Martin v. Brown

Opinions of the United
1995 Decisions States Court of Appeals
for the Third Circuit
8-23-1995
Martin v Brown
Precedential or Non-Precedential:
Docket 94-3248
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UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
___________
No. 94-3248
___________
LEON M. MARTIN
v.
HAROLD ED BROWN, an individual; KYLE ENERGY, INC.,
a Pennsylvania Corporation; KYLE ENERGY AND KYLE ENERGY
CORPORATION, a Pennsylvania Corporation
REBECCA E. BENDER*
(*Pursuant to Rule 12(a), F.R.A.P.),
Appellant
___________
Appeal from the United States District Court
for the Western District of Pennsylvania
(D.C. Civil Action No. 86-cv-01239)
___________
Argued: October 27, 1994
PRESENT: STAPLETON, HUTCHINSON and ROSENN, Circuit Judges
(Filed August 23, 1995)
____________
Rebecca E. Bender, Esquire (Argued)
Rebecca E. Bender & Associates, P.A.
Minnesota Law Center
514 Nicollet Mall
Suite 570
Minneapolis, MN 55402-1021
Attorneys for Appellant
1
____________
2
____________
OPINION OF THE COURT
____________
HUTCHINSON, Circuit Judge.
I. Introduction
Appellant, Rebecca E. Bender ("Bender"), an attorney who represen
defendants, Harold E. Brown, Kyle Energy, Inc. and Kyle Energy and Kyle Ene
0
Corporation, in this action, appeals orders of the United States District C
Western District of Pennsylvania sanctioning her for refusing to comply with
order and for refiling two motions the court reserved for trial after denyi
prejudice.0 The discovery sanctions required Bender and Brown to pay $500 ea
costs plaintiff Leon M. Martin ("Martin") incurred in connection with the di
request. Bender's and Brown's liability for these costs was joint and sever
sanction for refiling the two motions required Bender individually to pay an
$500. In an accompanying memorandum, the district court stated that it was
sanctions under Rule 11, Rule 37, 28 U.S.C.A. § 1927 (West 1994) and the co
power.
Brown shortly thereafter filed for bankruptcy in the Middle Distri
Bankruptcy Court. Martin's case against Brown was stayed under the automati
Bankruptcy Code § 362, 11 U.S.C.A. § 362 (West Supp. 1995), and the district
an order dismissing Martin's case against Brown without prejudice. Bender d
represent Brown in the bankruptcy, which is still pending.
0
Bender represented all three defendants. For the sake of simplicity, howev
refer solely to Brown.
0
The orders Bender appeals are dated April 20 and April 25, 1994. They impo
sanctions. The April 20 order, however, did not include the docket numbers
limine motions. See Martin v. Brown, No. 86-1239, slip op. at 1 n.1 (W.D.
1994).
3
Under the circumstances of this case, we hold that we have appella
jurisdiction over Bender's appeal despite the fact that the district court d
underlying action "without prejudice." Appellant's Appendix ("App.") at 664
hold that the manner in which the district court judge imposed these sanctio
Bender of the essentials of procedural due process, viz, fair notice and an
be heard. Because of our disposition of this appeal on procedural grounds, i
unnecessary for us to decide the propriety of the sanctions imposed on Bend
therefore vacate the district court's orders imposing sanctions on Bender an
case to it for further proceedings consistent with this opinion.
II. Statement of the Case and Facts
In November 1992, Brown retained Bender as defense counsel in an
which Martin claimed Brown violated federal securities laws, the Racketeerin
and Corrupt Organizations Act ("RICO"),0 and engaged in state common law fra
of contract by selling or offering to sell interests in numerous gas well p
On December 30, 1992, the district court issued an order disposing
Martin's discovery motions. The order included a provision granting Martin
inspect certain real property Brown owned. This part stated, "[t]he defenda
arrangements with plaintiff for inspection [of the real property] on or befo
1993." App. at 106. The real estate covered included Brown's personal resi
laundromat he owned. Bender refused to permit inspection of the real proper
believed it was irrelevant to any liability Brown might have to Martin or an
might owe after the RICO claim had been dismissed.
On January 22, 1993, Martin's counsel sent a telex to Bender infor
Martin's continuing insistence on inspecting these properties. Bender respo
0
The district court dismissed the RICO count on October 23, 1990, before Ben
association with the case.
4
day by denying the request for inspection and reiterating her contention tha
of the real property had no relevance to any of Martin's surviving claims.
February 1993, Bender sent a letter to Martin's attorney asking him to clar
the inspection of these properties.
In March 1993, Bender filed ten in limine motions. They were unre
discovery dispute. She also filed a motion to dismiss the federal security
that the interests in gas wells Martin claimed Brown fraudulently offered fo
not securities as defined by federal law. Alternatively, Bender moved to ce
issue for immediate appeal believing an interlocutory determination could ex
dispose of Martin's only remaining federal claim. See 28 U.S.C.A. § 1292(b)
This was the third time Brown had raised the lack-of-a-security question.0
in limine motions Bender had filed was yet a fourth attempt to relitigate t
issue. In another of Bender's ten in limine motions, she also raised for t
the statute of limitations as a defense.0
On March 31, 1993, with the dispute over inspection of Brown's re
unresolved, Martin filed a Rule 37 motion to sanction Brown for her refusal
the December 30, 1992 order. In April 1993, Bender filed a response and Ma
filed a reply. In an order entered April 30, 1993, the district court decid
Martin's Rule 37 motion for sanctions under advisement, "subject to the par
attorneys' compliance with discovery directives set forth" in the memorandum
its order. App. at 593. The memorandum criticized both parties for their c
discovery, warned them that sanctions would be imposed for future noncomplia
letter or spirit of the discovery rules and cautioned them about the use of
0
The issue was first decided in October 1990 and then again in December 1992
without prejudice.
0
The issue was also first decided in October 1990.
5
verbiage," "superfluous language" and the filing of unwarranted motions and
long papers. App. at 587.
Also on April 30, 1993, the district court denied Bender's motion
the security issue and refused to certify it for interlocutory appeal. Con
also rejected Bender's in limine motion concerning the security issue, reaso
was "in part a disguised motion to relitigate the 'securities' issue," App.
once more denied the statute of limitations issue as repetitive, but again
prejudice to Brown's right to raise it at trial. The court warned, however:
instructed not to make any further attempts to relitigate this issue prior t
merits." App. at 589.
After the April 30, 1993 order, counsel on each side seemed to hav
effort to resolve the outstanding discovery issues. Sometime around July 1
original counsel, Thomas E. Rodgers ("Rodgers"), was hospitalized. Thereaft
represented by a lawyer named David H. Cullis ("Cullis"). Bender contends t
unfamiliarity with her discussions with Rodgers revived the inspection probl
In January 1994, the district court dismissed without prejudice Be
remaining in limine motions and Martin's motion for sanctions. With the res
the dispute concerning inspection of Brown's real estate, the district court
directed the parties to negotiate outstanding matters and to resubmit formal
or before April 1, 1994, for judicial resolution of any pre-trial matters t
The district court instructed counsel to append to any such motions a certif
they had tried, in good faith, to resolve their dispute.
0
Bender argues that a number of problems in this case resulted from the entr
counsel. The record, however, suggests that Cullis may have had some previo
relationship to the case or to prior counsel. The record shows the followin
letterhead indicates that he was a sole practitioner. Cullis practiced in a
Rodgers and Cullis, P.C. Rodgers and Cullis, P.C.'s letterhead lists two par
Patricia A. Rodgers and Cullis. Rodgers and Rodgers & Cullis, P.C. have th
phone and facsimile number listed on their respective letterheads. Furtherm
responded to correspondence sent to Rodgers before his illness forced him ou
6
On March 16, 1994, Bender sent a letter directly to the judge pres
case. In it, she enclosed all ten of the in limine motions she had presente
March 1993, including for the fifth time the securities issue and, also, the
limitations defense that the district court, in its April 30, 1993 order, e
directed her not to resubmit until trial. Martin also refiled several of his
including the Rule 37 motion for sanctions for Brown's failure to afford in
real estate.
On April 8, 1994, the district court entered another order. It ag
the parties to meet in an effort to resolve Martin's outstanding discovery r
Brown's ten in limine motions. The court also noted that Bender had failed
the clerk the motions forwarded with her March 16, 1994 letter. The order s
April 15, 1994 hearing for unresolved matters. In its April 8, 1994 order,
court echoed its warning to the parties and their counsel that sanctions cou
for conduct that "is in violation of the Rules of Civil Procedure and/or the
Professional Conduct." App. at 647.
Bender did not appear personally at the April 15 hearing. She had
her in limine motions with the clerk of the district court, but Brown's loca
present and tried to argue their merits. The district court questioned him
about Bender's persistent refiling of motions denied without prejudice pendi
well as her refusal to permit inspection of all the real estate included in
December 30, 1992 order. It ordered Bender, on or before April 20, 1994, t
clerk the motions that she previously mailed to the judge with her March 16
before it would consider them. On April 20, 1994, Bender again filed all te
motions.0 On that day the district court entered its initial April 20, 1994
0
Bender claims that she only filed these ten in limine motions because the d
ordered her to do so. Thus, she contends that any sanctions imposed upon h
We need not decide this issue because of our resolution of this case on proc
grounds. We note, however, that when the district court directed Bender to
7
imposing sanctions on Bender and Brown and, on April 25, revised the April
adding the docket numbers of the in limine motions.
Bender appeals from those portions of both orders sanctioning her
and flagrant" disregard of the court's orders by "resurrecting and advocatin
motions in limine regarding 'lack of a security' and the 'statute of limita
defense'"; App. at 654-55, and "for refusal to permit meaningful inspection
property in compliance with [the] court's orders . . . ." Id. at 652-53.
persistence in raising questions the district court had decided, or indicate
defer to trial, the court ordered Bender to pay $500 personally. For prohib
from inspecting certain properties, the court ordered Bender and Brown each
and, jointly and severally, any costs Martin had incurred in attempting to
inspection.
III. Jurisdiction
The district court had subject matter jurisdiction over the underl
between Martin and Brown under 15 U.S.C.A. § 78a et seq. (West Supp. 1995) a
§§ 1341 and 1343 (West 1993). Bender contends that the district court's ord
April 20 and 25, 1994 are "final decisions" over which we have appellate ju
under 28 U.S.C.A. § 1291 (West 1993). Although no appellee is present to re
contention,0 we have a threshold obligation to consider our appellate jurisd
e.g., Hoots v. Commonwealth of Pa., 639 F.2d 972, 978 (3d Cir. 1981).
clerk the ten in limine motions she had enclosed in her March 16, 1994 lette
judge, it only ordered Bender to comply with its rules of procedure.
0
Appeals of attorney sanctions often present this procedural problem because
appellee. See Snow Machines, Inc. v. Hedco, Inc., 838 F.2d 718, 725 (3d Ci
Thus, "[w]e must play not only our accustomed and proper role of neutral adj
also (albeit temporarily) the role of adversary to the appellant in order to
assertions made on appeal." Id. at 726. In limited situations, we have appo
achieve the benefits of the adversarial system. See Eash v. Riggins Trucki
F.2d 557, 559 n.1 (3d Cir. 1985). We believe that action is unnecessary in
8
A. Strict Finality
Our appellate jurisdiction is generally limited to the review of f
of the district courts. United States v. Bertoli, 994 F.2d 1002, 1010 (3d
also 28 U.S.C.A. § 1291.0 Section 1291 states: "The courts of appeals . .
jurisdiction of appeals from all final decisions of the district courts of t
States . . . except where a direct review may be had in the Supreme Court."
§ 1291. "A final decision is one which disposes of the whole subject, gives
relief that was contemplated, provides with reasonable completeness, for giv
the judgment and leaves nothing to be done in the cause save to superintend,
ministerially, the execution of the decree." Isidor Paiewonsky Associates,
Properties, Inc., 998 F.2d 145, 150 (3d Cir. 1993) (internal brackets, quota
and citations omitted).
The district court's order dismissing the litigation underlying Be
sanctions states:
IT IS ORDERED the action is dismissed without prejudice and the Cl
shall mark the case closed. The Court retains complete jurisdicti
to vacate this Order and to reopen the action upon cause shown th
the stay has been lifted or further litigation is necessary.
App. at 664. In Borelli v. City of Reading, 532 F.2d 950, 951 (3d Cir. 197
curiam), we held that "[g]enerally, an order which dismisses a complaint wit
is neither final nor appealable because the deficiency may be corrected by t
without affecting the cause of action." In that case, and in subsequent cas
recognized that exceptions exist, e.g., when the party "cannot amend or dec
intention to stand on his complaint." Id. at 952. The dispositive inquiry
district court's order finally resolved the case. See, e.g., Presbytery of N
0
Although section 1292 authorizes appeals of certain specified non-final ord
applicable here. 28 U.S.C.A. § 1292 (West 1993 & Supp. 1994).
9
Orthodox Presbyterian Church v. Florio, 40 F.3d 1454, 1461 & n.6 (3d Cir. 19
N.A.A.C.P. v. Harrison, N.J., 907 F.2d 1408, 1416-17 (3d Cir. 1990).
In Trent v. Dial Medical of Florida, Inc., 33 F.3d 217 (3d Cir. 19
addressed the effect on our appellate jurisdiction of a district court's sta
dismissal pursuant to Colorado River abstention.0 We stated that "[e]ven di
without prejudice have been held to be final and appealable if they end the
the District Court was concerned, although . . . such dismissals may not co
orders until the party seeking relief renounces any intention to reinstate l
Id. at 220 (internal quotation, citation and brackets omitted). In relianc
Cone Memorial Hosp. v. Mercury Constr. Corp., 460 U.S. 1 (1983), we held th
was whether the purpose and effect of the stay order was to surrender jurisd
federal suit to a state court. Id. at 221 (quoting Moses H. Cone, 460 U.S.
Bender argues similarly that the district court's dismissal effec
this case. Her client, Brown, is in bankruptcy and she no longer represents
Martin may assert his claims against Brown in the bankruptcy court, he is pr
recommencing them in the district court while the bankruptcy is pending. M
be foreclosed from subsequently asserting his claims unless the bankruptcy c
Brown a discharge. Accepting Bender's argument, however, would require us t
the invocation of the bankruptcy code's automatic stay would always result
disposition triggering appellate review. That result would be inconsistent
rationale behind the automatic stay provision. See, e.g., Raymark Industri
F.2d 1125, 1130 (3d Cir. 1992) (automatic stay provides "a breathing spell
which stops all collection efforts") (internal quote omitted). Furthermore,
U.S. Capital Corp., 990 F.2d 780, 786 (3d Cir. 1993), we held that a dismis
prejudice based on the defendants' bankruptcy filing was not final because
0
See Colorado River Water Conservation Dist. v. United States, 424 U.S. 800
10
were "free to seek relief from the automatic stay and pursue their claims ag
defendants," and because the case had "the potential to lead to piecemeal ap
Although this case is dormant, if not dead, with regard to Martin's claims
our analysis under section 1291's strict finality rule requires us to look a
case, including Bender's conduct in allegedly not complying with the distric
orders. Thus, we are unable to say the district court's dismissal without p
finally determined the entire case and, therefore, we conclude that our juri
be based on the collateral order doctrine.
B. The Collateral Order Doctrine
The collateral order doctrine, as first annunciated in Cohen v. B
Indus. Loan Corp., 337 U.S. 541 (1949), relaxes the strict standard of final
permitting us to entertain appeals from certain orders that would not otherw
appealable final decisions. See Johnson v. Jones, No. 94-455, 1995 WL 3472
June 12, 1995) ("[I]n [Cohen], this Court held that certain so-called colla
amount to 'final decisions,' immediately appealable under . . . 28 U.S.C. §
though the district court may have entered those orders before (perhaps lon
case has ended."); Bertoli, 994 F.2d at 1010 ("The flexibility given by Cohe
permits appeal of some district court orders that do not terminate the entir
even a discrete part of it."). The collateral order doctrine recognizes th
achieved by the final decision rule can sometimes be outweighed by other con
Johnson, 1995 WL 347244, at *3 ("sometimes interlocutory appellate review ha
countervailing benefits"). The case law on the collateral order doctrine is
its requirements clear. It permits appellate review of orders that: (1) fi
a disputed question; (2) raise an important issue distinct from the merits o
and (3) are effectively unreviewable on appeal from a final judgment. See,
Equipment Corp. v. Desktop Direct, Inc., 114 S. Ct. 1992, 1995-96 (1994); P
11
Properties, Inc. v. Colonial Sav. Bank, S.L.A., 947 F.2d 49, 54 (3d Cir. 19
Properties, we described these three requirements as: (1) the "conclusivene
the "importance/separateness" prong; and (3) the "unreviewablity" prong. P
Properties, 947 F.2d at 54-58. Failure to meet any one prong precludes a fi
appellate jurisdiction. Bertoli, 994 F.2d at 1012.
1. The "Conclusiveness" Prong
"The requirement that the district court's order 'conclusively det
question means that appellate review is likely needed to avoid that harm."
WL 347244, at *4. An order "is conclusive when no further consideration is
by the district court." Bertoli, 994 F.2d at 1011 (citations omitted). The
conclusiveness prong excludes from review "'any decision which is tentative
incomplete.'" Swint v. Chambers County Com'n, 115 S. Ct. 1203, 1208 (1995)
Cohen, 337 U.S. at 546, and citing Coopers & Lybrand v. Livesay, 437 U.S. 4
In Eavenson, Auchmuty & Greenwald v. Holtzman, 775 F.2d 535, 537
we addressed the applicability of the collateral order doctrine to appeals o
sanctions. We concluded that there could be "no dispute" that the conclusiv
was satisfied because "[t]he sanctions order challenged . . . finally and c
determines the sanctions issue." Eavenson, 775 F.2d at 538. Similarly, in
Distributors, Inc. v. Maico-Fahrzeugfabrik, 658 F.2d 944 (3d Cir. 1981), alt
ultimately found the Rule 37 sanctions there involved were not immediately
noted that the sanction order conclusively determined the disputed question
and thus satisfied the first element. Eastern Maico, 658 F.2d at 947; see
Lawrence R. Kemm, Note, Interlocutory Appeals of Attorney Sanctions: In Sear
Standard, 25 Ind. L. Rev. 919, 923 (1991) ("[T]here has been little discussi
disagreement that a sanction order represents a 'conclusive determination.'"
cases).
12
We have no trouble concluding on the record before us that the dis
orders sanctioning Bender were its final word on her liability for professio
misconduct. There is no indication that the court intended to revisit the i
of the sanctions were ordered to be paid by April 29, 1994. Although Bender
has been conclusively determined, there remains a question with regard to th
Bender's liability on the sanction imposed for the expenses caused by her fa
comply with the court's discovery order because that sanction has not yet b
The court order stated that "defendant Brown and attorney Bender, jointly an
are DIRECTED TO PAY to the Clerk of Court the reasonable travel expenses and
hourly fees incurred by plaintiffs for the services of Mr. John Welsch, MAI
he was unable to inspect defendants' properties, within 14 days of the filin
plaintiffs of a verified statement itemizing said expenses and fees." App.
Martin never filed a verified statement with the district court. Thus, the
sanction remains unquantified.
Generally, an order is not final until it is reduced to a determin
Napier v. Thirty or More Unidentified Federal Agents, Employees or Officers
1080, 1089 (3d Cir. 1988); see also Apex Fountain Sales, Inc. v. Kleinfeld,
934-35 (3d Cir. 1994); United States v. Sleight, 808 F.2d 1012, 1015 (3d Cir
Becton Dickinson & Co. v. District 65, United Auto., Aerospace and Agric. Im
Workers of Am., AFL-CIO, 799 F.2d 57, 61-62 (3d Cir. 1986). The need for qu
arises from "concerns with duplicative expenditure of judicial time and reso
Sleight, 808 F.2d at 1015. It is not without exceptions, however. See, e.
Seidman, 37 F.3d 911 (3d Cir. 1994). One exception applies to orders in whi
when determined, is insignificant in the overall context of the dispute and
unlikely to be the subject of a later appeal. Thus, we recently stated in
[W]e have continued to recognize that an order is final even if it
does not reduce the damages to a sum certain if "the order
sufficiently disposes of the factual and legal issues and [if] any
13
unresolved issues are sufficiently 'ministerial' that there would
no likelihood of further appeal."
Apex, 27 F.3d at 936 (quoting Polychrome Int'l Corp. v. Krigger, 5 F.3d 152
(3d Cir. 1993)) (second alteration in original).
In this case, the sole discovery expense Martin incurred was the c
retaining a single real estate appraiser to inspect the property. The deter
this amount is likely to be straightforward and mechanical, and it is also u
result in a later appeal. Furthermore, Bender insists her concern is not th
her professional reputation. In Simmerman v. Corino, 27 F.3d 58, 64 (3d Cir
recognized that the impact of attorney sanctions goes beyond the dollar amou
"as a symbolic statement about the quality and integrity of an attorney's wo
statement which may have tangible effect upon the attorney's career." In th
context of this case, the dollar amounts of the sanctions imposed and the po
liability for the unquantified sanction are insignificant in comparison to
effect. Furthermore, there is nothing in the record to explain Martin's del
the statement and it now appears highly unlikely that it will ever be filed.
record leaves much to be desired, the district court's order limited Martin
whatever amount is due from, or paid by Martin to Welsch for the time Welsch
on which he showed up to inspect Brown's real estate and was not able to do
at 249-255. Because the only thing missing is an invoice from the appraiser
limited lost time, we believe quantification is essentially a ministerial or
"mathematical" calculation that can be based on Welsch's bill for this time.
case is distinguishable from those in which we have refused to entertain ap
unquantified orders holding attorneys liable for reasonable attorney's fees
course of a particular dispute. See In re Jeannette Corp., 832 F.2d 43, 45
14
1987). We conclude that the district court's orders conclusively determine
question.
2. The "Importance/Separateness" Prong
Turning to whether the matter is separate from the merits of the a
been said that this prong "means that review now is less likely to force the
court to consider approximately the same (or a very similar) matter more tha
also seems less likely to delay trial court proceedings (for, if the matter
collateral, those proceedings might continue while the appeal is pending)."
WL 347244, at *4. This requirement of separateness "derives from the princi
should not be piecemeal review of steps toward final judgment in which they
Praxis Properties, 947 F.2d at 56-57 (internal quotation marks omitted). At
sanctions, especially discovery sanctions, are, however, often too intertwin
merits of the underlying litigation to permit immediate review under the col
doctrine. See Eavenson, 775 F.2d at 538 n.6; Eastern Maico, 658 F.2d at 94
Thus, in Eastern Maico, we stated that "sanctions for violation of
orders are usually considered interlocutory and not immediately appealable."
Maico, 658 F.2d at 947 (citations omitted). In applying the separateness p
concluded, "[i]n order to address the question whether the documents request
plaintiffs were truly relevant, we would have to consider the charges agains
defendants and reach some conclusion as to the relative importance of the di
material." Id. Thus, we held that "the discovery activity at issue here i
completely collateral to the underlying action." Id.
The circumstances of Eastern Maico, however, differ significantly
before us in Bender's case. In Eastern Maico, the party challenging the sa
agreed that the sanction order could not "be adequately understood without e
the entire discovery history in the case," which "would inevitably enmesh us
15
of relevance which could not be decided without reference to the underlying
at 951. In contrast, in Bender's case we can review the district court's al
to comply with the mandates of procedural due process. This review will not
in the merits of the underlying litigation.
Here, as in Eavenson, there is little danger that our review will
Brown is in bankruptcy, Martin's case against him has been dismissed and Ben
represent Brown in the bankruptcy. To the best of our knowledge, the underl
litigation continues in the bankruptcy court. Thus, Bender's sanction is "c
and separate from the merits not only because the principal case cannot be a
outcome of the sanction appeal, but also because the sanction appeal cannot
the outcome of the principal case." Lawrence R. Kemm, supra, 25 Ind. L. Rev.
Thus, we conclude that the sanctions imposed against Bender are separate fro
underlying merits within the meaning of Cohen.0
This prong, however, contains two subparts. The claim on appeal m
that is "too important to be denied review." Cohen, 337 U.S. at 546. There
also consider whether the issue Bender poses is important. This question is
merged in discussion with the third prong of the Cohen doctrine because the
subsequent review affects the importance of the question. See Digital Equi
S. Ct. at 2001 (applying the importance requirement as part of the third pr
that other cases have properly applied it to the second prong, citing Coope
437 U.S. at 468; Lauro Lines S.R.L. v. Chasser, 490 U.S. 495, 498 (1989)).
importance is reviewed as part of the second or the third prong, however, it
cannot be answered without a judgment about the value of the interests that
through rigorous application of a final judgment requirement." Id. As noted
0
Our finding of separateness is dependent on the facts presently before us.
Eavenson, "[w]e do not now adopt a rule that would allow immediate appellat
sanction order imposed upon counsel, whether counsel has withdrawn from the
Eavenson, 775 F.2d at 539 (emphasis in original).
16
imposition of attorney sanctions may impose significant burdens on the repu
career opportunities of the sanctioned attorney. We believe such potential
compliance with the constitutional protections of due process, coupled with
later opportunity for effective appellate review, is sufficient to meet the
requirement of the collateral order doctrine. See Digital Equipment, 114 S
("Where statutory and constitutional rights are concerned, irretrievable los
be trivial . . . .") (internal quotations and brackets omitted).
3. The "Unreviewability" Prong
On the unreviewability prong of the Cohen requirements, we conside
district court's orders will be "effectively unreviewable" if we do not revi
Bertoli, 994 F.2d at 1012. To meet this requirement, "an order must be such
postponed will, in effect, be review denied." Id. (internal quotation mark
omitted). For purposes of the collateral order doctrine, unreviewability "me
failure to review immediately may well cause significant harm." Johnson, 19
at *4 (citing 15A C. Wright, A. Miller, & E. Cooper, Federal Practice and P
§ 3911, pp. 334-35 (1992)).
In Eastern Maico, we concluded that we lacked appellate jurisdicti
collateral doctrine, in part, because the attorney was unable to satisfy th
requirement. We held that the orders would "be fully reviewable on appeal f
judgment: the parties to the order will still be before the court, and reta
interest in challenging the order as they have today." Eastern Maico, 658
As Bender is no longer involved in the underlying case, Eastern Maico is no
In this regard, Bender is in a situation more similar to the attorney sancti
Eavenson. There, we stated:
Because appellant [] is no longer connected with the merits of the
case, he has an immediate interest in challenging the sanction whi
is not shared by the parties to the suit or by counsel to a party.
17
Eavenson, 775 F.2d at 538-39. Bender, like the attorney in Eavenson and ag
attorney in Eastern Maico, is no longer a participant in the proceedings.
Bender is unlikely to have an adequate and effective opportunity for review
consider her appeal of the sanctions imposed on her now.
In sum, we hold that the sanction orders against Bender "conclusiv
the disputed question," "resolve an important issue completely separate from
the action," and are "effectively unreviewable on appeal from a final judgm
Gulfstream Aerospace Corp. v. Mayacamas Corp., 485 U.S. 271, 276 (1988) (ci
omitted). Thus, we have appellate jurisdiction under the collateral order d
flexible concept of finality. Accordingly, we will now turn to the merits o
appeal.
IV. Standard of Review
We review orders imposing sanctions for abuse of discretion. See
NASCO, Inc., 501 U.S. 32, 55 (1991); Arab African Int'l Bank v. Epstein, 10
(3d Cir. 1993). When the procedure the district court uses in imposing san
due process issues of fair notice and the right to be heard, however, our re
plenary. See Fabulous Assoc., Inc. v. Pennsylvania Public Utility Commissi
780, 783 (3d Cir. 1990) (constitutional issues subject to plenary review);
Inc. v. Hedco, Inc., 838 F.2d 718, 725 (3d Cir. 1988); see also Gillette Fo
Bayernwald-Fruchteverwertung, GmbH, 977 F.2d 809, 812 (3d Cir. 1992) (apply
review to legal issues that arise in a sanctions context).
V. Discussion
A.
18
Bender contends that the district court denied her notice and an o
be heard when it sanctioned her for failure to comply with discovery. The D
Clause of the Fifth Amendment requires a federal court to provide notice and
opportunity to be heard before sanctions are imposed on a litigant or attorn
Riggins Trucking Inc., 757 F.2d 557, 570-71 (3d Cir. 1985) (in banc); Lando
F.2d 450, 454 (3d Cir. 1991) (per curiam).
No precise all encompassing rule captures the requirements of proc
process. The process that is due varies with the nature of particular dispu
evaluation of its requirements should balance fairly the competing interest
sanctioned person against the judicial system's need for efficient judicial
administration. See Corino, 27 F.3d at 64 ("The precise form of procedural
required will, of course, vary with the circumstances of the case."); Eash,
570 ("The form which those procedural protections must take is determined by
of all the circumstances and an accommodation of competing interests."). Ne
the fundamental requirements of due process--notice and an opportunity to r
afforded before any sanction is imposed. See Eash, 757 F.2d at 570 (citati
Jones v. Pittsburgh National Corp., 899 F.2d 1350, 1357 (3d Cir. 1990) (cit
F.2d at 570-71). With regard to sanctions, particularized notice of the gro
sanction under consideration is generally required. See, e.g., Corino, 27
Jones, 899 F.2d at 1357.0
0
Because we conclude that the district court failed to afford Bender procedu
process, we believe it is unnecessary and inappropriate for us to decide on
her contention that she engaged in no sanctionable misconduct. We believe t
court must first address these matters on remand, after Bender is afforded t
safeguards required by the Due Process Clause.
0
Recently, we upheld the imposition of sanctions under the bankruptcy court'
sanction power without requiring this type of "particularized notice." Fell
& Braverman, P.C. v. Charter Technologies, Inc., No. 94-3461, 1995 WL 369875
June 22, 1995). In that case, however, the sanctioned attorney was plainly
he was facing sanctions for conduct involving subjective bad faith.
19
Bender's due process argument has two prongs. She argues that the
court failed to give her sufficient prior notice of the possibility of sanc
failed to relate specifically her conduct to the various theories it used to
sanctions. She contends that the court required her to defend her actions u
weapon the judicial arsenal has available for imposing sanctions on an attor
Bender's argument that the district court wholly failed to provide
somewhat overstated. In its memorandum, the district court stated that the
imposed on Bender for failure to afford discovery were imposed under Rule 3
motion requesting Rule 37 sanctions for noncompliance with the court's disc
obviously referred to Rule 37. It was served on Bender and she filed a respo
district court also provided her sufficient opportunity to be heard. It hel
before deciding the issues Martin's Rule 37 motion raised. Bender's electio
local counsel to state her position because of her own prior commitment is i
Although Martin's motion only requested dismissal or preclusion of evidence,
fair notice and an adequate opportunity to respond to Martin's request for R
sanctions before their imposition. See Corino, 27 F.3d at 64.
Bender's argument, however, that the district court's order impos
sanctions was overly broad, is more troubling. Rule 37 cannot justify the $5
0
In this respect, the district court said:
1. Plaintiff's Revised Motion for Sanctions Pursuant to Rule 37
(Document No. 434) is GRANTED IN PART AND DENIED IN PART, as foll
. . . c) plaintiff's request to sanction defendants and/or their
counsel for refusal to permit meaningful inspection of real proper
in compliance with this court's orders of December 30, 1992 and
January 25, 1993, is GRANTED, and defendant Harold E. Brown and
attorney Rebecca E. Bender are DIRECTED TO PAY to the Clerk of [th
Court the sum of $500.00 EACH for their willful refusal to comply
the court's orders; [and they are both jointly and severally liabl
for the resulting costs to the plaintiff].
App. at 651-53.
20
the district court imposed on Bender for her refusal to allow discovery.0 A
contempt, the only monetary sanctions Rule 37 authorizes are "reasonable ex
resulting from the failure to comply with discovery. Fed. R. Civ. P. 37 (19
Newton v. A.C.&S., Inc., 918 F.2d 1121, 1126 (3d Cir. 1990).0 The district
to explain the basis for the sanction amount. Although the imposition of th
discovery costs are allowable under Rule 37, imposition of the unauthorized
the court's justification for these sanctions ambiguous and thus requires us
elsewhere in the court's opinion to determine the grounds for both these di
sanctions and the refiling sanction. The only other reference to the grounds
is made in the district court's introduction. There, the district court sta
elaboration that it imposed sanctions under Rule 11, Rule 37, 28 U.S.C.A. §
inherent powers.0
0
Although Rule 37 authorizes both punitive and compensatory damages, it requ
amount of any monetary damages to be specifically related to expenses incurr
violations. See Roadway Express, Inc. v. Piper, 447 U.S. 752, 763-64 (1980)
Ford Motor Co., 636 F.2d 745, 747 (D.C. Cir. 1980) ("The principal purpose
is punitive, not compensatory."). But see Media Duplication Services, Inc.
Software, 928 F.2d 1228, 1241-1242 (1st Cir. 1991). The sanctions in Newto
Inc., 918 F.2d 1121 (3d Cir. 1990), and Media Duplication were imposed under
not Rule 37(b)(2). The latter is directed to a party or its agents. Rule 16
expressly to "a party or [its] attorney."
0
Rule 37(b)(2) states in part:
the court shall require the party failing to obey the order or the
attorney advising that party or both to pay the reasonable expense
including attorney's fees, caused by the failure, unless the court
finds that the failure was substantially justified or that other
circumstances make an award of expenses unjust.
Fed. R. Civ. P. 37 (1995).
0
We reproduce the full text of the relevant portion of April 20 and April 25
Penalties will now be imposed for the continued shenanigans of th
parties and their counsel, who have been repeatedly warned that th
court would take such action under the authority of the Federal Ru
of Civil Procedure, especially F.R.C.P. Rules 11 and 37, 28 U.S.C
§ 1927, and its inherent power to correct abuses of the judicial
process.
21
This scatter-gun approach is unfair to Bender. It also makes our
deciding whether the district court acted consistently with a sound exercise
impossible on the record now before us. Jones, 899 F.2d at 1358; accord Fo
Associates, Inc., 943 F.2d 139, 141-42 (1st Cir. 1991); United States v. Int
of Teamsters, 948 F.2d 1338, 1346 (2d Cir. 1991). In Jones, supra, we addre
problem and held:
Because the district court did not differentiate between Rul
and [section 1927] in imposing sanctions, we are not in a positio
even to know whether the district court applied the correct standa
insofar as Rule 11 is concerned. In consequence, the entire order
imposing sanctions on appellant must be vacated.
899 F.2d at 1358. The district court's failure to relate its general ground
conduct (and her conduct alone) requires us to vacate its order sanctioning
remand this case for further proceedings in which the district court will ha
opportunity to elaborate on Bender's conduct, as well as her state of mind,
the legal basis for each sanction imposed against Bender.
B.
Though we will not decide any of the other issues Bender raises, w
be appropriate to comment briefly on some issues that are likely to come up
Rule 11 authorizes imposition of sanctions upon the signer of any pleading,
other paper that was presented for an improper purpose, e.g., "to harass or
unnecessary delay or needless increase in the cost of litigation." See Land
at 452. Rule 11 sanctions are based on "'an objective standard of reasonab
the circumstances.'" Id. at 453 n.3 (quoting Mary Ann Pensiero, Inc. v. Lin
90, 94 (3d Cir. 1988)). Bad faith is not required. Id.; Jones, 899 F.2d a
Rule 11(c)(1) provides that sanctions can be initiated either by motion or
App. at 651.
22
initiative. When acting on its own initiative, however, the district court
enter an order describing the specific conduct that it believes will warrant
direct the person it seeks to sanction to show cause why particular sanctio
be imposed. See Rule 11(c)(1)(B); see also Rule 11(c)(3) ("When imposing s
court shall describe the conduct determined to constitute a violation of thi
explain the basis for the sanction imposed."). If the district court wishe
Bender under Rule 11, it should issue and serve on her an order to show cau
considering any response she may file, explain its rationale and describe th
conduct that supports the particular Rule 11 sanction imposed.0
Likewise, if the court desires to base any sanction on section 19
refer to that statute in the order to show cause and relate specific conduct
violation. We note, however, that section 1927, unlike Rule 11, requires
Gaiardo v. Ethyl Corp., 835 F.2d 479, 484 (3d Cir. 1987). In addition, secti
Rule 37, authorizes only the imposition of costs and expenses that result fr
particular misconduct the court sanctions. Eash, 757 F.2d at 560. Section
limits these costs and expenses to those that could be taxed to a losing par
U.S.C.A. § 1920 (West 1994). Id.
0
Rule 11 also has specific notice requirements echoing the Due Process Claus
Amendment. See Corino, 27 F.3d at 64 ("The party sought to be sanctioned is
particularized notice including, at a minimum, 1) the fact that Rule 11 san
under consideration, 2) the reasons why sanctions are under consideration, a
of sanctions under consideration.").
0
Section 1927 states:
Any attorney or other person admitted to conduct cases in an
court of the United States or any Territory thereof who so multipl
the proceedings in any case unreasonably and vexatiously may be
required by the court to satisfy personally the excess costs,
expenses, and attorneys' fees reasonably incurred because of such
conduct.
28 U.S.C.A. § 1927.
23
Usually, the inherent power that a district court retains to sanct
also requires bad faith. Gillette Foods, 977 F.2d at 813 ("[A] court may a
attorney's fees when a party has acted in bad faith, vexatiously, wantonly,
oppressive reasons.") (internal quotations omitted); Landon, 938 F.2d at 45
prerequisite for the exercise of the district court's inherent power to sanc
finding of bad faith conduct."); but see Republic of Philippines v. Westingh
Corp., 43 F.3d 65, 74 n.11 (3d Cir. 1994) (sanctions imposed under the court
authority do not always require a showing of bad faith).0 We have previousl
care in the use of inherent powers to impose sanctions. See Fellheimer, Eic
Braverman, 1995 WL 369875, at *8 ("'Because of their very potency,' . . . th
courts must be careful to exercise their inherent powers 'with restraint an
discretion.'") (quoting Chambers, 501 U.S. at 44); Republic of Philippines,
Generally, a court's inherent power should be reserved for those cases in wh
conduct of a party or an attorney is egregious and no other basis for sancti
See Gillette Foods, 977 F.2d at 813.
In summary, if the district court on remand wishes to pursue sanct
Bender, it should do more than state generally the various grounds authorizi
should relate each sanction to some aspect of Bender's conduct and explain h
conduct comes within the authority it relies on to impose it. Any sanction
against Bender should also be imposed solely because of her own improper con
considering the conduct of the parties or any other attorney.
VI. Conclusion
0
Bender correctly points out that the district court never used the term bad
order and suggests that there is no evidence that could support a finding of
The district court on remand will be in a position to determine, in the fir
whether Bender acted in bad faith.
24
For the reasons stated above, we will vacate the district court's
April 20 and April 25, 1994 insofar as they impose sanctions on Bender for
discovery and for refiling motions addressing issues already decided. The c
remanded to the district court for further proceedings consistent with this
Bender shall bear her own costs.
LEON M. MARTIN v. HAROLD ED BROWN, ET AL.
No. 94-3248
STAPLETON, Circuit Judge, dissenting:
I respectfully dissent because I believe we are without appellate
The court correctly concludes that the district court's order hav
of staying this case pending resolution of the bankruptcy proceeding is not
It also correctly concludes that an attorney who no longer represents a part
some circumstances appeal a sanction order under the collateral order doctri
I believe it errs in concluding that the order here appealed from meets the
"conclusiveness" prong of the collateral order doctrine.
25
The first of the two provisions of the order imposing sanctions on
provides as follows:
[P]laintiff's request to sanction defendants and/or their co
for refusal to permit meaningful inspection of real property in
compliance with this court's orders of December 30, 1992 and Janua
25, 1993, is GRANTED, and defendant Harold E. Brown and attorney
Rebecca E. Bender are DIRECTED TO PAY to the Clerk of Court the su
$500.00 EACH for their willful refusal to comply with the court's
orders; additionally defendant Brown and attorney Bender, jointly
severally, are DIRECTED TO PAY to the Clerk of Court the reasonab
travel expenses and standard hourly fees incurred by plaintiffs fo
the services of Mr. John Welsch, MAI, to the extent he was unable
inspect defendants' properties, within 14 days of the filing by
plaintiffs of a verified statement itemizing said expenses and fe
. . .
App. at 659-60.
The court acknowledges that "the amount of this sanction remains u
and that, generally, "an order is not final until it is reduced to a determi
(Slip op. at 17). It relies, however, on a venerable exception to the gene
as the Forgay-Conrad doctrine, see Forgay v. Conrad, 47 U.S. (6 How.) 201 (1
is applicable to cases in which the order appealed from leaves nothing to do
"ministerial act." The court cites Apex Fountain Sales, Inc. v. Kleinfeld,
(3d Cir. 1994) as authority for its conclusion that this is such a case.
In Apex, this court held that an order establishing liability and
accounting, but not quantifying the amount of money to be paid the plaintif
defendant, was not a final order. We made clear that the word "ministerial
context of the Forgay-Conrad doctrine refers to "mechanical" acts, like mat
calculations, about which there can be no dispute. Only when the act remai
is "ministerial" in this sense can an appellate court proceed with assurance
0
In the Forgay case itself, the order appealed from directed the immediate
physical property to the plaintiff, as well as an accounting. The losing pa
regarded as facing immediate irreparable injury and this fact has been regar
numerous courts as essential to the result reached. See 9 James W. Moore et
Federal Practice ¶110.11, at 89-97 (2d ed. 1995).
2
will "be no likelihood of [a] further appeal." Apex, 27 F.3d at 936 (quotat
We stressed the importance of the considerations behind insisting on quanti
damages, quoting from the Supreme Court's decision in Van Cauwenberghe v. B
517 (1988):
"Permitting piecemeal appeals would undermine the independence of
district judge, as well as the special role that individual plays
our judicial system. In addition, the [finality] rule is in
accordance with the sensible policy of avoiding the obstruction to
just claims that would come from permitting the harassment and cos
a succession of separate appeals from the various rulings to whic
litigation may give rise, from its initiation to entry of judgment
Van Cauwenberghe v. Biard, 486 U.S. 517, 521-22 n.3, 108 S. Ct. 19
1949 n. 3, 100 L. Ed. 2d 517 (1988) (quotations omitted); see Catli
United States, 324 U.S. 229, 233-34, 65 S. Ct. 631, 633-34, 89 L.E
911 (1945)("The foundation of this policy is not in merely technic
conceptions of 'finality.' It is one against piecemeal litigation
Apex, 27 F.3d at 935 (alteration in original).
Most important for present purposes, we noted in Apex that this u
the importance of finality is "reflected in our cases holding that a distric
awarding 'reasonable' attorneys fees is not appealable until the fees are qu
order to prevent two appeals -- one on whether attorneys fees should be awar
second on the amount of the award." Id. In my view, a determination of "r
travel expenses" and reasonable0 fees for the expert services of a professio
extent he was unable to inspect defendants' properties" holds no less potent
disagreement and a second appeal than does the typical determination of the
reasonable litigation expense and reasonable counsel fees following an unqua
of such expenses and fees. Accordingly, I do not see how we can hear this a
hereafter also hearing appeals from unquantified counsel fee awards.
0
While the district court's order refers to "standard hourly fees" rather
"reasonable fees," the former is obviously intended as an indicia of the lat
not suggest to me that the potential for disagreement is less than that inhe
lodestar determination.
3
My concern about the court's ruling on jurisdiction is based only
considerations we stressed in Apex. Piecemeal appellate review is an ineffi
federal judiciary can ill afford. But today's ruling gives rise to a distin
grave, concern. An order is either final or it is not final and if it is f
but a limited period in which courts of appeals have jurisdiction to review
makes it crucial that a party and its counsel be able to know with certainty
is final. In the absence of such certainty, counsel must either flood us w
appeals or run the risk that appeal rights will be unintentionally foregone.
ministerial exception is extended beyond the realm of mathematic calculation
will necessarily be generated in an area where certainty is essential to the
operation of the appellate justice system.
I would insist that the amount of the sanctions assessed against M
established before she is permitted to seek appellate review of those sancti
nothing to be lost by so requiring and a great deal to be gained.
0
See 9 Moore et al., supra note 1, ¶ 110.11, at 98-99.
0
The court considers it significant that Martin has apparently not yet app
the sanction quantified and may not do so hereafter. Ms. Bender, however, i
apply to the court for an order requiring quantification or the deletion of
the order relating to Martin's expenses.
Nor am I persuaded by the court's suggestion that the district court's
appealable because it constitutes "a symbiotic statement about the quality a
of" Ms. Bender's work. We rejected such a suggestion in Eastern Maico Distr
v. Maico-Fahrzeugfabrik, G.m.b.H., 658 F.2d 944, 951 (3d Cir. 1981).
4