                        NOT RECOMMENDED FOR PUBLICATION
                                File Name: 20a0490n.06

                                         Case No. 19-1800

                           UNITED STATES COURT OF APPEALS
                                FOR THE SIXTH CIRCUIT
                                                                                         FILED
                                                                                   Aug 20, 2020
 BRUCE W. JAMES; SUSAN JAMES,                      )                           DEBORAH S. HUNT, Clerk
                                                   )
          Plaintiffs-Appellants,                   )
                                                   )          ON APPEAL FROM THE UNITED
 v.                                                )          STATES DISTRICT COURT FOR
                                                   )          THE EASTERN DISTRICT OF
 CATERPILLAR, INC.,                                )          MICHIGAN
                                                   )
          Defendant-Appellee.                      )                       OPINION
                                                   )
                                                   )


BEFORE: NORRIS, NALBANDIAN, and READLER, Circuit Judges.

       NALBANDIAN, Circuit Judge. Courts typically reserve the “death penalty” sanction of

dismissal with prejudice for the most egregious cases—those that involve, for example, willful

misconduct, bad faith, fraud, or contempt. Even more unusual is a court dismissing a complaint as

a sanction without a dispositive motion. Although we recognize that such cases exist, we don’t

believe this is one. That’s not to say that Plaintiffs and their attorney are blameless. Their conduct

appears calculating and evasive at best, and sanctionable at worst. We leave that to the district

court on remand. But at this point, we find that the court’s dismissal of Plaintiffs’ complaint with

prejudice was premature. Thus, we VACATE the trial court’s order and remand for further

proceedings.
No. 19-1800, Bruce James, et al v. Caterpillar, Inc.


                                                  I.

       In 2014, Bruce James operated a Caterpillar wheel loader at a steel manufacturing mill in

Jackson, Michigan. While James was inside the loader, an explosion at the plant broke the loader’s

windshield and compromised its frame. The explosion also started a fire in the loader’s cabin,

which caused second and third degree burns to James’s body. James and his wife (collectively

Plaintiffs) filed several lawsuits seeking compensation for James’s injuries.

       Action One. On January 23, 2015, Plaintiffs filed a complaint in the Circuit Court for

Jackson County, Michigan against James’s employer, Gerdau Macsteel, Inc., Caterpillar, and

several individuals. The complaint alleged one count of negligence against Caterpillar and stated:

       Caterpillar owed Mr. James a duty to use reasonable care to design the Loader so
       that it would be reasonably safe for its intended uses and for other uses which are
       foreseeabl[y] probable. . . . Caterpillar breached that duty when it designed and
       manufactured the Loader without providing adequate support around the frame,
       window, and glass of the Loader. . . . Caterpillar’s breaches of that duty were a
       proximate cause of the injuries Mr. James sustained as a result of the [e]xplosion.
       These injuries were foreseeable under Michigan Law.

(R. 14-3, Summons & Compl., Case No. 15-371-NO, at *10.)1                   Discovery revealed that

Caterpillar’s exclusive Michigan Dealer, Michigan Machinery Company (“MMC”), modified the

loader after it left Caterpillar’s possession.2 Based on this information, Plaintiffs apparently agreed

to dismiss Caterpillar from the lawsuit if it produced an affidavit stating that it was not involved

in the modification of the loader. Caterpillar produced such an affidavit, and Plaintiffs dismissed

Caterpillar from the suit without prejudice.




       1
          The PageID locators for several record documents are illegible. For these documents we
cite the page number of the document itself.
       2
           MMC hired H&H Welding to perform these modifications.


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No. 19-1800, Bruce James, et al v. Caterpillar, Inc.


       Action Two. On April 11, 2017, Plaintiffs filed a second complaint, this time against

Caterpillar and H&H Welding in the Circuit Court for Ingham County, Michigan. Among other

things, the complaint again alleged one count of negligence against Caterpillar:

       Caterpillar owed Mr. James a duty to use reasonable care in the design of the Loader
       so that it would be reasonably safe for its intended uses and for other uses which
       are foreseeably probable. . . . Caterpillar breached that duty when it designed and
       manufactured the Loader without providing adequate support around the frame,
       window, and glass of the Loader. There was a simple and inexpensive alternative
       design available to Caterpillar that—had Caterpillar chosen that design that would
       have provided the proper support as noted above—would have prevented the
       injuries Mr. James sustained. . . . Caterpillar’s breach of that duty was a proximate
       cause of the injuries Mr. James sustained as a result of the [e]xplosion. These
       injuries were foreseeable under Michigan law.

(R. 14-4, Summons and Compl., Case No. 17-287-NI at *7–8 (emphasis added).) The only

difference between Plaintiffs’ negligence claims in the first and second complaints is the

emphasized language. The court dismissed the case for failure to properly serve the defendants.

       Action Three. On April 10, 2018, Plaintiffs filed a third complaint, again in the Circuit

Court of Ingham County, Michigan. For the third time Plaintiffs alleged one count of negligence

against Caterpillar, stating verbatim the same allegations that Plaintiffs pled in their second

complaint’s negligence count. Caterpillar removed the action to the Western District of Michigan.

Caterpillar then moved for sanctions under Fed. R. Civ. P. 11 and 28 U.S.C. § 1927, arguing that

the allegations in the complaint were false and misleading, and at the same time answered the

complaint and moved to transfer the case to the Eastern District of Michigan. The court granted

the motion to transfer.

       In the Eastern District, Caterpillar refiled its sanctions motion and again filed an answer at

the same time. Plaintiffs opposed the motion, arguing their third complaint was not frivolous

because:




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No. 19-1800, Bruce James, et al v. Caterpillar, Inc.


       [U]nder Michigan law the subsequent modifications to the loader only constitute a
       superseding intervening cause—that would preclude liability against Caterpillar—
       if they were unforeseeable. [And t]he putative modifications made by Caterpillar’s
       exclusive Michigan dealer were foreseeable.

(R. 20, Resp. to Mot. for Sanctions at PageID # 381–82.) Plaintiffs cited several communications

between Gerdau and MMC while Caterpillar still had possession of the loader, purportedly

establishing Caterpillar’s subjective knowledge of the modifications MMC would make, thus

rendering them foreseeable.

       While the motion for sanctions was pending, Caterpillar served James with Requests for

Admissions. He failed to respond. Ultimately, based in part on the admissions that the court

deemed admitted for failure to respond, the district court granted Caterpillar’s motion and

dismissed Plaintiffs’ third complaint with prejudice as the court’s chosen sanction. This appeal

follows.

                                                 II.

       We review a district court’s imposition of sanctions for abuse of discretion. Ridder v. City

of Springfield, 109 F.3d 288, 293 (6th Cir. 1997). “A court abuses its discretion when it commits

a clear error of judgment, such as applying the incorrect legal standard, misapplying the correct

legal standard, or relying upon clearly erroneous findings of fact.” Jones v. Ill. Cent. R.R. Co.,

617 F.3d 843, 850 (6th Cir. 2010).

       Here, the district court gave three reasons for dismissing Plaintiffs’ complaint. First,

Plaintiffs had no good-faith basis for bringing their third complaint because the documents cited

by Plaintiffs don’t prove that Caterpillar had subjective knowledge of the modifications, and the

requests for admissions that Plaintiffs did not respond to undermine their claims. Second, Plaintiffs

failed to provide adequate notice under Federal Rule of Civil Procedure 8(a)(2) of the theory they

raised in their response to Caterpillar’s motion for sanctions. And third, Plaintiffs forum shopped,



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No. 19-1800, Bruce James, et al v. Caterpillar, Inc.


evidenced by their filing of the second and third complaints in an improper venue. Yet even if the

district court’s analysis on all three of these is correct, Plaintiffs’ conduct was not severe enough

to justify the sanction the district court chose—dismissal with prejudice.3

       By filing a complaint, an attorney certifies: (1) the filing is not “for any improper purpose,

such as to harass”; (2) “the claims . . . are warranted by existing law or by a nonfrivolous argument

for extending” it; and (3) “the factual contentions have evidentiary support” or will after discovery.

Fed. R. Civ. P. 11(b). If a district court determines that an attorney violated this rule, the district

court is “given wide discretion” in “deciding the nature and extent of the sanctions to impose.”

INVST Fin. Grp., Inc. v. Chem-Nuclear Sys., Inc., 815 F.2d 391, 401 (6th Cir. 1987); see Fed. R.

Civ. P. 11(c)(1). That said, the chosen sanction, if any, “must be limited to what suffices to deter

repetition of the conduct or comparable conduct by others similarly situated.” Fed. R. Civ. P.

11(c)(4).

       Dismissal with prejudice is the most severe sanction a court can impose under Rule 11. See

5A Charles Alan Wright & Arthur A. Miller, Federal Practice and Procedure § 1336.3 (4th ed.

2020) (describing dismissal with prejudice as the “death penalty” sanction); cf. Beil v. Lakewood

Eng’g & Mfg. Co., 15 F.3d 546, 552 (6th Cir. 1994) (noting in the Rule 37 context that “[d]ismissal

is the sanction of last resort”). The misconduct leading to dismissal must be egregious. And at this

point, on this record, Plaintiffs’ conduct doesn’t reach that level.

       In Tahfs v. Proctor, we reversed monetary sanctions against a plaintiff who filed a

complaint the district court later dismissed under Rule 12(b)(6). 316 F.3d 584, 594 (6th Cir. 2003).

A complaint’s failure to satisfy Rule 12(b)(6) is not alone enough to impose sanctions. Neitzke v.




       3
            We express no opinion on whether the district court’s analysis for these three points was
correct.


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No. 19-1800, Bruce James, et al v. Caterpillar, Inc.


Williams, 490 U.S. 319, 327–28 (1989); Tahfs, 316 F.3d at 595. And even though the complaint

in Tahfs only included “bare, conclusory assertions,” the plaintiff “did not fail in this endeavor by

a wide margin.” 316 F.3d at 594. Thus, the attorney who filed the complaint did not violate Rule

11’s command that claims be warranted by existing law, and the district court abused its discretion

by imposing sanctions. Id. In reaching this conclusion, we noted several points relevant here. First,

“[a]s a general proposition, a district court should be hesitant to determine that a party’s complaint

is in violation of Rule 11(b) when . . . there is nothing before the court, save the bare allegations

of the complaint.” Id. And second, we cautioned against reading “[un]warranted by existing law,

as the expression is used in Rule 11(b)(2)[,]” to mean all claims that fail to satisfy Rule 12(b)(6).

Id. at 595 (internal quotations marks omitted). That’s because “Rule 11 ‘is not intended to chill an

attorney’s enthusiasm or creativity in pursuing factual or legal theories.’” Id. (quoting McGhee v.

Sanilac County, 934 F.2d 89, 92 (6th Cir. 1991)) (internal quotation marks omitted). As the

Advisory Committee Notes explain, parties should not employ a Rule 11 motion “to test the legal

sufficiency or efficacy of allegations in the pleadings; other motions are available for those

purposes.” Fed. R. Civ. P. 11(b), (c) advisory committee’s note to the 1993 amendment.

        But here, that appears to be what the district court did. Its first rationale for dismissing

Plaintiffs’ complaint as a Rule 11 sanction was that the facts in Caterpillar’s request for

admissions—taken as true because Plaintiffs failed to respond—undermine Plaintiffs’ claims, and

that the evidence Plaintiffs cite doesn’t support their claims. In other words, Plaintiffs fail to state

a claim upon which the court could grant relief. But that’s not enough to sanction Plaintiffs. See

Neitzke, 490 U.S. at 327–28; Tahfs, 316 F.3d at 595. In Tahfs, we held that a complaint containing

only “bare, conclusory allegations” could not support monetary sanctions. 316 F.3d at 594. So

such a complaint cannot support the more serious sanction of dismissal with prejudice.




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No. 19-1800, Bruce James, et al v. Caterpillar, Inc.


       Again, we note that, in general, motions for sanctions should not substitute for motions to

dismiss or motions for summary judgment, which test the sufficiency of the complaint’s

allegations. See, e.g., Blue v. U.S. Dep’t of the Army, 914 F.2d 525, 535–36 (4th Cir. 1990); Safe-

Strap Co. v. Koala Corp., 270 F. Supp. 2d 407, 412–21 (S.D.N.Y. 2003); Wright & Miller, supra,

at § 1336.3 (“Dismissals for frivolous actions ordinarily should be made under 12(b)(6), and a

Rule 11 sanction could be made in conjunction with a grant of that motion if the litigant’s behavior

was particularly egregious.”). That’s not to say that a defendant can never ask for sanctions soon

after a complaint is filed. See Safe-Strap Co., 270 F. Supp. 2d at 413 (citing Lebovitz v. Miller, 856

F.2d 902, 903–05 (7th Cir. 1988); Smith & Green Corp. v. Trs. of Constr. Indus. & Laborers

Health & Welfare Tr., 244 F. Supp. 2d 1098, 1100–04 (D. Nev. 2003); Dome Pat. L.P. v.

Permeable Tech., Inc., 190 F.R.D. 88, 89–90 (W.D.N.Y. 1999)). After all, a litigant must make a

Rule 11 motion promptly. See Fed. R. Civ. P. 11(b), (c) advisory committee’s note to the 1993

amendment (“Ordinarily the motion [for sanctions] should be served promptly after the

inappropriate paper is filed, and, if delayed too long, may be viewed as untimely.”); Safe-Strap

Co., 270 F. Supp. 2d at 413 n.3. And defendants spend time and money litigating dispositive

motions.4

       In any event, although we believe that filing a baseless complaint can give rise to a

dismissal sanction in some cases, we believe that a court will invariably need to examine evidence

outside the four corners of the complaint to justify such a sanction. Tahfs, 316 F.3d at 594. For

example, a concession by counsel that he only filed the complaint to harass the defendant may

qualify. See Fed. R. Civ. P. 11(b). But, at this point, the record here lacks sufficient evidence.



       4
          There may, for example, be a case in which a complaint on its face appears plausible
enough to survive dismissal, but the defendant can easily show that it is, in fact, frivolous. In that
case, an early Rule 11 dismissal is warranted.


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No. 19-1800, Bruce James, et al v. Caterpillar, Inc.


Caterpillar argues that Plaintiffs repeatedly made “claims about the facts supporting their claims

and the procedural history of this litigation they knew to be materially false and misleading.”

(Appellee’s Br. at 28.) Yet Caterpillar made this motion for sanctions before the close of discovery.

Without more record evidence, assessing the validity of Caterpillar’s allegation is extremely

difficult. See Tahfs, 316 F.3d at 594 (“While a party is bound by Rule 11 to refrain from filing a

complaint ‘for any improper purpose,’ from making claims ‘[un]warranted by existing law,’ or

from making ‘allegations and other factual contentions [without] evidentiary support,’ see Fed. R.

Civ. P. 11(b)(1)–(3), making those determinations is difficult when there is nothing before the

court except the challenged complaint.”).

       The district court’s two other rationales for dismissing Plaintiffs’ complaint as a Rule 11

sanction fare no better. We also held in Tahfs that a complaint’s failure to provide sufficient notice

“is not, perforce, ‘[un]warranted by existing law’ or frivolous[,]” so that particular inadequacy was

insufficient to support monetary sanctions. 316 F.3d at 595. So if Plaintiffs’ complaint failed to

provide Caterpillar with adequate notice of its superseding cause theory, that too cannot warrant

the sanction of dismissal. Finally, neither the district court nor Caterpillar cites any case when a

court has dismissed a case with prejudice because of forum-shopping or improper venue. Nor can

we find one. The appropriate sanction in such cases appears to be a monetary one. See Bender v.

Newell Window Furnishings, Inc., 560 F. App’x 469, 476 (6th Cir. 2014); First Bank of Marietta

v. Hartford Underwriters Ins. Co., 307 F.3d 501, 514 n.11 (6th Cir. 2002).

       It may well be that Plaintiffs’ complaint fails to state a claim on which the district court

can grant relief. And some of Plaintiffs’ conduct may warrant sanctions. Indeed, Plaintiffs and

their attorney may end up worse off in the end because the district court’s only sanction was

dismissal of the complaint with prejudice. The court may ultimately decide to dismiss the




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No. 19-1800, Bruce James, et al v. Caterpillar, Inc.


complaint with prejudice on a dispositive motion anyway and impose monetary sanctions. In any

event, none of the district court’s rationales support dismissing Plaintiffs’ complaint with prejudice

as a Rule 11 sanction at this point.

                                                 III.

   For these reasons, we VACATE the district court’s order dismissing Plaintiffs’ complaint as

a Rule 11 sanction and REMAND for further proceedings.




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