U.S. Supreme
Court
WILLY v.
COASTAL CORP., 503 U.S. 131 (1992)
503 U.S. 131
DONALD J. WILLY,
PETITIONER v. COASTAL CORPORATION ET AL.
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT
No. 90-1150
Argued December 3, 1991
Decided March 3, 1992
After
petitioner Willy sued respondent Coastal Corporation in Texas state court,
alleging that Coastal fired him in violation of, inter alia, federal and state
environmental law "whistleblower" provisions, Coastal removed the
case to Federal District Court. That court rejected Willy's argument that it
lacked subject matter jurisdiction and dismissed the case for failure to state
a claim. It also imposed sanctions against him, pursuant to Federal Rule of Civil
Procedure 11, based on conduct in the case that was unrelated to petitioner's
effort to convince the court that it lacked jurisdiction. The Court of Appeals
concluded that the District Court lacked subject matter jurisdiction, but
upheld the court's decision to award sanctions and remanded the case for the
court to determine the amount. On a second appeal, the Court of Appeals
rejected Willy's argument that the District Court had
no authority to impose sanctions in the absence of subject matter jurisdiction.
Held:
A
court may impose Rule 11 sanctions in a case in which the district court is
later determined to be without subject matter jurisdiction. Pp. 134-139.
(a)
While the expansive language of Rules 1 and 81(c) indicates a clear intent to
have the Rules, including Rule 11, apply to all district court civil
proceedings, the Rules must be deemed to apply only if their application will
not impermissibly expand the judicial authority conferred by Article III, see Sibbach v. Wilson, 312
U.S. 1 . Pp. 134-135.
(b)
The District Court's order in this case does not lie outside the range of
action constitutionally permitted to an Article III court. Willy concedes that
Congress has the power to regulate the courts and to authorize the imposition
of sanctions. He errs in contending that Rule 11 sanctions must be aborted
whenever it is determined that a court lacked jurisdiction at the time the
objectionable conduct occurred. A court's concern with the maintenance of
orderly procedure, even in the wake of a jurisdictional ruling later found to
be mistaken, justifies the conclusion that the sanction here need not be upset.
See, e.g., United States v. Mine Workers, 330
U.S. 258 . Because it deals with the issue whether
the court's rules were violated, the instant order is collateral to the merits
of the case. Thus, it implicates no constitutional concern, because it does not
deal with the court's assessment of the complaint's [503 U.S. 131, 132]
legal merits, over which the court lacked jurisdiction. See Cooter & Gell v. Hartmarx
Corp., 496
U.S. 384 . And the District Court's interest in
having rules of procedure obeyed did not disappear with the subsequent
determination that it lacked subject matter jurisdiction. United States
Catholic Conference v. Abortion Rights Mobilization, Inc., 487
U.S. 72 . Pp. 135-139.
915 F.2d 965 (CA5 1990), affirmed.
REHNQUIST,
C.J., delivered the opinion for a unanimous Court.
Michael
A. Maness argued the cause and filed briefs for petitioner.
Michael
L. Beatty argued the cause for respondents. With him on the brief were Carter
G. Phillips, Mark D. Hopson, Lawrence P. Ellsworth, and Robert C. DeMoss.
THE
CHIEF JUSTICE REHNQUIST delivered the opinion of the Court.
We
granted certiorari to decide whether a federal district court may impose
sanctions pursuant to Rule 11 of the Federal Rules of Civil Procedure in a case
in which the district court is later determined to be without subject matter
jurisdiction. 501 U.S. 1216 (1991). We
conclude that, in the circumstances presented here, it may do so.
Petitioner
Willy sued respondent Coastal Corporation (Coastal or respondent) in Texas
state court, raising a variety of claims relating to Coastal's decision to
terminate his employment as "in-house" counsel. Petitioner alleged
that he had been fired due to his refusal to participate in respondent's
violation of various federal and state environmental laws. Respondent removed
the case to Federal District Court, claiming original federal question
jurisdiction under 28 U.S.C. 1331, 1441. Petitioner objected to the removal,
claiming that his case did not "arise under" federal law, see 1331,
but the District Court disagreed and concluded that it had subject matter
jurisdiction. The District Court subsequently granted respondent's motion to dismiss for failure to [503 U.S. 131, 133]
state a claim, Fed.Rule Civ.Pro. 12(b)(6), and dismissed
petitioner's pendent state claims.
At
the same time, the District Court granted respondent's motion for Rule 11
sanctions, awarding attorney's fees of $22,625 against Willy and his attorney,
Young, jointly and severally. The District Court found that the filings made by
plaintiff's counsel "create[d] a blur of absolute confusion." App. to Pet. for Cert. A-7. These included a 1,200-page, unindexed, unnumbered pile of materials that the District
Court determined "to be a conscious and wanton affront to the judicial
process, this Court, and opposing counsel" that was "irresponsible,
at a minimum, and at worst, intentionally harassing." Ibid. Petitioner's sanctionable behavior also included careless pleading, such
as reliance on a nonexistent Federal Rule of Evidence. Ibid.
None of the sanctionable conduct was related to
petitioner's initial effort to convince the District Court that it was without
subject matter jurisdiction.
On
appeal, the Court of Appeals for the Fifth Circuit concluded that the District
Court had lacked subject matter jurisdiction because the complaint raised no
claims arising under federal law. Willy v. Coastal Corp., 855
F.2d 1160 (1988). It therefore reversed the District Court order
dismissing the claims and instructed that the case be remanded to state court.
The court also upheld the District Court's decision to award Rule 11 sanctions,
although it remanded the case to the District Court to determine the amount. On
remand, the District Court recomputed the Rule 11 sanctions and imposed
sanctions in the amount of $19,307, the amount of attorney's fees that
respondent had incurred in responding to petitioner's sanctionable
conduct. The Court of Appeals affirmed. 915 F.2d 965 (CA5
1990).
On
this second appeal, the Court of Appeals rejected petitioner's contention that,
in the absence of subject matter jurisdiction, the District Court was
constitutionally without [503 U.S. 131,
134] authority to impose
Rule 11 sanctions. It concluded that the authority to impose Rule 11 sanctions
rested in the "inherent powers" of the federal courts - those powers
"`necessary to the exercise of all others.'" Id., at 966 (quoting
Roadway Express, Inc. v. Piper, 447
U.S. 752, 764 (1980)). The court concluded that the exercise of Rule 11
powers was an example of such inherent powers. It principally relied on our
recent decision in Cooter & Gell
v. Hartmarx Corp., 496
U.S. 384 (1990), in which we upheld a Rule 11 sanction imposed for filing a
frivolous complaint even though the sanction order was entered after the
plaintiff voluntarily dismissed its suit.
Before
this Court, petitioner advances two claims. The first is that Congress, in
acquiescing in the adoption of the Federal Rules of Civil Procedure, did not "authoriz[e] recovery of fees or costs against parties who
prevail on jurisdictional grounds." Brief for Petitioner
18. Petitioner finds in both the Rules Enabling Act and the Rules the
"implicit premise . . . that rules of practice and procedure are not necessary
for disputes beyond the judicial power conferred by Article III." Id., at 28. Phrased this way, the petitioner's contention is
correct, but it does not dispose of this case.
The
Rules Enabling Act, 28 U.S.C. 2072, authorizes the Court to "prescribe
general rules of practice and procedure and rules of evidence for cases in the
United States district courts. . . . " Those
rules may not "abridge, enlarge or modify any substantive right." In
response, we have adopted the Federal Rules of Civil Procedure. Rule 1 governs
their scope. It provides that "[t]hese rules
govern the procedure in the United States district courts in all suits of a
civil nature. . . ." Rule 81(c) specifically provides that the Rules
"apply to civil actions removed to the United States district courts from
the state courts and govern procedure after removal." This expansive
language contains no express exceptions, [503
U.S. 131, 135] and
indicates a clear intent to have the Rules, including Rule 11, apply to all
district court civil proceedings. 1
But
in Sibbach v. Wilson, 312
U.S. 1 (1941), we observed that federal courts, in adopting rules, were not
free to extend or restrict the jurisdiction conferred by a statute. Id., at 10. Such a caveat applies a fortiori to any effort
to extend by rule the judicial power of the United States described in Article
III of the Constitution. The Rules, then, must be deemed to apply only if their
application will not impermissibly expand the judicial authority conferred by
Article III. We must therefore examine petitioner's second, and related,
contention that the District Court action in this case lies outside the range
of action constitutionally permitted to an Article III court.
Petitioner
begins by pointing out that Article III limits the subject matter jurisdiction
of the federal courts to certain "cases or controversies." Brief for Petitioner 11. He then contends that the District
Court's exercise of judicial power to grant Rule 11 sanctions must have been an
unconstitutional act because, in the absence of subject matter jurisdiction, [503 U.S. 131, 136] the district court lacks "a
substantive source of judicial power, beyond that conferred by Article
III." Id., at 18. Thus, according to petitioner,
even had Congress attempted to grant the courts authority to impose sanctions
in a case such as this, the grant would run afoul of Article III.
In
making this claim, petitioner acknowledges that there are some circumstances in
which federal courts may impose attorney's fees or costs, even where the court
eventually proves to be without subject matter jurisdiction. 2 He contends, however, that such instances are
limited to a narrowly prescribed category of cases, and do not include the
situation in which sanctions are imposed against a party who has successfully
contested jurisdiction.
We
think petitioner's contentions flawed in several respects. Article I, 8, cl. 1, authorizes Congress to establish the lower federal
courts. From almost the founding days of this country, it has been firmly
established that Congress, acting pursuant to its authority to make all laws
"necessary and proper" 3 to their establishment, also may enact laws
regulating the conduct of those courts and the means by which their judgments
are enforced. See Wayman v. Southward, 10 Wheat. 1, 21-22 (1825); Hanna v. Plumer,
380
U.S. 460, 473 (1965) (describing "long-recognized power of Congress to
prescribe housekeeping rules for federal courts"). Indeed, in acknowledging
the many circumstances in which sanctions can be imposed, several of which have
a statutory basis, petitioner effectively concedes both Congress' general power
to regulate the courts and its specific [503
U.S. 131, 137] power to
authorize the imposition of sanctions. See n. 2, supra.
This
leaves only petitioner's contention that Rule 11 sanctions must be aborted
because, at a time after the sanctionable conduct
occurred, it was determined by the Court of Appeals that the district court
lacked subject matter jurisdiction. A final determination of lack of subject
matter jurisdiction of a case in a federal court, of course, precludes further
adjudication of it. But such a determination does not automatically wipe out
all proceedings had in the district court at a time when the district court
operated under the misapprehension that it had jurisdiction. In Chicot County
Drainage District v. Baxter State Bank, 308
U.S. 371 (1940), we held that a judgment rendered in a case in which it was
ultimately concluded that the District Court was without jurisdiction was
nonetheless res judicata on collateral attack made by
one of the parties. See also Stoll v. Gottlieb, 305
U.S. 165 (1938). In Stoll, we observed that the practical concern with
providing an end to litigation justifies a rule preventing collateral attack on
subject matter jurisdiction. Id., at 172.
In
United States v. Mine Workers, 330
U.S. 258 (1947), we upheld a criminal contempt citation even on the
assumption that the district court issuing the citation was without
jurisdiction over the underlying action. In that case, the question was raised
on direct review, and not collateral attack. We think the same concern
expressed in these cases - the maintenance of orderly procedure, even in the
wake of a jurisdiction ruling later found to be mistaken - justifies the
conclusion that the sanction ordered here need not be upset.
The
District Court order which the petitioner seeks to upset is one that is collateral
to the merits. We recently had occasion to examine Rule 11's scope and purpose
in great detail in Cooter & Gell
v. Hartmarx Corp., 496
U.S. 384 (1990). The challenge in that case was to an order imposing Rule
11 sanctions for filing a frivolous complaint, entered [503 U.S. 131, 138]
after the plaintiff had voluntarily dismissed his action. In the course
of our discussion, we noted that "[i]t is well
established that a federal court may consider collateral issues after an action
is no longer pending. . . . [A]n imposition of a Rule 11 sanction is not a
judgment on the merits of an action. Rather, it requires the determination of a
collateral issue: whether the attorney has abused the judicial process, and, if
so, what sanction would be appropriate." Id., at 395-396. Such an order
implicates no constitutional concern, because it "does not signify a
district court's assessment of the legal merits of the complaint." Ibid. It therefore does not raise the issue of a district
court adjudicating the merits of a "case or controversy" over which
it lacks jurisdiction.
Petitioner
places great weight on our decision in United States Catholic Conference v. Abortion
Rights Mobilization, Inc., 487
U.S. 72 (1988), a case involving a civil contempt order entered by the
District Court. The contemnors, two nonparty witnesses, refused to comply with
a district court document subpoena. The District Court found them in civil
contempt and ordered them to pay a fine of $50,000 per day. The contemnors, as
was their right, immediately appealed the contempt order, challenging the
District Court's subject matter jurisdiction. We held that the Court of Appeals
was obligated to consider the jurisdictional challenge in full, rather than
simply contenting itself with an inquiry into whether the District Court colorably had jurisdiction. We further concluded that, if
the district court was found to be lacking subject matter jurisdiction, the
contempt order would also fall. Focusing on this second part of our decision,
petitioner cites Catholic Conference as establishing the proposition that a
sanction must fall if imposed when jurisdiction is in fact absent. 4
Catholic
Conference does not stand for such a broad assertion. A civil contempt order
has much different purposes [503 U.S.
131, 139] than a Rule 11
sanction. Civil contempt is designed to force the contemnor to comply with an
order of the court, id., at 79; Rule 11 is designed to punish a party who has
already violated the court's rules. Cooter & Gell, supra, supra, at 396.
Given that civil contempt is designed to coerce compliance with the court's
decree, it is logical that the order itself should fall with a showing that the
court was without authority to enter the decree. Accord,
United States v. Mine Workers, supra.
The
interest in having rules of procedure obeyed, by contrast, does not disappear
upon a subsequent determination that the court was without subject matter
jurisdiction. Courts do make mistakes; in cases such as Catholic Conference, it
may be possible immediately to seek relief in an appellate tribunal. But where
such an immediate appeal is not authorized, there is no constitutional
infirmity under Article III in requiring those practicing before the courts to
conduct themselves in compliance with the applicable procedural rules in the
interim, and to allow the courts to impose Rule 11 sanctions in the event of
their failure to do so. 5
For
the foregoing reasons, the judgment of the Court of Appeals is
Affirmed.
Footnotes
[ Footnote
1 ]
Rule 11 requires that every paper filed with the District Court be signed by an
attorney or by the party. The signature constitutes a certificate by the signer
that
"to
the best of the signer's knowledge, information, and belief formed after
reasonable inquiry it is well grounded in fact and is warranted by existing law
or a good faith argument for the extension, modification, or reversal of
existing law, and that it is not interposed for any improper purpose, such as
to harass or to cause unnecessary delay or needless increase in the cost of
litigation."
A
pleading determined to be in contravention of the Rule subjects both the signer
and the party he represents to "an appropriate sanction, which may include
an order to pay to the other party or parties the amount of the reasonable
expenses incurred because of the filing of the pleading, motion, or other
paper, including a reasonable attorney's fee." Ibid.
We take as given that the District Court correctly determined that petitioner's
filings were insufficiently well grounded to satisfy the Rule, the payment of
attorney's fees was a reasonable sanction in response, and the imposition of
joint and several liability was appropriate.
[ Footnote
2 ]
See Brief for Petitioner 18, n. 14, acknowledging 28 U.S.C. 1919 (authorizing
"payment of just costs" in any action or suit dismissed for lack of
jurisdiction) and 28 U.S.C. 1447(c) (authorizing attorney's fees and costs for
wrongful removal). See also Brief for Petitioner 22-27, admitting federal court
authority to exercise "inherent powers" to sanction through
attorney's fees and costs or criminal contempt those who obstruct a court's
effort to determine its jurisdiction.
[ Footnote
3 ]
Art. 1, 8, cl. 18.
[ Footnote
4 ]
Petitioner does acknowledge certain limited exceptions, see supra, n. 2.
[ Footnote
5 ]
Our conclusion that the District Court acted within the scope of the Federal
Rules and that the sanction may constitutionally be applied even when subject
matter jurisdiction is eventually found lacking makes it unnecessary for us to
consider respondent's alternative contention that the sanction may be upheld as
an appropriate exercise of the District Court's "inherent powers." [503 U.S. 131, 140]