Willy v. Coastal Corp.
503 U.S. 131 (1992)

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OCTOBER TERM, 1991

Syllabus

WILLY v. COASTAL CORP. ET AL.

CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT

No. 90-1150. Argued December 3, 1991-Decided March 3, 1992

Mter petitioner Willy sued respondent Coastal Corporation in Texas state court, alleging that Coastal fired him for refusing to participate in its violation of federal and state environmental laws, Coastal removed the case to Federal District Court. That court rejected Willy's argument that it lacked subject-matter jurisdiction and dismissed the case for failure to state a claim. It also imposed sanctions against him, pursuant to Federal Rule of Civil Procedure 11, based on conduct in the case that was unrelated to petitioner's effort to convince the court that it lacked jurisdiction. The Court of Appeals concluded that the District Court lacked subject-matter jurisdiction, but upheld the court's decision to award sanctions and remanded the case for the court to determine the amount. On a second appeal, the Court of Appeals rejected Willy's argument that the District Court had no authority to impose sanctions in the absence of subject-matter jurisdiction.

Held: A court may impose Rule 11 sanctions in a case in which the district court is later determined to be without subject-matter jurisdiction. Pp. 134-139.

(a) While the expansive language of Rules 1 and 81(c) indicates a clear intent to have the Rules, including Rule 11, apply to all district court civil proceedings, the Rules must be deemed to apply only if their application will not impermissibly expand the judicial authority conferred by Article III, see Sibbach v. Wilson & Co., 312 U. S. 1. Pp. 134-135.

(b) The District Court's order in this case does not lie outside the range of action constitutionally permitted to an Article III court. Willy concedes that Congress has the power to regulate the courts and to authorize the imposition of sanctions. He errs in contending that Rule 11 sanctions must be aborted whenever it is determined that a court lacked jurisdiction at the time the objectionable conduct occurred. A court's concern with the maintenance of orderly procedure, even in the wake of a jurisdictional ruling later found to be mistaken, justifies the conclusion that the sanction here need not be upset. See, e. g., United States v. Mine Workers, 330 U. S. 258. Because it deals with the issue whether the court's rules were violated, the instant order is collateral to the merits of the case. Thus, it implicates no constitutional concern because it does not deal with the court's assessment of the complaint's


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legal merits, over which the court lacked jurisdiction. See Cooter & Gell v. Hartmarx Corp., 496 U. S. 384. And the District Court's interest in having rules of procedure obeyed did not disappear with the subsequent determination that it lacked subject-matter jurisdiction. United States Catholic Conference v. Abortion Rights Mobilization, Inc., 487 U. S. 72, distinguished. Pp. 135-139.

915 F.2d 965, affirmed.

REHNQUIST, C. J., delivered the opinion for a unanimous Court.

Michael A. Maness argued the cause and filed briefs for petitioner.

Michael L. Beatty argued the cause for respondents.

With him on the brief were Carter G. Phillips, Mark D. Hopson, Lawrence P. Ellsworth, and Robert C. DeMoss.

CHIEF JUSTICE REHNQUIST delivered the opinion of the Court.

We granted certiorari to decide whether a federal district court may impose sanctions pursuant to Rule 11 of the Federal Rules of Civil Procedure in a case in which the district court is later determined to be without subject-matter jurisdiction. 501 U. S. 1216 (1991). We conclude that in the circumstances presented here it may do so.

Petitioner Willy sued respondent Coastal Corporation (Coastal or respondent) in Texas state court, raising a variety of claims relating to Coastal's decision to terminate his employment as "in-house" counsel. Petitioner alleged that he had been fired due to his refusal to participate in respondent's violation of various federal and state environmental laws. Respondent removed the case to Federal District Court, claiming original federal-question jurisdiction under 28 U. S. C. §§ 1331,1441. Petitioner objected to the removal, claiming that his case did not "arise under" federal law, see § 1331, but the District Court disagreed and concluded that it had subject-matter jurisdiction. The District Court subsequently granted respondent's motion to dismiss for failure to


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