## Facts

- Jack J. Grynberg, an oil and gas businessman, sued Ivanhoe Energy, Inc., related entities, and Ivanhoe executive Robert M. Friedland in federal court in Colorado over rights associated with the Pungarayacu tar sands deposit in Ecuador.
- The complaint alleged, among other things, that Friedland personally traveled to Ecuador and bribed the Ecuadorian president to secure concessions for Ivanhoe.
- Friedland served a proposed Rule 11 motion on January 9, 2009, supported by an affidavit denying he had ever traveled to Ecuador or met Ecuadorian government officials.
- Grynberg and his counsel, Roger A. Jatko, did not withdraw or amend the challenged allegations during the 21-day safe-harbor period.
- On February 9, 2009, Friedland filed the Rule 11 motion; roughly four hours later, plaintiffs filed an amended complaint removing the allegations against Friedland and substituting allegations that unidentified Ivanhoe representatives bribed unidentified Ecuadorian officials.
- In opposing sanctions, plaintiffs asserted reliance on confidential witnesses who were allegedly afraid to come forward, but they did not provide specific information allowing the court to evaluate reliability or basis of knowledge.

## Issues

1. Whether plaintiffs and counsel violated Federal Rule of Civil Procedure 11(b)(3) by alleging that Friedland personally bribed the Ecuadorian president without evidentiary support and without a reasonable prefiling inquiry.
2. Whether sanctions should be imposed on Grynberg and his counsel, and, if so, what sanction was appropriate under Rule 11(c).

## Decision

- The court granted the Rule 11 motion in part and denied it in part.
- The court found a Rule 11(b)(3) violation as to the allegation that Friedland personally traveled to Ecuador and bribed the Ecuadorian president.
- The court sanctioned Grynberg and Jatko jointly and severally under Rule 11(c).
- The sanction was limited to Friedland’s total expenses, including attorneys’ fees, incurred in filing the Rule 11 motion; Friedland was directed to submit documentation and plaintiffs were given time to respond to the amount.

## Legal Principles

- By presenting a pleading, an attorney or party certifies that factual contentions have evidentiary support or, if specifically identified, will likely have evidentiary support after reasonable investigation or discovery. Fed. R. Civ. P. 11(b)(3).
- Extraordinary accusations of serious misconduct against a named individual require an objectively reasonable factual basis and a reasonable prefiling inquiry; vague reliance on unidentified sources, without a concrete proffer supporting reliability and knowledge, may be insufficient.
- Failure to withdraw or correct challenged allegations within Rule 11’s safe-harbor period may support sanctions even if an amended pleading is filed after the motion is filed.
- Rule 11 sanctions must be tailored to deter and may be limited to the fees and costs caused by the violation; joint and several liability may be imposed when both client and counsel are responsible for the filing and maintenance of unsupported allegations.

## Conclusion

The district court held that plaintiffs and their counsel violated Rule 11(b)(3) by pleading an unsupported allegation that Friedland personally bribed Ecuador’s president, and it imposed joint-and-several monetary sanctions limited to the fees and costs Friedland incurred in bringing the Rule 11 motion.


Grynberg v. Ivanhoe Energy, Inc., 663 F. Supp. 2d 1022 (D. Colo. 2009)