Willy v. The Coastal Corporation and Coastal States Management Company: Appellant Suggestion for Rehearing En Banc

    IN THE UNITED STATES COURT OF APPEALS 
FOR THE FIFTH CIRCUIT

No. 90-2097

DONALD J. WILLY,
Plaintiff-Appellant,

versus

THE COASTAL CORPORATION AND
COASTAL STATES MANAGEMENT CO.,

Defendants-Appellees.

Appeal from the United States District Court for the 
Southern District of Texas 

Houston Division

APPELLANT DONALD J. WILLY'S SUGGESTION FOR REHEARING EN BANC

MICHAEL A. MANESS
1900 North Loop West, Suite 500
Houston, Texas 77018
(713) 680-9922

November 1990
Attorney for Appellant 
Donald J. Willy



CERTIFICATE OF INTERESTED PARTIES REQUIRED BY LOCAL RULE 28.2.1
In order that the judges of this Court may evaluate 

possible disqualification or recusal, I certify in accordance 
with Local Rule 28.2.1 that the following individuals and 
corporations have an interest in the outcome of this case:

Donald J. Willy and his counsel, Michael A. Maness.
The Coastal Corporation, Coastal States Management Company, 

Inc., and their subsidiaries and affiliates.
Coastal's counsel, James L. Reed, Jr. and his firm, Looper, 

Reed, Mark & McGraw, Houston, Texas; J. Richard Hammett, John 
B. Britton, and their firm, Verner, Liipfert, Bernhard,
McPherson & Hand, Chartered, Washington, D.C.; and Robert C. 
DeMoss, Coastal's in-house Houston counsel.

MICHAEL A. MANESS 
Attorney for Appellant 
Donald J. Willy



STATEMENT REQUIRED BY LOCAL RULE 35.2.2
I express a belief, based on a reasoned and studied 

professional judgment, that the panel decision is contrary to 
Thomas v. Capital Security Services. Inc., 836 F.2d 866 (5 Cir. 
1988) (en banc), and Chick Kam Choo v. Exxon Corp. , 764 F.2d 
1148, 1153 n. 4 (5 Cir. 1985), and that consideration by the 
full court is necessary to secure and maintain uniformity of 
decisions in this court.

I also express a belief, based on a reasoned and studied 
professional judgment, that this appeal involves the following 
questions of exceptional importance:

1. A United States district court lacking 
subject matter jurisdiction over an Article III case 
or controversy has no "inherent power," under or apart 
from Rule 11, F.R.Civ.P., to award attorney's fees as a sanction against a person who has properly resisted the exercise of federal jurisdiction, in favor of a 
corporation that has wrongly invoked it.

2. Awarding $19,307.00 in attorney's fees 
against a person with an uncontested net worth of less 
than $21,000.00, who has properly resisted the exercise of federal jurisdiction, in favor of an $8 
billion corporation that has wrongly invoked it, is 
not "reasonable" under Rule 11, F.R.Civ.P.

3. Rule 11, F.R.Civ.P., does not empower a 
United States district court, after its initial sanctions order has been set aside on appeal, to 
rationalize a modified award of attorney's fees by 
citing additional instances of alleged misconduct, 
purportedly occurring almost three years before, that were not sanctioned or even mentioned in the original 
order.4. The attorney's fees awarded by the district 
court in this case bear no rational relationship to 
the alleged Rule 11 violations they supposedly remedy.

MICHAEL A. MANESS 
Attorney for Appellant

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TABLE OF CONTENTS
P a g e

STATEMENT OF THE ISSUES....................................... 2
1. A United States district court lacking 

subject matter jurisdiction over an Article III 
case or controversy has no "inherent power," 
under or apart from Rule 11, F.R.Civ.P., to award 
attorney's fees as a sanction against a person 
who has properly resisted the exercise of federal 
jurisdiction, in favor of a corporation that has 
wrongly invoked it.

2. Awarding $19,307.00 in attorney's fees 
against a person with an uncontested net worth of less than $21,000.00, who has properly resisted 
the exercise of federal jurisdiction, in favor of 
an $8 billion corporation that has wrongly 
invoked it, is not "reasonable" under Rule 11,
F.R.Civ.P.

3. Rule 11, F.R.Civ.P., does not empower a 
United States district court, after its initial 
sanctions order has been set aside on appeal, to 
rationalize a modified award of attorney's fees by citing additional instances of alleged 
misconduct, purportedly occurring almost three 
years before, that were not sanctioned or even 
mentioned in the original order.

4. The attorney's fees awarded by the 
district court in this case bear no rational relationship to the Rule 11 violations they
supposedly remedy.

STATEMENT OF THE CASE..........................................2
ARGUMENT AND AUTHORITIES......................................10
CONCLUSION....................................................15
CERTIFICATE OF SERVICE........................................15

INDEX OF AUTHORITIESCases:
Alyeska Pipeline Service Co. v. Wilderness 
Society, 421 U.S. 420 (1975)................................  13

Business Guides, Inc. v. Chromatic Communications Enter­
prises, Inc., 892 F.2d 802 (9 Cir. 1989), cert, granted,
___ U.S. ___ [58 U.S.L.W. 3811, June 25, 1990]............. 14

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Chick Kam Choo v. Exxon Corp., 764 F.2d 1148 
(5 Cir. 1985) ............................................ii, 12

Cooter & Gell v. Hartmarx Corp., 496 U.S. ___,110 S.Ct. 2447, 110 L. Ed. 2d 359 (1990).................... 9, 11
Crawford Fitting Co. v. J. T. Gibbons, Inc.,
482 U.S. 437 (1987).........................................  13

Davis v. Cluet, Peabody & Co., 667 F.2d 1371 (11 Cir. 1982)...12
Johnson v. Smith, 630 F. Supp. 1 (N.D. Cal. 1986)............  11
News-Texan, Inc. v. City of Garland,
814 F. 2d 216 (5 Cir. 1987)................................... 6

Orange Production Credit Assn. v. Frontline Ventures Ltd.,792 F. 2d 797 (9 Cir. 1986).................................. 11

Roadway Express, Inc. v. Piper, 447 U.S. 752 (1980) 13
Sabine Pilot Service, Inc. v. Hauck, 687 S.W.2d 733
(Tex. 1985)............................................. 3, 4, 5
Szabo Food Service, Inc. v. Canteen Corp., 823 F.2d 1073 (7 Cir. 1987)...............................................  12
Thomas v. Capital Security Services, Inc., 836 F.2d 866 
(5 Cir. 1988)........................................... passim

Trohimovich v. Commissioner, 776 F.2d 873 (9 Cir. 1985)......  11
United States v. Hudson, 7 Cranch 32 (1812).................. 13
United States v. United Mine Workers, 330 U.S. 258 (1947).11, 13
Vatican Shrimp Co. v. Solis, 820 F.2d 674 (5 Cir. 1987), 
cert, denied 484 U.S. 953 (1987)............................. 6

Willy v. Coastal Corp., 647 F. Supp. 116 (S.D. Tex. 1986).....4
Willy v. Coastal Corp., 855 F.2d 1160 (5 Cir. 1988)........  1, 6
Wojan v. General Motors Corp, 851 F.2d 969 (7 Cir. 1988)..... 11
Statutes:
28 U.S.C. § 1331...............................................3
28 U.S.C. § 1341...............................................3

P a g e

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Federal Rules of Civil Procedure:
Rule 11...................................................passim
Rule 12 (b) (6)............................................. 4, 15
Rule 35........................................................1
Rule 41.......................................................11
Rule 82.......................................................10

P a g e

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IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT

No. 90-2097

DONALD J. WILLY,
Plaintiff-Appellant,

versus

THE COASTAL CORPORATION AND
COASTAL STATES MANAGEMENT CO.,

Defendants-Appellees.

Appeal from the United States District Court for the 
Southern District of Texas 

Houston Division

APPELLANT DONALD J. WILLY'S SUGGESTION FOR REHEARING EN BANC 
Appellant Donald J. Willy, in accordance with Rule 35, 

F.R.A.P. and Local Rule 35, suggests that this appeal should be 
reheard en banc.1/

1/ The district court's initial unpublished order, awarding 
$22,625.00 in attorney's fees against Willy and his former 
counsel as a sanction under Rule 11, F.R.Civ.P., is attached at
page A-l. The previous panel opinion, Willy v. Coastal_Corp.,
855 F. 2d 1160 (5 Cir. 1988), confirming the district court's 
lack of subject matter jurisdiction, reversing the sanctions 
order, and remanding the case for reconsideration in light of 
the intervening en banc decision in Thomas v. Capital Security 
Services. Inc.. 836 F.2d 866 (5 Cir. 1988), is attached at page 
A-5. The district court's second unpublished sanctions order, 
from which this appeal is taken, awarding $19,307.00 in 
attorney's fees against Willy and his former counsel, is 
attached at page A-20. The panel's October 26, 1990 summary calendar opinion affirming that award is attached at page A-27.



STATEMENT OF THE ISSUES
1. A United States district court lacking 

subject matter jurisdiction over an Article III case 
or controversy has no "inherent power," under or apart 
from Rule 11, F.R.Civ.P., to award attorney's fees as a sanction against a person who has properly resisted 
the exercise of federal jurisdiction, in favor of a 
corporation that has wrongly invoked it.

2. Awarding $19,307.00 in attorney's fees 
against a person with an uncontested net worth of less 
than $21,000.00, who has properly resisted the 
exercise of federal jurisdiction, in favor of an $8 
billion corporation that has wrongly invoked it, is 
not "reasonable" under Rule 11, F.R.Civ.P.

3. Rule 11, F.R.Civ.P., does not empower a 
United States district court, after its initial 
sanctions order has been set aside on appeal, to 
rationalize a modified award of attorney's fees by 
citing additional instances of alleged misconduct, 
purportedly occurring almost three years before, that 
were not sanctioned or even mentioned in the original 
order.

4. The attorney's fees awarded by the district 
court in this case bear no rational relationship to 
the alleged Rule 11 violations they supposedly remedy.

STATEMENT OF THE CASE
Willy, a Houston environmental attorney employed by a 

subsidiary of the Coastal Corporation, was fired in 1984. In 
1985, represented by George A. Young, another Houston lawyer, 
Willy sued his former employer and others ("Coastal") in a state 
court, alleging that Coastal had wrongfully terminated his 
employment because of his refusal to falsify environmental 
reports or to participate in criminal activity that allegedly 
resulted from Coastal's concealment of continuing violations of 
state and federal environmental laws at three of its facilities 
in Florida, Kansas, and Texas. Willy's petition alleged only 
state causes of action and sought relief exclusively under Texas

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law. None of the claims he asserted arose under or was created 
by a federal statute, nor did he claim entitlement to any 
federal remedy.2/

Nevertheless, Coastal filed a petition removing the case to 
the federal district court in Houston under 28 U.S.C. § 1441, on 
the theory that resolution of the controversy would require 
"significant interpretation and application" of federal 
environmental statutes to determine whether Coastal's or Willy's 
actions would have violated them, and that federal law therefore 
was "an essential and necessary element" of Willy's state law 
causes of action [R. 7: 1092, 1093]. After removal, Coastal 
filed an answer, generally denying each of Willy's state law 
claims and asserting affirmatively 14 separate defenses and 
several counterclaims, some of which were frivolous on their 
face [R. 7: 1059].3/

Willy's former counsel promptly filed a timely motion to 
remand the case to the state court, correctly pointing out that 
the controversy presented no federal question under 28 U.S.C. § 
1331, that there was no diversity of citizenship, and that the

2/ Willy's principal cause of action was based on a Texas 
Supreme Court decision condemning "the discharge of an employee 
for the sole reason that the employee refused to perform an 
illegal act." Sabine Pilot Service. Inc, v. Hauck, 687 S.W.2d 
733, 735 (Tex. 1985). His petition also alleged additional, 
subsidiary state law claims for breach of ethical duty, invasion 
of privacy, libel and slander, blacklisting, and intentional 
interference with contractual relationships [R. 7: 1096].
3/ For example, Coastal's answer asserted that Willy's suit 
was barred by the company's "Sixth Amendment right to counsel" 
[R. 7: 1060]. By its terms, the Sixth Amendment is applicable 
only to criminal prosecutions.

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federal district court therefore lacked both original and 
removal jurisdiction [R. 7: 1049]. That motion, and Willy's two 
subsequent renewals of his request to remand for lack of federal 
question or other subject matter jurisdiction, were denied 
without explanation [R. 6: 877; R. 9: 5-6; R. 4: 469-70].

Coastal then filed a motion under Rule 12(b)(6), 
F.R.Civ.P., to dismiss Willy's principal state law claim under 
Sabine Pilot Service on its merits [R. 6: 779]. Willy's former 
counsel filed on his behalf a timely reply to Coastal's motion 
to dismiss [R. 5: 567], a six-page motion for partial summary 
judgment, supported by Willy's affidavit, and a 110-page 
supporting brief [R. 5: 609; R. 6: 744],4/ addressed principally 
to Coastal's 14 "defenses" and counterclaims, and motions 
seeking permission to file in support of the partial summary 
judgment motion approximately 1,200 pages of documentation, 
virtually all of which Coastal itself had produced in an earlier 
administrative action filed by Willy with the United States 
Department of Labor [R. 5: 565; R. 6: 742]. The district court 
granted permission to file the documents [R. 4: 527]; R. 9: 38].

In a published memorandum and order, Willy v. Coastal 
Coro. . 647 F. Supp. 116 (S.D. Tex. 1986), the district court

4/ In three places the panel's summary calendar opinion 
mistakenly refers to "a 110-page motion for summary judgment," 
at one point going so far as to mischaracterize the pleading as 
"the infamous 110-page summary judgment motion" (slip op. at 448 
and n. 3, 451).

These and other inadvertent but nonetheless pervasive, 
confusing, and misleading factual misstatements and omissions 
are the subject of a separate petition for panel rehearing.

-4-



again declined to reexamine its own lack of subject matter 
jurisdiction, rejected on its merits Willy's principal state—law 
claim under the Sabine Pilot Service decision,5/ and granted 
Coastal's motion to dismiss the remainder of Willy's case.6/ In 
an unpublished order the court also granted Coastal's reguest 
for Rule 11 sanctions [R. 4: 544] and awarded $22,625.00 in 
attorney's fees against both Willy and his former counsel, 
Young, jointly and severally.7/

Willy then discharged Young, retained his present counsel, 
and appealed. A panel of Judges Garwood, Jones, and U. S. 
District Judge Lynn Hughes sustained Willy's claim that the 
district court lacked federal question removal jurisdiction over

5/ The panel opinion mistakenly states that the district court 
granted Coastal's motion "for dismissal of the federal claims" 
(slip op. at 448; emphasis added) . Of course, as the first 
panel eventually held, there were no "federal claims."
6/ The district court's "final judgment" [R. 3: 373] did not mention Coastal's counterclaims. They were later dismissed 
without prejudice on Willy's motion [R. 3: 278].
7/ The first order sanctioned Willy for Young's signing and 
filing of the motion for partial summary judgment, the 110-page 
supporting brief, the 1,200 pages of documents that the court had granted permission to file, and a brief misciting a 
provision of the Federal Rules of Evidence [R. 5: 567, 572], and 
for Willy's 12-page affidavit supporting the motion for partial 
summary judgment, apparently on the theory that the affidavit 
failed properly to authenticate the documents.

Circuit Judges Jolly and Higginbotham denied Willy's motion 
to stay the sanctions order, which had not first been presented 
to the district court, to provide that court with an opportunity 
to consider the circumstances warranting a stay, including "the 
health condition of Mr. Young, who, as counsel in the case 
appears to have been significantly responsible for incurring the 
Rule 11 sanctions [that are the] subject of this motion" [R. 3: 
290-91]. The district court was aware that Young was 
hospitalized after the sanctions order was entered [R. 8: 3-8].

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the controversy and directed its remand to the state court from
which Coastal had improperly removed it. Willy v. Coastal 
Corp.. 855 F.2d 1160 (5 Cir. 1988). After stating that "we and 
the district court retain jurisdiction over the Rule 11 aspects 
of this case, even though we have held that removal was 
improper," 855 F.2d at 1172,8/ the panel also reversed the Rule 
11 sanctions order and remanded the case for reconsideration in 
light of the intervening en banc decision in Thomas v. Capital 
Security Services. Inc.. 836 F.2d 866 (5 Cir. 1988).^/

On remand, at Willy's suggestion and over Coastal's 
opposition, the district court severed the Rule 11 issues from 
the remainder of the case and remanded it to the state trial 
court from which Coastal had been improperly removed it more

8/ The two decisions cited by the first panel in support of 
this proposition, Vatican Shrimp Co. v. Solis. 820 F.2d 674 (5 
Cir. 1987), cert, denied 484 U.S. 953 (1987), and News-Texan, 
Inc, v. City of Garland. 814 F.2d 216 (5 Cir. 1987), are not in 
point. They addressed directly only the guestion of appellate jurisdiction, in cases in which the sanctioned parties had 
invoked federal district court jurisdiction, but did not hold, 
and had no occasion to hold, that in the absence of Article III 
subject matter jurisdiction federal trial courts have the power 
to award attorney's fees, against those who properly resist the 
exercise of federal jurisdiction, for the benefit of those who 
wrongly invoke it. The second panel's assertion that "this 
conclusion is implicit in their broader holding" (slip op. at 
449 n. 6) is utterly mistaken.
9/ "The sanctions order is therefore reversed and the matter 
of sanctions is remanded to the district court for further 
proceedings consistent with this opinion and Thomas." 855 F.2d 
at 1173. The judgment provided that the sanctions order "is set 
aside" [R. 3: 224]. In light of this disposition, the 
assertions in the second panel opinion that, in the first 
appeal, "we affirmed the award of Rule 11 sanctions" (slip op. 
at 448; emphasis added), and that "we are bound by our prior 
decision affirming the district court's award of sanctions 
against both Willy and his attorney" (slip op. at 451), are 
simply astounding.

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than three years earlier [R. 1.1: 2-4]. Willy's principal 
argument in opposition to any award of attorney's fees was that, 
in the absence of Article III subject matter jurisdiction, 
United States district courts, by definition courts of limited 
rather than general jurisdiction, possess no constitutional 
authority, either inherently or under Rule 11, to award 
attorney's fees against a litigant correctly resisting the 
exercise of federal jurisdiction, for alleged misconduct that 
did not impede or obstruct resolution of the jurisdictional 
question and that related only to the merits of claims and 
defenses that the district court was constitutionally powerless 
to consider in the first place [R. 2: 189]. Willy also pointed 
out the anomaly of rewarding parties and attorneys who have 
improperly removed a case to the federal courts and urged 
essentially that Coastal's wrongful removal precluded any 
"reasonable" award of attorney's fees under Rule 11 in light of 
Thomas' disallowance of fees and expenses that "could have been 
avoided or were self-imposed." 836 F.2d at 879.

The district court's second Rule 11 sanctions order awarded 
$19,307.00 to Coastal against Willy and Young, jointly and 
severally. Without addressing Willy's arguments that no 
sanctionable conduct would ever have occurred but for Coastal's 
wrongful removal of the case (and the district court's repeated, 
erroneous refusal to remand it) , and that Coastal could not 
reasonably claim attorney's fees for time devoted to the merits 
of claims and defenses it had wrongly brought to the federal 
courts, the order instead recounted additional instances of

-7-



alleged misconduct that had not even been mentioned, much less 
sanctioned, in the original order some 30 months previously.10/ 
Willy's timely Rule 59 motion [R. 2: 57], urging detailed 
constitutional objections to the second sanctions order, was 
denied without opinion almost nine months later [R. 1: 5].11/

Willy again appealed.1 /̂ A panel of Judges Duhe, King, and 
Garwood affirmed the sanctions award on the summary calendar. 
Believing that the district court possessed broad "inherent 
power" to award attorney's fees to Coastal against Willy under 
Rule 11, even though it had never at any stage of the 
proceedings possessed subject matter jurisdiction over an 
Article III case or controversy, and even though Coastal had 
wrongly invoked federal jurisdiction, the panel analogized this

10/ These additional, previously unremarked improprieties 
included the filing by Willy against Coastal of an entirely 
separate action before a different United States district judge. 
The supposedly "baseless RICO claims against eighty Coastal 
officers and employees" (slip op. at 451) were not asserted in 
this case but in a separate civil action that was filed and 
later dismissed before service of process on any defendant. The 
federal judge in that case did not impose Rule 11 sanctions.
11/ willy filed a motion to stay the second sanctions order, 
asserting under oath in an accompanying affidavit that his net 
worth was less than $21,000.00 [R. 2: 63, 65]. Coastal did not 
contest that figure but argued that a stay should be denied because Willy had not shown his inability to borrow the money 
[R. 2: 24, 27-28]. The application for stay was denied without 
opinion by the district court [R. 1: 6].

Attached to Willy's motion were extracts from Coastal's 
1988 annual report, establishing that Coastal and its subsidiaries are a multinational megaconglomerate that in 1988 
had revenues of more than $8 billion, profits of more than $718 
million, net earnings of more than $157 million, and total 
assets of almost $8 billion [R. 2: 69-75].
12/ Young did not appeal the second, modified sanctions order.

-8-



case to Cooter & Gell v. Hartmarx Corp., 496 IJ.S. ___, 110 S.Ct.
2447, 2456, 110 L.Ed.2d 359, 376 (1990), as one involving not "a 
judgment on the merits of an action," but rather, like "the 
imposition of costs, attorney's fees, and contempt sanctions," 
one requiring "the determination of a collateral issue: whether 
the attorney has abused the judicial process, and, if so, what 
sanction would be appropriate" (slip op. at 449). '

The panel also thought it was irrelevant that Coastal had 
wrongfully removed the case, delayed its disposition in the 
courts of Texas for more than three years, and caused Willy to 
incur substantial attorney's fees and expenses to correct that 
error, believing those consequences were excused by Coastal's 
"good faith" (slip op. at 450 n. 7). The panel implicitly held 
that Thomas permits litigants and counsel wrongly invoking 
federal jurisdiction to claim entitlement to costs and 
attorney's fees under the district court's supposed "inherent 
power," for derelictions unrelated to prompt resolution of the 
jurisdictional issue, if there is at least "a colorable basis" 
for the trial court's erroneous rejection of the sanctioned 
party's legally correct jurisdictional position.

13/ The panel opinion frankly acknowledged that Cooter_&_Gell,
is not in point. There the district court's sanctions award was 
collateral to an Article III controversy over which the court 
properly had exercised subject matter jurisdiction, invoked by 
the sanctioned party, even though the case eventually was 
dismissed. Here, by contrast, the district court never 
possessed subject matter jurisdiction at any stage of the 
proceedings, nor had Willy ever wrongly sought to invoke it. 
Nonetheless, without explanation, the panel found Cooter— & 
Gell's "discussion of the collateral character of Rule 11 orders 
applicable in this context as well" (slip op. at 449 n. 5).

-9-



Finally, relying upon the "broad discretion" that Cooter & 
Gell and Thomas accord to United States district judges, the 
panel found no abuse of discretion here. Without addressing or 
even mentioning five of the questions raised at pages 32 through 
48 of Willy's brief, and without disclosing that the district 
court's revised sanctions order had awarded attorney's fees for 
purported misconduct not even mentioned in the first order 30 
months previously, the panel summarily ratified the district 
court's implicit determination that the substantial monetary 
award favoring Coastal was "reasonable," in the sense demanded 
by Rule 11, under all of the circumstances shown, and was the 
"least severe sanction adequate to [serve the] purpose" of the 
Rule. Thomas. 836 F.2d at 878.

ARGUMENT AND AUTHORITIES
The Court should grant rehearing en banc to reexamine the 

panel's unusual conclusion that federal judges, consistently 
with Article III of our Constitution and its prescription for 
courts of limited rather than general jurisdiction, possess 
"inherent power," apart from and unconstrained by statute or 
court rule,14/ to award attorney's fees as a sanction in a 
controversy over which they are constitutionally powerless to 
preside, in favor of litigants and lawyers who wrongly invoke 
their jurisdiction. In doing so the Court should again revisit, 
confront, and grapple with the perplexing and troubling problems

14/ Rule 11 does not confer its own jurisdiction, Rule 82, 
F.R.Civ.P., and is totally superfluous if federal courts have 
"inherent power" to award attorney's fees even in the absence of 
subject matter jurisdiction.

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amended Rule 11 has created, many of which were already apparent 
when Thomas was decided in 1988.

Willy does not maintain that those who wrongly invoke a 
federal court's jurisdiction, in a manner otherwise sanctionable 
under Rule 11, should escape the consequences by claiming "lack 
of jurisdiction." That proposition has been rightfully and 
repeatedly r e j e c t e d . N o r  does Willy contend that those who 
unreasonably block or impede the resolution of a preliminary 
jurisdictional question (for example, by discovery abuses or to 
gain some strategic advantage) should be immune from sanction 
because subject matter jurisdiction ultimately is found wanting. 
"Jurisdiction to determine jurisdiction" is a time-honored 
principle, United States v. United Mine Workers, 330 U.S. 258 
(1947) , and litigants or attorneys who obstruct a federal 
court's determination that it lacks the constitutional

15/ Federal courts uniformly have confirmed the power to sanction the wrongful invocation of their jurisdiction, 
regardless of whether Article III subject matter jurisdiction 
otherwise exists, whether at the time the sanctionable conduct 
occurs or when the sanctions are imposed. See, e. g., Cooter &
Gell v. Hartmarx Corn.. 496 U.S. ___, 110 S.Ct. 2447, 2456, 110
L.Ed.2d 359 (1990) (sanctions sustained despite plaintiff's Rule 
41 dismissal); Woian v. General Motors Corp, 851 F.2d 969 (7 
Cir. 1988) (sanctions sought against defendant wrongfully 
removing case from state court); Orange Production Credit Assn. 
v. Frontline Ventures Ltd. . 792 F.2d 797, 800 (9 Cir. 1986) 
(filing of complaint "completely [lacking] a factual foundation 
for subject matter jurisdiction" held sanctionable under Rule 
1 1); Johnson v. Smith. 630 F. Supp. 1 (N.D. Cal. 1986) 
(wrongful removal from state to federal court sanctionable); cf. 
Trohimovich v. Commissioner. 776 F.2d 873, 875 (9 Cir. 1985) 
(appeal dismissed for lack of jurisdiction; appellant sanctioned 
for abusive tactics). However, this case apparently marks the 
first time any federal court in the United States has ever held 
that attorney's fees under Rule 11 may be awarded in favor of a 
party wrongly invoking federal jurisdiction, against a party 
that properly contested it.

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competence to act in a given controversy are sanctionable just 
as much, and for essentially the same reasons, as those who 
obstruct the judicial process within the context of an Article 
III case or controversy.16/

Willy's argument, rather, is that Article III renders a 
United States district court constitutionally powerless to 
compel litigants and attorneys who do not invoke federal 
jurisdiction, and who have promoted rather than impeded the 
district court's prompt, correct resolution of jurisdictional 
issues, to pay the attorney's fees of the parties wrongfully 
invoking that jurisdiction. The panel's contrary conclusion, 
hypothesizing a previously unrecognized, unconstrained ''inherent

16/ See, e.q.. Szabo Food Service. Inc, v. Canteen Corp., 823 
F. 2d 1073, 1076-79 (7 Cir. 1987) ("silly" complaint or other 
improper imposition on federal court's time sanctionable by 
invocation of "jurisdiction to determine jurisdiction").

In Davis v. Cluet, Peabodv & Co. . 667 F.2d 1371 (11 Cir. 
1982), cited in Willy's brief but not in the panel opinion, the 
Eleventh Circuit rejected dismissal on the merits as a sanction 
for alleged misconduct by plaintiff's counsel, in a case that had been improperly removed to the federal courts by the 
defendant, because such action would "work a wrongful extension 
of federal jurisdiction and give the district courts power the 
Congress has denied them." American Fire & Cas. Co. v. Finn, 341 U.S. 6, 18 (1951). The court nevertheless emphasized that 
it was not dealing with obstruction of a jurisdictional 
determination and concluded that federal courts "have authority 
to sanction parties for misfeasance connected with the 
determination of whether jurisdiction exists." 667 F.2d at 1374 
n. 8.

An earlier decision of this Court to the same effect, Chick 
Kam Choo v. Exxon Coro.. 764 F.2d 1148, 1153 n. 4 (5 Cir. 1985), 
reversed the imposition of Rule 11 sanctions, "(b]ecause the 
district court was without jurisdiction," against an attorney 
who did not wrongly invoke that jurisdiction. Chick Kam Choo is 
inconsistent with this case. The panel's attempt to distinguish 
it (slip op. at 450 n. 8) is tenuous and unpersuasive.

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power" to award attorney's fees in these circumstances, 
apparently apart from Rule 11, against litigants and lawyers who 
never even wanted to be in a federal court in the first place, 
but who were wrongfully dragged there, kicking and screaming, by 
the parties for whose benefit the attorney's fees are awarded, 
is both unsound and unconstitutional.17/

Rule 11 by its terms authorizes "an appropriate sanction," 
including an award of "reasonable" expenses and attorney's fees, 
"incurred because of" a violation of the Rule. Rewarding 
litigants and lawyers who wrongly invoke federal jurisdiction is 
inherently "unreasonable" within the meaning of Rule 11. When a 
district judge unjustifiably and mistakenly prolongs federal

17/ "The inherent powers of federal courts are those which 'are 
necessary to the exercise of all others'." Roadway Express, 
Inc, v. Pioer. 447 U.S. 752, 764 (1980), citing United States v. 
Hudson. 7 Cranch 32, 34 (1812) (emphasis added). There was no 
"necessity" in this case for the district court to have 
possessed a power to award attorney's fees. It was only 
"necessary" for the entire matter to have been remanded promptly 
for lack of subject matter jurisdiction to the state court from 
which Coastal had been improperly removed it.

Moreover, the panel is wrong when it holds that this case, 
as in Cooter & Gell. involves "the determination of a collateral 
issue," "[1]ike the imposition of costs, attorney's fees, and 
contempt sanctions." See note 12, supra. A federal court 
possesses no "inherent power" to award attorney's fees or court 
costs. That authority must be conferred by Congress or
contractually by the parties. Alveska Pipeline Service Co._
Wilderness Society. 421 U.S. 420 (1975); Crawford Fitting Co. 
v. J. T. Gibbons. Inc.. 482 U.S. 437 (1987). Likewise, absent 
subject matter jurisdiction, federal courts are not inherently 
empowered to impose civil contempt sanctions. United States v. 
United Mine Workers. 330 U.S. 258, 294-95 (1947). If the 
district court should never have had this case in the first place, it makes virtually no sense to say it has determined a 
"collateral issue." "Collateral" to what? A case over which it 
lacks jurisdiction? Under Article III of our Constitution, that 
is really no federal "case" at all.

-13-



civil litigation that should have been promptly dismissed or 
remanded to the state court from which it was improperly 
removed, the imposition of sanctions during the spinning of 
judicial wheels that thereafter results smacks too much of sour 
grapes to be tolerable.

Thus, in this case, after publishing in the Federal 
Supplement an erudite, scholarly exposition of Texas employment 
law that turned out to be totally worthless in light of the 
first panel's determination that subject matter jurisdiction was 
lacking, the district court on remand of this case entered a 
second sanctions order that accused Willy, over the shoulders of 
his former counsel,^®/ of additional vicarious misconduct that 
was not even hinted at in the first sanctions order 3 0 months 
earlier. The panel's opinion now has indiscriminately lumped 
together those stale accusations with the purportedly sanction- 
able misbehavior set forth in the first order, without even 
disclosing the district court's apparent retaliatory behavior.

Finally, even according every deference to the district 
court's acknowledged discretion, the attorney's fees adjudged 
against Willy here simply bear no rational relationship to the 
supposed misconduct explicated by the panel opinion. Coastal's

18/ The Supreme Court recently has granted certiorari to 
consider whether Rule 11's standard of "objective 
reasonableness" is applicable both to attorneys and to the 
litigants they represent. Business Guides, Inc, v. Chromatic 
Communications Enterprises, Inc.. 892 F.2d 802 (9 Cir. 1989),
cert, granted ___ U.S. ___[58 U.S.L.W. 3811, June 25, 1990]. The
related question raised by Willy in this case —  whether a 
lawyer's Rule 11 derelictions automatically are attributable to 
the client simply because the client is an attorney —  was never 
addressed or answered by the panel's summary calendar opinion.

-14-



three lawyers have been compensated for all time they devoted to 
responding to the motion for partial summary judgment and to 
defending their own ill-founded Rule 12(b)(6) motion, not simply 
for the additional time allegedly occasioned by the supposed 
Rule 11 violations. Such a windfall, in favor of an $8 billion 
corporation, against an impecunious plaintiff who still has not 
had his day in court, almost five years after his case was 
filed, cannot conceivably constitute the kind of "reasonable,” 
"least severe" sanction that Thomas and Rule 11 contemplate.

CONCLUSION
For the foregoing reasons, the Court should take this 

important Rule 11 case en banc.

MICHAEL A. MANESS 
1900 North Loop West, Suite 500 
Houston, Texas 77018 
(713) 680-9922 
Attorney for Appellant 
Donald J. Willy

CERTIFICATE OF SERVICE
I certify that on November 14, 1990, I have served a copy

of the foregoing upon opposing counsel of record:
James L. Reed, Jr., Esquire 
Nine Greenway Plaza, Suite 1717 
Houston, Texas 77046
J. Richard Hammett, Esquire 
901 15th Street, N.W., Suite 700 
Washington, D.C. 20005-2301
Robert C. DeMoss, Esquire 
Nine Greenway Plaza, Suite 878

-15-



IN  THE UNITED STATES D IS T R IC T  COURT 
FOR THE SOUTHERN D IS T R IC T  OF T E X A S 

HOUSTON D IV I S IO N  —  7

DONALD J . WILLY,
Plaintiff,

V .

THE COASTAL CORPORATION, 
et al.,

Defendants.

X
X
X
XX CIVIL ACTION NO. H-35-6947
X
X
X
X
X

ORDER FOR SANCTIONS
Pending before this Court is Defendants' Motion 

for Sanctions. Having considered the pleadings with the 
reams of allegedly relevant supplemental material, the oral 
statements made on the record at hearings on August 18 , 
1986, and September 15, 1986, the Defendants’ affidavits for 
attorneys fees, the Plaintiff's (Pro Se) Response to 
Defendants Affidavits in Support of Sanction, and the court 
rules and law applicable thereto, this Court is of the 
opinion that Defendants' Motion for Sanctions is well 
advised.

Under Fed. R. Civ. P. 11, an attorney's signature 
on a pleading certifies that the attorney has (1) read the 
pleadings and other papers submitted, (2) made a reasonable 
inquiry of the Plaintiff's Complaint to determine if it is 
well grounded in fact and warranted by existing law or can 
make a good faith argument for extension of existing law, 
and (3) determined that the Complaint is not made in order 
to harass.

A—1



Plaintiff filed this suit in an apparent attempt 
to establish new law, at least as to one cause of action. 
Under such circumstances, the Court would expect Plaintiff, 
an attorney himself, and his counsel, to shed what light 
they could upon the issue in clear focus. Among the 
thousands of pages of pleadings and supplemental materials, 
Plaintiff did not illuminate the issue with any clarity, but 
rather chose to create a blur of absolute confusion. When 
the Plaintiff's attorney signed his 110-page brief in 
support of a Motion for Partial Summary Judgment, he made 
the Rule 11 certifications to this Court. Furthermore, 
Plaintiff asked and received permission of this Court to 
file what Plaintiff's attorney certifies to be appropriate 
and competent summary judgment evidence. What Plaintiff's 
attorney filed, however, was a 1,200-page, unindexed, 
unnumbered, foot-high pile of material which this Court is 
unable, after examination, to fathom and which is determined 
to be a conscious and wanton affront to the judicial 
process, this Court, and opposing counsel. This Court finds 
the submission and the Plaintiff's accompanying affidavit to 
this Court to be irresponsible at a minimum and at worst 
intentionally harassing. The material is generally 
incompetent hearsay, supported only by the Plaintiff's own 
conclusions and averments. See Galindo v. Precision Am. 
Corp., 754 F .2d 1212, 1215 (5th Cir. 1985).

Unfortunately, the transgressions do not stop 
here. Plaintiff's response(s) to Defendants' Motion to

A-2



Dismiss are also careless and confusing. For example, at 
page 4 of Defendants' Response to Plaintiff's Briefs 
Regarding Defendants' Motion to Dismiss, the Plaintiff 
relies upon Rule 503 of the Federal Rules of Evidence. At 
the August 13, 1986, hearing, this Court asked Plaintiff to
find Federal Rule of Evidence 503. Plaintiff could not. At 
the September 15, 1986, hearing, Plaintiff acknowledged that 
Rule 503 was never adopted by the United States Supreme 
Court. This is but an example of Plaintiff's and 
Plaintiff's counsel's careless pleading and a strong 
indication of intentional harassment.

The Court has spent enough time on this case to be 
sorely concerned with the actions of the Plaintiff and 
Plaintiff's counsel. The conduct of this suit has been 
inexcusable and can hardly be seen as a good faith attempt 
at making new law. It is therefore

ORDERED that Defendants' Motion for Sanctions be 
GRANTED. Plaintiff and Plaintiff's counsel, jointly and 
severally, are to pay $22,625 to the Defendants for the 
purpose of compensating the Defendants for the attorneys 
fees incurred in responding to Plaintiff's improper 
pleadings; in particular, Plaintiff's Motion for Partial 
Summary Judgment and Responses to Defendants' Motion to 
Dismiss. The $22,625 will be tendered to Defendants' 
attorney-in-charge on or before December 1, 1986. Proof of 
payment will be filed with the Court on or before December 
1, 1986.

A-3



November,

\

SIGNED at Houston, Texas, on this l day of 
1986 .

United States District Judge

A—4



1160 355 FEDERAL REPORTER. 2d SERIES

F.Supp. 116. dismissed and imposed Rule 
U sanctions, ana former employee appeal­
ed. The Court of Appeals. Garwood. Cir­
cuit Judge. held that: tl) claim ot wrongiui 
discharge in retaliation :or employee's ef­
forts to prevent employers from violating 
federal securities and environmental laws 
and because of employee's refusal to vio­
late those laws did not arise under federal 
law so as to give court federal question 
jurisdiction: (21 Rule 11 sanctions were 
proper but (31 attorney fees could be im­
posed as Rule 11 sanction only to the ex­
tent that they were reasonably caused by a 
violation.

Reversed and remanded in part.
Hughes, District Judge, sitting by des­

ignation. filed an opinion concurring in part 
and dissenting in part.

Donald J. WILLY, Plaintiff-Appellant, 
and

George A. Young, 
Respondent-Appellant,

v.
The COASTAL CORP., Coastal States 

Management Co.. Inc., et al„ 
Defendants-Appellees.

No. 86-2992.

United States Court of Appeals, 
Fifth Circuit.

Sept. 29, 1988.

1. Removal of Cases <3=107(7)
Burden of establishing federal jurisdic­

tion is placed on the party seeking removal. 
28 U.S.C.A. § 1441.

2. Removal of Cases <5=2
Removal jurisdiction must be strictly 

construed because it raises significant fed­
eralism concerns. 28 U.S.C.A. § 1441.

3. Removal of Cases ®=1
Right to remove case from state to 

federal court derives solely from the statu­
tory grant of jurisdiction. 28 U.S.CA. 
§ 1441(a).

4. Federal Courts <3=191
For constitutional purposes, case 

arises under federal law whenever a feder­
al question is an ingredient of the cause of 
action, but the "arising under’’ jurisdiction 
of the federal question statute is more lim­
ited. 28 U.S.C.A. § 1331; U.S.CA. Const. 
Art. 3, § 2, cl. 2.

5. Removal of Cases <3=25(1)
Former employee brought wrongful When case is removed to federal court,

discharge action against former employer, plaintiffs well-pleaded complaint, not the 
Following removal from state court, the removal petition, must establish that the 
United States District Court for the South- case arises under federal law. 28 U.S.C.A.
em District of Texas, David Hittner, J., 647 § 1441.

A-5



4. Removal of Cases -3=25< 1)
Under the weil-pieaded complaint rule, 

federal preemption is generally a defensive 
issue that does noc authorize removal of a 
case to federal court. 23 U.S.C.A. § 1441.
7. Federal Courts -3=191. 196

There is no distinction becween the 
" arising under" standard for federal ques­
tion jurisdiction and the "arising under" 
standard for jurisdiction based on an act of 
Congress regulating commerce. 23 U.S. 
C.A. §§ 1331. 1337.
3. Removal o f Cases <3=25(1)

Compiece federal preemption or dis­
placement was not basis for removing to 
federal court complaint of employee for 
wrongful discharge because of his efforts 
to avenge his employer for violating feder­
al securities and environmental laws and 
his refusal to violate them himself. 23 
U.S.CJL § 1441.
9. States <$=1825

State legislation i3 generally not 
preempted unless Congress has sufficiently 
evidenced, either expressly or inferentially 
through the comprehensiveness of the fed­
eral regulatory scheme, an intent to ex­
clude all state regulation in the field or 
unless state law conflicts with federal law, 
either because compliance 'with both is im­
possible or because state law stands as an 
obstacle to the accomplishment of the full 
objectives of Congress.
10. Federal Courts 3=241

Rule that plaintiff is master of his own 
complaint must give way to well-pleaded 
complaint rule when plaintiff attempts to 
choose a federal forum based on anticipa­
ted federal defense.
11. Federal Courts <̂ =242

Wrongful discharge claim of employee 
who alleged that he was discharged be­
cause he had sought to prevent his employ­
er from violating federal securities and en­
vironmental laws and because he would not 
violate them himself did not arise under 
federal law where he did not claim that the 
employer had violated the whistleblower 
provisions of the federal statutes in ques­
tion. 23 U.S.C.A. § 1331; Comprehensive

Response. Compensation. 
Act of 1980. 5 110. 42 U.S. 
Clean Air Act. § 322. 42 U.S. 

Soiid Waste Disposal Act.
§ 7001. as amended. 42 U.S.C.A. 3 6971; 
Federal Wacer Pollution Control Act 
Amendments of 1272. § 507. as amended. 
33 U.S.C.A. § 1367: Puolic Health Service 
Act. § 1450(0, as amended. 42 U.S.C.A.
§ 300j-9(i); Toxic Substances Control Act.
§ 23. 15 U.S.C.A. § 2622.

12. Federal Civil Procedure <3=2721 
District court and Court of Appeals

retained jurisdiction over Rule 11 sanctions 
even though Court of Appeals heid that 
removal was improper. Fed.Ruies Civ. 
Proc.Rule 11, 23 U.S.C.A.

13. Federal Civil Procedure <3=2721 
Reasonable and appropriate expenses,

including attorney fees, may be awarded as 
a Rule 11 sanction to the extent that the 
expenses were reasonably caused by a vio­
lation of the rule. Fed.Ruies Civ.Proc.Rule 
11, 23 U.S.C-A.

14. Federal Civil Procedure <3=2721 
Rule 11 sanctions were warranted by

plaintiffs filing of mountainous piles of 
unorganized documents and citing to non­
existent rules of law. Fed.Ruies Civ.Proc. 
Rule 11, 23 U.S.C.A.

15. Federal Civil Procedure <3=2721
It was proper to impose sanction of 

attorney fees on plaintiff found to have 
violated Rule 11 by filing mountainous 
piles of unorganized documents and citing 
to nonexistent rules of law. Fed.Ruies Civ. 
Proc.Rule 11, 23 U.S.C.A.

1161

Edward F. Sherman, Austin, Tex., for 
amicus curiae Texas Trial Lawyers Assn.

.Michael A. Maness, Houston, Tex., for 
Donald J. Willy.

George A. Young, Houston, Tex., pro se.
David Van Os, James C. Harrington, 

Austin, Tex., Sharon D. Groth, Houston, 
Tex., for amicus curiae Texas AFL-CIO.

WILLY v. COASTAL CORP.
C ite ee 1133 F.ZJ 1 160 l 5th O r .  WHHI

Environmental 
and Liability 
C.A. 3 9610: 
C.A. 3 7622:

A-6



1162 S55 FEDERAL REPORTER. Id SERIES

Bruce V. Griffiths, Staff Counsel. Hous­
ton, Tex., for amicus curiae ACLU-Hous- 
ton.

James L. Reed. Jr.. Robert C. DeMoss. 
Houston. Tex., for defendants-appeilees.

Peter Linzer. University of Houston Law 
Center. Houston. Tex., for amicus curiae.

Appeals from the United States District 
Court for the Southern District of Texas.

Before GARWOOD and JONES,
Circuit Judges, and HUGHES," District 
Judge.

GARWOOD, Circuit Judge:
Plaintiff-appellant Donaid J. Willy (Willy) 

brought this action in the Texas courts 
seeking primarily to allege a wrongful dis­
charge claim under Sabine Pilot Service, 
Inc. v. Hauck, 637 S.W.2d 733, 735 (Tex. 
1985), or some extension thereof. He also 
asserted other related claims (such as def­
amation and blacklisting) under state law. 
Defendants-appeilees removed the case to 
federal court on the basis of original feder­
al question jurisdiction under 28 U.S.C. 
§§ 1331, 1441, arguing that federal issues 
pleaded as a part of Willy's state wrongful 
discharge claim made this a federal case. 
The district court agreed and subsequently 
dismissed Willy's wrongful discharge claim 
for failure to state a claim upon which 
relief can be granted, Fed.R.Civ.P. 12(b)(6), 
treated Willy's remaining claims as pen­
dent state claims and dismissed them under 
United Mine Workers v. Gibbs, 383 U.S. 
715, 86 S.Ct. 1130, 1139, 16 L.Ed.2d 213 
(1966), and ordered Willy and his attorney 
to pay 522,625 in attorneys' fees to defend­
ants as a sanction pursuant to Fed.R.Civ.P. 
11. We find that the district court lacked 
subject matter jurisdiction over the case, 
and that the amount of the Rule 11 sanc­
tions is not adequately supported by the 
record and should be reconsidered in light 
of our opinion herein and the principles 
announced in Thomas v. Capital Security 
Services, Inc., 836 F.2d 866 (5th Cir.1988). 
Accordingly, we reverse and remand.

* District Judge of the Southern District of Texas.

Facts and Proceedings B elow  

Wiilv is a iawyer who was employed as 
in-house counsel from May 1981 until he 
was fired in October 1984 by uefendanc-ap- 
peilee Coastal States Management Co., a 
wholly-owned subsidiary of defendant-ap- 
peilee The Coastal Corporation. These en­
tities (collectively, Coastal), are involved in 
the oil and gas industry through other sub­
sidiaries of The Coastal Corporation. Willy 
claims that he was fired because he insist­
ed that Coastal comply with various state 
and federal environmental and securities 
laws and because he would not act in viola­
tion of those laws.

Within a month of his dismissal. Willy 
filed an administrative complaint against 
Coastal with the United States Department 
of Labor pursuant to 29 C.F.R. pt. 24 
(1984). He argued that by firing him 
Coastal had violated the “whistleblower” 
provisions of the Comprehensive Environ­
mental Response, Compensation, and Lia­
bility Act, 42 U.S.C. § 9610; the Clean Air 
Act, 42 U.S.C. § 7622; the Solid Waste 
Disposal Act, 42 U.S.C. § 6971; the Water 
Pollution Control Act, 33 U.S.C. § 1367; 
the Safe Drinking Water Act, 42 U.S.C.
§ 300j—9(f); and the Toxic Substances Con­
trol Act, 15 U.S.C. § 2622. The Depart­
ment of Labor investigated and agreed. 
The Administrative Law Judge (AU ) to 
whom Willy's case was assigned, however, 
found that Willy had engaged in only intra­
corporate activity, not communications with 
a governmental agency, and recommended 
dismissal of Willy's claim under Brown & 
Root, Inc. v. Donovan, 747 F.2d 1029 (5th 
Cir.1984) (the “whistleblower" provision of 
the Energy Reorganization Act, 42 U.S.C. 
§ 5851(a)(3), does not protect an employee 
from filing an intracorporate quality con­
trol report). On June 4, 1987, the Secre­
tary of Labor (Secretary) rejected the 
ALJ’s recommendation and remanded, find­
ing from the record that Willy had been in 
contact with governmental agencies, pre­
sumably federal, before he was fired. The 
Secretary further “ held” that Brown & 
Root was incorrectly decided and that this 
Court should be given an opportunity to

silting by designation.

A-7



WILLY v. COASTAL CORP. H tj3
C I l l u J J J  FUd 1160 I3 th CIr. 19HMI

reconsider its decision ;n light ot Kansas 
Gas Jc Electric (Jo. i*. 3 rncx. 730 F.2d L505 
(10th Cir.L985), cert, denied. 473 U.S. 1011. 
tOfi S.CL 3311. 92 L.Ed.Ld 724 U986). ana 
Mackoudak u. University Nuclear Sys­
tems. 735 F.2d 1159 (9th Cir.1984). The 
present status ot Willy's administrative ac­
tion is not reflected by the record or briefs.

On November 22. 1985. after the A id ’s 
recommendation of dismissal but before re­
mand by the Secretary, Willy tiled this 
action in Texas state court, naming as de­
fendants Coastal and several individuals 
associated with Coastai. He asserted 
claims for wrongful discharge, breach of 
the codes of ethics of the American and 
Texas bar associations, invasion of privacy, 
defamation, blacklisting, and interference 
with contractual and business relation­
ships. Although Willy's complaint does not 
mention case law, he obviously attempted 
to plead his wrongful discharge action un­
der Sabine Pilot, which established a Tex­
as common law wrongful discharge action 
for at-will employees who have been fired 
for refusing to perform an illegal act, or 
some extension thereof. Willy alleged that 
he sought to cause his employer to comply 
with, and that he refused to engage in 
activity that assertedly would violate, 3tate 
and federal environmental and securities 
laws, specifically naming the Clean Water 
Act (33 U.S.C. §§ 1251, et seq.), the Re­
source Conservation and Recovery Act (42 
U.S.C. §§ 6901, et seq.), the Clean Air Act 
(42 U.S.C. §§ 7401, et seq.), the Safe Drink­
ing Water Act (42 U.S.C. §§ 300f, et seq.), 
and the Solid Waste Disposal Act (42 U.S. 
C. §§ 6901, et seq.).1

On December 30, 1985, defendants re­
moved the case to the United States Dis­
trict Court for the Southern District of 
Texas pursuant to 28 U.S.C. § 1441 on the 
basis of original federal question jurisdic­
tion under 23 U.S.C. § 1331. They con­
tended that federal question jurisdiction ap-

1. In his state court pleading, Willy alleged only 
the names of these statutes, and did not other­
wise state in his pleading any citation for the 
statutes he named; we have furnished the cita­
tions appearing in parentheses in the text. We, 
of course, imply no pleading requirement con­
cerning case law or statutory citations.

pears on :he face of Willy s comoiainc be­
cause the federal statutes that Willy 
claimed he was fired for refusing to vtolate 
formed a necessary element of his Sabine 
Pilot-type claim. The district court agreed 
and denied Willy's initial mocion to remand. 
Willy then moved for partial summary 
judgment and defendants moved to dismiss 
pursuant to Fed.R.Civ.p. 12(b)(6) and for 
sanctions pursuant to Fed.R.Civ.p. LI. Be­
fore the district court ruied on these mo­
tions, Wiilv twice more unsuccessfuilv 
moved for remand. On Septemoer 17, 
1986. the district court denied Wiilv s mo­
tion for partial summary judgment and on 
November L2. 1986, dismissed Willy's Sa­
bine Pilot-type action pursuant to Ruie 
12(b)(6), dismissed Willy's remaining pen­
dent state law claims under Gibbs. 647 
F.Supp. 116, and imposed Rule 11 sanctions 
in the amounc of 522,625 jointly and sever­
ally against Willy and his attorney.2 This 
appeal followed.

Discussion
Because the district court dismissed Wil­

ly's complaint for failure to state a ciaim 
pursuant to Ruie 12(b)(6), see Voter Infor­
mation Project, Inc. v. City o f  Baton 
Rouge, 612 F.2d 208, 210 (5th Cir.1980), 
and because we look to the well-pleaded 
complaint to determine subject matter jur­
isdiction, see, e.g.. Franchise Tax Board v. 
Construction Laborers Vacation Trust, 
463 U.S. 1, 103 S.CL 2341, 2346, 77 L.Ed.2d 
420 (1983), we accept as true for the pur­
poses of this appeal Willy's factual allega­
tions that are relevant to subject matter 
jurisdiction, see Williamson v. Tucker, 645 
F.2d 404, 412 (5th Cir.), cert denied, 454 
U.S. 897, 102 S.CL 396, 70 LEd.2d 212 
(1982). We note, however, that Willy's fac­
tual allegations are often imprecise. For 
instance, he discusses an episode where he 
sought to prevent changes in a report, but 
does not indicate whether the report was 
for purely intracorporate purposes. Sim-

2. After entering judgment on these orders, the
district court entered a modified judgment. Fed.
R.Civ.P. 60(b), that dismissed counterclaims
pleaded by defendants.

A-8



355 FEDERAL REPORTER. 2d SERIES1164
ilariv, a contact with a governmental agen­
cy is hinted at by a vague discussion of 
“ actions” he took that "were the first legal 
step” in reporting to the Securities ana 
Exchange Commission Coastal s noncompii- 
ance with environmental laws. Because 
we hold that the district court did not nave 
subject matter jurisdiction over Willy's ac­
tion under any reasonable construction of 
his state court pleading, we find it unneces­
sary to resolve these ambiguities. Thus, 
for purposes of this appeal, we will as­
sume, arguendo, that Willy alleges that ne 
was fired because he complied with and/or 
refused to violate federal and state envi­
ronmental and federal securities laws and 
that his activities in this connection were 
not wholly intracorporate.1

I. Removal Jurisdiction
[1.2] As a preliminary matter, we em­

phasize that the burden of establishing fed­
eral jurisdiction is placed upon the party 
seeking removal. See Wilson v. Republic 
Iron & Steel Co., 257 U.S. 92, 42 S.Ct. 35,
66 L-Ed. 144 (1921). Moreover, removal 
jurisdiction raises significant federalism 
concerns, see Merrell Dow Pharmaceuti­
cals, Inc. v. Thompson, 478 U.S. 804, 106 
S.Ct. 3229, 3233, 92 L.Ed.2d 650 (1986); 
Franchise Tax Board, 103 S.Ct. at 2846, 
and we must therefore strictly construe 
removal jurisdiction. Shamrock Oil & Gas 
Corp v. Sheets, 313 U.S. 100, 61 S.Ct. 868, 
872, 35 L-Ed. 1214 (1941); Powers v. South 
Central United Food & Commercial 
Workers Unions and Employers Health & 
Welfare Trust, 719 F.2d 760, 762 (5th Cir. 
1983); Butler v. Polk, 592 F.2d 1293, 1296 
(5th Cir.1979).

[3] The right to remove a case from 
state to federal court derives solely from 
the statutory grant of jurisdiction in 28 
U.S.C. § 1441, which provides in relevant 
part:
3. We do not. however, purport to decide these 

matters and in no way reach the substantive 
merits of Willy's claims.

4. Section 1441(c) provides:
“(c) Whenever a separate and independent 

claim or cause of action, which would be 
removable if sued upon alone, is joined with

"(a) anv civii action brought in a 
State court of whicn the district courts of 
the United States have original jurisdic­
tion. may be removed by the defendant 
or the defendants, to the district court of 
the United States for the district and 
division embracing the piace wnere such 
action is pending.' *

See Finn v. American Fire ±  Cos. Co..
207 F.2d 113, 115 (5th Cir.1953), cert de­
nied. 347 U.S. 912. 74 S.Ct 476. 98 L.Ed. 
1069 (1954). Here, there is no allegation of 
diversity of citizenship between the parties: 
therefore, the oropnecy of removal depends 
on whether the case fails within the provi- 
sions of 23 U.S.C. § 1331 that: “The dis­
trict courts shall nave original jurisdiction 
of all civil actions arising under the Consti­
tution, laws, or treaties of the United 
States.”

[4] Section 1331 executes Article III.
§ 2, of the Constitution, which grants the 
federal courts the power to hear cases 
"arising under” the Constitution and feder­
al statutes. Although.section 1331 and Ar­
ticle III employ the same “ arising under” 
language, the phrase does not have the 
same meaning in these different contexts. 
For constitutional purposes, the case arises 
under federal law whenever a federal ques­
tion is an “ ingredient”  of the cause of 
action. Osoom v. Bank o f  Lmited States.
9 Wheat. 22 U.S. 738. 822. 6 L.Ed. 204 
(1824). Section 1231 “ arising under” juris­
diction is more limited, however. Merrell 
Dow, 106 S.Ct at 3232. See Fabrique. Inc. 
v. Carman, 813 F.2d 725, 725-26 (5th Cir. 
1987) (Supreme Court has rejected "ingre­
dient”  test for federal question jurisdic­
tion). See generally 13B C. Wright, A. 
Miller, & C. Cooper, Federal Practice and 
Procedure § 3562 (2d ed. 1984) (hereinafter 
Wright & Miller).

[5] The issue that we address in this 
case is whether the federal aspect of Wil­
ly’s state cause of action brings his case

one or more otherwise non-removable claims 
or causes of action, the entire case may be 
removed and the district court may determine 
all issues therein, or. in its discretion, may 
remand all matters not otherwise within i »  
original jurisdiction."

A-9



1165WILLY v. COASTAL CORP.
Cite u  433 F.ld 1160 tSthClr. 19IW1

within section 1331's “ arising under'1 
boundaries. Defining when a oiaim anses 
under federal law has drawn much atten­
tion but no simple solutions. See Powers. 
TI9 F.2d at 763 & n. 1. See also Superior 
Oil Co. v. Pioneer Carp.. 706 F.2d 603, 605 
(5th Cir.1983). Certainly the most often 
discussed feature of the “ arising under’ 
requirement, however, is the well-pleaded 
complaint rule: whether a ciaim arises un­
der federal law must be determined from 
the allegations in the well-pleaded com­
plaint. See generally 13B Wright & Mil­
ler. § 3566 (2d ed. 1984). In cases removed 
to federal court, the plaintiffs well-pleaded 
complaint, not the removal petition, must 
establish that the case arises under federal 
law. See Merrell Dow, 106 S.Ct at 3232; 
Franchise Tax Board, 103 S.Ct. at 2347. 
This rule requires the court to determine 
federal jurisdiction from only those allega­
tions necessary to state a claim or, stated 
alternatively, a federal court does not have 
jurisdiction over a state law claim because 
of a defense that raises a federal issue, 
even if the plaintiff anticipates and pleads 
the federal issue in his complaint. Fran­
chise Tax Board, 103 S.Ct. at 2846; Gully 
v. First National Bank at Meridian, 299 
U.S. 109, 57 S.Ct. 96, 81 LEd. 70 (1936); 
Louisville & Nashville R. Co. v. Mottley, 
211 U.S. 149, 29 S.Ct. 42, 53 LEd. 126 
(1908) (case brought in federal court).

.4. Jurisdiction Based on Federal Pre­
emption

(6,7] Under the well-pleaded complaint 
rule, federal preemption is generally a de­
fensive issue that does not authorize re­
moval of a case to federal court5 See 
Powers, 719 F.2d 764-65. However, in

5. Prior to the amendments to the removal stat­
ute in 1887, a federal defense such as preemp­
tion couid be the basis for removal jurisdiction.
Caterpillar, Inc. v. Williams, ----  UJS. ------ . 107
S.Ct. 2425. 2430, 96 L-Ed-2d 318 (1987).

6. Although section 301 has been held to be an
adequate jurisdictional grant, see, e.g., Textile 
Workers Union v. Lincoln Mills o f Ala., 353 U.S. 
448, 77 S.Ct. 912. 915, 1 L.Ed.2d 972 (1957). the 
Avco Court found jurisdiction for cases 
preempted by section 301 under 28 U.S.C. 
§ 1337, which grants federal jurisdiction in ac­
tions “arising under any Act of Congress regulat-

Mrco Corn. v. Aero Lodge No. 7J5. Int'l 
Assn, of Machinists. 390 U.S. 557. 38 S.Ct. 
1225. 1237, 20 L.£d.2d 126 (1968). the Court 
tersely held that because state actions for 
breach of collective bargaining agreements 
were preempted by section 301 of the La­
bor Management Relations Act of 1947 
(LMRA), 29 U.S.C. § 185. the federal court 
had removal jurisdiction.4 In Franchise 
Tax Board. 103 S.Ct. at 2353-54. the Court 
subsequently explained that because “ the 
preemptive force of § 301 is so powerful as 
to displace entirely'1 state actions for 
breach of a collective bargaining agree­
ment, any such action “ is purely a creature 
of federal law, notwithstanding the fact 
that state law would provide a cause of 
action in the absence of § 301.’’ The Court 
further stated: “Avco stands for the propo­
sition that if a federal cause of action com­
pletely preempts a state cause of action 
any complaint that comes within the scope 
of the federal cause of action necessarily 
‘arises under1 federal law.” 103 S.Ct. at 
2354.

Nonetheless, Franchise Tax Board re­
fused to find federal question jurisdiction 
based on preemption of a 3tate tax collec­
tion action by the Employee Retirement 
Income Security Act of 1974, 29 U.S.C.
§ 1001, et seq. (ERISA).6 7 The Court held 
that because the state's claims were not 
within the scope of section 502(a), which is 
ERISA’s civil enforcement provision, they 
could not be removed to federal court. 103 
S.Ct at 2854-55. In other words, a federal 
action cannot be found to so completely 
displace state claims that Avco applies un­
less there would have been a federal cause 
of action under the preempting federal 
law.5 In fact, in Merrell Dow, which did

ing commerce." There is no distinction, how­
ever. between "arising under' standards for sec­
tion 1337 and section 1331. See Franchise Tax 
Board, 103 S.Ct. at 2845 n. 7.

The Court assumed ERISA preemption, but 
did not actually determine that question.

8. In Avco the plaintiff was denied the injunctive 
relief that it sought because of independent lim­
its on federal jurisdiction at that time. The 
Franchise Tax Board Court reasoned that the 
Avco plaintiff nevertheless had stated a claim

A-10



1 1 * 5 6 353 FEDERAL REPORTER. 2d SERIES

not directly raise federal preemption as an 
issue, the Court held that

“ a complaint alleging a violation of a 
federal statute as an eiement of a state 
cause of action, when Congress has de­
termined that there should be no private, 
federal cause of action for the violation, 
does not state a claim 'arising under the 
Constitution, laws, or treaties of the 
United States.’ 23 U.3.C. § 1231.” 106 
S.Ct. at 3227.
In Metropolitan Life Ins. Co. v. Taylor. 

431 U.S. 53. 107 S.Ct. 1542. 95 L.Ed.2d 55 
(1987), the Court extended the Avco rule to 
a state action that is preempted by 
ERISA's civil enforcement provision, sec­
tion 502(a). See Pilot Life Ins. Co. v. De- 
deaux, 481 U.S. 41. 107 S.Ct 1549, 95 
L.Ed.2d 39 (1987) (under section 514(a), sec­
tion 502(a)(1)(B) completely preempts a 
state common law claim for improper pro­
cessing of a claim submitted to an ERISA- 
qualified plan). In Taylor, unlike Fran­
chise Tax Board, the claim was within the 
scope of ERISA’s private cause of action. 
Furthermore, Congress had expressed an 
explicit intent for actions preempted by sec­
tion 502(a) to arise under federal law in a 
“ similar fashion to those brought under 
section 301.” 107 S.Ct. at 1547-48. Be­
cause of these two factors, the Court found 
that the action arose under federal law. 
Id. at 1548. See also Oneida Indian Na­
tion v. County o f  Oneida, 414 U.S. 661, 94 
S.Ct. 772, 39 L.Ed.2d 73 (1974) (claim of 
right to possession of Indian lands asserts 
a purely federal right and claim therefore 
arises under federal law).

It is important to recognize that Taylor 
is a narrow extension of Avco, which itself 
represents a narrow exception to the rule 
that federal preemption is a defensive issue 
that does not authorize removal of a case 
to federal court. Avco was an action aris­
ing under section 301 of the LMRA. Be­
cause of the unique Congressional mandate 
for a uniform body of federal labor law 
under the LMRA, several broad preemption 
doctrines have evolved to protect this fed-

that arose under section 301 of the LMRA. 103
S.Ct. at 2S53.

erai interest. Sec. e.g.. 1 aca c. Sipes. oS6 
U.S. L71. 87 S.Ct. 903. 17 L.Ed.2d 342 
(1967) (preemption of state substantive law. 
but not state court jurisdiction, in breach of 
duty of fair representation claim); Amal­
gamated Ass n o f  Street. Electric Railway 
and Motor Coach Employees v. Lockmdge. 
403 U.S. 274. 91 S.Ct. 1909. 29 L.Ed.2d 473 
(1971) (jurisdiction of National Labor Rela­
tions 3oard over unfair labor practices 
preempts state and federal court jurisdic­
tion); Allis Chalmers Carp. u. Lueck, 471 
U.S. 202. 105 S.Ct. 1904, 1912-16. 35 L-Ed.2d 206 (1985) (state tort action that is “ in­
extricably intertwined with consideration of 
the terms of” a collective bargaining agree­
ment is preempted by LMRA section 301). 
But see Farmer v. United Brotherhood o f  
Carpenters & Joiners, 430 U.S. 290, 97 
S.Ct. 1056, 1561-62, 51 L~Ed.2d 338 (1977) 
(discussing cases where state law is not 
preempted because the activity is only a 
“ peripheral concern of the LMRA” or 
touches an interest “ deeply rooted in local 
feeling” ); Caterpillar, Inc. v. Williams,
----  U.S. ------ , 107 S.Ct. 2425, 2431, 96
L.Ed.2d 318 (1987) (section 301 does not 
preempt state breach of employment con­
tract claim even though there was a collec­
tive bargaining agreement in place under 
which plaintiffs could have brought suit). 
In cases not implicating the LMRA. we 
have read the majority and concurring 
opinions in Taylor to require “manifest 
congressional intent”  to make a preempted 
state claim removable to federal court. 
See Beers v. North American Van Lines, 
Inc, 836 F.2d 910, 913 n. 3 (5th Cir.1988) 
(preemptive effect of Interstate Commerce 
Act).

[8.9] Here, the federal laws’  to which 
Willy explicitly refers as an aspect of his 
Sabine Pilot-type claim and the legislative 
history of those statutes indicate no intent, 
manifest or otherwise, that Avco should 
apply in this character of case. Thus, un­
der Taylor, complete federal preemption or 
displacement cannot be a basis for remov­
ing Willy’s case to federal court. In reach-

9. Although occasionally' mentioning federal se­
curities laws, the parties have focused this ap­
peal on the environmental laws.

A-11



1167WILLY v. COASTAL CORP
C ite as M33 F.«d

ini' this conclusion thuc eomplece federal 
preemption or displacement does not pro­
vide a basis for federal jurisdiction, we 
reiterate that we are noc determining 
wnecher ail or any of Willy’s state wrong­
ful discharge ciaim is preempted.1"

3. Jurisdiction Based on General 
“Arising Under'' Principles

[101 If complete displacement of state 
law cannot be the basis of federal question 
jurisdiction, does the presence of a feoerai 
aspect in Willy's state cause of action cre­
ate federal jurisdiction? With the excep­
tion of state actions completely displaced 
by federal law, the plaintiff is generally 
“master to decide what law he will rely 
upon,” The Fair v. Kohler Die & Specialty 
Co.. 223 U.S. 22. 33 S.CL 410, 411, 57 L.£d. 
716 (1913), and he “ may avoid federal juris­
diction by exclusive reliance on state law.” 
Caterpillar, 107 S.CL at 2429 & n. 7 (1987) 
(footnote omitted).10 11 Here, of course, Willy 
in part relies upon federal law and the 
question remains whether his case there­
fore arises under federal law.

One answer is found in Justice Holmes' 
test for federal question jurisdiction: “ A 
suit arises under the law that creates the 
cause of action.’’ American Well Works 
Co. v. Layne & Bowler Co.,241 U.S. 257, 36 
S.CL 585, 586, 60 L.Ed. 987 (1916). Federal

10. We note that state legislation is generally not
preempted unless Congress has sufficiently evi­
denced (either expressly or inferentially through 
the comprehensiveness of the federal regulatory 
scheme) an intent to exclude all state regulation 
in the field or unless state law conflicts with 
federal law (either because compliance with 
both is impossible or because state law stands as 
an obstacle to the accomplishment of the full 
objectives of Congress). See Silkwood v. Kerr- 
McGee Corp.. 464 U.S. 238, 104 S.CL 615. 621, 78 
L£d.2d 443 (1984); Osbum v. Anchor Laborato­
ries, Inc., 825 F_2d 908, 911 (5th Clr.1987). The 
states, of course, are traditional partners with 
the federal government in the fieldis of securities 
and environmental regulation. And the Sabine 
Pilot remedy may sometimes in practice supple­
ment but does not appear to directly conflict 
with any federal remedy. Slate remedies may, 
however, be preempted by federal ones in a 
given contexL See Atkinson v. Gates. McDonald 
St Co.. 838 F.2d 808 (5th Cir.1988) (Longshore 
and Harbor Workers' Compensation Act 
preempts state law claim for bad faith refusal to 
pay benefits due thereunder); LeSassier v. Chev­
ron USA, Inc., 776 F.2d 506 (5lh Cir.1985) (Loui-

1160 i 5th O r .  ItHKI

jurisdiction is noc shown by this test, for 
Willy alleges an asserted cause of action 
creaced by Texas law.

"However, it ;s well settled that Justice 
Holmes' test is more useful for describ­
ing :he vast majority of cases that come 
within the district courts' original juris­
diction than it is for describing which 
cases are beyond district court jurisdic­
tion. We have often held chat a case 
’arose under’ teaerai law where the vin­
dication of a right under stace law- neces­
sarily turned on some construction of 
ferierai law, see. e.g.. Smith u. Kansas 
City Title Trust Co.. 255 U.S. ISO, 41 
S.CL 243, 65 L.£d. 577 (1921); Hopkins 
v. Walker, 244 U.S. 486. 37 S.CL 711. 61 
L.£d. 1270 (1917), and even the most 
ardent proponent of the Holmes test has 
admitted that it has been rejected as an 
exclusionary principle, see Flournoy v. 
Wiener, 321 U.S. 253, 270-272. 64 S.CL 
548, 556-557, 88 L.Ed. 708 (1944) (Frank­
furter, J., dissenting).’’ Franchise Tax 
Board, 103 S.CL at 2S46.
Following Franchise Tax Board, we ad­

dressed federal question jurisdiction prem­
ised on vindication of a state right that 
“ necessarily turned on some construction 
of federal law." In Oliver v. Trunkline 
Gas Co., 796 F.2d 36, 88-39 (5ch Cir.1986)

siana law claim for wrongful discharge in retali­
ation for ciaim under Longshore and Harbor 
Workers’ Compensation Act inconsistent with 
section 48a thereof for purposes of the Outer 
Continental Shelf Lands Act).

11. In Caterpillar, the Court explained that the 
well-pleaded complaint rule makes plaintiff the 
master of his claim when he wishes to avoid 
federal jurisdiction. 107 S.CL at 2429. The 
plaintiff s mastery over his complaint gives way 
to the well-pleaded complaint rule when plain­
tiff attempts to choose a federal forum based on 
an anticipated federal defense. Louisville Sc 
Nashville R.R. v. Mottley, 211 U-S. 149, 29 S.CL 
42. 53 L.Ed-2d 126 (1908). See also Skelly Oil 
Co. v. Phillips Petroleum Co., 339 U-S. 667, 70 
S.CL 876, 94 l_Ed. 1194 (1950) (no federal juris­
diction over plaintiffs federal declaratory judg­
ment action because federal issue would be a 
defense in underlying damages or injunction 
action); Lowe v. Ingalls Shipbuilding, 723 F.2d 
1173, 1179-83 (5th Cir.1984) (no federal juris­

diction for declaratory judgment as to whether 
federal statute preempts nonfederal claim).

A-12



1 1 6 8 S53 FEDERAL REPORTER, 2d SERIES

(on petition for rehearing), we discussed 
the two cases cited in Franchise Tax 
Board for this proposition. Smith u. Kan­
sas City Title >£- Trusc Co.. 255 U.S. ISO. 41 
S.CL 243, 55 LEd. 5TT (19211. and Hopkins 
v. Walker, 244 U.S. 4S6, 37 5.CL 711, 61 
L.Ed. 1270 (1917). We read Hopkins, a 
suit to remove a cioud from tide originat­
ing in a federal patent, as distinguishable 
from a seemingly inconsistent decision in a 
quiet tide acdon. Barnett v. KunkeL 264 
U.S. 16, 44 S.CL 254. 68 L.Ed. 539 (1924), 
based on traditional disdncdons in the 
pleading requirements for these two ac­
tions. We thus found Hopkins to have 
"narrow” applicability. We read Smith, a 
shareholder suit to enjoin investment in 
bonds allegedly issued under an unconstitu­
tional federal act, as irreconcilable with 
Moore v. Chesapeake & Ohio Railway, 291 
U.S. 205, 54 S.CL 402, 78 L.Ed. 735 (1934). 
We found it unnecessary to resolve this 
dilemma, however, because in neither case 
did federal law provide a private remedy, 
and the recentiy rendered majority opinion 
in Merrell Dow, 106 S.CL 3229, required a 
federal remedy for the statute to be a basis 
for federal jurisdiction. The Merrell Dow 
Court found Smith and Moore reconcilable 
based on the "difference in the nature of 
the federal issues at stake." 106 S.CL at 
3236 n. 12. Merrell Dow suggested that 
Smith challenged the constitutionality of 
an important federal statute, whereas 
Moore was simply a state tort action that 
incorporated a federal standard. Merrell 
Dow, 106 S.CL at 3236 n. 12.

Justice Cardozo formulated the other 
well-recognized test for determining when 
an action arises under federal law: “ a right 
or immunity created by the Constitution or 
laws of the United States must be an ele- 
menL and an essential one, of the plain­
tiffs cause of action . . .  [and] must be 
such that it will be supported if the Consti­
tution or laws of the United States are 
given one construction of effecL and de­
feated if they receive another.” Gaily, 57 
S.CL at 97. In Franchise Tax Board, the 
Court then explained that the Holmes and 
Cardozo tests are alternative analyses, 
though the Court slightly altered the Car­
dozo essential element language and in­

stead required the weil-pieaued compiaint 
to require "resolution of a substantial 
question of federal law." 103 S.CL at 
2348, 2356. See also Fabrique. Inc.. 313 
F.2d at 726.

Defendants argue that the federal stat­
utes to which Wiily refers as a feature of 
his claim raise a substantial issue of feder­
al law. as demonstrated by the private, 
federal remedy granted by those statutes. 
However. Franchise Tax 3oara only held 
that a case might arise under federal law 
when a state claim requires resolution of a 
substantial question of federal law. and we 
have interpreted the substantial question 
test to be a "narrow exception” to the rule 
that a suit “ arises under the law that cre­
ates the cause of action.” Oliver, 796 F.2d 
at 88. Merrell Dow recognizes “ that the 
mere presence of a federal issue in a state 
cause of action does not automatically con­
fer federal-question jurisdiction" and cites 
with approval the passage from Justice 
Frankfurter’s dissenting opinion in Textile 
Workers v. Lincoln Mills, 353 U.S. 448. 77 
S.CL 912, 928, 1 L.Ed.2d 972 (1957), defin­
ing the proper test as "the degree to which 
federal law must be in the forefront of the 
case and not collateral, peripheral or re­
mote." Merrell Dow, 106 S.CL at 3235 & 
n. 11. While Merrell Dow held that a 
private, federal remedy was a necessary 
predicate to determining that the presence 
of a federal element in a state-created 
cause of action resulted in that cause of 
action being one which arose under federal 
law, it did not hold that the presence of any 
private, federal remedy would in all in­
stances suffice for that purpose. See Mer­
rell Dow, 106 S.CL at 3232 (no “ single, 
precise definition” of section 1331 "arising 
under” jurisdiction), 3235 (“ [f]ar from cre­
ating some kind of automatic tesL Fran­
chise Tax Board thus candidly recognized 
the need for careful judgments about the 
exercise of federal judicial power in an area 
of uncertain jurisdiction.” ).

Finally, because Merrell Dow, 106 S.Ct- 
at 3235, and Franchise Tax Board. 103 
S.CL at 2852, relied heavily upon Gully, we 
return in conclusion to its frequentedly cit­
ed passage:

A-13



WILLY v. COASTAL CORP. 1 1 6 9
Clta 433 F.Cd 1100 iS i h C l r .  I 9 M )

"'.Vhac is needed is something or chat 
common-sense iccommoinuon or judg­
ment co kaleidoscopic situations whtc.n 
cr.aractenzes che law in its treatment of 
problems of causation. One could carry 
che search cor causes backward, almost 
without end.. . .  Instead, there has been 
a selective process which picks the sub­
stantial causes out of che web and lays 
che other ones aside. .As in problems of 
causation, so here in che search for the 
underlying law. If we follow the ascent 
far enough, countless claims of right can 
be discovered co have their source or 
their operative limits in the provisions of 
a federal statute or in the Constitution 
itself with its circumambient restrictions 
upon legislative power. To sec bounds to 
the pursuit, the courts have formulated 
the distinction becween controversies 
that are basic and those that are collat­
eral, between disputes that are necessary 
and those that are merely possible. We 
shall be lost in a maze if we put that 
compass by.” 57 S.Ct. at 100.

Cf. Belknap, Inc. v. Hale, 463 U.S. 491, 103 
S.Ct 3172, 3177, 77 L.Ed.2d 798 (1983) 
(LMRA does not preempt state law where 
claim only of peripheral concern to LMRA 
and deeply rooted in local law); Farmer, 97 
S.Ct at 1561-62 (same).

[11] Turning to Willy’s complaint we 
begin with the minimum requirement that 
the federal statutes involved provide a pri­
vate, federal remedy. See Merrell Dow, 
106 S.Ct at 3234-37; Oliver, 796 F.2d at 
89. But Willy does not claim that defend­
ants violated the “ whistleblower”  provi­
sions of the federal statutes.12 Instead, he 
pleaded that he was fired for refusing to 
violate, or seeking to cause his employer to 
comply with, 3tate and federal reporting 
requirements. Defendants have not ar­
gued that Congress has provided a private, 
federal cause of action for violation of 
these federal regulations. Furthermore, 
the “ whistleblower”  provisions expressly

12. The parties do not contend that there is a 
"whistleblower" provision in the securities law 
and we are aware of none.

13. We note that if Willy's activities were wholly
intracorporate. Brown <Si Root would take his 
Sabine Pilot claim outside of the scope of the

Umic the remeay to an administrative claim 
witn the Secretary; therefore, the district 
court could not have exercised jurisdiction 
over Willy's claim if he had originally 
brought it in federal court under those 
provisions. See In re Willy, 331 F.2d 545.
546 (5th Cir.1987). Just os it wouid 
“ flout”  congressional intent to allow a fed­
eral court to exercise federal question juris­
diction over a removed ciaim for violation 
of a federal statute chat does not provide a 
private cause of action. Merrell Dow. 106 
S.Ct. at 3224-35, it wouid equaily flout 
congressional intent to give the federal 
court original (and hence removal) jurisdic­
tion based on statutes that limit the federal 
remedy to an administrative action.13

Assuming, however, that the “whistle­
blower”  provisions meet the requirements 
of Merrell Dow, the federal element in 
Willy’s Sabine Pilot-type claim is not sub­
stantial enough to confer federal question 
jurisdiction.

We note to begin with that Willy’s 
wrongful discharge ciaim 14 wa3 predicated 
on his alleged attempts to cause his em­
ployer to comply with, or his refusal to 
violate, state as well as federal environ­
mental laws and federal securities laws. 
For example, Willy alleges that he “re­
fused to permit Defendants to continue to 
operate in violation of the environmental 
laws of the federal and state govern­
ments,”  that had he “permitted che Defend­
ants to continue to operate in violation of 
the laws and regulations of the federal and 
state governments, he would have been in 
violation of the laws of the United States 
and the various states, and also not in 
compliance with the code of ethics govern­
ing the actions of lawyers in Texas,” and 
that his

“ actions . . .  also would have required 
Defendant Coastal . . .  to report to the 
U.S. Environmental Protection agency

whistleblower provisions. This, however, 
would only strengthen our conclusion that the 
district court lacked subject matter jurisdiction.

14. Willy’s claims other than for wrongful dis­
charge concededly involve no federal aspect.



1170 855 FEDERAL REPORTER, 2d SERIES

anv non-<:ompiiance with the laws and 
regulations of that agency, and to report 
to the respective state environmental 
agencies, any failure to comply with 
state law and regulations. Among the 
state agencies to which reporting wouid 
have been required was the Texas De­
partment of Water Resources and the 
Kansas Department of Health and Envi­
ronment.”

He further alleged that “Defendant Coast­
al would have been required to report these 
conditions to the investment public and its 
shareholders in its SEC Form 10K and 
10Q.” While Willy did not expressly allege 
why he was fired, the plain inference from 
his pleading is that he was discharged be­
cause of his refusal to violate, or his insis­
tence that his employer comply with, state 
as well as federal environmental laws and 
federal securities laws. Willy also alleged 
in connection with his wrongful discharge 
claim:

“ A contract for employment at will 
under the laws of the State of Texas 
prohibits discharge for compliance with 
the laws of the United States and the 
various states, including the State of 
Texas. All actions relevant to this cause 
of action undertaken by Donald J. Willy 
were to comply with the laws of the 
United States and the various states.'’
Thus, Willy's wrongful discharge claim 

was supported by alternate theories, first 
that his discharge was wrongful because it 
was on account of his attempt to cause 
employer compliance with or his refusal to 
violate federal law, and second that it was 
wrongful because it was on account of his 
attempt to cause employer compliance with 
or his refusal to violate state law. Nothing 
in Willy’s state pleading or in the Texas 
common law as announced in Sabine Pilot 
or otherwise indicates that the first (feder­
al law related) theory is necessary to Wil­
ly’s wrongful discharge claim or that the 
second (state law related) theory is not
IS. We do not determine that the facts pleaded 

by Willy are sufficient, under any theory, to 
state a claim under Texas law, we merely as­
sume. arguendo only, that they are. Our point 
is that if they are. there is nothing in either the

sufficient of itself and without the first 
theory.11

In ics recent decision in Christianson v.
Colt Industries Operating Corp.. ---- U.S.
------. 108 S.Ct. ” 166. 100 L.Ed.2d 311
1988) the Court considered an analogous 
situation in determining whether a ciaim 
was one “ arising under any Act of Con­
gress relating to patents” for purposes of 
jurisdiction under 23 U.S.C. § 1338(a). The 
Court noted that resolution of this question 
was governed by the same principles that 
applied in determining “ arising under” jur­
isdiction for purposes of section 1331.
Christianson,---- U.S. a t ------- , 108 S.Ct. at
2172-74. It then announced that “ a claim 
supported by alternative theories in the 
compiaint may not form the basis for sec­
tion 1338 jurisdiction unless patent law is 
essential to each of these theories,” id., and 
further explained:

“The well-pleaded compiaint rule, how­
ever, focuses on claims, not theories, see 
Franchise Tax Board, 463 U.S., at 26, 
and n. 29 [103 S.Ct. at 2855 and n. 29]; 
Gaily, 299 U.S., at 117 [57 S.Ct at 99- 
100], and just because an element that is 
essential to a particular theory might be 
governed by federal patent law does not 
mean that the entire monopolization 
claim ‘arises under’ patent law.” Id. —
U.S. at ------ , 108 S.Ct. at 2175-76.

The Christianson Court proceeded to hold 
that neither of the two Sherman Act claims 
there involved, an attempted monopoliza­
tion claim under section 2 and a group 
boycott claim under section 1, arose under 
the patent laws because ” [t]he patent-law 
issue, while arguably necessary to at least 
one theory under each claim, is not neces­
sary to the overall success of either claim.” 
Id. The theory on which the plaintiff actu­
ally prevailed in the district court was the 
patent law theory as to each claim, id.
— u.S. a t ------ , 108 S.Ct. at 2170-72, but
the Court pointed out that the complaint 
also alleged alternative theories of recov­
ery, not involving patent law, on each of

complaint or any Texas law source to indicate 
that the first (federal law related) theory 
necessary to state a claim and that the second 
(state law related) is not alone sufficient to do 
so.

A-15



the two claims. Id. —  U.5. at ------. LOS Further, ocher issues or Texas law are

W I L L Y  v. C O A S T A L  C D R P .  1 1 7 1
C l l e u K J J  F.Cd 1160 U tn C Ir .  IVM81

S.Ct. ac 2175-76. lienee, none of the eiaims 
mec the section 133S "arising under" re­
quirement. and accordingly the suit was 
noc one within the district court's section 
loo 3 jurisdiction.

We conclude that che Christianson doc­
trine is property applied to this case and 
results in the conclusion that Willy's 
wrongful discharge claim does not arise 
under federal law.

Our conclusion in this connection is 
strengthened by our view that the federal 
issues in Willy's claim are not ones in the 
forefront of the case, but are more collat­
eral in nacure, and are noc substantial in 
relation to the claim as a whole, which is in 
essence one under state law. The Texas 
common law doctrine stated in Sabine Pi­
lot is one intended to protect the rights of 
any employees, and whether the law that 
they are fired for refusing to violate is 
state or federal, environmental or other­
wise, is wholly immaterial.1* It is likewise 
immaterial to the Texas action whether the 
employee sought to aid a law enforcement 
agency or to bring to official cognizance 
violations committed by others. The feder­
al “whistleblower" statutes, by contrast, 
promote enforcement of environmental 
laws by protecting employees who aid the 
government enforcement agency. Accord­
ingly, in this Texas common law wrongful 
discharge case, the role of issues of federal 
law is more collateral than in the fore­
front.17
16. Sabine Pilot can be reasonably read as re­

stricted to instances where the violations of law 
the employee refused to commit “carry criminal 
penalties.” 687 S.W.2d at 73S. But whether a 
wrongful discharge action of the Sabine Pilot 
variety will remain so limited by the Texas 
courts—a matter we do not decide—is an issue 
the resolution o f which would not appear to be 
affected by whether the law in question is state 
or federal, environmental or otherwise.

17. Just because a Sabine Pilot-type wrongful dis­
charge action might lie in instances where a 
federal “whistleblower” administrative remedy 
would also be available does not mean the for­
mer regulates the same subject matter as the 
latter. Cf. Pilot Life Ins. Co.. 481 U.S. 41, 107 
S.Ct. 1S49 at 1553-53. 95 L.Ed.2d 39 (Mississippi 
common law tort action for bad faith breach of 
contract, “ the roots” of which "arc firmly plant-

substantially '.mpiicaceu in ail theories or 
che wrongful discharge claim. In their mo­
tion to dismiss, defendants argued that 
Willy’s ethical obligations as an attorney 
prohibited him from bringing this action. 
The Texas Code of Professional Responsi­
bility, DR 2-llO(B)(4), requires an attorney 
co withdraw when discharged by his client; 
DR 2-110(0(11 allows an attorney to with­
draw if his client intends co pursue an 
illegal course of action. Tex.Rev.Clv.5tat. 
Ann.. Title 14 App.. art. 12. § 3 (Vernon 
19731. In either case. DR 4-101(0 prohib­
its an attorney from revealing confidences 
without permission except in limited situa­
tions noc applicable here. Willy argues, on 
the other hand, that the attorney-client 
privilege does noc allow Coastal to fire him 
illegally. Tex.Rev.Civ.Stat.Ann., Title 14 
App., art. 12. § 8 (Vernon 19731. Thus, the 
primary legal issues in this case will in­
volve regulation of employment relation­
ships and attorney conduct, both of which 
are areas deeply rooted in local interest. 
See, e.g., Belknap, 103 S.Ct at 3183 (em­
ployment misrepresentation case). Resolu­
tion of these issues in defendants' favor 
could well mean that the federal issues 
would never arise.

We conclude that Willy's ’wrongful dis­
charge claim is noc one that “ arises under" 
federal law for purposes of section 1331, 
and is hence not removable on that basis. 
We have previously concluded that possible 
federal preemption does not serve as a 
ground for removal here. There is no di­

ed in the general principles of Mississippi tort 
and contract law" and under which "(a]ny 
breach of contract, and not merely breach o f an 
insurance contract, may lead to liability for 
punitive damages,” Is not a law “which regulates 
insurance” within the exception to the preemp­
tive provision of section 514(b)(2)(A) of ERISA 
”(e]ven though the Mississippi Supreme Court 
has identified its law of bad faith with the 
insurance industry”): Mackey v. Lanier Collec­
tions Agency St Service, Inc., ----  U.S. ------ , 108
S.CL 2182. 100 LEd.2d 836 (1988) (ERISA 
§ 514(a) preempts Georgia statute specifically 
exempting from garnishment any employee 
benefit plan subject to ERISA, but does not 
preempt application of Georgia general garnish­
ment statute to garnish benefit due employee 
under ERISA welfare benefit plan).

A-16



1 1 7 2 355 FEDERAL REPORTER. Id SERIES

versicy. Accordingly. the district court 
erred :n denying Willy's motion to remand, 
and the judgment beiow must be reversed 
with directions to remand the case to the 
state court. The only remaining issue is 
that of the Rule 11 sanctions against Willy 
and his attorney.

II. Rule 11 Sanctions 
On the day that it dismissed Willy's ac­

tion for failure to state a claim, the district 
court also awarded S22.625 in attorneys' 
fees to Coastal as a Rule 11 sanction. The 
district court viewed Willy's wrongful dis­
charge claim as a legitimate attempt to 
establish new law, but found that instead 
of illuminating the issues, he chose to “ cre­
ate a blur of absolute confusion." The 
district court's primary concern was with a 
110-oage brief in support of Willy's motion 
for partial summary judgment. With this 
brief, Willy filed what the district court 
described as “ a 1,200-page, unindexed, un­
numbered, foot-high pile of material which 
this Court is unable, after examination, to 
fathom and which is determined to be a 
conscious and wanton affront to the judi­
cial process, this Court, and opposing coun­
sel.” The district court furthermore found 
that Willy's responses to defendants’ mo­
tion to dismiss, in which Willy relied in part 
upon a federal rule of evidence that had 
not been adopted, were equally confusing. 
Willy argues both that sanctions were inap­
propriate and that the amount of the sanc­
tion was excessive.

[12.13] We begin by noting that we 
and the district court retain jurisdiction 
over the Rule 11 aspect of this case, even 
though we have held that removal was 
improper. See Vatican Shrimp Co. v. Sol­
is. 820 F.2d 674, 680 n. 7 (5th Cir.), cert
denied. —  U.S. ------ , 108 S.Ct. 345, 98
L.Ed.2d 371 (1987); News-Texan, Inc. v. 
City o f Garland, Texas, 814 F.2d 216, 21S- 
20 (5th Cir.1987). As to the propriety of 
the district court's Rule 11 sanctions, we 
are guided by our recent en banc opinion in 
Thomas v. Capital Security Services, Inc., 
S36 F.2d 866, 872-73 (5th Cir.1988), where 
we adopted an abuse of discretion standard 
of review. Our en banc opinion in Thomas

was issued after the case was appeaied. 
and the district court, of course, did not 
have the benefit of it when imposing sanc­
tions. Under Thomas, compliance with 
Rule 11 is generally judged by an objective 
standard of reasonableness. Id. at 873. 
Once a district court finds a Rule 11 viola­
tion. it must impose some sanction. Id. at 
376. The district court retains broad dis­
cretion in fashioning an “ appropriate'' 
sanction: however, the sanction imposed 
should be the least severe that adequately 
furthers the purposes of Ruie 11. Id. at 
376-73. Reasonable and appropriate ex­
penses. including attorneys’ fees, may be 
awarded as a Ruie 11 sanction to the extent 
that the expenses were reasonably caused 
by a violation of Ruie 11. Id. at 878. 
Actual expenses and attorneys’ fees are 
not necessarily reasonable: "A party seek­
ing Rule 11 costs and attorney's fees has a 
duty to mitigate those expenses, by corre­
lating his response, in hours and funds 
expended, to the merit of the claims.” Id. 
at 879. Moreover, not all such expenses 
and fees so caused need be awarded. See 
Smith International, Inc. v. Texas Com­
merce Bank, 844 F.2d 1193, 1197 (5th Cir. 
1988).

[14] Here, the district court clearly did 
not abuse its discretion in determining that 
Willy had violated Rule 11. Filing moun­
tainous piles of unorganized documents 
and citing to nonexistent rules of law are 
precisely the sort of conduct that, under 
the objective test of Rule 11, could lead a 
district court to conclude that the attorney 
had not made reasonable inquiry inco the 
law or was seeking to harass or delay. 
And the district court pointed out that its 
list of conduct that violated Rule 11 was 
not meant to be comprehensive. As Coast­
al argued in its motion for sanctions below 
and on appeal now, Willy’s briefs below 
contain other misleading citations of law.

[15] Turning to the sanction imposed, 
we find the type of sanction appropriate 
but that the amount of and basis for the 
sanction must be reconsidered by the dis­
trict court in light of the standards set ouc 
in Thomas. Sanctions may be awarded 
jointly and severally against the client an

A—17



WILLY v. COASTAL CORP.
Cite a* <153 F .-J  I

his attorney, see Pont nson c. National 
Ctsii Register Co.. 308 F.2d 11 ID. 1131 (Sen 
Cir. 1937); Southern Leasing Partners 
Lid. i\ .WcMuiiun. >01 F.2d 730. 730 loth 
Cir. 1986), and a joint and several award 
may often be appropriate where, as here, 
the diene is an attorney. Among other 
things, the court must determine whether 
its substantial award satisfied the require­
ment chat the fees must have been reason­
ably incurred as a result o f  a violation of 
Rule LI and in light of the duty to mitigate. 
Thomas. 336 F.2d at 373. Defendants sub­
mitted affidavits from two law firms: one 
sought reimbursement for 443 hours at 
3100 per hour ($44,200) and 32.639 in ex­
penses; the other firm sought reimburse­
ment for 307 hours at 3125 an hour ($38.- 
325). Neither firm submitted sufficiently 
detailed information from which the district 
court could determine what portion of 
these fees and expenses were incurred be­
cause of Rule 11 violations. Nor did the 
district court explain how it derived from 
these amouncs its figure of $22,625. As 
we stated in Smith IntemationaL  844 
F.2d at 1197:

“While Thomas adopced ‘a rule . . .  that 
does not require specific findings and 
conclusions by a district court in ail Rule 
11 cases,’ nevertheless we there held that 
where 'the basis and justification for the 
trial judge’s Rule 11 decision is noc readi­
ly discernible’ some explanation is ordi­
narily required, though 'the degree and 
extent to which specific explanation must 
be contained in the record will vary ac­
cording with the particular circumstanc­
es of the case, including the severity of 
the violation, the significance of the sanc­
tions, and the effect of the award.’ Id. 
[Thomas] at 883. ‘If the sanctions im­
posed are substantial in amount'—as 
they clearly are here— then ‘appellate re­
view of such awards will be inherently 
more rigorous’ and ‘such sanctions must 
be quantifiable with some precision.’ Id. 
[77tomas ].”

Here the sanctions are clearly substantial 
in amount and the district court’s orders in

18. We also note that "Rule 11 does not apply to 
conduct that occurred in state court before re­
moval." Foval v. First National Bank of Com- 
855 F.20—27

l o o  i 5th C lr. I fu e l

reference :o the amount thereof do noc 
meet the foregoing requirements.

The sanctions order :s therefore reversed 
and the matter of sanctions is remanded to 
the district court for further proceedings 
consistent with this opinion ana Thomas. 1S

CONCLUSION
We hoid thac this case was improvidentlv 

removed and chat the district court lacked 
subject matter jurisdiction over it (exceot 
as co Ruie 11 sanctions). Accordingly, the 
judgment below is reversed and remanded 
to the district court with directions to re­
mand the cause, except for the matter of 
sanctions, to the stace court. We likewise 
sec aside the district court's sanctions or­
der. and that phase of the case is remanded 
to the district court for further proceedings 
consistent herewith.

REVERSED AND REMANDED.

HUGHES, District Judge, dissenting 
in part;

Although I join fully the jurisdictional 
decision and reasoning, I cannoc concur in 
the portion of the opinion that remands the 
award of sanctions for further findings.

The process of imposing sanctions has 
three steps. First, the respondent must be 
given notice of the abuse for which sanc­
tions are sought. Second, he must have an 
opportunity to be heard in response. 
Third, the abuse and the imposition must 
be supported by the record. The only issue 
here is the third step, the quantification of 
the monetary sanction. The majority con­
fuse whether the record supports the find­
ings with whether there are sufficient find­
ings.

The record i3 not limited to the trial 
judge’s recitations. Ferguson v. Hill, 846 
F.2d 20 (5th Cir.I988). Failure to articulate 
the process of the evidence evaluation does 
not undermine the trial court'3 judgment. 
The quantification required some evidence 
and an answer finding the appropriate level 
of compensation. If it were a jury issue,

merce in New Orleans, 841 F.2d 126, 130 (5th
Cir.1988).

A-18



1174 S5.-> FEDERAL REPORTER- id SERIES

the '(uescion on appeal would ae -vnecher 
che one answer had sufficient eviaence in 
che record co support the imounc.

The testimony that is in che record con­
sists of affidavits from che defendants' 
lawyers describing in some detail ana some 
generality the time and efforts expended in 
che whole case. The fee tocai was -$82,573. 
The trial court did not accept chat evidence 
uncritically; he obviously discounted it by 
about $3%, awarding $22,625. The record 
is more chan che fee affidavits and che 
judges findings. Fed.Ruie of A dd.Pro. 
10(a). We must presume chat the trial 
court considered che course of the litigation 
represented by the pleadings, motions, 
hearings, docket entries, briefs, and other 
filed papers.

Although the abuses of the plaintiff and 
his counsel were pervasive, the record is 
weak on causation, but just because I 
would find the amount resulting from the 
abuses to be a lot less does not amount to 
an absence of either sufficiently specific 
findings or of evidence in the record itself. 
Anderson v. City o f  Bessemer, 470 U.S. 
564, 576, 105 S.Ct. 1504, 1513, 84 L.£d.2d 
518 (1985).

The people on whom the sanction was 
imposed here were content to leave the 
record in the state we find it. It supports 
the judgment. They were under a duty to 
contradict the evidence of amount and to 
supply evidence of justification. They did 
not. This case involves neither a default 
nor unrepresented parties, which would be 
instances that may require a trial or appel­
late judge to use a vigorous skepticism.

On appeal, our choices are limited: If we 
cannot hold that the value was clearly erro­
neous on the evidence, we are obliged to 
affirm.

A - 1 9



IN  THE UNITED STATES D IS T R IC T  COURT 
FOR THE SOUTHERN D IS T R IC T  OF TEXAS 

HOUSTON D IV IS IO N
APR IS

Jesse E . C l a r x ,  C *ertt
By Deputy:

DONALD J .  W ILLY

V .

THE COASTAL CORPORATION  
et al. ,

Plaintiff

Defendants.

X
X
X
X
X
X
X
X
X

C I V I L  A C TIO N  NO. H - 3 5 - 6 9 4 7

ORDER FOR SANCTIONS

Pending before this Court is Defendants' Motion for
Sanctions.

In December, 1985, Defendants, on the basis of federal 
question jurisdiction, removed to this Court an action filed by 
Plaintiff, Donald J. Willy. After numerous pleadings and no less 
than four hearings or conferences, this Court, on November 12, 
1986, granted Defendants' Motion to Dismiss Plaintiff's claims of 
wrongful discharge. In the same Order, the Court simultaneously 
dismissed Plaintiff's remaining claims for lack of pendent 
jurisdiction. On that same date, the Court also granted a Motion 
for Rule 11 Sanctions filed by Defendants. In its separate 
sanction Order, the Court found that Plaintiff (who is himself an 
attorney) and his former attorney, George A. Young, had committed 
multiple violations of Rule 11. Examples of improper conduct 
cited by the Court included Plaintiff's repeated oral and written 
citation of a nonexistent rule of evidence, Plaintiff's filing of 
confusing and misleading pleadings, his misleading misquotation

A-2 0



of an applicable disciplinary rule, and, nos* notably, has fading 
of a 120-page Motion for Summary Judgment that was accompanied by 
seme 1200 pages of unnumbered, unindexed, and largely irrelevant 
documents, which were purportedly rendered admissible by a wholly 
inadequate affidavit. As the result of this conduct, the Court, 
after the receipt of a generalised statement of attorneys' fees 
submitted by Defendants, ordered Plaintiff and his former counsel 
to pay to Defendants attorneys' fees in the amount of $22,525.

Plaintiff appealed both orders of this Court to the 
United States Court of Appeals for the Fifth Circuit. On 
September 29, 1988, the Fifth Circuit issued a lengthy opinion 
wherein it found that this Court had lacked removal jurisdiction 
over Plaintiff's claims and that those claims should therefore be 
remanded to the state court in which they were initially filed. 
Willy v. Coastal Corp., 855 F.2d 1160 (5th Cir. 1988). 
Notwithstanding this finding, the Fifth Circuit also concluded 
the following: (1) that this Court properly found that Plaintiff
and his former counsel had violated Rule 11 and (2) that this 
Court properly imposed a joint and several award of attorneys' 
fees against them. Id. at 1172-73. The Fifth Circuit found that 
the transgressions of Plaintiff and his former counsel were 
"precisely the sort of conduct" to which Rule 11 applies. Id. at 
1172. The Court of Appeals further found expressly that the type 
of sanction imposed by this Court, i.e., attorneys' fees, was 
appropriate in this case. Id. Because the Fifth Circuit was 
unable to discern from the record the precise calculations by 
which this Court reached the amount of its sanction award or the

A-21



extent to which attorneys' fees were the result of Plaintiff's 
Rule 11 violations, the Fifth Circuit remanded the Rule 11 issue 
to this Court for further proceedings in accordance with the 
decision in Thomas v. Capital Security Services, Inc., 326 F.2d 
366 (5th Cir. 1983).1 Thus, the only issues resubmitted to this 
Court for further consideration certain to "the amount of and 
basis for the sanction" to be imposed. Id.

First, this Court will discuss "the amount of and basis 
for the sanction." It is noted by this Court that the Fifth 
Circuit did not rule that the amount of the sanction initially 
imposed by this Court was excessive or inappropriate, but 
directed this Court to evaluate that amount in accordance with 
the guidelines in Thomas. Willy at 1173. Additionally, the 
Fifth Circuit did not rule that this Court was incorrect in 
finding that the conduct by Willy and his counsel was an 
appropriate ground or basis for sanctions. Id. at 1172. The 
Circuit Court did, however, state the following: (1) that the
attorneys' fees "must have been reasonably incurred as a result 
of a violation of Rule 11 and in light of the duty to mitigate" 
and (2) that the affidavits supporting the fees were 
insufficient. Id. at 1173. Thus, this Court will examine: (1)
the basis for, or causal relationship between, the fees and the

^The Honorable Lynn Hughes, sitting by designation, 
dissented from the remand of this Court's Rule 11 Order, and 
would have affirmed that Order in its entirety.

A-2 2



sanctions to be imposed and (2) the basis or the quantification 
of the fees.

Under Fed. R. Civ. ?. 11, an attorney's signature on a
pleading, motion, or other paper certifies that the attorney has 
(1) read the pleadings and other papers submitted, (2) made a 
reasonable inquiry of the basis for the document to determine if 
it is well grounded in fact and if it is warranted by existing 
law or makes a good faith argument for the extension of existing 
law, and (3) determined that the document is not made in order to 
harass, to cause unnecessary delay, or to increase needlessly the 
cost of litigation. Any sanction imposed pursuant to Rule 11 
should be the least severe sanction that adequately furthers the 
purpose of Rule 11. Willy, 855 F.2d at 1172 (citing Thomas, 836 
F.2d at 87 6-7 8) . "Thomas does not require that the 'least severe 
sanction' be imposed, rather that the 'least severe sanction 
adequate to serve the purpose' of Rule 11 be imposed.” Harmony 
Drilling Co. v. Kreutter, 846 F.2d 17, 19 (5th Cir. 1938) .

In addition to the violations of Rule 11 previously 
mentioned, Plaintiff and his counsel engaged in the following 
conduct that was violative of Rule 11:

a. Plaintiff reinserted in a subsequent pleading 
allegations which had been previously stricken 
by the Court as irrelevant and inflammatory;

b. Plaintiff filed responses to Defendants' Motion 
to Dismiss which were confusing, misleading, and 
not reasonably based on law or fact;

c. Plaintiff, without a reasonable basis in law or 
fact, asserted in a response to Defendants'
Motion to Dismiss that Defendants' counsel, the 
law firm of Looper, Reed, Ewing & McGraw, was 
engaged in an improper conflict of interest;

A-23



d. in a pleading, Plaintiff misquoted Disciplinary 
Rule 2-110(3)* (4) of the Texas Code of Professional Responsibility, and then proceeded 
in that pleading to discuss the Disciplinary 
Rule as though the language he had omitted did 
not exist;

e. in an effort to harass Defendants in the instant 
proceeding, Plaintiff filed an action against seme 
80 officers, directors, employees, affiliates, and 
attorneys of the corporate Defendants, wherein he 
alleged that those individuals, by engaging in the 
actions which are the subject of the instant 
proceedings had violated the Racketeering 
Influenced and Corrupt Organizations (RICO) Act; 
and

f. in a transcribed conference occurring during the 
course of this action, Plaintiff further evidenced 
his intent to harass Defendants by stating on the 
record that he intended to depose no less than 60 
individuals in connection with this matter.

In addition, the Court finds that Plaintiff and his 
counsel had sufficient and repeated notice that they were acting 
in violation of Rule 11. Specifically, the Court finds as 
follows;

a. in open court on August 18, 1986, and in a 
responsive pleading dated August 12, 1986, 
Defendants pointed out to Plaintiff and his 
counsel that their citation of Rule 503 of the 
Federal Rules of Evidence was improper;

b. in open court on August 18, 1986, and in a 
responsive pleading dated September 9, 1986, 
Defendants objected to Plaintiff's filing of the 
mass of exhibits that accompanied his Motion for 
Partial Summary Judgment on the grounds that such 
exhibits were improper;

c. in responsive pleadings dated August 12, 1986, 
Defendants pointed out to Plaintiff and his 
counsel that their Briefs in Response to 
Defendants' Motion to Dismiss were improper;

d. in open court on August 18, 1986, and in a 
responsive pleading dated August 12, 1986, 
Defendants pointed out to Plaintiff and his 
counsel that they had misquoted Disciplinary 
Rule 2-110 (b) (4) ;

A—2 4



e. in a responsive pleading dated August 12, 1986,
Defendants pointed out to Plaintiff and his 
counsel that they had improperly reinterjected in 
a subsequent pleading language that had previously 
been stricken from their Complaint by this Court;

f. in a responsive pleading dated August 12, 1986,
Defendants pointed out that Plaintiff and his 
counsel had improperly asserted that a conflict
of interest existed on the part of the law firm of 
Looper, Reed, Ewing & McGraw;

g. by letter dared March 26, 1986, Plaintiff and 
his counsel were advised that their proposed 
filing of an action against additional defendants, 
including Defendants' counsel, was improper; and

h. on several occasions, James L. Reed, counsel for 
Defendants, verbally advised Plaintiff’s counsel 
that positions taken by Plaintiff, including those 
involving the miscitation of DR 2-110(b) (4) and 
Rule 503, were not well grounded.

Based upon the foregoing, the Court finds that 
Defendants incurred at least the following attorneys' fees as a 
direct and proximate result of the Rule 11 violations previously 
listed and that Defendants acted reasonably in attempting to 
mitigate expenses as the result of the Rule 11 violations:

a. The law firm of Looper, Reed, Ewing & McGraw 
performed work in response to Plaintiff's 
Rule 11 violations in the amount of at least 
Thirteen Thousand Ninety Dollars ($13,090).

b. The law firm of Ford & Harrison performed work 
in response to Plaintiff's Rule 11 violations in 
the amount of at least Six Thousand Two Hundred 
Seventeen Dollars ($6,217).

By way of comparison, Plaintiff filed an affidavit with this 
Court indicating he had incurred attorneys' fees in excess of 
Forty Thousand Dollars ($40,000) in the preparation of the Motion 
for Summary Judgment, Brief, and supporting documents. The 
sanctions which this Court will impose will be the total of the

A—2 5



expenses of Defendants' fees incurred as a result of the Rule 11 
violations, i.e., 319,307. It is therefore

GRANTED. Plaintiff and Plaintiff's counsel at the time, George 
A. Young, jointly and severally, are to pay Nineteen Thousand 
Three Hundred Seven Dollars (319,307) to the Defendants for the 
purpose of compensating the Defendants for the attorneys' fees 
incurred in responding to the aforementioned Rule 11 violations. 
The Nineteen Thousand Three Hundred Seven Dollars (319,307) will 
be tendered to Defendants' attorney-in-charge on or before May 1, 
1989. Proof of payment will be filed with the Court on or before 
May 1, 1989.

ORDERED that Defendants' Motion for Sanctions be

SIGNED at Houston, Texas, on this day of
April, 1989

DAVID HITTNER
United States District Judge

A—2 6



WILLY v. COASTAL CORP. 447

D onald  J. W IL L Y . P la in tiff-A p p e ila n t .

The COASTAL CORPORATION, et al„ 
D efe n d a n ts -A p p e lle e s .

No. 90-2097 
Summary Calendar.

United States Court of Appeals, 
Fifth Circuit.

Oct. 26. 1990.

Former employee brought wrongful 
discharge action against former employer. 
Following removal from state court, case 
was dismissed and Rule 11 sanctions were 
imposed, 647 F.Supp. 116. Upon reversal 
and remand, 855 F.2d 1160, the United 
States District Court for the Southern Dis­
trict of Texas, David Hittner, J., held that 
employee and his attorney should be as­
sessed $19,307 in Rule 11 sanctions. Em­
ployee appealed. The Court of Appeals, 
Duhe, Circuit Judge, held that; (1) district 
court had jurisdiction to impose Rule 11 
sanctions even though it lacked subject 
matter jurisdiction over the merits of em­
ployee's claim, and (2) there was no abuse 
of discretion in the amount of sanction 
imposed.

Affirmed.

1. Federal Civil Procedure <£=2721

District court possesses authority to 
• impose Rule 11 sanctions irrespective of 

existence of subject matter jurisdiction.

2. A ttorney  and C lient 0 = 2 1
Federal Civil Procedure 0=2721 

District court had jurisdiction to im­
pose Ruie 11 sanctions upon plaintiff and 
his attorney for. inter alia, filing of mis­
leading and ill-founded pleadings, even 
though court lacked subject matter jurisdic­
tion over merits of his claim. Fed.Ruies 
Civ.Proc.Ruie 11. 23 U.S.C.A.

3. Federal Courts <5=917. 950
Under "law of the case" doctrine, legal 

decision by Court of Appeals is binding 
upon both district and appellate courts in 
all subsequent proceedings in same case 
unless that decision is clearly erroneous.

4. Federal Civil Procedure 3=2721
District court has broad discretion in 

imposing Rule 11 sanctions reasonably tai­
lored to further objectives of rule.

5. Federal Civil Procedure -3=2721
"Reasonableness’’ within context of 

Rule 11 must be considered in tandem with 
rule’s goals of deterrence, punishment, and 
compensation. Fed.Ruies Civ.Proc.Ruie 
11, 23 U.S.C.A.

6. Federal Civil Procedure <5=2721
In determining whether to award Rule 

11 sanctions, court must consider extent to 
which nonviolating party's expenses and 
fees could have been avoided or were self- 
imposed. Fed.Rules Civ.Proc.Ruie 11, 23 
U.S.C.A.

7. Attorney and Client -3=24 
Federal Civil Procedure 3=2721

Imposition of Rule 11 sanctions in 
amount of $19,307 against plaintiff and his 
attorney was proper; district court found 
that plaintiff had filed confusing, mislead­
ing, and ill-founded pleadings, asserted 
baseless conflict of interest allegation, andFed.Ruies Civ.Proc.Ruie 11, 28 U.S.C.A.

Synopsis, Syllabi and Key Number Classification 
COPYRIGHT ©  1990 by WEST PUBLISHING CO.

The Synopsis, Syllabi and Key Number Classifi­
cation constitute no part of the opinion of the court-

A-2 7



148 WILLY v. COASTAL CORP.

repeatedly misquoced Texas disciplinary 
and evidentiary rules. Fed.Ruies Civ.Proe. 
Ruie 11. 23 U.S.C.A.

Appeal t'rom the United States District 
Court for the Southern District of Texas.

Before RING. GARWOOD, and 
DUHE. Circuit Judges.

DUHE, Circuit Judge:
The appellant Donald Willy challenges 

the district court's imposition of sanctions 
pursuant to Rule 11 of the Federal Rules of 
Civil Procedure. Willy contends the dis­
trict court lacked jurisdiction to impose 
these sanctions, and that they are excessive 
and unreasonable. Finding no merit in 
these contentions, we affirm.

Facts and Proceedings Below

Willy, a Houston attorney, filed suit in 
state court against Coastal, his former em­
ployer. alleging that his discharge was in 
violation of Texas law prohibiting retali­
atory firing. Coastal removed asserting 
that federal employment statutes constitut­
ed an essential element of Willy’s claim. 
Willy moved to remand, challenging the 
basis for federal question jurisdiction. In 
response to Coastal’s 12(b)(6) motion to dis­
miss the case, Willy filed a 110-page mo­
tion for summary judgment and submitted 
1200 pages of unindexed, unorganized sup-

1. See, Willy v. Coastal Corp., 853 F.2d 1160 
(5th Cir.1988) {W illy  / ) .

2. This court concluded that remand was nec­
essary because it could not discern the basis 
upon which the district court had calculated 
the appropriate amount o f  sanctions.

3. These sanctions were imposed for the filing 
o f misleading and ill founded pleadings, the

porting material. After two separate hear­
ings. the district court granted Coastal’s 
I2!bi(61 motion for dismissal of the federal 
claims, dismissed the state law claims for 
lack of pendant jurisdiction, and granted 
Coastal’s motion for Rule 11 sanctions 
against Willy and his attorney.

On appeal, this court ruied that the suit 
was improvidentlv removed ana remanded 
the matter to the state court in which the 
action was initially filed.1 However, we 
affirmed the award of Rule 11 sanctions 
and remanded the case to the district court 
for further proceedings in accordance with 
this court's intervening decision in Thomas 
v. Capital Security Services. Inc., 336 
F.2d 366 (5th Cir.1988) (en banc).-

On remand, the district court concluded 
that Willy and his attorney should be as­
sessed 519,307 in Rule 11 sanctions.-1 The 
district court further ruled that Coastal 
and the other defendants had repeatedly 
notified Willy and his attorney of their 
transgression to no avail. Willy filed a 
Rule 59 motion for relief from this judg­
ment, which was denied. This appeal fol­
lowed.

Rule 11 Jurisdiction

Willy contends that because the district 
court lacked subject matter jurisdiction 
over the merits of his claim, it was similar­
ly without jurisdiction to impose Rule 11 
sanctions. He argues that Rule 11 does 
not confer its own jurisdiction, and

use o f the discovery process to harass oppos­
ing parties, repeated references to non-exis­
tent disciplinary and evidentiary rules, base­
less allegations o f conflicts o f interest, and 
the filing o f the infamous 110-page summa­
ry judgment motion accompanied by reams 
o f irrelevant and unorganized material.

A—28



WILLY v. COASTAL CORP. -149

federal courts possess no "inherent power" 
to impose sanctions when subject matter 
jurisdiction is lacking. We reject this argu­
ment.

As the appellant correctly notes, consti­
tutional limitations on the exercise of feder­
al jurisdiction can be neither "disregarded 
nor evaded." Owen Equipment and Erec­
tion Co. l\ Kroger. 457 U.S. •165, 074. 98 
S.Cti 2396. 2403. 57 L.Ed.2d 274 (1973). 
However, federal courts are entitled to ex­
ercise inherent powers, those considered 
“ necessary to the exercise of all others." 
Roadway Express. Inc. v. Piper. 447 U.S. 
752, 764, 100 S.Ct 2455, 2463, 65 LEd.2d 
488 (1980), citing United States v. Hudson.
7 Cranch 32, 34, 3 L.Ed. 259 (1812). We 
believe the imposition of Rule 11 sanctions, 
consistent with Congress’ intent to stream­
line the administration of federal justice,4 
constitutes such an inherent power.

Although the appellant maintains that 
Rule 11 jurisdiction is dependent on subject 
matter jurisdiction, the Supreme Court in 
Cooter & Gell v. Hartmarx Corp., —  U.S.
------, 110 S.Ct. 2447, 110 L.Ed.2d 359
(1990), the seminal case on Rule 11 sanc­
tions, teaches otherwise. Characterizing 
the decision to sanction as a collateral one, 
the court concluded:

Like the imposition of costs, attorney's 
fees, and contempt sanctions, the imposi­
tion of a Rule 11 sanction is not a judg-

4. See, Schwarzer, Sanctions Under the Mew 
Federal Rule 11— A Closer Look, 104 F.R.D. 
131 (1985).

5. In Cooter St Gell, the specific question ad­
dressed by the court was whether voluntary 
dismissal under Fed.Rule.Civ.Pro. 41(a), af­
ter the filing o f the offending pleading, de­
prived the district court of the authority to 
impose Rule 11 sanctions. We Find, how ­
ever, the court’s discussion o f the collateral 
character o f  Rule 11 orders applicable in this 
context as well.

menc on the merits of an action. Rather, 
it requires the determination of a collat­
eral issue: whether the attorney has
abused the judicial process, and if so. 
what sanction wouid be appropriate.

Id. 110 S.Ct. at 2456.’
[11 This circuit and others have recog­

nized thac to effectuate the goals of Rule 
11, a district court must possess the au­
thority to impose sanctions irrespective of 
the existence of subject matter jurisdiction.
In Vatican Shrimp Co. v. Solis. 820 F.2d 
674 (5th Cir.), cert den. 484 U.S. 953. 108 
S.Ct. 345. 98 L.Ed.2d 371 (1987) and News- 
Texan, Inc. v. Garland. 814 F.2d 216 (5th 
Cir. 1987), both involving improvidently re­
moved suits, this court concluded that re­
view of Rule 11 sanctions was available 
even when the district court which imposed 
them was without subject matter jurisdic­
tion.®

[21 The appellant attempts to distin­
guish these cases on the basis that the 
sanctioned parties in each were attempting 
to invoice rather than resist federal juris­
diction. We find no merit in this distinc­
tion. Willy and his attorney were sanc­
tioned for objectionable conduct which was 
independent of his jurisdictional posture in 
the case. Willy was entitled to contest 
removal jurisdiction to the extent a reason­
able interpretation of the law allowed such

6. As the appellant correctly notes, both Vati­
can Shrimp and H ews-Texan  addressed the 
jurisdiction o f the appellate court to review 
sanctions imposed by a district court lacking 
subject matter jurisdiction. Although these 
opinions do not expressly address the propri­
ety o f  the district court’s Rule 11 jurisdiction, 
this conclusion is implicit in their broader 
holding.

A-29



150 W I L L Y  v. C O A S T A L  C O R P .

a contest. However, this right did noc in­
clude the authority to tile misleading or 
incomprehensible pleadings, to use the dis­
cover/ process tor harassment, or to level 
frivolous allegations of conflicts of inter­
est.7 To effectuate the goals of deterrence 
and punishment. Rule 11 must embrace the 
conduct of those who resist, as well as 
those who invoke, federal jurisdiction.

Other circuits have adopted a similar 
view. In Wojan o. General Motors Carp.. 
851 F.2d 969 (7th Cir.1988), the plaintiff 
invoked diversity jurisdiction. The defen­
dant admitted diversity of citizenship in its 
early pleadings, but five years later assert­
ed that diversity was lacking. After the 
action was dismissed, the district court con­
cluded it had no jurisdiction to impose Rule 
11 sanctions.1 The Seventh Circuit re­
versed, concluding that the district court 
“ [confused] subject matter jurisdiction with 
the court's inherent ‘power’ to engage in 
those judicial acts attendant to the pres­
ence of a live controversy before the 
court.” Id. at 972.

In Orange Production Credit Assoc, u. 
Frontline Ventures. Ltd.. 792 F.2d 797

7. We are similarly unm oved by Willy's sug­
gestion that any injury suffered by Coastal is 
the result o f Coastal's decision to seek re­
moval o f this action. Essentially, Willy ar­
gues that if Coastal had not removed the 
case. Willy would not have had to file the 
offending pleadings. The district court's de­
nial o f the m otion to remand indicates that 
there was at least a colorable basis upon 
which Coastal could have sought removal. 
We refuse to find that Coastal’s good faith 
efforts "caused’* Willy and his attorney to 
engage in sanctionable conduct.

8. The district court based its ruling on a case 
from this circuit. Chick Kam  Choo v. Exxon 
Corp., 764 F.2d 1148 (5th Cir.1985), affirm ed, 
317 F.2d 307 (5th Cir.1987), reversed on other 
grounds. 486 U.S. 140. 108 S.Ct. 1684, 100 
LEd.2d 127 (1988). In that case, this court 
vacated a district court's Rule 11 order based

(9th Cir.1986), the plaintiff filed a com­
plaint in federal court lacking a faetuui 
basis for subject matter jurisdiction. The 
Ninth Circuit upheid the district court's 
Rule 11 order ruling that '’[tjhe fact that 
the district court lacked jurisdiction to con­
sider the merits of the case did not pre­
clude it from imposing sanctions.” Id. at 
801. citing Tronimovich l\ Commissioner. 
776 F.2d 372, 875 (9th Cir.1985). See also. 
Szabo Food Service Inc. u. Canteen Corp.. 
323 F.2d 1073, 1077 (7th Cir.1987.) We 
reaffirm our conclusion in Willy I that the 
district court had jurisdiction to impose 
Rule 11 sanctions upon Willy and his attor­
ney.

The Thomas Formula

[3] Under the “ law of the case” doc­
trine, a legal decision by this court is bind­
ing upon both district and appellate courts 
in all subsequent proceedings in the same 
case unless that decision is clearly errone­
ous. Schexnider v. McDermott Interna­
tional. Inc., 863 F.2d 717 (5th Cir. 1989);

upon its determination that the district court 
lacked subject matter jurisdiction. Although 
the Seventh Circuit in Wojan criticized this 
case without attempting to distinguish it, the 
distinction is easily made. In Chick Kam  
Choo, the plaintiffs filed a wrongful death 
claim in federal court, which was dismissed 
with prejudice for failure to state a cause o f 
action. The plaintiffs then filed a nearly 
identical suit in Texas state court, which the 
defendants removed based on diversity. The 
district court granted the defendants’ motion 
to dismiss on the basis o f  res judicata  and 
imposed Rule 11 sanctions. This court va­
cated the award o f sanctions because the 
offending conduct occurred in Texas state 
court rather than federal court. Instead o f 
expressing an opinion on  the authority o f a 
district court to regulate conduct in its own  
arena, this decision merely prohibits the use 
o f  Rule 11 to regulate state court activities.

A - 3  0



WILLY v. COASTAL CHRP. 151

White >\ Martha. 57. F.2d 423. 4.>!-■>- (5th 
Cir. 19671. Finding no clear error, we are 
bound by our prior decision affirming the 
district court's award of sanctions against 
both Willy and his attorney. Our review is 
limited to the amount of sanctions imposed 
under the Thomas criteria. We review the 
district court's calculations tor an abuse of 
discretion. Cooter Cell. 110 S.Ct. at 
2461.

[4_£] The district court has broad dis­
cretion in imposing sanctions reasonably 
tailored to further the objectives or the 
rule. Thomas. 336 F.2d at 376-78. “ Rea­
sonableness” within the context of Rule 11 
“ must be considered in tandem with the 
rule's goals of deterrence, punishment, and 
compensation.” Id. at 879. Additionally, 
the court must consider “ the extent to 
which the nonviolating party’s expenses 
and fees could have been avoided or were 
self-imposed.” Id.

[7] On remand, the district court exam­
ined both the causal relationship between 
Willy’ s conduct and the fees incurred by 
Coastal, as well as the amount of sanctions 
imposed. It found that Willy had filed 
confusing, misleading, and ill-founded

pleadings (including the 110-page summa­
ry judgment motion), asserted a baseless 
conflict of interest allegation, ana repeated­
ly misquoted Texas disciplinary and eviden­
tiary rules. The court also found that Wil­
ly had asserted baseless RICO claims 
against eighty Coastal officers and employ­
ees and threatened to depose each of them 
in an effort to harass Coastal. The court 
recognized Coastal’s repeated efforts, in 
open court and in private communications, 
to advise Willy and his attorney of these 
violations and mitigate its own expenses.

As the Supreme Court has noted, a dis­
trict court is in the best position to “ mar­
shall the pertinent facts and apply the fact- 
dependent legal standard mandated by 
Rule 11.” Cooter & Geil. 110 S.Ct. at 
2459. Our review of the record discloses 
ample support for the district court's con­
clusions. We find no abuse of discretion in 
the amount of sanction imposed against 
Willy and his attorney.

Conclusion

For the foregoing reasons, the judgment 
of the district court is

AFFIRMED.

Adm. Office, U.S. Courts—West Publishing Company, Saint Paul, Minn.

A-31