Court Opinion

ID: 9839278
Source: CourtListenerOpinion
Date Created: 2023-09-12 18:00:40.78953+00
Date Added: 2024-06-11T09:12:54.809845
License: Public Domain

Case: 22-10340      Document: 00516891917          Page: 1     Date Filed: 09/12/2023

            United States Court of Appeals
                 for the Fifth Circuit
                                                                          United States Court of Appeals
                                                                                   Fifth Circuit

                                 ____________                                    FILED
                                                                         September 12, 2023
                                  No. 22-10340                              Lyle W. Cayce
                                 ____________                                    Clerk

   Ben E. Keith Company,

                                                                          Plaintiff,

                                        versus

   Dining Alliance, Incorporated,

                                       Defendant/Counter-Claimant—Appellant,

                                        versus

   Foodbuy, L.L.C.,

                                       Counter-Defendant—Appellee.
                   ______________________________

                   Appeal from the United States District Court
                       for the Northern District of Texas
                             USDC No. 4:20-CV-133
                   ______________________________

   Before Jones, Clement, and Haynes, Circuit Judges.
   Edith H. Jones, Circuit Judge:
          Although modern business entities may organize in complex ways
   unknown in the past, the criteria for diversity of citizenship jurisdiction as to
   LLCs has been firmly established in this circuit since 2008. Dining Alliance
   unacceptably hid the ball with respect to elementary jurisdictional facts
Case: 22-10340      Document: 00516891917           Page: 2   Date Filed: 09/12/2023

                                    No. 22-10340

   during the entire course of this litigation, including on appeal. The district
   court dismissed its third-party claims with prejudice as a sanction for that
   willful abuse of the judicial process. Finding no abuse of discretion, we
   AFFIRM.
                                 BACKGROUND
          In February 2020, Ben E. Keith Company, a Texas citizen, brought
   state-law claims in federal court against “Dining Alliance Inc.” Prior to the
   suit, however, Dining Alliance Inc. had converted into Dining Alliance LLC
   (“Dining Alliance”), whose citizenship may include both Texas and
   Delaware. It is therefore possible that from the outset of the case, the parties
   were not diverse and jurisdiction was lacking.
          This potential jurisdictional defect was not recognized because Dining
   Alliance originally answered under the name Dining Alliance Inc. and
   represented itself as a Massachusetts citizen. Though Dining Alliance’s in-
   house counsel claims to have informed the company’s attorneys in July 2020
   that Dining Alliance Inc. was defunct, the company proceeded to litigate
   variously under both names.       For instance, in December 2020, Dining
   Alliance asserted third-party state-law claims against Foodbuy LLC—a
   citizen of Delaware, Georgia, and North Carolina—under the name Dining
   Alliance Inc. Yet in that same pleading, and without leave, it changed the
   case caption to Dining Alliance LLC. Four months later, Dining Alliance
   first revealed in a footnote within a motion to continue that Ben E. Keith
   named the wrong entity. Though it assured the court that the parties would
   file a stipulation to correct the record, it never filed such a document. Only
   in October 2021 did Dining Alliance correct its pleadings; and even then, it
   still failed to plead the LLC’s complete citizenship and make proper
   jurisdictional allegations.

                                          2
Case: 22-10340      Document: 00516891917          Page: 3   Date Filed: 09/12/2023

                                    No. 22-10340

          Throughout the suit, Foodbuy maintained that it was “without
   knowledge or information sufficient to form a belief regarding the truth of
   [Dining Alliance’s] allegations as they relate to its proper corporate identity
   or residence, as [Dining Alliance] has filed multiple pleadings
   interchangeably referring to themselves as ‘Dining Alliance Inc.’ and/or
   ‘Dining Alliance LLC.’” Dining Alliance, for its part, resisted jurisdictional
   discovery. Foodbuy was impelled to move to dismiss for lack of jurisdiction
   in November 2021. In response, the district court ordered each party to “file
   a document establishing its citizenship for diversity purposes, supported by
   affidavit or declaration.” The court warned that failure to comply could
   result in dismissal.
          Dining Alliance’s response conceded lack of diversity of citizenship
   with Foodbuy, but it assured the district court that diversity existed between
   it and Ben E. Keith. The district court held that Dining Alliance failed to
   comply with its order because the company did not list its corporate
   members’ principal places of business or the individual LLC members’
   citizenship. See Harvey v. Grey Wolf Drilling Co., 542 F.3d 1077, 1080 (5th
   Cir. 2008) (“[L]ike limited partnerships and other unincorporated
   associations or entities, the citizenship of a LLC is determined by the
   citizenship of all of its members.”); see also Carden v. Arkoma Assocs.,
   494 U.S. 185, 195–96, 110 S. Ct. 1015, 1021 (1990).        It ordered Dining
   Alliance to file an amended response providing “all of the information
   required for the court to determine the citizenship of” its members. And it
   again warned that failure to comply could result in sanctions.
          Dining Alliance’s next filing did not identify higher-level members,
   and it claimed anonymity for some members but purported to provide those
   members’ current residences. One of the anonymous members allegedly
   resided in Texas, placing in doubt Dining Alliance’s previous assertion of
   diversity with Ben E. Keith. The court once again held that Dining Alliance

                                         3
Case: 22-10340         Document: 00516891917              Page: 4       Date Filed: 09/12/2023

                                          No. 22-10340

   had not complied with its order and requested legal authorities bearing on
   sanctions and its subject matter jurisdiction. 1 The court also set a show-cause
   hearing to ascertain why Dining Alliance and its attorneys should not be
   sanctioned. Before that hearing, Ben E. Keith and Dining Alliance settled
   and dismissed their claims against one another, leaving only the third-party
   state-law claims between Dining Alliance and Foodbuy. Dining Alliance then
   offered additional, though still incomplete, information to the court and for
   the third time amended its citizenship. 2
           Dining Alliance’s attorneys and in-house counsel appeared at the
   show-cause hearing. They disclaimed any intentional deception and asserted
   that their representation was merely inept. They also claimed they were
   “unable” to obtain the information necessary to comply fully with the
   court’s orders.       Characterizing Dining Alliance’s overall conduct as a
   “cover-up,” the court found that Dining Alliance and its attorneys violated
   various federal and local rules, the most important being their duty of candor.
   The court then invoked its “inherent authority” to dismiss Dining Alliance’s
   claims against Foodbuy “as a sanction for failure to comply with the Court’s
   orders and the Court’s rules.”
           Dining Alliance moved to alter the judgment on the ground that the
   sanction operated as an adjudication on the merits pursuant to Rule 41(b) of

           _____________________
           1
             Ben E. Keith amended its complaint to include federal claims. Consequently, one
   question was whether that amendment cured any jurisdictional defect that existed at the
   outset of the case.
           2
              Dining Alliance first claimed it was a citizen of Delaware, Florida, New York, and
   the Channel Island of Jersey. Its second filing expanded this list to include California,
   Connecticut, Indiana, New Jersey, Texas, and England. And its third filing included
   Nebraska, Puerto Rico, and the Cayman Islands. Indeed, Dining Alliance has yet to reveal
   its citizenship for diversity purposes, as it again amended its representations regarding
   citizenship while on appeal to this court.

                                                4
Case: 22-10340       Document: 00516891917         Page: 5    Date Filed: 09/12/2023

                                    No. 22-10340

   the Federal Rules of Civil Procedure. Such a sanction, it argued, was
   inappropriate because the court did not find that Dining Alliance or its
   counsel engaged in intentional misconduct. The district court denied the
   motion, clarifying that, while it “did not want to say that the attorneys acted
   intentionally to deceive the court,” it found that Dining Alliance had
   intentionally failed “to comply with the Court’s orders.” (emphasis added).
   Moreover, the court found that no lesser sanction would be appropriate
   because dismissal “without prejudice would allow Dining Alliance to flout
   court orders and move on to the next venue without penalty[,] and it would
   punish innocent parties who would again have to undertake a defense.”
          Dining Alliance appealed the district court’s judgment and has since
   refiled its case against Foodbuy in North Carolina state court. See Dining
   Alliance, LLC v. Foodbuy, LLC, No. 22-cvs-5219 (Mecklenburg Cnty., N.C.,
   Mar. 31, 2022).
                                 DISCUSSION
          Dining Alliance contends that the district court lacked jurisdiction to
   dismiss its claims with prejudice. It also argues that the district court abused
   its discretion in imposing those sanctions. We reject both propositions.
                             A. Collateral Jurisdiction
          Dining Alliance contends that the district court lacked subject matter
   jurisdiction after Ben E. Keith dismissed its federal claims because the
   district court never exercised supplemental jurisdiction over Dining
   Alliance’s third-party state-law claims against Foodbuy. That argument
   assumes the district court at some point had jurisdiction over the claims
   between Ben E. Keith and Dining Alliance. But the district court never
   decided that issue because Dining Alliance failed to provide the information
   necessary to make that determination.

                                          5
Case: 22-10340         Document: 00516891917             Page: 6      Date Filed: 09/12/2023

                                         No. 22-10340

           In ordering sanctions, the district court instead relied on its collateral
   jurisdiction. Such jurisdiction permits a federal court to consider issues
   collateral to the merits even where it lacks subject matter jurisdiction. Willy
   v. Coastal Corp., 503 U.S. 131, 137–38, 112 S. Ct. 1076, 1080–81 (1992).
   Common examples of “collateral” issues include costs, attorney fees,
   sanctions, and contempt proceedings, as such proceedings do “not signify a
   district court’s assessment of the legal merits of the complaint.” Cooter &
   Gell v. Hartmarx Corp., 496 U.S. 384, 396, 110 S. Ct. 2447, 2456 (1990).
           This court has not addressed whether a case-dispositive sanction that
   operates “on the merits” under Rule 41(b) can fall within a district court’s
   collateral jurisdiction. But the majority of circuits that have addressed the
   issue have held that such sanctions are permissible. Ernst v. Rising, 427 F.3d
   351, 367 (6th Cir. 2005); El v. AmeriCredit Fin. Servs., Inc., 710 F.3d 748, 751
   (7th Cir. 2013); Caribbean Broad. Sys., Ltd. v. Cable & Wireless PLC, 148 F.3d
   1080, 1091 (D.C. Cir. 1998); see also In re Exxon Valdez, 102 F.3d 429, 431
   (9th Cir. 1996) (Rule 37 sanctions). 3 As the Ninth Circuit reasoned, though
   such a sanction terminates the action, it does “not signify a district court’s
   assessment of the legal merits of the complaint.” Exxon Valdez, 102 F.3d at
   431 (quoting Willy, 503 U.S. at 137, 112 S. Ct. at 1080) (quotation marks
   omitted). Consequently, it falls within the district court’s “collateral”
   jurisdiction. Id.
           We agree. A case-dispositive sanction does not require the district
   court to assess a claim’s merits, weigh the evidence proffered in support of

           _____________________
           3
             See also Bedford v. Nowlin, 2021 WL 3148953, at *2–5 (10th Cir. July 26, 2021)
   (Rule 37 sanctions); cf. Crenshaw-Logal v. City of Abilene, 436 F. App’x 306, 310 (5th Cir.
   2011) (per curiam) (Dismissal for lack of subject matter jurisdiction “ordinarily should be
   without prejudice” absent “special circumstances that warrant deviation from the general
   rule.”).

                                               6
Case: 22-10340        Document: 00516891917              Page: 7       Date Filed: 09/12/2023

                                         No. 22-10340

   or against the claim, or decide an issue that bears on the claim’s legal
   substance. It is a purely procedural order. See Exxon Valdez, 102 F.3d at 431;
   see also Hernandez v. Conriv Realty Assocs., 182 F.3d 121, 123 (2d Cir. 1999).
   Such a sanction fits squarely within the boundaries of a court’s collateral
   jurisdiction, as it “does not raise the issue of a district court adjudicating the
   merits of a ‘case or controversy’ over which it lacks jurisdiction.” Willy,
   503 U.S. at 138, 112 S. Ct. at 1080–81.
           It is true that Rule 41(b) states that such sanctions operate “as an
   adjudication on the merits.” (emphasis added). But the Supreme Court
   clarified that the phrase on the merits “has come to be applied to some
   judgments . . . that do not pass upon the substantive merits of a claim.”
   Semtek Int’l, Inc. v. Lockheed Martin Corp., 531 U.S. 497, 502, 121 S. Ct. 1021,
   1025 (2001) (emphasis in original). The Court therefore held that the phrase
   as used in Rule 41(b) signifies only that the litigant is barred from refiling the
   claim in the court of dismissal. Id. at 506, 1027. Consequently, the fact that
   a case-dispositive sanction operates “on the merits” under Rule 41(b) does
   not transform it into an assessment of the claim’s substantive legal merits.
           The cases relied upon by Dining Alliance predate Semtek and are
   undercut by its reasoning. 4 The Second Circuit concluded that the res
   judicata effect of case-dispositive sanctions impermissibly interferes with

           _____________________
           4
              Dining Alliance also cites Christopher v. Stanley-Bostitch, Inc., 240 F.3d 95
   (1st Cir. 2001), Olcott v. Delaware Flood Co., 327 F.3d 1115 (10th Cir. 2003), and Borchardt
   v. Minnesota, 264 F. App’x 542 (8th Cir. 2008) (per curiam). Those cases, however, did
   not address the question at hand and are thus unhelpful. Christopher, 240 F.3d at 100
   (vacating a district court’s order, entered after it determined it lacked subject matter
   jurisdiction and should remand, that “judicially stopped” plaintiff from recovering more
   than $75,000 because the order was not “inextricably intertwined with the remand
   determination”); Olcott, 327 F.3d at 1123 (holding the district court had jurisdiction over
   the case); Borchardt, 264 F. App’x at 543 (modifying judgment dismissing case with
   prejudice for lack of jurisdiction to be without prejudice).

                                                7
Case: 22-10340        Document: 00516891917              Page: 8       Date Filed: 09/12/2023

                                         No. 22-10340

   state court jurisdiction. Hernandez, 182 F.3d at 123. And the Third Circuit
   reasoned that case-dispositive sanctions issued without subject matter
   jurisdiction impermissibly “determine[ ] the cause of action.”                       In re
   Orthopedic “Bone Screw” Prods. Liab. Litig., 132 F.3d 152, 156 (3d Cir. 1997).
   Semtek, however, rejected these concerns in holding that a case-dispositive
   sanction does not inherently prohibit a party from refiling in state court or
   require a court to pass upon a claim’s substantive merits. Semtek, 531 U.S. at
   505–06, 121 S. Ct. at 1027.
           Here, the district court’s sanction was purely procedural. It therefore
   fell within the court’s collateral jurisdiction.
                                B. Propriety of the Sanction
                                         1. Standards
           The district court invoked its inherent power to dismiss Dining
   Alliance’s claims. 5        We take this opportunity to clarify both the
   circumstances that justify a district court in imposing such sanctions and our
   appellate standard of review.
           The parties first disagree as to whether a district court must find a
   “clear record of delay or contumacious conduct,” Snider v. L-3 Commc’ns
   Vertex Aerospace, LLC, 946 F.3d 660, 678 (5th Cir. 2019), or “bad faith or
   willful abuse” of the judicial process, Vikas WSP, Ltd. v. Econ. Mud Prods.
   Co., 23 F.4th 442, 455 (5th Cir. 2022). To the extent those standards may
   fail to overlap, Supreme Court precedent and our case law require district
   courts to find “bad faith or willful abuse” of the judicial process. See
   Chambers v. NASCO, Inc., 501 U.S. 32, 45–46, 111 S. Ct. 2123, 2133 (1991);
           _____________________
           5
             Foodbuy contends that the district court did not need to invoke its inherent power
   and could have instead relied upon, for instance, Rule 37 or Rule 41(b). That may be true,
   but the district court explicitly stated that it was exercising its inherent power.

                                                8
Case: 22-10340        Document: 00516891917              Page: 9      Date Filed: 09/12/2023

                                         No. 22-10340

   Durham v. Fla. E. Coast Ry. Co., 385 F.2d 366, 368 (5th Cir. 1967); Woodson
   v. Surgitek, Inc., 57 F.3d 1406, 1417 & n.23 (5th Cir. 1995) (collecting cases);
   see also Ali v. Johnson, 259 F.3d 317, 318 (5th Cir. 2001) (“This court is always
   bound by earlier controlling precedents, if two of our decisions conflict.”).
           Dining Alliance next argues that the district court must find that the
   sanctioned litigant’s conduct prejudiced the opposing party. It cites in
   support FDIC v. Conner, 20 F.3d 1376, 1381 (5th Cir. 1994), and Law Funder,
   LLC v. Munoz, 924 F.3d 753, 758 (5th Cir. 2019). Those cases, however,
   belong to a “line of cases involving dismissals for discovery order violations.”
   In re Taxotere (Docetaxel) Prods. Liab. Litig., 966 F.3d 351, 357 (5th Cir. 2020);
   see also Gonzalez v. Trinity Marine Grp., 117 F.3d 894, 898 (5th Cir. 1997)
   (distinguishing case-dispositive sanctions issued pursuant to Rule 37(b) from
   those issued pursuant to the court’s inherent power). Precedent concerning
   sanctions issued pursuant to the court’s inherent power does not require a
   showing that the opposing litigant was prejudiced. See Chambers, 501 U.S. at
   50–51, 111 S. Ct. at 2136; Flaksa v. Little River Marine Constr. Co., 389 F.2d
   885, 887–88 (5th Cir. 1968); Woodson, 57 F.3d at 1417–18; Gonzalez, 117 F.3d
   at 897–99; Brown v. Oil States Skagit Smatco, 664 F.3d 71, 76–80 (5th Cir.
   2011) (per curiam); Snider, 946 F.3d at 678–79. For good reason: A court
   invokes its inherent power to vindicate its own interests, not the interests of
   the opposing litigant. See Flaksa, 389 F.2d at 887; Snider, 946 F.3d at 678. 6
           The parties additionally dispute the appellate standard of review for
   case-dispositive sanctions issued pursuant to a court’s inherent power.
   Dining Alliance contends that this court conducts a two-step evaluation:
   review the district court’s invocation of its inherent power de novo, then
           _____________________
           6
              Even if a prejudice showing was required, it was obviously made here: Dining
   Alliance’s runaround required Foodbuy to defend itself for more than a year in a court that
   likely lacked subject matter jurisdiction.

                                               9
Case: 22-10340       Document: 00516891917              Page: 10       Date Filed: 09/12/2023

                                         No. 22-10340

   review the sanctions themselves for abuse of discretion. See Vikas, 23 F.4th at
   455. Foodbuy, in contrast, argues that the abuse of discretion standard
   applies. See Snider, 946 F.3d at 678. This court has long held that the
   exercise of a court’s inherent power to impose litigation ending sanctions “is
   subject to review for abuse of discretion.” Flaksa, 389 F.2d at 887. The
   Supreme Court agrees. See Chambers, 501 U.S. at 55, 111 S. Ct. at 2138 (“We
   review a court’s imposition of sanctions under its inherent power for abuse
   of discretion.”). To the extent this court conducts a de novo review, it does
   so only to assure that the district court imposed sanctions “in the interest of
   the orderly administration of justice,” rather than for an anterior or
   extraneous reason. Flaksa, 389 F.2d at 887; see also id. at 887 nn.2–3
   (collecting cases). Compare with FDIC v. Maxxam, 523 F.3d 566, 593 (5th
   Cir. 2008) (vacating inherent-power sanction that was not issued to protect
   “the court’s own judicial authority or proceedings”).
           To sum up our conclusions, a district court may invoke its inherent
   power to dismiss claims with prejudice in order to protect “the integrity of
   the judicial process.” Brown, 664 F.3d at 78; see also Chambers, 501 U.S. at
   44–46, 111 S. Ct. at 2132–33; Flaksa, 389 F.2d at 887. It must find that the
   litigant acted in bad faith or willfully abused the judicial process. 7 Durham,
   385 F.2d at 368; Woodson, 57 F.3d at 1417; Gonzalez, 117 F.3d at 898. It must
   also find that “lesser sanctions would not serve the best interests of justice.”
   Brown, 664 F.3d at 77 (internal quotation marks and citation omitted); see also
   Gonzalez, 117 F.3d at 898. It should go without saying that the district court

           _____________________
           7
              The objectionable conduct at issue must typically be attributable to the client.
   Woodson, 57 F.3d at 1418. But where “an attorney’s conduct falls substantially below what
   is reasonable under the circumstances,” Link v. Wabash R.R., 370 U.S. 634 n.10, 82 S. Ct.
   1386, 1390 n.10 (1962), the party may not “avoid the consequences of the acts or omissions
   of [his] freely selected agent,” id. at 633–34, 1390.

                                               10
Case: 22-10340        Document: 00516891917              Page: 11       Date Filed: 09/12/2023

                                          No. 22-10340

   must articulate its reasons for imposing sanctions under its inherent power
   sufficiently to enable appellate review.
           On appeal, this court will review the sanction for abuse of discretion.
   Chambers, 501 U.S. at 55, 111 S. Ct. at 2138; Flaksa, 389 F.2d at 887. Still,
   our review is “particularly scrupulous,” as dismissal with prejudice “is an
   extreme sanction.” Snider, 946 F.3d at 678 (internal quotation marks and
   citation omitted).
                                        2. Application
           Willful abuse. Dining Alliance argues that the district court imposed
   the sanction only for violations of the jurisdictional orders. It asserts that any
   failure to comply with those orders was attributable to counsel, not Dining
   Alliance. And it contends that counsel’s mistakes, both as they relate to the
   jurisdictional orders and to the course of litigation, do not amount to bad faith
   or a willful abuse of the judicial process.
           Contrary to Dining Alliance’s assertion, the district court found that
   Dining Alliance itself willfully abused the judicial process based on the totality
   of its litigation misconduct, which culminated in its refusal to obey the
   court’s orders. 8 See Chambers, 501 U.S. at 50–51, 111 S. Ct. at 2136 (course
   of litigation conduct can evidence willful abuse). In its original pleading,
   Dining Alliance, acting through in-house counsel, misstated the company’s
   name, corporate form, and citizenship. That misstatement was reckless

           _____________________
           8
             Our caselaw is deeply divided as to whether a district court must find bad faith or
   willful abuse by a preponderance of the evidence or by clear and convincing evidence.
   Compare Flaksa, 389 F.2d at 887–88, Woodson, 57 F.3d at 1417–18, Gonzalez, 117 F.3d at
   897–99, Brown, 664 F.3d at 76–80, and Snider, 946 F.3d at 678–80 (applying
   preponderance of the evidence standard), with Crowe v. Smith, 261 F.3d 558, 563 (5th Cir.
   2001); In re Moore, 739 F.3d 724, 730 (5th Cir. 2014); and Vikas, 23 F.4th at 455 (applying
   clear and convincing evidence standard). Either standard is satisfied here.

                                                11
Case: 22-10340       Document: 00516891917            Page: 12      Date Filed: 09/12/2023

                                       No. 22-10340

   because the company’s transformation into Dining Alliance LLC should have
   been and apparently was known at the time. 9 When Dining Alliance’s in-
   house counsel discovered the misrepresentation, he failed to ensure that the
   company’s attorneys immediately alerted the court and amended their pro
   hac applications to appear in the Northern District of Texas on Dining
   Alliance LLC’s behalf. Later, he approved an amended complaint that not
   only altered the case caption without leave of the court, but also brought
   claims against Foodbuy in the name of Dining Alliance Inc., again
   misrepresenting the company’s name, corporate form, and citizenship.
   Though notified of this anomaly by Foodbuy, Dining Alliance did not amend
   its complaint until October 2021. Yet again, it failed to plead its proper
   citizenship and make jurisdictional allegations. And despite the ongoing
   confusion regarding its corporate form and citizenship, Dining Alliance
   refused Foodbuy’s requests for jurisdictional discovery. The district court
   found that this train of misconduct can be directly attributed to Dining
   Alliance, and we agree.
          But Dining Alliance’s wrongdoing did not end there. When the
   district court ordered Dining Alliance to disclose the LLC’s citizenship, it
   failed to comply after being informed by both Foodbuy and the district court
   of this circuit’s well-established law. See Harvey, 542 F.3d at 1080. In
   particular, Dining Alliance misrepresented that it and Ben E. Keith were
   diverse. When given a second chance, Dining Alliance again refused to
   provide the information necessary to determine its citizenship. And it has
   yet to comply. 10 Considering Dining Alliance’s willful disregard for the
          _____________________
          9
             Dining Alliance included Dining Alliance LLC in its certificate of interested
   persons just eleven days after it filed its answer.
          10
            Dining Alliance asserts that it was unable to reveal the identities of all its
   members because that information was not within its possession and protected by certain

                                             12
Case: 22-10340       Document: 00516891917              Page: 13       Date Filed: 09/12/2023

                                         No. 22-10340

   district court’s orders in combination with its other malfeasance, we cannot
   say the district court erred in finding that Dining Alliance’s course of conduct
   amounted to a willful abuse of the judicial process.
           Lesser sanctions. Dining Alliance argues that the district court did not
   consider lesser sanctions before dismissing its claims. This contention is
   belied by the record. 11 The district court warned Dining Alliance on two
   separate occasions that its failure to comply with the court’s orders may lead
   to sanctions, including dismissal. The failure of such express warnings
   permitted the court to infer that less onerous sanctions would not address the
   offensive conduct. See Brown, 664 F.3d at 78. The district court also
   provided Dining Alliance with two opportunities to produce complete
   information about its citizenship, which itself is a lesser sanction. See
   Taxotere, 966 F.3d at 360. Moreover, the district court ultimately found that
   “[n]o lesser sanction than dismissal with prejudice is appropriate.” The
   district court did not err in finding that lesser sanctions would not serve the
   best interests of justice.
           We hasten to add, however, that the court’s dismissal, though indeed
   a significant sanction, could not and did not end the litigation, because,
   pursuant to Semtek, 531 U.S. at 505–06, 121 S. Ct. at 1027, Dining Alliance

           _____________________
   confidentiality agreements. As the district court found, these “excuses” are unavailing
   because Dining Alliance “never sought any relief from the orders.” If, because of claimed
   confidentiality, Dining Alliance was unable to provide the names and residences of all LLC
   members in camera for review by the court, then of course it could not prove federal
   diversity jurisdiction.
           11
             It is also undermined by Dining Alliance’s position that the imposition of lesser
   sanctions, such as attorney fees, would have been inappropriate.

                                               13
Case: 22-10340        Document: 00516891917              Page: 14       Date Filed: 09/12/2023

                                          No. 22-10340

   filed a new lawsuit in North Carolina, whose courts will determine whether
   it can go forward under state law. 12
                                      CONCLUSION
           Based on the foregoing record, the district court neither lacked
   jurisdiction nor abused its discretion in dismissing Dining Alliance LLC’s
   third-party claims with prejudice as a sanction for its willful abuse of the
   judicial process. The judgment of the district court is AFFIRMED.

           _____________________
           12
               In this scenario, the “greater sanction” might have consisted of attorneys’ fees,
   but it is not our place to second-guess the district court’s reasonable option.

                                                14
Case: 22-10340         Document: 00516891917                Page: 15        Date Filed: 09/12/2023

                                            No. 22-10340

   Haynes, Circuit Judge, concurring in part, dissenting in part:
           I agree that Dining Alliance should have been sanctioned for its
   conduct in continuing to fail to follow the district court’s jurisdictional
   discovery directives.         Given the fact that jurisdiction depends on the
   citizenship of the owners of the LLC, it was not proper to simply ignore the
   district court’s requests. This case has a strange twist to it, though, because
   it is unclear what the nature of the sanction actually is. As described at the
   end of the majority opinion, Dining Alliance has filed the same lawsuit in
   state court in North Carolina. If, in fact, it is not barred by the dismissal with
   prejudice (as that opinion suggests), then the sanction was not a sanction at
   all, and this appeal should have been dismissed. On the other hand, if the
   dismissal with prejudice does preclude any further litigation, then it is the
   most severe sanction. While the district court did not immediately enter that
   sanction, in my view, it failed to address an obvious “lesser sanction” which
   is awarding the attorney’s fees incurred by Foodbuy in addressing the
   jurisdictional issues. 1 See, e.g., Fed. R. Civ. P. 37(b)(2)(C). Thus, I would
   remand to address these points.

           _____________________
           1
               The majority opinion suggests this would be a “greater sanction,” but that is
   true only if the dismissal is no sanction at all because it does not actually prejudice the state
   court filing (dismissal for lack of jurisdiction is not a sanction).

                                                  15