## Facts

- Business Guides, Inc. published trade directories and inserted deliberate false entries (“seeds”) to detect copying by competitors.
- Business Guides sued Chromatic Communications Enterprises, Inc. and Michael Shipp in federal court alleging copyright infringement and related claims and sought a temporary restraining order (TRO).
- The TRO application was signed by both Business Guides’ counsel and Business Guides’ president; supporting materials asserted that Chromatic’s directory contained ten seeded entries copied from Business Guides.
- After the court requested specifics about what was false in each cited listing, further checking showed several alleged seeds were not false as claimed.
- The district court found there was no factual basis for the copyright/TRO request once the listings were examined and concluded Business Guides had not made a reasonable inquiry before signing the TRO papers and a supplemental affidavit.
- The district court imposed monetary sanctions under Federal Rule of Civil Procedure 11 on Business Guides (the corporate party); the Ninth Circuit affirmed.

## Issues

1. Whether Federal Rule of Civil Procedure 11 applies to a represented party who signs a pleading, motion, or other paper.
2. Whether Rule 11 requires an objective “reasonable inquiry” by a represented party who signs, rather than a subjective good-faith standard.
3. Whether the district court acted within its discretion in sanctioning the corporate party based on signatures by its officers on TRO-related filings lacking adequate factual support.

## Decision

- The Supreme Court affirmed the Ninth Circuit in a 5–4 decision authored by Justice O’Connor.
- Rule 11 applies to represented parties who sign court papers; a represented party’s signature can violate Rule 11 even if not required.
- Rule 11 imposes an objective standard of reasonable inquiry on any signer—attorney or party.
- The district court did not abuse its discretion in sanctioning Business Guides because its officers signed filings without conducting a reasonable factual investigation into the alleged “seeds.”

## Legal Principles

- Under Rule 11, the signature of an attorney or party certifies that, after reasonable inquiry, the paper is well grounded in fact and warranted by existing law or a nonfrivolous argument for change.
- The Rule’s “attorney or party” language includes represented parties; reading it to exclude represented signers is inconsistent with the text.
- Rule 11’s reasonable-inquiry requirement is objective; subjective good faith does not satisfy the certification duty.
- Sanctions may be imposed on the person who signed the violating paper, including a party (such as a corporation) acting through a signing officer, when filings for relief lack adequate factual support.

## Conclusion

The Court held that Rule 11’s objective reasonable-inquiry obligation applies to represented parties who sign litigation papers, and it upheld monetary sanctions against a corporate plaintiff whose officers signed TRO submissions without an adequate factual basis for the asserted infringement claims.


Business Guides, Inc. v. Chromatic Commc’ns Enters., Inc., 498 U.S. 533 (1991)