Source: https://law.justia.com/cases/federal/appellate-courts/cadc/99-7058/99-7058a-2011-03-24.html
Timestamp: 2019-04-19 16:18:41+00:00

Document:
Charles L. Reischel, Deputy Corporation Counsel, and Melvin W. Bolden, Jr., Trial Counsel.
Silberman, Circuit Judge: The District of Columbia ap- peals from an order of the district court imposing contempt fines of $5,096,340 on it for its failure to comply with a consent decree. We agree with appellant that the fine was a criminal sanction that could not be imposed without a criminal trial; we also agree that the district court abused its discre- tion in refusing to modify the consent decree. We therefore reverse.
This case started back in 1976, when residents of Forest Haven, the District of Columbia's institution for the mentally retarded, brought a class action alleging a panoply of consti- tutional violations resulting from poor conditions at the facili- ty. Named as defendants were the Mayor and four other District officials (collectively, the "District"), all sued in their official capacities. The United States soon intervened on the side of the plaintiffs.
ment of the mentally retarded. In particular, it requires the District to place specified numbers of Forest Haven residents in community institutions and to "insure that all vendors are paid for their goods and services no later than thirty days following their submission of acceptable vouchers."
By the mid-1990s, the District was confronted with finan- cial problems of "horrendous proportions" and faced "its worst crisis in over a century." H.R. Rep. No. 96, 104th Cong., 1st Sess. 4 (1995). It was running an annual deficit of over $600 million, and a congressional committee found that "[t]he District of Columbia is insolvent: The City does not have enough cash to pay all of its bills." Id. at 5. The District began missing some of the payment deadlines set out in the consent decree. In April 1995, on the motion of the plaintiffs, the district court issued an order to show cause why the defendants should not be held in contempt. It ultimately so held but did not impose sanctions. Instead, it appointed a special master to develop a remedial plan through which the defendants could purge themselves of contempt, and it or- dered that the plan include "specific monetary penalties for noncompliance."
non-Medicaid payments. Late Medicaid payments, regard- less of amount, were to result in a fine of $5,000 per day.
The master concluded that the motion for sanctions was unnecessary because the remedial plans made fines automat- ic. She thought the fines were civil coercive sanctions, so the defendants were not entitled to the protections of criminal procedures. Although she did not formally find that circum- stances had changed so as to warrant modifying the order as the defendants requested, she did recommend three changes to the schedule of sanctions which essentially, at least pro- spectively, gave the District the relief it sought. First, fines for missed payments would be forgiven unless the non- payment continued until the 45th day. Second, fines for delays in non-Medicaid payments would be reduced to $1,000 per day, regardless of the amount of the payment, and third, fines for delays in Medicaid payments would be increased from $5,000 per day to $10,000 per day.
tions unjust. It also adopted the special master's conclusions with respect to modification of the order and the remedial plan. But it modified the remedial plan only prospectively from the date of its decision, which was almost two years after the defendants had sought the modification.
This case turns entirely on the proper characterization of the contempt fine. Was it civil or criminal? If the fine was criminal then it may be imposed only if the District's non- compliance--which the District claims was practically un- avoidable--is proven beyond a reasonable doubt to be willful. See United States v. Rapone, 131 F.3d 188, 195 (D.C. Cir. 1997). If it was civil the District would have had to show that compliance was impossible to avoid the sanction. Perhaps of even greater significance, if the judge's order is criminal in character (and the fine is serious), then the District is entitled to a jury trial. See Bloom v. Illinois, 391 U.S. 194, 198 (1968).
a finding of contempt is criminal if the contemnor has no subsequent opportunity to reduce or avoid the fine through compliance." Id. at 829.
Appellees argue instead that the fines should be seen as coercive and therefore civil in character because the schedule of prospective fines was announced in advance. The District therefore had the capacity to avoid the fines, so to speak to purge itself of contempt, by altering its conduct prior to the time the fines accrued. The United States makes a similar argument: the fines "were imposed for each day or month in which the defendants failed to comply with the 30-day pay- ment requirement, and ended once the defendants complied with the requirement." In effect, the government would treat the defendants' contempt as one ongoing systemic prob- lem of noncompliance with the consent decree. Each missed bill payment deadline would be another instance of the ongo- ing contempt. On this view the fines for missed bill pay- ments were coercive sanctions that were imposed only so long as the defendants remained in contempt and that stopped being imposed once the defendants began to comply.
__________ 1 The District does not challenge the per diem fines associated with late Medicaid payments (even to the extent of raising an impossibility defense). We therefore discuss only the doubling fines associated with non-Medicaid payments.
fines of $52 million against the United Mine Workers for repeated violations of an injunction prohibiting the union and its members from engaging in illegal picketing practices, including throwing rocks at employees and obstructing access to company facilities. The court had set forth a prospective schedule of fines, which it too had characterized as "civil and coercive," saying that payment "would only be required if it were shown the defendants disobeyed the Court's orders." Id. at 824. The Supreme Court nevertheless held that the sanctions were criminal and that the union was entitled (due process) to the protections of criminal procedures.
The Supreme Court began its analysis by noting that the fines were not compensatory because they were paid to the court and not the company that was injured by the union's conduct. Then, it recognized the futility of distinguishing between coercing affirmative acts and punishing prohibited conduct (pointing out, for example, that "an injunction order- ing the union: 'Do not strike,' would appear to be prohibitory and criminal, while an injunction ordering the union: 'Contin- ue working,' would be mandatory and civil"). Id. at 835. Nor did it attach significance to the fact that the trial court had prospectively announced a schedule of sanctions, reasoning that "the union's ability to avoid the contempt fines was indistinguishable from the ability of any ordinary citizen to avoid a criminal sanction by conforming his behavior to the law." Id. at 837. It thought that the fines were most closely analogous to fixed, determinate criminal fines that the union had no chance to purge once imposed.
of contempt by paying a bill before the thirtieth day--it simply was not in contempt until it failed to pay on the thirtieth day. Each missed payment was a separate violation of the consent decree and a separate act of contempt. And for each act of contempt, the District was subjected to a one- time determinate fine; once it was imposed, there was no opportunity to eliminate it through future compliance. To be sure, the District could have avoided liability had it paid each bill before the thirtieth day. But as the Bagwell Court pointed out, this is no different from any citizen's ability to avoid punishment by conforming his conduct to the law.
Appellees also argue that the fines are not large enough to be scrutinized under Bagwell.2 They do not suggest that a fine of over $5 million is not "serious"--obviously it is. Instead, they contend that the many smaller fines that make up the $5 million should be evaluated separately. This over- looks the large size even of some of the component fines (for example, a $104,600 bill paid on the 31st day produced a $209,200 fine). More fundamentally, it is at odds with the approach taken by Bagwell, which considered the amount of the total fine. See id. at 837 ("The fines assessed were serious, totaling over $52 million.") (emphasis added); see also NOW v. Operation Rescue, 37 F.3d 646, 660 (D.C. Cir. 1994) (Aggregate fine of $193,623 was "large enough to invite our scrutiny under the principles enunciated in Bagwell.").
In any event, it was the nature of the injunction itself, rather than the form or amount of the fines, that appears to have been the key to the Court's determination that the contempt was criminal in character in Bagwell. The Court described the injunction as establishing a "detailed code of conduct," Bagwell, 512 U.S. at 836, and it was that "consider- ation" that convinced the court that the fines were criminal.
The union's sanctionable conduct did not occur in the court's presence or otherwise implicate the court's ability to maintain order and adjudicate the proceedings before __________ 2 Neither the appellees nor the intervenors argue that, even if the fine is criminal, it is nevertheless "petty" and could be imposed without a jury trial. Cf. Taylor v. Hayes, 418 U.S. 488 (1974).
it. Nor did the union's contumacy involve simple, affir- mative acts, such as the paradigmatic civil contempts examined in Gompers. Instead, the Virginia trial court levied contempt fines for widespread, ongoing, out-of- court violations of a complex injunction. In so doing, the court effectively policed petitioners' compliance with an entire code of conduct that the court itself had imposed. The union's contumacy lasted many months and spanned a substantial portion of the State. Id. at 837-38.
In response to the District's claim that the order before us is just the same kind of complex injunction that was before the Court in Bagwell, appellees (and the intervenors) argue that we should see the consent decree as only addressing various simple discrete acts; in other words, they would disaggregate the decree. But, if anything, the decree here is more far-reaching than the Bagwell injunction which, after all, did not seek to control the union's business. It only prohibited violence at a strike at one company. Here, by contrast, the decree governs the administration of an entire governmental program in the District of Columbia. It pre- scribes a complete code of conduct--originally covering ev- erything from bill payments to staffing to air conditioning-- that the district court has enforced for years. Even the payment requirement has complex elements because the Dis- trict paid over one hundred non-Medicaid providers each month.
There remains the propriety of the district court's refusal to modify the consent decree. The practical consequence of this issue has been somewhat attenuated by the special master's decision to modify the fine structure, but the ques- tion remains relevant because the fines were modified only prospectively. The District still faces the possibility of being fined for late payments made between April 1997 (when it made the motion to modify) and February 1999 (when the fine schedule was modified).
__________ 126 (2d Cir. 1998) (reversing a $10,000 punitive fine imposed without criminal procedures); Law v. NCAA, 134 F.3d 1025 (10th Cir. 1998) (reversing retroactively imposed per diem fines); In re E.I. DuPont de Nemours & Co.-Benlate Litigation, 99 F.3d 363 (11th Cir. 1996) (reversing an over $13,000,000 punitive fine imposed without crimi- nal procedures).
4 Because we have determined that the District must be given a criminal trial, we do not address the argument that the district court abused its discretion in refusing to consider the defense of impossibility.
pellant argues that under Rufo v. Inmates of the Suffolk County Jail, 502 U.S. 367 (1992), the district court should have granted its motion to modify. Rufo held that the party seeking a modification need not make a "clear showing of grievous wrong evoked by new and unforeseen conditions"--a standard that had been applied since United States v. Swift & Co., 286 U.S. 106, 119 (1932). It pointed out that flexibility is especially important in institutional reform litigation: "Be- cause [consent] decrees often remain in place for extended periods of time, the likelihood of significant changes occurring during the life of the decree is increased." Rufo, 502 U.S. at 380. In particular, "[m]odification of a consent decree may be warranted when changed factual conditions make compliance with the decree substantially more onerous." Id. at 384. While a modification should not be granted because of "events that actually were anticipated" by the parties, the party seeking a modification need not show that the changed cir- cumstances were unforeseeable. Id.
that it expected to be unable to pay on time. In any event, the parties do not appear to have regarded the remedial plan as a complete solution to all of the problems that had arisen under the consent decree. They thought that the District's financial difficulties still might require a future solution. The special master noted that the possibility of further modifica- tions had been discussed, and the judge observed that the District was in a time of "transition" and its ability to make timely payments might be contingent on the actions of Con- gress. We therefore think we must look at whether circum- stances have changed since 1983 rather than at whether they have altered only in the last few years.
The District makes the obvious point that no one in 1983 anticipated the District's insolvency or its crushing debt burden. And as Rufo explained, "[f]inancial constraints may not be used to justify the creation or perpetuation of consti- tutional violations, but they are a legitimate concern of gov- ernment defendants in institutional reform litigation and therefore are appropriately considered in tailoring a consent decree modification." Id. at 392-93. Appellees respond that although this particular financial crisis was not contemplated, the parties certainly had in mind the District's generic inabil- ity or refusal to pay the vendors--that was the very reason the 30-day requirement was part of the consent decree. But Rufo's modification standard does not require absolute un- foreseeability. It is enough that the parties did not actually contemplate the changed circumstances. And the crisis of the 1990s was different in kind rather than degree. More- over, the 30-day payment requirement likely was intended to protect the class members against bureaucratic neglect, not against the District's near-bankruptcy. In truth, the consent decree was negotiated with the expectation that the District would be able to pay its bills. Once it could not, circum- stances had changed.
trary, and the district court seems at least implicitly to have resolved this question in its favor, for the effect of its ruling is to give the District the benefit of a 45-day payment schedule, albeit only after February 1999. The judge offered no reason why the District's relief from fines should not extend to the point at which it made the motion--nor can we think of one.
Nor is the United States correct when it invokes the collateral bar rule of Walker v. City of Birmingham, 388 U.S. 307 (1967). Walker provides that the invalidity of an injunc- tion is not a defense to contempt, so that a party faced with an invalid injunction must have the injunction modified or vacated; he cannot simply ignore it. The theory behind that rule is rather obvious, but it does not extend to cases where a party is faced with an injunction with which it is unable to comply. Walker cannot justify subjecting the District to liability for the period in which the district court was consid- ering the modification motion.
The order of the district court is reversed, and the case is remanded for further proceedings consistent with this opin- ion.

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