Anderson News v. American Media
U.S. DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
Judge Paul Crotty
Anderson's March 2009 complaint charging defendant competitors with anti-competitive conduct included Paragraph 55, asserting a meeting of their key employees. After Second Circuit reversed that complaint's dismissal, Anderson's amended complaint included Paragraph 63, essentially repeating the allegations in Paragraph 55. The court denied defendants Rule 11 sanctions against Anderson and its counsel for refusing to retract its allegedly false allegation. It also denied Anderson sanctions against defendants for bringing a frivolous motion. Paragraph 63 was based on information provided by Gillis, who refused to recant his belief that the meeting occurred. Under Campanella v. Cnty of Monroe, Anderson was entitled to include "allegations based on hearsay" in its amended complaint. Also, Anderson was not at liberty to speak to affiants about their denials outside the discovery process. The affiants, represented by counsel, were employed by parties adverse to Anderson. Thus Anderson had to choose between relying solely on Gillis or withdrawing Paragraph 63 based solely on defendants' denials. Thus, sanctioning a party for objectively unreasonable factual allegations would be premature prior to the end of discovery.