In the

United States Court of Appeals

For the Seventh Circuit ____________

No. 07-1126

SOFIA LOPEZ DE MAÑEZ, et al.,

Plaintiffs,

v.

BRIDGESTONE FIRESTONE

NORTH AMERICAN TIRE, LLC, et al.,

Defendants-Appellees.

APPEAL OF:

LEONEL PEREZNIETO

____________

Appeal from the United States District Court

for the Southern District of Indiana, Indianapolis Division.

No. IP 03-5790-C-B/S, MDL No. 1373—Sarah Evans Barker, Judge.

____________

ARGUED SEPTEMBER 11, 2007—DECIDED JULY 11, 2008

____________

Before RIPPLE, MANION, and WOOD, Circuit Judges.

WOOD, Circuit Judge. This appeal arises out of one of

the many cases that were filed against Ford Motor Company and Bridgestone/Firestone, Inc. (now known as

Bridgestone Firestone North American Tire, LLC), after

some Firestone tires installed on Ford Explorers exploded, often with catastrophic consequences. Although
2 No. 07-1126

most of those lawsuits involved U.S. citizens who were

driving their cars within the United States, a certain

number involved foreigners. This is one of the latter

group: it was brought by the family of José Samuel MañezReyes, who was killed in Veracruz, Mexico, in one such accident. In an earlier opinion, this court reviewed a decision by the district court to dismiss the Mañez litigation

under the doctrine of forum non conveniens, on the ground

that a forum in Mexico would be available and more

appropriate. In re Bridgestone/Firestone, Inc., 420 F.3d 702

(7th Cir. 2005) (Mañez I).

The earlier appeal took an unexpected turn when the

plaintiffs submitted documents indicating that the

Fourth Court of First Instance for Civil Cases of the First

Judicial District in Morelos, Mexico, had concluded

(contrary to the district court’s expectation) that it did

not have jurisdiction over the case. In supplemental

filings before this court, plaintiffs argued that this demonstrated conclusively that the courts of Mexico were not

available to hear the case and thus that a dismissal for

forum non conveniens was improper. See generally Gulf

Oil Corp. v. Gilbert, 330 U.S. 501, 506-07 (1947) (“In all cases

in which the doctrine of forum non conveniens comes into

play, it presupposes at least two forums in which the

defendant is amenable to process; the doctrine furnishes

critera for choice between them.”). When we invited

the defendants to respond to this new information, they

raised serious questions about the proffered documents.

We concluded that the best course of action was to remand

the case to the district court for reconsideration of the

question whether, in light of all the evidence, Mexico is

an available forum.

The district court accordingly held an evidentiary

hearing on remand to explore the circumstances sur-
No. 07-1126 3

rounding the Morelos court’s decision. Ultimately, the

court had to decide whether the plaintiffs brought that

case in good faith and whether the Mexican court’s decision was entitled to recognition in the U.S. action. The

district court concluded that the Morelos judgment had

indeed been procured in bad faith and thus was not subject to recognition. The court therefore reaffirmed its

earlier decision to dismiss the Mañez litigation on the

ground of forum non conveniens.

With that judgment in hand, defendants moved for an

order imposing sanctions against plaintiffs’ U.S. and

Mexican lawyers. Initially, the district court refrained

from taking that step, because it believed that any fraud

that may have been perpetrated was directed to this

court, not the district court. Upon reconsideration, however, the court concluded that the court of appeals no

longer had jurisdiction over the motion for sanctions,

because no proceeding was then pending there. In addition, the court noted that it, too, was arguably the victim of

vexatious and unreasonable proceedings, as described in 28

U.S.C. § 1927. It therefore imposed a fine of $50,000 as a

sanction against plaintiffs’ U.S. lawyers, to be divided

among the defendants in any way that defendants

thought appropriate. In addition, the court singled out

the appellant before us, Leonel Pereznieto-Castro, for a

particular sanction:

Further, Dr. Leonel Pereznieto, the apparent mastermind behind these frauds on the U.S. and Mexican

courts, is ordered to pay over, as a personal sanction,

the amount of one hundred thousand dollars

($100,000.00). Fifty thousand dollars ($50,000.00) of

that amount is payable to Defendants as an additional offset against the expenses they incurred in
4 No. 07-1126

investigating the Morelos proceedings and litigating

the remand issues and the second fifty thousand

dollars is payable to the Clerk of this court as a sanction for the fraud perpetrated by him in this forum. So

long as this monetary sanction remains unpaid in

the full amount of $100,000, Leonel Pereznieto is and

shall be barred from providing any testimony against

any Defendant in this cause in any United States

court. Further, in terms of resolving the remaining

cases in this multidistrict litigation, any and all

sworn assertions reflecting the views or opinions of

Leonel Pereznieto, whether made by him directly

or indirectly, shall be stricken and we shall not consider as authority cases where his testimony whether oral or written was relied upon as justification for

the court’s opinion.

The court concluded by ordering that its sanctions judgment should be issued under FED. R. CIV. P. 58(d), and

that the dismissal of the case as a whole would be without prejudice. (Here and throughout this opinion we cite

to the version of the Federal Rules of Civil Procedure

that took effect on December 1, 2007, unless it appears

that it would not be “just and practicable” to apply the

new rules to this pending case.)

The fact that the dismissal was without prejudice

raises the question whether the judgment before us is

final for purposes of 28 U.S.C. § 1291. We conclude that

it was, given the nature of a dismissal based on forum

non conveniens. First, we note the obvious difference

between dismissing a case on this ground and refusing

to dismiss and thereby permitting the litigation to continue. The latter kind of order is nonfinal and does not

fall within the narrow confines of the collateral order
No. 07-1126 5

doctrine. See Van Cauwenberghe v. Biard, 486 U.S. 517,

527 (1988). A dismissal, in contrast, ends the case before

the court. The premise of a dismissal under the forum non

conveniens doctrine, as we noted earlier, is that there is

an alternative forum that is better suited to hear the

case. Had the dismissal here been one “with prejudice,”

there would have been some question about plaintiffs’

right to resort to that alternative forum; by stipulating

that it was “without prejudice,” the district court properly signaled that it intended no such limitation. See

In re Joint E. & S. Dists. Asbestos Litig., 22 F.3d 755, 762

n.13 (7th Cir. 1994) (stating that “[t]he grant of a motion to

dismiss on the common law grounds of forum non

conveniens is appealable,” despite being without prejudice).

Compare Peters v. Welsh Dev. Agency, 920 F.2d 438, 439

(7th Cir. 1990) (holding that the district court’s order,

which dismissed a complaint without prejudice for

failure to prosecute but indicated that the case would be

reinstated in that same court if plaintiff were to meet certain conditions, was not final and therefore not appealable).

In this context, therefore, the phrase “without prejudice”

means that although the dismissal is “final” in the sense

that plaintiffs are finished before the U.S. courts, they

still are free to refile the case in another, appropriate

forum, and (at least to the extent that a U.S. court is in a

position to assure such a thing) such a refiling would not

be subject to a defense based on former adjudication. See

Esfeld v. Costa Crociere, S.P.A., 289 F.3d 1300, 1303, 1306

(11th Cir. 2002) (stating that after a dismissal without

prejudice on grounds of forum non conveniens, plaintiffs

are “free to refile” in “any other jurisdiction which

[would] entertain the case,” and noting that an “appropriate forum” for refiling in Esfeld could be “the courts of
6 No. 07-1126

Italy, Vietnam, or Plaintiffs [sic] respective home states”).

Because the underlying litigation is finished, nothing

in Cunningham v. Hamilton County, 527 U.S. 198 (1999),

which addressed interlocutory appeals from sanctions

orders, would prevent Pereznieto from appealing (assuming for the sake of argument that he is best characterized

as one of the lawyers for the plaintiffs, rather than an

expert witness).

This situation is not unlike a dismissal for lack of personal or federal subject-matter jurisdiction, which, while

foreclosing future litigation of the matter in the court

issuing the order, does not preclude a plaintiff from

refiling and litigating in a proper forum. See, e.g., Milwaukee

Concrete Studios, Ltd. v. Fjeld Mfg. Co., Inc., 8 F.3d 441, 448

(7th Cir. 1993) (taking appellate jurisdiction and affirming

the district court’s dismissal without prejudice on grounds

of improper venue because of insufficient contacts to confer

personal jurisdiction but noting that refiling in a proper

venue remains an option); Fuhrman v. Livaditis, 611 F.2d

203, 204 (7th Cir. 1979) (same).

Returning to the case presently before us, it is Pereznieto

who has appealed. His complaint is not about the dismissal of the underlying action, but instead is about the

order imposing sanctions on him. This order, we conclude, is also final for purposes of appeal; the district

court is finished with him, and the only thing that remains is for him to pay the fine that it imposed, unless

he can obtain relief on appeal. See United States v. Dowell,

257 F.3d 694, 698 (7th Cir. 2001); United States v.

Kirschenbaum, 156 F.3d 784, 794 (7th Cir. 1998). Beginning

with fundamental jurisdictional arguments and moving

on to others, he argues that the court’s order was either

beyond its competence, unauthorized, or an abuse of
No. 07-1126 7

discretion. We consider these points in turn, filling in the

factual background as necessary.

I

A few more details about the conduct for which

Pereznieto was sanctioned help to explain the district

court’s action. After the case was remanded to the district court, the parties spent nearly a year in discovery. The

court then held a two-day evidentiary hearing. The evidence presented showed that plaintiffs’ U.S. lawyers,

Roger Reed and Alberto Guerrero, had hired Mexican

lawyers on a contingent-fee basis after the initial appeal

had been filed in this court, and that they did so for

the express purpose of filing a deficient complaint in an

improper Mexican court. The idea was to file something

that the Morelos courts would dismiss, so that plaintiffs

could present “proof” to this court that Mexico was not

an available alternative forum. The Mexican attorney in

charge of this strategy was Pereznieto—a Mexican citizen and attorney whom plaintiffs’ U.S. lawyers knew

because he previously had filed an expert declaration in

support of their claims in the U.S. courts. Pereznieto in

turn hired two other Mexican lawyers to assist him, Juan

Carlos Guerrero-Valle and Rosa Maria Avila-Fernandez.

The district court found that the evidence, including a

“smoking gun” email sent on January 14, 2005, showed

that the Mexican attorneys improperly had used family

connections and had ex parte contact with the Morelos

judge in order to manipulate the system and ensure that

the judge would “throw out the suit according to what

we planned.” Pereznieto, the court found, had “played a

double role in this attempted fraud on the court,” both by
8 No. 07-1126

orchestrating the proceedings in Morelos and by submitting an “expert affidavit” to the Seventh Circuit in

support of the plaintiffs’ arguments while the initial

appeal was pending. At no time did Pereznieto disclose

the circumstances of the Mexican proceedings to the

U.S. courts, nor did he mention that he was representing

the plaintiffs on a contingent-fee basis in Mexico (in

itself, a lawful arrangement) while at the same time

giving sworn statements as an expert in the U.S. proceedings. These findings provided the basis for the sanctions order we set forth above.

II

In his appeal, Pereznieto raises three principal arguments: that the district court lacked jurisdiction to

impose sanctions against him; that the district court did

not observe the requirements of due process; and that

the court erred in its findings about the Mexican proceedings and Mexican law.

A

We consider first Pereznieto’s jurisdictional argument.

To the extent that he is challenging the district court’s

subject-matter jurisdiction to investigate the circumstances

behind his filings and to impose sanctions for fraud or

misconduct, we reject his argument. In Chambers v. NASCO,

Inc., 501 U.S. 32 (1991), the Supreme Court reaffirmed

the inherent power of the federal courts to address “a

full range of litigation abuses.” Id. at 46. Although the

exercise of the inherent power may be limited by statute

or rule, id. at 47, it is still possible in appropriate circum-
No. 07-1126 9

stances for a court “to sanction bad-faith conduct by

means of the inherent power” even if “that conduct

could also be sanctioned under the statute or the Rules,” id.

at 50. No matter who allegedly commits a fraud on the

court—a party, an attorney, or a nonparty witness—the

court has the inherent power to conduct proceedings to

investigate that allegation and, if it is proven, to punish

that conduct.

Whether the court had authority under 28 U.S.C. § 1927

to punish someone in Pereznieto’s position is another

question. Section 1927 permits sanctions only against

“[a]ny attorney or other person admitted to conduct cases

in any court of the United States or any Territory thereof.”

Pereznieto is neither, and so the court’s sanction was not

authorized by § 1927. That is not, however, a point that

affects the court’s jurisdiction; it simply means that the

sanction must stand or fall on some other ground. The

fact that some of the conduct that ultimately gave rise

to the filings in the U.S. court took place outside the

United States (here, in Mexico) does not deprive the

court of its competence to adjudicate this matter. Compare

F. Hoffman-LaRoche Ltd. v. Empagran S.A., 542 U.S. 155,

175 (2004) (in an antitrust case, reserving judgment on

the question whether U.S. law may apply if foreign conduct and domestic conduct are not independent of one

another).

This case is not like United Phosphorus, Ltd. v. Angus

Chemical Co., 322 F.3d 942 (7th Cir. 2003) (en banc), in

which this court found that the restrictions imposed by

the Foreign Trade Antitrust Improvements Act (FTAIA),

15 U.S.C. § 6a, on the reach of the antitrust laws over

conduct occurring outside the United States affect the

subject-matter jurisdiction of the district court. Relying
10 No. 07-1126

on cases that had construed the FTAIA, the en banc court

found that Congress, through that particular statute,

had acted to limit the subject-matter jurisdiction of the

federal courts. No such statute exists in our case. Moreover,

here the district court was exercising its authority to protect

the integrity of the proceedings occurring before it. The acts

in question may have begun outside the United States, but

the scheme decidedly came to fruition within the United

States.

Insofar as Pereznieto is objecting to the court’s exercise

of personal jurisdiction, he runs into a somewhat different problem. He was not a defendant, “haled” into the

U.S. federal district court against his will. See, e.g., WorldWide Volkswagen Corp. v. Woodson, 444 U.S. 286 (1980).

Instead, he was hired in part as an expert witness and

in part as co-counsel for the Mexican proceedings. He

voluntarily submitted opinions to his U.S. counterparts,

knowing that they would in turn submit them to the

district court and this court in connection with the

Ford/Firestone cases. The nature of a person’s relation

to the court matters, as the Supreme Court held in

Phillips Petroleum Co. v. Shutts, 472 U.S. 797 (1985). There

the Court held that the Due Process Clause of the Fourteenth Amendment “need not and does not afford [absent

class plaintiffs] as much protection from state-court

jurisdiction as it does [absent defendants in non-class

cases].” Id. at 811. At the same time, the Court stressed

that due process protections appropriate to the person

in question must be observed: “The Fourteenth Amendment does protect ‘persons,’ not ‘defendants,’ however,

so absent plaintiffs as well as absent defendants are entitled

to some protection from the jurisdiction of a forum State

which seeks to adjudicate their claims.” Id. What the Court
No. 07-1126 11

said about the Fourteenth Amendment and state-court

jurisdiction applies with equal force to the Due Process

Clause of the Fifth Amendment, for purposes of federalcourt jurisdiction.

There are two questions here: first, to the extent that the

district court imposed sanctions against Pereznieto for

representations he made, directly or indirectly, to the

district court or this court, is it permissible to conclude

that Pereznieto submitted himself to the personal jurisdiction of the court for purposes of anything arising out

of those filings; second, to the extent that the district

court imposed sanctions against Pereznieto for actions

he took before the Morelos courts, in Mexico, what, if

anything, justifies bringing Pereznieto before the U.S.

court?

In the affidavit he submitted in conjunction with the

proceedings on remand, Pereznieto stated:

1. My involvement in this case, and others involving

“roll over” cases against the Defendants here and

others [sic], initially arose in consulting capacity

based on experience and training in conflict of law,

Mexican law, and particularly, issues of “territorial

competence” of Mexican Courts (much akin to U.S.

jurisdictional issues).

2. In this capacity I have consulted and/or provided

declarations or opinions in 20 U.S. cases.

* * *

4. However, in this case, US attorneys Reed, Guerrero

and Dubose (hereinafter collectively “American

Lawyers”) approached me regarding initiation of

litigation in Mexican Courts, first, to establish a Mexi-
12 No. 07-1126

can “estate”, and, second, to pursue a claim of the

estate in a Mexican Court.

* * *

10. I did send, with the other Mexican lawyers, the

letter attached as Exhibit “B”, which I understand was

sent to the Court by the American Lawyers by transmittal letter Exhibit “C”.

Although it is not entirely clear to which “Exhibit B”

Pereznieto was referring in paragraph 10 of his affidavit,

there is no doubt that Pereznieto allowed at least one

document to be filed directly with a U.S. court. While

Mañez I was pending in this court, Pereznieto filed an

affidavit discussing the Morelos proceedings. It began

with the caption of the case, showing our docket number

(No. 04-1827), leaving no doubt that he meant to file the

affidavit with this court; it concluded with Pereznieto’s

signature. The affidavit was signed on July 6, 2005, in

Mexico City, with the statement that it was executed

“under penalty of perjury under the laws of the State of

Illinois, the United States of American, and Mexico.”

The district court was entitled to exercise personal

jurisdiction over Pereznieto (putting to one side for the

moment questions of proper notice and proper service

of papers) if Pereznieto had the kind of contacts with

Indiana specified in its Trial Rule 4.4(A) (which serves as

Indiana’s long-arm provision, see LinkAmerica Corp. v.

Albert, 857 N.E.2d 961, 965 (Ind. 2006)) and had minimum

contacts with Indiana such that the exercise of authority

would be consistent with fair play and substantial

justice. See FED. R. CIV. P. 4(k)(2)(A); World-Wide Volkswagen, 444 U.S. at 291-92. Indiana Trial Rule 4.4(A)(1)

provides for jurisdiction over a nonresident over actions
No. 07-1126 13

1 The discussion in the text follows the well-established

rule that the district court’s jurisdiction over the parties in a

diversity case is linked to the state’s long-arm statute. Because

we find that jurisdiction was proper under Indiana law, we

save for another day the question whether the district court

might also have relied on federal law in the proceedings

(continued...)

arising from his having done any business in the state;

Rule 4.4(A)(4) covers actions arising from the supply of

services in the state. Either or both of those subsections

describe Pereznieto’s situation. From the standpoint of the

federal constitution, the person’s contacts with the state

cannot be fortuitous; instead, there must be “some act by

which the defendant purposefully avails itself of the

privilege of conducting activities within the forum State,

thus invoking the benefits and protections of its laws.”

Hanson v. Denckla, 357 U.S. 235, 253 (1958). Because the

issue before the court is tied directly to Pereznieto’s

activities with respect to the Mañez litigation, there is no

need to consider whether his contacts with Indiana were

so extensive as to justify so-called general jurisdiction.

See Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S.

408, 414-16 (1984). Here, it would be hard to imagine a

closer link between the activities within a forum and the

conduct for which a person is being asked to answer. The

fact that the affidavit mentioned Illinois law, and the

proceedings in the district court were occurring in Indiana,

does not mean anything. The affidavit was filed in support of an appeal that sought to restore the case to the

docket of the district court for the Southern District of

Indiana. Looking strictly at adjudicatory competence,

we conclude that the district court was entitled to exercise jurisdiction over Pereznieto in this manner.1
14 No. 07-1126

1 (...continued)

against Pereznieto, on the theory that his actions were an affront to the federal court’s own processes.

Although it is conceivable that one might argue that

Pereznieto also consented to the court’s jurisdiction, by

the act of furnishing his affidavit to be filed in the

Seventh Circuit, we prefer not to reach that question. It

was plaintiffs’ U.S. lawyers who actually submitted

Pereznieto’s affidavit to the district court. He never appeared personally, he never had his deposition taken (for

this case) within the United States, nor in the end did

he consent to a deposition in Mexico. We thus proceed

on the basis only of specific adjudicatory jurisdiction,

which supports the district court’s power to resolve

issues arising out of Pereznieto’s actions directed to the

Indiana litigation.

Finally, we consider the question whether the district

court had any authority to evaluate Pereznieto’s actions

before the Mexican courts, apart from anything he reported

back to the U.S. lawyers or courts. We think not (and,

indeed, the district court may not have meant to do any

such thing). Whether the proceedings in Morelos were

conducted in an honest and upright manner is a matter

for the Mexican judicial and bar authorities, not for us.

We are not in a position to draw any conclusion, positive or

negative, even though we are aware that the problem

of corruption within the judicial sector is one that

plagues scores of countries around the globe, as the 2007

Report of the organization Transparency International

documents in detail. See http://www.transparency.org/

publications/gcr/download_gcr (last visited Mar. 3, 2008).

As the famous Operation Greylord investigation in Chicago
No. 07-1126 15

during the 1980s illustrated, courts in the United States are

not exempt from this plague. See http://www.fbi.gov/

page2/march04/greylord031504.htm (last visited Mar. 3,

2008). We therefore focus only on Pereznieto’s actions

that were directed toward the proceedings in the United

States.

B

Pereznieto’s central argument is that the proceedings

that led to the court’s sanctions order against him did not

satisfy basic due process standards. He is supported in

this effort by the Consulate General of Mexico in

Chicago, appearing amicus curiae on behalf of the Ministry

of Foreign Affairs of the United Mexican States. A few

more background facts are important at this point.

Pereznieto emphasizes time and again that he was never

a party to the action before the district court, that he

did not appear as counsel in the district court, and that he

is not admitted to practice in the Southern District of

Indiana. He is a citizen and resident of Mexico. He also

points out that there was never a court order directing

him to do anything. Instead, when the case returned to

the district court after Mañez I, the assigned magistrate

judge stated, in connection with a possible deposition of

Pereznieto, that “this court likely has no authority to

require Mexican counsel to travel to the United States to

be deposed.” Instead, the judge directed in December 2005 that he should be deposed in Mexico City.

Ford and Firestone noticed depositions in accordance

with that order, but they never attempted to serve any

subpoenas, court orders, letters of request, or letters

rogatory on him there. Prior to a court-ordered status

conference in mid-July 2006, Pereznieto and the other
16 No. 07-1126

Mexican lawyers notified plaintiffs’ U.S. lawyers that

they were refusing to be deposed. They cited both rules

of professional secrecy and the risk of criminal penalties

under Mexican law if they violated those rules. Later,

Ford and Firestone listed the Mexican attorneys, including Pereznieto, as witnesses for the upcoming evidentiary hearing, but once again they did not follow

up with subpoenas or other compulsory process. Indeed,

they never served Pereznieto directly with a notice of

the hearing, which had been scheduled for July 19, 2006.

One week before the hearing, defense counsel filed a

motion requesting sanctions against both the U.S. lawyers

and the Mexican lawyers, including Pereznieto. That

motion was served on the U.S. lawyers, but not on

Pereznieto. The court initially declined to address the

motion, but it promised the U.S. lawyers that if the

court changed its mind and decided to rule, they would

be given an opportunity to respond before a decision

was rendered. As matters unfolded, this did not happen.

Instead, the court conducted its evidentiary hearing on

the facts surrounding the Morelos litigation on September 5 and 6, 2006. Pereznieto was not present and was

not represented by counsel at the hearing. The details of the

evidence are not important here, as no one has appealed

from the district court’s November 14 decision to reaffirm

its dismissal of the action based on forum non conveniens.

After the case was again dismissed, Ford and Firestone

made a formal request for a ruling on their sanctions

motion on December 6, 2006. Three days before the end

of the 15-day period normally allowed by S.D. Ind. Local

Rule 7.1(a) for a response to such a motion, on December 18, 2006, the court issued its order imposing sanctions and ordering entry of a final judgment. We have
No. 07-1126 17

already set forth the critical language from that order. The

U.S. lawyers did not contest the order, but on January 12,

2007, Pereznieto appeared by counsel and filed a motion for relief from the sanctions; he supported his motion with an affidavit and offered to make himself available for testimony pursuant to the terms of the Hague

Convention on the Taking of Evidence Abroad in Civil

or Commercial Matters (“Hague Evidence Convention”),

Oct. 7, 1972, 23 U.S.T. 2555, 847 U.N.T.S. 231, reproduced at

28 U.S.C. § 1781 note. On January 16, 2007, Pereznieto

(through newly-retained counsel) filed a timely notice

of appeal. The district court later dismissed his motion

for relief as moot, in light of the fact that it no longer

had jurisdiction over the matter.

The defendants do not seriously dispute the fact that

they never attempted to compel Pereznieto to appear

before the district court. Instead, they stress the closeness of his relationship with the plaintiffs’ U.S. attorneys—in effect, they say, he was a “joint venturer” with

counsel for Mañez. As such, they argue, any notices

that reached U.S. counsel also reached Pereznieto by

operation of law, and U.S. counsel were de facto representatives of Pereznieto’s interests before the district court.

Through Mañez’s U.S. counsel, Pereznieto received a

copy of the notice of deposition and initially indicated

that he would be willing to be deposed in Mexico. His

later change of heart, defendants urge, permitted the

district court to draw negative inferences, find facts

against him, and impose the sanctions that it chose.

In analyzing the district court’s sanctions against

Pereznieto, we must draw a distinction between the

$100,000 fine for which he is personally liable and the

order barring his testimony (new or already submitted)
18 No. 07-1126

before any courts in the United States. We look first to

the fine, and then to the testimonial bar.

1

As an initial matter, it is unclear how we should characterize the $100,000 fine. The court did not specify the

exact nature of the order, although that in itself is unimportant, as it is the substance that matters. The order

could have been several different things: (1) an adjudication of criminal contempt of court; (2) an adjudication of

civil contempt; (3) a penalty under FED. R. CIV. P. 11 or

37 for submitting a misleading or evasive document; or

(4) a penalty for acts that imposed needless costs on the

court, imposed under the court’s inherent authority. No

matter which of these it was, however, the conclusion

is inescapable that Pereznieto did not have adequate

notice or a proper opportunity to respond. See generally

Autotech Tech. LP v. Integral Research & Dev. Corp., 499 F.3d

737, 746-47 (7th Cir. 2007) (observing that due process

requires that one charged with contempt of court be

advised of the charges against him, have a reasonable

opportunity to meet them by way of defense or explanation, have the right to be represented by counsel, and

have a chance to testify and call other witnesses in his

behalf, either by way of defense or explanation, and noting

that this principle extends to both criminal and civil cases).

We start with the first two possibilities, criminal or

civil contempt. The Supreme Court reviewed the difference between these two types of proceedings in Mine

Workers v. Bagwell, 512 U.S. 821 (1994). Citing Gompers v.

Bucks Stove & Range Co., 221 U.S. 418, 441 (1911), the

Court stated that “a contempt sanction is considered
No. 07-1126 19

civil if it is remedial, and for the benefit of the complainant. But if it is for criminal contempt the sentence is

punitive, to vindicate the authority of the court.” 512

U.S. at 827-28 (internal quotation marks omitted). As the

Ninth Circuit explained it, “[t]he primary purpose of

criminal contempt is to punish past defiance of a

court’s judicial authority, thereby vindicating the court,”

while “[c]ivil contempt is characterized by the court’s

desire to compel obedience to a court order or to compensate the contemnor’s adversary for the injuries

which result from the noncompliance.” Falstaff Brewing

Corp. v. Miller Brewing Co., 702 F.2d 770, 778 (9th Cir. 1983)

(citation omitted). The line between the two forms of

contempt is not always clear. As applied to fines, however, Bagwell held that “a ‘flat, unconditional fine’

totaling even as little as $50 announced after a finding

of contempt is criminal if the contemnor has no subsequent opportunity to reduce or avoid the fine through

compliance.” 512 U.S. at 829 (quoting Penfield Co. of Cal. v.

SEC, 330 U.S. 585, 588 (1947)). Last, the Bagwell Court

reviewed the procedures that due process requires

before any particular contempt penalty may be imposed. Id.

at 830-34. For that purpose, it distinguished between direct

contempt, occurring in the court’s presence, and indirect

contempt, occurring out of court. Id. at 827 n.2.

Even for a direct contempt, the Court held, if the trial

court “delays punishing a direct contempt until the completion of trial, . . . due process requires that the

contemnor’s rights to notice and a hearing be respected.”

Id. at 832 (citing Taylor v. Hayes, 418 U.S. 488 (1974)). Direct

contempt “cannot be punished with serious criminal

penalties absent the full protections of a criminal trial.” Id.

at 833; see FED. R. CRIM. P. 42(a). Even greater procedural
20 No. 07-1126

protections must accompany punishment for indirect

contempt; “[s]ummary adjudication of indirect contempts is prohibited.” Bagwell, 512 U.S. at 833.

A finding of civil contempt also requires adequate

procedures. One court described the process as follows:

To establish civil contempt, each of the following

elements must be shown by clear and convincing

evidence:

(1) the existence of a valid decree of which the

alleged contemnor had actual or constructive

knowledge; (2) . . . that the decree was in the

movant’s “favor”; (3) . . . that the alleged

contemnor by its conduct violated the terms of

the decree, and had knowledge (at least constructive knowledge) of such violations; and (4) . . . that

[the] movant suffered harm as a result.

Ashcraft v. Conoco, Inc., 218 F.3d 288, 301 (4th Cir. 2000)

(alterations in original). This court, too, emphasizes the

importance of a particular decree or order as a predicate

for civil contempt:

To hold [a person] in civil contempt, the district court

“must be able to point to a decree from the court

which sets forth in specific detail an unequivocal

command which the party in contempt violated.”

Grove Fresh Distribs., Inc. v. John Labatt, Ltd., 299 F.3d 635,

642 (7th Cir. 2002) (quoting Jones v. Lincoln Elec. Co., 188

F.3d 709, 738 (7th Cir. 1999)); see also 11A WRIGHT, MILLER

& KANE, FEDERAL PRACTICE AND PROCEDURE § 2960 (2d ed.

1995).

We need not pursue the topic of contempt further,

because we are convinced that it is a poor match for
No. 07-1126 21

what the district court did in this case. Because Pereznieto’s

actions were not taken in the presence of the court, anything he did would have to be viewed as an indirect

contempt. No one argues that the court invoked the

procedures spelled out in FED. R. CRIM. P. 42(a) for a

prosecution for criminal contempt, and there is no hint

in this record that Pereznieto received notice that this

was what he was facing. If the $100,000 fine was intended instead to reflect a finding of civil contempt, the

procedural problems are just as serious. The most glaring

deficiency is the lack of any particular court decree or

order that Pereznieto allegedly violated. Without any

certainty about that, it is also impossible to know whether Pereznieto had actual or even constructive knowledge

of the decree or that the decree somehow favored the

defendants.

Another possibility is that the court’s order rested on

either Rule 11 or Rule 37 of the Federal Rules of Civil

Procedure. It is easy, however, to eliminate Rule 11,

because it applies only to attorneys or unrepresented

parties, see Rule 11(a) & (c), and Pereznieto is neither. He

participated in the U.S. proceeding as an expert witness,

and so it is possible that his affidavit and other (unspecified) filings might be considered as reports for purposes

of Rule 26(b)(4)(A). That rule does not specifically address misleading or fraudulent expert reports, but

Rule 37 addresses the topic of discovery sanctions in

general. Rule 37(a)(1) allows a party to move for a court

order compelling discovery, and Rule 37(b) provides for

sanctions against either parties or nonparties who disregard a court order. To outline this possibility is to show,

once again, that it does not fit here. The court never

issued an order to Pereznieto either requiring him to file

the affidavit in this court or requiring him to explain
22 No. 07-1126

himself. It tried instead to arrange for a voluntary deposition in Mexico City, and when that fell through, it took no

additional steps either to compel his appearance or to

compel his compliance with any other court order. Thus,

we must reject both Rule 11 and Rule 37 as possible

sources of authority.

Last is the possibility of a penalty imposed under the

court’s inherent authority to punish Pereznieto for an act

that inflicted needless costs on the court and the defendants. As we have already noted, courts retain inherent

power to punish the full range of litigation abuses. Chambers, 501 U.S. at 46. This power is distinct from the contempt power. See Matter of Maurice, 73 F.3d 124, 127-28

(7th Cir. 1995). In Maurice, we discussed the difference

between a sanction under FED. R. APP. P. 38 and contempt.

Rule 38 authorizes the courts of appeals to “award just

damages and single or double costs to the appellee” if

it determines that an appeal is frivolous. (Notably, the

court may do so only “after a separately filed motion or

notice from the court and reasonable opportunity to

respond.”) We also explained that

a fine for contempt of court . . . entails a violation of a

judicial order, rather than a waste of time by taking

frivolous steps, the domain of Rule 38. Ability to

impose sanctions for acts that impose needless costs

on other litigants is a longstanding power of federal

courts.

73 F.3d at 128. All that means, however, is that the full

panoply of procedures that attend contempt proceedings,

either criminal or civil, are not necessary for Rule 38 or

analogous sanctions. Maurice assuredly did not hold

that sanctions could be imposed without either notice to

the offending person or an opportunity to respond.
No. 07-1126 23

In short, while we have no doubt that the court

possessed inherent authority to address the kind of

abuse with which Pereznieto is charged, that does not

mean that it could dispense with such fundamental

incidents of due process as adequate notice and an opportunity to be heard. Cf. In re Teknek, LLC, 512 F.3d

342 (7th Cir. 2007) (holding that the bankruptcy rules

and the Federal Rules of Civil Procedure require a nonparty to be served with process before being held in

contempt). And the kind of casual notice that one can

infer from this record that Pereznieto may have received

is not good enough. In order to be adequate, the Supreme

Court has held, a person is entitled to “notice reasonably

calculated, under all the circumstances, to apprise [him]

of the pendency of the action and afford [him] an opportunity to present [his] objections.” Mullane v. Cent. Hanover

Bank & Trust Co., 339 U.S. 306, 314 (1950). The Court also

specified how much it expected of the person giving notice:

But when notice is a person’s due, process which is

a mere gesture is not due process. The means employed must be such as one desirous of actually informing the absentee might reasonably adopt to

accomplish it. The reasonableness and hence the

constitutional validity of any chosen method may

be defended on the ground that it is in itself reasonably

certain to inform those affected, or, where conditions

do not reasonably permit such notice, that the form

chosen is not substantially less likely to bring home

notice than other of the feasible and customary substitutes.

Id. at 315 (citation omitted).

Defendants take the position that their motion for

sanctions sufficed both to give Pereznieto notice of that
24 No. 07-1126

possibility and to afford him the opportunity to be heard. It

is neither their fault nor the court’s, they continue, if

Pereznieto let this chance slip away. Their motion identified him by name, sought sanctions against him personally,

and detailed the events in Morelos in which he was directly involved. What defendants downplay, however,

is the fact that they never served that motion on him

directly. Nothing in the court record indicates that counsel for plaintiffs were also representing Pereznieto in his

individual capacity, and so we cannot accept that service

as a substitute. Nor is there anything that indicates an

effort to serve Pereznieto directly in Mexico. Both the

United States and Mexico are parties to the Hague Convention on the Service Abroad of Judicial and Extrajudicial

Documents in Civil or Commercial Matters (“Hague

Service Convention”), opened for signature Nov. 15,

1965, 20 U.S.T. 361, 658 U.N.T.S. 163, reproduced at 28

U.S.C. App., FED. R. CIV. P. 4 note, as well as the Hague

Evidence Convention. In the documents he filed seeking

reconsideration of the district court’s order, Pereznieto

specifically said that he would make himself available in

Mexico City for a deposition pursuant to the Evidence

Convention. Beyond that, FED. R. CIV. P. 4(f) offers a

number of options for service on an individual in a

foreign country.

We conclude, therefore, that the part of the district

court’s order that imposed a personal fine of $100,000 on

Pereznieto must be set aside for failure of proper

service. The court is free if it wishes to conduct further

proceedings on this matter on remand, if it concludes they

are warranted.
No. 07-1126 25

2

The part of the district court’s order that bars Pereznieto

from providing any testimony in the Ford/Firestone

cases before any court in the United States and that

strikes all assertions that are already in the record is also

problematic, although parts of it stand on stronger

ground. District courts have broad discretion over the

admission of evidence into the record, whether at the

pretrial stage or during a trial. The findings that the

court made about the contrived nature of the Morelos

proceedings and the attempted fraud on the court amply

support the court’s decision to exclude these materials

for purposes of the multi-district proceeding before it.

Insofar as it purported to address other lawsuits, before

other courts, however, the court’s order was impermissibly

overbroad. As applied to the Ford/Firestone cases, however, the order can be implemented easily. Pereznieto has

a lesser stake in the possibility of acting as an expert for

these consolidated cases, as compared with his interest in

not being subject to a large monetary fine. Courts regularly reject expert testimony using the framework introduced by Daubert v. Merrell Dow Pharmaceuticals, Inc., 509

U.S. 579 (1993), and later incorporated in FED. R. EVID. 702.

No one suggests that the rejected expert has a right to

notice and an opportunity to be heard before the court

renders such a decision. If this means that Pereznieto has

breached his contract with the attorneys for the plaintiffs, that is a matter to be resolved between them.

That said, we think it best to vacate this part of the order

as well. The testimonial bar is linked directly to the payment of the monetary sanction of $100,000 that must be

set aside for lack of proper notice and opportunity to be

heard. It is unclear what sanction or sanctions the dis-
26 No. 07-1126

trict court may decide are appropriate, if and when it

has the benefit of a full adversary proceeding that includes Pereznieto. We note, in this connection, that

Pereznieto has argued that the district court erred in its

consideration of Mexican law and that it should have

considered a wider range of materials. Should the district

court decide to pursue this proceeding on remand,

Pereznieto will be free to renew these arguments at an

appropriate time.

III

In summary, we conclude that the district court had

subject-matter jurisdiction to decide whether there had

been an abuse of process and that Pereznieto’s contacts

with the Indiana proceeding were sufficient to support

personal jurisdiction over him. We further conclude

that although the district court possesses inherent authority to address the kind of abuse with which Pereznieto

is charged, Pereznieto did not receive constitutionally

adequate notice and an opportunity to be heard in the

proceeding that led to the $100,000 fine and other sanctions against him. We therefore VACATE the order and

REMAND to the district court for reconsideration in light

of this opinion. Each party shall bear its own costs on

appeal.

USCA-02-C-0072—7-11-08