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14–6442
United States Court of Appeals for the Sixth Circuit
_____________________________
Joseph Konowitz & Melody Konowitz Plaintiffs–Appellants
v.
Titeflex Corporation Defendant–Appellee
On Appeal from the U.S. District Court for the
Middle District of Tennessee, Cookeville Division 2:13-cv-00005
| Hon. Kevin Sharp
_____________________________
Appellants’ Brief
Michael A. Durr [email protected] Jason E. Fisher
[email protected] Quist, Cone & Fisher, PLLC 800 South Gay
Street, Suite 2121 Knoxville, Tennessee 37929 (865) 312-0440
Counsel for Plaintiffs-Appellants
March 5, 2015
Case: 14-6442 Document: 22 Filed: 03/05/2015 Page: 1
mailto:[email protected]:[email protected]
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UNITED STATES COURT OF APPEALSFOR THE SIXTH CIRCUIT
Disclosure of Corporate Affiliationsand Financial Interest
Sixth CircuitCase Number: Case Name:
Name of counsel:
Pursuant to 6th Cir. R. 26.1, Name of Party
makes the following disclosure:
1. Is said party a subsidiary or affiliate of a publicly owned
corporation? If Yes, list below theidentity of the parent
corporation or affiliate and the relationship between it and the
namedparty:
2. Is there a publicly owned corporation, not a party to the
appeal, that has a financial interestin the outcome? If yes, list
the identity of such corporation and the nature of the
financialinterest:
CERTIFICATE OF SERVICE
I certify that on _____________________________________ the
foregoing document was served on allparties or their counsel of
record through the CM/ECF system if they are registered users or,
if they are not,by placing a true and correct copy in the United
States mail, postage prepaid, to their address of record.
s/
This statement is filed twice: when the appeal is initially
opened and later, in the principal briefs, immediately preceding
the table of contents. See 6th Cir. R. 26.1 on page 2 of this
form.
14-6442 Joseph Konowitz; et al v. Titeflex Corp.
Michael A. Durr
Joseph Konowitz; Melody Konowitz
No.
This is an appeal from the denial of Plaintiffs/Appellants'
motion for sanctions. Appellants filed their notice of appeal upon
the uncontested dismissal of the underlying lawsuit for lack of
subject matter jurisdiction. That lawsuit has since been refiled in
Tennessee state court. State Farm Fire and Casualty Company has a
financial/subrogation interest in the outcome of that lawsuit.
State Farm is not a party to this appeal and it does not have a
financial interest in the outcome of this appeal.
Monday, December 15, 2014
Michael A. Durr Quist, Cone & Fisher, PLLC Knoxville,
Tennessee
Case: 14-6442 Document: 8 Filed: 12/15/2014 Page: 1
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Table of Contents Page(s)
Corporate Disclosure
.......................................................................................i
Table of Contents
............................................................................................ii
Table of Authorities
.......................................................................................
iv
Statement in Support of Oral Argument
........................................................ 1
Jurisdictional Statement
.................................................................................
1
Statement of Issues
.........................................................................................
2
Statement of the Case
.....................................................................................
3
Summary of Argument
...................................................................................
6
Argument
.........................................................................................................
7
1. The underlying lawsuit: Appellants Joe and Melody Konowitz
bring this product liability lawsuit against Titeflex Corporation
after a fire damages their Tennessee home in 2012
.................................................... 7
1.1 Fourteen months into the lawsuit, Titeflex’s counsel informs
the Konowitzes that no subject matter jurisdiction exists
............... 11
1.2 The story changes: Three weeks later, counsel’s account of
the jurisdictional discovery is revealed to be false
................................. 14
1.3 Despite confirming that both parties are Tennessee citizens
just a few months after this lawsuit is filed, counsel conducts no
jurisdictional inquiry
......................................................................
15
1.4 Six months later, counsel confirms that Titeflex was a
Tennessee citizen when the lawsuit was filed, yet allows the
lawsuit to continue for months
....................................................... 16
1.5 Three months after that confirmation, counsel recognizes
that the court lacks jurisdiction before a court-ordered mediation,
but withholds this fact until three weeks after that mediation
......... 18
1.6 The fallout: more than one year of intense federal court
litigation has been wasted
...............................................................20
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1.7 The Konowitzes concede that no jurisdiction exists and move
for sanctions for this waste; the district court rules that the
motion is moot
...............................................................................
22
2. The district court erred in finding the Konowitzes’ motion
for sanctions moot
.......................................................................................
23
2.1 Mootness is a legal question that this Court reviews de novo
........... 23
2.2 Sanctions through the court’s inherent authority or 28 U.S.C
§ 1927 are not controversies between the parties; therefore, a
motion seeking either cannot become
moot.................................... 24
2.3 Even if the Konowitzes’ motion for sanctions is considered a
controversy between the parties, the motion is not moot
................ 25
3. Counsel’s admitted version of events shows a reckless
disregard of the risk of multiplying these proceedings; therefore,
a sanction under section 1927 in the first instance is appropriate
............................ 25
3.1 This Court may reach whether sanctions under section 1927
are warranted in the first instance here because the parties argued
it below and because the record is clear and complete .........
27
3.2 Federal courts impose a duty on attorneys to affirmatively
confirm subject matter jurisdiction
................................................. 28
3.3 Counsel recklessly disregarded the risk of multiplying these
proceedings by conducting no jurisdictional inquiry after
confirming that all parties were Tennessee citizens
........................ 29
3.4 Counsel recklessly disregarded the risk of multiplying these
proceedings by allowing the lawsuit to continue for months after
confirming that all parties were Tennessee citizens when this
lawsuit was filed
......................................................................
32
Conclusion
..................................................................................................
33
Certificate of Compliance
...........................................................................
35
Certificate of Service
..................................................................................
36
Designation of Relevant District Court Documents
................................. 37
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Table of Authorities
Cases Page(s)
B-Line, LLC v. Wingerter, 594 F.3d 931 (6th Cir. 2010)
.......................................................................
23
BEM I, L.L.C. v. Anthropologie, Inc., 301 F.3d 548 (7th Cir.
2002)
.................................................................
19, 29
Chase Manhattan Bank, N.A. v. Am. Nat’l Bank & Trust Co., 93
F.3d 1064 (2d Cir. 1996)
.........................................................................
27
Cleveland Branch, NAACP v. City of Parma, 263 F.3d 513 (6th Cir.
2001)
.......................................................................
23
Curry v. U.S. Bulk Transp., Inc., 462 F.3d 536 (6th Cir. 2006)
.......................................................................
10
Demis v. Sniezek, 558 F.3d 508 (6th Cir. 2009)
.......................................................................
23
E.R. Squibb & Sons, Inc. v. Lloyd’s & Co., 241 F.3d 154
(2d Cir. 2001)
.........................................................................
10
Ford v. Wilder, 469 F.3d 500 (6th Cir. 2006)
......................................................................
23
Garner v. Cuyahoga Cnty. Juvenile Court, 554 F.3d 624 (6th Cir.
2009)
.................................................................
26, 26
Heinen v. Northrop Grumman Corp., 671 F.3d 669 (7th Cir. 2012)
.......................................................................
30
Manzanares v. Higdon, 575 F.3d 1135 (10th Cir. 2009) 2009 U.S.
App. LEXIS 17817 ...................... 27
Mt. Clemens v. EPA, 917 F.2d 908 (6th Cir. 1990)
.....................................................................
27
Oliveri v. Thompson, 803 F.2d 1265 (2d Cir. 1986)
.......................................................................
24
Patel v. U.S. Citizenship & Immigration Servs., 732 F.3d 633
(6th Cir. 2013)
.........................................................................
7
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Red Carpet Studios Div. of Source Advantage, Ltd. v. Sater, 465
F.3d 642 (6th Cir. 2006)
...............................................................
passim
Reitz v. City of Mt. Juliet, 680 F. Supp.2d 888 (M.D. Tenn.
2010) ..................................................... 13
Smith v. Detroit Fed’n of Teachers, Local 231 etc., 829 F.2d
1370 (6th Cir. 1987)
.....................................................................
26
Stromback v. New Line Cinema, 384 F.3d 283 (6th Cir. 2004)
......................................................................
27
Wedgewood Ltd. P’ship I v. Twp. of Liberty, 610 F.3d 340 (6th
Cir. 2010)
...................................................................
6, 23
Willy v. Coastal Corp., 503 U.S. 131
(1992).......................................................................................
1
Statutes and Rules
28 U.S.C. § 1332
...............................................................................................
9
28 U.S.C. § 1927
......................................................................................
passim
FRAP 4
............................................................................................................
5
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Statement in Support of Oral Argument
This is an appeal from the district court’s ruling that
Appellants’ motion for
sanctions is moot. We argue here (1) that this legal conclusion
was incorrect,
and (2) that the unusual clarity of the record before this Court
merits a finding
in the first instance that sanctions are appropriate. The first
issue is
straightforward and this Court, we believe, does not need oral
argument to
resolve it. The second goes to the very foundation of the
federal courts’
authority to administer justice—subject matter jurisdiction—and
to an
attorney’s obligation to safeguard that authority as an officer
of the Court. It is
also novel. This Court has never delineated the contours of an
attorney’s duty
to confirm the court’s subject matter jurisdiction. In fact, no
federal court has
on a record this clear about what an attorney knew, when that
attorney knew
it, and when that attorney ultimately disclosed it. The Court
may find the
importance and rarity of this issue make oral argument
appropriate here.
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Jurisdictional Statement
“A court’s jurisdiction to issue sanctions under 28 U.S.C. §
1927 or pursuant
to a court’s inherent authority is ever present.”1 This is an
appeal from the
district court’s denial of a motion seeking sanctions under
these sources of
authority. Specifically, the Konowitzes brought their motion
against (1)
Titeflex Corporation’s national counsel Carl E. Switzer
individually through
28 U.S.C. § 1927, and (2) Switzer individually and Titeflex
Corporation
through the district court’s inherent authority. The sanctions
sought are
collateral to the merits; therefore, this Court has jurisdiction
over this appeal,
notwithstanding its lack of subject matter jurisdiction
otherwise.
Statement of Issues
1. Sanctions under section 1927 or the court’s inherent
authority are intended
to deter and punish the offending attorney, not compensate the
moving
party. Because a motion for such sanctions raises only the
question of
punishment, can such a motion be considered “a controversy
between the
parties,” such that it could become moot?
1 Red Carpet Studios Div. of Source Advantage, Ltd. v. Sater,
465 F.3d 642, 645 (6th Cir. 2006); Willy v. Coastal Corp., 503 U.S.
131, 138 (1992).
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http://www.law.cornell.edu/uscode/text/28/1927http://www.law.cornell.edu/uscode/text/28/1927http://scholar.google.com/scholar_case?q=%22Thus,+a+court%27s+jurisdiction+to+issue+sanctions+under+28+U.S.C.+%C2%A7+1927%22+or+pursuant+to+a+court%27s+inherent+&hl=en&as_sdt=3,43&case=3746523599304071873&scilh=0http://scholar.google.com/scholar_case?q=%22Thus,+a+court%27s+jurisdiction+to+issue+sanctions+under+28+U.S.C.+%C2%A7+1927%22+or+pursuant+to+a+court%27s+inherent+&hl=en&as_sdt=3,43&case=3746523599304071873&scilh=0http://scholar.google.com/scholar_case?case=10879163773058774633&hl=en&as_sdt=6,43
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2. Opposing counsel knew or should have known that no subject
matter
jurisdiction existed at least nine months before he disclosed
this fact.
During that period, the parties racked up two court hearings, 14
written
orders, nearly 1,000 pages of filings, and a failed mediation
conducted
under false pretenses (that is, with the Konowitzes believing
the case would
continue in federal court and Titeflex knowing that it would
not) as the
case remained parked in the wrong court for more than a year.
Virtually all
of this work has been wasted. Did the Konowitzes’ motion
seeking
sanctions for this waste become moot when the underlying lawsuit
was
dismissed?
3. As an officer of the court, opposing counsel owed an
affirmative duty of
assistance to both the Konowitzes and the district court to
ensure subject
matter jurisdiction existed. After becoming aware that all
parties were
Tennessee citizens, counsel needed only to make a phone call to
confirm
that no subject jurisdiction existed here. Instead, the
Konowitzes and the
district court remained tied up in fierce litigation for more
than one year to
little effect. Was the conscious decision to not make that call
a reckless
disregard of the risk of multiplying the proceedings,
sanctionable under 28
U.S.C. § 1927?
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Statement of the Case
Appellants and Plaintiffs Joseph (“Joe”) and Melody Konowitz
brought this
product liability lawsuit after a fire damaged their Tennessee
home in January
2012, causing about $200,000 in property damages.2 This lawsuit
is one of
many brought against makers of corrugated stainless steel tubing
or CSST.
CSST is a flexible stainless steel tubing used to pipe fuel gas
through homes
and other structures.3 Here the Konowitzes filed suit against
CSST maker
Titeflex Corporation in the Middle District of Tennessee on
January 23,
2013.4 They invoked the district court’s diversity jurisdiction
because they
were citizens of Tennessee when they filed suit and because
Titeflex
represented to the Tennessee Secretary of State that it was a
Connecticut
corporation with its principal place of business in
Massachusetts.
The parties engaged in hard-fought discovery for more than one
year,
generating more than 1,000 pages of filings, and prompting a
series of written
2 Konowitz Complaint, RE 1, PageID #1–7. 3 See e.g. RE 20-2,
PageID #63-101 (trial and intermediate opinions from
Tincher v. Omega Flex, Inc.); RE 65, PageID #1018 (CSST claims
against Titeflex through 2006); RE 77-6, PageID #1269-70 (PACER
record of claims against Titeflex) and
http://www.pddocs.com/csst/default.aspx.
4 Konowitz Complaint, RE 1, PageID #3–7.
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orders from the district court. In March 2014, Titeflex
announced that its
principal place of business was Tennessee, not Massachusetts.
The following
week Titeflex moved to dismiss for lack of subject matter
jurisdiction.5 After
some jurisdictional discovery, the Konowitzes conceded that
subject matter
jurisdiction had never existed and that dismissal without
prejudice was
warranted.6 The following week, the Konowitzes moved for
sanctions for the
delay in bringing the jurisdictional defect to light.7
On September 18, 2014, District Judge Kevin Sharp granted
Titeflex’s
unopposed motion to dismiss.8 In that same order, Judge Sharp
dismissed the
Konowitzes’ motion for sanctions as moot.9 Within the week, the
Konowitzes
moved the district court to correct its final judgment to be one
without
prejudice.10 The district court granted that unopposed motion on
November
5 Defendant’s Motion to Dismiss, RE 69, PageID #1176 and
Memorandum in Support, RE 70, PageID #1179.
6 Response to Defendant’s Motion to Dismiss, RE 76, PageID
#1206. 7 Konowitz Motion for Sanctions, RE 77, PageID #1208–1272. 8
Order granting motion to dismiss, RE 84, PageID #1299–1301. 9 Id.
at 3, RE 84, PageID #1301. 10 Konowitz Motion to Reconsider/Alter
or Amend Judgment, RE 86,
PageID #1303–04.
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5, 2014.11 The Konowitzes filed their notice of appeal to this
Court 19 days
later.12
Summary of Argument
1. After granting Titeflex’s unopposed motion to dismiss for
lack of subject
matter jurisdiction, the district court ruled, in one conclusory
sentence,
that our motion for sanctions for the withholding of that defect
was moot.
“The test for mootness is whether the relief sought would, if
granted,
make a difference to the legal interest of the parties.”13 The
district court’s
ruling was incorrect for two reasons. First, sanctions under
section 1927
and a court’s inherent authority are punitive, not
compensatory.
Punishment is not a controversy between the parties; therefore
as a matter
of law, a motion for sanctions that constitute punishment cannot
become
moot. Second, even if such sanctions are viewed as affecting the
legal rights
of the complaining party, the district court erred in concluding
that its
dismissal of the underlying lawsuit rendered the Konowitzes’
motion
moot. The Konowitzes endured a year of intense federal court
litigation
11 Order, RE 87, PageID #1305. 12 Konowitz Notice of Appeal, RE
88, PageID #1306–07; FRAP 4(a)(1)(A)
and 4(a)(4)(A)(iv). 13 Wedgewood Ltd. P’ship I v. Twp. of
Liberty, 610 F.3d 340, 348 (6th Cir. 2010).
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that is now void. Dismissing that litigation did not affect,
much less
eliminate, this harm; nor did it preclude the district court
from addressing
it. So, even if the Konowitzes’ motion legally could have become
moot, it
did not become moot here.
2. As one of your colleagues has written, “The ultimate decision
is available
to us because the facts in this case are undisputed, leaving
only questions of
law that we can review as easily as can the district court,
thereby avoiding
the burden of an unnecessary remand.”14 Such is the case here
with
respect to the Konowitzes’ motion against Switzer through
section 1927. A
sanction in the first instance is warranted because counsel’s
own account
of what occurred here compels sanctions under section 1927.
Argument
1. The underlying lawsuit: Appellants Joe and Melody Konowitz
bring this product liability lawsuit against Titeflex Corporation
after a fire damages their Tennessee home in 2012.
The Fire. The fire originated in the basement of the Konowitz
home where
CSST had been run on the underside of the floor joists. CSST is
a flexible
stainless steel pipe with a yellow coating used to transmit fuel
gas in homes
14 Patel v. U.S. Citizenship & Immigration Servs., 732 F.3d
633, 639 (6th Cir. 2013) (Daughtrey, J., dissenting).
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and other structures. It is typically routed through and
alongside floor joists,
inside interior wall cavities, and on top of attic ceiling
joists. This is the run of
Gastite in the Konowitz basement where the fire started:
The Product. CSST was developed as an alternative to what has
been used
to pipe fuel gas through homes for more than 100 years: black
iron pipe.
CSST’s advantage is its flexibility, which makes it easier to
route through
infrastructure. This flexibility is a consequence of its walls
being only about
1/10th as thick as iron pipe. This thinness has a high cost.
Electrical energy
from lightning can energize metal piping within a structure to
the point that
the energy “jumps” to or from it in the form of an arc. The arc,
also known as
flashover, burns through CSST’s super-thin wall and ignites the
escaping gas.
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This creates a blowtorch.15 As even Titeflex now acknowledges
publicly, a
direct lightning strike is not required for this to occur: the
conditions for
lightning need only be close by.16 Just such an event caused the
hole in the
Konowitz Gastite shown here:
15 As noted here by an Assistant Fire Marshal after a recent
Gastite fire: “Generally it doesn’t spread this fast. What we’re
seeing now is that sometimes there’s some issues with corrugated
stainless steel tubing that gets breached during the lightning
strike and then you have a natural gas-fed fire.”
16 Gastite’s current installation guide states that “Even a
nearby lightning strike that does not strike a structure directly
can cause systems in the structure to become electrically
energized. Differences in potential between systems may cause the
charge to arc between systems. Such arcing can cause damage to
CSST, including holes.”
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The Lawsuit. The Konowitzes filed suit in the Middle District of
Tennessee
in January 2013. They invoked the court’s diversity jurisdiction
through 28
U.S.C. § 1332(a) because at the time they filed they were
citizens of Tennessee
and because Titeflex was representing to the Tennessee Secretary
of State that
it was a Connecticut corporation with its principal place of
business in
Massachusetts.17 (Diversity jurisdiction is determined at the
time the lawsuit
is filed.18) Titeflex confirmed these representations in its
Answer the following
month and again in the parties’ March and June 2013 case
management
orders.19 The Konowitzes brought claims through the Tennessee
Products
Liability Act and for common law negligence.20
17 Konowitz Complaint, RE 1, PageID #1; Konowitz Motion for
Sanctions, RE 77-2, PageID #1231 and Declaration at ¶¶2–3, RE 77-7,
PageID #1271.
18 Curry v. U.S. Bulk Transp., Inc., 462 F.3d 536, 540 (6th Cir.
2006). See also E.R. Squibb & Sons, Inc. v. Lloyd’s & Co.,
241 F.3d 154, 163–64 (2d Cir. 2001) (explaining that jurisdiction
is assessed “as of the moment the complaint was filed” and that
“federal jurisdiction is not defeated if one party, subsequent to
the filing of a complaint, becomes a citizen of the same state as
his opponent.”)
19 Titeflex Answer at ¶2, RE 7, PageID #20; Case Management
Order at ¶A, RE 11, PageID #33; Case Management Order at ¶A, RE 22,
PageID #217.
20 Konowitz Complaint, RE 1, PageID #5–6.
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The parties proceeded into written discovery and never emerged
from it.
Over the next ten months, the parties completed two court
hearings (including
one lasting four hours from which no written order emerged);
nearly two
dozen motions, responses, and replies; 14 written orders; and
more than 1,100
pages of filings. Nevertheless, by November 2013, much
remained
unresolved.21 At that point, the parties paused to mediate. That
February 11,
2014 mediation was unsuccessful.22
1.1 Fourteen months into the lawsuit, Titeflex’s counsel informs
the Konowitzes that no subject matter jurisdiction exists.
Three weeks following that failed mediation, national counsel
for Titeflex
announced that “We evaluated our client’s business activities
recently and
determined that there is no way to avoid the fact that it is now
a resident of
Tennessee. As such, we have a lack of diversity and, therefore,
federal
21 This included the Konowitzes’: (1) Second Motion to Compel,
RE 58; Supplement to its initial motion to compel, which sought
costs for Titeflex’s failure to produce a list of prior clams that
it had produced in other lawsuits and for misleading the Magistrate
about this fact, RE 65; and (3) Motion for Spoliation Sanctions, RE
66.
22 Status and Statement of Outstanding Discovery, RE 67, PageID
#1166.
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jurisdiction.”23 This was Titeflex’s first notice that subject
matter jurisdiction
did not exist.24 The following week, Titeflex filed a formal
motion to dismiss
on this ground.25 It based its motion on an affidavit from its
Vice President and
General Manager, Dave Oehlers.26 In response to a
jurisdictional
interrogatory, Titeflex explained that:
In May of 2010, Dave Oehlers became General Manager and
Vice-President for the Construction Products Division of Flex-Tek
Group, of which Titeflex is a member company. Mr. Oehlers’ office
is located in Cookeville, Tennessee. Once Mr. Oehlers became
General Manager, Titeflex became headquartered in and established a
principal place of business in Tennessee.27
Oehlers later testified that he has worked from Tennessee for at
least the last
ten years.28 And according to him, Titeflex has been
headquartered in
23 March 3, 2014 email from counsel that is part of Exhibit 2 to
the Konowitz Motion for Sanctions “The Evolution of Titeflex’s
Representations,” RE 77-2, PageID #1237.
24 Declaration at ¶3, Exhibit 7 to the Konowitz Motion for
Sanctions, RE 77-7, PageID #1271.
25 Titeflex Motion to Dismiss, RE 69, PageID #1176 and
Memorandum in Support, RE 70, PageID #1179.
26 Titeflex Motion to Dismiss, RE 71, PageID #1186–87. 27
Titeflex answer to jurisdictional Interrogatory 1, Exhibit 4 to the
Konowitz
Motion for Sanctions, RE 77-4, PageID #1245. 28 Oehlers
deposition at 10/12–18 which is Exhibit 5 to the Konowitz
Motion
for Sanctions, RE 77-5, PageID #1261.
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Tennessee since 2007.29 That is nearly six years before the
Konowitzes filed
suit here.
In its motion to dismiss Titeflex stated that “In February 2014,
Titeflex’s
national and local counsel confirmed that Titeflex’s principal
place of business
had relocated to Tennessee.”30 We sought to verify this
representation with
Titeflex directly, but Titeflex (via counsel) objected to
answering written
discovery about the timing of this discovery.31 Counsel also
directed Oehlers
not to answer the deposition question about it.32 Both
objections were
questionable given what Titeflex had placed at issue.33
Regardless, Titeflex
29 Id. at 20/6–13; RE 77-5, PageID #1263. 30 Memorandum in
Support of Titeflex Motion to Dismiss at 3, RE 70,
PageID #1181. 31 Titeflex answers to jurisdictional
interrogatories 2–4, RE 77-4, PageID
1245–47. 32 Oehlers deposition at 26/25–27/10, RE 77-5, PageID
#1265. 33 See Reitz v. City of Mt. Juliet, 680 F. Supp.2d 888,
892-93 (M.D. Tenn.
2010) (“The Sixth Circuit has recognized that, when a party uses
the content of privileged communications offensively, it is
troublesome for the party to subsequently claim privilege as a
shield to prevent either testing of the claim or, if some
privileged communications have been revealed, amplification or
impeachment of the material. Accordingly, the privilege may be
implicitly waived when [a party] asserts a claim that in fairness
requires examination of protected communications.”).
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itself has never corroborated any aspect of its counsel’s
account of when and
how this jurisdictional discovery occurred.
1.2 The story changes: Three weeks later, counsel’s account of
the jurisdictional discovery is revealed to be false.
Not long after receiving Titeflex’s motion to dismiss, we
discovered that
Titeflex had filed an Answer in another lawsuit nine months
earlier admitting
that it was no longer headquartered in Massachusetts.34 We
confronted
Oehlers with this fact during his April 22, 2014 deposition:
Q. Do you know why Titeflex admitted that its principal place of
business was at 603 Hendee Street in Springfield, Massachusetts, in
February of 2013, and then four months later denied that it was at
that location?
A. I have no idea.
Q. Do you have any insight at all into that?
A. I have no idea.35
Soon after this exchange an affidavit from counsel arrived with
a revised
version of events.36 It directly contradicted his earlier
representations to the
34 Titeflex June 14, 2013 Answer at 7, ¶2 in Country Mutual Ins.
Company v. Titeflex Corporation et al. 2:13-cv-00108-RWS in the
Northern District of Georgia at Exhibit 2 to the Konowitz Motion
for Sanctions, RE 77-2, PageID #1235–36.
35 Oehlers deposition at 21/8–18, RE 77-5, PageID #1264. 36
Switzer affidavit, RE 73-1, PageID #1199–1202.
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district court and the Konowitzes that he had not discovered
Titeflex was
headquartered in Tennessee until February 2014. Instead, he
revealed that he
had confirmed this fact definitively nearly one year earlier: In
May 2013, he
“began to cause Titeflex’s pleadings to reflect Tennessee as the
jurisdiction of
its principal place of business.”37 Precisely how long before
May 2013 counsel
determined that Titeflex was headquartered in Tennessee remains
unknown.
1.3 Despite confirming that both parties are Tennessee citizens
just a few months after this lawsuit is filed, counsel conducts no
jurisdictional inquiry.
Yet this alleged discovery did not prompt an inquiry into
whether Titeflex
was a Tennessee citizen just a few months earlier when the
Konowitzes had
filed suit (and therefore whether jurisdiction existed). This
confirmation,
according to Titeflex, would have required nothing more than a
phone call to
verify Oehlers’s office location.38 And had counsel typed “Dave
Oehlers
Titeflex” into Google, the first page of the search results
would have shown
the 2010 press release announcing Oehlers’s promotion to the
position that
37 Id. at ¶10, PageID #1201. 38 See Titeflex answer to
jurisdictional Interrogatory 1 (stating that Titeflex
became headquartered in Tennessee when Oehlers assumed the job
of General Manager in May 2010), RE 77-4, PageID #1245; Switzer
affidavit at ¶¶11-12, RE 73-1, PageID #1201.
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counsel claims shifted Titeflex’s headquarters to Tennessee.39
That press
release states that Oehlers lives in the Greater Nashville,
Tennessee area.40
1.4 Six months later, counsel confirms that Titeflex was a
Tennessee citizen when the lawsuit was filed, yet allows the
lawsuit to continue for months.
Instead, counsel claimed to have relied on an “understanding
that Oehlers
had only recently established his office in Tennessee.”41
“Recently” here
must have meant that 3-month (at most) period between when
counsel caused
Titeflex to admit in its February 13, 2013 Answer that it was
headquartered in
Massachusetts and “in or about May 2013” and when counsel caused
Titeflex
pleadings henceforth “to reflect Tennessee as the jurisdiction
as its principal
place of business.”42 This explanation requires one to believe
that counsel
represented Titeflex nationally 2011–2013 in connection with
dozens of
lawsuits without knowing the whereabouts of the individual who
“has
39 Konowitz Motion for Sanctions, RE 77-3, PageID #1241–43. 40
See
http://www.marketwired.com/press-release/Smiths-Group-Promotes-
Oehlers-to-VP-GM-of-Construction-Group-Division-1358538.htm. 41
Switzer affidavit at ¶9, RE 73-1, PageID #1201. 42 Titeflex Answer
at ¶2, RE 7, PageID 20; Switzer affidavit at ¶¶8–9, RE 73-
1, PageID #1200–01. It may have been shorter still: see the
March 23, 2013 Initial Case Management Order at ¶A (asserting
Titeflex is headquartered in Massachusetts), RE 11, PageID #33.
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directed, controlled, and coordinated” “all of Titeflex’s
activities, including,
but not limited to, overseeing all engineering, research and
development,
manufacturing, operations, distribution, marketing and sales
functions of
Titeflex.”43
Anyway, counsel represented to the district court that he
discovered that
Oehlers had been based in Tennessee before the Konowitzes filed
suit while
working extensively with Oehlers in the “the last two months of
2013.” We
later learned that in November 2013, Oehlers was deposed in the
wrongful
death lawsuit Estate of Brennan Teel & State Farm Lloyds v.
Titeflex
Corporation.44 (Titeflex announced its intention to quash the
subpoena to
obtain this transcript and then stay this effort after raising
the lack of subject
matter jurisdiction.45) That deposition covered Oehlers residing
in Tennessee
since at least 2010.46 So, when counsel claimed that he learned
Oehlers’ office
location “in the last two months of 2013,” he really meant
November 2013.
43 Switzer affidavit at ¶2, RE 73-1, PageID #1199; Titeflex
answer to jurisdictional interrogatory 6, RE 77-4, PageID
#1248.
44 No. 2012-04105 in the 72 District Court for Lubbock County,
Texas, Declaration at ¶7, RE 77-7, PageID #1272.
45 Id. at ¶6, RE 77-7, PageID #1271. 46 Id. at ¶7, RE 77-7,
PageID #1272.
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Despite having all the pieces by then, counsel claimed that he
remained
unaware that the district court lacked jurisdiction. Meanwhile,
between
December 1, 2013 and sometime before the parties’ February 2014
mediation
(when counsel admitted to making this connection), the parties
filed several
now-void motions, issued and then deferred now-void written
discovery to
third parties, and arranged to mediate the case.47
1.5 Three months after that confirmation, counsel recognizes
that the court lacks jurisdiction before a court-ordered mediation,
but withholds this fact until three weeks after that mediation.
Counsel claims that preparing for this mediation—an event with
zero
jurisdictional significance—prompted him to affirmatively
evaluate the
court’s subject matter jurisdiction for the first time:
In preparing for the February 2014 mediation in this action I
conducted an extensive review of the file my office maintains in
connection with this action. At that time, I reconciled the
information I had recently learned regarding the company’s
Tennessee operations—specifically the location of Mr. Oehlers’
office—and concluded that the company’s [principal] place of
business at the time Plaintiffs’ complaint was filed was actually
Tennessee, not
47 RE 56, 57, 58, 60–61, 63, 65–66; RE 62, 68; Declaration at
¶6, RE 77-7, PageID #1271.
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Massachusetts. I immediately notified counsel for Plaintiffs and
this Court in an effort to satisfy my duty of candor to each.48
That last sentence is false. Counsel did not reveal this to the
Konowitzes until
three weeks after the mediation.49 Counsel first revealed it to
the district court
the week after that in Titeflex’s March 11, 2014 motion to
dismiss. This
ensured a mediation with the Konowitzes believing that this
expert-driven
(and relatively modest ~$200K property damage) case would
continue in
federal court, with its concomitant demanding and more expensive
expert
disclosure requirements.50
Following that failed mediation, Titeflex’s responses to the
Konowitzes’
(1) motion for spoliation sanctions, and (2) motion for costs
for alleged
misrepresentations Titeflex made to the Magistrate in connection
with
48 Switzer affidavit at ¶13–14 (emphasis added), RE 73-1 at
PageID 1201–02. 49 March 3, 2014 email from counsel that is part of
Exhibit 2 to the Konowitz
Motion for Sanctions, RE 77-2, PageID #1237; Declaration at ¶3,
RE 77-7, PageID #1271.
50 Declaration at ¶5, RE 77-7, PageID #1271. See also BEM I,
L.L.C. v. Anthropologie, Inc., 301 F.3d 548, 551–52 (7th Cir. 2002)
(explaining that a defendant who holds a challenge to subject
matter jurisdiction in reserve because it hopes to obtain an
advantage engages in misconduct for which it can be
disciplined).
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producing a record of the prior claims against it were coming
due.51 The
jurisdictional issue emerged just in time to spare Titeflex
answering for both.52
1.6 The fallout: more than one year of intense federal court
litigation has been wasted.
Titeflex’s misrepresentations to the Tennessee Secretary of
State about the
location of its principal place of business induced the
Konowitzes to file suit in
the wrong court.53 Unlike state court, discovery was delayed
until the
completion of a Rule 16 scheduling conference. That conference,
the proposed
scheduling order that emerged from it, and the June 3, 2013
hearing
conducted by the Court to discuss it, will now be essentially
repeated in state
court.54
The Konowitz 30-page motion to compel, the efforts to resolve
the issues
raised in that motion informally, the Magistrate’s initial order
on that motion,
51 See Konowitz Motion for Spoliation Sanctions, RE 66 PageID
#1019-1165; Supplement to the Konowitz Response to Defendant’s
Notice of Filing, RE 65, PageID #1008-1018.
52 See Konowitz Reply to Titeflex Response to Plaintiffs’ Motion
for Sanctions at 2–3, RE 82, PageID #1294–95. See also the
Titeflex-prepared joint motion to stay these motions at RE71,
PageID #1190–93.
53 Declaration at ¶2, RE 77-7, PageID #1271. 54 See RE 11, June
3, 2013 minute entry; RE 22.
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and the Magistrate’s September 12, 2013 four-hour hearing on
that motion
(from which no written order has emerged), will now be
re-litigated before a
state court judge who will start over.55 Our second and
supplemental motions
to compel regarding the scope of the Magistrate’s rulings at
that September
hearing [RE 58 & 65] are nullities. As are the motions to
file documents under
seal and to de-designate documents Titeflex labeled confidential
under the
protective order prepared by the parties [RE 26, 45, 46, 63].
Our motion for
spoliation sanctions [RE 66] and non-party subpoenas [RE 62
& 68], delayed
for months due to the mediation, will be now be reconstituted
from state law
(if they can be).56 The district court’s orders at RE 16, 18,
23, 24, 27, 29, 34,
43, 47, 59, 79, and 83 managed a lawsuit that effectively never
existed. All of
this is to say nothing of the hours spent investigating the
jurisdictional
discovery, ferreting out counsel’s original misrepresentations
about that
discovery, and bringing it all to the district court’s
attention.
55 See RE 33, 28, 20, 36, and the September 13, 2013 minute
entry. 56 Declaration at ¶6, RE 77-7, PageID #1271.
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1.7 The Konowitzes concede that no jurisdiction exists and move
for sanctions for this waste; the district court finds the motion
moot.
After conceding that no jurisdiction existed, the Konowitzes
moved for
sanctions for having been subjected to this waste and delay.
Specifically, the
Konowitzes sought sanctions against (1) Titeflex Corporation’s
national
counsel Carl E. Switzer individually through 28 U.S.C. § 1927,
and (2) Switzer
individually and Titeflex Corporation through the district
court’s inherent
authority.57
Two months after the parties completed briefing the motion, the
district
court issued its rulings on the motion and on Titeflex’s
by-then-unopposed
motion to dismiss.58 In a three-page order, after acknowledging
that it lacked
subject matter jurisdiction, the district court allotted one
sentence to the
Konowitzes’ motion and the 35 pages of briefing the parties had
devoted to it:
“Furthermore, Plaintiffs’ Motion for Sanctions (Docket Entry 77)
is denied as
moot.”59 This appeal followed.
57 Konowitz Motion for Sanctions, RE 77, PageID #1210–1272. 58
See Titeflex Corporation’s Response to the Konowitz Motion for
Sanctions, RE 80, PageID #1276–1286; Konowitz Reply, RE 82,
PageID #1293–1295.
59 Order at 3, RE 84, PageID #1301.
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2. The district court erred in finding the Konowitz motion for
sanctions moot.
2.1 Mootness is a legal question that this Court reviews de
novo.
A federal court has no authority to render a decision upon moot
questions
or to declare rules of law that cannot affect the matter at
issue.60 Therefore,
the question of whether a particular controversy is moot is
jurisdictional.61
This Court reviews jurisdictional questions de novo.62
“The test for mootness is whether the relief sought would, if
granted,
make a difference to the legal interest of the parties.”63
Stated differently, “A
court determines whether a case is moot by examining whether an
actual
controversy between the parties exists in light of
intervening
circumstances.”64 The “heavy burden of demonstrating mootness”
lies with
the party claiming that the case is moot.65 Here, not only did
Titeflex and its
60 Ford v. Wilder, 469 F.3d 500, 504 (6th Cir. 2006). 61 Demis
v. Sniezek, 558 F.3d 508, 512 (6th Cir. 2009). 62 Id. See also
Cleveland Branch, NAACP v. City of Parma, 263 F.3d 513, 530
(6th Cir. 2001) (“We review de novo a district court’s decision
regarding mootness.”).
63 Wedgewood Ltd. P’ship I v. Twp. of Liberty, 610 F.3d at 348.
64 B-Line, LLC v. Wingerter, 594 F.3d 931, 936 (6th Cir. 2010). 65
Cleveland Branch, 263 F.3d at 531 (6th Cir. 2001).
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counsel not meet this heavy burden in the district court, they
never even
attempted to do so. Neither argued that the Konowitzes’ motion
was moot.66
2.2 Sanctions through the court’s inherent authority or 28 U.S.C
§ 1927 are not controversies between the parties; therefore, a
motion seeking either cannot become moot.
Sanctions under section 1927 or the court’s inherent authority
are intended
to deter and punish the offending attorney, not compensate the
moving
party.67 So once a motion for such sanctions is sought, what has
been raised
becomes an issue between the court and the non-moving party—that
is,
whether the non-moving party should be punished under the
applicable
standard. Because this question is not an “actual controversy
between the
parties,” it cannot cease to be “an actual controversy between
the parties
because of some intervening event,” that is, become moot. Where
sanctions
seek punishment, the complained-of conduct must be measured
against the
66 See Titeflex Response to the Konowitz Motion for Sanctions,
RE 80. 67 Red Carpet Studios, 465 F.3d at 647 (explaining that
sanctions under section
1927 or through a court’s inherent authority are intended to
deter and punish the offending party not compensate the moving
party). See also Oliveri v. Thompson, 803 F.2d 1265, 1273 (2d Cir.
1986) (“When congress amended § 1927 in 1980 to include attorneys’
fees among the category of expenses that a court might require an
attorney to satisfy personally, it made clear that the purpose of
the statute was ‘to deter unnecessary delays in litigation.’”
(citing R. Conf. Rep. No. 1234, 96th Cong., 2d Sess. 8, reprinted
in 1980 U.S. Code Cong. & Ad. News, 2716, 2782)).
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standards for imposing those sanctions. The district court’s
failure to
recognize this was a legal error.
2.3 Even if the Konowitzes’ motion for sanctions is considered a
controversy between the parties, the motion is not moot.
Even if sanctions through section 1927 or the court’s inherent
authority are
viewed as something that affects the legal rights of the
complaining party, the
district court erred in concluding that the Konowitzes’ motion
is moot. The
Konowitzes sought sanctions for being subjected to nearly a year
of wasted
federal court litigation. Dismissing the litigation did not
affect, much less
eliminate, this harm; nor did it preclude the district court
from addressing it.
There remains here a live controversy, a demonstrable wrong, and
the capacity
to address both. Accordingly, this Court should reverse the
district court’s
finding that the Konowitzes’ motion for sanctions against
Titeflex and its
counsel is moot and remand for consideration that motion’s
merits.
3. Counsel’s admitted version of events shows a reckless
disregard of the risk of multiplying these proceedings; therefore,
a sanction under section 1927 in the first instance is
appropriate.
Section 1927 states: “[a]ny attorney or other person admitted to
conduct cases
in any court of the United States … who so multiplies the
proceedings in any
case unreasonably and vexatiously may be required by the court
to satisfy
personally the excess costs, expenses, and attorneys’ fees
reasonably incurred
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because of such conduct.” Section 1927 sanctions are warranted
when an
attorney objectively “falls short of the obligations owed by a
member of the
bar to the court and which, as a result, causes additional
expense to the
opposing party.”68 At times, this court has held that Section
1927 sanctions
require less than subjective bad faith or recklessness.69 At
others, it has
appeared to require recklessness; that is, that the attorney
“knowingly
disregards the risk that his actions will needlessly multiply
proceedings.”70 It
matters not here, as counsel vexatiously multiplied the
proceedings under
either measure.
68 Red Carpet Studios, 465 F.3d at 646. 69 See Smith v. Detroit
Fed’n of Teachers, Local 231 etc., 829 F.2d 1370, 1379
(6th Cir. 1987) (explaining that the question of whether an
attorney multiplied the proceedings unreasonably and vexatiously
does not require a finding of recklessness, subjective bad faith,
or conscious impropriety) and Garner v. Cuyahoga Cnty. Juvenile
Court, 554 F.3d 624, 645 (6th Cir. 2009) (“Bad faith is not
required to support a sanction under § 1927”).
70 Red Carpet Studios, 465 F.3d at 646. See also Garner v.
Cuyahoga Cnty., 554 F.3d at 645 (“There is tension within this
court’s jurisprudence as to the proper standard to apply in
determining whether sanctions are warranted under § 1927”.)
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3.1 This Court may reach whether sanctions under section 1927
are warranted in the first instance here because the parties argued
it below and because the record is clear and complete.
“An appellate court has the power to decide cases on appeal if
the facts in
the record adequately support the proper result or if the record
as a whole
presents no genuine issue as to any material fact.”71 In such
cases a remand is
unnecessary.72 The record here is unusually complete and
detailed regarding
(1) the emergence of the jurisdictional defect, and (2)
counsel’s explanations
about that. The parties thoroughly briefed the motion to
sanction counsel
through section 1927 in the district court. This Court need only
apply the law
to this well-developed, well-argued record. Doing so would spare
the parties
the expense and delay of a remand on this issue. It would also
clarify for
71 Stromback v. New Line Cinema, 384 F.3d 283, 294–95 (6th Cir.
2004) (citing Chase Manhattan Bank, N.A. v. Am. Nat’l Bank &
Trust Co., 93 F.3d 1064, 1072 (2d Cir. 1996)).
72 Id. See also Manzanares v. Higdon, 575 F.3d 1135, 1146 n.10
(10th Cir. 2009) (finding a remand unnecessary where “Although the
district court did not reach this issue, it is a purely legal
determination that was argued below and that we may decide on the
record ... Moreover, the parties briefed this issue, providing us
the benefit of the adversarial process.”) Cf. Mt. Clemens v. EPA,
917 F.2d 908, 916 n. 7 (6th Cir. 1990) (remanding to the district
court and declining to affirm on alternative grounds “[b]ecause
these arguments were not addressed by the district court and
additional fact finding would be required to resolve the issues
raised”).
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attorneys in the Sixth Circuit how this underreported issue
should be
handled—and that it should not be handled as it was here.
3.2 Federal courts impose a duty on attorneys to affirmatively
confirm subject matter jurisdiction.
Subject matter jurisdiction is unique in three important ways.
First,
because it is a jurisdictional requirement, it cannot be waived.
Therefore, it
can be gamed for tactical advantage for the duration of a
lawsuit. Second, it is
potentially the most devastating because it can render a lawsuit
void ab initio.
And third, its absence can be difficult for an opposing attorney
to detect,
particularly in a case founded on diversity jurisdiction where
the opposing
party is a non-publicly traded corporation whose “nerve center”
is not
apparent (or misrepresented in public corporate filings, as it
was here).
Courts have accounted for these realities and demanded that
attorneys
treat subject matter jurisdiction with a commensurate high level
of care. This
required care is not merely an obligation to raise the lack of
subject matter
jurisdiction when it becomes unavoidably obvious, but rather is
one of
affirmative assistance to ensure that jurisdiction is
ever-present. Furthermore,
this duty is owed not just to the opposing party, but to the
court itself:
As officers of the court, lawyers who practice in federal court
have an obligation to assist the judges to keep within the
boundaries fixed by the Constitution and Congress; it is precisely
to impose a duty of assistance on the bar that lawyers are called
‘officers of the court.’
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Lawyers also owe it to the judge and the opposing lawyer to
avoid subjecting them to the burdens of a lawsuit that they know or
think may eventually be set at naught, and have to be started over
again in another court, because of a jurisdictional problem of
which the judge and the opposing lawyer may be unaware.73
This lawsuit has been set at naught and started over again in
another court
because of a jurisdictional problem of which the judge and the
opposing lawyer
were unaware.
3.3 Counsel recklessly disregarded the risk of multiplying these
proceedings by conducting no jurisdictional inquiry after
confirming that all parties were Tennessee citizens.
Counsel has represented Titeflex nationally since 2011; his firm
since
2008.74 Despite having been sued more than 20 times in federal
court alone
since 2011 (nearly all involving allegations similar to those
here—structure
fires caused by Gastite CSST), this lawsuit is the first claim
ever filed against
Titeflex in Tennessee federal court.75 Therefore, it presented a
fresh
obligation: the requirement to verify that Titeflex could be
sued in federal
court through diversity jurisdiction by a Tennessee plaintiff.
Lawyers have a
73 BEM I, L.L.C. v. Anthropologie, 301 F.3d at 551–52. 74
Switzer affidavit at ¶2, RE 73-1, PageID #1199. 75 See the list of
the Titeflex federal court cases at RE 77-6, PageID #1247.
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professional obligation to analyze subject-matter jurisdiction
before judges
need to question the allegations.76
Titeflex itself made clear that meeting this duty of assistance
would have
been easy. In its verified interrogatory answers, Titeflex
stated “All such
information [regarding Titeflex’s true principal place of
business] has been
readily discoverable to Plaintiffs since the filing of this
action.”77 If everything
about Titeflex’s principal place of business has been “readily
discoverable” to
the Konowitzes—who had no reason to doubt Titeflex’s multiple
assurances
to them and to the district court that jurisdiction was
proper—then it would
have been readily accessible to counsel. Even so, counsel took
not one
affirmative step to confirm the court’s subject matter
jurisdiction when this
lawsuit was filed. Not one—notwithstanding knowledge that
Titeflex had
years earlier moved all of its manufacturing operations to
Tennessee and
changed chief executives.78 This combination was notice that
Titeflex could be
a Tennessee citizen when this lawsuit was filed and that no
subject matter
jurisdiction existed.
76 Heinen v. Northrop Grumman Corp., 671 F.3d 669, 670 (7th Cir.
2012). 77 Titeflex’s answer to jurisdictional Interrogatory 1, RE
77-4, PageID #1245. 78 Switzer affidavit at ¶¶3-4, 6; RE 73-1,
PageID #1199–1200. Oehlers
deposition at 20/6–20/13 (confirming 2007 relocation), RE 77-5,
PageID 1263.
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If it hadn’t already, this neglect fell short of the obligations
owed by a
member of the bar to the court “in or about May 2013” when
counsel
confirmed that Titeflex was, like the Konowitzes, a Tennessee
citizen. At this
point, counsel admits to believing:
• That the Titeflex relocation to Tennessee occurred during what
was, at most, a 3-month window (between when counsel caused
Titeflex to admit in its February 13, 2013 Answer that it was
headquartered in Massachusetts and “in or about May 2013” when
counsel caused Titeflex pleadings henceforth “to reflect Tennessee
as the jurisdiction as its principal place of business”).79
• That confirming the actual timing of this jurisdictional move
required him only to verify when Oehlers began working as
Titeflex’s General Manager in Tennessee.
Therefore, the most generous view of counsel’s current account
yields the
following: Counsel considered the risk that the 1,000-mile
relocation of his
multi-million dollar corporate client occurred outside a
three-month window
at a potential cost of invalidating this entire lawsuit to be
unworthy of a single
phone call to ask one executive “How long have you been there?”
No remand
is necessary to recognize that this is a reckless disregard of
the risk of
multiplying the proceedings. Nor is a remand needed to see that
this risk
materialized: after June 1, 2013, the parties racked up two
court hearings, 14
79 Switzer affidavit at ¶¶8–9, RE 73-1, PageID #1200–01. Again,
it may have been shorter: see the March 23, 2013 Initial Case
Management Order at ¶A (stating Titeflex was headquartered in
Massachusetts), RE 11, PageID #33.
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orders, nearly 1,000 pages of filings, and a mediation conducted
under false
pretenses as the case remained parked in the wrong court through
November
2014.
3.4 Counsel recklessly disregarded the risk of multiplying these
proceedings by allowing the lawsuit to continue for months after
confirming that all parties were Tennessee citizens when this
lawsuit was filed.
If the risk counsel took “in or about May 2013” was not
definitively
sanctionable through section 1927, then it became so in November
2013 when
counsel claims to have learned that Oehlers had been based in
Tennessee years
before this lawsuit was filed. Prior to that, he had confirmed
that Titeflex was
a Tennessee citizen. His stated basis for suspecting
jurisdiction might still
exist here was the misplaced bet that Oehlers had moved to
Tennessee within
(at most) a three-month sliver in 2013. Now he knew that was
wrong. Yet he
allowed the lawsuit to continue for four more months, during
which time the
Konowitzes filed several now-void motions, issued and then
deferred now-void
written discovery to third parties, and mediated the case under
false
pretenses.80 This Court need only apply the law to these
admitted facts to find
80 RE 56, 57, 58, 60–61, 63, 65–66; RE 62, 68; Declaration at
¶6, RE 77-7, PageID #1271.
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that counsel breached “the obligations owed by a member of the
bar to the
court [which caused] additional expense to the opposing
party.”81
Conclusion
We are by no means conceding that counsel’s current explanation
is what
actually occurred here. Indeed, counsel himself has provided a
counter
explanation for why this all played out as it did. In his
initial disclosure in
March 2014, counsel wrote, “We evaluated our client’s business
activities
recently and determined that there is no way to avoid the fact
that it is now a
resident of Tennessee. As such, we have a lack of diversity and,
therefore,
federal jurisdiction.”82 This is an incorrect statement of the
law. Diversity
jurisdiction is determined when the lawsuit is filed. That
counsel believed
diversity jurisdiction was lost when he happened to discover the
parties were
citizens of the same state means that when he recognized “in or
about May
2013” that his client’s citizenship had changed, he also
believed right then
that jurisdiction here had been lost. This misunderstanding
could also explain
why counsel thereafter conducted no jurisdictional inquiry: from
his
understanding, there was nothing more to learn.
81 Red Carpet Studios, 465 F.3d at 646. 82 March 3, 2014 email
from counsel that is part of Exhibit 2 to the Konowitz
Motion for Sanctions, RE 77-2, PageID #1237 (emphasis
added).
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But squaring counsel’s original jurisdictional account with the
current one;
determining why Titeflex filed a case management order stating
its principal
place of business was Massachusetts in June 2013—one month after
counsel
claims to have verified that Titeflex was headquartered in
Tennessee,83 and
ascertaining Titeflex’s involvement in counsel’s varied
jurisdictional accounts
can be remanded to the district court. Our point is simply that
what is now
before this Court violates section 1927. This Court need only
apply the law to
counsel’s explanation of record to make clear that what occurred
here must
never happen again.
Accordingly, Appellants Joseph and Melody Konowitz request that
this
Court:
• Reverse the district court’s order dismissing as moot the
Konowitzes’ motion for sanctions against: (1) Titeflex
Corporation’s national counsel Carl E. Switzer individually through
28 U.S.C. § 1927, and (2) Switzer individually and Titeflex
Corporation through the district court’s inherent authority.
• Render that Switzer be sanctioned through 28 U.S.C. § 1927 for
vexatiously multiplying these proceedings. And,
• Remand to the district court: (1) the Konowitzes’ motion for
sanctions against Titeflex Corporation’s and its national counsel
Carl E. Switzer through the district court’s inherent authority;
and (2) the determination of the appropriate sanction against
Switzer under 28 U.S.C. § 1927.
83 Compare Initial Case Management Order at ¶A, RE 22, PageID
#217 to Switzer affidavit at ¶9, RE 73-1, PageID #1201.
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Thursday, March 05, 2015 Respectfully submitted,
Knoxville, Tennessee Quist, Cone & Fisher, PLLC
By: /s/Michael A. Durr Michael A. Durr [email protected] Jason E.
Fisher [email protected] 800 South Gay Street, Suite 2121
Knoxville, Tennessee 37929 (865) 524-1873 Attorney for
Appellants-Plaintiffs Joseph & Melody Konowitz
Certificate of Compliance
I, Michael A. Durr, hereby certify that (1) this brief complies
with the type-
volume limitation of Fed. R. App. P. 32(a)(7)(B)(i) because it
contains 7,227
words, excluding the parts of the brief exempted by Fed. R. App.
P.
32(a)(7)(B)(iii), and (2) this brief complies with the typeface
requirements of
Fed. R. App. P. 32(a)(5) because it has been prepared in a
proportionally
spaced 14-point Equity font using Microsoft Office Word
2013.
By: /s/Michael A. Durr Michael A. Durr
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mailto:[email protected]:[email protected]
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Certificate of Service
I hereby certify that, on Thursday, March 05, 2015, I
electronically filed the
foregoing with the Clerk of the Court for the United States
Court of Appeals
for the Sixth Circuit by using the CM/ECF system. I certify that
all
participants in the case are registered CM/ECF users and that
service will be
accomplished by the CM/ECF system.
By: /s/Michael A. Durr Michael A. Durr
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Appellants’ Designation of Relevant District Court Documents
RE Description PageID
1 Konowitz Complaint 1–7
7 Titeflex Answer 20–28
11 Proposed Case Management Order 33–36
22 Proposed Case Management Order 217–219
65 Konowitz Supplement to Motion to Compel 1008–1018
66 Konowitz Motion for Spoliation Sanctions 1019–1165
69 Titeflex Motion to Dismiss for Lack of Subject Matter
Jurisdiction
1176–1178
70 Titeflex Memorandum in Support Titeflex Motion to Dismiss for
Lack of Subject Matter Jurisdiction
1179–1189
71 Motion to Stay Sanctions/Non-Party Subpoena 1190–1193
73 Titeflex Notice of Filing by Titeflex (Switzer Affidavit)
1197–1202
76 Konowitz Response to Titeflex Motion to Dismiss for Lack of
Subject Matter Jurisdiction
1206–1207
77 Konowitz Motion for Sanctions 1208–1272
80 Titeflex Opposition to Motion for Sanctions 1276–1287
82 Konowitz Reply in Support of Motion for Sanctions
1293–1296
84 ORDER Granting Motion to Dismiss/Denying Motion for
Sanctions
1299–1301
86 Konowitz (Unopposed) Motion for Reconsideration/Alter or
Amend Judgment
1303–1304
87 ORDER Granting Motion for Reconsideration 1305
88 Konowitz Notice of Appeal 1306–1307
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Pages from .14-6442 Konowitz v Titeflex - Appellants'
Brief.Konowitz - Substitute Sixth Circuit BriefTable of
AuthoritiesStatement in Support of Oral ArgumentJurisdictional
StatementStatement of IssuesStatement of the CaseSummary of
ArgumentArgument1. The underlying lawsuit: Appellants Joe and
Melody Konowitz bring this product liability lawsuit against
Titeflex Corporation after a fire damages their Tennessee home in
2012.1.1 Fourteen months into the lawsuit, Titeflex’s counsel
informs the Konowitzes that no subject matter jurisdiction
exists.1.2 The story changes: Three weeks later, counsel’s account
of the jurisdictional discovery is revealed to be false.1.3 Despite
confirming that both parties are Tennessee citizens just a few
months after this lawsuit is filed, counsel conducts no
jurisdictional inquiry.1.4 Six months later, counsel confirms that
Titeflex was a Tennessee citizen when the lawsuit was filed, yet
allows the lawsuit to continue for months.1.5 Three months after
that confirmation, counsel recognizes that the court lacks
jurisdiction before a court-ordered mediation, but withholds this
fact until three weeks after that mediation.1.6 The fallout: more
than one year of intense federal court litigation has been
wasted.1.7 The Konowitzes concede that no jurisdiction exists and
move for sanctions for this waste; the district court finds the
motion moot.
2. The district court erred in finding the Konowitz motion for
sanctions moot.2.1 Mootness is a legal question that this Court
reviews de novo.2.2 Sanctions through the court’s inherent
authority or 28 U.S.C § 1927 are not controversies between the
parties; therefore, a motion seeking either cannot become moot.2.3
Even if the Konowitzes’ motion for sanctions is considered a
controversy between the parties, the motion is not moot.
3. Counsel’s admitted version of events shows a reckless
disregard of the risk of multiplying these proceedings; therefore,
a sanction under section 1927 in the first instance is
appropriate.3.1 This Court may reach whether sanctions under
section 1927 are warranted in the first instance here because the
parties argued it below and because the record is clear and
complete.3.2 Federal courts impose a duty on attorneys to
affirmatively confirm subject matter jurisdiction.3.3 Counsel
recklessly disregarded the risk of multiplying these proceedings by
conducting no jurisdictional inquiry after confirming that all
parties were Tennessee citizens.3.4 Counsel recklessly disregarded
the risk of multiplying these proceedings by allowing the lawsuit
to continue for months after confirming that all parties were
Tennessee citizens when this lawsuit was
filed.ConclusionCertificate of ComplianceCertificate of Service