## Facts

- The International Powerlifting Federation (IPF) governed international powerlifting, with the United States Powerlifting Federation (USPF) as its U.S. affiliate; the American Powerlifting Federation (APF) was a competitor.
- IPF rules barred lifters who competed in non-IPF-sanctioned events from IPF international championships.
- Two lifters, including Ernie Frantz, were disqualified from IPF competition after participating in APF events.
- The lifters and APF sued IPF, USPF, and Conrad Cotter (USPF’s president), alleging antitrust violations and a conspiracy to monopolize the sport.
- IPF did not appear, and a default judgment was entered against it.
- The district court dismissed the initial complaint against USPF and Cotter under Rule 12(b)(6) after plaintiffs’ counsel conceded the complaint was insufficient.
- Plaintiffs filed an amended complaint against USPF alone; the district court again dismissed under Rule 12(b)(6).
- The district court initially awarded Rule 11 attorneys’ fees to Cotter for being named in the original complaint, finding no legal or factual basis for naming him, but denied Rule 11 sanctions sought by USPF regarding the amended complaint.
- After Cotter sought approximately $44,700 in fees (including substantial fees for litigating sanctions), the district court vacated its own fee award to Cotter.
- Cotter appealed the vacatur; USPF appealed the denial of Rule 11 sanctions.

## Issues

1. What pre-filing factual and legal inquiry does Rule 11 require when naming defendants and asserting multiple theories?
2. Whether the district court erred by vacating its Rule 11 sanction award in favor of Cotter after initially finding the claim against him baseless.
3. Whether the district court erred by refusing to impose Rule 11 sanctions in favor of USPF based on the amended complaint.

## Decision

- The Seventh Circuit reversed the district court’s sanctions rulings in substance, holding that Rule 11 sanctions were warranted for naming Cotter without a legally supportable basis.
- The court agreed that established antitrust doctrine generally forecloses a conspiracy theory between a corporation and its own officer, making Cotter’s inclusion objectively unreasonable.
- The court distinguished the amended complaint against USPF as “colorable, though unsuccessful,” and not sanctionable merely because it was dismissed under Rule 12(b)(6).
- The court required careful scrutiny of the amount of any fee-based sanction, emphasizing that recoverable fees must reflect expenses reasonably incurred in responding to the sanctionable filing and not become a separate, outsized litigation.

## Legal Principles

- Rule 11 imposes an objective duty of reasonable pre-filing inquiry into both facts and law for each pleading and each claim.
- In a multi-claim pleading, each claim and each named defendant must independently satisfy Rule 11’s requirement of being well grounded in fact and warranted by existing law (or a nonfrivolous argument to change the law).
- Filing in disregard of settled, controlling legal rules can warrant sanctions even at the pleading stage.
- A claim’s failure under Rule 12(b)(6) does not, by itself, justify Rule 11 sanctions; the question is objective unreasonableness at the time of filing.
- Fee-based sanctions must be calibrated to the reasonable costs caused by the violation; courts should police overbilling and disproportionate sanctions litigation.

## Conclusion

The Seventh Circuit treated Rule 11 as requiring competent pre-filing legal research and factual investigation for each claim and defendant, approved sanctions where a corporate officer was sued on a legally foreclosed conspiracy theory, and insisted that any fee award be limited to reasonable expenses attributable to the sanctionable conduct.


Frantz v. U.S. Powerlifting Fed'n, 836 F.2d 1063 (7th Cir. 1987)