Document: 357 U.S. 197 78 S.Ct. 1087 2 L.Ed.2d 1255 SOCIETE INTERNATIONALE POUR PARTICIPATIONS INDUSTRIELLES ET COMMERCIALES, S. A., etc., Petitioner,v.William P. ROGERS, Attorney General of the United States, and Ivy Baker Priest, Treasurer States. No. 348. Argued May 1, 1958. Decided June 16, Mr. John J. Wilson, Washington, D.C., for petitioner. Lee Rankin, Sol. Gen., respondents. Justice HARLAN delivered opinion Court. 1 The question before us is whether, in circumstances this case, District Court erred dismissing, with prejudice, a complaint civil action as to plaintiff that had failed comply fully pretrial production order. This issue comes context an intricate litigation. Section 5(b) Trading Enemy Act, 40 Stat. 415, amended, 50 U.S.C.Appendix, § 5(b), U.S.C.A.Appendix, sets forth conditions under which States during period war or national emergency may seize' * any property interest foreign country *.' Acting section, Alien Property Custodian World War II assumed control assets were found by be 'owned held benefit of' I.G. Farbenindustrie, German firm then enemy national. These assets, valued at more than $100,000,000, consisted cash American banks approximately 90% capital stock Aniline & Film Corporation, Delaware corporation. In 1948 petitioner, Swiss holding company also known I. G. Chemie Interhandel, brought suit 9(a) 419, 9(a), against General, successor Custodian, recover these assets. section authorizes recovery seized '(a)ny person not ally enemy' extent such person's Petitioner claimed it owned time vesting hence, neutral power, was entitled recovery. 3 Government both challenged petitioner's claim ownership asserted event petitioner 'enemy' within meaning Act since intimately connected Farben hence affected 'enemy taint' despite its 'neutral' incorporation. See Uebersee Finanz-Korp., A. v. McGrath, 343 U.S 205, 72 618, 96 L.Ed. 888. More particularly, alleged from incorporation 1928, conspired Farben, H. Sturzenegger Cie, banking firm, others '(t)o conceal, camouflage, cloak ownership, domination properties interests located countries, including other Germany, order avoid seizure confiscation between countries Germany.' 4 At early stage litigation moved Rule 34 Federal Rules Civil Procedure, 28 U.S.C.A., requiring make available inspection copying large number records Cie. 34, conjunction 26(b), provides upon motion 'showing good cause therefor,' court party produce nonprivileged documents relevant subject matter pending '* are his possession, custody, support sought showing true they because andSturzenegger substantially identical. did dispute general relevancy but denied controlled them. granted Government's motion, holding, among things, 'control' over been prima facie established. 5 Thereafter followed motions relieved on ground disclosure required bank would violate penal laws consequently might lead imposition criminal sanctions, fine imprisonment, those responsible disclosure. turn 37(b)(2) Procedure dismiss noncompliance During Attorney, deeming accordance constitute violation Article 273 Penal Code, prohibiting economic espionage, 47 Bank Law, relating secrecy records, 'confiscated' records. 'confisaction' left possession amounted interdiction Sturzenegger's transmission third persons. upshot all Court, finally ruling relief complaint, referred Special Master findings nature block faith seeking achieve compliance court's 6 Report bears importantly our disposition case. It concluded acted own established doctrines exercising preventive police power constructive there no proof, evidence collusion papers herein.' Noting burden show efforts order, taking test whether attempted reasonable man have undertaken has sustained proof placed shown (to order) foregoing test.' 7 confirmed Nevertheless court, February 1953, filed wherein that: (1) apart considerations law records; (2) prove crucial outcome litigation; (3) furnish adequate excuse failure could invoke justify disobedience orders entered forum; (4) 37(b)(2), well inherent complaint. 111 F.Supp. 435. However, view statements Government, following intercession, certain deemed released, secure waivers persons who protected laws, whose permit production, suspended effective date dismissal limited continue obtain consent production. 8 By October some 63,000 released process tendered inspection. None books account submitted, though prepared offer plans here too permitted least partial compliance. full appeared impossible, November 1953 final affirmed Appeals, accepted documents, them good-faith unnecessary decide 37 authorized ruled empowered 41(b) 'inherent power.' did, however, modify allow additional six months efforts. U.S.App.D.C. 232, 225 F.2d 532. We certiorari. 350 937, 76 302, 100 818. 9 further grace, through waivers, inspection, so July 1956, 190,000 procured. Record offered examination Switzerland, expected approval material covered waivers. Finally, presented plan, already approved designed maximum order: A expert, American, appointed investigator parties, authorities. After files, submit report parties identifying without violating regulations, he seek letters rogatory arbitration proceedings courts. 10 refused entertain plan inspect determine substantial directed action. Appeals affirmed, same observed: 'That (petitioner) counsel patiently diligently doubted.' 148, 149, 243 254, 255. Because decision raised important questions proper application we , 355 812, 61, 30. 11 consider first contention issuing requirement ordered must them, satisfied. Without intimating merits litigation, accept amply supported two courts below that, effect law, Sturenegger control. becomes: Do interdictions bar conclusion 34? 12 approach light fact limit ability satisfy sanctions producing exposed. Still do situation analogous one where ceased exist taken into actual produce, party's complicity. 'confiscation' authorities adds nothing dimensions problem consideration, stayed possibility prosecution course present issued. 13 broader scope, requires consideration policies underlying Act. If can record title stock, certainly open itself captive direct taint nationals powers, particularly companies financial structures, rights deep concern Congress when broadened 1941 reach masqueraded innocent fronts.' Clark 332 480, 485, 68 174, 176, 92 88. Administration Wartime Financial Controls Treasury Department (1942), pp. 29—30; H.R.Rep. 2398, 79th Cong., 2d Sess. 3. 14 considerations, hold broadly fear punishment sovereign precludes finding thereby ordering their undermine congressional made explicit amendments, invite place firms assures vital influence insofar shed confused background. most advantageous position plead relaxation adoption will significant measure indeed end progress. should free require claimants face legal obstacles requested promise bear out dispel doubt introduce 15 say apply every restricted otherwise sufficiently flexible adapted exigencies particular propriety use put depends given only accommodation instance justified II. 16 next source authority 37(b)(2)(iii) equity powers federal court. chose rely 37, rested Court's power. 17 describes consequences refusal discovery. Subsection (b), 'Failure Comply With Order,' pertinent part: 18 '(2) refuses obey document thing *, regard just, following: 19 '(iii) An striking pleadings parts thereof dismissing proceeding part 20 concerned involuntary dismissals reads 'For prosecute rules defendant move him.' opinion, exclusively addresses particularity discovery listing variety remedies employ authorizing 'just.' There need resort 41(b), appears trials lacks specific references Further, appropriate defendant's remedy, while expansive coverage comprehending party. Reliance 41, cannot easily interpreted afford does power,' obscure analysis us. generally Rosenberg, Sanctions Effectuate Pretrial Discovery, 58 Col.L.Rev. 480. 21 invoked uses word 'failure,' hesitated draw 37(b) cover applies 'refuses obey.' (Italics added.) urged 'refuses' implies willfulness simply refuse willful disobedience. But argument turns literalism unduly accents distinctions language various subsections 37.1 Indeed subsection noted above, Order.' For purposes subdivision (b)(2) think obey' failing So construed allows flexibility framing situation. Whatever reasons, Such hardly affect path follow dealing comply. III. 22 remaining question, properly exercised diligent execute 23 discard outset strongly transfer prior avoided advantage laws. words, suggests stands deliberately courted impediments thus now heard assert after expectation realized. Certainly contentions, if facts, bearing justification action, here. conclusions; indeed, even apparent charge ever passed below. Although mean preclude establish facts remand, dispose case basis Master, adopted Appeals. 24 provisions involved read Fifth Amendment shall deprived due opinions Hovey Elliott, 167 409, 841, 42 215, Hammond Packing Co. State Arkansas, 212 322, 29 370, 53 530. decisions constitutional limitations courts, aid valid processes, affording opportunity hearing cause. authors aware considerations. Notes Advisory Committee Rules, U.S.C. (1952 ed.) p. 4325, U.S.C.A. 25 supra, answer struck, leading decree pro confesso merits, suit. modified state consistently Due Process Clause Fourteenth Amendment, strike render default judgment distinguished grounds right defend 'as mere punishment'; preserved reasoning utilized permissible presumption admission want merit defense.' pages 350—351, page 380. took care emphasize penalized do.' All 'was bona fide effort therefore inability satisfied requirements *' 347, 378. 26 leave violated plaintiff's inability, efforts, falter circumstances. Cf. Tot 319 463, 63 1241, 87 1519. provoked Their gravity accented cast role plaintiff, customary invoking vindicate another. Rather defendant, belatedly challenges protesting summarily possessed protest claiming unjustified Past summary seize believed enemy-owned rescued invalidity Just Compensation Clauses non-enemy claimant later judicial seizure. Stoehr Wallace, 255 239, 245—246, 41 293, 296, 65 604; Guessefeldt 342 308, 318, 338, 344, 342; cf. Russian Volunteer Fleet 282 481, 489, 51 229, 231, 75 473. 27 below, what extensive compliance, compel fostered neither conduct nor debatable constitutes weighty nonproduction, weakened preventing sovereign. Of claims reveal provide violated. Murdock, 284 141, 52 63, 210. Here very initial view, Switzerland pursuant privileges citizenship accorded domestic litigants Guaranty Trust New York 304 126, 133 135, 785, 82 1224. protecting enforced. explicitly recognizes procedural rules. asserts immunity law. serious noted, authorize willfulness, bad faith, fault petitioner.2 profit tender called for. carries ultimate disputed relying information obtained depositions affiliated trial handicap dispelling able inject absence complete drawing inferences unfavorable events. much concedes. problems go adequacy being contest merits. 30 On possesses wide discretion proceed whatever manner deems effective. desire challenge faith. wish explore looking towards fuller Or commence once prejudice justified. 31 reversed remanded conformity opinion. 32 ordered. 33 Judgment directions. CLARK entitled: 'Refusal Make Discovery: Consequences.' Different refer Answer' (a), 'Expenses Refusal Admit' (c), Party Attend Serve Answers' (d), Respond Letters Rogatory' (e). find design evidenced pattern words clear distinction detects concerned. 'refusal,' way example, clearly refers several instances (a) reason. And turn, discussed above text, 'failure comply' applied dismissal. added throughout.) 'refusal' 'failure' fixed common sections subsection. relies British prize cases adjudication prevented satisfying However interpreted, persuasive interpretation governing procedure doctrine

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