Dissenting Justice Would Reconsider Hawaii Corp. Rule.
In Klestadt & Winters, LLP v. Cangelosi, Case Nos. 10-16970 et al. (9th Cir. Mar. 6, 2012) (for publication), the Ninth Circuit, in a 2-1 decision, determined that Rule 11/inherent powers sanctions orders against a client and their attorneys by a district court sitting in bankruptcy are not immediately appealable under the reasoning of In re Hawaii Corp., 796 F.2d 1139 (9th Cir. 1986), U.S. Supreme Court decisons interpreting the scope of 28 U.S.C. § 1291’s jurisdictional grant, and Cunningham v. Hamilton County, Ohio, 527 U.S. 198 (1999). [The sanctions order was a big one--clients and attorneys were held jointly and severally liable for some $279,615 in sanctions, an amount based on the lenders’ attorney’s fees and expenses, as well as an order for counsel to disgorge separate retainers of $300,000 each.] The dissenting circuit judge disagreed with the Hawaii Corp. rule (as did the Fifth, Second, and First Circuits) and disagreed with applying Cunningham to a main bankruptcy case.