On June 1, 2016, in Boyer v. BNSF Railway Company, the US Court of Appeals for the Seventh Circuit imposed sanctions on plaintiff's counsel under 28 U.S.C. § 1927 for forum shopping but affirmed the district court's denial of sanctions under FRCP 11 because the plaintiff's claim was not frivolous ( (7th Cir. June 1, 2016)).

In 2008, Kenneth Irish and three other residents of Bagley, Wisconsin (the Irish plaintiffs) filed a putative class action in Wisconsin state court against Burlington Northern and Santa Fe Railway Company (BNSF). The Irish plaintiffs sued for damages on theories of negligence and nuisance, alleging that BNSF's faulty design and construction of a railway bridge trestle caused rainwater to build up and flood the town the year before.

BNSF removed the case to the US District Court for the Western District of Wisconsin and moved to dismiss for failure to state a claim under FRCP 12(b)(6). The district court granted BNSF's motion, ruling that the Irish plaintiffs' exclusive remedy was Wis. Stat. § 88.27, which does not permit suits against the railroad arising out of the design and construction of a railway trestle.

The Irish plaintiffs appealed, arguing that they alleged not only faulty construction but also faulty maintenance of the trestle, and they contended that faulty maintenance did not fall under the scope of Wis. Stat. § 88.27. The Seventh Circuit affirmed the lower court's dismissal, holding that the Irish plaintiffs forfeited their faulty maintenance argument because they did not raise it before the district court.

Sixteen months later, several Bagley residents, led by Beatrice Boyer (the Boyer plaintiffs), sued BNSF in Arkansas state court, where BNSF was licensed to do business. The Boyer case was very similar to the Irish case:

The only notable difference between the cases was that the Boyer plaintiffs' sole theory of the case was that BNSF was negligent based upon faulty maintenance, rather than the Irish plaintiffs' theory of negligent design and construction.

BNSF removed the case to the Eastern District of Arkansas, then moved to transfer the case to the Western District of Wisconsin, contending that Wisconsin had stronger ties to the case. In their response, the Boyer plaintiffs acknowledged that they filed in Arkansas because they had "grave concerns" that the Wisconsin court would rule against them based on past history, and they sought "a fresh pair of judicial eyes, in a proper forum." They claimed venue in Arkansas was proper because BNSF was licensed to do business in Arkansas. The Arkansas district court granted BNSF's motion and transferred the case to the Western District of Wisconsin.

After transfer of the Boyer case to the Western District of Wisconsin, BNSF moved to dismiss under FRCP 12(b)(6). BNSF also moved to sanction the Boyer plaintiffs under FRCP 11 and 28 U.S.C. § 1927 for pursuing frivolous claims and engaging in abusive litigation tactics. The district court dismissed the Boyer plaintiffs' claims, finding that they failed to state a claim for relief because Wis. Stat. § 88.27 exclusively governed their faulty maintenance claims. However, the district court denied BNSF's request for sanctions, finding that the Boyer plaintiffs' arguments were not frivolous because their theory of the case had not been addressed in the Irish litigation.

The Boyer plaintiffs appealed the dismissal, while BNSF cross-appealed the denial of their request for sanctions. On appeal, the Seventh Circuit first reviewed Wis. Stat. § 88.27, and affirmed the district court ruling that the statute included claims for faulty maintenance, making Wis. Stat. § 88.27 the exclusive relief available to the Boyer plaintiffs. But because the issue of whether the statute encompassed claims for faulty maintenance was not addressed in the Irish litigation, the court found the Boyer plaintiffs' argument was not frivolous, and therefore the court affirmed the district court's ruling denying sanctions under FRCP 11.

The Seventh Circuit reviewed the denial of sanctions under 28 U.S.C. § 1927 de novo because the district court did not address sanctions under § 1927 specifically. The Seventh Circuit explained that while FRCP 11 requires a finding that a party's claims are frivolous, § 1927 allows for sanctions with a finding of objective bad faith. The court found that the Boyer plaintiffs' counsel acted in objective bad faith because:

Therefore, the Seventh Circuit granted BNSF's motion for sanctions under 28 U.S.C. § 1927 and ordered the Boyer plaintiffs' counsel to pay the costs and fees BNSF's counsel incurred for the Arkansas litigation. The Seventh Circuit affirmed the district court in all other respects.