Opinion ID: 503844
Heading Depth: 2
Heading Rank: 3

Heading: Dismissal Under Inherent Powers

Text: 19 The only ground cited directly by the district court for its dismissal was its inherent power to impose sanctions for discovery abuses that may not be a technical violation of the discovery rules. The Supreme Court has recognized this as an acceptable ground. Roadway Express, Inc. v. Piper, 447 U.S. 752, 764-67, 100 S.Ct. 2455, 2463-64, 65 L.Ed.2d 488 (1980). As noted above, we review dismissals under inherent powers for abuse of discretion. National Medical, 792 F.2d at 910; Fjelstad, 762 F.2d at 1337. Dismissals under a court's inherent powers are subject to much the same considerations as those under the Federal Rules of Civil Procedure. A district court must determine (1) the existence of certain extraordinary circumstances, (2) the presence of willfulness, bad faith, or fault by the offending party, (3) the efficacy of lesser sanctions, (4) the relationship or nexus between the misconduct drawing the dismissal sanction and the matters in controversy in the case, and finally, as optional considerations where appropriate, (5) the prejudice to the party victim of the misconduct, and (6) the government interests at stake. We discuss each of these factors in turn.
20 Dismissal under a court's inherent powers is justified in extreme circumstances, Wyle v. R.J. Reynolds Indus., Inc., 709 F.2d 585, 589 (9th Cir.1983), in response to abusive litigation practices, Fjelstad, 762 F.2d at 1338, and to insure the orderly administration of justice and the integrity of the court's orders. National Medical, 792 F.2d at 912 (quoting Phoceene Sous-Marine, S.A. v. United States Phosmarine, Inc., 682 F.2d 802, 806 (9th Cir.1982)). These considerations do not establish a precise substantive standard, but they do suggest the conditions under which a dismissal under a court's inherent powers might be appropriate. We assume without deciding that these general criteria were satisfied in this case. We now turn to the substantive standards for the imposition of the dismissal sanction under a court's inherent powers.
21 In cases where the drastic sanctions of dismissal or default are ordered, the range of discretion for a district court is narrowed and the losing party's non-compliance must be due to willfulness, fault, or bad faith. Fjelstad, 762 F.2d at 1337; Sigliano, 642 F.2d at 310. A finding of any of these circumstances can justify the sanction of dismissal. Munoz-Santana v. INS, 742 F.2d 561, 564 (9th Cir.1984). 22 EPA makes much of the fact that Magistrate Reichmann found that their doctoring of the NEIC report was not willful, and that the district court did not upset this finding. 2 The magistrate's finding is not, however, decisive on the issue of whether the district judge was justified in finding the EPA at fault. Judge Marshall's remarks at the hearing for imposition of sanctions against the EPA for excising the NEIC report support her finding that the EPA had at least been at fault in issuing a report which had been censored. Moreover, the circumstances surrounding the preparation of the EMSL report also indicate, according to the author Williams' deposition testimony, that the EPA had been at fault in giving misleading information to those preparing the report and allowing its issuance in the form in which it appeared. 23 The measure of EPA's fault is, however, minimal. See Fjelstad, 762 F.2d at 1343 (single willful violation insufficient for dismissal sanction). The contents of the EMSL report were presumably intended for, at most, introduction at trial as evidence. Halaco objected to the method of preparing the report even before it had any use in the litigation. If EPA had sought to introduce the report at trial, Halaco might have had a colorable claim that the method of preparation constituted an abusive litigation tactic. At least, Halaco would have had ample grounds to discredit the report. We hold that it was error for the district court to dismiss EPA's counterclaim because it found EPA to be at fault in the preparation of the misleading contents of the EMSL report. The fault at issue was insufficient to support a dismissal.
24 The district court must, before dismissing an action under its inherent powers, consider less drastic sanctions. National Medical, 792 F.2d at 912. At the hearing on Halaco's motion for dismissal, the court noted that [t]he appropriate remedy for the EPA's conduct is a dismissal of EPA's counterclaim, and the striking of its answer. The court is aware that this is an environmental case; however, the government's conduct is so outrageous as to require this sanction. 25 This statement by the district court is an insufficient consideration of lesser sanctions. This court has said that the consideration of less severe penalties must be a reasonable explanation of possible and meaningful alternatives. Anderson v. Air West, Inc., 542 F.2d 522, 525 (9th Cir.1976). The district court did not make such an explanation. 26
27 The most critical criterion for the imposition of a dismissal sanction is that the misconduct penalized must relate to matters in controversy in such a way as to interfere with the rightful decision of the case. See Fjelstad, 762 F.2d at 1338; Wyle, 709 F.2d at 591; Phoceene, 682 F.2d at 806. This rule is rooted in general due process concerns. Insurance Corp. of Ireland, Ltd. v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 705-07, 102 S.Ct. 2099, 2105-06, 72 L.Ed.2d 492 (1982). There must be a nexus between the party's actionable conduct and the merits of his case. Fjelstad, 762 F.2d at 1342; Wyle, 709 F.2d at 591. 28 The district court's dismissal of EPA's counterclaim does not satisfy this test. Halaco claims whether the wastes were characterized as hazardous (the offending statement in the EMSL report) directly affected the issues of damages and restoration requirements at issue in the underlying suit. Nevertheless, by the very terms of its complaint for declaratory judgment, Halaco was only litigating the issue of whether its waste disposal site was in a wetland under the jurisdiction of the Clean Water Act. Whether the wastes were hazardous was a peripheral matter. Halaco attempts to argue that the EPA's own guidelines for imposing penalties raised the issue of the characterization of hazardous waste to a central one in the litigation. Citing to the EPA's internal policies is not persuasive when read within the narrow terms of the declaratory judgment action. 29 Even if the issue of hazardous wastes went to the merits of this action, the mere preparation of the EMSL report, no matter how erroneous, could not have interfered with the rightful decision of the case. Subject only to the rule of materiality, parties in lawsuits are free to make whatever claims they wish. They may offer evidence to substantiate those claims. Whether that evidence will be admitted before the court is an altogether different matter. If the EPA had offered its EMSL report in evidence, Halaco could freely have attacked its characterization of waste as hazardous for lack of foundation. There is little doubt that the attack would have succeeded, and that the EPA's misstatement would not have caused a distortion of the fact finding process. But to accept Halaco's motion for dismissal would constitute an unnecessary and drastic substitute for the adversary process of litigation. We find that the nexus between the dismissal sanction and the asserted misconduct of EPA was not shown.
30 A final consideration is the existence and degree of prejudice to the wronged party. This factor is purely optional. National Medical, 792 F.2d at 913. Also, in a case where the government is litigating, public policy concerns must also be weighed if these would be affected by a dismissal. Id. Halaco says it was prejudiced in two ways by EPA's actions. It suggests that the doctored NEIC report hindered its preparation for trial, and misled it about the EPA's findings regarding its site. This is really irrelevant, since the abuse complained of and which led to the dismissal was the preparation of the EMSL report. As for that document, Halaco says its false statements constituted public misinformation. Halaco claims, in effect, it was libeled by the EPA. It is an unfortunate fact that in litigation parties often make expansive, if sometimes incorrect, claims concerning their adversary's conduct. The fact is, though, that the EMSL report was never issued directly to the public, and, indeed, had never been used in litigation. The district court made no finding whether Halaco was prejudiced by the EPA's actions, nor was it required to since it is an optional factor for the imposition of dismissals. We hold, however, that Halaco has not made an effective showing that its position was prejudiced with the court. As for the important government interests at stake in this litigation, those go to the merits of the underlying case, and we make no comment on them here.