The New Jersey Superior Court, Appellate Division, upheld an imposition of sanctions against a plaintiff’s attorney for pursuing frivolous litigation against his client’s former employer. Carolyn Baynes filed a sexual harassment complaint in November 2003 against her supervisor, Darryl Denman. Thereafter, Baynes received obscene and threatening correspondence, warning her to “keep [her] mouth shut” prompting her to file, with the local police, a complaint against Denman. Three years later, in May 2007, the company terminated Denman’s employment.
On June 25, 2007, Denman filed a complaint against the company, Baynes, and another employee, Thomas Kiernan. Denman asserted causes of action alleging violations of the New Jersey Law Against Discrimination, intentional infliction of emotional distress, and tortious interference with a contractual relationship, claiming that the company terminated his employment because it attributed authorship of the threatening correspondence to him. Without any evidentiary basis, Denman claimed that Kiernan, who also worked for the company at the time, authored and sent the threatening letters to Baynes “for the purpose of falsely implicating [Denman].”
Kiernan’s attorney sent seven letters to Denman’s counsel, demanding dismissal of the complaint as frivolous litigation. Specifically, the communications to counsel noted that Denman’s claims were both untimely and lacked evidentiary support. Denman’s counsel refused to dismiss the complaint against Kiernan.
Thereafter, in November 2007, Kiernan filed a motion to dismiss and sought an award of sanctions and fees. On July 29, 2008, the trial judge dismissed the complaint against Kiernan in its entirety. Furthermore, despite finding that Denman’s counsel did not engage in bad faith, the court imposed sanctions against Denman’s attorney for attorneys’ fees related to the time-barred claims because Kiernan had provided Denman’s counsel with proper notice of the statute of limitations issue.
On appeal, Denman’s counsel argued that the trial court abused its discretion in imposing sanctions despite a finding that counsel had acted in good faith. The Appellate Division noted that, in order to impose sanctions upon a party for pursuing frivolous litigation, the judge must find (1) that the non-prevailing party continued to pursue litigation in bad faith, or (2) that the non-prevailing party knew or should have known that its pursuit of litigation “was without any reasonable basis in law or equity.” Although Denman did not act in bad faith, he did pursue litigation of time-barred claims despite receiving notice that the statute of limitations had expired. Therefore, the Appellate Division affirmed the trial court’s imposition of sanctions as to the untimely claims.
This case demonstrates that, under certain circumstances, New Jersey courts will impose sanctions on attorneys who pursue frivolous claims, including those that lack evidentiary support or are untimely. Further, this decision highlights the need to provide written notice to counsel of any deficiencies in the complaint prior to seeking sanctions relating to such deficiencies.