

CONCLUSION..........................................................................  14



11

TABLE OF AUTHORITIES

CASES

Bates v. State Bar of Arizona,
433 U.S. 350 (1977) ......................................................  5,7,

Chambers v. NASCO, 501 U.S. —, 111 S.Ct. 2123,
115 L.Ed. 2d 27, 44-45 (1991) ........................................  5-8,

In re Primus, 436 U.S. 412 (1978) .......................  4-5, 7-11,

Keller v. State Bar of California, 496 U.S. 1 (1990) ............

Lockary v. Kayfetz, 917 F.2d 1150 (9th Cir. 1990) ............  9-

Lucas v. South Carolina Coastal Commission,
— U.S. —, 112 S.Ct. 2286 (1992)..........................................

NAACP v. Button, 371 U.S. 415 (1 9 6 3 )................  4-5, 7-11,

New York Times v. Sullivan, 376 U.S. 254 (1964)............  8,

Nollan v. California Coastal Commission,
483 U.S. 825 (1987) ..................................................................

Ohralik v. Ohio State Bar Association,
436 U.S. 447 (1978) ......................................................  5,1,

Roadway Express, Inc. v. Piper, 447 U.S. 752 (1980) .........

United States v. Hudson, 7 Cranch (11 U.S.) 32 (1812) . . . .

United Transportation Union v. Michigan Bar,
401 U.S. 576 (1971) ................................................................

13

11

13

4

•11

10

13

11

. 4

11

. 6

. 5

. 4



STATUTES

28 U.S.C. §1927 ................................................................. 3, 6-13

OTHER AUTHORITIES

Fed. R. Civ. P. 11 .............................................................. passim

Notes of Advisory Comm, on Rules. Federal Civil
Judicial Procedure and Rules 36 (West, 1991)..........................6



No. 92-1544

In The
Supreme Court of the United States

October Term, 1992

Pacific Legal Foundation ,
Petitioner,

v.
Paul  Kayfetz; V ictor am oroso:

D iana Lopez Farnsworth; D oris Elaine LeMieux;
Jack Bowen McClellan; William N iman;

Orville Schell; Margueritte Harris: Judith Weston; 
and  Bolinas Community Public  utility District,

Respondents.

Petition for Writ of Certiorari to the 
United States Court of Appeals 

for the Ninth Circuit

BRIEF OF AMICI CURIAE 
NEW ENGLAND LEGAL FOUNDATION 
and ATLANTIC LEGAL FOUNDATION 

IN SUPPORT OF PETITIONER

INTEREST OF AMICI

The New England Legal Foundation ("NELF")is a not-for-pro­
fit public interest legal organization. Since its founding in 1977, 
NELF’s mission has been to use litigation to promote free market 
values and to protect the economic rights and freedoms of New 
England’s citizens. NELF locates and litigates, without charging 
a fee, precedent-setting cases involving individual and corporate 
economic and property rights and unconstitutional or illegal govern­
ment regulation of economic activity. NELF is funded by tax-de­
ductible contributions from businesses, charitable foundations and 
individuals.



2

The Atlantic Legal Foundation ("(ALF") is a public interest 
law organization whose mandate is to present balanced articulation 
of the public interest in cases that involve issues of law that are 
likely to have broad impact beyond the interests of the particular 
litigants, or that have public policy implications or are of signifi­
cance in the development of principles of constitutional law. ALF 
has appeared before this Court, lower federal courts in several 
circuits, and state courts in many states as counsel for parties, 
intervenors, and amici in numerous cases involving issues of public 
interest, public policy and constitutional law. ALF represents 
individuals, civic and business organizations, small businesses, and 
on rare occasion sizeable enterprises, in litigation, always without 
charging legal fees.

Because, like Petitioner Pacific Legal Foundation ("PLF"), 
NELF and ALF are engaged in litigating novel of theories of law 
which often depend for their success on persuading the courts to 
change prior law. Amici fear that the decision below, if allowed to 
stand, will create a risk that they, too, as well as many other public 
interest organizations, could be sanctioned for activities which are 
fully protected by the First Amendment. Even the prospect of 
sanctions chills the exercise of their First Amendment rights.

Pursuant to Supreme Court Rule 37.2, NELF and ALF have 
obtained consent for the filing of this amicus brief from counsel for 
the Petitioner. Counsel for the Respondents has not consented, so 
a motion for leave to file this brief has been filed herewith.

STATEMENT OF THE CASE

Amici accept and adopt the Petitioner’s Statement of the
Case.1

1Amici take no position on the specifics of the actions for which PLF 
was sanctioned. Amici’s knowledge of the facts of this action is limited 
to the discussions contained in the Petition and Appendix. Accordingly, 
Amici are unable to take any position as to whether the conduct of PLF’s

(continued...)



SUMMARY OF ARGUMENT

The issue of national importance at stake in this case is in 
what circumstances a trial court may resort to vaguely defined "in­
herent powers" to sanction alleged misconduct by a public interest 
law foundation in the conduct of public interest litigation concern­
ing constitutional rights. Such litigation is political speech fully 
protected by the First Amendment against the chilling effect of 
vague and overbroad governmental action, including judicially im­
posed sanctions. A court should use its "inherent powers" only 
after finding that more precisely defined rules and statutes are 
inadequate due to an attorney’s or a party’s bad faith tactics. In 
this case, even if there were genuine misconduct, the court could 
have completely resolved the matter by applying Fed. R. Civ. P. 11 
and 28 U.S.C. §1927. Unless reversed, the decision below will 
have a chilling effect on the efforts of many non-profit public inter­
est law organizations, including Amici, to mount novel and difficult 
legal challenges to government action that threatens the rights of 
.Americans.

REASONS FOR GRANTING THE WRIT

I. First A mendment Principles Require A Court to apply  
Specific rules  before Resorting to Vague "Inherent 
Powers" to Sanction a No n -Profit Organization  
Litigating a  Public Interest Ca se .

A. Public /merest Litigation is Political Speech Protected by
the First Amendment.

‘(...continued)
attorney-employees was sanctionable. Amici contend that, even assuming 
arguendo the correctness of the findings of the magistrate and trial court, 
the courts below committed reversible error by applying the wrong legal 
principles to those facts.



4

It is well-established that public interest litigation engaged in 
by a non-profit law organization seeking to develop or change the 
law and to protect constitutional rights is political speech entitled 
to the full protection of the First Amendment. For public interest 
organizations like the ACLU, the NAACP, PLF2 and Amici, "‘liti­
gation is not a technique of resolving private differences’; it is ‘a 
form of political expression and political association.’" In re 
Primus, 436 U.S. 412, 428 (1978), citing NAACP v. Button, 371 
U.S. 415, 429, 431 (1963). ”[C]ollective activity undertaken to 
obtain meaningful access to the courts is a fundamental right within 
the protection of the First Amendment."3 United Transportation 
Union v. Michigan Bar, 401 U.S. 576, 585 (1971).

B. The Government Can Restrict Public Interest Litigation 
Only by Specific Regulations Tightly Focused on 
Misconduct Unprotected by the Constitution.

Because non-profit public interest litigation is political speech, 
it can be regulated only by precise rules that are much more 
narrowly directed to sanctionable conduct than is required for regu­
lation of commercial litigation. "Where political expression or 
association is at issue this Court has not tolerated the degree of

2PLF’s attorneys have represented parties in many cases that involved 
novel theories of law, or required extension or elaboration of principles 
of constitutional law, or required creative and tenacious advocacy. Two 
cases of note which have reached this Court in recent years in which PLF 
attorneys argued successfully for a party challenging governmental action 
are Nollan v. California Coastal Commission, 483 U.S. 825 (1987), and 
Keller v. Stale Bar o f California, 496 U.S. 1 (1990).

Collective litigation activity is equally protected whether the rights 
sought arise under the Equal Protection Clause or under the Takings 
Clause. See Button, 371 U.S. at 440, n. 19 (citing activities of National 
Lawyers Committee, a group created to litigate challenges to economic 
regulations as precedent for First Amendment protecuon of NAACP’s 
right to litigate equal protection claims).



5

imprecision that often characterizes government regulation of the 
conduct of commercial affairs." Primus, 436 U.S. at 434, disting­
uishing Ohralik v. Ohio State Bar Association, 436 U.S. 447 
(1978). Rather, "standards of permissible statutory vagueness are 
strict in the area of free expression." Button, 371 U.S. at 432. 
"Because First Amendment freedoms need breathing space to 
survive, government may regulate in the area only with narrow 
specificity." Id. at 433.

This strict rule of precision is intended to avoid the chilling 
effect on protected political speech which would occur if speakers 
feared being penalized for speaking out in ways that might or 
might not violate vaguely defined standards. "First Amendment 
interests are fragile interests, and a person who contemplates 
protected activity might be discouraged by the in terrorem effect," 
Bates v. State Bar o f Arizona, 433 U.S. 350, 380 (1977), of, e.g., 
six-figure sanctions imposed under a court’s undefined inherent 
powers. Commercial speech, by contrast, is not "particularly 
susceptible to being crushed by overbroad regulation," Id. at 381, 
and so can be subjected to broad prophylactic rules. See Ohralik, 
436 U.S. at 455-456, 458-459.

C. A Court Should Use Its "Inherent Powers" to Sanction 
Misconduct in Public Interest Litigation Only as a Last 
Resort.

This Court has recognized that a court has "inherent powers" 
to sanction misconduct in some circumstances. The scope of these 
powers, which "necessarily result to our Courts of justice from the 
nature of their institution," U.S. v. Hudson, 7 Cranch (11 U.S.) 32, 
34 (1812), has never been delimited, although this Court has given 
some examples. See Chambers v. NASCO, 501 U.S. —, 111 S.Ct. 
2123, 115 L.Ed. 2d 27, 44-45 (1991). Indeed, a court’s inherent 
powers necessarily elude clear definition since they include the 
reserve power to deal with extraordinary circumstances not covered 
by express rules. Merely saying that attorneys, parties, and perhaps 
unspecified other persons (such as PLF), must do nothing potential­



6

ly sanctionable under a court’s "inherent powers" provides only a 
vague standard of conduct as compared to Rule 11 and §1927.

Rule 11 lays out a clearer, objective standard of reasonable 
inquiry. As this Court has pointed out. "Rule 11 was amended . . . 
precisely because the subjective bad-faith standard was difficult to 
establish." Chambers, 501 U.S. at — n.ll.  111 S.Ct. at 2133, 115 
L.Ed. 2d at 46 (1991). Rule 11, which the trial court did not find 
applicable in this case, specifically is "not intended to chill an 
attorney’s enthusiasm or creativity in pursuing factual or legal 
theories." Notes of Advisory Comm, on Rules, Federal Civil 
Judicial Procedure and Rules 36 (West, 1991). By contrast, the 
threat of sanctions under the court’s inherent powers will likely 
have such an inhibitory effect on legal innovation because it is so 
difficult for attorneys to know in advance what is proscribed.

This Court has repeatedly stressed that "because of their very 
potency, inherent powers must be exercised with restraint and 
discretion." Chambers, 501 U.S. —, 111 S.Ct. at 2133, 115 L.Ed. 
2d at 45 (1991); Roadway Express. Inc. v. Piper, 447 U.S. 752, 
764 (1980). Even as to commercial litigation, a court usually 
should apply sanctions under Rule 11 before resorting to its broader 
but vaguer inherent powers.

[Wjhen there is bad faith conduct in the course of litiga­
tion that could be adequately sanctioned under the rules, 
the court ordinarily should rely on the rules rather than 
the inherent power.

Chambers, 501 U.S. at —, 111 S.Ct. at 2136, 115 L.Ed. 2d at 48. 
This follows from the principle that "inherent powers of federal 
courts are those which are necessary to the exercise of all others." 
Roadway Express, 447 U.S. at 764 (emphasis added). Where the 
court can apply power flowing from a specific rule such as Rule 11 
or a statute such as §1927, the exercise of its inherent power is not 
"necessary." In Chambers, the sanctioned party in ordinary com­
mercial litigation engaged in complex maneuvers both in and out 
of court that deliberately "emasculated and frustrated the purposes



7

of these rules and powers of the District Court." 111 S.Ct. at 2128, 
115 L.Ed.2d at 39. In that context of deliberately evasive and 
malicious behavior this Court ruled that the court could resort di­
rectly to its inherent power because the full range of misconduct in 
and out of the courtroom could not be reached by Rule 11 and 
§19^. Id., I l l  S.Ct. at 2136, 115 L. Ed. 2d at 48-49. In such 
circ ...nstances, it would waste judicial resources to first apply Rule
II and §1927 to "discrete occurrences before invoking inherent 
power to address remaining instances of sanctionable conduct." Id.

A fortiori, when a court is supervising public interest litigation. 
First Amendment principles require that it rigorously adhere to the 
priority of specific Rule 11 and § 1927 over general inherent power. 
"Broad prophylactic rules in the area of free expression are suspect. 
[Citations omitted.] Precision of regulation must be the touchstone 
in an area so closely touching our most precious freedoms." But­
ton, 371 U.S. at 438. Accord, Primus, 436 U.S. at 434. While in 
ordinary commercial litigation such as Chambers, the profit motive 
provides some insulation against chilling effects of a court’s invo­
cation of its inherent powers, see Chambers, 501 U.S. at — n. 11,
II I  S.Ct. at 2133, 115 L.Ed. 2d at, 46, the chill is real in public 
interest litigation such as the instant case. See. id. I l l  S.Ct. at 
2145, 115 L. Ed. 2d at 60 (Kennedy, J. dissenting) (standardless 
and unchecked judicial power could be applied to chill rights of ad­
vocacy); see Bates, 433 U.S. at 383 ("since the advertiser . . .  has 
a commercial interest . . .  we have little worry that regulation to 
assure truthfulness will discourage protected speech"); compare Pri­
mus, 436 U.S. at 434, with Ohralik 436 U.S. at 458. In public in­
terest litigation, the application of the court’s inherent powers must 
be tested against the most stringent First Amendment standards.

Amici recognize, of course, that the court’s inherent powers 
continue to be available in the extraordinary case to "fill in the 
interstices" of more specific rules. Chambers, 111 S.Ct. at 2134, 
115 L.Ed. 2d at 46. Only if and after Rule 11 and § 1927 are found 
to be inadequate to control abusive litigation conducted in bad faith 
can a court decide to resort to its "ultimate weapon" -  its inherent 
powers — to control attorneys and parties who, like Mr. Chambers,



8

deliberately and in bad faith engage in a pattern of conduct 
designed to "emasculate" the court’s other powers. See Chambers, 
111 S.Ct. at 2138, 115 L.Ed. 2d at 39. No one should fear 
"chilling" the inclination to engage in such improper activities.

Given the unavoidable vagueness of inherent powers, which 
can reach misconduct not subject to Rule 11 or § 1927, fairness and 
the First Amendment require that the court sanction someone using 
its inherent powers only after first warning him that if he persists 
in specifically defined bad faith misconduct he will be sanctioned. 
Where political speech is concerned, it would not be enough for a 
court merely to threaten that past conduct may be sanctioned at the 
end of the litigation or to threaten to sanction any future mis­
conduct within the reach of its inherent powers.

"Non-profit, public interest litigation" is, of course, not a man­
tra that protects abusive litigation from all sanctions. A frivolous 
and abusive "public interest" suit is sanctionable if it is actually 
brought for a "malicious purpose or ‘for private gain serving no 
public interest,’" Primus, 436 U.S. at 437, citing Button, 371 U.S. 
at 440. A useful analogy is New York Times v. Sullivan, 376 U.S. 
254, 279-280 (1964), where this Court quoted James Madison’s 
statement that "the censorial power is in the people over the 
Government and not in the Government over the people." Id. at 
282. The same principle should apply whether a citizen’s criticism 
of government officials is expressed in a newspaper or a court. In 
New York Times, this Court ruled that a person criticizing a public 
official concerning official conduct is liable only if "the statement 
was made with ‘actual malice’ — that is, with knowledge that it 
was false or with reckless disregard of whether it was false or not". 
Where the defendant is a corporate entity, it can be held liable only 
if the individuals who decided to publish did so with actual malice. 
Id. at 287. So, too, in the context of litigation, a person should not 
be penalized unless the court makes a specific finding of "actual 
malice": knowingly and in bad faith filing a false complaint or 
other pleading which evades control by Rule 11 or §1927.



9

D. The Misconduct Alleged in this Case was Attorney 
Misconduct Which Could Have Been Sanctioned Under 
Rule 11 and 28 U.S.C. §1927.

There is no dispute that Petitioner PLF is a non-profit public 
interest organization. Nor is there any dispute that in the 
underlying case it was assisting individuals to litigate claims that 
their constitutional rights were being violated. There is no 
evidence in the record that PLF was motivated by any commercial 
or selfish interest whatsoever. Even assuming, arguendo, that PLF 
was subject to the jurisdiction of the District Court at all,4 the 
sanctions imposed on PLF must be tested against the First 
Amendment’s rules for protection of political speech. The District 
Court below erred in three respects when it resorted to its inherent 
powers without first using Rule 11 or §1927.

First, the courts below applied an excessively vague standard 
when it exercised its inherent powers. It is not sanctions per se 
that chill legitimate public interest litigation, but rather the 
impossibility of knowing what conduct ultimately will be 
sanctioned. The courts below made no finding that the underlying 
suit was brought for a "malicious purpose or ‘for private gain 
serving no public interest,”' Primus, 436 U.S. at 437 citing Button, 
371 U.S. at 440. To the contrary, the District Court did not find 
that any of the plaintiffs who brought the case deserved to be 
sanctioned. The Ninth Circuit found that there was some merit to 
the suit. Lockary v. Kayfetz, 917 F.2d 1150 (9th Cir. 1990) 
(reprinted as App. H. to Petition); A. A-19-A-20. Although the 
District Court warned counsel that if the action proved to be 
frivolous in whole or in part, the court would make someone pay 
for the defendant’s time and resources, A. C-22, there appears to 
have been no prior warning to PLF that it would be sanctioned

“PLF’s petition for certiorari points out in detail why PLF, which was 
neither an attorney nor a party, was neither subject to the court’s inherent 
power nor within its in personam jurisdiction. Amici have nothing to add 
to that discussion.



10

under the court’s inherent powers if it persisted in specifically 
defined misconduct. The decisions below thus rest entirely on ad 
hoc and post hoc determinations that bad acts occurred, a result that 
offers no guidance to attorneys who wish to evaluate their future 
conduct against the possibility of sanctions.

Second, the Ninth Circuit apparently would not have held PLF 
itself sanctionable but for PLF’s protected First Amendment activi­
ties. That court mled that PLF could be sanctioned for the alleged 
misconduct because it believed that PLF. acting through its em­
ployees. contacted and organized the plaintiffs, A. A-6; funded the 
litigation to "establish a legal precedent," A. A-13; and provided 
attorneys for merely "nominal" plaintiffs, A. A-12-13.5 But solicit­
ing clients and litigating their claims to establish a general prece­
dent are activities fully protected by the First Amendment. Button; 
Primus.

Third, avoiding an unconstitutional chill of protected political 
speech required the District Court to expend the time and effort to 
first apply the more precise standards of Rule 11 and §1927. Had 
it done so, it would have realized that, even if misconduct occurred 
below, each allegedly sanctionable act was an act of an attorney 
that could have been sanctioned under Rule 11 or § 1927 or both. 
For all but one of the matters for which the Circuit Court imposed 
sanctions, the magistrate appointed as special master found that at 
least one individual attorney could have been sanctioned under 28 
U.S.C. §1927. A. C-104-06. As to the remaining matter (the 
inverse condemnation claims of Mesa Ranch and Holter), the

5Contrary to the implication that the plaintiffs had no real stake in the 
case, the plaintiffs undisputedly did have enough of a stake to have 
standing and to give the courts Article III junsdiction to decide the case 
on the merits. See Lockary v. Kayfetz, 917 F.2d 1150 (App. H). The 
Ninth Circuit itself notes that the plaintiffs alleged that the challenged 
action of the Defendants prevented them from using valuable real 
property, A-6, an allegation which certainly gave them a substantial 
constitutional claim, see Lucas v. South Carolina Coastal Commission, — 
U.S. —, 112 S.Ct. 2286 (1992).



11

master based his conclusion entirely on pleadings filed and signed 
by individual attorneys named in his report. A. C-56-61. If these 
documents were as misleading as the master believed, then the 
attorneys who signed them could have been sanctioned under Rule 
11. Yet neither the master nor the District Court ever applied Rule 
11 to this supposed misconduct before resorting to the court’s 
sweeping inherent powers. In short, this is not a case in which, 
because "neither the statute nor the rules are up to the task.” the 
court may fall back on its inherent power.6 See Chambers, 501 
U.S. at —, 111 S.Ct. at 2136, 115 L.Ed. 2d at 48-49.

It is not enough that a sanctioning court recite that public 
interest advocacy is constitutionally protected and should not be 
chilled, as did the Ninth Circuit, A. A-14, if the court then 
proceeds to levy chilling sanctions grounded on an organization’s 
having engaged in such advocacy. See Button. 371 U.S. at 437- 
438. "This Court’s duty is not limited to the elaboration of 
constitutional principles; [it] must also in proper cases review the 
evidence to make certain that those principles can be 
constitutionally applied." Primus, 436 U.S. at 434 quoting New 
York Times v. Sullivan, 376 U.S. at 285. Accord, Ohralik, 436 U.S. 
at 463 (this Court will make independent review of record). 7

‘’Even supposing that PLF as an entity could be subject to sanctions for 
specific misconduct in the course of the litigation, PLF could have been 
sanctioned only if the individual attorneys who made its strategic 
decisions themselves acted with "actual malice," i.e. only if they filed 
papers which they knew or should have known were false. See New York 
Times v. Sullivan. If that were so, then the court could have resolved the 
matter by sanctioning the auomevs personally under Rule 11 or §1927 
with no need to use its inherent powers.

The record concerning the sanction arising from the plaintiffs’ antitrust 
claim may deserve such review. The magistrate below initially proposed 
that PLF be sancuoned for bringing an entirely frivolous suit; when the 
Ninth Circuit held that plaintiffs were entitled to a trial on the merits of 
some of their claims, Lockary v. Kayfetz, 917 F.2d at 1157, A. H-14, the

(continued...)



12

The decision below should be reversed and the trial court 
directed to apply a precise rule that safeguards First Amendment 
principles: namely, that the court not exercise its inherent powers 
unless it first apply Rule 11 and § 1927 to all actions which may be 
subject to those specific provisions and then only use its inherent 
powers as to conduct which was clearly defined in a prior warning 
and was malicious and in bad faith.

II. Unless Re v er sed , the d e c isio n  b elo w  w il l  Ha v e  a 
Chilling E ffect on Pu blic  Interest  Litig atio n  
Natio nw ide .

Despite the lip service that the courts below paid to this 
Court’s First Amendment precedents, Amici fear that unless the 
decision below is reversed it will inhibit robust public interest 
litigation throughout the country.

The Ninth Circuit decision in effect establishes a rule that 
sanctions can be imposed on an organization if it allegedly recruits 
plaintiffs and funds litigation to make new law on an issue of broad 
public importance and if misconduct allegedly occurs in the course 
of that litigation. Such a rule, although facially neutral as between 
public interest organizations and private for-profit law firms, 
actually would have a much more severe impact on public interest 
organizations. Public interest organizations are much more likely 
to recruit clients who have small stakes in a major public issue; 
who lack sufficient resources to pay substantial legal fees; who 
require the organization’s assistance in funding the litigation; and 
whose claims depend on novel legal theories too risky for private 7

7(... continued)
magistrate fell back on altemauve theories, including a proposal to 
sanction PLF for bringing the antitrust claims, which were rejected on the 
merits as contrary to established precedents, A. A-21. Petition at 4, A. M- 
6-M-10. The Ninth Circuit upheld the sanction for bringing the antitrust 
claim, apparendy because it concluded that PLF should have known that 
there was no basis for them.



13

attorneys to advance in contingency fee cases.
As this court’s decision in Button, 371 U.S. at 433, 

acknowledges, public interest organizations, which typically get no 
financial reward even if they win,8 will be relatively easily 
inhibited. Such organizations are motivated to bring cases by their 
hope to advance the law and their view of the public interest. 
However fierce a foundation’s dedication to principle, in the real 
world the prospect that it could be betting its life on the outcome 
of a single case will necessarily be a significant deterrent. The 
deterrent effect of a single huge sanction, such as PLF has suffered, 
will extend beyond that specific case to engender fear in other 
organizations considering bringing many other cases. The First 
Amendment freedoms of organizations like NAACP, PLF and the 
Amici "are delicate and vulnerable, as well as supremely precious 
in our society. The threat of sanctions may deter their exercise 
almost as potently as the actual application of sanctions.'" Button, 
371 U.S. at 433. Compare Bates, 433 U.S. at 380-81 (commercial 
litigation and advertising by for-profit firms not as susceptible to 
chill as political litigation is).

.Amici NELF and ALF and their attorneys recognize and abide 
by their clear obligations under Rule 11 and § 1927, but they fear 
that their First Amendment rights will be chilled if the Ninth 
Circuit’s decision is allowed to stand as a precedent for sweeping 
use of "inherent powers'" in their parts of the country. NELF and 
ALF often raise claims that require changing prior law to prevail. 
Their willingness to bring such suits would be inhibited if they had 
to worry about the crushing impact of heavy sanctions every time 
they plead a novel theory and vigorously advocate their clients’ 
rights. .And if firms like NELF and ALF, NAACP and ACLU. are 
silenced, ultimately it will be the public at large that will suffer a 
loss of their constitutional rights.

8A non-profit public interest law firm does not lose the full protection of 
the First Amendment if it is sometimes awarded attorneys’ fees by the 
court under, e.g. 42 U.S.C. §1988, or if contributions to the firm rise 
when it wins a case. Primus, 436 U.S. at 429-431.



14

CONCLUSION

For the reasons stated above, Amici the New England Legal 
Foundation and the Atlantic Legal Foundation respectfully request 
this Court to grant the petition for writ of certiorari and reverse the 
decision of the Ninth Circuit.
DATED: Boston, Massachusetts: April 19, 1993.

Respectfully submitted, 
New England Legal 

Foundation
Atlantic Legal Foundation 
By their attorneys,

Of Counsel:
M artin  Kau fm a n  
Douglas Foster 
Atlantic Legal Foundation 
205 E. 42nd St. 9th FI. 
New York, NY 10017 
(212) 573-1960

Stephen S. Ostrach 
(Counsel of Record) 

Patrick w . Hanifin 
New England Legal 

Foundation 
150 Lincoln Street 
Boston, MA 02111 
(617) 695-3660