IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 07-20277

FLEMING & ASSOCIATES

Plaintiff-Appellant

v.

NEWBY & TITTLE DEFENDANTS, Represented by Liaison Counsel;

ROBERT A BELFER; NORMAN P BLAKE, JR; RONNIE C CHAN; WENDY

L GRAMM; ROBERT K JAEDICKE; CHARLES A LEMAISTRE; JOE H

FOY; BRUCE G WILSON; JOHN MENDELSON; PAULO V FERRAZ

PEREIRA; FRANK SAVAGE; HERBERT S WINOKUR, JR; JEROME J

MEYER; JOHN A URQUHART; CHARLES E WALKER; JOHN WAKEHAM

Defendants-Appellees

________________________________________________________________________

DAVID JOSE; JAMES BRISTER; PETER MAXFIELD; GEORGE ATALLAH

Plaintiffs-Appellants

v.

ROBERT A BELFER; NORMAN P BLAKE , JR; RONNIE C CHAN, JR;

JOHN H DUNCAN; JOE H FOY; WENDY L GRAMM; KEN L HARRISON;

ROBERT K JAEDICKE; MICHAEL J KOPPER; CHARLES A LEMAISTRE;

REBECCA MARK-JUBASCHE; JOHN MENDELSOHN; JEROME J

MEYER; PAUL V FERRAZ PEREIRA; FRANK SAVAGE; JOHN A

URQUHART; JOHN WAKEHAM; CHARLES E WALKER; HERBERT S

WINOKUR, JR, CERTAIN OUTSIDE DIRECTOR DEFENDANTS

Defendants-Appellees

________________________________________________________________________

MARY BAIN PEARSON; JOHN MASON

Plaintiffs-Appellants

v.

United States Court of Appeals

Fifth Circuit

F I L E D

May 30, 2008

Charles R. Fulbruge III

Clerk
No. 07-20277

2

ROBERT A BELFER; NORMAN P BLAKE, JR; RONNIE C CHAN; JOHN H

DUNCAN; JOE H FOY; WENDY L GRAMM; KEN L HARRISON; ROBERT

K JAEDICKE; MICHAEL J KOPPER; CHARLES A LEMAISTRE; JOHN

MENDELSOHN; JOHN A URQUHART

Defendants-Appellees

________________________________________________________________________

FRED ROSEN; MARIAN ROSEN; LARRY D BARNETT; ROBERT CHAZEN;

CLIFFORD D GOOKIN, Trustee for the Clifford D Gookin Revocable Living

Trust; CARL HERRIN; TODD L JOHNSON, Administrator for RJS &

Affiliated Companies Pension Plan; ROBIN SAEX; JOHN SIEMER AND

ELIZABETH SIEMER, Trustees FBO the Siemer Family Trust; JOHN E

WILLIAMS; LEE ANN TOBIN, Personal Representative of the Estate of

Anthony Tobin

Plaintiffs-Appellants

v.

ROBERT A BELFER; NORMAN P BLAKE, JR; RONNIE C CHAN; JOHN H

DUNCAN; JOE H FOY; WENDY L GRAMM; ROBERT K JAEDICKE;

CHARLES A LEMAISTRE; JOHN MENDELSOHN; JEROME J MEYER;

PAUL V FERRAZ PEREIRA; FRANK SAVAGE; JOHN A URQUHART;

JOHN WAKEHAM; CHARLES E WALKER; HERBERT S WINOKUR,

CERTAIN OUTSIDE DIRECTOR DEFENDANTS

Defendants-Appellees

________________________________________________________________________

HAROLD AHLICH; FRANCES AHLICH; JOHN BANKS; IDA BANKS;

NANCY BELL; BILL BRAGDON; RHONDA BRAGDON; BRUCE

CAMPBELL; JANET CAMPBELL; VINCENT CARRELLA; MARIANNE

CARRELLA; LOUIS CARUCCI; PATRICK CUNNINGHAM; JAMES

DAVIDSON; KAREN DAVIDSON; JOHN DAVIS; PETER DORFLINGER;

RONALD GISH; JOHANNE GRAHAM; JOHN GUTMAN; DAVID HUCKIN;

EDWARD JAPHE; MICHAEL KREHEL; JOHN NEIGHBORS; JEAN

NEIGHBORS; WILLIAM PWELL; SAMUEL REINER; LILLIAN REINER;

HENRITTA ROWE; RALPH SHAPIRO; JEAN SHAPIRO; CONSTANCE

THEODORE; GEORGE VENTERS; NICKYE VENTERS; PETER VERUKI;

CHRIS BABSON AND STACEY BABSON, Co-Executors of the Estate of

Irving Babson; JENNIE LUTZ, Personal Representative of the Estate of Paul

Lutz
No. 07-20277

3

Plaintiffs-Appellants

v.

ROBERT A BELFER; NORMAN P BLAKE, JR; RONNIE C CHAN; JOHN H

DUNCAN; JOE H FOY; WENDY L GRAMM; ROBERT K JAEDICKE;

CHARLES A LEMAISTRE; JOHN MENDELSOHN; JEROME J MEYER;

PAUL V FERRAZ PEREIRA; FRANK SAVAGE; JOHN A URQUHART;

JOHN WAKEHAM; CHARLES E WALKER; HERBERT S WINOKUR, JR

Defendants-Appellees

________________________________________________________________________

RUBEN DELGADO; IRENE DELGADO; APOLONIO BACA; ROBERT H

BAKER, on Behalf of the Brookdale Baker Limited Family Partnership;

DAVID F BITONTI; EDWIN C BROUN, III; CAROLINE CALLERY;

WALLACE TILLEY, as Representative of the Estate of Bonnie Cooksey;

LOUIS J DALEO, on Behalf of Loumar Ltd a Partnership; KEN DAVIS;

JEFFREY W ELLIOT; DONNA L GAGLIARDI; LOUIS GORDON; JOEL

GROSSMAN; JAIME GROSSMAN; DOUGLAS C HAUSE; RIETTA

HUGHMACHER; GEORGE JEFFORDS; KENNETH H JONES, on Behalf of

Marianne Jones; EMILY KEMPER; ALAN LEVIN; DIANE LEVIN; SYLVIA

H LOHMAN; DAVID P MATTHEWS; KEN J MCCALL; MARY FAYE

MCCALL; LANCE MILLER; BARBARA MILLER; EDWARD O’ROURKE;

KATHRYN O’ROURKE; FRANK PARGAC; DEBRA PARGAC; ALEX

PEZDEK; ARLENE RAWITSCHER; JOHN B ROWE; JEFFREY E

SHAINOCK; ROBERT TILOTTA; THOMAS TOSONI; BILL W VERNON;

SHAUN WYMES; NANCY BELL, Personal Representative of the Estate of

Howard Earl Bell

Plaintiffs-Appellants

v.

ROBERT A BELFER; NORMAN P BLAKE, JR; RONNIE C CHAN; JOHN H

DUNCAN; JOE H FOY; WENDY L GRAMM; ROBERT K JAEDICKE;

CHARLES A LEMAISTRE; JOHN MENDELSOHN; JEROME J MEYER;

PAULO V FERRAZ PEREIRA; FRANK SAVAGE; JOHN A URQUHART;

JOHN WAKEHAM; CHARLES E WALKER; HERBERT S WINOKUR, JR

Defendants-Appellees

________________________________________________________________________

DON L GUY, Trustee for the Guy Family Living Trust; JACK MANNING;

SUE MANNING; MARY H PEARSON; CURTIS D ROBERT; GREY

SWINDENSKY; BARRY M WUNTCH; DOROTHY ZEIGFINGER AND
No. 07-20277

4

HAROLD ZEIGFINGER, Co-trustees for the Harold & Dorothy Zeigfinger

Family Trust; CHARLES H ADDERHOLD; ARNOLD GREENBERG;

REGAN YARDLEY; HAROLD SPEARS; SUZANNE C SPEARS; LENORA

HARTMAN; JOSEPH HAMER; PATRICIA A THOMAS; ALFRED

URBANEK; ADRIENNE SAMUELS; ROBERT HERZBERG; FRANCES R

MATTINGLY; GEORGE J COOKE; DEBRA C LEVENSON; WILLIS

BARTAK; JOYCE W RICHARDSON; RICHARD C KENTOPP; JIM BEMIS;

ROSANNA KAAR; WILLIAM P TODSEN; JOSEPH TENNARO;

THEODORE A MARCINIAK; MARTIN KAYE AND JUDITH KAYE,

Trustees for the Kaye Family Trust; STANLEY JACK ABRAMS;

LAWRENCE P TREADWELL; THOMAS J REGAN; MARTHA SEARS,

Personal Representative of the Estate of Kaylor Wilkins

Plaintiffs-Appellants

v.

ROBERT A BELFER; NORMAN P BLAKE, JR; RICHARD B BUY; RONNIE

C CHAN; JOHN H DUNCAN; JOE H FOY; WENDY L GRAMM, M D;

ROBERT K JAEDICKE; CHARLES A LEMAISTRE; JOHN MENDELSOHN;

JEROME J MEYER; FRANK SAVAGE; JOHN A URQUHART; JOHN

WAKEHAM; CHARLES E WALKER; HERBERT S WINOKUR, JR

Defendants-Appellees

________________________________________________________________________

CYNTHIA L ADAMS; COURTNEY L ALLEN; MARIA M ALTINGER;

SUSAN L DAVIS; WILDA B DAVIS; MARY ANN FISHER; RUTH E

FLOURNOY; FRANK W GEROLD; FRANK W GEROLD, on Behalf of the

Estate of Patricia M Gerold; DOROTHY L PIERCE; DOUGLAS P PIERCE;

GERALD E SEDLACEK; JEANETTE A SEDLACEK; CARL TRAGESSER;

ROBERT F WOHLFARTH; ERNEST J SCHWARTZ; EDITH SCHWARTS;

VERN C SMITH; NANCY S ROBERTSON; GEORGE FRASER; MAURINE D

FRASER; JACOB J TAMBORELLO; PHYLLIS F TAMBORELLO; JOHN W

PETERSON; CAROLYN JANE PETERSON; WILLIAM E TOLSON;

RICHARD F MILLER; PETER JENNINGS; STEPHEN JENNINGS AND

LINDA JENNINGS, Trustees for the Stephen and Linda Jennings Trust;

STEPHEN O JENNINGS, Trustee for the Susan Trust; LEROY W PICKENS;

JOHN A TUTHILL; THOMAS K HUISKAMP; ROBERT W SLOAN;

GEORGE C CAUBLE, JR; ARUN MISRA; JAY MISRA; CLYDE

CARPENTER; CAROLYN CARPENTER

Plaintiffs-Appellants

v.
No. 07-20277

* District Judge of the Western District of Texas, sitting by designation.

5

ROBERT A BELFER; NORMAN P BLAKE, JR; RONNIE C CHAN; JOHN H

DUNCAN; JOE H FOY; WENDY L GRAMM, M D; ROBERT K JAEDICKE;

CHARLES A LEMAISTRE; JOHN MENDELSOHN; JEROME J MEYER;

FRANK SAVAGE; JOHN A URQUHART; JOHN WAKEHAM; CHARLES E

WALKER; HERBERT S WINOKUR, JR, CERTAIN OUTSIDE DIRECTOR

DEFENDANTS

Defendants-Appellees

Appeals from the United States District Court 

for the Southern District of Texas

Before SMITH and PRADO, Circuit Judges, and LUDLUM*, District Judge.

PRADO, Circuit Judge:

In this case we review an award of attorneys’ fees that, regardless of our

decision, will never be paid. Plaintiffs-Appellants brought this appeal, seeking

vacatur of the district court’s imposition of compensatory attorneys’ fees in light

of the settlement of their suit against Defendants-Appellees. For the following

reasons, we AFFIRM the judgment of the district court with respect to its initial

sanctions order but VACATE the attorneys’ fees portion of the district court’s

judgment.

I. FACTUAL AND PROCEDURAL BACKGROUND

The underlying litigation in this case is one of many cases arising from the

Enron collapse and consolidated in the Southern District of Texas. This

particular case involved several coordinated/consolidated plaintiffs represented

by Fleming & Associates L.L.P. (“the Fleming Plaintiffs”) and their claims

against Defendants-Appellees, the former outside directors of Enron (“the

Outside Directors”). 
No. 07-20277

6

During the course of discovery, the Fleming Plaintiffs designated Curtis

Verschoor (“Verschoor”) as an expert witness on business and professional

ethics, corporate governance, corporate auditing, and public disclosures.

Verschoor prepared a 165-page reportthatthe Fleming Plaintiffs timely filed on

June 1, 2006,the deadline to file such reports under the district court’s discovery

order. The discovery order applicable to the Enron cases required parties to

upload expert opinions to a secure FTP site to be used for Enron discovery

documents. The order also required parties to post a notice to a separate

website, esl3624.com, to inform the other parties of the production of a new

document. 

On September 5, 2006, the day before Verschoor’s scheduled deposition,

the Fleming Plaintiffs uploaded an amended version of his expert report to the

Enron discovery website. They did not post notice of the newly uploaded

document to the notice website, esl3624.com. 

The Outside Directors first became aware of revisions to Verschoor’s report

at the beginning of his September 6 deposition. At that time, the Fleming

Plaintiffs did not provide a comparison of specific changes made to the report,

though they asserted that all changes were non-substantive. In his deposition,

Verschoor characterized the changes as typographical and grammatical—periods

and semicolons out of place—and a few omitted words. He also initially testified

that the Fleming Plaintiffs’ counsel did not make any changes to the report,

although after further questioning, Verschoor realized that the Fleming

Plaintiffs’ counsel had made some revisions to the report’s table of contents.

Verschoor’s deposition testimony also suggested that the Fleming Plaintiffs’

counsel knew of errors in the body of the report around the time it was originally

filed, June 1, and that Verschoor did not make revisions to the body of the report

until approximately ten days prior to his deposition. 
No. 07-20277

7

The Outside Directors’ counsel halted the deposition and requested an

emergency telephone hearing before the district judge overseeing the case, Judge

Melinda Harmon. Judge Harmon suggested that the deposition be recessed

until she could make further rulings. In the interim, the Outside Directors filed

a motion to exclude Verschoor’s testimony.

On September 14, 2006, the district court issued an order sanctioning the

FlemingPlaintiffs’ counsel and denying the Outside Directors’ motion to exclude

the expert’s testimony. After performing its own line-by-line comparison of the

original and revised expert reports, the district court concluded,

Although the table of contents is substantially different, the only

differences in the body of the report consist of occasional changes of

dates, the dropping of a line from the original reportin the amended

report,the additions of words and a few punctuation and formatting

changes. None of the changes to the body of the original report

found in the amended report appear to be material.

The court noted that counsel’s revisions to the report’s table of contents “give[]

rise to suspicion that counsel may have had a hand in writing the report,” but

the court concluded that any changes to the body of the report were not material

and were made by the expert witness himself. The court nevertheless ordered

that the Fleming Plaintiffs’ counsel be “sanctioned for changing the expert

witness’s report and shall pay to the Former Outside Directors the reasonable

attorneys[’] fees incurred by counsel for the Former Outside Directors in

bringing the [motion to exclude expert testimony].” The court ordered the

Outside Directors to submit a fee affidavit to be used to calculate the sanctions

amount. 

On September 28, 2006, the Fleming Plaintiffs moved for reconsideration

of the sanctions order under Federal Rule of Civil Procedure 59(e). They also

objected to the fee affidavit submitted by the Outside Directors. In turn, the
No. 07-20277

1 Counsel for the Outside Directors wrote to the magistrate judge, advising her of the

settlement: “Our clients, however, have settled the claims of the Fleming Plaintiffs

and—pursuantto that settlement—are precluded from pursuing further the sanctions atissue

in Judge Harmon’s ruling.” 

8

Outside Directors opposed the Fleming Plaintiffs’ motion for reconsideration and

opposed the objections to the fee affidavit. 

In early December 2006, the parties settled their underlying dispute, and

on December 13, 2006, the Fleming Plaintiffs moved to dismiss all claims

against the Outside Directors. In an unopposed motion, the Fleming Plaintiffs

moved that“all parties shall bear their own costs, expenses and attorneys’ fees.”

Thereafter, the Outside Directors withdrew their opposition to reconsideration

and agreed to withdrawal of the sanctions order.

On February 8, 2007, the district court denied reconsideration of its

sanctions order and referred the attorneys’ fee issue to a magistrate judge “for

consideration and resolution, including a hearing, should she find one

necessary.” On March 6, 2007, although the Outside Directors informed the

magistrate judge that they had agreed not to collect sanctions after the

settlement,1the magistrate judge held a hearing and directed the Fleming

Plaintiffs’ counsel to pay $15,214.45 in attorneys’ fees and expenses to the

Outside Directors. This appeal followed. We have jurisdiction under 28 U.S.C.

§ 1291 to hear this appeal.

II. DISCUSSION

The Fleming Plaintiffs raise two arguments in challenging the district

court’s sanctions orders. First, they make arguments based on mootness: either

the settlement stripped the district court of jurisdiction to impose compensatory

sanctions, requiring mandatory vacatur, or the Fleming Plaintiffs should be

entitled to equitable vacatur of the sanctions because the settlement made any

appeal of the sanctions moot. Second, the Fleming Plaintiffs contend that the
No. 07-20277

9

district court abused its discretion in granting the sanctions order in the first

place. 

A. Mootness

This court reviews questions of mootness de novo. Staley v. Harris County,

485 F.3d 305, 308 (5th Cir.) (en banc), cert. denied, 128 S. Ct. 650, and cert.

denied, 128 S. Ct. 647 (2007). TheFlemingPlaintiffs argue thattheir settlement

with the Outside Directors in the underlying case should have mooted the

district court’s award of compensatory sanctions against the Fleming Plaintiffs’

counsel. This argument basically splits into two prongs. First, the Fleming

Plaintiffs claim that the district court lacked jurisdiction at the time it imposed

the final sanctions because the parties had settled by that time. Second, the

Fleming Plaintiffs contend that, regardless of whether the district court had

jurisdiction, the settlement moots any appeal of the sanctions order, and the

order is therefore subject to equitable vacatur. 

The Fleming Plaintiffs’ first argument invites us to view the district

court’s September 14, 2006 sanctions order as a mere preliminary order that did

not become a final appealable order until the magistrate judge determined the

sanctions amount on March 6, 2007. Citing Williams v. Ezell, 531F.2d 1261 (5th

Cir. 1976), the Fleming Plaintiffs argue that the district court’s sanctions order

was not final until a monetary amount was decided. In Williams, we held that

the district court’s grant of a party’s motion seeking attorneys’ fees was not a

final order for the purpose of appellate review because the court deferred the

question of the amount of those fees. Id. at 1263; accord Perkins v. Gen. Motors

Corp., 965 F.2d 597, 599 (8th Cir. 1992) (“This order, however, was not a final

appealable order because it prescribed procedures to determine the amount of

money due under the sanctions.”). If the instant case was moot before the

district court’s final judgment on the sanctions order, that final order is subject

to mandatory vacatur. Goldin v. Bartholow, 166 F.3d 710, 718 (5th Cir. 1999)
No. 07-20277

2 Regardless ofwhether the district court had jurisdiction over a purportedly mootissue,

the Court of Appeals retains jurisdiction to order vacatur of a mooted case. U.S. Bancorp

Mortgage Co. v. Bonner Mall P’ship, 513 U.S. 18, 20-22 (1994). 

10

(“If mootness occurred prior to the rendering of final judgment by the district

court, vacatur and dismissal is automatic. The district court would not have had

Article III jurisdiction to render the judgment, and we cannotleave undisturbed

a decision that lacked jurisdiction.”).2

Nevertheless, we recognize that a district court always has jurisdiction to

impose sanctions designed to enforce its own rules, even after that court no

longer has jurisdiction over the substance of a case: “It is well established that

a federal court may consider collateral issues after an action is no longer

pending. For example, district courts may award costs after an action is

dismissed for want of jurisdiction.” Cooter & Gell v. Hartmarx Corp., 496 U.S.

384, 395 (1990); see also Willy v. Coastal Corp., 503 U.S. 131, 139 (1992) (holding

that a district court had jurisdiction to impose Rule 11 sanctions even though it

was later found to lack jurisdiction over the underlying case). The Eighth

Circuit elaborated on this point:

The purpose of sanctions goes beyond reimbursing parties for

expenses incurred in responding to unjustified or vexatious claims.

Rather, sanctions are designed to punish a party who has already

violated the court’s rules. The interest in having rules of procedure

obeyed does not disappear merely because an adversary chooses not

to collect the sanctions.

Perkins, 965 F.2d at 599 (citation and internal quotation marks omitted). 

Second, the Fleming Plaintiffs contend that if the district court had

jurisdiction atthe time itissued its final attorneys’ fee award, any appeal ofthat

monetary award would be rendered moot by the parties’ settlement and the

Outside Directors’ agreement not to collect it. In that event, we would vacate

under equitable principles. U.S. Bancorp Mortgage Co. v. Bonner Mall P’ship,
No. 07-20277

3 We observe that the Supreme Court has relaxed the Munsingwear rule of“automatic”

vacatur in cases that become moot on appeal. See U.S. Bancorp, 513 U.S. at 23-25; Staley, 485

F.3d at 310. Under current law, the appropriateness of equitable vacatur is determined by

weighing the equities on a case-by-case basis. Staley, 485 F.3d at 311 n.2. “[T]he burden is

on ‘the party seeking relief from the status quo’ of the lower court judgment to demonstrate

‘equitable entitlement to the extraordinary remedy of vacatur.’” Id. at 310 (quoting U.S.

Bancorp, 513 U.S. at 26) (emphasis removed). Equitable vacatur generally is only available

in cases where the party seeking relief from the judgment below did not cause the mootness

by voluntary action: “Where mootness results from settlement, . . . the losing party has

voluntarily forfeited his legal remedy by the ordinary processes of appeal or certiorari, thereby

surrendering his claim to the equitable remedy of vacatur. The judgment is not unreviewable,

but simply unreviewed by his own choice.” U.S. Bancorp, 513 U.S. at 25. 

In this case, the district court never had a chance to rule on the merits ofthe underlying

dispute because the parties settled. The court’s March 6 sanctions order—assuming the court

retained jurisdictionatthe time itissued its final monetary award—was a punishment against

the Fleming Plaintiffs’ counsel, not a judgment that either ofthe parties in the case could claim

as a victory or a loss. We should not deprive the Fleming Plaintiffs’ counsel of the right to

equity when the party he represents chose to settle its suit. See Agee v. Paramount Commc’ns,

Inc., 114 F.3d 395, 399 (2d Cir. 1997) (“[An attorney] ha[s] an ethical obligation as an attorney

to act in his client’s best interests, and he could not discourage his client from entering into a

settlement simply because his client’s action might cause him to ‘forfeit’ his opportunity to

appeal the district court’s findings that he acted in bad faith.”); Perkins, 965 F.2d at 600 (“The

refusal to grant jurisdiction over an appeal of sanctions after the underlying suit has been

settled thrusts a personal conflict upon the attorney—by settling a case in the client’s interest

he may have to forfeit a personal right to appeal the sanctions levied against him.”).

11

513 U.S. 18, 25 (1994) (“A party who seeks review of the merits of an adverse

ruling, but is frustrated by the vagaries of circumstance, ought not in fairness

be forced to acquiesce in the judgment.”); United States v. Munsingwear, Inc.,

340 U.S. 36, 39 (1950) (“The established practice of the Court in dealing with a

civil case from a court in the federal system which has become moot while on its

way here or pending our decision on the merits is to reverse or vacate the

judgment below and remand with a direction to dismiss.”).3

Regardless of which approach we take, itis importantto recognize thatthe

district court’s action included two components: (1) a finding that the Fleming

Plaintiffs’ attorney engaged in sanctionable behavior; and (2) a compensatory

award payable to the Outside Directors. Although no Fifth Circuit case gives us

direct guidance on this issue, courts in other circuits have recognized that a

compensatory sanction—primarily intended to compensate a party for a wrong
No. 07-20277

12

committed against it by the opposing party—is substantially different from a

purely punitive sanction, in which a litigant must pay the court or perform some

other penance for misbehavior. For example, the Seventh Circuit drew such a

distinction in Clark Equipment Co. v. Lift Parts Manufacturing Co., 972 F.2d

817 (7th Cir. 1992). The court emphasized that parties should be able to bargain

away the right to receive compensatory sanctions:

We agree that a court’s interest in having the rules of procedure

obeyed never disappears. But that interest is not sufficient to keep

a compensatory award alive for appeal after the parties have

settled. A district court may sanction abusive behavior directly by

imposing a punitive fine made payable to the court or by imposing

non-monetary sanctions. These sanctions cannot be settled by the

parties. Alternatively, however, the court may sanction the

offending party by forcing him to compensate his opponent for the

trouble he has caused. This second enforcement mechanism may be

analogized to tort remedies, which also regulate behavior by

compensating injured parties. Society at large has an interest in

enforcing negligence rules, yet we allow tort plaintiffs to bargain

away that interest by settling. So too the beneficiary of a

compensatory sanction may bargain away the court’s interest in

seeing its rules enforced. And despite the way we have phrased our

analogy, a settlement does not mean that a sanction has been

rendered ineffective—any more than a guilty plea indicates thatthe

criminal laws are not being enforced.

Id. at 819 (citation omitted) (emphasis added). 

The Eleventh Circuit took a similar approach in Kleiner v. First National

Bank of Atlanta, 751 F.2d 1193 (11th Cir. 1985). In that case, the district court

imposed various sanctions on one party’s lawyers, including compensatory

attorneys’ fees payable to the other party and a fine payable to the court. Id. at

1199. While an appeal of the sanctions was pending, the parties settled the

underlying case. Id. The Eleventh Circuit remanded the attorneys’ fee awards

to the district court with instructions to vacate those portions of its order as

moot. Id. By contrast, the Eleventh Circuit upheld the fine payable to the court.
No. 07-20277

13

Thatfine was “imposed pursuantto the inherent powers of the district court and

is not subject to revocation by the parties.” Id. at 1200. The court thus

articulated a distinction between sanctions payable to the court and those

intended to compensate the opposing party: 

The stipulation awarding attorneys’ fees by its terms encompasses

the district court’s award of fees and costs incident to class notice

and the disciplinary proceeding. The parties correctly argue that

the settlement has mooted issues of attorneys’ fees, costs, and the

legality of the voidable exclusion sanction . . . . A different result

must obtain with respect to the fines and disqualification imposed

upon counsel. The $50,000 fine assessed against [counsel] was

imposed pursuant to the inherent powers of the district court and is

not subject to revocation by the parties.

Id. at 1199-200. Under Kleiner, therefore, a district court order awarding

compensatory attorneys’ fees should be vacated as moot after a settlement of the

underlying litigation. 

We are persuaded by Clark and Kleiner that we should vacate the

monetary portion of the sanctions in this case, regardless of whether the issue

became moot before or after the district court’s sanctions order became final. If

we interpret the magistrate judge’s March 6, 2007 order as the only final

sanctions order at issue, the issue of monetary sanctions was moot at that time,

the district court lacked jurisdiction, and we must therefore vacate the

judgment. See Goldin, 166 F.3d at 718. Alternatively, because the settlement

moots any appeal ofthe compensatory portion ofthe sanctions, we should vacate

under equitable principles. See Munsingwear, 340 U.S. at 39.

Notwithstanding our reversal of the compensatory sanctions, we decline

to vacate the district court’s September 14 order entirely. In that order, prior to

the parties’ settlement, the district court sanctioned the Fleming Plaintiffs’

lawyer and explained its reasons for doing so. If the September 14 order is seen

as a final judgment, it is not subject to mandatory vacatur, which applies only
No. 07-20277

4 We note that this approach differs from the reasoning of other circuits, where courts

have declined to take appellate jurisdiction to review a sanctions order merely for its

reputational effects. See Clark, 972 F.2d at 820 (“[A]n attorney may not appeal from an order

that finds misconduct but does not result in monetary liability, despite the potential

reputational effects.”); Riverhead Sav. Bank v. Nat’l Mortgage Equity Corp., 893 F.2d 1109,

1112 (9th Cir. 1990) (holding that the court lacked appellate jurisdiction where a settlement

released all claims for sanctions awards, and implicitly rejecting the sanctioned party’s

argument that it still had an interest in appealing the sanctions merely because of the

sanctions’ reputational effect).To the extentthatthose opinions conflict with Walker, we follow

our own precedent. 

14

when the court lacked jurisdiction at the time it issued a final order. See Goldin

166 F.3d at 718. It is clear that the sanctions issue could not have become moot

before the settlement. Therefore the district court had jurisdiction on September

14 to issue the sanctions order, and mandatory vacatur does not apply. See id.

Even if the September 14 order was not a final judgment, equitable

vacatur is not appropriate because the order is nevertheless appealable: Any

non-monetary portion of the sanctions not rendered moot by settlement is

appealable for its residual reputational effects on the attorney. Walker v. City

of Mesquite, 129 F.3d 831, 832-33 (5th Cir. 1997) (holding that even without a

monetary sanctions award, the damage to an attorney’s reputation caused by a

court’s sanction creates a reviewable issue sufficient to support Article III

jurisdiction over an appeal of the judgment). Equitable vacatur, intended as a

remedy when an appeal itself is moot, is therefore unavailable. We instead

review the sanctions award on its merits.4 Our holding comports with Clark and

Kleiner, which recognized that although compensatory sanctions may be

bargained away by the parties, the court’s right to sanction parties for

misconduct remains. Clark, 972 F.2d at 819; Kleiner, 751 F.2d at 1199-200. 

We also are in harmony with the Eighth Circuit’s decision in Perkins,

which emphasized that parties generally cannot bargain away the court’s right

to impose sanctions. 965 F.2d at 600. In that case, the district court imposed

sanctions against Perkins and her lawyer for various abuses during trial and
No. 07-20277

15

discovery, but the court set a later hearing date to determine the sanctions

amount. Id. at 598. Before that hearing, the parties settled, and General

Motors joined Perkins and her lawyer in asking the district court to lift its

sanctions order. Id. The district court refused to do so. Id. Nevertheless, in

fashioning its final sanctions order, the district court—in light of GM’s

agreement not to collect any monetary sanctions—declined to impose any

monetary penalty. Id. at 599-600. Perkins and her lawyer appealed. The

appellate court concluded that “[a]ppellants are entitled to bargain with

adversaries to drop a motion for sanctions, but they cannot unilaterally bargain

away the court’s discretion in imposing sanctions and the public’s interest in

ensuring compliance with the rules of procedure.” Id. at 600. Thus, although

the district court declined to impose monetary sanctions, the appellate court

recognized a district court’s ability to impose sanctions despite a prior

settlement. While the Perkins court imposed sanctions despite a settlement, it

did not compel the sanctioned party to pay attorneys’ fees. Unlike the court in

Perkins, the district judge in the instant case ignored both parties’ requests for

the court to decline to impose attorneys’ fees. 

Our holding preserves the right of parties to bargain away sanctions

designed to compensate the parties themselves, such as the attorneys’ fee award

in this case. On the other hand, we recognize that district courts retain the

ability to police their own rules through various punitive sanctions mechanisms,

including issuing written opinions that describe attorney misconduct. Such

admonitions play an important role in discouraging bad behavior by litigators,

and where a district court has reviewed a case of misconduct and issued a well

reasoned sanctions order, we should not allow a subsequent settlement to erase

that language. 

B. Merits
No. 07-20277

16

Although we vacate the monetary portion of the sanctions award, we

consider whether to vacate the district court’s sanctions order in its entirety

because of the reputational effects that order might have on the Fleming

Plaintiffs’ counsel. See Walker, 129 F.3d at 832-33. This court reviews a district

court’s imposition of sanctions for abuse of discretion. Goldin, 166 F.3d at 722.

“Generally, an abuse of discretion only occurs where no reasonable person could

take the view adopted by the trial court.” Friends for Am. Free Enter. Ass’n v.

Wal-Mart Stores, Inc., 284 F.3d 575, 578 (5th Cir. 2002) (internal quotation

marks omitted). 

The district court cited no legal authority for its imposition of sanctions.

Thus, the parties are left to argue the appropriateness of sanctions under

various possible provisions. Because the timing of the changes to the report was

of key concern to the district court, we look to Federal Rule of Civil Procedure

16(f), which permits sanctions “[i]f a party or its attorney . . . fails to obey a

scheduling or other pretrial order.” FED. R. CIV. P. 16(f). 

The district court’s discovery order compelled the parties to submit expert

reports by June 1, 2006. The Fleming Plaintiffs filed Verschoor’s revised expert

report in September, without any explanation for the delay. The district court

noted that changes to the report’s table of contents were made “shortly before

the scheduled deposition . . . without prior notice to the defense lawyers,” and

that the last minute disclosure “calls into question the motives of counsel for the

Fleming plaintiffs.” The district court also emphasized that the late disclosure

of these changes forced the Outside Directors to expend additional costs: “Such

expense could have been easily avoided, and the ease of avoiding that expense

calls into question the motives of counsel for the Fleming plaintiffs in making

the changes to the table of contents in the time frame those changes were made,
No. 07-20277

5 Because we conclude that the sanctions were justified under Rule 16, we need not

consider the Outside Directors’ alternative arguments that the sanctions were proper under

Federal Rule of Civil Procedure 37, 28 U.S.C. § 1927, or the district court’s inherent power.

17

and without prior explanation to defense counsel.” (emphasis added). Thus, we

find that the district court did not abuse its discretion under Rule 16.5

III. CONCLUSION

Finding the issue of monetary sanctions moot, we vacate the portion ofthe

district court’s sanctions order to the extent that it made an award of attorneys’

fees. Nevertheless, we decline to vacate the district court’s sanctions order in its

entirety because the court did not abuse its discretion when it issued its original

sanctions order. As this inconsequential case has already consumed too many

judicial resources, we see no reason to remand to the district court. 

VACATED in part and AFFIRMED in part.