Walker v. Norwest Corporation
108 F.3d 158 (1997)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
An attorney's failure to conduct a reasonable inquiry into the facts supporting federal diversity jurisdiction, which results in filing a complaint that on its face demonstrates a lack of complete diversity, is sanctionable conduct under Federal Rule of Civil Procedure 11.
Facts:
- Cynthia M. Walker was the legal guardian for her son, Jimmy Lee Walker, III, both of whom were citizens of South Dakota.
- Norwest Bank South Dakota, N.A. administered a trust fund for Jimmy Lee Walker.
- A dispute arose concerning the administration of the trust fund.
- The Walkers decided to sue Norwest Corporation, a Minnesota corporation, and several of its subsidiaries, employees, and legal representatives.
- Many of the individual defendants and the defendant law firm were identified in the complaint as being residents of South Dakota, the same state as the Walkers.
Procedural Posture:
- Attorney James Harrison Massey, on behalf of the Walkers (plaintiffs), filed a complaint against Norwest Corporation and others (defendants) in the U.S. District Court for the District of South Dakota, asserting diversity jurisdiction.
- Defendants' counsel sent a letter to Massey demanding he dismiss the complaint due to the lack of complete diversity apparent on its face and warning of a motion for sanctions.
- Massey failed to dismiss or amend the complaint.
- Defendants moved to dismiss for lack of jurisdiction under Fed. R. Civ. P. 12(b)(1) and for sanctions under Fed. R. Civ. P. 11.
- The plaintiffs filed a response opposing the motion, which included a procedurally improper request for leave to amend the complaint.
- The district court granted the motion to dismiss and ruled that sanctions against Massey were warranted.
- The plaintiffs' subsequent motion for reconsideration was denied by the district court.
- After a hearing on fees, the district court ordered Massey to pay the full amount of attorneys' fees requested by the defendants as the sanction.
- Massey and the Walkers (appellants) appealed the district court's dismissal and sanctions order to the U.S. Court of Appeals for the Eighth Circuit, with Norwest et al. as appellees.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Did the district court abuse its discretion by sanctioning an attorney under Federal Rule of Civil Procedure 11 for filing a complaint that failed to properly allege complete diversity of citizenship and alleged facts suggesting jurisdiction was improper?
Opinions:
Majority - Judge John R. Gibson
No, the district court did not abuse its discretion. An attorney has a professional responsibility to affirmatively plead facts establishing federal jurisdiction, and filing a complaint that fails to do so, or worse, pleads facts negating jurisdiction, is a violation of Rule 11. The plaintiff bears the burden of pleading complete diversity of citizenship, which requires that no plaintiff is a citizen of the same state as any defendant. Here, the attorney, Massey, not only failed to allege the citizenship of all defendants but also pleaded that many were residents of the same state as his clients, a fact fatal to diversity jurisdiction. Massey’s argument that investigating the defendants' citizenship was too burdensome is meritless, as this is a fundamental requirement for invoking diversity jurisdiction established since Strawbridge v. Curtiss. Furthermore, after being notified of the defect by opposing counsel, Massey persisted with the frivolous legal theory that the parent corporation's citizenship determined the citizenship of all other defendants. This conduct justified the district court's imposition of sanctions.
Analysis:
This case serves as a strong reminder of the mandatory nature of pre-filing factual investigation under Rule 11, particularly concerning jurisdictional requirements. It reinforces that federal courts will not tolerate carelessness or willful blindness in pleading subject matter jurisdiction. The decision makes clear that an attorney cannot rely on ignorance or claim that a proper investigation is too burdensome to escape sanctions. It solidifies the principle that persisting with a frivolous legal theory after being warned of its defects will weigh heavily in favor of sanctions, demonstrating a lack of the good faith required by the rules of procedure.
