Sofaly v. Portfolio Recovery Associates

Affirming Rule 11 and inherent-authority sanctions against debt-defense counsel, the Third Circuit reaffirmed that Rule 11 imposes a duty of candor, and that this duty reaches pre-litigation correspondence once it is incorporated into and attached to a complaint under Rule 10(c). The Court further held that Rule 11 applies to pleadings originally filed in state court when counsel “later advocates” them in federal court after removal. On inherent authority, the Court confirmed that federal courts may sanction pre-litigation conduct intended to improperly influence judicial proceedings, but reiterated that a district court should first consider whether Rule- or statute-based sanctions would suffice.