Also known as: improper purposes
Written by attorneys · grounded in primary & secondary sources — see below
An illegitimate objective in presenting a pleading, motion, discovery request, or derivative claim. The purpose deviates from legitimate adjudication or transaction goals and instead seeks harassment, delay, cost escalation, or personal gain unrelated to the principal's interests.
Isla Ireland's attorney filed a motion to seal all documents in a contract dispute with Indigo Textiles. During a recorded call the attorney stated the motion would force repeated re-drafts and punish the defendant. The court found the filing served an improper purpose and imposed sanctions.
Ines Ibarra filed a derivative action against Infinity Bank after the board rejected her demand. The court found the suit was commenced without reasonable cause and for an improper purpose of harassing the directors. It ordered Ibarra to pay the corporation's expenses incurred in defending the proceeding.
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Ivan Ivanov served broad discovery requests on Integrity Partners in a commercial case. The requests sought documents unrelated to the pleaded claims and were designed to drive up litigation expenses. The court determined the requests were interposed for an improper purpose and awarded sanctions.
A corporate insider disclosed confidential information to a close relative who then traded on it. The disclosure was made to confer a personal gift rather than to advance any corporate interest. The court treated the gift as an improper purpose that satisfied the personal-benefit element of tipping liability.
An insider provided material nonpublic information to a friend with the expectation that the friend would trade and share profits. The arrangement was pursued solely for the insider's personal financial gain. The court held that this personal-benefit motive constituted an improper purpose supporting liability.
An improper purpose exists when a paper is presented to harass, cause unnecessary delay, or needlessly increase litigation costs rather than to advance a legitimate claim or defense. The certification requires that the filing serve the proper objectives of the judicial process.
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Under Model Business Corporation Act section 7.46(2), a court may order the plaintiff to pay the corporation's expenses if the demand or derivative proceeding was made or maintained for an improper purpose. The finding shifts costs to deter abusive litigation.
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Yes. The rule prohibits discovery requests interposed for an improper purpose such as harassment or cost escalation. Courts examine the circumstances surrounding the request to determine whether the stated purpose masks an illegitimate objective.
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In tort law, malice is defined as an improper purpose other than securing proper adjudication of the claim. Initiating proceedings primarily to harass or for a collateral objective satisfies the malice element even without spite.
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…using undisclosed corporate information to their advantage” and from “giv[ing] such information to an outsider for the same improper purpose of exploiting the information for their personal gain”). Dirks specifies that when a tipper gives inside information to “a trading relative or friend,” the jury can infer that the tipper…