Business Guides, Inc. v. Chromatic Communications Enterprises, Inc. Michael Shipp

Business Guides, Inc. (Business Guides) appeals from an order imposing Rule 11 sanctions in its copyright action against Chromatic Communications Enterprises, Inc. (Chromatic) and Shipp, Chromatic’s president. Business Guides argues that the district court (1) erred in applying to Business Guides, a represented party, an objective standard of “reasonable inquiry” into the factual basis of papers submitted to court, Fed.R.Civ.P. 11; (2) erred in determining that Business Guides failed to conduct such a reasonable inquiry; and (3) abused its discretion in dismissing Business Guides’s action as part of the sanction imposed. In addition, Chromatic urges us to invoke Rule 11 to require Business Guides to reimburse Chromatic for its costs of defending this appeal. The district court had jurisdiction pursuant to 28 U.S.C. § 1338 (a). We have jurisdiction over this timely appeal pursuant to 28 U.S.C. § 1291 . We affirm in part, reverse in part, vacate in part, and remand.

I

Business Guides is a subsidiary of Leb-har-Friedman, Inc., a leading publisher of trade journals and magazines in the United States. Business Guides publishes 18 different directories for specialized areas of retail…