1-10 Industry Associates, LLC v. United States

The Federal Circuit reversed and remanded an order of the U.S. Court of Federal Claims imposing sanctions on the sanctioned party-appellant, an attorney who represents the government in a contract dispute between the plaintiff and the U.S. Postal Service, for breach of the duty of candor under Rule 11 of the court's rules. The plaintiff sued the government in the Court of Federal Claims for unpaid electric charges under a real estate lease; the government counterclaimed for unauthorized electric charges, and the plaintiff moved to dismiss the counterclaim as untimely. During the course of a telephonic hearing to address the plaintiff's motion, the trial court became concerned that the sanctioned party-appellant had misled the court about the date in which the government learned the facts on which its counterclaim was based, and it ordered the sanctioned party-appellant to show cause why he had not violated Rule 11. The court held that the trial court erred in failing to include in the show cause order notice of its belief that the sanctioned party-appellant's alleged misconduct in a prior case provided evidence of a pattern of misconduct. The court further held that the trial court erred in its conclusion that the sanctioned party-appellant misrepresented the government's knowledge when it first became aware of the grounds for the counterclaim, finding that the trial court knew the facts that the sanctioned party-appellant allegedly failed to disclose and, therefore, could not have been misled.