UNITED STATES COURT OF APPEALS
For the Fifth Circuit
No. 96-30777
DONNA THORNTON,
Plaintiff,
VERSUS
GENERAL MOTORS CORPORATION,
Defendant-Appellee,
VERSUS
BERNEY L. STRAUSS,
Movant-Appellant.
Appeal from the United States District Court
For the Western District of Louisiana
March 2, 1998
Before EMILIO M. GARZA, PARKER and DENNIS, Circuit Judges.
PER CURIAM:
Appellant attorney, Berney L. Strauss, was sanctioned under
Federal Rule of Civil Procedure 11 by the district court on its own
initiative for filing a lawsuit on behalf of Donna Thornton against
General Motors, Inc. for punitive damages without first having made
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a reasonable inquiry into the facts underlying Thornton’s claim.
In imposing the sanctions, the district court suspended Strauss
from the practice of law before the Western District of Louisiana
for two years and ordered him to reimburse General Motors, Inc. its
reasonable attorney’s fees incurred in defending the suit. This
appeal concerns only the propriety of the imposition of sanctions
upon Strauss, Thornton having failed to file a timely appeal from
the district court’s summary judgment dismissing her complaint. We
reverse and vacate the district court’s sanctions order.
Federal Rule of Civil Procedure 11(c)(1)(B) requires that,
when the district court itself initiates sanctions proceedings, it
shall enter an order describing the specific conduct that appears
to violate Rule 11(b) and directing the attorney to show cause why
he has not committed a violation with respect to that specific
conduct. In the present case, the district court entered a show
cause order that did not describe the specific conduct for which it
subsequently sanctioned Strauss. Accordingly, the district court
did not, prior to imposing sanctions, afford Strauss adequate
notice to afford him an opportunity to respond to charges of
specifically described conduct as prescribed by Rule 11(c)(1)(B).
Facts and Proceedings Below
Donna Thornton, was employed by General Motors Corporation
(“GMC”) at its headlamp manufacturing plant in Monroe, Louisiana.
Thornton worked in an area called the “BAT Room” (Base
Coat/Aluminize/Top Coat Room) where headlamp housings are cleaned
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and painted. In this process the chemical n-Butyl Acetate is used
as a solvent for the paint and as a wash to clean the housings. On
April 8, 1994, Thornton was hospitalized and received treatment
after reporting to the GMC infirmary complaining of dizziness,
nausea, vomiting, and exhibiting a skin rash. Another GMC
employee, Arlene Young, who worked near Thornton, was also
hospitalized after she too broke out in a rash. Subsequently, GMC
discovered that in the area in which Thornton and Young worked a
filter canister containing n-Butyl Acetate had developed a crack
and was emitting fumes into the BAT room.
On February 17, 1995, Thornton met with an attorney, Berney
Strauss, in New Orleans and sought legal representation in
connection with her April 8, 1994 accident and resulting injuries.
Strauss discussed with Thornton the events surrounding her
hospitalization and reviewed documents provided by her relating to
both GMC’s reaction to the leak and the properties of n-Butyl
Acetate. A GMC service report verified that two employees had been
admitted to the hospital for chemical exposure on April 8, and a
“Material Safety Data Sheet” (“MSDS”) revealed the hazardous nature
of n-Butyl Acetate. In addition, the GMC document confirmed other
key components of Thornton’s story -- that a crack had developed in
a “solvent wash” canister and that it had resulted in the release
of n-Butyl Acetate. The report, signed by Bruce DeBruhl, GMC’s
senior manufacturing engineer, referred to the leak as a “safety
problem.” Thornton also told Strauss that, following the accident,
DeBruhl disclosed to her that her supervisors “should have”
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detected the leak hours before they did.
On March 20, 1995, Strauss filed a complaint on Thornton’s
behalf in United States District Court for the Western District of
Louisiana seeking punitive damages from GMC under Louisiana Civil
Code article 2315.3 in connection with her accident. Article
2315.3 allowed for an award of exemplary (or punitive) damages in
cases of wanton or reckless disregard for the public safety in the
storage, handling, or transportation of hazardous or toxic
substances. The complaint alleged that Thornton’s injuries were
the result of the defendant “failing to maintain” machinery,
“failing to take proper precautions” to prevent toxic emissions,
“failing to rectify a known hazard,” and, lastly, requiring
Thornton to work in an area known to be dangerous by GMC. These
acts and omissions, Thornton claimed, constituted a “wanton or
reckless disregard for the public safety.”
Following discovery, GMC moved for summary judgment on March
14, 1996. GMC asserted that Thornton had not presented a genuine
issue of material fact that her injury was based on the “wanton or
reckless” conduct of the company as required by La. Civ. Code art.
2315.3 under its interpretation by the Louisiana state supreme
court in Billiot v. B.P. Oil Co., 645 So. 2d 604, 613 (La. 1994).
On April 8, 1996, the district court granted GMC’s motion for
summary judgment and dismissed Thornton’s claims with prejudice.
In its memorandum ruling, the district court stated that Thornton,
in response to the motion for summary judgment, had “failed to come
forth with any evidence even remotely raising a genuine issue of
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material fact as to whether GM stored or handled n-Butyl Acetate in
a wanton or reckless manner.”
Previously, on April 4, 1996, the district court, on its own
initiative, had ordered Berney L. Strauss to show cause why he had
not violated Federal Rule of Civil Procedure 11(b). The district
court’s order and reasons stated:
The court, pursuant to F.R.C.P. Rule 11(c)(1)(B),
hereby ORDERS Berney L. Strauss to show cause why he has
not violated subsections (b)(2) and (3) of this rule.
Berney L. Strauss is ORDERED to produce evidence
that supports a claim pursuant to La. Civ. code art
2315.3 and which meets the standards set forth in Billiot
v. B.P. Oil Co., 645 So.2d 604 (La. 1994), for seeking
punitive damages under Article 2315.3. Mere argument by
Mr. Strauss will not be sufficient. Rule 11(b)(2) and
(3) require that Mr. Strauss have a reasonable basis in
fact to support a claim under Article 2315.3. To this
point, Mr. Strauss has not produced any evidence which
supports making a claim for $10,000,000 in punitive
damages under 2315.3. Thus, Mr. Strauss is ORDERED to
produce evidence to show cause why he should not be
sanctioned under Rule 11 (b).
After reviewing Strauss’ written response, the district court,
on June 21, 1996, issued an order sanctioning Strauss by suspending
him from the practice of law in the Western District of Louisiana
for two years and by ordering him to reimburse GMC its reasonable
attorney’s fees incurred in defending this suit. The district
court, however, did not quantify the amount of attorney’s fees.
Subsequently, and prior to a final determination as to the amount
of attorney’s fees owed, Strauss filed a timely appeal from the
district court’s order sanctioning his conduct.
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Jurisdiction
While neither party contests this court’s jurisdiction to
entertain this matter, we are obligated to satisfy ourselves that
appellate jurisdiction is proper. See Silver Star Enterprises,
Inc. v. M/V Saramacca, 19 F.3d 1008, 1013 n.5 (5th Cir. 1994).
Initially, we are confident in stating that under normal
circumstances a post-judgment order imposing sanctions is final and
appealable. See Didie v. Howes, 988 F.2d 1097, 1103 (11th Cir.
1993)(noting that “a postjudgment order, which is the last order
entered in an action, is final and appealable”); Cassidy v.
Cassidy, 950 F.2d 381, 382 (7th Cir. 1991)(determining that Rule 11
sanctions awarded after judgement are separately appealable); see
also Dardar v. Lafourche Realty Co., Inc., 849 F.2d 955, 957 (5th
Cir. 1988)(stating that an award of attorney’s fees may be appealed
separately as a final order following a final determination of
liability on the merits). However, in this case, the district
court’s order imposed two separate sanctions on Strauss: one
sanction suspending him from practice before the Western District
effective immediately and the other a monetary sanction of
unquantified attorney’s fees. Normally, an unquantified award of
attorney’s fees does not constitute a final appealable order
pursuant to 28 U.S.C. §1291. See Southern Travel Club, Inc. v.
Carnival Air Lines, Inc., 986 F.2d 125, 129-30 (5th Cir. 1993).
However, the portion of the district court’s order suspending the
appellant is final and appealable.
We believe that the two sanctions ordered by the district
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court are severable with respect to the issue of finality. See
John v. Barron, 897 F.2d 1387, 1390 (7th Cir.)(addressing portion
of Rule 11 finding as to monetary sanction but ruling that court
had no jurisdiction over award of attorney’s fees in which amount
not fixed), cert. denied, 498 U.S. 821 (1990); see also Resolution
Trust Corp. v. Bright, 6 F.3d 336, 340 n.5 (5th Cir.
1993)(addressing number of Rule 11 sanctions although order
contained one sanction over which the court did not have
jurisdiction and apparently was not appealed by the parties).
Thus, we may consider the propriety of the court’s determination
that Strauss’ pre-filing conduct contravened Rule 11 because at
least one portion of the district court’s order, i.e. the
suspension sanction, is a final appealable order.
Considering the finality of at least one aspect of the
district court’s sanction order, both parties urge this court to
exert pendant appellate jurisdiction over the normally unappealable
attorney’s fees liability order. See Gilda Marx, Inc. v. Wildwood
Exercise, Inc., 85 F.3d 675 (D.C. Cir. 1996)(recognizing the
potential for pendant appellate jurisdiction over non-final
attorney fee liability orders); see also Note, Timothy B. Smith,
Court-Created Expansion of Pendant Appellate Jurisdiction, 65 Geo.
Wash. L. Rev. 653 (1997). Pendant appellate jurisdiction is only
proper in rare and unique circumstances where a final appealable
order is “inextricably intertwined” with an unappealable order or
where review of the unappealable order is necessary to ensure
meaningful review of the appealable order. See Woods v. Smith, 60
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F.3d 1161, 1166 n.29 (5th Cir. 1995); see also Swint v. Chambers
Cty. Commission, 514 U.S. 35 (1995)(implying that pendant appellate
jurisdiction is proper in very limited circumstances). In this
case, the propriety of the district court’s attorney’s fees
sanction is “inextricably intertwined” with the suspension sanction
as to make pendant appellate jurisdiction appropriate over the
attorney’s fees sanction. Moreover, considering the result reached
by the court in this matter, pendant review promotes judicial
economy by providing both parties with a speedy resolution of the
issues while allowing for a “sensible allocation of judicial
resources.” Gilda Marx, 85 F.3d 678-79.
Analysis
The district court’s sanctions ruling stated that it had
initiated the sanctions proceeding “[d]ue to the complete absence
of evidence produced by Thornton in response to GM’s motion [for
summary judgment].” Consistent with this reasoning, the district
court’s show cause order had directed Strauss “to produce evidence
that supports” Thornton’s claim, because “Rule 11(b)(2) and (3)
require that Mr. Strauss have a reasonable basis in fact to
support” the claim, and “[t]o this point, Mr. Strauss has not
produced any evidence which supports making” the claim.
The district court’s show cause order did not allege that
Strauss failed to make a reasonable inquiry prior to filing suit or
that this was the specific conduct that appeared to have been a
violation of Rule 11(b). Instead, the district court’s show cause
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order cited Strauss for his general conduct in failing to produce
evidence in support of Thornton’s claim prior to the district
court’s ruling on GMC’s motion for summary judgment. Strauss
argues, with merit, that he reasonably read the court’s show cause
order to call upon him to produce evidence supporting Thornton’s
claim as of the time he opposed GMC’s motion for summary judgment,
not to show that he had made a reasonable inquiry before filing the
initial complaint, the lack of which the court’s order ultimately
found was Strauss’ only omission that called for sanctions.
Given the timing of the court’s ruling and the lack of
precision in the show cause order, we do not believe that Strauss
was adequately placed on notice as to the “specific conduct” that
the court ultimately found to be sanctionable. Four days before
granting GMC’s motion for summary judgment, the district court
issued the show cause order demanding “evidence” of GMC’s liability
and lamented the lack of evidence that had been produced “[t]o this
point.” Although the court invoked subsection (b)(2) and (3) of
Rule 11 and indicated that it found Thornton’s claim lacked a
reasonable basis in fact, these references do not sufficiently
clarify what conduct Strauss needed to explain and justify in his
response to the court.
As a consequence of the court’s action, Strauss was misled and
hampered in presenting his defense. The district court’s sanctions
order evaluated his pre-filing conduct according to the factors
elucidated by the en banc court in Thomas v. Capital Sec. Serv.,
Inc., 836 F.2d 866 (5th Cir. 1988)(en banc). These factors
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include: the time available for investigation; the extent to which
an attorney relied on his client for factual support; the
feasibility of a pre-filing investigation; whether the attorney
accepted the case from another member of the bar; the complexity of
the factual and legal issues; and the extent to which the
development of the factual circumstances of the claim requires
discovery. Thomas, 836 F.2d at 875. The district court’s rule to
show cause, issued more than one year after the filing of suit, did
not reasonably and fairly put Strauss on notice that the district
court’s decision to sanction him would hinge on his showing under
the pre-complaint conduct factors.
Despite the show cause order’s failure to notify Strauss
adequately that he might be sanctioned for a pre-complaint failure
to investigate rather than a failure to produce evidence in
response to a motion for summary judgment, the court found that
Strauss had violated Rule 11(b) by not conducting a reasonable
investigation of the evidence supporting the claim prior to
initially filing suit. Thus, the show cause order did not comply
with Rule 11(c)(1)(B) which provides that, when a trial court
itself initiates the proceedings for sanctions, it shall “enter an
order describing the specific conduct that appears to violate
subdivision (b)[the substantive subdivision of the Rule] and
directing an attorney, law firm, or party to show cause why it has
not violated subdivision (b) with respect thereto.” See Larsen v.
City of Beloit 130 F.3d 1278, 1286 (7th Cir. 1997); Johnson v.
Waddell & Reed, Inc., 74 F.3d 147, 150-151 (7th Cir. 1996). This
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requirement imposed on district courts when acting on their own
initiative under Rule 11(c)(1)(B) was intended to ensure due
process. Johnson, 74 F.3d at 151.
We review the imposition of Rule 11 sanctions for an abuse of
discretion. Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 405
(1990); Thomas, 836 F.2d at 872. In this case the notice and due
process requirements for a district court’s imposition of sanctions
on its own initiative were not followed. Thus, the district court
abused its discretion by sanctioning Strauss without giving him
notice of the specific conduct for which he ultimately was
suspended from practice and ordered to pay GMC’s attorney’s fees.
Moreover, where sanctions are imposed under Rule 11(c)(1)(B)
by a district court on its own initiative, neither the award of
attorney’s fees nor the suspension from practice before the court
constitute a valid sanction. Specifically, an award of attorney’s
fees is authorized only “if imposed on motion and warranted for
effective deterrence.” Fed. R. Civ. P. 11 (c)(2); see Johnson, 74
F.3d at 152 n.3. Furthermore, when a district court finds that a
disciplinary sanction more severe than admonition, reprimand, or
censure under Rule 11 is warranted, it should refer the matter to
the appropriate disciplinary authorities. See Fed. R. Civ. P. 11
advisory committee notes to the 1993 Amendments. Thus, in this
case, even if the notice and due process requirements of Rule
11(c)(1)(B) had been followed, the order suspending Strauss from
practice and the award of attorney’s fees imposed on Strauss would
have been improper.
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Therefore, it is hereby ordered that the district court’s
order imposing sanctions on Appellant-movant Strauss is REVERSED
and VACATED.
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