Opinion ID: 529755
Heading Depth: 2
Heading Rank: 1

Heading: Sanctions Payable to the Court

Text: 7 In determining the validity of any judicial sanction, we must first consider the underlying authority for the court's action. For a sanction to be validly imposed, the conduct in question must be sanctionable under the authority relied on. Cunningham v. County of Los Angeles, 869 F.2d 427, 436 (9th Cir.1989) (quoting McCabe v. Arave, 827 F.2d 634, 639 (9th Cir.1987)). In sanctioning Tafolla and Orr, the trial court explicitly acted under the aegis of local rules adopted by the judges of the Central District of California. 9 Local Rule 2.1 requires that any attorney appearing on behalf of a client before the district court be a member in good standing of the court's bar. 10 Local Rule 27.1 authorizes the trial judge to sanction a party or counsel for a wide range of transgressions. The violation of or failure to conform to any of these Local Rules, the F.R.Civ.P., F.R.Crim.P. or F.R.App.P., shall subject the offending party or counsel to such penalties, including monetary sanctions and/or the imposition of costs and attorney's fees to opposing counsel, as the Court may deem appropriate under the circumstances. 8 We have consistently upheld the power of the district court to sanction attorneys for violations of local rules. See, e.g., United States v. Summet, 862 F.2d 784, 786 (9th Cir.1988). Although district courts frequently sanction members of their bar under the authority of such rules, we may have been somewhat remiss in not defining the source of the court's authority, drawing the precise contours of that power, or establishing rules to guide trial courts in the exercise of their discretion. 9 The power of the federal courts to sanction parties and counsel has been a subject of intense debate. In Gamble v. Pope & Talbot, Inc., 307 F.2d 729 (3d Cir.) (en banc), cert. denied, 371 U.S. 888, 83 S.Ct. 187, 9 L.Ed.2d 123 (1962), the Third Circuit held that a federal district court lacked the power to sanction counsel for violations of a standing order of the Eastern District of Pennsylvania. The majority, over a vigorous dissent by Chief Judge Biggs, reasoned that the fine was a criminal penalty and that the power to assess criminal punishment was strictly a legislative, not a judicial, function. Id. at 733. In dissent, the Chief Judge argued that miscreant attorneys posed a substantial hazard to the fair and orderly administration of justice. The often unconscious mental attitudes of this small group [of attorneys] contributes substantially to calendar congestion. It is the banal but brutal fact that justice delayed is justice denied. Id. at 734. Chief Judge Biggs argued that sanctioning counsel--rather than visiting the more serious penalty of dismissal upon the litigant 11 --was an appropriate and reasonable solution to the problems engendered by repeated lawyer misconduct. This power, the dissent argued, was consistent with both the separation of powers and Congress' delegation of authority to the federal courts. 10 The Gamble holding has been much criticized, both by commentators 12 and courts. 13 The Third Circuit itself has repudiated Gamble. See Eash v. Riggins Trucking Co., 757 F.2d 557 (3d Cir.1985) (en banc). In our seminal decision on the issue, Miranda v. Southern Pacific Transportation Co., 710 F.2d 516 (9th Cir.1983), we declined to follow Gamble and adopted the theories advocated by Chief Judge Biggs. 14 We see no reason to preclude the use of reasonable monetary sanctions against attorneys for violations of local rules when they are the offending parties. Id. at 521. 11 The Miranda court concluded that the power to issue sanctions under local rules has two sources. First, the authority to sanction attorneys under local rules emanates from the trial court's inherent power. Miranda, 710 F.2d at 520. See also Roadway Express Inc. v. Piper, 447 U.S. 752, 766, 100 S.Ct. 2455, 24, 65 L.Ed.2d 488 (1980) (recognizing the well-acknowledged inherent power of the court to levy sanctions). This inherent authority flows from the very nature of a court, from strict functional necessity. Michaelson v. United States, 266 U.S. 42, 66, 45 S.Ct. 18, 20, 69 L.Ed. 162 (1924). See also Gompers v. Bucks Stove & Range Co., 221 U.S. 418, 450-51, 31 S.Ct. 492, 501-02, 55 L.Ed. 797 ([w]ithout authority to act promptly and independently the courts could not administer public justice or enforce the rights of public litigants). Second, Congress has expressly granted to the various district courts the authority to promulgate rules governing its practice. See Fed.R.Civ.Pro. 83. In Miranda, we suggested that pursuant to this authority the district courts could penalize attorneys for violations of local rules. 710 F.2d at 520. There are, however, limitations on both roots of power. We now turn to the question of what limitations apply.
12 Inherent powers derive from the absolute need of a trial judge to maintain order and preserve the dignity of the court. See Cooke v. United States, 267 U.S. 517, 539, 45 S.Ct. 390, 395, 69 L.Ed. 767 (1925). Although it is now unchallenged in this circuit that a district court has inherent authority to sanction miscreant attorneys, there are factual and legal prerequisites to the exercise of this power. Because inherent powers are shielded from direct democratic controls, they must be exercised with restraint and discretion. Roadway Express, 447 U.S. at 764, 100 S.Ct. at 2463. To insure that restraint is properly exercised, we have routinely insisted upon a finding of bad faith before sanctions may be imposed under the court's inherent power. Id. at 765-66, 100 S.Ct. at 2463-64. 15 See also McCabe, 827 F.2d at 640 (court would have to make a finding of bad faith); United States v. Stoneberger, 805 F.2d 1391, 1393 (9th Cir.1986); In re Itel Securities Litigation, 791 F.2d 672, 675 (9th Cir.1986), cert. denied sub nom Bader v. Itel Corp., 479 U.S. 1033, 107 S.Ct. 880, 93 L.Ed.2d 834 (1987) (quoting Toombs, 777 F.2d at 471). A specific finding of bad faith by the trial judge or magistrate must accompany the sanction order in all such cases. Stoneberger, 805 F.2d at 1393.
13 Our holding in Miranda has been routinely cited for the proposition that the power of the trial court to impose sanctions is limited by the court's inherent power and, by implication, by the requirement of bad faith conduct on the part of the sanctioned parties. See, e.g., Ray A. Scharer and Co., Inc. v. Plabell Rubber Products, Inc., 858 F.2d 317, 321 (6th Cir.1988); Braley v. Campbell, 832 F.2d 1504, 1510 n. 5 (10th Cir.1987) (en banc); McCabe, 827 F.2d at 640; Adduono, 824 F.2d at 621; In re Howe, 800 F.2d at 1252; Toombs, 777 F.2d at 471; Kleiner v. First Nat'l Bank of Atlanta, 751 F.2d 1193, 1209 (11th Cir.1985). However, a close reading of Miranda makes it clear that the district court's power to impose sanctions stems from a broader base than its inherent authority. 14 The authority of a district court to sanction attorneys derives not just from an inherent judicial power but from the legislative grant of authority to promulgate rules. In Rule 83 of the Federal Rules of Civil Procedure and in 28 U.S.C. Sec. 2071, 16 Congress provided authority to the federal courts to make local rules for the proper administration of judicial business. Section 2071 provides that the Supreme Court and all courts established by Act of Congress may from time to time prescribe rules for the conduct of their business. 17 Under this provision, the federal courts may establish rules for the orderly processing of its docket provided that such rules are not repugnant to the laws of the United States. Heckers v. Fowler, 69 U.S. (2 Wall.) 123, 128, 17 L.Ed. 759 (1864). 15 The extent of the legislative delegation is an issue of some debate. Substantive local rules have been challenged on the theory that the enabling statute was intended only for the narrow administrative purpose of permitting the federal courts to issue rules covering noncontroversial housekeeping matters. 12 C. Wright & A. Miller, Federal Practice and Procedure Sec. 3152, at 228 (1973). 18 Consequently, some local rules have been criticized--indeed struck down--for reaching beyond the legislative grant of power and instituting basic procedural innovations. See Miner v. Atlass, 363 U.S. 641, 80 S.Ct. 1300, 4 L.Ed.2d 1462 (1960). 19 More recently, the Supreme Court has interpreted the basic procedural innovation bar of Miner to limit only those aspects of the litigatory process which bear upon the ultimate outcome of the litigation ... Colgrove v. Battin, 413 U.S. 149, 163 n. 23, 93 S.Ct. 2448, 2456 n. 23, 37 L.Ed.2d 522 (1973). 20 Although sanctions may have a substantive effect on the rights and duties of litigants and lawyers, they do not fall within the parameters of the outcome-determinative test of Colgrove. See Eash, 757 F.2d at 569. 16 Congress, in passing section 2071, did not intend to permit the federal courts to arrogate unto themselves substantial powers over either litigants or members of the bar. Nevertheless, while we carefully scrutinize claims of judicial overreaching, we have held that Congress did authorize the federal courts to impose a relatively mild form of sanctions as a means of preserving authority and control over the district bar. See Miranda, 710 F.2d at 519. We think this authority is implicit in the right to make rules for the orderly administration of justice. Without a narrow sanctions power, district courts might have difficulty preserving the vitality of local rules against repeated disobedience short of wielding its greater, less surgical, the powers over parties. Id. at 522. 17 However, the legislative grant of power is not a discretionless or roving commission for the district court to bludgeon violators of local or federal rules. Several factors limit the district court in this regard. First, by the terms of the statute, sanctions must be consistent with the Federal Rules and with other statutes. See Martinez, 593 F.2d at 993 (the rule ... [must] ... be consistent with the Acts of Congress and the rules prescribed by the Supreme Court). Second, the order must be necessary for the court to carry out the conduct of its business. Frazier v. Heebe, 482 U.S. 641, 107 S.Ct. 2607, 2611, 96 L.Ed.2d 557 (1987). There must be a close connection between the sanctionable conduct and the need to preserve the integrity of the court docket or the sanctity of the federal rules. Third, the order must be consistent with principles of right and justice. Id. (quoting In re Ruffalo, 390 U.S. 544, 554, 88 S.Ct. 1222, 1228, 20 L.Ed.2d 117 (1968) (White, J., concurring). Finally, any sanction imposed must be proportionate to the offense and commensurate with principles of restraint and dignity inherent in judicial power. 21 This last principle includes a responsibility to consider the usefulness of more moderate penalties before imposing a monetary sanction. 18 In determining the reach of the sanction authority, our courts are guided by the mandate of Federal Rule 1. The rules shall be construed to secure the just, speedy and inexpensive determination of every action. Judge Wisdom's eloquent message to the district courts, powerful 25 years ago, still stands as a forceful reminder of the fairness limits of the sanctions power. The force of this first and greatest of the Rules should not be blunted by district court's exaggerating the importance of local rules and enforcing such rules through inappropriate over-rigorous sanctions. Woodham v. American Cystoscope Co., 335 F.2d 551, 557 (5th Cir.1964). See also Loya v. Desert Sands Unified School District, 721 F.2d 279, 281 (9th Cir.1983). 19 Thus, while we believe that Congress authorized the federal courts to wield reasonable authority over attorneys appearing before them, we do not think that the imposition of financial sanctions for mere negligent violations of the local rules is consistent with the intent of Congress or with the restraint required of the federal courts in sanction cases. Attorneys should not be 'disciplined by financial reprisal for conduct attributable to mistake, inadvertence or error of judgment.'  In re Sutter, 543 F.2d at 1035. Thus, courts have required conduct amounting to recklessness, 22 gross negligence, repeated--although unintentional--flouting of court rules, 23 or willful misconduct before approving the imposition of monetary sanctions under local rules. A practice that punishes mere negligence on the part of counsel is not necessary to the orderly functioning of the court system, especially in light of the availability of alternative remedies. 24 See 18 U.S.C. Sec. 401 (the federal contempt statute). 20 Moreover, we think it inappropriate for the court system to claim compensation for being ill-used. The court system is not a private party that needs to be reimbursed for its inconvenience. Consequently, absent grossly negligent, reckless, or willful conduct, monetary penalties such as jury costs or judicial sanctions cannot be fairly levied against counsel for a violation of the local rules.