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March 19, 2026 Get Citation Alerts Download PDF Add Note

National Christmas Products, Inc v. OJ Commerce, LLC

Court of Appeals for the Eleventh Circuit

• Citations: None known
• Docket Number: 25-10089
• Precedential Status: Non-Precedential

• Nature of Suit: NEW

• Opinion

• Authorities (10)

• Cited By (0)

• Summaries (0)

• Similar Cases (11.2K)

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Combined Opinion

USCA11 Case: 25-10089 Document: 45-1 Date Filed: 03/19/2026 Page: 1 of 15

NOT FOR PUBLICATION

In the
United States Court of Appeals
For the Eleventh Circuit

---

No. 25-10089
Non-Argument Calendar

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NATIONAL CHRISTMAS PRODUCTS, INC,
a New Jersey Corporation,
d.b.a. National Tree Company,
Plaintiff-Counter Defendant-Appellee,
versus

OJ COMMERCE, LLC,
a Florida Limited Liability Company,
Defendant-Counter Claimant-Appellant.

---

Appeal from the United States District Court
for the Southern District of Florida
D.C. Docket No. 0:22-cv-60897-WPD

---

Before LUCK, LAGOA, and KIDD, Circuit Judges.
PER CURIAM:
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2 Opinion of the Court 25-10089

Proceeding under the assumption that it was an S-Corpora-
tion, National Christmas Products, Inc. filed suit against OJ Com-
merce, LLC, invoking the federal court’s diversity of citizenship ju-
risdiction. But after two years of litigation, National Christmas dis-
covered that its corporate-structure allegations were incorrect,
which destroyed diversity. As such, the district court dismissed the
case for lack of jurisdiction. OJ Commerce then moved for sanc-
tions, but the district court denied this request because it could not
ascertain any bad faith on the part of National Christmas or its
counsel. OJ Commerce appeals this decision. After careful review,
we find no abuse of discretion in this determination and affirm the
decision to deny sanctions.
I. BACKGROUND
In May 2022, National Christmas Products, Inc., doing busi-
ness as National Tree Company (“National Christmas”), filed suit
against OJ Commerce, LLC (“OJ Commerce”) seeking damages for
(1) breach of contract, (2) account stated, and (3) goods sold and
delivered. National Christmas asserted that federal jurisdiction was
proper because the parties were citizens of different states and the
amount in controversy exceeded $75,000.
Due to deficiencies in the initial citizenship allegations, the
district court sua sponte directed National Christmas to file an ad-
dendum “listing the citizenship of every member of any [p]arty that
is a limited liability company or any other form of unincorporated
business or association.” National Christmas complied, and its ad-
dendum provided that OJ Commerce was an LLC with its sole
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25-10089 Opinion of the Court 3

member being a Florida citizen and that National Christmas was
an S-Corporation incorporated in, and with its principal place of
business in, New Jersey.
“[A] corporation shall be deemed to be a citizen of any State
by which it has been incorporated and of the State where it has its
principal place of business.” Sweet Pea Marine, Ltd. v. APJ Marine,
Inc., 411 F.3d 1242, 1247 (11th Cir. 2005) (quoting 28 U.S.C.
§ 1332 (c)(1)). An LLC is a “citizen of any state of which a member
of the company is a citizen.” Rolling Greens MHP, L.P. v. Comcast
SCH Holdings L.L.C., 374 F.3d 1020, 1022 (11th Cir. 2004). As such,
OJ Commerce was treated as a citizen of Florida and National
Christmas was treated as a citizen of New Jersey. With federal sub-
ject matter jurisdiction apparently satisfied, the parties proceeded
with the case.
In January 2024, following the close of discovery and just
prior to the deadline for filing pretrial motions, National Christmas
moved to dismiss the case in its entirety for lack of subject matter
jurisdiction. The motion explained that National Christmas’s Chief
Financial Officer (“CFO”) had informed counsel two months prior
that the company was not an S-Corporation because it had
“merged out of existence and into National Christmas Products
LLC” in November 2019. After additional investigation, counsel
determined that a member of one of the many LLCs involved in
National Christmas’s complicated ownership structure was a citi-
zen of Florida, thereby destroying diversity jurisdiction.
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4 Opinion of the Court 25-10089

OJ Commerce requested “expedited discovery on subject
matter jurisdiction,” alleging that National Christmas had commit-
ted fraud on the court by intentionally concealing its true corporate
structure. In relevant part, it wished to “determine what exactly
[National Christmas] and its counsel knew” and when it was aware
of such information, including the “details of any investigations
they did (or didn’t do) in response to the” district court’s May 2022
order to show cause.
The magistrate judge granted this motion in part, limiting
OJ Commerce to discovery relevant to determining the citizenship
of the LLC member at issue. The magistrate judge specifically
noted that OJ Commerce was “not entitled (at that time) to take
depositions of [National Christmas’s] ‘counsel, and all others in-
volved in any investigations (or lack thereof) related to [its] re-
sponse to’” the show cause order.
Following the additional discovery and further briefing, the
magistrate judge recommended granting National Christmas’s mo-
tion. The district judge adopted this recommendation and dis-
missed the case without prejudice. OJ Commerce did not appeal
this order.
Shortly after the dismissal, OJ Commerce moved for sanc-
tions against National Christmas and its counsel, invoking
28 U.S.C. § 1927 and the court’s inherent power. It argued that
both National Christmas and its counsel acted in bad faith by re-
peatedly misrepresenting the company’s true corporate status,
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25-10089 Opinion of the Court 5

which led it to expend numerous resources on this litigation. Na-
tional Christmas responded in opposition to the motion and argued
that there was no evidence of bad faith. It also supplied a declara-
tion from its counsel, John Horgan, which revealed the following
relevant information.
In March 2022, counsel attempted to avoid litigation by
sending a demand letter to OJ Commerce under the name “Na-
tional Christmas Products, LLC.” When the parties failed to reach
an agreement, counsel prepared the complaint using the docu-
ments supplied by his client, which included “the parties’ agree-
ment and the accounts receivable statement,” both of which used
the name “National Christmas Products, Inc.” When the court is-
sued its show cause order after the filing of the complaint, counsel
investigated only OJ Commerce’s corporate status because it was
“[u]nder the mistaken impression” that OJ Commerce was the only
LLC involved in the litigation.
The discovery period was extended multiple times for vari-
ous reasons, and the deadline was ultimately set for December 13,
2023. One month prior to that date, National Christmas’s CFO in-
formed counsel that it was an LLC rather than an S-Corporation.
“Immediately thereafter,” counsel began its investigation into Na-
tional Christmas’s corporate structure and had to search for infor-
mation that was neither immediately in their possession nor pub-
licly available. In early December, while conducting discovery re-
lated to the instant case, counsel requested that National Christ-
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6 Opinion of the Court 25-10089

mas’s CFO obtain the missing membership information. On De-
cember 21, 2023, the CFO informed counsel that at least one lim-
ited partner of “an offshore entity in [National Christmas’s] chain
of membership” was a Florida citizen, so counsel requested more
specific information about the timing of this individual’s member-
ship. On December 28, 2023, counsel was able to confirm that the
individual had been a continuous limited partner in the subject
LLC since May 2022, so National Christmas filed its initial motion
to dismiss on January 4, 2024.
Following OJ Commerce’s reply, the magistrate judge rec-
ommended denying the sanctions motion because it could not as-
certain any bad faith on behalf of National Christmas or its counsel.
Rather, the magistrate judge reasoned that, based primarily on
Horgan’s “unrebutted” declaration, “this entire episode was a most
unfortunate case of negligence,” which was insufficient to support
sanctions under either § 1927 or the court’s inherent power.
The magistrate judge recognized that National Christmas
and its counsel “made a significant and substantial error,” but
found that, “as puzzling and troubling as this error was,” OJ Com-
merce “presented no specific evidence of dishonest intent.” Rather,
OJ Commerce contended, without support, that National Christ-
mas kept this information hidden as a “failsafe,” which, in the mag-
istrate judge’s view, neglected that both parties wasted resources
because of this error and there was no identifiable advantage to the
change of jurisdiction. The magistrate judge also observed that OJ
Commerce never recognized the error, despite receiving a demand
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25-10089 Opinion of the Court 7

letter from and making payments to the LLC. The magistrate judge
found that this point indicated that National Christmas and its
counsel could also have “innocently” overlooked the jurisdictional
issue. He also observed that, given that the mistake had already
been made, it was reasonable to infer that National Christmas’s
counsel focused only on OJ Commerce’s citizenship in response to
the show cause order.
The magistrate judge further concluded that National
Christmas’s two-month delay in filing its motion to dismiss was not
indicative of bad faith, as Horgan immediately began an investiga-
tion while the parties resolved discovery disputes, there was a
change in lead counsel, and the holiday season occurred. He rea-
soned that the “convoluted web” of National Christmas’s owner-
ship made it reasonable to conduct a six-week investigation and for
counsel “to wait until he had a complete understanding of the
facts” before raising the issue with the court, which he promptly
did before either party moved for summary judgment. The magis-
trate judge further concluded that OJ Commerce did not demon-
strate that National Christmas’s counsel knowingly tried to “vexa-
tiously multipl[y] the proceedings,” nor could he say based on the
“dearth of evidence” before the court that counsel acted recklessly.
Over OJ Commerce’s objections, the district judge entered
an order summarily adopting the R&R and denying sanctions. OJ
Commerce now appeals.
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8 Opinion of the Court 25-10089

II. STANDARD OF REVIEW
We review sanctions orders for an abuse of discretion. Am-
long & Amlong, P.A. v. Denny’s, Inc., 500 F.3d 1230, 1237–38 (11th
Cir. 2007). Under this standard, “we must affirm unless we find that
the district court has made a clear error of judgment, or has applied
the wrong legal standard.” Id. at 1238 (citation modified); see Pur-
chasing Power, LLC v. Bluestem Brands, Inc., 851 F.3d 1218, 1222 (11th
Cir. 2017).
III. DISCUSSION
“Courts have the inherent power to police those appearing
before them.” Purchasing Power, 851 F.3d at 1223. “A court’s inher-
ent power is governed not by rule or statute but by the control nec-
essarily vested in courts to manage their own affairs so as to achieve
the orderly and expeditious disposition of cases.” Id. (citation mod-
ified). Similarly, § 1927 provides that “[a]ny attorney . . . who so
multiplies the proceedings in any case unreasonably and vexa-
tiously may be required by the court to satisfy personally the excess
costs, expenses, and attorneys’ fees reasonably incurred because of
such conduct.” 28 U.S.C. § 1927.
“A sanctions motion under either a court’s inherent powers
or § 1927 requires a showing that the party acted in bad faith.” Hyde
v. Irish, 962 F.3d 1306, 1310 (11th Cir. 2020). “Our circuit has linked
inherent power sanctions with subjective bad faith.” Purchasing
Power, 851 F.3d at 1224. When considering whether to impose
these sanctions, courts “should look for disobedience and be
guided by the purpose of vindicating judicial authority.” Id. at 1225;
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25-10089 Opinion of the Court 9

see Trump v. Clinton, 161 F.4th 671, 689 (11th Cir. 2025). “Evidence
of recklessness alone w[ill not] suffice.” Hyde, 962 F.3d at 1310. A
court’s inherent “power must be exercised with restraint and dis-
cretion and used to fashion an appropriate sanction for conduct
which abuses the judicial process.” Purchasing Power, 851 F.3d at
1223 (citation modified).
A party moving for sanctions under § 1927 must show ob-
jective bad faith, which ordinarily “means an attorney acted ‘know-
ingly or recklessly.’” Hyde, 962 F.3d at 1310 (quoting Schwartz v.
Millon Air, Inc., 341 F.3d 1220, 1225 (11th Cir. 2003)). This statute
“imposes a ‘high standard’ that requires the moving party to show
that the other side engaged in behavior that ‘grossly deviates from
reasonable conduct.’” Id. (quoting Amlong, 500 F.3d at 1240, 1242).
A party “may . . . rely on evidence of subjective bad faith to make
this showing,” as “an act done in subjective bad faith is also more
likely to be objectively unreasonable.” Id.
In adopting the magistrate judge’s full analysis of National
Christmas and its counsel’s actions, the district judge found no ev-
idence of subjective or objective bad faith. OJ Commerce provides
several arguments as to why these determinations were erroneous,
none of which we find availing.
OJ Commerce first challenges the magistrate judge’s reli-
ance on Horgan’s declaration and its characterization of this docu-
ment as “unrebutted.” It contends that the only reason this decla-
ration went unrebutted was because it was erroneously denied dis-
covery on the bad-faith issue.
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10 Opinion of the Court 25-10089

OJ Commerce did request discovery at the motion-to-dis-
miss stage on the timing of National Christmas’s and its counsel’s
knowledge of the jurisdictional defect, and the magistrate judge de-
nied its request at that time. However, OJ Commerce never re-
newed such a request when it filed its sanctions motion. While OJ
Commerce primarily relies upon Itel Containers International Man-
agement, Inc. v. Puerto Rico Marine Management, Inc., 108 F.R.D.
96 (D.N.J. 1985), a case in which a district court allowed evidentiary
submissions regarding concealment of a jurisdictional defect, this
case is not binding on our Court. Siemens Power Transmission & Dis-
trib., Inc., v. Norfolk S. Ry. Co., 420 F.3d 1243, 1253 n.9 (11th Cir.
2005). We also cannot say that the district court committed reversi-
ble error in considering Horgan’s declaration where OJ Commerce
does not provide a basis for questioning the credibility of his state-
ments.
Notwithstanding its challenge to Horgan’s declaration, OJ
Commerce contends that the record clearly evidences bad faith on
behalf of both National Christmas and its counsel, and the district
court erroneously evaluated the relevant facts and law. Particu-
larly, it takes issue with the magistrate judge’s reliance on Purchas-
ing Power and contends that the facts of J.C. Penney Corp., Inc. v. Ox-
ford Mall, LLC, 100 F.4th 1340 (11th Cir. 2024), are more analogous
to this case. However, the abuse of discretion standard affords con-
siderable leeway and “recognizes the range of possible conclusions
the trial judge may reach.” Amlong, 500 F.3d at 1238 (citation mod-
ified). Under this deferential standard, we find that the district court
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25-10089 Opinion of the Court 11

was within its discretion to rely on Purchasing Power, although it
addressed only inherent-power sanctions, given its similar facts.
In Purchasing Power, the defendant sought to remove a case
to federal court based on diversity jurisdiction and requested con-
firmation from opposing counsel of the plaintiff’s citizenship.
851 F.3d at 1221. Opposing counsel responded that, based on infor-
mation from his client, the plaintiff was not a citizen of the same
states as the defendant. Id. During discovery, information was re-
quested regarding the plaintiff’s corporate structure; however, this
information was not turned over and neither the parties nor the
district court “took additional steps to verify that subject matter ju-
risdiction existed.” Id. at 1222.
On appeal from an order granting summary judgment to the
defendant, our Court recognized that the pleadings did not suffi-
ciently allege the plaintiff’s citizenship. Id. Our Court’s observation
prompted the parties to begin an investigation, which led them to
conclude that diversity jurisdiction was lacking, as one of the LLCs
in plaintiff’s corporate structure was a citizen of the same state as
the defendant. Id. The district court ultimately dismissed the case
for lack of jurisdiction and imposed, as relevant here, inherent
power sanctions against the defendant. Id. However, on appeal,
our Court reversed the award of sanctions, finding that no party
“acted with bad intentions.” Id. at 1228.
Similarly, in this case, counsel trusted National Christmas to
know its corporate structure and followed the information sup-
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12 Opinion of the Court 25-10089

plied by the client when filing the instant complaint. Unfortu-
nately, this information did not accurately reflect National Christ-
mas’s corporate structure at the time of filing. We recognize that,
as the party initially seeking to invoke federal jurisdiction, National
Christmas bore the burden of establishing that the parties were
completely diverse, and both the company’s and its counsel’s
pre-litigation investigation on this issue was significantly deficient.
See Underwriters at Lloyd’s, London v. Osting-Schwinn, 613 F.3d 1079,
1085 (11th Cir. 2010). But, despite OJ Commerce’s suggestions to
the contrary, there was no evidence that National Christmas inten-
tionally concealed that it was an LLC, that it knowingly supplied
its counsel with false information regarding its corporate structure,
or that either National Christmas or its counsel willfully failed to
correct this information once the complaint had been filed.
OJ Commerce contends that National Christmas “doubled
down” and violated a court order by failing to correct its jurisdic-
tional allegation when responding to the May 2022 show cause or-
der. But we find no abuse of discretion in the district court’s deter-
mination that it was reasonable for counsel to focus only on OJ
Commerce for this investigation, given counsel’s mistaken belief
that this was the only LLC involved in the case. And, notably, de-
spite discrepancies in National Christmas’s corporate name in the
demand letter and complaint, neither party noticed these discrep-
ancies or questioned whether federal jurisdiction was proper in the
early stages of the case.
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25-10089 Opinion of the Court 13

Further, by all indications, once National Christmas became
aware of the jurisdictional error, it notified its counsel, who imme-
diately began a thorough investigation to corroborate the veracity
of this information. While it took 52 days for National Christmas
to file its motion to dismiss from the date of that notification, we
find no error in the determination that this was a reasonable time
to complete the investigation given the complexity of National
Christmas’s corporate structure, the number of discovery issues
ongoing at the time, and the coinciding of this investigation with
the holiday season. The length of counsel’s inquiry is especially ex-
cusable given the ramifications of his investigation—that it could,
and did, lead to information requiring the dismissal of an already
significantly litigated case.
In contrast, the defendant in Oxford Mall was fully aware that
diversity jurisdiction was lacking but chose to sit on the infor-
mation and actively continue with litigation for 15 months.
100 F.4th at 1345. Only when the defendant “was poised to lose the
case” did it move to dismiss the action for lack of subject matter
jurisdiction. Id. at 1343, 1345. Here, although there was a slight de-
lay in National Christmas seeking dismissal, it still notified the
court of the jurisdictional defect as soon as practicable and did so
prior to either party filing a dispositive pretrial motion.
Finally, OJ Commerce insists that it was prejudiced by Na-
tional Christmas’s actions and that the district court overlooked
this important point when declining to impose sanctions. We rec-
ognize that dismissal of this case for lack of jurisdiction not only
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14 Opinion of the Court 25-10089

impacted National Christmas but also resulted in the dismissal of
OJ Commerce’s counterclaims, which it spent time and money lit-
igating over the course of this two-year federal case. However,
these counterclaims were dismissed without prejudice, and OJ Com-
merce has indicated that they have been refiled in state court. 1 And
there was simply no evidence before the district court, beyond OJ
Commerce’s own conjecture, that National Christmas or its coun-
sel knowingly and vindictively withheld the jurisdictional defect to
prolong the litigation for its own benefit and to the detriment of its
opposing party.
In short, we cannot say that the district court abused its dis-
cretion in determining that the conduct of National Christmas and
its counsel amounted to no more than negligence, which, “by itself,
does not warrant sanctions under a court’s inherent powers or
§ 1927.” Hyde, 962 F.3d at 1311. Although the overlooked jurisdic-
tional defect in this case resulted in “a colossal waste of time and
effort,” our Court is not convinced that any party “acted with bad
intentions.” Purchasing Power, 851 F.3d at 1228. “We trust that the
damage done to [National Christmas’s and its counsel’s] credibility,

1 In its appendix, OJ Commerce has supplied our Court with several docu-

ments from the pending state court dispute between the parties, which it con-
tends demonstrates bad faith and prejudice. National Christmas asks us to
strike those portions of OJ Commerce’s appendix and the reference to those
documents in its brief, as these documents were not before the district court.
We DENY AS MOOT this motion because our Court did not consider these
state court documents in reaching our decision.
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25-10089 Opinion of the Court 15

finances, and time is enough of a sanction to curb [its] conduct and
to serve as a warning to future diversity jurisdiction litigants.” Id.
IV. CONCLUSION
We AFFIRM the district court’s denial of OJ Commerce’s
motion for sanctions.