sanction.”); Ray v. Eyster (In re: Orthopedic "Bone Screw" Prods. Liability Litig.), 132 F.3d 152, 156-57 (3d Cir. 1997) (same). But see Allen v. Exxon Corp. (In re The Exxon Valdez), 102 F.3d 429, 431 (9th Cir. 1996) (default judgment imposed as discovery sanction is enforceable even if it is later determined the court lacked subject matter jurisdiction). If a case or controversy is properly before the federal courts, however, Article III's restriction on federal courts' subject matter jurisdiction is not implicated. See Willy v. Coastal Corp., 503 U.S. 131, 132 (1992) (discussing Article III-based limits on court's ability to impose sanctions where court never had subject matter jurisdiction).[1]
Plaintiff's complaint asserted federal securities act claims and pendant state law claims. The district court had original subject matter jurisdiction over the federal claims pursuant to 28 U.S.C. § 1331 and over the state claims pursuant to 28 U.S.C. § 1367(a). Dismissal of a properly pled federal claim does not retroactively deprive the court of subject matter jurisdiction. See Bell v. Hood, 327 U.S. 678, 682 (1946) (federal
- ↑ Although we reach the same result, we recognize our analysis differs from that employed in Olcott II. Olcott II similarly affirmed the district court's imposition of a sanction after the district court dismissed all substantive claims. But Olcott II affirmed after concluding the sanction was punitive rather than civil in nature. A punitive sanction may be enforced even absent subject matter jurisdiction. See Willy, 503 U.S. at 132. Olcott II did not decide whether the district court had subject matter jurisdiction when it entered the prior monetary sanction. Because Defendants asserted the district court did not have jurisdiction, and Plaintiff never argued otherwise, Olcott II began its analysis with the assumption that the district court did not have subject matter jurisdiction. The Olcott II punitive/civil sanction analysis is based on Article III's restrictions on federal jurisdiction. The analysis is properly applied to sanctions entered by a federal court without subject matter jurisdiction. See id. The analysis is unnecessary in a case in which the district court had subject matter jurisdiction when it entered a sanction.
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