Key Points

  • A district court that finally determines it lacks Article III jurisdiction over a case has no power to adjudicate a contract-based attorneys' fee motion and must dismiss it.
  • The court's Rule 11 sanctions power survives a jurisdictional dismissal, but that exception does not extend to enforcing private contractual fee-shifting provisions.
  • The circuits are split on whether statutory fee-shifting provisions can independently confer jurisdiction when a court otherwise lacks subject-matter jurisdiction.
  • The Third Circuit expressly declined to resolve the statutory fee-shifting split, holding only that contractual fee provisions do not provide an independent basis for Article III jurisdiction.
  • The opinion vacated the district court's denial of fees and remanded with instructions to dismiss the fee motion.

The Third Circuit ruled Tuesday that a district court that dismissed a case as unripe lacked authority to rule on a subsequent motion for attorneys' fees under the parties' contract, holding that the court should have dismissed the fee motion rather than denying it on the merits.

In SWN Production Co. v. Blue Beck Ltd., a three-judge panel vacated an order from the U.S. District Court for the Middle District of Pennsylvania that had denied Blue Beck Ltd.'s request for fees, costs, and expenses under a lease agreement's fee-shifting provision. Judge Malachy E. Mannion had earlier dismissed the underlying declaratory judgment action as unripe, finding that the dispute over lease termination depended on contingent future events.

Writing for the panel, Judge Shwartz held that once a federal court makes a final determination that it lacks Article III jurisdiction, the court has "no power to do anything but to strike the case from the docket."

The dispute arose from a gas lease under which SWN Production paid royalties to Blue Beck for gas extracted from Blue Beck's land. When a disagreement emerged over performance under the lease, SWN sued in 2022 seeking declarations that no default had occurred, that Blue Beck was required to disclose information so SWN could cure any alleged defaults, and that the lease could not be forfeited absent the parties' agreement or a judicial determination.

Judge Mannion dismissed the complaint without prejudice in October 2023, concluding that because termination of the lease was contingent on future events that might not occur, the case was not ripe for adjudication. SWN did not appeal that dismissal.

Blue Beck then moved for fees, costs, and expenses under the lease's fee-shifting clause, which provides that "[t]he losing Party in any action brought to compel performance of, or to recover for breach of any covenant or condition herein contained, or for declaratory relief, shall pay to the prevailing Party's [sic] reasonable fees, costs and expenses." Some of the fees Blue Beck sought related to discovery the parties had conducted while the motion to dismiss was pending.

In May 2024, Judge Mannion denied the fee motion, reasoning that Blue Beck was not a "prevailing party" under Pennsylvania law because a dismissal without prejudice did not finally determine the parties' rights. The court held it had diversity jurisdiction under 28 U.S.C. Section 1332 to consider the fee motion but did not address its earlier holding that Article III jurisdiction was absent over the original claim.

The Third Circuit vacated that decision. Because ripeness is a constitutional justiciability requirement, Judge Shwartz wrote, federal courts lack subject-matter jurisdiction over unripe claims "even when statutory subject-matter jurisdiction would otherwise exist."

The opinion cited 19th-century Supreme Court precedent establishing that a court without jurisdiction cannot award costs or penalties. In Mayor & Aldermen of City of Nashville v. Cooper, the Supreme Court held in 1867 that a court that lacked statutory jurisdiction "clearly err[ed]" by granting costs because "[i]f there were no jurisdiction, there was no power to do anything but to strike the case from the docket."

The Third Circuit also cited Citizens' Bank of Louisiana v. Cannon, where the Supreme Court in 1896 held that "Having dismissed the bill for want of [statutory] jurisdiction, the court was without power to decree the payment of costs and penalties."

Applying those principles, the Third Circuit concluded that because the district court had determined the case was unripe and therefore not a case or controversy over which it had jurisdiction under Article III, it "lacked authority to address the fees motion." As the court noted, citing its 2024 decision in George v. Rushmore Service Center, "A lack of jurisdiction 'voids any decree entered in a federal court.'"

The panel noted one recognized exception: courts retain the power to impose sanctions under Federal Rule of Civil Procedure 11 even in cases dismissed for lack of subject-matter jurisdiction. But that exception, rooted in courts' inherent authority to control their dockets and enforce their rules, does not cover enforcing private contracts. Because the sole basis for fees in this case was the lease agreement, the Rule 11 carve-out did not apply.

The opinion also catalogued a deep circuit split on a related but distinct question: whether statutory fee-shifting provisions can provide an independent basis for jurisdiction when a court otherwise lacks subject-matter jurisdiction over the underlying claim.

The Second, Fifth, Sixth, Eighth, Ninth, and Eleventh Circuits have held that district courts lacking subject-matter jurisdiction cannot award fees under statutes like ERISA, Section 1983, and the Individuals with Disabilities Education Act. In contrast, the Seventh Circuit held in Citizens for a Better Environment v. Steel Co. that "a motion seeking an award under [a fee-shifting] statute[] is a case or controversy that may be adjudicated to the extent the movant has suffered at its adversary's hands an injury may be redressed by a decision in its favor." The Tenth Circuit reached a similar conclusion regarding the False Claims Act, viewing the fee claim as a "separate" case or controversy.

The Fourth Circuit and the D.C. Circuit have acknowledged the split without resolving it.

The Third Circuit expressly declined to weigh in on that dispute. "We need not weigh in on the issue of whether a fee-shifting statute independently grants jurisdiction," Judge Shwartz wrote, "and we hold only that after a final determination of the absence of Article III subject-matter jurisdiction, the district court lacks constitutional authority to act absent another basis for such jurisdiction."

The court also reserved judgment on whether a federal court has authority to decide a fee request where only statutory subject-matter jurisdiction is lacking, or in a case dismissed on Article III grounds that includes a cause of action with a statutory fee-shifting provision.

The case was argued September 28, 2026, and the opinion was issued the following day.

Judges Restrepo and Chung joined Judge Shwartz's opinion.

Thomas J. Campenni and Robert D. Schaub of Rosenn Jenkins & Greenwald, along with Steven G. Leventhal of Leventhal Mullaney & Blinkoff, represented Blue Beck. Cara L. Brack, Carolyn B. McGee, and Ronald L. Hicks of Nelson Mullins represented SWN Production. Attorneys on the case included Thomas J. Campenni of Rosenn Jenkins & Greenwald for Blue Beck and Cara L. Brack of Nelson Mullins for SWN Production.

On remand, the district court must dismiss Blue Beck's fee motion.