*

 After examining the briefs and appellate record, this panel has determined

unanimously that oral argument would not materially assist in the determination

(continued...)

F I L E D

United States Court of Appeals

Tenth Circuit

JUN 21 2004

PATRICK FISHER

Clerk

PUBLISH

UNITED STATES COURT OF APPEALS

TENTH CIRCUIT

SALLY BEAUTY COMPANY, INC.,

a Delaware corporation; MARIANNA

IMPORTS, INC., a Nebraska

corporation,

Plaintiffs,

v.

BEAUTYCO, INC., a Delaware

corporation,

Defendant, 

CRAIG S. FOCHLER; CHARLES R.

MANDLY, JR.; NATHAN E.

FERGUSON; JILL ROBB

ACKERMAN; MICHAEL

SULLIVAN, 

 Appellants.

No. 03-6055

Appeal from the United States District Court

for the Western District of Oklahoma

(No. CIV-99-1372-C)

Submitted on the briefs: *
 

*

(...continued)

of this appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G).

-2-

Craig S. Fochler, Charles R. Mandly, Jr., and Nathan E. Ferguson of Wildman,

Harrold, Allen & Dixon, LLP, Chicago, Illinois and Jill Robb Ackerman and

Michael Sullivan of Baird, Holm, McEachen, Pedersen, Hamann & Strasheim,

Omaha, Nebraska, on the briefs for Appellants.

Philip J. Weiser, University of Colorado School of Law, Boulder, Colorado, on

the Amicus Curiae Brief.

Before BRISCOE, BALDOCK, and LUCERO, Circuit Judges.

A settlement agreement reached on the eve of trial generated the dispute

before us. After determining that the parties’ attorneys could have alerted the

court to the settlement in time to avoid the expense of requiring the attendance of

jurors in court the following morning, the district court assessed the expense of

the jury impanelment jointly on the parties’ counsel. The attorneys for one of the

parties, Sally Beauty Co., Inc., appeal the assessment. Exercising jurisdiction

pursuant to 28 U.S.C. § 1291, we AFFIRM.

I

On Monday, January 13, 2003, jury selection for the case underlying this

dispute began in district court. Selected jurors were instructed to call Friday,

January 17, after 5.00 P.M. to verify that trial was proceeding on Tuesday,

January 21, as scheduled. Also on January 13, 2003, the parties reentered
-3-

settlement conferencing with a magistrate judge. The magistrate judge informed

counsel that the district court would need to know whether a settlement had been

reached prior to 3:00 P.M. on Friday, January 17, in order to inform the jury. 

Following a three-day holiday weekend, at a hearing held the morning of Tuesday,

January 21, and while the jury waited in the jury assembly room, the parties

informed the district court judge that a settlement had been reached the previous

evening. 

After ordering that judgment be entered in accordance with the submitted

consent order, the trial court proceeded to assess the costs of the jury jointly on

counsel for both parties. In support of this decision, the trial judge explained that

she had asked the magistrate judge to communicate to counsel that if the jury was

required to appear unnecessarily, counsel would “be responsible for the cost of

the jury panel.” (App. at 193.) Counsel responded that the magistrate judge

informed them of the 3:00 P.M. deadline so that the district court “could advise

the jury,” but that they had not been informed that any settlement reached after

that time would result in the assessment of costs. (App. 193–94.) Further, they

argue, a settlement had not been reached until late into the previous evening.

The court explained:

I’d like to state for the record that this case has been announced settled to

me something like five times in the last week . . . . I am not proposing

sanctions against counsel only because counsel have never announced to me

that this case settled. . . . Well, the jury is here. . . . I’m going to impose the
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cost of that on counsel jointly. I don’t know who’s been at fault for what’s

happened in this case or the communications that were made to me, and I

don’t particularly want to know, but I hope that it will never happen again. 

What’s happened is an abuse of the system . . . . This case is dismissed. I

will discharge the jury and you will be billed for your share of the jury

costs.

(App. at 190, 194.) 

Entering an order assessing costs in the amount of $405.68 to be borne

equally by plaintiff and defendant counsel on January 23, 2003, the district court

stated that “counsel required the attendance of the selected jury despite having

settled the case in time to avoid the expense to the Courts . . . .” Sally Beauty Co.

v. Beautyco., Inc., No. CIV-99-1372-C, slip op. at 1 (W.D. Okla. Jan. 23, 2003.) 

Counsel (“counsel”) for Sally Beauty Co. now appeal.

II

We review a district court order imposing jury costs on counsel for an

abuse of discretion. In re Baker, 744 F.2d 1438, 1440 (10th Cir. 1984) (en banc). 

In considering whether the district court abused its discretion, we will examine

the “totality of the circumstances, including the specific case under review, the

total management problems for courts, and access and cost problems for

litigants.” Id.

In this case, counsel concede that it is within a federal district court’s

inherent power to assess costs against them. See, e.g., Martinez v. Thrifty Drug

& Discount Co., 593 F.2d 992, 993–94 (10th Cir. 1979) (approving a district
-5-

court’s shifting of jury costs, pursuant to local regulations, to counsel when

counsel failed to notify the court of a settlement). Nonetheless, they argue that

such power must be “exercised with restraint and discretion.” Roadway Express,

Inc. v. Piper, 447 U.S. 752, 764 (1980). In particular, counsel argue that jury

costs may be assessed to counsel only when individual lawyers demonstrate badfaith conduct and only after affording counsel due process of law. See Chambers

v. NASCO, Inc., 501 U.S. 32, 45–46 (1991). Counsel argues that the district

court abused its discretion in levying costs because: (1) they did not act in bad

faith; and (2) they did not have notice of the possibility of costs, nor were they

given specific findings in support of the assessment of costs in violation of their

due process rights. 

We are not persuaded. As to bad faith, Chambers held that the inherent

powers of the district court extend to awarding as a sanction attorneys’ fees to the

opposing party “when a party has acted in bad faith, vexatiously, wantonly, or for

oppressive reasons.” 501 U.S. at 45–46 (citations omitted). Importantly,

Chambers addressed the bad faith exception to the general “American Rule,”

which prohibits fee-shifting. The Court did not, however, purport to limit feeshifting to only bad faith contexts; rather, it required a finding of bad faith, with

the attendant due process requirements, when a district court relies upon its

inherent power to sanction a party for bad faith conduct. We are persuaded by the
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record, moreover, that we are not reviewing sanctions, but rather a taxing of jury

costs. The district court judge expressly disclaimed any intent to sanction any of

the attorneys involved in this matter and refused to attempt to assign individual

blame. Accordingly, we reject counsel’s assertion that Chambers controls here.

A more closely analogous case is Baker, 744 F.2d at 1441, in which we

concluded that in cases where an attorney’s conduct (e.g., the failure to take a

deposition before trial) wastes the jury’s time, a district court is well within its

discretion to assign jury costs to the attorney. Id. at 1441, 1442. In fact, we held

that in such cases, courts should assign costs “where the fault lies.” Id. at 1440. 

We recognized that by requiring those who created the costs to bear them, court

efficiency is promoted and tax money saved. Id. at 1441, 1442. Accord, United

States v. Mottweiler, 82 F.3d 769, 772 (7th Cir. 1996) (“Costs should fall on

those whose carelessness creates them, the better to induce people to take care. 

The public fisc should not be saddled with expenses that counsel could have

averted by taking simple precautions.”).

In the instant case, counsel settled on the eve of trial. While judicial

economy is generally promoted by encouraging settlements, see, e.g., U.S.

Bancorp Mortgage Co. v. Bonner Mall Partnership, 513 U.S. 18, 28 (1994), much

of the benefit of settlements to the judicial system is lost when the court is

obligated to require the attendance of jurors at the opening of a trial of an already
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settled matter. We reject counsel’s invitation to graft a bad-faith requirement

onto our existing precedent; rather, we reiterate that in the instant matter, because

attorney conduct resulted in unnecessary jury costs, it was within the district

court’s discretion to assign costs.

Turning to the question of due process, counsel first argues that the district

court did not make sufficiently specific findings to support an assessment of jury

costs. Though we conclude that sanctions were not imposed here, we nonetheless 

look to the due process required to impose sanctions as a benchmark for

evaluating whether counsel was given adequate process in the instant case. We

have previously endorsed the view that when “a court imposes sanctions . . . it

must sufficiently express the basis for the sanctions imposed to identify the

excess costs reasonably incurred by the party to whom they will be due.” Braley

v. Campbell, 832 F.2d 1504, 1513 (10th Cir. 1987) (en banc). Following Braley,

to impose sanctions, a court must make specific findings sufficient to: (1)

identify the excess costs providing a basis for the sanctions; (2) identify the

conduct leading to the sanctions in order to provide notice and to allow a

meaningful response from the sanctioned attorney; and (3) identify for the

reviewing court the reason for the sanction. Id. 

Counsel suggests that the trial court’s findings were deficient because the

judge bundled the attorneys into a single group, not inquiring into individual
-8-

responsibility and thus failing to specify which attorneys were liable to pay the

assessed jury costs. Baker, however, suggests that when the context for the

assignment of costs is clear, and the justification for the imposition of costs is

included in the record, as in this case, more specific findings are not required. 

Baker, 744 F.2d at 1442 (“While the record is not as explicit as it could be, we

believe that the context is clear enough to understand the trial court’s justification

for imposing the sanction.”). Further, because counsel knew they were settling

after the court-imposed deadline, it is reasonable to expect that “if the fault [of

the jury impanelment] lies with the attorneys, that is where the impact” of the

assignment of jury costs should be felt. Id. 

The district judge was not required to ascribe the fault, and therefore the

costs, to particular attorneys in this case as the record does not indicate that any

of the attorneys were particularly responsible for the case settling after the

mandated deadline. Although we generally require individual assessments to

impose a sanction as punishment, in the case of conduct by counsel of both parties

which leads to avoidable court costs, assignment of culpability to individual

attorneys may be impossible. We therefore conclude that the trial court’s implicit

determination that all the attorneys involved in the underlying matter were

responsible for the unnecessary cost of seating the jury was not an abuse of

discretion. 
-9-

In addition to nonspecific assessment, counsel also argue that the court

violated their due process rights by failing to provide notice that sanctions were

being considered and an opportunity to respond to that notice. See Braley, 832

F.2d at 1513. Specifically, counsel contends that: (1) before the hearing on

Tuesday, January 21, they had received no notice that the court was considering

assessing jury costs; (2) several lawyers of record were not present at the January

21 hearing; and (3) the court’s query: “Is there anything else from counsel?” (R.

at 194) at the end of the hearing did not provide those attorneys present with a

meaningful opportunity to respond to the decision to assess costs. 

“The fundamental requirement of due process is the opportunity to be heard

at a meaningful time and in a meaningful manner.” Mathews v. Eldridge, 424

U.S. 319, 333 (1976). However, “due process is flexible and calls for such

procedural protections as the particular situation demands.” Id. at 334 (citation

omitted). For example, the dismissal of a case presents greater due process

concerns than the imposition of attorney’s fees on the opposing party. Roadway

Express, 447 U.S. at 767 n.14. 

Importantly, the “adequacy of notice and hearing respecting proceedings

that may affect a party’s rights turns, to a considerable extent, on the knowledge

which the circumstance show such party may be taken to have of the

consequences of his own conduct.” Link v. Wabash R. Co., 370 U.S. 626, 632
-10-

(1962). Here the parties were warned that they were to advise the court before

3:00 P.M. on January 17 of any settlement agreement in order to apprise the jury

members that their presence in court on Tuesday, January 19, was not required. 

The fact that the parties now tell us that a settlement was not reached until late in

the evening before trial does not change our analysis as the court’s warning came

against a background of various statutes (e.g., 28 U.S.C. § 1927) and rules (e.g.,

Fed. R. Civ. P. 16(f), Fed. R. App. P. 38) that were promulgated in part to

encourage judicial efficiency and which authorize courts to impose sanctions,

excess costs, expenses, and attorney’s fees. Moreover, it is well established that a

district court has broad, inherent power to manage its proceedings. See Roadway

Express, 447 U.S. at 764–67. “It has long been understood that certain implied

powers must necessarily result to our Courts of justice[,]. . . [powers which] are

governed not by rule or statute but by the control necessarily vested in courts to

manage their own affairs.” Chambers, 501 U.S. at 43 (citations omitted). We

conclude that the possibility of the taxation of jury costs on counsel—where

counsel settled after a court-imposed deadline, resulting in unnecessary court

costs—is reasonably foreseeable in this case, and therefore that counsel had

adequate notice of the possibility of taxation of jury costs against them. Accord,

Devaney v. Continental Amer. Ins. Co., 989 F.2d 1154, 1160 (11th Cir. 1993)

(holding due process is satisfied where counsel had reason to know of the
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possibility of sanctions, despite the fact that the motions for sanctions named only

the party and not counsel). 

Next, we address counsel’s argument that the trial judge’s question, asking

if counsel had anything else to bring to the court’s attention, did not provide them

an adequate opportunity to respond. First we note that because due process is

contextual, what constitutes an adequate opportunity to respond in one instance

may be entirely inadequate in another. Here we are faced with the imposition of

costs of slightly more than four hundred dollars, to be divided evenly between the

attorneys for the plaintiff and defense. Thus, relatively less process is due in the

instant case than in a case where a party’s claim is to be dismissed as a sanction,

Roadway Express, 447 U.S. at 767 n.14, or even where a party is facing the

possibility of monetary sanctions, as opposed to the assessment of court costs. 

Given that the taxation of jury costs was reasonably foreseeable, and given that

counsel present were given an opportunity to raise their concerns regarding the

taxation of costs at the close of the hearing — if only to object to the taxation or

ask for permission to brief the matter — we find that in this context, an adequate

opportunity to respond to the imposition of costs was provided to counsel.

In sum, the court: (1) instructed the magistrate judge to inform counsel to

advise the court of a settlement in time to apprise the jury; and (2) gave counsel

the opportunity to respond to the court’s taxation of costs upon them at the
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hearing on January 21. Given the amount of the costs taxed to counsel, the

judge’s explicit renunciation of an intent to sanction counsel, her warning to

counsel to inform the court of any settlement in time to apprise the jury, and the

opportunity given to counsel to respond to the assessment of costs at the January

21 hearing, we conclude that counsel received all the process that was due in this

matter. Accordingly, we find no abuse of discretion on the part of the district

court in assigning jury costs to the parties’ counsel jointly. 

For the reasons set forth above, we AFFIRM.

ENTERED FOR THE COURT

Carlos F. Lucero

Circuit Judge
No. 03-6055, Sally Beauty Co. v. Beautyco, Inc.

Briscoe, Circuit Judge, dissenting:

I respectfully dissent. In my view, the district court’s order assessing jury

costs against counsel was clearly a sanction that was issued without a factual

basis in the record and without sufficient notice. I would reverse.

I.

When the parties appeared before the district court for trial on January 13,

2003, the district judge advised them that she was ill. The judge proposed

conducting voir dire to select a jury and continuing the trial proceedings until

January 21, 2003 (the day after the Martin Luther King, Jr., holiday), and the

parties agreed. After the district judge completed the voir dire proceedings, she

advised the jurors to call the court “[a]nytime between Friday [at 5 p.m.] and

Tuesday morning . . . to find out if you’re still supposed to report” for trial. App.

at 182. Following completion of voir dire, the magistrate judge conducted a

settlement conference. No settlement was reached but “substantial progress” was

made and the parties continued throughout the ensuing week to engage in

settlement discussions. Aplt. Br. at 9-10.

On January 17, the district judge allegedly directed the magistrate “to

communicate to [counsel]” that they would “be responsible for the cost of the jury

panel” if the case settled after “3 o’clock on Friday.” App. at 193. The

magistrate “informed [one of the defense attorneys], who in turn relayed the
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information to [the lead counsel for plaintiff Sally Beauty], that the district court

would need to know that a settlement had been reached prior to 3:00 p.m. on

Friday . . . if jurors were to be notified to avoid reporting for duty on Tuesday,

January 21st.” Aplt. Br. at 10. However, appellants and defense counsel deny

being informed by the magistrate that they would be responsible for jury costs if

settlement was reached after that time.

On the evening of January 20, the parties “finally did reach agreement to

settlement terms,” and “[a] signed writing memorializing the terms was received

by plaintiffs’ lawyers from defendant’s lawyers at approximately 10:00 p.m.” 

Aplt. Br. at 10. Between 8:00 and 9:00 a.m. the following morning, appellants

“informally informed the Trial Judge’s chambers that they believed . . . a

settlement agreement had been concluded.” Id. at 11. At a hearing convened at

approximately 9:00 a.m., the district judge noted that she “ha[d] in front of [her]

an agreed settlement order which [wa]s signed by most of you, [but] not enough

to make it a settlement as yet.” App. at 190. After confirming that defendant’s

insurer had agreed to pay the agreed settlement terms, the district judge noted her

intent to discharge the jury and dismiss the “case on entry of the agreed

settlement order.” Id. at 193. In doing so, the judge expressed frustration at

having “been told [apparently by the magistrate judge] that . . . the case [wa]s

settled too many times.” Id. at 190. Upon inquiry by the district judge, counsel
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denied that they had been informed by the magistrate judge that jury costs would

be imposed against them if the case settled after 3:00 p.m. on January 17. The

district judge proceeded to impose the jury costs “on counsel jointly.” Id. at 194. 

The written order, dated January 23, 2003, stated:

As stated in open court on Tuesday, January 21, 2003, because

counsel required the attendance of the selected jury despite having

settled the case in time to avoid the expense to the Courts, counsel

are required to pay to the Government those costs. As reflected by

the records of the jury clerk, attached hereto, the total cost is

$405.68. This shall be borne equally between Plaintiffs and

Defendant. Each shall remit a check in the amount of $202.84, made

payable to the U.S. District Courts within twenty (20) days.

Id. at 152. The district court granted appellants’ motion for stay of judgment on

February 13, 2003.

II.

Nature of district court order

Despite the majority's statement to the contrary, there is little doubt the

district court's order constitutes a sanction. It is apparent from the record that the

district court was not acting pursuant to any Federal Rule of Civil Procedure,

statute, or local rule regarding the imposition of costs. Cf. Martinez v. Thrifty

Drug & Discount Co., 593 F.2d 992, 993 (10th Cir. 1979) (approving local court

rule of United States District Court for District of New Mexico “which authorized

the court, under certain conditions, to impose jury costs against the parties and

their counsel”); Fed. R. Civ. P. 54(d) (authorizing award of costs to prevailing
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party and against losing party); 28 U.S.C. § 1920 (authorizing taxation of certain

costs); 28 U.S.C. § 1927 (authorizing imposition of costs on any attorney “who so

multiplies the proceedings in any case unreasonably and vexatiously”). Thus, the

only reasonable conclusion is that the district court was sanctioning counsel for

what it viewed as noncompliance with its pretrial order regarding notification of

settlement (i.e., its oral direction to counsel to notify the court if settlement

occurred prior to 3 p.m. on January 17, 2003). See In re Baker, 744 F.2d 1438,

1440-41 (10th Cir. 1984) (characterizing similar order as sanction pursuant to

Fed. R. Civ. P. 16(f)).

“[F]ederal district courts have the inherent power to manage their business

‘so as to achieve the orderly and expeditious disposition of cases.’” LaFleur v.

Teen Help, 342 F.3d 1145, 1149 (10th Cir. 2003) (quoting Chambers v. NASCO,

Inc., 501 U.S. 32, 43 (1991)). In particular, federal district courts have the

inherent power “to fashion an appropriate sanction for conduct which abuses the

judicial process.” Chambers, 501 U.S. at 44-45. We “review a court’s imposition

of sanctions under its inherent power for abuse of discretion.” LaFleur, 342 F.3d

at 1149 (internal quotations omitted). In doing so, we review the district court’s

underlying factual findings for clear error. Id. “An abuse of discretion occurs

when the district court bases its ruling on an erroneous conclusion of law or relies
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on clearly erroneous fact findings.” Ashby v. McKenna, 331 F.3d 1148, 1149

(10th Cir. 2003) (internal quotations omitted).

Lack of factual basis for sanction

Appellants assert, and I agree, that the facts of record are inadequate to

support the district court’s sanction. There is no evidence in the record that

appellants had been advised by the district court that settlement of the case after

3:00 p.m. on January 17, 2003, would result in the imposition of jury costs against

them. Thus, as noted by appellants, there was no evidence that they acted in bad

faith or in willful disobedience of a court order in settling the case on the night of

January 20, 2003. Indeed, the district court made no findings of misconduct on

the part of appellants or anyone else involved in the litigation. See App. at 194

(“I don’t know who’s been at fault for what’s happened in this case or the

communications that were made to me, and I don’t particularly want to know.”). 

Finally, and most troubling, the district court’s written order of January 23, 2003,

erroneously stated that counsel “required the attendance of the selected jury

despite having settled the case in time to avoid the [jury] expense to the Courts.” 

Id. at 152. As outlined above, the record belies this finding. A tentative

settlement was not reached until 10:00 p.m. on January 20, 2003 (the night before

trial), and the actual settlement agreement was not finalized until the morning of

January 21, 2003 (when the defendant’s insurer agreed to pay the terms of the
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settlement). Thus, contrary to the district court’s written order, there is no

evidence that the case was settled in time to avoid the jury expense.

Lack of notice

Appellants also contend the district court “failed to accord them due

process of law,” including providing them with “requisite notice ” of the

possibility of sanctions. Aplt. Br. at 14. I agree.

The only published circuit case that I have found on point is Boettcher v.

Hartford Ins. Group, 927 F.2d 23 (1st Cir. 1991). In Boettcher, the trial court

directed that the plaintiff and her attorney pay $231.68 to the court’s jury

commissioner as a result of having settled their case on the first day of trial. The

trial court cited the following reasons for its order: “unnecessary costs incurred

for the jurors’ attendance at court; two days loss of trial time by the court; and

unreasonable conduct by the plaintiff in delaying settlement.” 927 F.2d at 25. On

appeal, the First Circuit reversed the trial court’s order. In doing so, the court

noted there was “no local district court rule providing for the payment of jury

costs for settling a case on the day of trial after the jury ha[d] reported to the

courthouse,” nor was notice “given to counsel in this case, either orally or in

writing, at any time prior to the settlement that jury costs would be imposed if

there was a settlement on the scheduled trial date.” Id. The court concluded that

“[l]ack of fair notice [wa]s fatal to [the trial court’s] exercise of inherent power
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under these circumstances.” Id. at 26. Thus, the court set aside the sanctions

“because appellants did not have fair warning of th[e trial court’s] unwritten

rule.” Id. (internal quotations omitted).

As was the case in Boettcher, the district court here imposed its sanction

order without fair warning to appellants. In particular, there was no evidence that

appellants were advised by the magistrate judge that settlement of the case after

3:00 p.m. on January 17, 2003, would result in the jury costs being imposed on

them. Absent such an express warning, I am not persuaded that reasonable

attorneys in their position would or should have known they would be liable for

such costs. See Zebrowski v. Hanna, 973 F.2d 1001, 1007 (1st Cir. 1992) (noting

parties in Boettcher “would not likely have expected to suffer the unusual

sanction of paying for a jury”).