It is fairly accepted that strategic considerations factor into most plaintiffs’ choices of forum in which to sue. Yet the Seventh Circuit last week held that such forum shopping can rise to the level of conduct punishable by monetary sanctions. See Boyer v. BNSF Ry. Co., Nos. 14-3131 & 14-3182, slip op. (7th Cir. June 1, 2016). Traditionally, the penalty for improper forum shopping has been transfer—and forfeiting the plaintiff’s privilege of choosing the forum in which to litigate. The facts in Boyer are unique, but the principle that forum shopping can occasion sanctions will likely increase efforts to recover attorney’s fees for preliminary procedural wrangling.
Boyer arose from flooding in Bagley, a small Wisconsin town in a valley along the Mississippi River. The bluffs along the river feature ravines that drain water from above down into the river. The Burlington Northern & Santa Fe Railway (“BNSF”) owned a railroad bridge across one of those ravines. During torrential rains in mid-July 2007, debris caught in the trestle beneath the bridge, causing water to backup into Bagley and flood most of the town.
In 2008, four Bagley residents filed a class action lawsuit against BNSF and two of its managers in Wisconsin state court. The suit sought recovery under theories of negligence and nuisance. BNSF removed the case to federal court, where it was dismissed. The district court reasoned that plaintiffs’ claims were preempted by Wis. Stat. §88.87, which does not authorize money damages. The Seventh Circuit affirmed the dismissal order. In doing so, it noted that the plaintiffs had belatedly suggested that they could evade Wis. Stat. §88.87 by focusing on the maintenance, rather than the design and construction, of the railroad bridge. However, because the plaintiffs raised this argument too late in the proceedings, the Seventh Circuit deemed it forfeited and therefore insufficient to overcome the dismissal order.
A little more than a year later, one of the lawyers from the first case filed a new lawsuit on behalf of several Bagley residents. Most (but not all) of the plaintiffs in the new case had not been involved in the earlier case. And the new case was filed in state court in Arkansas. The complaint acknowledged that Wisconsin law governed the claims. It alleged the same four claims as the prior complaint and contained similar factual allegations, though there was no longer any mention of the railroad bridge’s construction and the new complaint focused on the idea that the bridge was negligently maintained.
BNSF removed the new case from state court to federal court in Arkansas. It then filed a motion to transfer the case to federal court in Wisconsin (the same court that had dismissed the earlier lawsuit). In support of its motion to transfer, BNSF noted that there was no connection between Arkansas and the plaintiffs or their claims. In response, the plaintiffs openly acknowledged that they brought suit in Arkansas to avoid the court that had dismissed the prior lawsuit, writing that, because of their “‘grave concerns whether the Wisconsin District Court will yield to the temptation of ruling against th[e] plaintiffs based on the prior case, rather than the merits of the arguments put before it,’” they chose to sue in Arkansas “‘simply seeking a fresh pair of judicial eyes, in a proper forum, to examine the merits of their arguments without a prejudice or predisposition stemming from prior litigation by other individuals.’” Boyer, slip op. at 8.
The Arkansas court ordered the case transferred to Wisconsin, expressing “‘serious doubt that Plaintiffs’ concerns about the Wisconsin court are well-founded.’” The plaintiffs appealed this order to the Eighth Circuit. When BNSF sought to have the appeal dismissed as procedurally improper, the plaintiffs filed a petition for a writ of mandamus to reverse the transfer order. In response, BNSF filed a motion for sanctions, alleging that the underlying lawsuit, the effort to appeal the transfer order, and the mandamus petition were all improper. The Eighth Circuit issued a summary order dismissing the appeal, denying the mandamus petition, and declining to award any sanctions.
Back in the Wisconsin federal court, BNSF moved to dismiss the complaint and requested sanctions against the plaintiffs for filing a frivolous lawsuit. Judge Crabb ordered dismissal, reasoning that Wisconsin state-court case law forecloses the negligent maintenance theory that plaintiffs sought to use to evade Wis. Stat. §88.87. Judge Crabb also denied the sanctions motion, stating that, while plaintiffs’ claims failed, they were not frivolous inasmuch as they raised a new theory of liability that the Seventh Circuit had previously suggested was plausible. Both sides appealed Judge Crabb’s decision to the Seventh Circuit.
The Seventh Circuit affirmed Judge Crabb’s dismissal of plaintiffs’ claims. The court reasoned that Judge Crabb correctly concluded that Wisconsin decisional law foreclosed plaintiffs’ efforts to recover. The court reversed Judge Crabb on the sanctions issue, however. While agreeing with Judge Crabb that plaintiffs’ claims were not frivolous (since they raised the negligent-maintenance theory expressly left open by the Seventh Circuit opinion in the prior case), the Seventh Circuit held that the decision to file suit in Arkansas was sanctionable under 28 U.S.C. §1927 because of “counsel’s decision to file the Boyer litigation in Arkansas,” even thought “plaintiffs’ claims have no tie whatsoever to Arkansas.” Boyer, slip. op. at 29. “We cannot think,” the court explained, “of a better example of multiplying the proceedings needlessly, unreasonably, and vexatiously.” Id.
The problem wasn’t just that Arkansas had no connection to the litigation, but that the plaintiffs had been so open about their intentions:
As the briefing on BNSF’s motion to transfer the case made patently clear, other than the plaintiffs’ choice of forum, none of the factors bearing on venue (including the convenience of the parties and the witnesses and the interest of justice) pointed to Arkansas as an appropriate forum in which to litigate this case. Indeed, it is absolutely telling that the only affirmative reason that the plaintiffs could articulate in opposition to BNSF’s transfer motion, apart from the deference purportedly owed to their choice of venue, was the notion that Judge Crabb might be tempted to give the Boyer plaintiffs’ claims short shrift given her rulings against the plaintiffs in the [prior] litigation, so that review by a “fresh pair of judicial eyes” was in order. This was a virtual admission that the plaintiffs’ counsel was forum shopping. And the choice of Arkansas, a state outside of this circuit, leaves no doubt that counsel was shopping not only for a different trial-level judge but a different appellate court.
Id. at 30. As a result, the court ordered the plaintiffs’ lawyer personally to repay BNSF for the costs it incurred in removing the case from state court to federal court in Arkansas and in transferring the case from the Arkansas federal court to the Wisconsin federal court. The Seventh Circuit, in deference to the summary order issued by the Eighth Circuit, declined to award sanctions for BNSF’s expenses in the appellate proceedings before the Eighth Circuit over the transfer order.
What’s notable about this case is the Seventh Circuit’s holding that forum shopping is sanctionable. Courts understandably both disapprove of and seek to limit forum shopping. Yet, forum shopping, while frowned upon, is tacitly acknowledged as a common strategic tool, at least within limits. The issue here seems to have been how blatant, clumsy, and unreasonable the effort was in this case. (The Seventh Circuit characterized it as “an attempt to shop for a different judge and a different court of review in a forum that had no connection whatsoever to the claims and the underlying facts and served no interest other than the pursuit of counsel’s short-sighted and misplaced strategic goals.” Id. at 35.)
Perhaps if the transfer motion had been a closer call, or if the plaintiffs’ lawyer had been less overt about his intentions, sanctions would have been denied. Certainly lawyers facing future sanctions motions in the Seventh Circuit will argue that Boyer is a fact-specific case and that their behavior does not reach the same egregious standard. But the Seventh Circuit’s language, which says simply that forum shopping can occasion sanctions for causing unnecessary procedural litigation over venue, will likely lead to sanctions requests in cases where no one would previously have considered seeking sanctions. In that respect, this decision may have the unintentionally vexatious effect of multiplying judicial proceedings.
Update: The Seventh Circuit responded to the attorney's petition in an opinion issued on August 9. More information can be found here.