Citizens for a Better Environment v. The Steel Co.

• Decision Date: 17 October 2000
• Docket Number: No. 99-2709,99-2709
• Citation: 230 F.3d 923
• Parties: (7th Cir. 2000) Citizens for a Better Environment, Plaintiff-Appellee, v. The Steel Company, also known as Chicago Steel and Pickling Company, Defendant-Appellant
• Court: U.S. Court of Appeals — Seventh Circuit

Page 923

230 F.3d 923 (7th Cir. 2000)

Citizens for a Better Environment, Plaintiff-Appellee, v. The Steel Company, also known as Chicago Steel and Pickling Company, Defendant-Appellant.

No. 99-2709

In the United States Court of Appeals For the Seventh Circuit

Argued February 9, 2000

Decided October 17, 2000

Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 95 C 4534--George M. Marovich, Judge. [Copyrighted Material Omitted] Before Bauer, Easterbrook, and Ripple, Circuit Judges.

Easterbrook, Circuit Judge.

The Steel Company missed reporting deadlines established by the Emergency Planning and Community Right-To-Know Act, 42 U.S.C. sec.sec. 11001-50. Notified of its default by Citizens for a Better Environment (CBE), The Steel Company quickly furnished all required documents. Nonetheless CBE filed suit under the Act's citizen-suit provision. 42 U.S.C. sec.11046(a)(1). The Act authorizes a civil penalty of $25,000 per day per report for tardiness, 42 U.S.C. sec.11045(c), and by the complaint's calculations The Steel Company could have owed more than $537 million. The Steel Company replied that CBE is not entitled to pursue such a claim. A panel of this court rejected this argument without discussing CBE's standing, 90 F.3d 1237 (7th Cir. 1996), but the Supreme Court unanimously reversed. Steel Co. v. Citizens for a Better Environment, 523 U.S. 83 (1998). Six Justices concluded that, even if delay in disclosure injured CBE, that injury could not be redressed given that any civil penalty would be paid to the United States rather than a private plaintiff; CBE therefore lacks a justiciable controversy with The Steel Company. 523 U.S. at 102-10. Three Justices concluded that Congress has authorized citizen suits only if the litigation begins before the firm files all required reports; these three did not decide whether CBE has standing. Id. at 131-34 (Stevens, J., joined by Souter & Ginsburg, JJ.).

It took three years and $270,000 in attorneys' fees for The Steel Company to convince the federal judiciary that CBE was whistling in the dark. After the Supreme Court's decision, we know that this suit never should have been filed. Now The Steel Company wants to be placed in the pecuniary position it would have occupied but for the suit. Accordingly, it moved in the district court for an award of attorneys' fees under sec.11046(f), only to be told "no jurisdiction." 1999 U.S. Dist. Lexis 9042 (N.D. Ill. June 8, 1999). Though those words were music to its ears when sung by the Supreme Court, The Steel Company insists that this repeat is not in the score.

The district court thought that, if CBE lacks standing to seek civil penalties from The Steel Company, then The Steel Company must lack standing to seek attorneys' fees from CBE. A court either has jurisdiction or it doesn't, the district judge believed, and the Supreme Court has put this case in the no-jurisdiction cubbyhole. Yet "[c]ourts that lack jurisdiction with respect to one kind of decision may have it with respect to another. See Szabo Food Service, Inc. v. Canteen Corp., 823 F.2d 1073, 1077-79 (7th Cir. 1987). A court, for example, always has jurisdiction to consider its own jurisdiction". Muthig v. Brant Point Nantucket, Inc., 838 F.2d 600, 603 (1st Cir. 1988) (Breyer, J.). See also Yang v. INS, 109 F.3d 1185, 1192-94 (7th Cir. 1997). In particular a court may lack authority to resolve the merits of a claim yet have jurisdiction to award costs and attorneys' fees to the prevailing party. We held this in Szabo Food Service, and the Supreme Court agreed in Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 393-98 (1990), and Willy v. Coastal Corp., 503 U.S. 131 (1992). In this very case the Supreme Court granted certiorari, held a hearing, and considered whether federal courts had jurisdiction to entertain the suit. The Court said no, and it had jurisdiction to say no. Article III of the Constitution authorized the proceedings in which the Court gave its answer. Article III allowed this court on remand to direct that the district court dismiss the suit. Article III allowed taxation of costs against CBE pursuant to 28 U.S.C. sec.1919 in the Supreme Court and here on remand. Article III allows an award of other costs of litigation, including attorneys' fees, incurred in the proceedings. Although CBE lost because the judiciary could not redress any injury it suffered from The Steel Company's delay in filing the required reports, The Steel Company's injury (the costs of defending this litigation) assuredly may be redressed by an order requiring CBE to reimburse those expenses. That satisfies Article III. The Steel Company has only to establish that federal law authorizes the district court to make the award.

The district court's conviction that it may not award attorneys' fees reflects a misunderstanding of what the Supreme Court said in this litigation about Article III. The Court concluded that CBE's prospect of recovering costs and legal fees if it prevailed on the merits could not justify adjudicating the question whether The Steel Company had violated the Act. "[A] plaintiff cannot achieve standing to litigate a substantive issue by bringing suit for the cost of bringing suit." 523 U.S. at 107. But a fee award is the substantive issue in The Steel Company's motion. It has been injured in fact to the tune of $270,000 and counting. CBE's suit inflicted that injury, which can be redressed by an award in The Steel Company's favor. Malicious prosecution and abuse of process are very old torts that reflect a defendant's entitlement to be made whole following wrongful litigation--including litigation so baseless that it does not even come within the jurisdiction of the court in which it was filed. Suppose a federal statute established the right to recover for loss caused by "wrongful invocation of federal jurisdiction," affording compensatory damages to defendants who have been dragged pointlessly through federal court. The constitutionality of such a provision could not be doubted, nor would anyone deny that the aggrieved former defendant has standing to avail itself of the federal right so created. Cf. 28 U.S.C. sec.sec. 1495, 2513 (granting such a remedy to a criminal defendant who can establish innocence). That the aggrieved litigant invoked its entitlement by counterclaim rather than by an independent suit would not deprive the district court of authority to supply the remedy.

Until 1875 federal courts did not award either attorneys' fees or any other costs in cases that had been dismissed for want of jurisdiction. The reason lay in the common law, not the Constitution, the Court explained in Mansfield C.&L.M. Ry. v. Swan, 111 U.S. 379, 386-87 (1884). In considering the power conferred on circuit courts by the Act of March 3, 1875, 18 Stat. 470, 472, to award costs secured by a bond when remanding a suit to state court, the Court observed: "These provisions were manifestly designed to avoid the application of the general rule, which, in cases where the suit failed for want of jurisdiction, denied the authority of the court to award judgment against the losing party, even for costs." Id. at 387. Mansfield applied the new statute and held that costs may be awarded even when the court to which the action is removed lacks jurisdiction to decide the merits. The law applied in Mansfield is still on the books, now split into two and modified. One part appears in 28 U.S.C. sec.1919:

Whenever any action or suit is dismissed in any district court, the Court of International Trade, or the Court of Federal Claims for want of jurisdiction, such court may order the payment of just costs.

The other survives as 28 U.S.C. sec.1447(c)

If at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded. An order remanding the case may require payment of just costs and any actual expenses, including attorney fees, incurred as a result of the removal.

We applied this statute in Garbie v. DaimlerChrysler Corp., 211 F.3d 407 (7th Cir. 2000), stating that attorneys' fees should be normal incidents of remands for lack of jurisdiction; none of the parties suggested that sec.1447(c) violates Article III, and such a contention would have been untenable. Use of this fee-shifting power has been uncontroversial. See, e.g., Morgan Guaranty Trust Co. v. Republic of Palau, 971 F.2d 917 (2d Cir. 1992); Mints v. Educational Testing Service, 99 F.3d 1253 (3d Cir. 1996); W.H. Avitts v. Amoco Production Co., 111 F.3d 30 (5th Cir. 1997); Stallworth v. Greater Cleveland RTA, 105 F.3d 252 (6th Cir. 1997).

Willy noted that statutes such as sec.sec. 1919 and 1447(c) permit awards of litigation expenses in suits that federal courts are not authorized to decide on the merits. Cooter & Gell held that Fed. R. Civ. P. 11 permits such awards in cases originally within the court's jurisdiction but voluntarily dismissed by plaintiffs before defendants seek fees. Then Willy generalized that approach by holding that attorneys' fees may be awarded under Rule 11 even if the case never came within the district court's subject-matter jurisdiction. The district court sought to distinguish these decisions

[A] court's authority to award attorney's fees or sanctions under Rule 11 is drawn not from the Constitution's Article III jurisdictional requirements, but rather congressional authority under Article I, sec. 8, cl. 9 to establish laws regulating the conduct of the courts. Willy, 503 U.S. at 136. The imposition of Rule 11 sanctions therefore is a procedural matter that is not restricted by Article III standing requirements. Here, the procedural concerns regarding abuse of the judicial system present in both Willy and Cooter & Gell are notably absent. As such, the Supreme Court's Rule 11 jurisprudence is not germane.

This passage confuses two concepts--legislative authority to create...