## Facts

- Former employees of a Charlotte, North Carolina bakery filed a putative class action alleging Title VII racial discrimination and fraudulent misrepresentation related to the bakery’s closure.
- Pamela A. Hunter, an attorney, represented the employees and argued that the collective bargaining agreement (CBA) did not clearly and unmistakably waive employees’ rights to litigate statutory discrimination claims in court.
- Earthgrains contended the CBA required arbitration of the claims.
- The district court granted summary judgment for Earthgrains, including on the ground that the claims were subject to arbitration, relying in part on circuit precedent.
- After entering summary judgment, the district court sua sponte issued a Rule 11 show-cause order targeting counsel’s contention that the CBA did not require arbitration of the statutory claims.
- The district court imposed Rule 11 sanctions, including a five-year suspension of Hunter from practice in that district (and a reprimand of co-counsel).
- While the Rule 11 matter was pending, the Supreme Court decided *Wright v. Universal Maritime Service Corp.*, requiring a “clear and unmistakable” waiver in a CBA to compel arbitration of federal statutory discrimination claims.

## Issues

1. Whether Hunter’s legal position on arbitrability of statutory discrimination claims under the CBA was objectively frivolous under Federal Rule of Civil Procedure 11.
2. Whether the district court abused its discretion by imposing a five-year suspension from practice as a Rule 11 sanction.

## Decision

- The Fourth Circuit vacated the district court’s order suspending Hunter from practice for five years.
- The court held Hunter’s arbitrability argument was not frivolous under Rule 11 because it had a reasonable legal basis in a disputed area of law and was consistent with later Supreme Court authority.
- The court criticized the extended delay in imposing sanctions as inconsistent with Rule 11’s deterrent purpose.
- The court rejected reliance on an unrelated, older sanction history where the conduct in the present case did not warrant Rule 11 sanctions.
- The court concluded the district court applied an erroneous view of Rule 11 and imposed a disproportionate sanction, constituting an abuse of discretion.

## Legal Principles

- Rule 11 sanctions require objective unreasonableness; a position is not sanctionable merely because it loses.
- A court may not impose Rule 11 sanctions based on inadequate briefing or lack of thoroughness where the claim has some legal and factual basis.
- When the governing law is unsettled, advancing a reasonable legal argument—particularly one aligned with substantial authority—does not constitute frivolous conduct.
- Rule 11 sanctions should be timely and proportionate to serve deterrence; significant delay can weigh against severe sanctions.
- Sanctions must be supported by specific findings tied to the conduct at issue; unrelated prior discipline cannot substitute for a current Rule 11 basis.

## Conclusion

The Fourth Circuit vacated the five-year suspension because counsel’s argument against compelled arbitration of statutory discrimination claims under the CBA had a reasonable basis, and the district court’s delayed, disproportionate sanction rested on an incorrect application of Rule 11.


Hunter v. Earthgrains Co. Bakery, 281 F.3d 144 (4th Cir. 2002)