Court Opinion

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Opinions of the United
1997 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit

12-22-1997

In Re: Orthopedic Bone
Precedential or Non-Precedential:

Docket 96-1704

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Recommended Citation
"In Re: Orthopedic Bone" (1997). 1997 Decisions. Paper 279.
http://digitalcommons.law.villanova.edu/thirdcircuit_1997/279

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Filed December 22, 1997

UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT

No. 96-1704

IN RE: ORTHOPEDIC "BONE SCREW" PRODUCTS
LIABILITY LITIGATION
(MDL No. 1014)

WILLIAM MICHAEL RAY,

       Appellant.

v.

ROBERT L. EYSTER, M.D.; ST. JOSEPH MEDICAL
CENTER, INC.; SOFAMOR, INC., a Foreign Corpo ration
(D.C. Civil No. 95-cv-03865)

On Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D.C. Civil Action No. 95-cv-03865)

Argued on September 23, 1997

BECKER, SCIRICA, and ROTH,
Circuit Judges.

(Opinion filed: December 22, 1997)
       Gary A. Eaton, Esquire (Argued)
       Eaton & Sparks
       1717 East 15th Street
       Tulsa, OK 74104
        and
       Green & Stites
       3739 East 3lst Street
       Tulsa, OK 74135
        Attorneys for Appellant

       David W. Steed, Esquire
       Turner & Boisseau
       825 North Waco
       P.O. Box 397
       Wichita, KS 67203
        Attorney for Appellee Eyster

       Stephen S. Phillips, Esquire
       Philip H. Lebowitz, Esquire (Argued)
       Pepper, Hamilton & Scheetz
       18th & Arch Streets
       3000 Two Logan Square
       Philadelphia, PA 19103-2799
        Attorneys for Appellee Sofamor,
        Inc.

OPINION OF THE COURT

ROTH, Circuit Judge.

This appeal is a part of multi-district product liability
litigation, involving manufacturers of orthopedic bone screw
devices. The district court, sitting as the transferee court,
imposed the ultimate sanction of dismissing plaintiff's suit
with prejudice for failure to comply with discovery orders.
Because we find that the district court lacked subject
matter jurisdiction of the case, we must determine whether
it had the ability to impose the sanction of dismissal with
prejudice.

Facts and Procedural Background

The appellant, William Michael Ray, originally filed this
action as a pro se petition in Kansas state court, seeking

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damages for personal injuries allegedly incurred as the
result of the implantation of an internal spinalfixation
device. Ray sued Sofamor, Inc., a Tennessee manufacturer
and distributor of pedicle screw devices; his physician, Dr.
Robert Eyster of Kansas; and St. Joseph Medical Center, a
Kansas hospital where Ray underwent surgery. Four
months later, defendants removed the case to federal court
in the District of Kansas, alleging federal question
jurisdiction. They contended that the case presented a
federal question because it arose under the Medical Devices
Amendments and Safe Medical Device Act ("MDA") to the
Federal Food, Drug and Cosmetic Act, 21 U.S.C. S 301, et.
seq. The action was then transferred to the United States
District Court for the Eastern District of Pennsylvania as
part of Multi-District Litigation ("MDL") 1014, known as the
Bone Screw Litigation.

After Ray filed his pro se petition, he became a plaintiff in
a separate action filed in Tennessee, also alleging bone
screw related claims. Ray is represented by counsel in the
Tennessee action, Eugene Haffey, et al. v. Danek Medical,
Inc., which was also transferred to MDL 1014. Counsel for
Ray in Haffey is now representing him in this appeal.
Counsel maintains, however, that he was not aware of the
pro se action or of its removal and transfer to the MDL until
after defendants had filed a motion to dismiss it as a result
of Ray's failure to comply with discovery.

Prior to the transfer of Ray's pro se action, the multi-
district transferee court had issued several orders governing
pretrial procedures and discovery. In particular, Pretrial
Order 6 required plaintiffs in MDL 1014 to provide
defendants with answers to a questionnaire and with
authorizations for the release of medical records. When
Ray's pro se action was transferred to MDL 1014, it was
covered by PTO 6.1 Ray failed, however, to submit the
required documents. On September 15, 1995, defendants
informed the Plaintiffs' Legal Committee (appointed by the
District Court to represent plaintiffs in MDL 1014) that Ray
had failed to comply with PTO 6 and that, if noncompliance
continued, defendants would file a motion to dismiss. App.
_________________________________________________________________

1. Ray was served with PTO 6 on June 12, 1995. See App. 67.

                               3
at 80. Defendants also wrote Ray a letter. On November 13,
1995, defendants moved to dismiss Ray's petition for failure
to comply with PTO 6. It is at this point that Ray's counsel
in Haffey claims to have become aware of Ray's pro se
action. Counsel then filed a motion in opposition to the
motion to dismiss.

Because motions to dismiss for noncompliance with
pretrial orders had been filed in other MDL 1014 actions as
well as Ray's, the court had appointed a Special Discovery
Master. The Special Discovery Master recommended that
dismissal with prejudice be the sanction used to resolve
these motions. The district court adopted this
recommendation and ordered that Ray and other
noncompliant plaintiffs appear to show cause why their
actions should not be dismissed with prejudice.

Counsel for Ray appeared at the show cause hearing.
Ray, however, was not present. The record reveals the
district court's understandable confusion during this
proceeding due to the fact that Ray was a pro se litigant in
one case and was represented by counsel in another. App.
121-138. The district court ordered a subsequent hearing
at which Ray was specifically and pointedly instructed to be
present. Notice was mailed the following day to Ray,
notifying him of the July 9, 1996, hearing. On July 8,
counsel for Ray filed a motion for continuance on the
grounds that he had been unable to contact Ray. Neither
counsel nor Ray was present at the July 9 proceeding. The
district court therefore imposed the sanction of dismissing
this case with prejudice for failure to comply with discovery.
The court also held Ray in contempt for his failure to
appear and imposed a $500 monetary sanction on him. 2

At the same time that the discovery motions were being
_________________________________________________________________

2. The order dismissing Ray's petition does not indicate under which rule
the judge imposed the sanction of dismissal for Ray's failure to comply
with an order of the court. We have held that Rule 37 is the applicable
rule in such cases. In addition, Rule 16(f), which provides sanctions for
failure to comply with pretrial and scheduling orders of the court,
incorporates the sanctions under Rule 37 by reference, including the
Rule 37(b)(2)(C) provision for dismissal for failure to comply with
discovery orders. Fed. R. Civ. P. 16(f).

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resolved, the district court was also considering several
motions by other MDL plaintiffs to remand their actions to
state court. These actions had been removed to federal
court on the basis of federal preemption under the MDA.
On June 20, 1996, the district court issued Pretrial Order
409, finding that "[b]ecause the [Medical Devices
Amendments to the Federal Food Drug and Cosmetic Act]
do not completely preempt state law, they do not provide
Federal jurisdiction." In re Orthopedic Bone Screw Products
Liability Litigation, MDL 1014. 1996 WL 900348 (E.D. Pa.
June 20, 1996). The district court then granted the motions
and remanded these cases to their respective state courts.

Analysis

Ray bases his appeal on his contention that, because the
district court did not have subject matter jurisdiction over
his claim, it did not have the authority to impose the
sanction of dismissal with prejudice for failure to comply
with discovery orders. We will begin our discussion with the
issue of subject matter jurisdiction. The parties concede
that there is no federal question jurisdiction in this case.
The parties also agree that there is no diversity of
citizenship. Thus, the district court did not have subject
matter jurisdiction of Ray's action. For this reason, Ray
questions the ability of the district court to have sanctioned
him by dismissing his action with prejudice.

The defendants argue, however, that Ray's petition was
properly before the court at the time it was dismissed and
that, even if the court lacked jurisdiction, it had the
inherent authority to dismiss the case with prejudice for
failure to comply with court orders. As transferee court in
MDL 1014, the district court was dealing with hundreds of
transferred actions which had been brought by plaintiffs in
courts all over the country. Ray filed his pro se petition in
January of 1995 in state court. In April, the defendants
removed Ray's action to federal district court in Kansas on
the basis of complete preemption by federal law under the
MDA. In June, Ray's case was transferred to MDL 1014 in
the Eastern District of Pennsylvania. Although Ray did not
move to remand, the district court did decide in numerous
other actions that no such preemption existed under the

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MDA.3 The defendants contend that, since the definitive
Supreme Court ruling in Medtronic v. Lohr, 116 S. Ct. 2240,
2254-58 (1996) (finding that the MDA does not completely
preempt state causes of action) was issued on June 26,
1996, only days before the district court sanctioned Ray
with dismissal, his pro se action was properly before the
district court. We disagree.

The district court had considered the issue of federal
preemption by the MDA with regard to other cases which
had been removed to federal court and then transferred to
the Eastern District of Pennsylvania as part of MDL 1014.
The only basis for removal of these cases was the alleged
existence of a federal question based on the MDA. This was
also the basis for the removal of Ray's petition. In PTO 409,
the district court concluded that there was no federal
question jurisdiction and remanded the challenged cases
back to the state courts where they had originated. As Ray
did not move for remand of his case, his petition was not
among those cases remanded by PTO 409.

Nevertheless, the defendants contend that, until a
determination was made that the district court lacked
jurisdiction in Ray's case, the court properly exercised its
inherent authority to order discovery and conduct
proceedings. This authority, they contend, included the
authority to sanction Ray for lack of procedural compliance
by dismissing the action with prejudice. The defendants
make much of the fact that Ray never moved to remand his
case and did not raise subject matter jurisdiction in the
district court. Had Ray moved to remand his pro se action
for lack of jurisdiction, no doubt the jurisdictional issue
would have been resolved expeditiously. However, it is
fundamental that a court may consider jurisdiction on its
own. The issue of jurisdiction is always open for
determination by the court. Underwood v. Maloney, 256
F.2d 334 (3d Cir.), cert. denied, 358 U.S. 864 (1958).

If a court then determines that it lacks subject matter
jurisdiction, it cannot decide the case on the merits. It has
no authority to do so. A federal court can only exercise that
_________________________________________________________________

3. Pretrial Order 409, 1996 WL 900348 (E.D. Pa.) ( June 20, 1996), citing
Michael v. Shiley, 46 F.3d 1316 (3d Cir. 1995).

                                6
power granted to it by Article III of the Constitution and by
the statutes enacted pursuant to Article III. Bender v.
Williamsport, 475 U.S. 534, 541 (1986); Marbury v.
Madison, 1 Cranch (5 U.S.) 137, 173-80 (1803); see also
Willy v. Coastal Corp., 503 U.S. 131, 137 (1992) (noting
that "[a] final determination of lack of subject-matter
jurisdiction of a case in a federal court, of course, precludes
further adjudication of it."). If a case, over which the court
lacks subject matter jurisdiction, was originallyfiled in
federal court, it must be dismissed. If it was removed from
state court, it must be remanded. See Bradgate Associates
v. Fellows, Read & Associates, 999 F.2d 745, 750-51 (3d
Cir. 1993) (finding that, where the district court lacks
subject matter jurisdiction, it must remand a removed state
court case, and it must dismiss a case, originallyfiled in
federal court). The disposition of such a case will, however,
be without prejudice. See, e.g., Winslow v. Walters, 815
F.2d 1114, 1116 (7th Cir. 1987) (holding that "a ruling
granting a motion to dismiss for lack of subject matter
jurisdiction is not on the merits; its res judicata effect is
limited to the question of jurisdiction."); Verret v. Elliot
Equip. Corp., 734 F.2d 235, 238 (5th Cir. 1984) ("it would
be inappropriate to enter any judgment on the merits when
the dismissal is based on lack of subject matter
jurisdiction").

However, despite this inability of a court to decide the
merits of a case over which it lacks jurisdiction, a court
does have inherent authority both over its docket and over
the persons appearing before it. It has long been recognized
that courts are vested with certain inherent powers that are
not conferred either by Article III or by statute, but rather
are necessary to all other functions of courts. U.S. v.
Hudson, 7 Cranch 32, 34 (1812); Roadway Express Inc. v.
Piper, 447 U.S. 752, 64, 100 S. Ct. 2455, 63 (1980). Of
course, implicit in all these powers is the power to sanction.

The Supreme Court has recognized the inherent power of
courts to impose sanctions in order to manage their own
affairs and achieve orderly and expeditious disposition of
cases. Chambers v. NASCO Inc., 501 U.S. 32, 43; 111 S. Ct.
123, 32 (1991). These powers include the power to manage
their dockets and impose silence and order on those before

                                7
the court. Link v. Wabash, 370 U.S. 626, 30-31, 82 S. Ct.
1386, 88-89 (1962). In addition courts have the authority to
punish contempt whether the sanctioned conduct is before
the court or beyond it. Ex parte Robinson, 19 Wall. 505,
510 (1874). Nevertheless, even though the choice of
sanction may be within the court's discretion, this power is
not without limit. Link v. Wabash, 447 U.S. at 765.

The question we face here is whether the inherent power
to sanction extends in a case, over which the court lacks
subject matter jurisdiction, to permit the court to impose a
sanction which will be dispositive of the merits of the case.
We think not.

We come to this conclusion despite the fact that we
recognize that there is abundant authority permitting the
imposition of sanctions in the absence of jurisdiction over
a case. The Supreme Court held unanimously in Willy v.
Coastal Corp. that the absence of jurisdiction will not
operate automatically to invalidate all proceedings below.
The Willy Court, however, addressed the imposition of Rule
11 sanctions, awarding attorneys' fees incurred in
responding to sanctionable conduct. Willy did not involve a
dismissal with prejudice. In approving the sanction in Willy,
the Court relied in large measure on the principle that
Article III concerns are not implicated by Rule 11 sanctions
since they are collateral to the merits and do not result in
the Court assessing the legal merits of a complaint over
which it lacks jurisdiction. Courts have an interest in
maintaining order. For this reason, Rule 11 sanctions,
which are imposed on persons appearing before the court,
may be upheld in the absence of jurisdiction where they are
consistent with a court's inherent power to manage its
docket and maintain order. Permitting the imposition of
Rule 11 sanctions by a court, later found to lack
jurisdiction over the case, does not affect the
appropriateness of such sanctions. Willy, 503 U.S. at 138.

Defendants contend that the Supreme Court's holding in
Willy is applicable to this case. We conclude, however, that
Willy is not controlling here because Willy involved a
sanction collateral to the merits of the case. The sanction of
dismissal with prejudice, imposed on Ray, is not collateral
to the merits. It acts to terminate the cause of action. A

                               8
court's power to determine the merits of a case is distinct
from its power to exercise its authority over a person
appearing before the court. This distinction is inherent in
the reliance by the Court in Willy on the notion that Rule
11 sanctions could stand in the absence of jurisdiction
because they were collateral to the merits of the action and
did not signal a legal conclusion by the sanctioning court.
The defendants seek to obscure this difference. We
conclude, however, that where, as here, the court lacks
subject matter jurisdiction, it may not act in a way that
determines the cause of action even though it may still--as
in Willy--exercise its authority over the person before the
court in the interest of enforcing compliance with the
court's procedures. A court has an interest in enforcing
cooperation with its orders by persons appearing before the
court whether it has jurisdiction or not. A court also has an
interest in deterring noncompliant behavior by future
litigants. National Hockey League v. Metropolitan Hockey
Club, Inc., 427 U.S. 639, 643; 96 S. Ct. 2778, 2781 (1976).
However, where jurisdiction is found to be lacking, there
can be no adjudication of the merits of the case. This
prohibition must bar the imposition of a sanction which will
terminate the case on the merits. For this reason, we will
leave undisturbed the District Court's $500 monetary
sanction against Ray but we will vacate the dismissal with
prejudice.4

Conclusion

In this case, the already complicated task of the
transferee court in multi-district litigation was made more
so by Ray's failure to comply with the district court's
orders. We recognize the need for the district court to be
able to enforce compliance with its rules. Where, however,
the district court lacked subject matter jurisdiction, it could
_________________________________________________________________

4. For the reasons we have stated, we disagree with the conclusion
reached by the Ninth Circuit in In re Exxon Valdez, 102 F.3d 429 (9th
Cir. 1996) and by the Second Cicuit in Hernandez v. Conriv Realty
Assoc., 116 F.3d 35 (2d Cir. 1997) that, despite a lack of subject matter
jurisdiction, a district court may dismiss a case with prejudice as a
sanction for repeated discovery violations.

                               9
not impose a sanction that   has the effect of adjudicating
the merits of the case. We   will, therefore, affirm the
imposition of the monetary   sanction, but we will vacate the
dismissal of the case with   prejudice and remand this case
to the District Court with   instructions to remand it to the
state court.

A True Copy:
Teste:

       Clerk of the United States Court of Appeals
       for the Third Circuit

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