O'MALLEY, Circuit Judge.
Tesco filed a complaint against NOV for infringement of U.S. Patent Nos. 7,140,443 and 7,377,324 on August 19, 2008. These patents involve a tool used in well drilling technology—an apparatus and method for handling sections of pipe used for lining a well bore. Id. at *1. The purportedly innovative aspect of the technology is the location of the point of connection for "link arms," which connect the Case Drilling System to the drill pipe that will be placed in the well bore. U.S. Patent No. 7,377,324 col. 1 l.31—col.2 l.27. In the prior art systems, the link arms attached to the top drive of a Case Drilling System, but the patents-at-issue described a Case Drilling System with the link arms attached to the lower pipe engaging apparatus. Id. By lowering the point of connection, the link arms could better reach and grab sections of the pipe.
In response to Tesco's complaint, NOV filed an answer, counterclaims, and a request for attorney's fees under 35 U.S.C. § 285. NOV subsequently filed a series of motions to compel requesting, in part, information about any relevant documents that evidence what occurred during the six month period prior to the on-sale bar date of November 2002. Tesco claimed that it had already disclosed all relevant documents, but nevertheless eventually released a series of printed invoices for brochures created shortly before November 2002. In light of these invoices, NOV specifically requested any information about the brochures, including the brochures themselves, but Tesco denied the continuing existence of these brochures. During a status conference, the district court asked Tesco about the brochures, and Ballard, Tesco's attorney, insisted that Tesco had produced all responsive documents. Joint Appendix ("J.A.") 10703. Up until trial, NOV continued to file motions requesting the brochures, and Tesco continued to deny their existence. At the pretrial conference, the district court again reiterated his concern about possible non-production of documents, stating that "if there are documents that have been produced to others but not the adversaries, that's, obviously, very serious conduct." J.A. 20111-12.
Trial began on October 25, 2010. On October 28, NOV cross-examined one of the named inventors of the patents-at-issue, Kevin Nikiforuk. NOV questioned Nikiforuk about an image in Exhibit 851, which NOV claimed was the missing brochure
Tesco objected to this testimony and asked that it be stricken as speculative and irrelevant. Ballard then requested time to determine why the brochure was not produced during discovery and if it actually represented the claimed invention. The next day, Ballard informed the court that Tesco had produced a low-resolution, black-and-white, single-page version of the brochure during discovery, and argued that none of the defendants had asked for a clearer version of the produced document. Ballard then told the court that the image in the brochure did not show the claimed invention. In response, NOV requested a curative instruction and a sanction switching the burden of proof due to Tesco's failure to disclose an original, legible version of the brochure. Certain defendants also refused an offer of a mistrial because they did not want to give Tesco the opportunity to prepare Nikiforuk for a new trial, insisting that they preferred entry of judgment to a new trial. Ballard agreed to continue to investigate the brochure over the weekend. J.A. 20724.
On November 1, Ballard explained that he had done further research on the brochure, and that Luman had contacted the alleged designers of the brochure. Ballard then made the following declaration to the court:
J.A. 20885 (emphasis added). Ballard again argued that Tesco sufficiently produced the image in black-and-white form, but the district court disagreed, stating that the black-and-white version was not equivalent to the color version, especially with regards to the point of connection for the link arms. Ballard then continued:
J.A. 20888 (emphasis added). Ballard reiterated that, based on the statements of Karr and Orcherton, "there is no doubt that [the image in the brochure is] not Mr. Nikiforuk's invention." J.A. 20897. Ballard made this same assertion to the jury in his closing argument.
In light of the non-production of the original brochure, the district court sanctioned Tesco by reversing the burden of proof on validity, and setting the burden to
After trial, the district court issued an April 12, 2011 order permitting post-trial discovery on the brochure. NOV filed what the parties characterize as post-trial summary judgment motions of invalidity under 35 U.S.C. § 102(b) and § 103 based on, inter alia, what it asserts was disclosed in the brochure.
NOV continued its post-trial motions practice with a focus on its request for attorney's fees under § 285. Tesco filed a motion seeking judgment in its favor regarding the exceptional case determination, arguing that a "trial" was unnecessary because all relevant allegations regarding litigation misconduct had already been heard by the court.
NOV deposed both Karr and Orcherton near the end of 2013, focusing on the discussions between Karr/Orcherton and the Attorneys during trial. Karr testified that he did not say that the brochure failed to disclose the invention. J.A. 40391. Karr explained that, when he first spoke with Luman, he informed Luman that he could not tell definitively where the link arms connected to the Case Drive System in the brochure because of the low resolution of the image. J.A. 40391; see also Sanctions
After discovery was completed, the district court set a trial date of March 17, 2014, for the exceptional case "counterclaim," and held a motions hearing on February 21, 2014, to discuss, in part, the litigation misconduct issue.
On August 25, 2014, the district court issued an order sua sponte dismissing the case with prejudice under the court's inherent authority based on counsel's inaccurate representations "to the Court during trial."
The court said it had an "independent obligation to safeguard . . . the proceedings before it." Id. It reasoned that the brochure "might very well have been case dispositive." Id. The court explained that a lesser sanction would be insufficient. Id. at *7. The court went on to emphasize, however, that:
Id. The court did not award fees to NOV at this time, but said it was reserving the question of whether fees might be appropriate for later consideration in light of its August 25 findings. Tesco and the Attorneys again filed notices of appeal.
We determine our jurisdiction over a case or controversy according to Federal Circuit law, not regional circuit law. Nisus Corp. v. Perma-Chink Sys., 497 F.3d 1316, 1318 (Fed.Cir.2007) ("We resolve questions as to our jurisdiction by applying the law of this circuit, not the regional circuit from which the case arose."); Sanders Assocs., Inc. v. Summagraphics Corp., 2 F.3d 394, 395 (Fed.Cir. 1993) ("[B]ecause the appealability of the sanction order relates directly to the issue of our own jurisdiction, this court will determine its own jurisdiction to hear this appeal."); Woodard v. Sage Prods. Inc., 818 F.2d 841, 844 (Fed.Cir.1987) (en banc) ("This court has the duty to determine its jurisdiction and to satisfy itself that an appeal is properly before it."). "We may, of course, look for guidance in the decisions of the regional circuit to which appeals from the district court would normally lie, as well as those of other courts. However, our decision to follow another circuit's interpretation . . . results from the persuasiveness of its analysis, not any binding effect." Woodard, 818 F.2d at 844.
The Attorneys argue that there remains an Article III case or controversy because the statements made in the district court's opinion constitute a sanction against the Attorneys, and the subsequent reputational harm to the Attorneys is a sufficient injury-in-fact to justify our jurisdiction. The Attorneys further claim that the district court erred, as a procedural matter, in issuing a sanctions order under its inherent authority without providing the Attorneys notice and an opportunity to be heard. The Attorneys believed that the result of the hearings held in early 2014 would be, at worst, a trial on NOV's exceptional case motion, and they claim to have been taken by surprise by the sanctions order. On the merits of the sanctions order, the Attorneys argue that the district court erred in finding bad faith because Ballard relied on Karr's statements during trial when Ballard made the representations to the court about the brochure, and Karr was equivocal during his deposition testimony about what he told Luman. According to the Attorneys, the deposition evidence of Karr and Orcherton was an insufficient basis upon which to premise an exercise of the court's inherent authority. They contend, moreover, that this is especially true because the court chose to dismiss the case with prejudice.
NOV responds that, due to the settlement agreement, there is no enduring case or controversy. All parties mutually released each other, including the Attorneys, from any further liability, and NOV claims that statements made in an opinion issuing formal sanctions against Tesco, not the Attorneys, cannot justify our jurisdiction. NOV also argues that the Attorneys received more than sufficient due process, including multiple opportunities to recant their statements to the court, and that the trial court informed the Attorneys on multiple occasions that he was considering issuing sanctions for litigation misconduct. And for the merits of the sanctions order, NOV asserts that the district court acted well within its inherent powers.
Article III, section 2 of the Constitution extends the "judicial Power of the United States" to an enumerated list of cases or controversies. Under this framework, a party must have standing to resolve the dispute, and there must be an on-going case or controversy throughout the trial and appeals. Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992) (recognizing three elements necessary for a federal court to have Article III standing: (1) an injury-in-fact that is "actual or imminent, not conjectural or hypothetical"; (2) "a causal connection between the injury and the conduct complained of"; and (3) a likelihood that the "injury will be redressed by a favorable decision"). We have generally held that nonparties "may not appeal from judgments or other actions of a district court." Nisus, 497 F.3d at 1319. We have made an exception, however, for an attorney "held in contempt or otherwise sanctioned by the court in the course of litigation," concluding that, once the court has specifically punished an attorney, the injury "becomes personal to the sanctioned individual and is treated as a judgment against him." Id.
This appeal presents two questions that must be resolved in order for us to have jurisdiction over the dispute: (1) can the sanctions order that was explicitly issued against Tesco be considered a formal reprimand against the Attorneys so as to provide them with standing to pursue this appeal; and (2) what is the effect of the settlement by all parties on the redressability of the Attorneys' request for relief? In order for us to have jurisdiction over this appeal, we would have to conclude that the order was the equivalent of a formal reprimand against the Attorneys and that we can redress the injury to their reputation. Because we do not find we can redress the Attorneys' claimed injury, we need not decide whether the sanctions order in this case is the type of reprimand that could confer standing to pursue this appeal.
We have twice recently addressed the appealability of a sanctions order. In Precision Specialty Metals, Inc. v. United States, 315 F.3d 1346 (Fed.Cir.2003), we held that we had jurisdiction when the Court of International Trade formally reprimanded a Department of Justice attorney. In an unpublished opinion, the Court of International Trade found that the attorney violated Rule 11 of the Rules of the Court of International Trade due to
On appeal, we concluded that "we have jurisdiction to review the Court of International Trade's formal reprimand of [an attorney] for attorney misconduct." Id. at 1352 (noting that the reprimand was "explicit and formal, imposed as a sanction"). We explained that a formal reprimand, even without monetary sanctions, could have a "seriously adverse effect . . . upon a lawyer's reputation and status in the community and upon his career." Id. Because of this, we concluded that the attorney had standing to appeal the order independently of any appeal by the parties. Id. at 1352-53. We noted, however, that our jurisdiction did have limits—"judicial statements that criticize the lawyer, no matter how harshly, that are not accompanied by a sanction or findings, are not directly appealable." Id. at 1352; see also id. at 1353 ("Nothing in this decision should be taken as suggesting . . . that other kinds of judicial criticisms of lawyers' actions, whether contained in judicial opinions or comments in the courtroom, are also directly reviewable.").
We again addressed our jurisdiction over an appeal from a potential sanction against an attorney in Nisus. In Nisus, the district court concluded that the patent-at-issue was unenforceable because of inequitable conduct, in part due to the actions of one of the attorneys who prosecuted the patent and participated in the trial as a witness. 497 F.3d at 1318. The parties settled, but the prosecuting attorney appealed the inequitable conduct determination and the denial of his motion to intervene in the litigation. Id. We recognized that:
Id. at 1319. We reiterated our conclusion in Precision Specialty Metals that criticisms of attorneys intended to be "a formal judicial action" are appealable, but not other kinds of judicial criticisms. Id. at 1320. Because the district court did not enter any formal judicial action against the attorney, we concluded that we did not have jurisdiction over the appeal. Id. at 1321. We held that:
Id. Allowing appeals based solely on concerns about professional reputation would open the floodgates to appeals "by any nonparty who feels aggrieved by some
Precision Specialty Metals and Nisus thus require a formal sanction or reprimand to justify our jurisdiction over an appeal by an attorney from an order criticizing the attorney's conduct. The Attorneys argue that the present order should be considered the equivalent of a formal reprimand because the dismissal was predicated on the conduct of the Attorneys. The Attorneys further say that having their client's case dismissed is more harmful to them than would be a small monetary sanction, which they contend surely would justify the exercise of our jurisdiction under Precision Specialty Metals. NOV responds that Nisus makes clear that, when counsel's conduct is criticized in the course of rendering judgment against a party, that counsel lacks standing to pursue an appeal. The present case does not fit nicely within the facts of either Precision Specialty Metals or Nisus, however.
Neither Precision Specialty Metals nor Nisus addressed the effect of a subsequent settlement agreement. If Tesco, NOV, and the Attorneys had not entered into a settlement absolving all parties of any further liability, we would be required to determine if the statements made in the district court order are functionally equivalent to a formal reprimand, and thus provide the Attorneys with the standing necessary to pursue this appeal. The intervening settlement, however, renders that determination unnecessary to the resolution of this appeal.
Our court has not previously determined the effect of an intervening settlement on an appeal of an order containing critical statements about the conduct of an attorney. Our sister circuits have, however, addressed the effect of a change in circumstances which removes or moots the underlying judgment. We agree with their conclusion that an intervening settlement can abrogate the case or controversy justifying appellate jurisdiction.
For example, in In re Williams, 156 F.3d 86, 87 (1st Cir.1998), the United States Court of Appeals for the First Circuit had to determine if "a trial court's published findings of attorney misconduct [are] . . . independently appealable, notwithstanding that the monetary sanctions imposed by the court for that conduct have been nullified." There, a bankruptcy court judge imposed Rule 37(b) sanctions against the government and two government attorneys for failing to timely produce certain documents during discovery. Id. at 88. In his opinion, the bankruptcy judge "harshly criticized" the two attorneys, and ordered them to each pay $750 to the court. Id. But on reconsideration, the judge vacated one of the monetary sanctions, and instructed that the other attorney pay the $750 to the aggrieved party, not the court. Id. The bankruptcy judge refused, however, to vacate his findings, and the district court also declined to vacate any of the bankruptcy court's factual findings. Id. at 89.
The First Circuit concluded that it did not have jurisdiction to review the factual finding from the original bankruptcy judge's opinion. Id. at 89-92. Once the monetary sanctions were removed from the case, the only remaining "sanctions" were the statements made in the published opinion that had not been vacated. Id. at 89. The court recognized the reputational harm such statements could have on the attorneys, but reiterated that "federal appellate courts review decisions, judgments, orders, and decrees—not opinions, factual findings, reasoning, or explanations." Id. at 90. Because the monetary sanctions
The United States Court of Appeals for the Seventh Circuit reached a similar conclusion in Clark Equipment Co. v. Lift Parts Manufacturing Co., 972 F.2d 817 (7th Cir.1992). The district court awarded attorney's fees and costs to be paid by the sanctioned attorney due to the attorney's role in contributing to the absence of a crucial witness at trial and for re-arguing an issue that had previously been resolved. Id. at 818. The attorney immediately appealed the sanctions, but the parties entered a settlement during the pendency of the appeal that included a commitment by one of the parties to pay all of the attorney's fees owed by the offending attorney. Id. The court recognized that district courts have an interest in guaranteeing that the rules of procedure were followed, but that interest cannot keep a compensatory consent award "alive for appeal after the parties have settled." Id. at 819 ("[T]he beneficiary of a compensatory sanction may bargain away the court's interest in seeing its rules enforced."). The court explained how, normally when an appeal becomes moot, the appellate court vacates the district court's judgment and remands with instructions to dismiss the complaint. Id. But, because of the settlement, the court clarified that there was no need to dismiss the complaint or vacate the judgment. It pointed out that the attorney was requesting that the court vacate the opinion, not the judgment. Id. at 819-20. The court declined to take that step, explaining that appellate courts review judgments, not opinions. Id.
We agree with the reasoned analysis of our sister circuits. The Attorneys, in essence, face a redressability problem. Once all parties entered into the settlement agreement, no party—except the Attorneys for reputational reasons—had any enduring interest in the underlying order dismissing the case with prejudice. The case was, for all purposes, complete, considering that the settlement resolved the outstanding motion for attorney's fees under 35 U.S.C. § 285. The fact that the sanction was directed at Tesco in the opinion, not the Attorneys, further supports the conclusion that no party retains an
Walker v. City of Mesquite, 129 F.3d 831 (5th Cir.1997) is not to the contrary. In Walker, the Fifth Circuit merely concluded that the court had jurisdiction to hear an appeal of a formal sanctions order premised solely on damage to the attorney's reputation. Id. at 832 ("We have heretofore held that monetary penalties or losses are not an essential for an appeal."). We have similarly held that our jurisdiction does not require a monetary sanction. See Precision Specialty Metals, 315 F.3d at 1352-53. Although Walker may be relevant to determining when formal non-monetary sanctions which have not been vacated or mooted by later developments are sufficient to justify appellate jurisdiction, Walker does not provide insight into the redressability issues faced by the Attorneys.
Nor do the other cases upon which the dissent relies help the Attorneys' cause. Fleming & Associates v. Newby & Tittle, 529 F.3d 631 (5th Cir.2008), was concerned with a district court's continuing authority to impose sanctions predicated on counsel's misconduct even after a case has settled. The Fifth Circuit simply affirmed the trial court's right to impose non-compensatory sanctions in such circumstances and its own ability to review any sanction so imposed. Id. at 640. Perkins v. General Motors Corp., 965 F.2d 597 (8th Cir.1992) was to the same effect. Neither case dealt with a circumstance where no sanction remained in place. Indeed, both recognized that sanctions designed to compensate a party for the harm it incurred because of the misconduct of its adversary or its counsel—such as the burden shifting sanction and dismissal order at issue here—are mooted by any subsequent settlement.
Kirkland v. National Mortgage Network, Inc., 884 F.2d 1367 (11th Cir.1989), Analytica, Inc. v. NPD Research, Inc., 708 F.2d 1263 (7th Cir.1983), Grider v. Keystone Health Plan Central, Inc., 580 F.3d 119 (3rd Cir.2009), Sheppard v. River Valley Fitness One, L.P., 428 F.3d 1, 6 (1st Cir.2005), and Obert v. Republic Western Insurance Co., 398 F.3d 138, 143 (1st Cir. 2005), remand order modified, 2005 U.S.App. LEXIS 4793 (1st Cir. Mar. 24, 2005), were all cases where formal sanctions and/or reprimands were imposed upon counsel, leaving an order in place which could be reviewed and presumably vacated. For example, Sheppard v. River Valley Fitness One, 428 F.3d at 6, involved a monetary sanction against an attorney for misrepresenting his client's settlement in a closely related case to the plaintiff. Although the dissent cites Sheppard as demonstrating that the First Circuit permits review of "factual findings by themselves (i.e. unattached to any sanctions)," the court in fact preceded this statement with, "if an appellate tribunal has jurisdiction to review [a sanctions] order, its examination will encompass the underlying findings." Id. (emphasis added). The court affirmed the monetary sanction in that case, but vacated a single factual finding accompanying it. In Obert v. Republic Western Insurance Co., 398 F.3d 138, 143 (1st Cir.2005), remand order modified, 2005 U.S.App. LEXIS 4793 (1st Cir. Mar. 24, 2005), the attorneys appealed orders sanctioning their conduct. The court granted review of formal rulings that the
The only two cases where it appears reputational injury without more was deemed sufficient to justify the exercise of jurisdiction, Butler v. Biocore Medical Technologies, Inc., 348 F.3d 1163 (10th Cir.2003) and Johnson v. Board of County Commissioners, 85 F.3d 489 (10th Cir. 1996)—both out of the Tenth Circuit—lacked any discussion of the redressability concern upon which our decision is predicated. This is perhaps understandable since, in both cases, the district courts' orders were affirmed, obviating the need to assess what relief the court of appeals might fashion.
The Attorneys request that we remedy their injury in one of three ways: (1) vacate the underlying order; (2) remove the district court's finding of bad faith; or (3) remand for a full hearing on litigation misconduct. There is no need to vacate the district court's judgment and underlying order because the settlement rendered that step unnecessary by making the judgment moot. See Clark Equip., 972 F.2d at 819-20. And we decline to address the predicate findings in the trial court's opinion. As the court in Williams correctly explained, and we have noted in many contexts, Courts of Appeals review judgments, not opinions. 156 F.3d at 90; cf. OSRAM Sylvania, Inc. v. Am. Induction Techs., Inc., 701 F.3d 698, 707 (Fed.Cir. 2012) ("we review judgments not opinions"); Mangosoft, Inc. v. Oracle Corp., 525 F.3d 1327, 1330 (Fed.Cir.2008) (same); Stratoflex, Inc. v. Aeroquip Corp., 713 F.2d 1530, 1540 (Fed.Cir.1983) ("We sit to review judgments, not opinions."). We also will not remand for a full hearing on litigation misconduct. That would be an unnecessary use of the district court's and the parties' resources. Although the Attorneys claim that a full hearing would allow them the opportunity to clear their name, we have no authority to order a court to conduct a hearing in a case that is closed and cannot be reopened.
We agree that statements made in a judicial opinion can harm the reputation of attorneys, and that an attorney's reputation is one of his or her most valuable assets. But that concern alone is insufficient to justify our jurisdiction where there is no judgment that remains. There is no remaining sanction which could be vacated or punishment imposed upon the Attorneys which could be reversed. There is simply no Article III case or controversy that allows us to redress any reputational harm the Attorneys may have suffered.
Because we find that, in light of the settlement entered by all parties to the litigation, including the Attorneys, there remains no on-going case or controversy, we dismiss the appeal for lack of jurisdiction.
NEWMAN, Circuit Judge, dissenting.
The issue on this appeal is whether these two sanctioned attorneys should have, and do have, the right and opportunity to "clear their name" by appealing the sanctions order. My colleagues on this panel hold that they do not, for the reason that "a full hearing on litigation misconduct" would be "an unnecessary use of the district court's and the parties' resources." Maj. Op. at 1379. Thus this court holds that an appeal to bring out potentially mitigating information is not available.
These sanctioned attorneys ask for the opportunity to provide privileged records
A lawyer's reputation is the lawyer's most valuable asset. These two lawyers were publicly sanctioned, with imposition of the most severe punishment: dismissal of the client's case with prejudice. The reason was that two witnesses testified contrary to what these lawyers had, three years earlier, told the trial judge would be the witnesses' testimony concerning a Tesco brochure related to the patented device.
The panel majority refuses the attorneys' request for appeal or proceedings to allow them to provide these privileged records. My colleagues cite "jurisdictional" grounds, stating that the case is over because the parties "settled." Every other circuit that has considered this aspect has held that settlement does not bar an attorney's right to appeal a sanctions order.
The panel majority not only rules that no appeal is available and that the proffered exculpatory evidence cannot be received, but the majority also presents, in prejudicial and pejorative detail, the statements of counsel that led to their sanctions. If this issue is to be retried only in appellate dictum, the victims should at least have the opportunity to tell their side of the story. The closest that the Appellants have gotten to this opportunity is in their appellate brief, where they summarize this history:
Appellant's Br. 2. These witnesses later diverged from the described testimony, leading the district court to impose sanctions and to dismiss the Tesco case with prejudice. The Appellants summarize these events:
Appellant's Br. 2-3. This appeal arises from the district court's refusal to review the proffered evidence that, according to the sanctioned attorneys, would show that they did not misrepresent what they were told by the two witnesses. The Appellants raise due process concerns as to the sanctions procedure, and summarize:
Appellant's Br. 3. The district court dismissed the case with prejudice "outright," an action that the Supreme Court has called "a particularly severe sanction." Chambers v. NASCO, Inc., 501 U.S. 32, 43, 111 S.Ct. 2123, 115 L.Ed.2d 27 (1991).
The Appellants describe their proffer of evidence as follows:
Appellant's Br. 4. My colleagues on this panel refuse to review this evidence, or to require the district court to review it, stating that we do not have jurisdiction of this appeal at all, because the case was settled. Nonetheless, my colleagues describe, in exhaustive detail, the course of the proceedings below, apparently to demonstrate counsels' malfeasance. Not only is no mention made of the proffered exculpatory information, but the majority reiterates selected parts of the district court's criticisms, reinforcing the injury while denying the requested hearing.
Precedent and due process require that sanctioned attorneys be permitted appellate review of the sanctions order. In the Fifth Circuit, whose law controls this procedural issue, the imposition of attorney sanctions is subject to the processes of law. Hazeur v. Keller Indus., 983 F.2d 1061, 1993 WL 14973, *5 (5th Cir.1993) ("[W]hen a district court imposes sanctions under its inherent authority, due process considerations undoubtedly are implicated.") (citing Roadway Express v. Piper, 447 U.S. 752, 767, 100 S.Ct. 2455, 65 L.Ed.2d 488 (1980)). With all respect to my colleagues, their one-sided approach to this appeal, where they deny jurisdiction due to settlement, but nonetheless make adverse findings while simultaneously denying all opportunity of exculpation, is not only prejudicial, but also unfair.
The majority argues that this dissent "fails to recognize" the "fine factual distinctions" upon which sanctions are based. Maj. Op. at 1374 n. 7. On this ground, the majority justifies ignoring the vast body of precedent in which sanctioned attorneys have had the right and opportunity to defend their reputations. To the contrary, precedent demands that fine facts be found. My concern is that the district court repeatedly refused to receive the Appellants' proffered evidence, although that evidence could affect the factual weight and perhaps even change the conclusion.
The appellate obligation is to assure an adequate and fair factual foundation to which the law is applied. I dissent for precisely this reason: the incompleteness of the record renders the sanction possibly unfair. All of the precedents that I cite are founded on the position that when the trial judge issues a reprimand, it is incumbent on the appellate tribunal to assure that the processes of law are fully recognized.
On the question of loss of appellate jurisdiction based on settlement, my colleagues err in ruling that there is no jurisdiction to review the issue of sanctions. The Supreme Court has made it clear: "It is well established that federal courts may consider collateral issues after an action is no longer pending." Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 395, 110 S.Ct. 2447, 110 L.Ed.2d 359 (1990). See also Willy v. Coastal Corp., 503 U.S. 131,
The appealability of a severe sanction, such as dismissal with prejudice, is recognized in all of the circuits. Appealability is not defeated by an intervening settlement. The courts have reasoned that settlement does not "moot" an attorney sanction, for the reputational damage is perpetual.
As the district court resides within the Fifth Circuit, I start with their decisions. The Fifth Circuit, like all the other circuits, recognizes that injury to an attorney's professional reputation is a cognizable and legally sufficient cause for appellate review, for reputation is the attorney's "most important and valuable asset." Walker v. City of Mesquite, 129 F.3d 831, 832-33 (5th Cir.1997).
In Fleming & Associates v. Newby & Tittle, 529 F.3d 631 (5th Cir.2008) the district court had awarded attorney fees as a sanction for improper procedures concerning an expert report; the parties then settled, and agreed that each side would bear its own attorney fees. The district court nonetheless wrote a written opinion that described attorney misconduct during the proceedings. Id. at 641. The circuit court held that the sanctions order, and its appealability, survive settlement, stating that "[w]e should not deprive the . . . counsel of the right to equity when the party he represents chose to settle its suit." Id. at 638 n. 3. The court concluded that "any nonmonetary portion of the sanctions not rendered moot by settlement is appealable for its residual reputational effects on the attorney." Id. at 640.
Other circuits have dealt with the effect of settlement on the appeal of an attorney sanction. The First Circuit explicitly allows review of "factual findings by themselves (i.e. unattached to any sanctions)" due to the "`serious practical consequences' they may have on counsel's reputation." Sheppard v. River Valley Fitness One, L.P., 428 F.3d 1, 6 (1st Cir.2005) (quoting Obert v. Republic W. Ins. Co., 398 F.3d 138, 143 (1st Cir.2005), remand order modified, 2005 U.S.App. LEXIS 4793 (1st Cir. Mar. 24, 2005)). In Obert, the First Circuit held that while settlement had mooted the sanctions imposed, "given the substance of the underlying rulings, the reputations of counsel are affected by the findings that individual counsel and their firms violated state ethics rules or Rule 11," the "serious practical consequences of such findings . . . [were] sufficient to avoid mootness." 398 F.3d at 142-143. Here, the district court's action of dismissal of the entire case underscores the seriousness of the charges to which the Appellants were not permitted to respond.
In Cheng v. GAF Corp., 713 F.2d 886, 890 (2d Cir.1983), counsel was sanctioned by the district court for filing an inappropriate motion. The Second Circuit recognized that "[i]f the case is settled, or if appellant succeeds on the merits, it is not clear that appellant's lawyer will be able to appeal." To address this concern, the Second Circuit permitted an immediate appeal of the fee award.
The Second Circuit has also considered a situation close on its facts to the case at bar, and declined to hold that settlement mooted the attorney's right to appeal from a sanction, "because his reputation—the basis of the attorney's livelihood—is at stake and, unlike his client, he did not voluntarily enter into the settlement in question." Agee v. Paramount Commc'ns, Inc., 114 F.3d 395, 399 (2d Cir.1997).
Also contrary to the majority's ruling herein, the Eighth Circuit directly ruled
The Eighth Circuit brought pragmatic reasoning to the effect of settlement of the underlying case, on the right of an attorney to appeal a sanction order:
Id. at 600.
The circuits have also held that an attorney has standing to appeal a sanctions order, based on the injury to professional reputation, whether or not other punishment is also levied. In Butler v. Biocore Medical Technologies, Inc., 348 F.3d 1163 (10th Cir.2003), the court stated "we believe that the position taken by the majority of the circuits, that an order finding attorney misconduct but not imposing other sanctions is appealable under § 1291 even if not labeled as a reprimand, is the proper position." Id. at 1168.
The circuits stress the reputational aspect of sanctions awards in cases that were settled. In Grider v. Keystone Health Plan Central, Inc., 580 F.3d 119, 133 (3d Cir.2009) the court agreed that "the settlements did not moot the appeals because the Appellants experienced (and continue to experience) reputational harm."
In Johnson v. Board of County Commissioners, 85 F.3d 489 (10th Cir.1996), the court held that "settlement of an underlying case does not preclude appellate review of an order disqualifying an attorney from further representation insofar as that order rests on grounds that could harm his or her professional reputation." Id. at 492.
In Kirkland v. National Mortgage Network, Inc., 884 F.2d 1367 (11th Cir.1989) the court held that an attorney's appeal of an order revoking his pro hac vice status survived dismissal because "the `brand of disqualification' on grounds of dishonesty and bad faith could well hang over his name and career for years to come." Id. at 1370.
The cases cited by the majority do not support their position that settlement removes the sanction from appellate review. The majority relies primarily on In re Williams, 156 F.3d 86 (1st Cir.1998), where the court held a bankruptcy judge's sanctions order unappealable on the facts of that case, the court explaining that appealability of the sanction "depends on whether the findings comprise a decision, order, judgment, or decree." Id. at 89. The court observed that the monetary fine against counsel had been withdrawn, and let stand the chastisement of counsel. The court held that since there was no consequence and no punishment, there was no appeal.
The other cases that the majority says supports its bar to appeal, are inapposite here. In Bolte v. Home Insurance Co., 744 F.2d 572 (7th Cir.1984), the circuit court found that only because no sanctions were actually imposed by the district court upon settlement and dismissal was the issue moot. Here, sanctions, harsh sanctions, were imposed. And even there, the court questioned whether defamatory statements alone were never sufficient to raise a claim for appellate relief, citing to Analytica, Inc. v. NPD Research, Inc., 708 F.2d 1263 (7th Cir.1983), where the court alluded that the reputational damage to attorneys in that case was an argument worth consideration. Id.
The panel majority also relies on Weissman v. Quail Lodge, Inc., 179 F.3d 1194 (9th Cir.1999). The district court statements at issue in Weissman and the present appeal are far apart. In Weissman, the district court stated the attorney's behavior reflected "a serious lack of professionalism and good judgment." Id. The circuit court found that that statement did not constitute a formal reprimand and so avoided appellate review. Here, in contrast, the district court issued a separate Sanctions Order, accompanied by the dramatic act of dismissing the client's case with prejudice.
Also in Clark Equipment Co. v. Lift Parts Manufacturing Co., 972 F.2d 817 (7th Cir.1992), after the client agreed to pay the entire attorney fee sanction levied against the offending attorney, the court declined to accept the attorney's appeal of the sanction, the court stating that the entire consequence of his transgression had been "bargained away." Id. at 819. Yet still, the circuit court found sufficient purchase to vacate the district court's judgment to the extent it imposed sanctions. On the facts of that case, the circuit court's treatment was not a matter of "jurisdiction" but of pragmatic judicial wisdom.
In sum, there is no support for the majority's general theory that there is no "jurisdiction" to appeal an otherwise appealable sanction, after the case has been settled. Review of all the circuits reveals a logical pattern whereby the integrity of the judicial process is preserved not only by authorizing the imposition of sanctions, but also by assuring due process in the imposition itself. And when there is a settlement, the courts have recognized that jurisdiction is present, and have reviewed the imposition of sanctions as appropriate to the specific situation.
In today's ruling the Federal Circuit stands alone. Indeed, this panel stands alone among Federal Circuit rulings.
The law of this circuit is also on the side of judicial review. In Precision Specialty Metals, Inc. v. United States, 315 F.3d 1346 (Fed.Cir.2003), this court stated that "a judicial reprimand is likely to have a serious impact upon a lawyer's professional reputation and career," and is "directly
Here, the attorneys were "before the court as a participant in the underlying litigation, and the court's action was directed at regulating proceedings before the court or over which the court had supervisory authority." Id. Indeed, this court has "taken the position that a court's order that criticizes an attorney and that is intended to be `a formal judicial action' in a disciplinary proceeding is an appealable decision." Id. at 1320.
The majority seeks to avoid the issue of "whether the district court's dismissal order amounted to the type of formal judicial action over which we could exercise jurisdiction. . . instead deciding this case on redressability grounds." Maj. Op. at 1378 n. 8. That issue is at the heart of this matter, for a district court's dismissal of the underlying action with prejudice based on alleged attorney misconduct is a sanction accompanying a judicial reprimand, and is directly appealable as provided in Precision Specialty Metals and Nisus.
The district court invoked its inherent power to punish what it saw as bad faith and willful misconduct. Such power is available "only if clear and convincing evidence supports the court's finding of bad faith or willful abuse of the judicial process." In re Moore, 739 F.3d 724, 729-30 (5th Cir.2014). The issue is not whether the district court has such inherent disciplinary power, but whether these sanctioned attorneys are entitled to appeal and to bring forth privileged documents to defend themselves. My colleagues hold we do not have jurisdiction to consider this issue.
Common to all circuits is the requirement that sanctionable behavior must be established by clear and convincing evidence on the record as a whole. There cannot be clear and convincing evidence without an opportunity to present contrary evidence. Although my colleagues state that the Appellants had adequate opportunity to "recant their statements to the court," it was not until three years after these attorneys' conversations, that the witnesses were deposed.
The Fifth Circuit explains that: "For this court to affirm inherent power sanctions on grounds other than those expressly chosen by the imposing court would constitute an encroachment upon that court's discretion unwarranted by the concerns for order and necessity inherent in their use." Crowe v. Smith, 151 F.3d 217, 240 (5th Cir.1998). The Appellees, scouring the record for damaging communications not mentioned by the district court, have presented grounds upon which the majority's affirmance affixes this court's imprimatur, exceeding this safeguard—again, while insisting that we do not have any jurisdiction at all.
My colleagues ignore the vast body of circuit reasoning, and instead hold that "a full hearing on litigation misconduct" would be "an unnecessary use of the district court's and the parties' resources." Maj. Op. at 1379. Indeed, some aspects of due process of law do consume resources. The settlement did not eradicate the right of these Appellant attorneys to appeal the sanction against them. They have the right to clear their name in appropriate