[ PUBLISH] 

## In the 

# United States Court of Appeals For the Eleventh Circuit

____________________
No. 22

- 12461

____________________
J.C. PENNEY CORPORATION, INC.,
Plaintiff

- Counter Defendant

- Appellee,

versus OXFORD MALL, LLC,

Defendant

- Counter Claimant

- Appellant.

____________________ Appeal from the United States District Court for the Northern District of Alabama D.C. Docket No. 1:19

- cv

- 00560

- KOB

_____________ _______
Before G RANT , A BUDU , and E D C ARNES , Circuit Judges. USCA11 Case: 22-12461 Document: 55-1 Date Filed: 05/01/2024 Page: 1 of 152 Opinion of the Court 22

- 12461

G RANT , C IRCUIT J UDGE :
A limited liability company named Oxford Mall fought J.C. Penney in federal court for over two years

. J ust when it was poised to lose the case, Oxford informed the court that it lacked subject

matter jurisdiction over the lawsuit

. T he court issued sanctions, ordering Oxford to pay part of J.C. Penney’s wasted attorney’s fees. But Oxford was not finished yet. When the district court asked the parties for briefing o n the appropriate amount of fees, Oxford added an affidavit explaining why sanctions were not appropriate. The district court struc k the affidavit and awarded J.C. Penney two

thirds of its requested fees. Oxford challenges both decisions as abuses of discretion . We emphatically affirm.

I. In a 2017 foreclosure sale, Oxford Mall, LLC, purchased the Quintard Mall Shopping Center and subsequently entered into a significant redevelopment plan with the local government

. A cting on this agreem ent , Oxford renovated the mall ’ s interior and razed what had been a n old Sears store in anticipation of new, more inviting construction. M ore development wa s yet to come , b ut all

wa s not well behind the storefronts.

Enter J.C. Penney Corporation, Inc.
, a fixture at the m all since 1968

. As an inducement to set up shop, J.C. Penney’s lease include d the right to approve certain changes to the mall’s site plan
, as well as options to extend the lease ’s term

. Decades after that initial agreement
, and years a fter the mall changed hands , J.C. Penney sought to exercis e one of its remaining contractual option s

. USCA11 Case: 22-12461 Document: 55-1 Date Filed: 05/01/2024 Page: 2 of 1522

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But j ust three days after agreeing to redevelop the mall
, Oxford denied that request, claiming that J.C. Penney was out of extension options. Whe ther that was true was crucial for the redevelopment plans

— i f J.C. Penney’s lease w as still in effect, Oxford would need its approval to redevelop certain parts of the mall. If not, the renovations could move forward unimpeded. J.C. Penney filed this laws uit in April 2019, invoking the district court’s diversity jurisdiction. For federal diversity jurisdiction to attach, all parties must be completely diverse. Strawbridge v. Curtiss , 7 U.S. (3 Cranch) 267, 267 (1806). Oxford Mall did not contest jurisdiction in its answer to the complaint

— and even plead ed diversity jurisdiction in its counterclaim

. B oth parties took the position that the court had diversity jurisdiction, but Oxford ’s LLC ownership structure made it a complex question.
A limited liability company or a limited partnership has the citizenship of each one of its member s

. Rolling Greens MHP, L.P. v. Comcast SCH Holdings L.L.C. , 374 F.3d 1020, 1021

– 22 (11th Cir. 2004). And b ecause members of an LLC are often themselves LLCs or LPs, the citizenship inquiry can balloon at each step. J.C. Penney i s a citizen of Delaware and Texas

. S o diversity jurisdiction is defeated if any member of Oxford Mall
, LLC, is a citizen of D elaware or Texas . And if any of those members were LLCs or LPs, the same rule would appl y for the members of those members, and so on. These requirements were met a ccording to both parties’ pleadings
, a nd f or the next two years, the lawsuit proceeded with the understanding that jurisdiction existed. USCA11 Case: 22-12461 Document: 55-1 Date Filed: 05/01/2024 Page: 3 of 154 Opinion of the Court 22

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In the meantime, a second dispute p opped up

. Hibbett Sporting Goods

— another tenant

— sued Oxford in August 2019 , seeking a declaration of its right to extend its lease term. Like J.C. Pen ney, Hibbett assert ed diversity jurisdiction. This time , though, Oxford and its attorney Wayne Grovenstein 1 immediately began seeking information that would strip the court of jurisdiction over the case. In one email to a member of Oxford
, Eightfold Opp ortunity Fund II, LP
, Grovenstein accurately explained how to determine diversity jurisdiction for Oxford. He emphasiz ed that if Eightfold was a citizen of Alabama, federal jurisdiction would be unavailable and the Hibbett suit would move to state court

— a better forum from the partnership’s perspective . “Likewise for J.C. Penney,” he went on, “if one or more of the members is a Texas or Delaware resident, then we may be able to relocate their lawsuit to Georgia.” Th e same outr each was repeated throughout Oxford’s ownership chain, but without immediate success in identifying a non

- diverse person or entity that could shift either suit

to state court

. Those efforts trailed off in late 2019 for unknown reasons

—

u ntil January 2020 , t hat is, when the Hibbett court ordered Oxford

to disclose the identity of all of its members and their states of citizenship . At this point, Grovenstein reached back out to Eightfold. E xpla i n ing his renewed interest, Grovenstein wrote that he assumed that the judge d id “ not want to spend time on a

1 Grovenstein is general counsel for Oxford’s property manager, Hull Property Group, LLC. USCA11 Case: 22-12461 Document: 55-1 Date Filed: 05/01/2024 Page: 4 of 1522

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diversity action for which diversity jurisdictions [sic] does not actually exist,” just to “have the proceedings vacated at some later date.”
The revived efforts paid off . O n January 28 , 2020, Eightfold identified a Delaware citizen in its ownership chain , refuting Hibbett’s assertion of diversity jurisdiction . The very next day, Oxford filed a complaint against Hibbett in Georgia state court. And thirty

- six days after that
, it filed a motion to dismiss the federal Hibbett case for lack of jurisdiction. Th at was March 5, 2020.
For the J.C. Penney case, however, there was no such filing

— Oxford continued to actively litigate i n federal court

. Briefing on

t he parties’ cross

- motions for summary judgment was completed just six days before Oxford learned that it was a Delaware citizen

— one of J.C. Penney’s states of citizenship

. Oxford did not follow up with the court. A few months later
, when the district cou rt stay ed the case in light of J.C. Penney’s bankruptcy petition
, Oxford remained silent . L itigation resumed after J.C. Penney agreed to relinquish the right to have the claims heard in bankruptcy court

. S till
, no one told the court

. T he stay was lifted on August 7 , 2020

— more than six months after Oxford learned it was a Delaware citizen

. Still no word. With nothing standing in the way (that it knew of) , the district court turned to the merits. On August 27, i t granted J.C. Penney’s motion for partial summary judgment and denied Oxford ’ s motion in full. Still no word.
Dissatisfied with th at outcome, Oxford filed a motion for reconsideration. Still no mention of the jurisdictional problem. USCA11 Case: 22-12461 Document: 55-1 Date Filed: 05/01/2024 Page: 5 of 156 Opinion of the Court 22

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Over the next two months
, the parties briefed the moti on and the district court again ruled in favor of J.C. Penney on November 24,
2020

. Still no word. Following th at ruling, Oxford and J.C. Penney jointly asked the district court to stay the case once more
, this time for mediation. Still

— no word. M ediat ion was held on March 31,
2021 , more than fourteen months after Oxford learned it was a Delaware resident. The parties could not come to an agreement, and they informed the district court of that fact on April 14. Oxford Mall

— still

— informed neither J.C. Penney nor the court about the lack of jurisdiction. The court s cheduled a status conference for April 28, 2021. Exactly one week later

— five days before the scheduled conference and fifteen months after learn ing that both parties in the case were citizens of Delaware

— Oxford filed a motion to dismiss for lack of subject

- matter jurisdiction, finally informing the court of the lack of diversity. The district court immediately stayed all proceedings. For its part , J.C. Penney moved for sanctions under Federal Rule of Civil Procedure 37 and the court’s inherent
powers

. T he court granted Oxford’s motion to dismiss
, but retained jurisdiction over J.C. Penney’s motion for sanctions. After briefing and a hearing on th e matter, the court agreed to issue sanctions under its inherent powers (but not Rule 37)
, instructed J.C. Penney to outline its fees, and asked Oxford to brief the reasonableness of th at amount. Oxford filed a brief as requested

. B ut it also added an af fidavit from its attorney , G r ovenstein , wh o asserted that Oxford Mall had not intentionally USCA11 Case: 22-12461 Document: 55-1 Date Filed: 05/01/2024 Page: 6 of 1522

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misled the court

. The district court was unmoved, and it struck the affidavit as untimely and irrelevant. After yet another round of briefing, the court awarded J .C. Penney $62,556 in attorney’s fees

— two

- thirds of the amount that it incurred after Oxford learned the diversity

- destroying information

— and another $558.05 in costs

. This is Oxford Mall , LLC ’s appeal from both rulings

. II.
This Court reviews sanctions orders for abuse of discretion. Purchasing Power, LLC v. Bluestem Brands, Inc. , 851 F.3d 1218, 1222 (11th Cir. 2017). And because a finding of bad faith is a finding of fact
, we review it for clear error. DeLauro v. Porto ( I

n re Porto ) , 645 F.3d 1294, 1304 (11th Cir. 2011); accord Skanska USA Civ. S e. Inc. v. Bagelheads, Inc. , 75 F.4th 1290, 1311 (11th Cir. 2023). We also review a district court’s ruling on the admissibility of evidence, including a decision to strike an aff idavit, for abuse of discretion. See Corwin v. Walt Disney Co. , 475 F.3d 1239, 1249, 1252 (11th Cir. 2007) ; Useden v. Acker , 947 F.2d 1563, 1571

– 72 (11th Cir. 1991)

. III.
T he inherent powers of the federal courts include the authority to fashion sanctions for conduct that abuses the judicial
process. Goodyear Tire & Rubber Co. v. Haeger , 581 U.S. 101, 107 (2017). Th is power’s “dual purpose” is “to vindicate judicial authority” and “to make the prevailing party whole.” Purchasing Power , 851 F.3d at 1223. T he “key to unlocking ” that power is a finding of bad faith. Id. But a blank conclusion that a party acted in bad faith is not enough ; the court instead needs to make specific USCA11 Case: 22-12461 Document: 55-1 Date Filed: 05/01/2024 Page: 7 of 158 Opinion of the Court 22

- 12461
findings about which conduct justifies sanctions. DeLauro , 645 F.3d

at 1304. And t h os e findings must show “subjective bad faith
, ” meaning intentional and not just reckless behavior

. Purchasing Power , 851 F.3d at 1224

– 25. Still, that intent can be inferred “if an attorney’s conduct is so egregious that it coul d only be committed in bad faith.” Id. Just so h ere, where t he district court ma de a series of specific factual findings about why Oxford ’s act ions were in bad faith. F irst , on January 28, 2020, Oxford had actual knowledge that it, like J.C. Penney , was a citizen of Delaware, which destroy ed the court’s diversity jurisdiction. Next , t he district court found that Oxford properly understood the relevant law

— a conclusion made necessary by Oxford’s surprising argument that because Grovenstein wa s a tran sactional lawyer
, it was “imminently plausible” that he did not recognize the relevance of shared citizenship

. That is absolute nonsense. Grovenstein was in charge of Oxford’s effort to establish its citizenship, and his emails reflect that he full well knew the effect of shared citizenship on diversity jurisdiction. Oxford’s contention that it did not consider the connection between its two tenant disputes at the same property until after mediation was disproven by attorney Grovenstein’s own September 2 019 email spelling out the implications of the Hibbett jurisdictional inquiry to the J.C. Penney litigation. Finally , the district court found that Oxford ’s delay in disclosing the lack of diversity jurisdiction was strategic; it waited until April 2021

— 15 months and several unfavorable rulings later

. USCA11 Case: 22-12461 Document: 55-1 Date Filed: 05/01/2024 Page: 8 of 1522

- 12461 Opinion of the Court 9

This evidence , the court concluded , showed that the conduct was “so egregious that Oxford Mall could only have committed it in bad faith.” We cannot disagree ; Oxford Mall’s wrongdoing here is startling in its obviousness

. B ut even if we were less certain, when “there are two permissible views of the evidence, the factfinder’s choice between them cannot be clearly erroneous.” Brnovich v. Democratic Nat’l Comm. , 141 S. Ct. 2321, 2349 (2021) (q uoting Anderson v. Bessemer City , 470 U.S. 564, 574 (1985)). The district court’s determination of bad faith is far more than “plausible in light of the entire record,” and we do not disturb it. See id.
Oxford , however, protests that sanctions are not ap propriate because bad faith is not the only plausible explanation for its actions

. But that argument misunderstands the standard . Requiring the district court to rule out all other “plausible” explanations would be tantamount to requiring proof beyond a reasonable doubt

— a bar even Oxford admits is too high. 2 The district court , in short, did not abuse its “broad discretion” in deciding whether to impose sanctions. Peer v. Lewis , 606 F.3d 1306, 1316 (11th Cir. 2010).

2 We need not decide today whether district courts should use a preponderance standard or a clear

- and

- convincing standard . The district court applied the clear

- and

- convincing standard “out of an abundance of caution
, ” and n either party challenges that decision on appeal. USCA11 Case: 22-12461 Document: 55-1 Date Filed: 05/01/2024 Page: 9 of 1510 Opinion of the Court 22

- 12461

IV.
Oxford also argues that even if it did act in bad faith, the district court’s sanction award was too high. Again, we disagree.

W hen a court uses its inherent authority to award a sanction in the form of attorney’s fees
, legal fees awarded “ must be compensatory rather than punitive ”

— at least i n civil litigation. Goodyear , 581 U.S. at 108. B ecause the purpose of this fee

- shifting mechanism is to reimburs e the victim, a causal connection is required between the fees awarded and the sanctioned party’s misconduct. Id. at 108

– 09. So t he complaining party may only recover th os e fees it would not have incurred “ but for ” its opponent’s misconduct. Id. at 109 (quotation omitted)

. Under this approach , the court’s “fundamental job ” is to decide whether a le gal fee would have existed even without the sanctioned conduct. Id. at 110. T his sometimes means evaluating each specific litigation expense

— b ut not always. Id. at 109. T he Supreme Court has been careful to avoid turn ing judges into auditors: c ourt s assessing fees “ need not, and indeed should not, become green

- eyeshade accountants.” Id. at 110 (quoting Fox v. Vice , 563 U.S. 826, 838 (2011)). So “ r ough justice” is the aim, not “auditing perfection.” Id. (quotation omitt ed). Along these lines , a district court may consider “ its overall sense of [ the ] suit” and “use estimates in calculating and allocating an attorney’s time.” Id. (alteration adopted) (quotation omitted)

. I t could decide , for example, that “all (or a set percentage) of a particular category of expenses” satisfy the standard

. Id. In USCA11 Case: 22-12461 Document: 55-1 Date Filed: 05/01/2024 Page: 10 of 1522

- 12461 Opinion of the Court 11
“exceptional cases,” the court could even award all fees incurred after some significant event during the litigation. Id. As for our standard of review on appeal, the district court’s judgment is “entitled to substantial deference” in light of its “superior understanding of the litigation.” Id. (quotation omitted)

. The district court here complied with these standards. Its starting point was the amoun t of fees that J.C. Penn e y incurred after March 5, 2020

— the date Oxford moved to dismiss the Hibbett case for lack of subject

- matter jurisdiction. After all, “J.C. Penney would not have litigated any matters in this case after March 2020, ‘but

- for’ Oxford Mall’s bad faith.”

T hat was not the only limitation. T he district court offered

two reasons for not award ing J.C. Penney all of its fees starting on that date . F or one , “J.C. Penney’s efforts to litigate this case since March 2020 were not entirely wasted” because it was able to make “use of its arguments from this case in the state court proceeding.” So a warding all of its fees from the relevant time period would

“ over compensate J.C. Penney, rather than ‘making it whole.’” On top of that , the district court placed at least some part of the blame on J.C. Penney for not working harder to discover the jurisdictional defect itself

. For these reasons, t he district court lim ited its sanction award to two

- thirds of J.C. Penney’s incurred attorney’s fees after Oxford discovered its Delaware citizenship

. 3 Oxford argues that

3 We reject the argument that because the limitation had a dual purpose

— both avoiding an award for fees that J.C. Penney would have incurred anyway USCA11 Case: 22-12461 Document: 55-1 Date Filed: 05/01/2024 Page: 11 of 1512 Opinion of the Court 22

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the district court erred by not “‘assessing and allocating specific litigation expenses’ as the but

- for standard ‘demands.’” But there is no such “demand.” Oxford ’s suggestion to the contrary ignores Goodyear ’s explicit qualifications of th e general approach it outlined . The Supreme Court went out of its way to caution that district courts need not parse every single litigation expense with a fine

- tooth comb. Goodyear , 581 U.S. at 110. Here, t he district court considered its “overall sense of [ the ] suit,” “use[d] estimates,” and concluded that “a set percentage” (two

- thirds) “of a particular category of expenses ” (those incurred after Oxford should have dismissed the case) were “incurred solely because of [Oxford’s] bad

- faith conduct. ” Id. We owe this judgment substantial deference on appeal

. I d. Ultimately, Oxford cries foul about the district court shifting fees in a manner explicitly blessed by the Supreme Court. We reject its attempt to characterize the district court’s action as anything else. T he district court did not abuse its considerable discretion in determining the amount of fees owed to J.C. Penney. 4

and accounting for J.C. Penney’s responsibility

— it did not independently satisfy either one.

4 Oxford also ar gues that the district court erred by refusing to apply the “excess costs” framework from Amlong & Amlong, P.A. v. Denny’s, Inc. , 500 F.3d 1230 (11th Cir. 2007). But Amlong only analyzed the permissibility of sanctions under 28 U.S.C. § 1927. 500 F.3d at 1239

– 42. And this Court has previously admonished lower courts for “blurr[ing] the lines between the inherent power standard and the standard used for Rule 11 and § 1927 sanctions.” Purchasing Power , 851 F.3d at 1223 n.4. “While these powers can be use d to punish the USCA11 Case: 22-12461 Document: 55-1 Date Filed: 05/01/2024 Page: 12 of 1522

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V.

W e also conclude that the district court did not abuse its discretion when it sua sponte struck Oxfor d’s affidavit as untimely and ir relevant. On June 24, 2021, after both parties had moved for sanctions, the district court ordered reply briefs to be filed no later than July
6 , with a hearing twenty days later on whether the court should impose sanction s

. Both parties complied with the filing deadline, and the court held the hearing. On August 5, it granted J.C. Penney’s motion in part and imposed sanctions on Oxford.

T h ough th e court had decided that sanctions were in order
, the amount was not yet det ermined

. So the court’s next order directed J.C. Penney to outline its legal fees and Oxford to brief the reasonableness of those amounts

. Se e ing an opportunity, Oxford filed an affidavit from its attorney, Grovenstein , in addition to its brief . But th is affidavit did not mention J.C. Penney’s fees at all
, let alone the reasonableness of those fees . Instead, it contained a protracted merits discussion of how Grovenstein ( and by extension, Oxford ) did not act in bad faith. The district court refused to consider it. The affidavit, the court concluded, bore “only on whether the court should impose sanctions at all

— not the

amount of fees
, ” which was the only issue pending at the time

.

same areas of conduct, they are not governed by the same standard.” Id. The district court did not err by refusing to apply an incorrect standard

. USCA11 Case: 22-12461 Document: 55-1 Date Filed: 05/01/2024 Page: 13 of 1514 Opinion of the Court 22

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We see no problem

— a district court is not required to consider irrele vant evidence

. Cf. United States v. Hall , 653 F.2d 1002, 1005 (5th Cir. 1981)

. 5 Because Grovenstein’s affidavit had nothing to do with the amount of fees recoverable, the district court had no

reason to assess it

. What’s more, even if the affidavit had been relevant, it was untimely. The Federal Rules of Civil Procedure provide that “any opposing affidavit must be served at least 7 days before the hearing
, ” unless the court allows otherwise. Fed. R. Civ. P. 6(c)(2 ). Oxford did not file Grovenstein’s affidavit until August 19, 2021

— forty

- four days after its pre

- hearing briefing deadline and twenty

four days after the sanctions hearing. “Absent an affirmative showing by the non

- moving party of excusable neglect ,” a “ court does not abuse its discretion in refusing to accept out

- of

- time affidavits.” Useden , 947 F.2d at 1571 (quotation omitted). Oxford made no such showing here . In fact, it did not even argue for excusable neglect, admitting at oral argument that no t filing sooner was a “strategic decision

. ” No matter how Oxford tries to reframe the issue, the district

court ’s refusal to allow the overdue and irrelevant affidavit to function as the equivalent of a motion for reconsideration was not an abuse of discre tion.

5 Decisions by the former Fifth Circuit handed down before October 1, 1981
, are binding on this Court. Bonner v. City of Prichard , 661 F.2d 1206, 1207 (11th Cir. 1981) (en banc). USCA11 Case: 22-12461 Document: 55-1 Date Filed: 05/01/2024 Page: 14 of 1522

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* * * This case offers a textbook example of bad faith. Undeterred after discovering that the district court lacked jurisdiction
, Oxford decided to withhold th at fact and try its hand at the merits . When those merits efforts failed, Oxford pulled out the diversity

destroying card . And when jurisdiction vanished, so did all the unfavorable rulings. We do not take this kind of jurisdictional manipulation lightly. W e therefore AFFIRM the award of sanctions

. USCA11 Case: 22-12461 Document: 55-1 Date Filed: 05/01/2024 Page: 15 of 15