                                   In the

       United States Court of Appeals
                     For the Seventh Circuit
                         ____________________

Nos. 18-3527 & 18-3583
NORMA L. COOKE,
                                    Plaintiff-Appellee, Cross-Appellant,

                                      v.

JACKSON NATIONAL LIFE INSURANCE COMPANY,
                        Defendant-Appellant, Cross-Appellee.
                         ____________________

           Appeals from the United States District Court for the
             Northern District of Illinois, Eastern Division.
              No. 15 C 817 — Rubén Castillo, Chief Judge.
                         ____________________

   SUBMITTED MARCH 12, 2019 — DECIDED MARCH 26, 2019
                ____________________

   Before EASTERBROOK and BARRETT, Circuit Judges, and
STADTMUELLER, District Judge.*
    EASTERBROOK, Circuit Judge. In this suit under the diversi-
ty jurisdiction, a district court ordered Jackson National Life
Insurance to pay about $191,000 on a policy of life insurance.
243 F. Supp. 3d 987 (N.D. Ill. 2017). The court added that the


   *   Of the Eastern District of Wisconsin, sitting by designation.
2                                            Nos. 18-3527 & 18-3583

insurer had litigated unreasonably and ordered it to reim-
burse Cooke’s legal fees under 215 ILCS 5/155. (Throughout
this opinion “Cooke” refers to plaintiﬀ Norma Cooke, the
widow of decedent Charles Cooke.) The insurer paid the
death beneﬁt and appealed to contend that the court should
not have tacked on ahorneys’ fees. But because the district
court had not speciﬁed how much the insurer owes, we dis-
missed the appeal as premature. 882 F.3d 630 (7th Cir. 2018).
    The district court then awarded $42,835 plus interest.
2018 U.S. Dist. LEXIS 197908 (N.D. Ill. Nov. 20, 2018). The in-
surer ﬁled another appeal (No. 18-3527), which we resolve
using the briefs ﬁled in its initial appeal (No. 17-2080). Cooke
ﬁled a cross-appeal (No. 18-3583). Her lead contention is that
the district court should have awarded a higher death bene-
ﬁt, but that argument comes too late. As our ﬁrst decision
explains, a judgment on the merits and an award of ahor-
neys’ fees are separately appealable. Budinich v. Becton Dick-
inson & Co., 486 U.S. 196 (1988). Cooke did not appeal within
30 days of the district court’s order specifying the amount
payable on the policy, and a later award of ahorneys’ fees
does not reopen that subject.
    Instead of seeking additional fees, Cooke’s brief in No.
18-3583 is principally devoted to contending that the judge
did the right thing for the wrong reason. She made a similar
argument in response to the insurer’s initial appeal. We turn
to the award under §5/155 and consider all of the arguments
in all of the briefs ﬁled in Nos. 17-2080 and 18-3583.
    Section 5/155(1) provides:
    In any action by or against a company wherein there is in issue
    the liability of a company on a policy or policies of insurance or
    the amount of the loss payable thereunder, or for an unreasona-
Nos. 18-3527 & 18-3583                                                   3

   ble delay in sehling a claim, and it appears to the court that such
   action or delay is vexatious and unreasonable, the court may al-
   low as part of the taxable costs in the action reasonable ahorney
   fees, other costs, plus an amount not to exceed any one of the fol-
   lowing amounts:
       (a) 60% of the amount which the court or jury ﬁnds such par-
       ty is entitled to recover against the company, exclusive of all
       costs;
       (b) $60,000;
       (c) the excess of the amount which the court or jury ﬁnds
       such party is entitled to recover, exclusive of costs, over the
       amount, if any, which the company oﬀered to pay in sehle-
       ment of the claim prior to the action.

The district judge understood this statute to allow an award
either for pre-litigation conduct or for behavior during the
litigation. 243 F. Supp. 3d at 1006. He wrote that “Jackson’s
denial of coverage was based on a good-faith dispute regard-
ing the nature of Cooke’s payments” (ibid.) and that the in-
surer could not properly be penalized for insisting that a
judge resolve the parties’ dispute. But, the judge added,
“Jackson’s behavior in this litigation has been much less rea-
sonable.” Id. at 1007.
    The judge faulted the insurer because it opposed Cooke’s
motion for judgment on the pleadings without ahaching the
full policy to its papers. Jackson observed that Cooke had
not supplied the court with all of the pertinent writings
(which included an electronic funds transfer agreement as
well as the policy) but failed to do so itself, until the sum-
mary-judgment stage, and the judge thought this unreason-
able. Ibid. The judge summed up (ibid.):
   This Court believes that this case could have been resolved on
   Plaintiﬀ’s motion for judgment on the pleadings one year ago.
4                                             Nos. 18-3527 & 18-3583

    This is a straightforward insurance policy dispute with essential-
    ly undisputed facts, and the primary issue is the interpretation of
    the policy. Had Jackson provided with its response the full doc-
    ument to be construed, or clearly identiﬁed those documents it
    had already turned over that it contended were necessary to in-
    terpret the policy, this case may have been resolved one year
    ago. By frustrating Plaintiﬀ’s motion solely by pointing to the in-
    complete policy and then coyly refusing to identify the deﬁcien-
    cy for months thereafter, Defendant unnecessarily and unrea-
    sonably extended this litigation for no reason related to its good-
    faith position on the merits.

    The district court assumed that §5/155 governs the con-
duct of litigation in federal court. It did not explain why.
Many cases hold that federal, not state, rules apply to proce-
dural mahers—such as what ought to be ahached to plead-
ings—in all federal suits, whether they arise under federal or
state law. See, e.g., Shady Grove Orthopedic Associates, P.A. v.
Allstate Insurance Co., 559 U.S. 393 (2010); Burlington Northern
R.R. v. Woods, 480 U.S. 1 (1987); Walker v. Armco Steel Corp.,
446 U.S. 740 (1980); Mayer v. Gary Partners & Co., 29 F.3d 330
(7th Cir. 1994). Federal rules and doctrines provide ample
means to penalize unreasonable or vexatious conduct in fed-
eral litigation. The district court’s decision to rely on state
rather than federal law was a mistake.
    Cooke tells us that TKK USA, Inc. v. Safety National Casu-
alty Corp., 727 F.3d 782, 795 (7th Cir. 2013), has established
that §5/155 regulates the conduct of federal litigation. We do
not read it so. The district judge in TKK cited §5/155 in sup-
port of an award against an insurer that ﬁled unnecessary
and unreasonable papers. In contesting that award, the in-
surer did not rely on Shady Grove and its predecessors. In-
stead it argued that its litigation strategy had been reasona-
ble. We agreed with the district court on that score, and by
Nos. 18-3527 & 18-3583                                                 5

doing so we did not resolve an issue (the extent to which
state law governs the conduct of federal litigation) that was
neither briefed by the parties nor mentioned in the opinion.
    It has long been understood that federal judges have a
common-law power (sometimes called an inherent power)
to impose sanctions on parties that needlessly run up the
costs of litigation. See Chambers v. NASCO, Inc., 501 U.S. 32
(1991). The parties and the panel in TKK understandably did
not focus on the source of law, when §5/155 and Chambers
came to the same thing. But the district court in our case did
not invoke Chambers or treat §5/155 as a doppelganger of the
Chambers doctrine. Instead it penalized Jackson for failing to
ahach evidence to a document at the pleading stage.
    The initial question should have been whether the Rules
of Civil Procedure require a defendant to ahach documents
to a ﬁling that opposes a plaintiﬀ’s request, under Rule 12(c),
for judgment on the pleadings. The answer is no. Quite the
contrary. Although ahaching documents is permissible, the
usual consequence is to defeat the motion and require the
case to proceed to summary judgment. Rule 12(d) reads:
   RESULT OF PRESENTING MATTERS OUTSIDE THE PLEADINGS. If, on a
   motion under Rule 12(b)(6) or 12(c), mahers outside the plead-
   ings are presented to and not excluded by the court, the motion
   must be treated as one for summary judgment under Rule 56. All
   parties must be given a reasonable opportunity to present all the
   material that is pertinent to the motion.

Courts occasionally hold that, despite the word “must” in
Rule 12(d), presenting the court with mahers outside the
pleadings does not inevitably move the suit to the summary-
judgment stage. See, e.g., Yassan v. J.P. Morgan Chase & Co.,
708 F.3d 963, 975 (7th Cir. 2013). But conversion to summary
6                                            Nos. 18-3527 & 18-3583

judgment is the norm under Rule 12(d), which makes it hard
to see how Jackson can be penalized for taking a step (not
ahaching documents) that had the same eﬀect as ahaching
them: moving to summary judgment. If the district judge be-
lieved that §5/155 changes the rules for what documents
must be ahached to which ﬁlings, and with what eﬀect, it
was giving state law forbidden priority over a federal rule.
    Perhaps the district judge did not mean to penalize the
insurer just for its failure to ahach documents to papers op-
posing Cooke’s motion. Several passages in the judge’s opin-
ion imply that the problem was Jackson’s failure to identify
all of the pertinent documents, which had already been
turned over under Fed. R. Civ. P. 26(a), so that the parties
could focus their eﬀorts on them. We agree with the district
judge that Jackson could and should have done this earlier
than it did. Imposing sanctions for failing to point to the
right documents could have been justiﬁed under Chambers.
But Cooke has not used this doctrine to defend the district
court’s decision or asked us to remand so that the judge can
consider Chambers. Instead she relies on Fed. R. Civ. P. 11,
26(g)(3), and 37(b)(2)(C), plus 28 U.S.C. §1927.
   Rule 11 concerns the pleadings, and neither Cooke nor
the district judge identiﬁed any problem with the insurer’s
pleadings. Nor did Cooke make the motion required by Rule
11(c)(2).
    Rule 26(g)(3) reads:
    If a certiﬁcation violates this rule without substantial justiﬁca-
    tion, the court, on motion or on its own, must impose an appro-
    priate sanction on the signer, the party on whose behalf the sign-
    er was acting, or both. The sanction may include an order to pay
Nos. 18-3527 & 18-3583                                                7

   the reasonable expenses, including ahorney’s fees, caused by the
   violation.

Rule 26(g)(1), to which Rule 26(g)(3) refers, requires a party
or her ahorney to certify that its disclosures are complete
and that any requested discovery is legally appropriate and
not presented to harass the opponent or needlessly increase
the cost of litigation. A false certiﬁcate is a good reason for a
ﬁnancial penalty—but Cooke does not develop an argument
that Jackson’s lawyers signed a false certiﬁcate, let alone that
the district court found any violation of Rule 26. Jackson
turned over the policy and related papers as part of its Rule
26 disclosures. Cooke says that Jackson did not identify,
clearly enough, just what parts of its disclosures it was rely-
ing on when opposing her motion, but that’s outside the
scope of Rule 26.
    Rule 37(b)(2)(C) provides that any litigant who disobeys
a judge’s order with respect to discovery must pay the other
side’s costs, including ahorneys’ fees. Yet Cooke does not
contend that it requested, or that the district judge issued,
any order requiring Jackson to produce additional docu-
ments in discovery. Rule 37 is irrelevant.
    So is §1927. It allows a court to penalize a lawyer who
“multiplies the proceedings in any case unreasonably and
vexatiously”. But liability under §1927 is personal to the
lawyer; the client may not be ordered to pay for counsel’s
misconduct. See, e.g., Byrne v. Neshat, 261 F.3d 1075, 1106
(11th Cir. 2001); MaMa v. May, 118 F.3d 410, 413–14 (5th Cir.
1997). The district court’s award of ahorneys’ fees against
Jackson therefore cannot be supported by §1927.
    Cooke contends that the award of fees should be aﬃrmed
for a reason that the district court rejected: that Jackson acted
8                                       Nos. 18-3527 & 18-3583

unreasonably and vexatiously before litigation began. Illi-
nois asks whether an insurer’s conduct was objectively un-
reasonable or vexatious. See West Bend Mutual Insurance v.
Norton, 406 Ill. App. 3d 741, 745 (2010); Norman v. American
National Fire Insurance Co., 198 Ill. App. 3d 269, 303–05 (1990).
(Other decisions articulate a subjective standard. See, e.g.,
Deverman v. Country Mutual Insurance Co., 56 Ill. App. 3d 122,
124 (1977). For current purposes we assume that an objective
approach governs.) In writing that Jackson’s pre-suit denial
of coverage “was based on a good-faith dispute regarding
the nature of Cooke’s payments” (243 F. Supp. 3d at 1006),
Cooke contends, the judge asked and answered a question
about Jackson’s state of mind.
    It is possible to read the district court’s bohom line as
Cooke does, but we do not think it the best reading. The bulk
of the analysis is objective.
    Charles Cooke had a policy of life insurance. For 15 years
he paid premiums by monthly electronic transfers from his
bank account, though the policy itself called for either annu-
al or quarterly premiums. In May 2013 Jackson informed
Charles that his premium for the next year (beginning in Ju-
ly) would be $2,835.85 a month. Toward the end of July the
insurer sent the usual transfer request to Charles’s bank,
which rejected it because the account lacked suﬃcient funds.
This started a 31-day grace period under the policy: Charles
had until August 28 to make good the July payment or the
policy would be cancelled. On August 15 Jackson sent
Charles a leher telling him that he now owed a quarterly
payment of $8,637.94. This leher speciﬁed a (retroactive) due
date of July 28, which again implied that the grace period
would end on August 28. But Charles did not pay anything
Nos. 18-3527 & 18-3583                                     9

that month—not the $2,835.85 for July, not the payment for
August, and not the $8,637.94 for the quarter. Charles died
on September 10, 2013, and Jackson declined to pay the
death beneﬁt, telling his widow that the policy had lapsed
because of non-payment plus the expiration of the grace pe-
riod.
    When the suit began in 2015 Cooke contended that Jack-
son had waived its right to enforce the policy’s payment
terms or was estopped to do so. She ﬁled an amended com-
plaint in 2016 changing her theory. The amended complaint
asserted that the leher of mid-August created a new grace
period, running through September 15, even though the
grace period (and thus the policy) otherwise would have ex-
pired on August 28, and even though the leher gave a due
date implying that the end of the grace period remained Au-
gust 28. The district judge eventually agreed with Cooke’s
contention, after conceding that neither the policy nor any
state statute or decision said that a switch from monthly to
quarterly premium collection would extend the grace peri-
od. (Recall that Charles did not pay the premium for either
July or August and died on September 10, which made it
look like he was well over 31 days in arrears.) The district
judge concluded that the lack of language in the policy or
state law about how to handle an unpaid monthly premium,
followed by a demand for a quarterly premium, made it im-
proper to apply the label “vexatious and unreasonable” to
the insurer’s decision to litigate rather than pay on demand.
243 F. Supp. 3d 1006–07. That is an objective analysis—it
turns on the events in the world, and on the (lack of) appli-
cable law, not on the contents of anyone’s head.
10                                    Nos. 18-3527 & 18-3583

   This means that an award under §5/155 could be justiﬁed
only by Jackson’s conduct during the litigation. For the rea-
sons we have already given, federal rather than state law
governs how federal litigation is conducted, plus when (and
who) may be penalized for misconduct. As we have rejected
Cooke’s arguments under federal law, the award must be
reversed. And this means that we must reject Cooke’s argu-
ment that §5/155 entitles her to legal fees incurred in oppos-
ing Jackson’s appeals.
                                                    REVERSED
