The Court of Appeals for the Fifth Circuit affirmed a lower court’s sanctions for costs under Rule 11 because the plaintiff improperly pursued a course of action to delay the case and increase the costs of litigation. In Federal Deposit v. Maxxam, 523 F.3d 566 (5th Cir. 208), the court considered the imposition of Rule 11 sanctions for the filing of a frivolous lawsuit as well as for discovery abuses. Rule 11 (b)(1) states that by filing a pleading, motion or other paper, a party is certifying that it is “not being presented for any improper purpose, such as to harass, cause unnecessary delay, or needlessly increase the cost of litigation.” The Court of Appeals held that the district court improperly applied Rule 11 to the filing of the lawsuit. However, the Court upheld the award of sanctions for the actions of the plaintiff which were being used to pressure the defendants to settle. The court said,
“Despite the lack of an improper purpose as the “but for” motivation behind the suit, we affirm the district court’s finding of improper purpose because its finding that the FDIC pursued the litigation with redwoods in mind and with a motivation of increasing the costs of litigation and forcing settlement was not clearly erroneous. The court found, for example, that the FDIC “did not admit that it was withholding documents” initially, delayed producing the privilege log, failed to identify many documents and disclosures that it kept in a warehouse, and “impeded the depositions of its officials.” Indeed, there is evidence in the record showing that the FDIC engaged in various strategies in several forms to “pressure” Defendants.” (p. 587)