661 F.3d 914 (6th Cir. 2011), 09-2117, Indah v. U.S.S.E.C.
|Docket Nº:||09-2117, 09-2570, 10-1477, 10-1837.|
|Citation:||661 F.3d 914, 80 Fed.R.Serv.3d 731|
|Opinion Judge:||KAREN NELSON MOORE, Circuit Judge.|
|Party Name:||PT Pukuafu INDAH; PT Tanjung Sera Pung; Leonard L.J. Young; PT Lebong Tandai; Gideon Minerals U.S.A., Inc., Plaintifs-Appellants, v. UNITED STATES SECURITIES AND EXCHANGE COMMISSION; Mary L. Schapiro; Export Import Bank of the United States; James H. Lambright; JPMorgan Chase & Co.; Goldman Sachs Group, Inc.; PricewaterhouseCoopers, L.L.C.; James N|
|Attorney:||Steven W. Reifman, Reifman & Glass, Southfield, Michigan, for Appellants. Mark Wielga, Temkin Wielga & Hardt LLP, Denver, Colorado, Jeffrey G. Raphelson, Bodman LLP, Detroit, Michigan, Michael J. Dell, Kramer Levin Naftalis & Frankel LLP, New York, New York, for Appellees. Steven W. Reifman, Reif...|
|Judge Panel:||Before: MOORE, COLE, and ROGERS, Circuit Judges.|
|Case Date:||September 06, 2011|
|Court:||United States Courts of Appeals, Court of Appeals for the Sixth Circuit|
Argued: March 2, 2011.
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The plaintiffs in this case believe that they have an ownership interest in several mines in Indonesia. In pursuit of these interests, they have filed several lawsuits against the Newmont Mining Corporation (" Newmont" ) and others in both state and federal courts in the past ten years. Each of these lawsuits was found to be completely lacking in merit, however, and sanctions were imposed on the plaintiffs in two of these prior lawsuits. The present appeals are from a lawsuit that plaintiffs filed against Newmont and other entities on March 13, 2009. The district court dismissed all claims against all of the defendants under Federal Rule of Civil Procedure 12(b). Nonetheless, the plaintiffs filed several motions for reconsideration and relief from judgment, every one of which was denied. Eventually, Newmont filed a motion for sanctions under Rule 11, which the district court granted. The district court ordered that the plaintiffs and their counsel, Steven W. Reifman, pay over $100,000 to Newmont for its attorney fees and costs in defending against the entire lawsuit, and the court enjoined the
plaintiffs and Reifman from ever filing another lawsuit arising out of the subject matter of this case in any state or federal court. The plaintiffs now appeal.
For the reasons that follow, we AFFIRM the dismissal of all claims against all defendants by the district court, along with the district court's denial of the plaintiffs' motion for reconsideration. With respect to the imposition of sanctions, we hold that the district court erred in its finding of a Rule 11 violation; we therefore REVERSE the district court's sanctions holding, VACATE the order of monetary and injunctive sanctions, and REMAND this case to the district court to consider Newmont's motion for Rule 11 sanctions anew in light of this opinion.
I. FACTS AND PROCEDURAL HISTORY
The plaintiffs in this case are PT Pukuafu Indah, PT Lebong Tandai, PT Tanjung Sera Pung, Gideon Minerals U.S.A., Inc., and Dr. Leonard L.J. Young (collectively, " plaintiffs" ). They filed this suit on March 13, 2009 against the Securities and Exchange Commission and its Chair, Mary L. Schapiro (together, " SEC" ); the Export-Import Bank of the United States and its Chair, Fred P. Hochberg (together, " ExIm Bank" ); and JPMorgan Chase & Co., alleging that the SEC and ExIm Bank failed to take enforcement actions against Newmont in connection with allegedly false filings made by Newmont with the SEC, and that JPMorgan " convert[ed]" a $400 million loan from ExIm Bank. R.2 (Complaint ¶ 6 at 3). The plaintiffs also sought a temporary restraining order, but this request was denied by the district court.
On May 4, 2009, the plaintiffs filed an Amended Complaint, in which they added Newmont Mining Corp., Goldman Sachs Group, Inc., and PricewaterhouseCoopers, L.L.C. as defendants. In addition to restating the claim made in the original complaint, the plaintiffs added five new counts— Counts Two through Six. In Count Two, the plaintiffs sought relief against the SEC and the ExIm Bank under the Administrative Procedure Act. In Count Three, the plaintiffs alleged " conversion pursuant to the Uniform Commercial Code Section 3-420." R.11 (Amended Complaint ¶ 22 at 10). In Count Four, the plaintiffs complain that Newmont " created an artifice to convert [certain Indonesian mineral assets] ... and to defraud the general and investing public." Id. ¶ 27 at 11-12. In Count Five, the plaintiffs complain of " theft of Plaintiffs' financial identity" and a deprivation of their right to due process under the Fifth Amendment. Id. ¶ ¶ 29-30 at 12-13. Lastly, in Count Six, the plaintiffs allege that Goldman Sachs committed fraud and conspiracy.
Eight days later, on May 12, 2009, the plaintiffs filed a Second Amended Complaint, in which they added Devonwood Capital Partners, L.L.C.; Devonwood's CEO, James Nelson Lane; and the New Canaan Society as defendants. To the six counts already alleged, they added two more: a second Count Six, claiming " investment advising and securities fraud" against Lane, and Count Seven, claiming that Devonwood, Lane, and the New Canaan Society violated the Investment Advisers Act of 1940 and other securities laws. R.13 (Second Amended Complaint ¶ ¶ 38-42 at 15-17). The plaintiffs then moved for summary judgment on May 24, 2009. In response, Newmont filed a motion to dismiss the Second Amended Complaint for lack of personal jurisdiction, pursuant to Federal Rule of Civil Procedure 12(b)(2), on June 10, 2009. JPMorgan followed with its own motion to dismiss, under Rule 12(b)(6), as did the SEC and ExIm Bank; Goldman Sachs; Lane, Devonwood,
and the New Canaan Society; and PricewaterhouseCoopers.
On July 15, 2009, the district court granted Newmont's motion to dismiss on the ground that the court lacked personal jurisdiction over Newmont, and the court also denied the plaintiffs' motion for summary judgment. R. 61 (Opinion and Order (" Op." ) July 15, 2009). Four days later, the plaintiffs filed a motion for leave to amend their complaint again, this time to file a Third Amended Complaint. The proposed Third Amended Complaint makes additional assertions regarding the subject-matter jurisdiction of the court, but it says nothing new about personal jurisdiction over Newmont. The plaintiffs also filed a motion for reconsideration of the dismissal of Newmont, followed by an emergency motion for a preliminary injunction against the SEC and PricewaterhouseCoopers, both of which were denied.
In response to the manner in which the plaintiffs and Reifman have pursued this litigation (and similar litigation in other courts in the past), Newmont filed a motion for Rule 11 sanctions on August 21, 2009. In this motion, Newmont argued that the attempted filing of the Third Amended Complaint constituted sanctionable conduct, and Newmont sought attorney fees in defending against the entire case from the beginning of the suit. Rather than respond to this motion directly, however, the plaintiffs filed an " emergency motion for reconsideration" of the denial of their emergency motion for a preliminary injunction. The district court denied the plaintiffs' motion.
On October 6, 2009, the district court dismissed the remainder of the case. It granted the remaining defendants' motions to dismiss, denied the plaintiffs' motion for leave to file a Third Amended Complaint, and entered judgment in favor of the defendants. R. 100 (Op. Oct. 6, 2009). The district court granted Newmont's motion for sanctions on November 4, 2009, and ordered " that monetary sanctions in the form of compensation for Newmont's reasonable attorneys' fees and costs will be imposed against counsel and Plaintiffs upon Newmont's submission of adequate proofs establishing those fees and costs." R.102 (Op. Nov. 4, 2009 at 13). The district court also ordered " that Plaintiffs are enjoined from filing any lawsuits against Defendants in this or any federal or state court related to the subject matter of this lawsuit." Id. at 13-14. Subsequently, Newmont produced a bill of costs, showing that it " has incurred $107,369.53 in attorneys' fees, costs and expenses in defending against this lawsuit." R.103 (Bill of Costs at 1). On January 19, 2010, the district court ordered that this full amount be paid by " Plaintiffs and Plaintiffs' counsel, Reifman & Glass, P.C. and Steven W. Reifman," within thirty days. R.111 (Op. Jan. 19, 2010 at 3).
Shortly after the district court ordered these sanctions, the...
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