USCA1 Opinion

UNITED STATES COURT OF APPEALS

FOR THE FIRST CIRCUIT
____________________
No. 94-1870
MANUEL RODRIGUEZ O'FERRAL, ET AL.,
Plaintiffs, Appellants,
v.
TREBOL MOTORS CORPORATION, ET AL.,
Defendants, Appellees.
____________________
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
[Hon. Carmen C. Cerezo, U.S. District Judge]
___________________
____________________
Before
Torruella, Chief Judge,
___________
Boudin, Circuit Judge,
_____________
and Boyle,* Senior District Judge.
_____________________
____________________

Luiz G. Rullan with whom Limeres, Vergne, Duran & Rullan was
_______________
_________________________________
brief for appellants.
Maria del Carmen Taboas with whom Fiddler, Gonzalez & Rodrig
________________________
___________________________
was on brief for appellees.
____________________
January 27, 1995
____________________

____________________
*Of the District of Rhode Island, sitting by designation.

Per Curiam.
__________
wife

and their

action in

In

May 1991 Manuel Rodriguez-O'Ferral, his

conjugal

the district court

Motors Corp.,
1961 et seq.
_______

gist

in Puerto Rico

a civil

RICO

against Trebol

which distributes Volvos there.

18 U.S.C.

Also named were the Swedish manufacturer of the

car, its North American

The

partnership brought

of the

distributor, and officers of Trebol.

complaint

deception charge sought to be

was a

garden

variety consumer

brought within RICO by

claims

that pertinent advertising comprised mail and wire fraud.

In brief,
made two

the complaint charged that

related models, a 240

GLE with additional

to

make (or

extra features

DL and a more

features; that in 1984

at least to

model; that Trebol

DL model with

own GLE badge;

cars as GLEs;

Rodriguez and

injured when in 1986

Rico) the latter

had thereafter ordered the

cost Trebol significantly less than

price; and that

expensive 240

Volvo had ceased

export to Puerto

and attached its

had advertised these

Volvo had earlier

that Trebol

that the added

features

its mark-up over the

his wife had

they had brought one of

been duped

DL
and

these upgraded

DLs under the impression that it was a factory made GLE.

None of
occurred until
framing

the advertisements cited by

after plaintiffs

the RICO suit as a

the plaintiffs had

bought their own

car; but,

class action on behalf of 15,000

customers allegedly so deceived, plaintiffs' counsel asserted

that this

did

not

matter.

The

-2-2-

complaint

sought

treble

damages,

as permitted by RICO, 18 U.S.C.

alleged $5,000 loss

damnum to $225
______

1964(c); given an

per customer, this brought the

million.

The complaint was

total ad
__

signed by

Jose

Quetglas Jordan, one of the plaintiffs' attorneys.

The district

court ordered

the plaintiffs to

submit a

"RICO case statement," which sets forth answers to a standard

questionnaire

that the

court

by

standing order

employed in civil RICO

cases.

Bank, 948
____

n.3 (1st Cir.

F.2d 41, 44

See Miranda v.
___ _______
1991).

routinely

Ponce Federal
_____________
The

filing is

intended to adduce the specifics that underlie general claims

of

RICO misconduct.

both

by Quetglas

In

and by

extensive but it failed

this instance,

the filing--signed

co-counsel Luis

Rullan Marin--was

substantially to bolster the general

claims of fraud.
In

particular,

allegation
request

show

that

supplied in

represented

allegations

the

nothing

or inferior
its GLE
cars

were not borne

case statement did

was

the features

were fewer than,

ordinarily
Trebol

to

there

It was

factory-made,

out by the

not point to any

added
to, those

car.
as

even

by
at

way

of

Trebol's
that Volvo

alleged that
but

advertisements.

those
The

other express statement

in the advertising alleged to be false.

Nor were there other

allegations of fact from which fraudulent intent could easily

be inferred.

-3-3-

The district court then

no RICO claim had been
and

dismissed the case, ruling that

set forth, Fed. R. Civ.

P. 12(b)(6),

that the plaintiffs had failed to alleged fraud with the

required particularity, Fed. R.

court affirmed

Civ. P. 9.

On

appeal, this

in a unpublished per curiam opinion; without

___________

resolving plaintiffs' standing, we

held that in this context

mere nondisclosure, absent some affirmative misrepresentation

or a

special

fraud.
2303,

duty of

disclosure,

Rodriguez O'Ferral v.
__________________

does not

comprise

Trebol Motors Corp.,

___________________

RICO

No. 92-

slip op. at 8-9 (1st Cir., July 9, 1993) (citing cases

from other circuits).

While

the appeal

was

pending,

defendants

moved

for

sanctions against plaintiffs' attorneys under Fed. R. Civ. P.

11

for

filing

a groundless

reasonable inquiry, the

as

attorney's fees as a

action.

Finding

a lack

court awarded the defendants

sanction.

of

$8,000

Independently, the court

awarded
this

the defendants costs in the amount of $3,973.40.

appeal, Rullan

against

disputes the

award of

On

attorney's fees

him as to both basis and amount (co-counsel have not

appealed).

The award of costs is also challenged.

Starting with the

sanction, we think it

plaintiffs' suit was extremely thin.

plain that the

The question whether it

was so thin as to warrant sanctions is, as is typical in Rule

11 matters,

a "judgment call,"

Anderson v.
________

Beatrice Foods
______________

Co., 900 F.2d 388, 394 (1st Cir.), cert. denied, 498 U.S. 891
___
____________

-4-4-

(1990),

ordinarily

reviewed only

Kale v. Combined Ins. Co.,

____
__________________
1988).

Still, there

underpins an award

for abuse

861 F.2d 746,

may be

of discretion.

757-58 (1st

determination of

of sanctions, and

Cir.

law that

Rullan raises such

an

issue here.
Pointing out that he did not sign the

complaint, Rullan

says that the

only pleading to which he

RICO case statement.

institute the

This case statement, he says,

action or amend

the complaint; the

any, is with the original complaint;

on

him

is

is connected is the

therefore

to

impose

did not
fault, if

and to impose sanctions

on

him

"continuing

obligation" to assure that a case does not continue unless it

is

well

grounded.

obligation" language
(1st

Cir.

1990),

Although
in Cruz
____
Rullan

this

court used

v. Savage,
______
says

that

"continuing

896 F.2d
the

Fifth

626, 630
Circuit

precedents relied on in Cruz have been overruled and that all

____
other circuits reject the continuing obligation theory.1
Rule 11 is not all of a piece.
directed
least

Much of

its language is

to the signing of documents, see Rule 11(a), but at

one sentence

filed document.

Rule

concerns "later
11(b).

advocating" an

We have no

earlier

occasion to pursue

____________________
1Thomas v. Capital Sec. Servs., Inc., 836 F.2d 866, 874______
_________________________
75 (5th Cir. 1988) (en banc) (rejecting any such continuing
_______
obligation); see also Dahnke v. Teamsters Local 695, 906 F.2d
________ ______
___________________
1192,
1200-01 (7th Cir.
1990) (same); Corporation of
_______________
Presiding Bishop of Jesus Christ of Latter-Day Saints v.
_________________________________________________________
Associated Contractors, Inc., 877 F.2d 938, 942-43 (11th Cir.
____________________________
1989) (same), cert. denied, 493 U.S. 1079 (1990).
____________
-5-5-

the problem in

this case

case statement

which

taken

because Rullan did

effectively reasserted

in the complaint.

case

statement

was

complaint; and at
on the

sign the
the

RICO

positions

Indeed, the intended purpose of the

to

flesh

out

and

the time that Rullan

document, the fraud claims

particularize

the

placed his signature

which remained inadequate

became his own.

As
defects

we

have said,

it is

were so severe as

that the assertion of

to justify a

in a

flaw, one

we had not

in bad faith

Here, other circuits prior to

already ruled that mere nondisclosure

context like this one

fraud; but

whether the

court in concluding

the RICO claims was done

or without reasonable inquiry.

the case statement had

judgment call

did not support a

done so

might argue about

and, if this

whether Rullan

claim of RICO
were the
was obliged

only
to

anticipate our ruling.

But

even if

fraud, nothing

nondisclosure

were here

enough for

RICO

in the case statement here points directly to

fraudulent intent.

Fraudulent intent is

often easy to infer

from

an affirmative false statement; but no one could fairly

infer

fraudulent

intent

attributed to Trebol.
happens they

merely

from

the

nondisclosure

The car did have extra features; as it

were installed

in the

central,

identified nondisclosure

badge was

added in Puerto Rico.

Volvo factory;
appears

to be

To say that

and the
that

the

the cars were

-6-6-

not genuine GLEs without

pointing to material differences is

unpersuasive.
As

to

the

amount

of

the

sanction,

admittedly

district court did not explain the basis for the

that led to the $8,000 figure.
million

two years and generated

foot

high.

Further,

incidental filing--say,

the
a

the litigation consumed more

a record that

case

statement

dispute about

discovery request--but related

calculation

But the complaint sought $225

for a large class, and

than

the

to the core

was a condition of any further proceedings.

stands nearly a
was

not

some

one deposition

or

of the case

and

No one remotely familiar with lawyer fees can doubt that

the defense
district

spent vastly more than $8,000 on this case.

court

defense costs,

plainly chose

figure

that, measured

was practically nominal but

always helpful, and

required for appellate

logic

of

the

in some

district

mysterious, and the

Explanations

cases explanations

review of

a Rule 11

court's

by

was large enough

to serve as a warning and deterrent to counsel.

are

The

may be

award; but

approach

here

result is well within the

is

the
not

wide latitude

allowed for remedial judgments.

Finally,
costs

in

we find no error in the award of other defense

the

photocopying,

amount

of $3,973.40,

translation,

delivery,

for

such

and other

matters

as

logistics.

Despite plaintiffs' contrary claim, the award was timely even

-7-7-

though made
may

wait

after the original judgment;

until a

judgment

is

affirmed

the district court

on appeal

before

awarding

costs.

See
___

10

Practice and Procedure

______________________

C. Wright

of

costs

implicitly

to

bars

authorized.

to

costs

for

18

U.S.C.

defendants

We see no basis for

the prevailing

Miller,

Federal
_______

because RICO provides for an

plaintiffs,

R. Civ. P. 54(d)(1)

A.

2668, at 212 (2d Ed. 1983).

Plaintiffs also claim that

award

&

1964(c),

even

if

it

elsewhere

such an implication.

Fed.

allows costs other than attorney's

fees

party as

a matter

of course

unless the

court directs otherwise; the introductory proviso to the rule

("Except when express provision therefor is
statute

of

the

United

States")

discretion to deny costs to

does not

affect an award

might

made . . .
limit

in a

court's

a prevailing RICO plaintiff, but

of defense costs--which

RICO does

not address.
It

is

district

true

that some

of

the

costs

allowed by

court went beyond those listed in 28 U.S.C.

the
1920,

but a district court has discretion to award costs other than

those

so enumerated.

used sparingly"

Although

for such

this discretion

expenses, Farmer v.
______

"should be

Arabian Amer.
_____________

Oil Co., 379 U.S. 227, 235 (1964), we have examined the costs
_______
allowed and conclude that there was no abuse of discretion in
this case.
Affirmed.
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