Twice Is Not As Nice: Plaintiff’s Counsel Ordered to Pay Defendant For Unreasonable and Vexatious Filing

On June 1, 2016, the U.S. Court of Appeals for the Seventh Circuit issued an interesting ruling in Beatrice Boyer, et al., v. BNSF Railway Company dba Burlington Northern and Santa Fe Railway Company. It ordered plaintiffs’ counsel to compensate BNSF almost $35,000. The Court of Appeals’ ruling was premised on it concluding:

“We believe the record makes clear that the plaintiffs’ counsel unreasonably and vexatiously multiplied the proceedings by filing [a second] suit in Arkansas, which had absolutely no connection to this case” after its initial complaint filed in Wisconsin was dismissed.

A few years ago, the court decided the first case that was generated by a July 2007 flood in Bagley, Wisconsin which damaged many homes in Bagley. The plaintiffs’ counsel filed a federal class action lawsuit against BNSF alleging that its poor maintenance of a railway trestle caused the flood waters to back up and inundate the Bagley community. The case was dismissed because these claims were subject to a state statute, and they were not properly filed, as the state law required.

Just before the relevant Wisconsin statute of limitations expired, the plaintiffs’ counsel filed identical claims (with mostly new plaintiffs) in a state court in Arkansas. Arkansas was selected because the BNSF Railway was licensed to do business there. The case was promptly removed to a federal U.S. District Court in Arkansas and then transferred to a U.S. District Court in Wisconsin, where it was again dismissed for failure to state a claim on which relief could be granted.

On appeal, the Seventh Circuit again ruled against the plaintiffs, and agreed with BNSF’s counsel that plaintiffs’ counsel should be sanctioned for engaging in vexatious, objectively unreasonable litigation. It concluded that BNSF is entitled to its fees and costs for removing the case to federal court and successfully seeking its transfer to the Wisconsin Dustrict Court under 28 U.S.C. § 1927, and ordered plaintiffs’ counsel to compensate BNSF for these costs.