Opinion ID: 2808503
Heading Depth: 2
Heading Rank: 1

Heading: The Bankruptcy Court's Authority.

Text: The debtor first posits that the challenged sanction is tantamount to a fine for criminal contempt. That fine, he asserts, was beyond the bankruptcy court's authority for two reasons: as a jurisdictional matter and as a result of the court's noncompliance with the procedural prerequisites for such a fine.2 But the premise on which this binary assertion rests mischaracterizes the bankruptcy court's action. While the challenged sanction shares certain features of a criminal contempt fine — after all, the sanction is punitive (that is, one imposed to vindicate the authority of the court) rather than coercive (that is, one imposed to force compliance with a court order) — a criminal contempt fine is not the only type of punitive sanction that lies within a court's armamentarium. In United States v. Kouri-Perez, we explicitly renounced the proposition that any punitive sanction is perforce a criminal contempt sanction. 187 F.3d 1, 8-9 (1st Cir. 1999). We recognized that a district court may, in appropriate circumstances, impose punitive non-contempt 2 A fine for criminal contempt may only be imposed in conformity with the requirements of Federal Rule of Criminal Procedure 42. See United States v. Burgos-Andújar, 275 F.3d 23, 31 (1st Cir. 2001). The bankruptcy court made no effort to satisfy these prerequisites. - 7 - sanctions. See id. at 7. In other words, the contempt power is merely one of many inherent powers that a court possesses; it is not the only type of inherent power that can be deployed. See Chambers v. NASCO, Inc., 501 U.S. 32, 43-44 (1991) (describing the power to punish for contempt as one of multiple inherent powers of the courts arising out of courts' authority to manage their own affairs); United States v. Pina, 844 F.2d 1, 14 (1st Cir. 1988) (noting that the contempt power . . . is not the only weapon available to a judge to protect the order and dignity of the courtroom). The authority to issue a punitive sanction also may reside in a court's inherent power to police itself, thus . . . 'vindicat[ing] judicial authority without resort to the more drastic sanctions available for contempt of court.' Chambers, 501 U.S. at 46 (second alteration in original) (quoting Hutto v. Finney, 437 U.S. 678, 689 n.14 (1978)). Exercising this authority, courts may levy sanctions (including punitive sanctions) for such varied purposes as disciplining attorneys, remedying fraud on the court, and preventing the disruption of ongoing proceedings. See id. at 43-44 (collecting cases). The courts of appeals, too, have recognized the authority of federal courts to impose inherent-power sanctions without a finding of contempt. See, e.g., Mark Indus., Ltd. - 8 - v. Sea Captain's Choice, Inc., 50 F.3d 730, 733 (9th Cir. 1995) (explaining that a non-contempt inherent-power sanction can be employed to vindicate a court's authority); Harlan v. Lewis, 982 F.2d 1255, 1259 (8th Cir. 1993) (approving imposition of a non-contempt monetary sanction as within district court's inherent powers). Indeed, such a principle is part of the warp and woof of this court's jurisprudence. See, e.g., United States v. Romero-López, 661 F.3d 106, 108 (1st Cir. 2011); Aoude v. Mobil Oil Corp., 892 F.2d 1115, 1119 (1st Cir. 1989). For ease in exposition, we will from this point forward use the term inherent-power sanction as a shorthand for a non-contempt inherent-power sanction. Factors relevant in distinguishing between contempt sanctions and inherent-power sanctions include whether the issuing court made an express finding of contempt, whether the underlying conduct evinces a criminal mens rea, and whether the order falls within a recognized inherent power of the court (other than the contempt power). See Romero-López, 661 F.3d at 108; Kouri-Perez, 187 F.3d at 8-9. Here, these factors point unerringly to the conclusion that the bankruptcy court's ukase, though punitive, was an inherent-power sanction. The bankruptcy court not only made no finding of contempt but also expressly disavowed any notion that its order was meant to be a criminal sanction. - 9 - What is more, the court acknowledged that the debtor's delayed compliance was not the product of any malign intent. Last — but far from least — the $100 impost fell squarely within the long-recognized authority of courts to impose . . . submission to their lawful mandates. Chambers, 501 U.S. at 43 (quoting Anderson v. Dunn, 19 U.S. (6 Wheat.) 204, 227 (1821)). We conclude, therefore, that the bankruptcy court imposed a garden variety inherent-power sanction, not a criminal contempt sanction. The question remains whether a bankruptcy court, like other federal courts, has the authority to impose punitive noncontempt sanctions. The debtor argues that because bankruptcy courts are creatures of statute and have limited jurisdiction, they lack the inherent power to issue such sanctions. We reject this crabbed view. To begin, the Supreme Court has implied that bankruptcy courts possess inherent sanctioning powers beyond those expressly authorized by statute or rule. See Law v. Siegel, 134 S. Ct. 1188, 1198 (2014); see also Marrama v. Citizens Bank of Mass., 549 U.S. 365, 375-76 (2007). This acknowledgment dovetails with Chambers, in which the Court explained that by the very nature of their institution, all courts are necessarily vested with the inherent power - 10 - required to carry out their judicial functions to achieve the orderly and expeditious disposition of cases. 501 U.S. at 43 (internal quotation mark omitted). The Chambers Court stated that even though a district court's inherent power can be limited by statute and rule, it would not lightly assume that Congress . . . intended to depart from established principles such as the scope of a court's inherent power. Id. at 47 (internal quotation mark omitted). This reasoning readily can be applied to bankruptcy courts, which by the nature of their institution must possess inherent power sufficient to manage their own affairs and impose . . . submission to their lawful mandates. Id. at 43 (internal quotation marks omitted). The proof of the pudding is in the case law. The courts of appeals consistently have recognized that bankruptcy courts may impose various forms of inherent-power sanctions. See, e.g., Isaacson v. Manty, 721 F.3d 533, 538-39 (8th Cir. 2013); McGahren v. First Citizens Bank & Trust Co. (In re Weiss), 111 F.3d 1159, 1171 (4th Cir. 1997); Mapother & Mapother, P.S.C. v. Cooper (In re Downs), 103 F.3d 472, 477-78 (6th Cir. 1996); Caldwell v. Unified Capital Corp. (In re Rainbow Magazine, Inc.), 77 F.3d 278, 284 (9th Cir. 1996); Glatter v. Mroz (In re Mroz), 65 F.3d 1567, 1575 (11th Cir. 1995); Fellheimer, Eichen & Braverman, P.C. v. Charter Techs., - 11 - Inc., 57 F.3d 1215, 1224 (3d Cir. 1995); Citizens Bank & Trust Co. v. Case (In re Case), 937 F.2d 1014, 1023 (5th Cir. 1991). Our court has joined in this chorus. See Pearson v. First NH Mortg. Corp., 200 F.3d 30, 42 n.7 (1st Cir. 1999). We therefore hold, without serious question, that bankruptcy courts possess the inherent power to impose punitive non-contempt sanctions for failures to comply with their orders. There is one loose end. The parties agree that the debtor's failure to comply with the tax return production requirement was inadvertent and did not exhibit bad faith. With this in mind, a colloquy ensued at oral argument in this court about whether a finding of bad faith was a prerequisite for the imposition of an inherent-power sanction. This argument is procedurally defaulted several times over. The debtor did not advance it in the bankruptcy court, in the district court, or in his briefing before this court. Consequently, the argument has not been preserved. See Limone v. United States, 579 F.3d 79, 100 n.11 (1st Cir. 2009). Even if we assume, favorably to the debtor, that the argument was forfeited rather than waived, see United States v. Rodriguez, 311 F.3d 435, 437 (1st Cir. 2002) (discussing distinction between waiver and forfeiture), the challenged sanction would still stand. The argument for a bad-faith - 12 - requirement prescinds from the Supreme Court's review of an inherent-power sanction in the form of an award of attorneys' fees. See Roadway Express, Inc. v. Piper, 447 U.S. 752, 767 (1980). The Roadway Express Court noted that a finding [of bad faith] would have to precede any sanction under the court's inherent powers. Id. The Supreme Court later clarified this holding explaining that nothing in the other sanctioning mechanisms or prior cases . . . warrants a conclusion that a federal court may not, as a matter of law, resort to its inherent power to impose attorney's fees as a sanction for badfaith conduct. Chambers, 501 U.S. at 50 (emphasis supplied). For the most part, the courts of appeals have read these precedents narrowly, limiting them to instances in which an inherent-power sanction takes the form of an award of attorneys' fees.3 See, e.g., United States v. Seltzer, 227 F.3d 36, 41-42 (2d Cir. 2000); Republic of the Philippines v. Westinghouse Elec. Corp., 43 F.3d 65, 74 n.11 (3d Cir. 1994); Harlan, 982 F.2d at 1260. This limitation makes eminently good 3 The Fifth Circuit is an outlier. See, e.g., In re Thalheim, 853 F.2d 383, 389 (5th Cir. 1988). Even that court has acknowledged that its expansive application of the badfaith requirement may be open to question. See Elliott v. Tilton, 64 F.3d 213, 217 n.3 (5th Cir. 1995). In any event, we join the majority of our sister circuits in rejecting the Fifth Circuit's more sweeping use of the bad-faith requirement. - 13 - sense. The Roadway Express Court's reasoning took into account the venerable American Rule, which provides that litigants ordinarily shall pay their own lawyers. See Roadway Express, 447 U.S. at 765-66; see also Alyeska Pipeline Serv. Co. v. Wilderness Soc'y, 421 U.S. 240, 247 (1975). Where an inherentpower sanction has the effect of reversing this rule, that sanction demands heightened justification. See Roadway Express, 447 U.S. at 765-66. But where an inherent-power sanction does not take the form of an award of attorneys' fees (and thus does not involve a departure from the American Rule), a finding of bad faith is not ordinarily required. See Seltzer, 227 F.3d at 40-42; United States v. Mottweiler, 82 F.3d 769, 772 (7th Cir. 1996); Harlan, 982 F.2d at 1260; Mulvaney v. Rivair Flying Serv., Inc. (In re Baker), 744 F.2d 1438, 144142 (10th Cir. 1984) (en banc); see also Romero-López, 661 F.3d at 108 (affirming imposition of inherent-power sanction, not in form of fee award, without requiring showing of bad faith); Sacramona v. Bridgestone/Firestone, Inc., 106 F.3d 444, 447 (1st Cir. 1997) (same). It follows that the absence of bad faith does not serve to undermine the inherent-power sanction imposed by the bankruptcy court. Of course, the absence of a bad faith requirement should not be thought to give the bankruptcy court free reign - 14 - to impose sanctions without restraint. The admonition that courts [are] to be cautious in using their inherent power to sanction remains true. See Romero-López, 661 F.3d at 108 (citing Chambers, 501 U.S. at 44). Here, however, we are satisfied that the bankruptcy court, in choosing this modest sanction (rather than, say, dismissing the Chapter 13 proceeding in its entirety), opted for the least extreme sanction reasonably calculated to achieve the appropriate punitive and deterrent purposes. Kouri-Perez, 187 F.3d at 8.