PREDATOR INTERNATIONAL, INC., a Colorado corporation, Plaintiff,
GAMO OUTDOOR USA, INC., a Florida corporation, Defendant. JOHN M. COGSWELL, Attorney -- Appellant
APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO. (D.C. No. 1:09-CV-00970-PAB-KMT).
Submitted on the briefs: John M. Cogswell, Cogswell Law Offices, P.C., Buena Vista, Colorado, for Attorney -- Appellant.
Before HARTZ, GORSUCH, and MORITZ, Circuit Judges.
HARTZ, Circuit Judge.
Attorney John Cogswell appeals the imposition of a Rule 11 sanction. Acting on behalf of Predator International, Inc., Cogswell filed a lawsuit in April 2009 in the United States District Court for the District of Colorado against Gamo Outdoor USA, Inc. and Industrias El Gamo, S.A. (collectively, Gamo). The original complaint alleged patent infringement and other claims. When it appeared that Lee Phillips, a coinventor of the patent at issue, was asserting that he still owned half the patent, Cogswell moved to dismiss the infringement claim, explaining that Predator would litigate ownership in state court with the expectation of reviving the patent-infringement claim once it had established its ownership. The state litigation expanded after Gamo purchased Phillips's interest in the patent. Cogswell then moved in federal court to supplement Predator's complaint with a challenge to Gamo's claimed interest in the patent and moved to amend the complaint by reviving the patent-infringement claim. The district court denied the motion.
Eventually the district court imposed a Rule 11 sanction on Cogswell for filing the motion to supplement and amend Predator's complaint. It justified the sanction on the grounds that he was forum shopping on the claims he wished to add, his motion came too long after he had learned of Gamo's purchase of Phillips's interest in the patent, and nothing had changed to justify his reinstating the patent-infringement claim. Cogswell appeals the sanction. Exercising jurisdiction under 28 U.S.C. § 1291, we reverse. The motion to supplement and amend was not unwarranted under existing law.
We address our jurisdiction, the requirements for a Rule 11 sanction, and the application of these requirements to this case.
Because this case involves a patent, our jurisdiction could be questioned. For actions filed before September 16, 2011, the United States Court of Appeals for the Federal Circuit had exclusive jurisdiction over appeals from district-court decisions if the lower court's jurisdiction rested in whole or in part on 28 U.S.C. § 1338(a), which gives district courts jurisdiction over civil actions arising under patent legislation. See 28 U.S.C. § 1295(a)(1) (2006). Section 1295(a)(1) might seem to deprive this court of jurisdiction because a claim for patent infringement was included in Predator's original complaint, as well as in Predator's first, second, and third amended complaints, filed between May 2009 and March 2010. But at the time of Cogswell's notice of appeal, the most recent complaint was Predator's fourth amended complaint, filed in September 2010, which did not contain a patent-infringement claim. And it is that complaint which governs our jurisdiction.
This conclusion follows from two propositions. First, an amended pleading " supersedes the pleading it modifies and remains in effect throughout the action unless it subsequently is modified." Gilles v. United States, 906 F.2d 1386, 1389 (10th Cir. 1990) (en banc); see Mink v. Suthers, 482 F.3d 1244, 1254 (10th Cir. 2007) (" an amended complaint super[s]edes an original complaint and renders the original complaint without legal effect" (internal quotation marks omitted)). Second, a court's subject-matter jurisdiction ordinarily is determined by the situation at the time that jurisdiction is invoked. This is true of federal district courts. See Grupo Dataflux v. Atlas Global Grp., L.P., 541 U.S. 567, 570, 124 S.Ct. 1920, 158 L.Ed.2d 866 (2004) (" the jurisdiction of the court depends upon the state of things at the time of the action brought" ) (internal quotation marks omitted)); cf. id. at 572 (noting exception to time-of-filing rule when lack of diversity jurisdiction is cured by dismissal of a party); 16 James Wm. Moore et al., Moore's Federal Practice § 107.41[c] (3d. ed. 2011) (" Removability is ordinarily determined as of the date the notice of removal is filed." ). And it is also true of a federal appellate court, whose jurisdiction is invoked by a notice of appeal. Thus, the Federal Circuit has held that it lacked jurisdiction over an appeal because the patent claim originally brought in the district court had been voluntarily dismissed without prejudice before entry of final judgment and filing of the notice of appeal. See Gronholz v. Sears, Roebuck & Co., 836 F.2d 515, 518 (Fed. Cir. 1987); see also Holmes Grp., Inc. v. Vornado Air Circulation Sys., Inc., 535 U.S. 826, 835, 122 S.Ct. 1889, 153 L.Ed.2d 13 (2002) (Stevens, J., concurring in part and in the judgment) (" [I]f the only patent count in a multicount complaint was voluntarily dismissed in advance of trial, it would seem . . . clear that the appeal should be taken to the appropriate regional court of appeals rather than to the Federal Circuit." ); id. at 840 (Ginsburg, J., concurring in the judgment) (Because " no patent claim was actually adjudicated" in district court, Federal Circuit lacked appellate jurisdiction.).
Here the notice of appeal was filed after the fourth amended complaint was filed. Later events--such as dismissal of a federal claim or mootness--can affect a court's jurisdiction. See Rockwell Int'l Corp. v. United States, 549 U.S. 457, 473, 127 S.Ct. 1397, 167 L.Ed.2d 190-74 (2007) (" [W]hen a plaintiff files a complaint in federal court and then voluntarily amends the complaint, courts look to the amended complaint to determine jurisdiction." ); Winsness v. Yocom, 433 F.3d 727, 736 (10th Cir. 2006) (" Even if we assume that a credible threat of prosecution existed before this lawsuit was filed, the prosecutors' [post-complaint] affidavits [disavowing an intention to prosecute] have rendered the controversy moot." ). But no such events after the notice of appeal have been presented to us. We have jurisdiction under 28 U.S.C. § 1291 and can proceed to the merits.
B. The Rule 11 Standard
Federal Rule of Civil Procedure 11 warns attorneys that by " presenting to the court a pleading, written motion, or other paper," they certify to the best of their " knowledge, information, and belief, formed after an inquiry reasonable under the circumstances," that the paper meets the following conditions:
(1) it is not being presented for any improper purpose, such as to harass, cause unnecessary delay, or needlessly increase the cost of litigation;
(2) the claims, defenses, and other legal contentions are warranted by existing law or by a nonfrivolous argument for extending, modifying, or reversing existing law or for establishing new law;
(3) the factual contentions have evidentiary support or, if specifically so identified, will likely have evidentiary support after a reasonable opportunity for further investigation or discovery; and
(4) the denials of factual contentions are warranted on the evidence or, if specifically so identified, are reasonably based on belief or a lack of information.
Fed. R. Civ. P. 11(b). In short, Rule 11 requires that a " pleading be, to the best of the signer's knowledge, well grounded in fact, warranted by existing law or a good faith argument for the extension, modification, or reversal of existing law, and . . . not interposed for any improper purpose." Coffey v. Healthtrust, Inc., 1 F.3d 1101, 1104 (10th Cir. 1993). " If, after notice and a reasonable opportunity to respond, the court determines that Rule 11(b) has been violated, the court may impose an appropriate sanction," meaning one " limited to what suffices to deter repetition of the conduct or comparable conduct by others similarly situated." Fed.R.Civ.P. 11(c)(1), (4).
The district court imposed a Rule 11 sanction against Cogswell, Predator's attorney, for filing a motion to supplement its complaint with a challenge to Gamo's claimed interest in the patent and to amend its complaint by reviving the patent-infringement claim. Because the court found " no evidence that Predator acted with malice or bad faith," Predator Int'l, Inc. v. Gamo Outdoor USA, Inc., No. 09-cv-00970-PAB-KMT, 2014 WL 201662, at *8 (D. Colo. Jan. 17, 2014), the question before us is whether the motion to supplement and amend the complaint was unwarranted under the facts or law. To answer that question, the district court must evaluate Cogswell's conduct under a standard of " objective reasonableness--whether a reasonable attorney admitted to practice before the district court would file such a document." Adamson v. Bowen, 855 F.2d 668, 673 (10th Cir. 1988). Because our adversary system expects lawyers to zealously represent their clients, this standard is a tough one to satisfy; an attorney can be rather aggressive and still be reasonable. Even if a legal position in a pleading is clearly contrary to current law, it is not sanctionable if the position is warranted " by a nonfrivolous argument for extending, modifying, or reversing existing law or for establishing new law." Fed.R.Civ.P. 11(b)(2). This standard can be compared to the lesser standard for sanctions under Rule 37(a)(5)(A) (for improperly opposing discovery disclosure), which ordinarily must be imposed to compensate the opposing party for its expenses unless the objection to disclosure " was substantially justified." And even if counsel obnoxiously tries a court's patience with unfounded or silly arguments, the sanction must be based solely on those violations of Rule 11, not on other rejected arguments that were in fact objectively warranted.
On appeal we " apply an abuse-of-discretion standard in reviewing all aspects of a district court's Rule 11 determination. A district court would necessarily abuse its discretion if it based its ruling on an erroneous view of the law or on a clearly erroneous assessment of the evidence." Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 405, 110 S.Ct. 2447, 110 L.Ed.2d 359 (1990). To evaluate the district court's imposition of the sanction ...