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

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No. 02-14089

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D. C. Docket No. 01-00441 CV-T-17

EUGENE C. ANDERSON,

CYNTHIA BAILEY WATSON, et al.,

Plaintiffs-Appellants,

versus

SMITHFIELD FOODS, INC.,

JOSEPH W. LUTER, III,

Defendants-Appellees.

_________________________

No. 02-15657

__________________________

D. C. Docket No. 01-00441 CV-T-17

EUGENE C. ANDERSON,

CYNTHIA BAILEY WATSON, et al.,

Plaintiffs-Appellants,

DOUGLAS B. ABRAMS,

ABRAMS & ABRAMS, P.A., et al.,
*Honorable Maurice M. Paul, United States District Judge for the Northern District of

Florida, sitting by designation.

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Interested Parties-Appellants,

versus

SMITHFIELD FOODS, INC.,

JOSEPH W. LUTER, III,

Defendants-Appellees.

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Appeals from the United States District Court

for the Middle District of Florida

_________________________

(December 17, 2003)

Before HULL and COX, Circuit Judges, and PAUL*

, District Judge.

PER CURIAM:

I. INTRODUCTION

A group of landowners appeals the district court’s judgment dismissing their

civil action and imposing sanctions on their counsel in the amount of $128,563.43.

We affirm dismissal of the action, but reverse the award of sanctions. 
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II. BACKGROUND & PROCEDURAL HISTORY

Plaintiffs Eugene C. Anderson, Cynthia Bailey Watson, Roger Dae Pickett,

Marvin Carnagey, Keith Dotson, Jim Braum, Linus Solberg, Betty Janssen, and Don

Webb own land abutting Defendant Smithfield Foods, Inc., the world’s largest hog

producer and pork processor. Plaintiffs bring this putative class action on their own

behalf and for all others similarly situated, alleging that Smithfield and its CEO,

Joseph W. Luter, III, are liable under the civil provisions of the Racketeer Influenced

and Corrupt Organizations Act (“RICO”), 18 U.S.C. § 1961, et seq., for business

practices amounting to racketeering. 

Plaintiffs’ First Amended Complaint alleged that Defendants polluted land and

water in violation of numerous laws and regulations, and lied about and profited from

these environmental transgressions. Plaintiffs alleged that this conduct gives rise to

liability under RICO because it constitutes a pattern of money laundering and wire

and mail fraud. Defendants moved, under Fed. R. Civ. P. 12(b)(6), to dismiss the

First Amended Complaint for failure to state a claim upon which relief can be

granted. The district court granted the Defendants’ motion. Anderson v. Smithfield

Foods, Inc., 209 F. Supp. 2d 1270, 1278 (M.D. Fla. 2002). The district court stated

generally that RICO was not an available remedy: 
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The Court recognizes Plaintiffs' concern for the impact that Defendants'

business has on the environment. However, the Clean Air Act, the

Clean Water Act, and a variety of other statutes were designed to protect

against these hazards. Although Plaintiffs allege that Defendants

consistently and constantly violate these statutes, RICO is not the proper

remedy for Plaintiffs to vindicate their rights involving violations of

these statutes.

Id. at 1275. The district court’s order went on, however, to identify defects in the

Plaintiffs’ RICO claims, noting that the Plaintiffs had insufficiently alleged the

specific intent required to prove mail and wire fraud, that their allegations that

Defendants profited from violating environmental laws were insufficient to show

money laundering, that the facts they alleged were too vague to show the enterprise

required for RICO liability, and that they had failed to allege the harm required by

RICO. Id. at 1275-76. The district court then gave the Plaintiffs thirty days to file

another amended complaint. Id. at 1278. 

The Plaintiffs then filed a Second Amended Complaint. They again sought to

recover under RICO. In this complaint, however, they dropped the money laundering

allegations, but elaborated on their mail and wire fraud allegations and added new

allegations of extortion. Defendants again moved to dismiss under Rule 12(b)(6).

The district court granted this second motion to dismiss. Anderson v. Smithfield

Foods, Inc., 207 F. Supp. 2d 1358, 1365 (M.D. Fla. 2002).
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When the Defendants moved to dismiss the Second Amended Complaint, they

also moved for sanctions under Fed. R. Civ. P. 11, asserting that the Plaintiffs had

improperly pleaded RICO claims in the Second Amended Complaint. The district

court granted the motion and imposed monetary sanctions in the amount of

$128,563.43 to defray the fees and costs incurred by the Defendants in attacking the

Second Amended Complaint. Anderson 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 reasonable inquiry into the viability of the RICO

claims before filing the Second Amended Complaint. Id. at 1281. Specifically, the

court stated:

In dismissing the First Amended Complaint, the Court warned Plaintiffs

that, although Plaintiffs could possibly have a cause of action 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

granted Plaintiffs leave to amend their complaint. Plaintiffs took the

opportunity to amend their complaint, and Plaintiffs again brought a

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

reasonable attorney, especially in light of the dismissal of the First

Amended Complaint and under the circumstances, could reasonably

believe that the Second Amended Complaint had any reasonable chance

of success or that it stated a claim of relief upon which relief could be

granted.

Id. The Plaintiffs appeal. 
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III. ISSUES ON APPEAL AND CONTENTIONS OF THE PARTIES

The Plaintiffs contend that the district court erred in imposing sanctions related

to the Second Amended Complaint. They contend, among other things, that it was

reasonable for them to interpret the district court’s order dismissing the First

Amended Complaint as inviting an effort to remedy pleading defects in the RICO

claims.

The Plaintiffs also contend that the district court erred in granting the

Defendants’ two motions to dismiss. We find these arguments meritless, and affirm

the dismissal without further discussion. See 11th Cir. R. 36-1. In doing so, we

affirm only the district court’s ultimate conclusions that plaintiffs’ complaints fail to

state a claim on which relief can be granted, and do not endorse all of the district

court’s reasons for these conclusions. We do conclude, however, that the district

court entered judgment for the defendants without a reversible error of law. 

IV. STANDARD OF REVIEW

We review for an abuse of discretion the district court’s imposition of sanctions

under Rule 11. Massengale v. Ray, 267 F.3d 1298, 1301 (11th Cir. 2001). 

V. DISCUSSION

“The standard for testing conduct under amended Rule 11 is ‘reasonableness

under the circumstances.’” United States v. Milam, 855 F.2d 739, 743 (11th Cir.
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1988) (quoting Donaldson v. Clark, 819 F.2d 1551, 1556 (11th Cir. 1987) (en banc)).

A district court has the discretion to award Rule 11 sanctions:

(1) when a party files a pleading that has 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 and that cannot be advanced as a

reasonable argument to change existing law; or (3) when the party files

a pleading in bad faith for an improper purpose. 

Massengale, 267 F.3d at 1301 (quoting Worldwide Primates, Inc. v. McGreal, 87

F.3d 1252, 1254 (11th Cir. 1996)). Here, the district court found that the Plaintiffs

had filed a pleading advancing claims that had no possible chance of success. After

carefully reviewing the district court’s first dismissal order and the Plaintiffs’ Second

Amended Complaint, we conclude, for two related reasons, that the district court

abused its discretion in imposing sanctions. 

First, there is scant on-point authority to guide the reasonable lawyer to the

conclusion that, with the RICO claims in the Second Amended Complaint, he either

had no reasonable chance of success or was advancing an unreasonable argument to

change existing law. Though we have concluded 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 district court’s order dismissing the claims in the First Amended

Complaint did not give such a clear warning not to refile under RICO that only an
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unreasonable lawyer would have repleaded RICO claims. The district 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 available remedy, and reasons that the order would have put

any reasonable lawyer on notice that the RICO claims had no chance of success.

While the district court’s first dismissal does state that RICO is not the proper remedy

for Plaintiffs to pursue, the order also points out the pleading defects in the Plaintiffs’

RICO claims and gives the Plaintiffs leave to file a Second Amended Complaint.

This approach created an ambiguity. Based on this ambiguity, a reasonable lawyer

could interpret the order as inviting better-pleaded RICO claims. Thus, we cannot

say, in light of the first dismissal order, that a reasonable lawyer must have known

that improved RICO claims would have no reasonable chance of success.

In light of the paucity of controlling precedent and the district court’s first

dismissal order, Plaintiffs’ counsel were not unreasonable in pleading the RICO

claims in the Second Amended Complaint. Therefore, we conclude that the district

court abused its discretion in imposing sanctions. 

VI. CONCLUSION
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The district court’s dismissal of the action is affirmed; because the district court

abused its discretion in awarding sanctions, the district court’s imposition of

sanctions is reversed.

AFFIRMED IN PART; REVERSED IN PART.