## Facts

- George Hadges, a licensed harness racehorse driver, trainer, and owner, was reinstated by the New York State Racing and Wagering Board after a suspension.
- Yonkers Racing Corp. (YRC), operator of Yonkers Raceway, refused to permit Hadges to race at Yonkers despite his reinstated state license.
- In an earlier federal § 1983 action, YRC obtained summary judgment on the ground that its exclusion of Hadges was not state action; that judgment was affirmed on appeal.
- Hadges later brought a separate federal action seeking relief from the earlier judgment under Federal Rule of Civil Procedure 60(b), alleging YRC committed “fraud on the court” through an affidavit by YRC’s general manager that the court had understood to indicate Hadges could work at other tracks.
- Hadges relied in part on later events involving a New Jersey racetrack and an affidavit suggesting the New Jersey operator had acted in reliance on YRC’s ban.
- In support of Rule 60(b) relief, Hadges and his counsel, William M. Kunstler, filed affidavits asserting Hadges had not worked for several years and omitted disclosure of related prior New York state-court litigation concerning alleged industry-wide exclusion.
- YRC produced evidence that Hadges had raced at another track during the relevant period, contradicting statements that he had not worked.
- Hadges also submitted a document presented as showing a post-reinstatement exclusion by the Racing Board; YRC demonstrated the document concerned an earlier, pre-reinstatement event.
- The district court denied Rule 60(b) relief, imposed Rule 11 sanctions on Hadges, and censured Kunstler; it later denied reargument.

## Issues

1. Whether the district court abused its discretion in denying Rule 60(b) relief based on an alleged fraud on the court connected to YRC’s affidavit in the earlier action.
2. Whether Rule 11 sanctions against Hadges and a censure of Kunstler were procedurally valid in light of Rule 11’s service-and-timing (“safe-harbor”) requirements.
3. Whether the alleged misstatements and omissions in the affidavits warranted Rule 11 sanctions against a represented party and counsel under the “reasonable inquiry” standard.

## Decision

- The Second Circuit affirmed the denial of Rule 60(b) relief.
- The Second Circuit reversed the Rule 11 sanction against Hadges and vacated the censure of Kunstler.
- The court held the alleged “fraud on the court” was not established because later developments at a different racetrack did not retroactively make the earlier affidavit fraudulent, and the record did not show concealment of a conspiracy affecting the earlier adjudication.
- The court concluded sanctions could not stand because the Rule 11 motion practice failed to comply with the rule’s safe-harbor procedure, and the record did not justify sanctions under Rule 11’s substantive standards.
- The court disapproved personal judicial remarks made in connection with the censure.

## Legal Principles

- Rule 60(b) relief for “fraud on the court” is reserved for extraordinary misconduct that seriously affects the integrity of the adjudicative process; later-arising facts ordinarily do not prove fraud in prior submissions absent proof of material deception at the time.
- Appellate review of a denial of Rule 60(b) relief is for abuse of discretion.
- Rule 11 sanctions require strict compliance with procedural prerequisites, including service and a safe-harbor period allowing withdrawal or correction before a sanctions motion is filed or presented for decision.
- Under Rule 11, an attorney’s duty is to conduct a reasonable inquiry under the circumstances; counsel may rely on client representations when supported by available information, and sanctions are improper where the record provides evidentiary support for the filing.
- Sanctions are not warranted merely because some statements prove inaccurate; the court must assess reasonableness, evidentiary support, and the rule’s procedural protections.

## Conclusion

The Second Circuit held that the asserted inconsistency between an earlier affidavit and later events did not show a fraud on the court sufficient to reopen a final judgment under Rule 60(b), but it vacated Rule 11 sanctions and a censure because the safe-harbor procedure was not satisfied and the record did not support imposing punitive measures under the reasonable-inquiry standard.


Hadges v. Yonkers Racing Corp., 48 F.3d 1320 (2d Cir. 1995)