### FILED U.S. COURT OF APPEALS ELEVENTH CIRCUIT DECEMBER 17, 2003 THOMAS K. KAHN CLERK [PUBLISH] IN THE UNITED STATES COURT OF APPEALS FOR THE ELEVENTH

CIRCUIT

________________________ No. 02-14089

________________________ D. C. Docket N

o. 01-00441 CV-T- 17 EUGENE C. ANDERSON, CYNTHIA BAILEY WATSON, et al., Plaintiffs-Appe llants,
versus SMITHFIELD FOODS, INC., JOSEPH W. LUTER, I

II, Defendants-Appe llees.

_________________________ No. 02-15657

__________________________ D. C. Docket N

o. 01-00441 CV-T- 17 EUGENE C. ANDERSON, CYNTHIA BAILEY WATSON, et al., Plaintiffs-Appe llants, DOUGLAS B. ABRAMS, ABRAMS & ABRAMS, P.A., et al.,* Honorable Maurice M. Paul, United States D istrict Judge for the Northern District of Florida, sitting by designation. 2 Interested Parti es-Appellants,
versus SMITHFIELD FOODS, INC., JOSEPH W. LUTER, I

II, Defendants-Appe llees.

________________________ Appeals from the United States District Court for the Middle Dist

rict of Florida

_________________________ (December

17, 2003) Before HULL and COX, Circuit Judg es, and PAUL * , District Judge. PER CURIAM: I. INTRODUCTION A group of landowner

s appeals the distric

t court’s judgm

ent dismissing

their civil action and imposi

ng sanctions on their counsel in the amou nt of $128,563.43. We affirm dismissal of the action, bu t reverse the award of san ctions.3 II. BACKGROUND & PROCE DURAL HISTORY Plai ntiffs Eugene C. Ander son, Cynthia Ba

iley Watson,

Roger Dae Picke

tt , Marvin Carnagey, K

eith Dotson, Jim

Braum, Linu

s Solberg, Betty

Janssen, and Don Webb own land abutting Defendant Smithf ield Foods, Inc., the

world’s larges

t hog producer and pork processor. Plaintiffs bring thi s putative class acti on on their own behalf and for all othe

rs sim ilarly situated, allegi ng that Smithfield and i ts CEO, Joseph W. Luter, III, are liable

under the civil provis

ions of the Racketeer Influenced and Corrupt Organization s Act (“RICO”), 18 U.S.C. § 1961, et seq ., for busine ss practices amounting to racketeering. Plaintiffs’ First Amende

d Complaint alle

ged that Defendant

s polluted land and water in violation of nume

rous laws and

regulations, and lie

d about and profited f

rom these environmental t

ransgressions. Pla

intiffs alleged tha

t this conduct gives rise to liabi lity unde r RICO because it constitutes a pattern of money laundering and wire and mail fr aud. Defendants mo ved, under Fed. R

. Civ. P. 12(b)(

6), to dismiss th

e First Amended Complaint for failure to state a claim upon which re lief can be granted. The district court granted the

Defendants’ motion. Anderson v. Smithf ield Foods, Inc. , 209 F. Supp. 2d 1270 , 1278 (M.D. Fla. 2002). The district court stated generally that

RICO was not an a

vailable reme

dy:4

The Court recognizes P

laintiffs'concern for the impact that Defendants' business has on the environm ent. However,

the Clean Air Act, the Clean Water Act,

and a variety of

other statutes wer

e designed toprotect against these hazards. A

lthough Plainti ff

s allege that Defe

ndants consistently

and constantly violate these statutes , RICO is not the proper remedy for Plaintiffs to vin dicate their rights involving violations of these statutes. Id
. at 1275. The distri

c t court’s order went on, how ever, to identify

defects in the Plaintiffs’ RICO claims, noting that the Plaintiffs had insufficiently alleged the
s pecifi c intent required to prove mail and wire fraud, that their allegations that Defendants

profited from

violating environm

ental laws were

insuffic ient to show money laundering, that the

facts they alleged w

ere too vague to show the ente rprise required for RICO liabilit y, and that they

had failed to allege

the harm requi

r ed b y RICO. Id . at 1275-76. The district court thengave th e Plaintiffs thirt y days to fil

e another amended complaint. Id . at 1278. The Plaintiffs then filed a Second Amended Com

plaint. They a

gain sought

to
recover under RICO. In this complaint, however, they dropped the money laundering allegations, but elaborated on the ir mail and wi

re fraud alle gations and

added new all egations of extortion. Defendants again moved to dismiss under Rule 1 2(b)(6)
. The district court gran te d this second motion to dismiss. Anderson v. Smithf ield Foods, Inc ., 207 F. Supp. 2d 1358, 1365 (M.D. Fla. 2002).5

When the Defendants moved to dismiss the Second Amended Complaint,

they also moved for sanctions under Fed. R. Civ. P. 11, asserting that the P lainti ffs had improperl ypleaded RICO claims in the Second Amended Com plaint. The district courtgranted the mot

ion and imposed m

oneta ry sa nctions in the amo

unt of $128,563.43 to defray the f ees and costs incurr

ed by the Defe

ndants in attacking the Second Amended Complaint. And erson v. Smithfield Foods, Inc. , 209 F. Supp. 2d 1278, 1282 (M.D. Fla. 2002). The court imposed the

sanctions because it concluded that the Plaintiffs had not made a reaso nable inquiry into the viability of the RICO claims before filing the S econd Amended Complaint. Id . at 1281. Specif ically, the court stated: In dismissing the First Amended Complaint, the Court warned Plaintiffs that, althoug h Pla intiffs could possibly have a cause of ac

tion against Defendants, they

did not have a claim under RICO. After detailing the reasons why

Plaintiffs did not have a claim under RICO, this Court gr antedPlaintiffs leave to amend their c omplaint. Pla

intiffs took th e op portuni ty

to amend their c

omplaint, and P

laintiffs again brou

ght a RICO claim, against this Court's advice. . . . [T]he Court finds that no reasonable

attorney, esp ecially in light o f the dismissal of the Fi rst Amended Complaint and under

the circumstance s, could reasonably believe that theSecond Amende d Complaint

had any reasonable chance of success or that it sta

ted a c laim of relief upon whic h relief could be granted. Id . The Plaintiffs appeal.6

III. ISSUES ON APPEAL AND CONTENTIONS OF THE PARTIES The Plaintiffs contend that the district court err ed in imposing sanc

tions related to the Seco nd Amend ed Compl aint. Th ey c ontend , among other things, that it was reasonable

for them to inte

rpret the district c

ourt’s order dism

issing the First Amended Complaint as inviting an effort to remedy pleading defects in the RI CO claims. The Plaintiffs also con

tend that th e district court er red in granting the Defendants’ two motions to dismiss. We find these ar guments mer

itless, and affirm the dismissal without furt her discussion. See 11th Cir. R. 36-1 . In doing so, we affirm only the district court’s

ultimate concl

usions that plaintiffs ’ complaints fail to state a claim on which relie f can be granted, and do not endorse all of the district court’s reasons for these c onclusions. We do c

onclude, how ever, tha

t the district court entered judgment for the defendants with out a reversible error o f law. IV. STANDARD OF REVIEW We review for an abuse of discretion the d i strict court’s im position of sanctions under Rule 11. Massengale v. Ray , 267 F.3d 1298, 130 1 (11th Cir. 2001). V. DISCUSSION “The standar

d for testing conduct u

nder amended R

ule 11 is ‘reasonablene ss
u nder t he circumstances.’” United States v. Milam, 855 F.2d 739, 743 (11th Cir.7

1988) (quoting Donaldson v. Clark , 819 F.2d 1551, 1556 ( 11th Cir. 1987) (en banc)). A district court ha

s the discretion to aw

ard Rule 11 sanctions: (1) when a party f

iles a pleading that ha

s no reasonable factual basis; (2) when the party

files a pleading that is based on a legal theory that has no reasonable

chance of success a

nd that cannot be adva nced as a reasonable

argument to

change existing l aw; or (3) when the party files a pleading in bad fai th for an improper purpos e. Massengale , 267 F.3d at 1301 (quotin g Worldwide Primates, Inc . v. McGreal, 87 F.3d 1252, 1254 (11th Cir. 1996)). Here, the district court f

ound that the Plaintiffs hadfiled a pleading advancing claims that had no possible chance of success. After carefully reviewing

the district court’s first dis missal order a

nd the Plaintiffs’ Second Amended Complai nt, we c onclude, for two related reasons, that the district court abused its discret ion in imposing sanc tions. First, there is scant on-point au t hority to guide the reasonable lawy

er to the conclusion

that, with the RICO cl

aims in the Second Amended Complaint, he either hadno reasonable chance of success or was advancing an unreasonable argum

ent to change existing law. Though we hav e conc luded that the Second Amended Complaint

does not state viable RICO claims, we are unable to conclude that only an unreasonable lawyer would have made these claims. Second, the distric

t court’s order d

ismissing the cl aims in the First Amended Comp laint

did not give such a clear warning not to refile under RICO that only an8

unreasonable

lawyer would h ave replead ed RICO claims. The distri ct court’s sanctions order gives particular consideration to its first dismissal warning that RICO
was not a proper remedy. The court states that its first dismissal order clearly

stated that RICO was not an a

vailable reme

dy, and reasons that the order would have put any reasonable lawy

er on notice that the

RICO claim

s had no chance of success. While the district court’s first dismissaldoes state that RICO is not the proper remedy for Plaintiffs to pursue , the order also poi nts out the pleading defect

s in the Plaintiffs’ RICO claims and give s the Pla inti ffs leave to file a Second Amende

d Complaint. This approach created an ambigu ity. Based o n this a mbiguit y, a reasonable lawyer
cou ld interp ret the order as inv iting better-pleade

d RICO claim

s. Thus, we ca

nnot say, in light of the first

dismissal order, that a reas onable lawyer must have known that improved RI

CO claims w

ould have no reasonabl

e chance of succes s. In light of the

paucity of

controlling precede

nt and the district co

urt’s first dismissal order, Plaintiffs’ counsel were not unreas onable in pleading the RICO claims in the Second Am ended Complaint.

Therefore, w

e conclude

that the district court abused its d iscretion in imposin g sanctions. VI. CONCLUSION9

The district court’s

dismissal of the

action is a ffirmed ; because the district court abused its discretion in aw arding sanctions, the

district court’s

imposition of sanctions is reverse

d. AFFIRMED IN PART; REVERSED IN PART.