Anderson v. Smithfield Foods, Inc., 02-14089.

• Decision Date: 17 December 2003
• Docket Number: No. 02-15657.,No. 02-14089.,02-14089.,02-15657.
• Parties: Eugene C. ANDERSON, Cynthia Bailey Watson, et al., Plaintiffs-Appellants, v. SMITHFIELD FOODS, INC., Joseph W. Luter, III, Defendants-Appellees. Eugene C. Anderson, Cynthia Bailey Watson, et al., Plaintiffs-Appellants, Douglas B. Abrams, Abrams & Abrams, P.A., et al., Interested Parties-Appellants, v. Smithfield Foods, Inc., Joseph W. Luter, III, Defendants-Appellees.
• Court: U.S. Court of Appeals — Eleventh Circuit

353 F.3d 912

Eugene C. ANDERSON, Cynthia Bailey Watson, et al., Plaintiffs-Appellants, v. SMITHFIELD FOODS, INC., Joseph W. Luter, III, Defendants-Appellees.

Eugene C. Anderson, Cynthia Bailey Watson, et al., Plaintiffs-Appellants, Douglas B. Abrams, Abrams & Abrams, P.A., et al., Interested Parties-Appellants, v. Smithfield Foods, Inc., Joseph W. Luter, III, Defendants-Appellees.

No. 02-14089.

No. 02-15657.

United States Court of Appeals, Eleventh Circuit.

December 17, 2003.

Hiram Chester Eastland, Jr., Eastland Law Offices, Greenwood, MS, Joe R. Whatley, Jr., Whatley Drake, L.L.C., Birmingham, AL, Herbert T. Schwartz, Williams, Bailey, L.L.P., Houston, TX, Honey Lynn Kober, Gregory P. Joseph, Susan M. Davies, Sandra M. Lipsman, Mara Leventhal, Gregory P. Joseph Law Offices, L.L.C., New York City, Douglas B. Abrams, Abrams & Abrams, P.A., Raleigh, NC, for Anderson and Watson.

Anne Marie Whittemore, E. Duncan Getchell, Jr., J. William Boland, Rosewell Page, III, Richard Cullen, McGuire, Woods, Battle & Boothe, LLP, Richmond, VA, Ira H. Raphaelson, O'Melveny & Myers, LLP, Washington, DC, Benjamin H. Hill, II, William C. Guerrant, Jr., Lara J. Tibbals, Hill, Ward & Henderson, P.A., Tampa, FL, for Defendants-Appellees.

Appeals from the United States District Court for the Middle District of Florida.

Before HULL and COX, Circuit Judges, and PAUL^*, District Judge.

PER CURIAM:

I. INTRODUCTION

A group of landowners appeals the district court's judgment dismissing their civil action and imposing sanctions on their counsel in the amount of $128,563.43. We affirm dismissal of the action, but reverse the award of sanctions.

II. BACKGROUND & PROCEDURAL HISTORY

Plaintiffs Eugene C. Anderson, Cynthia Bailey Watson, Roger Dae Pickett, Marvin Carnagey, Keith Dotson, Jim Braum, Linus Solberg, Betty Janssen, and Don Webb own land abutting Defendant Smithfield Foods, Inc., the world's largest hog producer and pork processor. Plaintiffs bring this putative class action on their own behalf and for all others similarly situated, alleging that Smithfield and its CEO, Joseph W. Luter, III, are liable under the civil provisions of the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1961, et seq., for business practices amounting to racketeering.

Plaintiffs' First Amended Complaint alleged that Defendants polluted land and water in violation of numerous laws and regulations, and lied about and profited from these environmental transgressions. Plaintiffs alleged that this conduct gives rise to liability under RICO because it constitutes a pattern of money laundering and wire and mail fraud. Defendants moved, under Fed.R.Civ.P. 12(b)(6), to dismiss the First Amended Complaint for failure to state a claim upon which relief can be granted. The district court granted the Defendants' motion. Anderson v. Smithfield Foods, Inc., 209 F.Supp.2d 1270, 1278 (M.D.Fla.2002). The district court stated generally that RICO was not an available remedy:

The Court recognizes Plaintiffs' concern for the impact that Defendants' business has on the environment. However, the Clean Air Act, the Clean Water Act, and a variety of other statutes were designed to protect against these hazards. Although Plaintiffs allege that Defendants consistently and constantly violate these statutes, RICO is not the proper remedy for Plaintiffs to vindicate their rights involving violations of these statutes.

Id. at 1275. The district court's order went on, however, to identify defects in the Plaintiffs' RICO claims, noting that the Plaintiffs had insufficiently alleged the specific intent required to prove mail and wire fraud, that their allegations that Defendants profited from violating environmental laws were insufficient to show money laundering, that the facts they alleged were too vague to show the enterprise required for RICO liability, and that they had failed to allege the harm required by RICO. Id. at 1275-76. The district court then gave the Plaintiffs thirty days to file another amended complaint. Id. at 1278.

The Plaintiffs then filed a Second Amended Complaint. They again sought to recover under RICO. In this complaint, however, they dropped the money laundering allegations, but elaborated on their mail and wire fraud allegations and added new allegations of extortion. Defendants again moved to dismiss under Rule 12(b)(6). The district court granted this second motion to dismiss. Anderson v. Smithfield Foods, Inc., 207 F.Supp.2d 1358, 1365 (M.D.Fla.2002).

When the Defendants moved to dismiss the Second Amended Complaint, they also moved for sanctions under Fed.R.Civ.P. 11, asserting that the Plaintiffs had improperly pleaded RICO claims in the Second Amended Complaint. The district court granted the motion and imposed monetary sanctions in the amount of $128,563.43 to defray the fees and costs incurred by the Defendants in attacking the Second Amended Complaint. Anderson v. Smithfield Foods, Inc., 209 F.Supp.2d 1278, 1282 (M.D.Fla.2002). The court imposed the sanctions because it concluded that the Plaintiffs had not made a reasonable inquiry into the viability of the RICO claims before filing the Second Amended Complaint. Id. at 1281. Specifically, the court stated:

In dismissing the First Amended Complaint, the Court warned Plaintiffs that, although Plaintiffs could possibly have a cause of action against Defendants, they did not have a claim under RICO. After detailing the reasons why Plaintiffs did not have a claim under RICO, this Court granted Plaintiffs leave to amend their complaint. Plaintiffs took the opportunity to amend their complaint, and Plaintiffs again brought a RICO claim, against this Court's advice.... [T]he Court finds that no reasonable attorney, especially in light of the dismissal of the First Amended Complaint and under the circumstances, could reasonably believe that the Second Amended Complaint had any reasonable chance of success or that it stated a claim of relief upon which relief could be granted.

Id. The Plaintiffs appeal.

III. ISSUES ON APPEAL AND CONTENTIONS OF THE PARTIES

The Plaintiffs contend that the district court erred in imposing sanctions related to the Second Amended Complaint. They contend, among other things, that it was reasonable for them to interpret the district court's order dismissing the First Amended Complaint as inviting an effort to remedy pleading defects in the RICO claims.

The Plaintiffs also contend that the district court erred in granting the Defendants' two motions to dismiss. We find these arguments meritless, and affirm the dismissal without further discussion. See 11th Cir. R. 36-1. In doing so, we affirm only the district court's ultimate conclusions that plaintiffs' complaints fail to state a claim on which relief can be granted, and do not endorse all of the district court's reasons for these conclusions. We do conclude, however, that the district court entered judgment for the defendants without a reversible error of law.

IV. STANDARD OF REVIEW

We review for an abuse of discretion the district court's imposition of sanctions under Rule 11. Massengale v. Ray, 267 F.3d 1298, 1301 (11th Cir.2001).

V. DISCUSSION

"The standard for testing conduct under amended Rule 11 is `reasonableness under the circumstances.'" United States v. Milam, 855 F.2d 739, 743 (11th Cir.1988) (quoting Donaldson v. Clark, 819 F.2d 1551, 1556 (11th Cir.1987) (en banc)). A district court has the discretion to award Rule 11 sanctions:

(1) when a party files a pleading that has no reasonable factual basis; (2) when the party files a...