JUSTICE WHITE delivered the opinion of the Court.
This case requires us to explore the scope of the inherent power of a federal court to sanction a litigant for bad-faith conduct. Specifically, we are asked to determine whether the District Court, sitting in diversity, properly invoked its inherent power in assessing as a sanction for a party's bad-faith conduct attorney's fees and related expenses paid by the party's opponent to its attorneys. We hold that the District Court acted within its discretion, and we therefore affirm the judgment of the Court of Appeals.
This case began as a simple action for specific performance of a contract, but it did not remain so.
NASCO decided to take legal action. On Friday, October 14, 1983, NASCO's counsel informed counsel for Chambers and CTR that NASCO would file suit the following Monday in the United States District Court for the Western District of Louisiana, seeking specific performance of the agreement, as well as a temporary restraining order (TRO) to prevent the alienation or encumbrance of the properties at issue. NASCO provided this notice in accordance with Federal Rule of Civil Procedure 65 and Rule 11 of the District Court's Local Rules (now Rule 10), both of which are designed to give a defendant in a TRO application notice of the hearing and an opportunity to be heard.
The reaction of Chambers and his attorney, A. J. Gray III, was later described by the District Court as having "emasculated and frustrated the purposes of these rules and the powers of [the District] Court by utilizing this notice to prevent NASCO's access to the remedy of specific performance." NASCO, Inc. v. Calcasieu Television & Radio, Inc., 623 F.Supp. 1372, 1383 (1985). On Sunday, October 16, 1983, the pair acted to place the properties at issue beyond the reach of the District Court by means of the Louisiana Public Records Doctrine. Because the purchase agreement had never been recorded, they determined that if the properties
To this end, Chambers and Gray created a trust, with Chambers' sister as trustee and Chambers' three adult children as beneficiaries. The pair then directed the president of CTR, who later became Chambers' wife, to execute warranty deeds conveying the two tracts at issue to the trust for a recited consideration of $1.4 million dollars. Early Monday morning, the deeds were recorded. The trustee, as purchaser, had not signed the deeds; none of the consideration had been paid; and CTR remained in possession of the properties. Later that morning, NASCO's counsel appeared in the District Court to file the complaint and seek the TRO. With NASCO's counsel present, the District Judge telephoned Gray. Despite the judge's queries concerning the possibility that CTR was negotiating to sell the properties to a third person, Gray made no mention of the recordation of the deeds earlier that morning. NASCO, Inc. v. Calcasieu Television & Radio, Inc., 124 F. R. D. 120, 126, n. 8 (1989). That afternoon, Chambers met with his sister and had her sign the trust documents and a $1.4 million note to CTR. The next morning, Gray informed the District Court by letter of the recordation of the deeds the day before and admitted that he had intentionally withheld the information from the court.
Within the next few days, Chambers' attorneys prepared a leaseback agreement from the trustee to CTR, so that CTR could remain in possession of the properties and continue to operate the station. The following week, the District Court granted a preliminary injunction against Chambers and CTR and entered a second TRO to prevent the trustee from alienating or encumbering the properties. At that hearing, the District Judge warned that Gray's and Chambers' conduct had been unethical.
Undeterred, Chambers proceeded with "a series of meritless motions and pleadings and delaying actions." 124 F. R. D., at 127. These actions triggered further warnings from the court. At one point, acting sua sponte, the District Judge called a status conference to find out why bankers were being deposed. When informed by Chambers' counsel that the purpose was to learn whether NASCO could afford to pay for the station, the court canceled the depositions consistent with its authority under Federal Rule of Civil Procedure 26(g).
At the status conference nine days before the April 1985 trial date,
In the interlude between the trial and the entry of judgment during which the District Court prepared its opinion, Chambers sought to render the purchase agreement meaningless by seeking permission from the FCC to build a new transmission tower for the station and to relocate the transmission facilities to that site, which was not covered by the agreement. Only after NASCO sought contempt sanctions did Chambers withdraw the application.
The District Court entered judgment on the merits in NASCO's favor, finding that the transfer of the properties to the trust was a simulated sale and that the deeds purporting to convey the property were "null, void, and of no effect." 623 F. Supp., at 1385. Chambers' motions, filed in the District Court, the Court of Appeals, and this Court, to stay the judgment pending appeal were denied. Undeterred, Chambers convinced CTR officials to file formal oppositions to NASCO's pending application for FCC approval of the transfer of the station's license, in contravention of both the District Court's injunctive orders and its judgment on the merits. NASCO then sought contempt sanctions for a third time, and the oppositions were withdrawn.
When Chambers refused to prepare to close the sale, NASCO again sought the court's help. A hearing was set for July 16, 1986, to determine whether certain equipment was to be included in the sale. At the beginning of the hearing, the court informed Chambers' new attorney, Edwin A. McCabe,
On remand, NASCO moved for sanctions, invoking the District Court's inherent power, Fed. Rule Civ. Proc. 11, and 28 U. S. C. § 1927. After full briefing and a hearing, see 124 F. R. D., at 141, n. 11, the District Court determined that sanctions were appropriate "for the manner in which this proceeding was conducted in the district court from October 14, 1983, the time that plaintiff gave notice of its intention to file suit to this date." Id., at 123. At the end of an extensive opinion recounting what it deemed to have been sanctionable conduct during this period, the court imposed sanctions against Chambers in the form of attorney's fees and expenses totaling $996,644.65, which represented the entire amount of NASCO's litigation costs paid to its attorneys.
In imposing the sanctions, the District Court first considered Federal Rule of Civil Procedure 11. It noted that the alleged sanctionable conduct was that Chambers and the other defendants had "(1) attempted to deprive this Court of jurisdiction by acts of fraud, nearly all of which were performed outside the confines of this Court, (2) filed false and frivolous pleadings, and (3) attempted, by other tactics of delay, oppression, harassment and massive expense to reduce plaintiff to exhausted compliance." 124 F. R. D., at 138. The court recognized that the conduct in the first and third categories could not be reached by Rule 11, which governs only papers filed with a court. As for the second category, the court explained that the falsity of the pleadings at issue did not become apparent until after the trial on the merits, so that it would have been impossible to assess sanctions at the time the papers were filed. Id., at 138-139. Consequently, the District Court deemed Rule 11 "insufficient" for its purposes. Id., at 139. The court likewise declined to impose sanctions under § 1927,
The Court of Appeals affirmed. NASCO, Inc. v. Calcasieu Television & Radio, Inc., 894 F.2d 696 (CA5 1990). The court rejected Chambers' argument that a federal court sitting in diversity must look to state law, not the court's inherent power, to assess attorney's fees as a sanction for bad-faith conduct in litigation. The court further found that neither 28 U. S. C. § 1927 nor Federal Rule of Civil Procedure 11 limits a court's inherent authority to sanction bad-faith conduct "when the party's conduct is not within the reach of the rule or the statute."
Chambers maintains that 28 U. S. C. § 1927 and the various sanctioning provisions in the Federal Rules of Civil Procedure
It has long been understood that "[c]ertain implied powers must necessarily result to our Courts of justice from the nature of their institution," powers "which cannot be dispensed with in a Court, because they are necessary to the exercise of all others." United States v. Hudson, 7 Cranch 32, 34 (1812); see also Roadway Express, Inc. v. Piper, 447 U.S. 752, 764 (1980) (citing Hudson). For this reason, "Courts of justice are universally acknowledged to be vested, by their very creation, with power to impose silence, respect, and decorum, in their presence, and submission to their lawful mandates." Anderson v. Dunn, 6 Wheat. 204, 227 (1821); see also Ex parte Robinson, 19 Wall. 505, 510 (1874). These powers are "governed not by rule or statute but by the control necessarily vested in courts to manage their own affairs so as to achieve the orderly and expeditious disposition of cases." Link v. Wabash R. Co., 370 U.S. 626, 630-631 (1962).
Prior cases have outlined the scope of the inherent power of the federal courts. For example, the Court has held that a federal court has the power to control admission to its bar and to discipline attorneys who appear before it. See Ex parte Burr, 9 Wheat. 529, 531 (1824). While this power "ought to be exercised with great caution," it is nevertheless "incidental to all Courts." Ibid.
Of particular relevance here, the inherent power also allows a federal court to vacate its own judgment upon proof that a fraud has been perpetrated upon the court. See Hazel-Atlas Glass Co. v. Hartford-Empire Co., 322 U.S. 238 (1944); Universal Oil Products Co. v. Root Refining Co., 328 U.S. 575, 580 (1946). This "historic power of equity to set aside fraudulently begotten judgments," Hazel-Atlas, 322 U. S., at 245, is necessary to the integrity of the courts, for "tampering with the administration of justice in [this] manner. . . involves far more than an injury to a single litigant. It is a wrong against the institutions set up to protect and safeguard the public." Id., at 246. Moreover, a court has the power to conduct an independent investigation in order to determine whether it has been the victim of fraud. Universal Oil, supra, at 580.
There are other facets to a federal court's inherent power. The court may bar from the courtroom a criminal defendant who disrupts a trial. Illinois v. Allen, 397 U.S. 337 (1970). It may dismiss an action on grounds of forum non conveniens, Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 507-508 (1947); and it may act sua sponte to dismiss a suit for failure to prosecute, Link, supra, at 630-631.
Because of their very potency, inherent powers must be exercised with restraint and discretion. See Roadway Express, supra, at 764. A primary aspect of that discretion is the ability to fashion an appropriate sanction for conduct
Indeed, "[t]here are ample grounds for recognizing ... that in narrowly defined circumstances federal courts have inherent power to assess attorney's fees against counsel," Roadway Express, supra, at 765, even though the so-called "American Rule" prohibits fee shifting in most cases. See Alyeska Pipeline Service Co. v. Wilderness Society, 421 U.S. 240, 259 (1975). As we explained in Alyeska, these exceptions fall into three categories.
Third, and most relevant here, a court may assess attorney's fees when a party has "`acted in bad faith, vexatiously,
We discern no basis for holding that the sanctioning scheme of the statute and the rules displaces the inherent power to impose sanctions for the bad-faith conduct described above. These other mechanisms, taken alone or together, are not substitutes for the inherent power, for that power is both broader and narrower than other means of imposing sanctions. First, whereas each of the other mechanisms reaches only certain individuals or conduct, the inherent power extends to a full range of litigation abuses. At the very least, the inherent power must continue to exist to fill in the interstices. Even JUSTICE KENNEDY'S dissent so
It is true that the exercise of the inherent power of lower federal courts can be limited by statute and rule, for "[t]hese courts were created by act of Congress." Robinson, 19 Wall., at 511. Nevertheless, "we do not lightly assume that Congress has intended to depart from established principles" such as the scope of a court's inherent power. Weinberger v. Romero-Barcelo, 456 U.S. 305, 313 (1982); see also Link, 370 U. S., at 631-632. In Alyeska we determined that "Congress ha[d] not repudiated the judicially fashioned exceptions" to the American Rule, which were founded in the inherent power of the courts. 421 U. S., at 260. Nothing since then has changed that assessment,
The Court's prior cases have indicated that the inherent power of a court can be invoked even if procedural rules exist which sanction the same conduct. In Link, it was recognized that a federal district court has the inherent power to dismiss a case sua sponte for failure to prosecute, even though the language of Federal Rule of Civil Procedure 41(b) appeared to require a motion from a party:
In Roadway Express, a party failed to comply with discovery orders and a court order concerning the schedule for filing briefs. 447 U. S., at 755. After determining that § 1927, as it then existed, would not allow for the assessment of attorney's fees, we remanded the case for a consideration of sanctions under both Federal Rule of Civil Procedure 37 and the court's inherent power, while recognizing that invocation of the inherent power would require a finding of bad faith.
Like the Court of Appeals, we find no abuse of discretion in resorting to the inherent power in the circumstances of this case. It is true that the District Court could have employed Rule 11 to sanction Chambers for filing "false and frivolous pleadings," 124 F. R. D., at 138, and that some of the other conduct might have been reached through other Rules. Much of the bad-faith conduct by Chambers, however, was
We likewise do not find that the District Court's reliance on the inherent power thwarted the purposes of the other sanctioning mechanisms. Although JUSTICE KENNEDY'S dissent makes much of the fact that Rule 11 and Rule 26(g) "are cast in mandatory terms," post, at 66, the mandate of these provisions extends only to whether a court must impose sanctions, not to which sanction it must impose. Indeed, the language of both Rules requires only that a court impose "an appropriate sanction." Thus, this case is distinguishable from Bank of Nova Scotia v. United States, 487 U.S. 250 (1988), in which this Court held that a district court could not rely on its supervisory power as a means of circumventing the clear mandate of a procedural rule. Id., at 254-255.
Chambers asserts that even if federal courts can use their inherent power to assess attorney's fees as a sanction in some cases, they are not free to do so when they sit in diversity, unless the applicable state law recognizes the "bad-faith" exception to the general rule against fee shifting. He relies on footnote 31 in Alyeska, in which we stated with regard to the exceptions to the American Rule that "[a] very different situation
We agree with NASCO that Chambers has misinterpreted footnote 31. The limitation on a court's inherent power described there applies only to fee-shifting rules that embody a substantive policy, such as a statute which permits a prevailing party in certain classes of litigation to recover fees. That was precisely the issue in Sioux County v. National Surety Co., 276 U.S. 238 (1928), the only case cited in footnote 31. There, a state statute mandated that in actions to enforce an insurance policy, the court was to award the plaintiff a reasonable attorney's fee. See id., at 242, and n. 2. In enforcing the statute, the Court treated the provision as part of a statutory liability which created a substantive right. Id., at 241-242. Indeed, Alyeska itself concerned the substantive nature of the public policy choices involved in deciding whether vindication of the rights afforded by a particular statute is important enough to warrant the award of fees. See 421 U. S., at 260-263.
Only when there is a conflict between state and federal substantive law are the concerns of Erie R. Co. v. Tompkins, 304 U.S. 64 (1938), at issue. As we explained in Hanna v. Plumer, 380 U.S. 460 (1965), the "outcome determinative" test of Erie and Guaranty Trust Co. v. York, 326 U.S. 99 (1945), "cannot be read without reference to the twin aims of the Erie rule: discouragement of forum-shopping and avoidance of inequitable administration of the laws." 380 U. S., at 468. Despite Chambers' protestations to the contrary, neither of these twin aims is implicated by the assessment of attorney's fees as a sanction for bad-faith conduct before the
As Chambers has recognized, see Brief for Petitioner 15, in the case of the bad-faith exception to the American Rule, "the underlying rationale of `fee shifting' is, of course, punitive." Hall, 412 U. S., at 4-5. Cf. Pavelic & LeFlore v. Marvel Entertainment Group, 493 U.S. 120, 126 (1989). "[T]he award of attorney's fees for bad faith serve[s] the same purpose as a remedial fine imposed for civil contempt," because "[i]t vindicate[s] the District Court's authority over a recalcitrant litigant." Hutto, 437 U. S., at 691. "That the award ha[s] a compensatory effect does not in any event distinguish it from a fine for civil contempt, which also compensates
Chambers argues that because the primary purpose of the sanction is punitive, assessing attorney's fees violates the State's prohibition on punitive damages. Under Louisiana law, there can be no punitive damages for breach of contract, even when a party has acted in bad faith in breaching the agreement. Lancaster v. Petroleum Corp. of Delaware, 491 So.2d 768, 779 (La. App. 1986). Cf. La. Civ. Code Ann., Art. 1995 (West 1987). Indeed, "as a general rule attorney's fees are not allowed a successful litigant in Louisiana except where authorized by statute or by contract." Rutherford v. Impson, 366 So.2d 944, 947 (La. App. 1978). It is clear, though, that this general rule focuses on the award of attorney's fees because of a party's success on the underlying claim. Thus, in Frank L. Beier Radio, Inc. v. Black Gold Marine, Inc., 449 So.2d 1014 (La. 1984), the state court considered the scope of a statute which permitted an award of attorney's fees in a suit seeking to collect on an open account. Id., at 1015. This substantive state policy is not implicated here, where sanctions were imposed for conduct during the litigation.
Here, the District Court did not attempt to sanction petitioner for breach of contract,
We review a court's imposition of sanctions under its inherent power for abuse of discretion. Link, 370 U. S., at 633; see also Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 399-405 (1990) (Rule 11). Based on the circumstances of this case, we find that the District Court acted within its discretion in assessing as a sanction for Chambers' bad-faith conduct the entire amount of NASCO's attorney's fees.
Relying on cases imposing sanctions under Rule 11,
Second, Chambers claims that the fact that the entire amount of fees was awarded means that the District Court failed to tailor the sanction to the particular wrong. As NASCO points out, however, the District Court concluded that full attorney's fees were warranted due to the frequency and severity of Chambers' abuses of the judicial system and the resulting need to ensure that such abuses were not repeated.
Third, Chambers maintains that the District Court abused its discretion by failing to require NASCO to mitigate its expenses. He asserts that had NASCO sought summary disposition of the case, the litigation could have been concluded much sooner. But, as NASCO notes, Chambers himself made a swift conclusion to the litigation by means of summary judgment impossible by continuing to assert that material factual disputes existed.
Fourth, Chambers challenges the District Court's imposition of sanctions for conduct before other tribunals, including the FCC, the Court of Appeals, and this Court, asserting that a court may sanction only conduct occurring in its presence. Our cases are to the contrary, however. As long as a party receives an appropriate hearing, as did Chambers, see 124 F. R. D., at 141, n. 11, the party may be sanctioned for abuses of process occurring beyond the courtroom, such as disobeying the court's orders. See Young, 481 U. S., at 798; Toledo Scale, supra, at 426-428. Here, for example, Chambers' attempt to gain the FCC's permission to build a new transmission tower was in direct contravention of the District Court's orders to maintain the status quo pending the outcome of the litigation and was therefore within the scope of the District Court's sanctioning power.
Finally, Chambers claims the award is not "personalized," because the District Court failed to conduct any inquiry into whether he was personally responsible for the challenged conduct. This assertion is flatly contradicted by the District
For the foregoing reasons, the judgment of the Court of Appeals for the Fifth Circuit is
JUSTICE SCALIA, dissenting.
I agree with the Court that Article III courts, as an independent and coequal Branch of Government, derive from the Constitution itself, once they have been created and their jurisdiction established, the authority to do what courts have traditionally done in order to accomplish their assigned tasks. Some elements of that inherent authority are so essential to "[t]he judicial Power," U. S. Const., Art. III, § 1, that they are indefeasible, among which is a court's ability to enter orders protecting the integrity of its proceedings.
I think some explanation might be useful regarding the "bad-faith" limitation that the Court alludes to today, see ante, at 47. Since necessity does not depend upon a litigant's
However, a "bad-faith" limitation upon the particular sanction of attorney's fees derives from our jurisprudence regarding the so-called American Rule, which provides that the prevailing party must bear his own attorney's fees and cannot have them assessed against the loser. See Alyeska Pipeline Service Co. v. Wilderness Society, 421 U.S. 240, 247 (1975). That rule, "deeply rooted in our history and in congressional policy," id., at 271, prevents a court (without statutory authorization) from engaging in what might be termed substantive fee shifting, that is, fee shifting as part of the merits award. It does not in principle bar fee shifting as a sanction for procedural abuse, see id., at 258-259. We have held, however—in my view as a means of preventing erosion or evasion of the American Rule—that even fee shifting as a sanction can only be imposed for litigation conduct characterized by bad faith. See Roadway Express, Inc. v. Piper, 447 U.S. 752, 766 (1980). But that in no way means that all sanctions imposed under the courts' inherent authority require a finding of bad faith. They do not. See Redfield v. Ystalyfera Iron Co., 110 U.S. 174, 176 (1884) (dismissal appropriate for unexcused delay in prosecution); cf. Link, supra.
Just as Congress may to some degree specify the manner in which the inherent or constitutionally assigned powers of
I disagree, however, with the Court's statement that a court's inherent power reaches conduct "beyond the court's confines" that does not "`interfer[e] with the conduct of trial,'" ante, at 44 (quoting Young v. United States ex rel. Vuitton et Fils S. A., 481 U.S. 787, 798 (1987)). See id., at 819-822 (SCALIA, J., concurring in judgment); Bank of Nova Scotia v. United States, 487 U.S. 250, 264 (1988) (SCALIA, J., concurring). I emphatically agree with JUSTICE KENNEDY, therefore, that the District Court here had no power to impose any sanctions for petitioner's flagrant, bad-faith breach of contract; and I agree with him that it appears to have done so. For that reason, I dissent.
JUSTICE KENNEDY, with whom THE CHIEF JUSTICE and JUSTICE SOUTER join, dissenting.
Today's decision effects a vast expansion of the power of federal courts, unauthorized by Rule or statute. I have no doubt petitioner engaged in sanctionable conduct that warrants severe corrective measures. But our outrage at his
With all respect, I submit the Court commits two fundamental errors. First, it permits the exercise of inherent sanctioning powers without prior recourse to controlling Rules and statutes, thereby arrogating to federal courts Congress' power to regulate fees and costs. Second, the Court upholds the wholesale shift of respondent's attorney's fees to petitioner, even though the District Court opinion reveals that petitioner was sanctioned at least in part for his so-called bad-faith breach of contract. The extension of inherent authority to sanction a party's prelitigation conduct subverts the American Rule and turns the Erie doctrine upside down by punishing petitioner's primary conduct contrary to Louisiana law. Because I believe the proper exercise of inherent powers requires exhaustion of express sanctioning provisions and much greater caution in their application to redress prelitigation conduct, I dissent.
The Court's first error lies in its failure to require reliance, when possible, on the panoply of express sanctioning provisions provided by Congress.
The American Rule prohibits federal courts from awarding attorney's fees in the absence of a statute or contract providing for a fee award. Alyeska Pipeline Service Co. v. Wilderness Society, 421 U.S. 240, 258-259 (1975). The Rule recognizes that Congress defines the procedural and remedial powers of federal courts, Sibbach v. Wilson & Co., 312 U.S. 1, 9-10 (1941); McIntire v. Wood, 7 Cranch 504, 505-506 (1813), and controls the costs, sanctions, and fines available there, Kaiser Aluminum & Chemical Corp. v. Bonjorno, 494 U.S. 827, 835 (1990) ("[T]he allocation of the costs accruing from litigation is a matter for the legislature, not the courts"); Alyeska Pipeline Co., supra, at 262 ("[T]he circumstances
By direct action and delegation, Congress has exercised this constitutional prerogative to provide district courts with a comprehensive arsenal of Federal Rules and statutes to protect themselves from abuse. A district court can punish contempt of its authority, including disobedience of its process, by fine or imprisonment, 18 U. S. C. § 401; award costs, expenses, and attorney's fees against attorneys who multiply proceedings vexatiously, 28 U. S. C. § 1927; sanction a party and/or the party's attorney for filing groundless pleadings, motions, or other papers, Fed. Rule Civ. Proc. 11; sanction a party and/or his attorney for failure to abide by a pretrial order, Fed. Rule Civ. Proc. 16(f); sanction a party and/or his attorney for baseless discovery requests or objections, Fed. Rule Civ. Proc. 26(g); award expenses caused by a failure to attend a deposition or to serve a subpoena on a party to be deposed, Fed. Rule Civ. Proc. 30(g); award expenses when a party fails to respond to discovery requests or fails to participate in the framing of a discovery plan, Fed. Rules Civ. Proc. 37(d) and (g); dismiss an action or claim of a party that fails to prosecute, to comply with the Federal Rules, or to obey an order of the court, Fed. Rule Civ. Proc. 41(b); punish any person who fails to obey a subpoena, Fed. Rule Civ. Proc. 45(f); award expenses and/or contempt damages when a party presents an affidavit in a summary judgment motion in bad faith or for the purpose of delay, Fed. Rule Civ. Proc. 56(g); and make rules governing local practice that are not inconsistent with the Federal Rules, Fed. Rule Civ. Proc. 81. See also 28 U. S. C. § 1912 (power to award just damages and costs on affirmance); Fed. Rule App. Proc. 38 (power to award damages and costs for frivolous appeal).
The Court holds nonetheless that a federal court may ignore these provisions and exercise inherent power to sanction bad-faith misconduct "even if procedural rules exist which
This explanation of the permitted sphere of inherent powers to shift fees as a sanction for bad-faith litigation conduct is as illegitimate as it is unprecedented. The American Rule recognizes that the Legislature, not the Judiciary, possesses constitutional responsibility for defining sanctions and fees; the bad-faith exception to the Rule allows courts to assess fees not provided for by Congress "in narrowly defined circumstances." Roadway Express, Inc. v. Piper, 447 U.S. 752, 765 (1980). By allowing courts to ignore express Rules and statutes on point, however, the Court treats inherent powers as the norm and textual bases of authority as the exception. And although the Court recognizes that Congress in theory may channel inherent powers through passage of sanctioning Rules, it relies on Weinberger v. Romero-Barcelo, 456 U.S. 305 (1982), a decision that has nothing to do with
The Court has the presumption backwards. Inherent powers are the exception, not the rule, and their assertion requires special justification in each case. Like all applications of inherent power, the authority to sanction bad-faith litigation practices can be exercised only when necessary to preserve the authority of the court. See Roadway Express, Inc. v. Piper, supra, at 764 (inherent powers "are those which `are necessary to the exercise of all others'"); Young v. United States ex rel. Vuitton et Fils S. A., 481 U.S. 787, 819-820 (1987) (SCALIA, J., concurring in judgment) (inherent powers only those "necessary to permit the courts to function").
The necessity limitation, which the Court brushes aside almost without mention, ante, at 43, prescribes the rule for the correct application of inherent powers. Although this case does not require articulation of a comprehensive definition of the term "necessary," at the very least a court need not exercise inherent power if Congress has provided a mechanism to achieve the same end. Consistent with our unaltered admonition that inherent powers must be exercised "with great caution," Ex parte Burr, 9 Wheat. 529, 531 (1824), the necessity predicate limits the exercise of inherent powers to those exceptional instances in which congressionally authorized powers fail to protect the processes of the court. Inherent powers can be exercised only when necessary, and there is no necessity if a Rule or statute provides a basis for sanctions. It follows that a district court should rely on text-based authority derived from Congress rather than inherent power in every case where the text-based authority applies.
Despite the Court's suggestion to the contrary, ante, at 48-49, our cases recognize that Rules and statutes limit the exercise of inherent authority. In Societe Internationale pour Participations Industrielles et Commerciales, S. A. v. Rogers,
The Court ignores these rulings and relies instead on two decisions which "indicat[e] that the inherent power of a court can be invoked even if procedural rules exist which sanction the same conduct." Ante, at 49. The "indications" the Court discerns in these decisions do not withstand scrutiny. In Roadway Express, Inc. v. Piper, supra, we held that the costs recoverable under a prior version of 28 U. S. C. § 1927 for discovery abuse did not include attorney's fees. In the remand instruction, the Court mentioned that the District Court might consider awarding attorney's fees under either Federal Rule of Civil Procedure 37 or its inherent authority to sanction bad-faith litigation practices. 447 U. S., at 767-768. The decision did not discuss the relation between Rule 37 and the inherent power of federal courts, and certainly did not suggest that federal courts could rely on inherent powers to the exclusion of a Federal Rule on point.
In addition to dismissing some of our precedents and misreading others, the Court ignores the commands of the Federal Rules of Civil Procedure, which support the conclusion that a court should rely on rules, and not inherent powers, whenever possible. Like the Federal Rules of Criminal Procedure, the Federal Rules of Civil Procedure are "as binding as any statute duly enacted by Congress, and federal courts have no more discretion to disregard the Rule[s'] mandate than they do to disregard constitutional or statutory provisions." Bank of Nova Scotia v. United States, supra, at 255. See also Fed. Rule Civ. Proc. 1 (Federal Rules "govern the procedure in the United States district courts in all suits of a civil nature") (emphasis added). Two of the most prominent sanctioning provisions, Rules 11 and 26(g), mandate the imposition of sanctions when litigants violate the Rules' certification standards. See Fed. Rule Civ. Proc. 11 (court "shall impose ... an appropriate sanction" for violation of certification standard); Fed. Rule Civ. Proc. 26(g) (same); see also Business Guides, Inc. v. Chromatic Communications Enterprises,
The Rules themselves thus reject the contention that they may be discarded in a court's discretion. Disregard of applicable Rules also circumvents the rulemaking procedures in 28 U. S. C. § 2071 et seq., which Congress designed to assure that procedural innovations like those announced today "shall be introduced only after mature consideration of informed opinion from all relevant quarters, with all the opportunities for comprehensive and integrated treatment which such consideration affords." Miner v. Atlass, 363 U.S. 641, 650 (1960).
Upon a finding of bad faith, courts may now ignore any and all textual limitations on sanctioning power. By inviting district courts to rely on inherent authority as a substitute for attention to the careful distinctions contained in the Rules and statutes, today's decision will render these sources of authority superfluous in many instances. A number of pernicious practical effects will follow.
The Federal Rules establish explicit standards for, and explicit checks against, the exercise of judicial authority. Rule 11 provides a useful illustration. It requires a district court to impose reasonable sanctions, including attorney's fees, when a party or attorney violates the certification standards that attach to the signing of certain legal papers. A district court must (rather than may) issue sanctions under Rule 11 when particular individuals (signers) file certain types (groundless, unwarranted, vexatious) of documents (pleadings, motions and papers). Rule 11's certification requirements apply to all signers of documents, including represented parties, see Business Guides, Inc. v. Chromatic Communications Enterprises, Inc., supra, but law firms are not responsible for the signatures of their attorneys, see Pavelic & LeFlore v. Marvel Entertainment Group, 493 U.S. 120,
By contrast, courts apply inherent powers without specific definitional or procedural limits. True, if a district court wishes to shift attorney's fees as a sanction, it must make a finding of bad faith to circumvent the American Rule. But today's decision demonstrates how little guidance or limitation the undefined bad-faith predicate provides. The Court states without elaboration that courts must "comply with the mandates of due process ... in determining that the requisite bad faith exists," ante, at 50, but the Court's bad-faith standard, at least without adequate definition, thwarts the first requirement of due process, namely, that "[a]ll are entitled to be informed as to what the State commands or forbids." Lanzetta v. New Jersey, 306 U.S. 451, 453 (1939). This standardless exercise of judicial power may appear innocuous in this litigation between commercial actors. But the same unchecked power also can be applied to chill the advocacy of litigants attempting to vindicate all other important federal rights.
In addition, the scope of sanctionable conduct under the bad-faith rule appears unlimited. As the Court boasts, "whereas each of the other mechanisms [in Rules and statutes] reaches only certain individuals or conduct, the inherent power extends to a full range of litigation abuses." Ante, at 46. By allowing exclusive resort to inherent authority whenever "conduct sanctionable under the Rules was intertwined within conduct that only the inherent power could address," ante, at 51, the Court encourages all courts
Despite these deficiencies, the Court insists that concern about collateral litigation requires courts to place exclusive reliance on inherent authority in cases, like this one, which involve conduct sanctionable under both express provisions and inherent authority:
We are bound, however, by the Rules themselves, not their "aim," and the Rules require that they be applied, in accordance with their terms, to much of the conduct in this case. We should not let policy concerns about the litigation effects of following the Rules distort their clear commands.
Nothing in the foregoing discussion suggests that the fee-shifting and sanctioning provisions in the Federal Rules and Title 28 eliminate the inherent power to impose sanctions for certain conduct. Limitations on a power do not constitute its abrogation. Cases can arise in which a federal court must
The District Court's own findings concerning abuse of its processes demonstrate that the sanctionable conduct in this case implicated a number of Rules and statutes upon which it should have relied. Rule 11 is the principal provision on point. The District Court found that petitioner and his counsel filed a number of "frivolous pleadings" (including "baseless, affirmative defenses and counterclaims") that contained "deliberate untruths and fabrications." NASCO, Inc. v. Calcasieu Television & Radio, Inc., 124 F. R. D. 120, 127-128, 135 (WD La. 1989). Rule 11 sanctions extend to "the person who signed [a paper], a represented party, or both." The court thus had a nondefeasible duty to impose sanctions under Rule 11.
The Court concedes that Rule 11 applied to some of the conduct in this case, ante, at 50, and even hints that the Rule might have sufficed as a basis for all of the sanctions imposed, ante, at 42, n. 8. It fails to explain, however, why the District Court had the discretion to ignore Rule 11's mandatory langnage and not impose sanctions under the Rule against Chambers. Nor does the Court inform us why Chambers' attorneys were not sanctioned under Rule 11. Although the District Court referred to Chambers as the "strategist" for the abusive conduct, it made plain that petitioner's attorneys as well as petitioner were responsible for the tactics. For example, the District Court stated:
The court further stressed that "Chambers, through his attorneys, filed answers and counterclaims ... which both Chambers and his attorneys knew were false at the time they were filed." Id., at 143. In light of Rule 11's mandatory language, the District Court had a duty to impose at least some sanctions under Rule 11 against Chambers' attorneys.
The District Court should have relied as well upon other sources of authority to impose sanctions. The court found that Chambers and his attorneys requested "[a]bsolutely needless depositions" as well as "continuances of trial dates, extensions of deadlines and deferments of scheduled discovery" that "were simply part of the sordid scheme of deliberate misuse of the judicial process ... to defeat NASCO's claim by harassment, repeated and endless delay, mountainous expense and waste of financial resources." Id., at 128. The intentional pretrial delays could have been sanctioned under Federal Rule of Civil Procedure 16(f), which enables courts to impose sanctions, including attorney's fees, when a party or attorney "fails to participate in good faith" in certain pretrial proceedings; the multiple discovery abuses should have been redressed by "an appropriate sanction, ... including a reasonable attorney's fee," under Federal Rule of Civil Procedure 26(g). The District Court also could have sanctioned Chambers and his attorneys for the various bad-faith affidavits they presented in their summary judgment motions, see 124 F. R. D., at 128, 135, under Federal Rule of Civil Procedure 56(g), a Rule that permits the award of expenses and attorney's fees and the additional sanction of contempt. In addition, the District Court could have relied to a much greater extent on 18 U. S. C. § 401 to punish the "contempt of its authority" and "[d]isobedience ... to its ... process" that petitioner and his counsel displayed throughout the proceedings.
When a District Court imposes sanctions so immense as here under a power so amorphous as inherent authority, it must ensure that its order is confined to conduct under its own authority and jurisdiction to regulate. The District Court failed to discharge this obligation, for it allowed sanctions to be awarded for petitioner's prelitigation breach of contract. The majority, perhaps wary of the District Court's authority to extend its inherent power to sanction prelitigation conduct, insists that "the District Court did not attempt to sanction petitioner for breach of contract, but rather imposed sanctions for the fraud he perpetrated on the court and the bad faith he displayed toward both his adversary and the court throughout the course of the litigation." Ante, at 54 (footnote omitted). Based on this premise, the Court appears to disclaim that its holding reaches prelitigation conduct. Ante, at 54, and nn. 16-17. This does not make the opinion on this point correct, of course, for the District Court's opinion, in my view, sanctioned petitioner's prelitigation conduct in express terms. Because I disagree with the Court's characterization of the District Court opinion, and because I believe the Court's casual analysis of inherent authority portends a dangerous extension of that authority to prelitigation conduct, I explain why inherent
The District Court's own candid and extensive opinion reveals that the bad faith for which petitioner was sanctioned extended beyond the litigation tactics and comprised as well what the District Court considered to be bad faith in refusing to perform the underlying contract three weeks before the lawsuit began. The court made explicit reference, for instance, to "this massive and absolutely unnecessary lawsuit forced on NASCO by Chambers' arbitrary and arrogant refusal to honor and perform this perfectly legal and enforceable contract." 124 F. R. D., at 136. See also id., at 143 ("Chambers arbitrarily and without legal cause refused to perform, forcing NASCO to bring its suit for specific performance"); ibid. ("Chambers, knowing that NASCO had a good and valid contract, hired Gray to find a defense and arbitrarily refused to perform, thereby forcing NASCO to bring its suit for specific performance and injunctive relief"); id., at 125 (petitioner's "unjustified and arbitrary refusal to file" the FCC application "was in absolute bad faith"). The District Court makes the open and express concession that it is sanctioning petitioner for his breach of contract:
The trial court also explained that "[t]he attorney's fees and expenses charged to NASCO by its attorneys ... flowed from and were a direct result of this suit. We shall include them in the attorney's fees sanctions." Id., at 142 (emphasis added).
The American Rule recognizes these principles. It bars a federal court from shifting fees as a matter of substantive policy, but its bad-faith exception permits fee shifting as a sanction to the extent necessary to protect the judicial process. The Rule protects each person's right to go to federal court to define and to vindicate substantive rights. "[S]ince litigation is at best uncertain one should not be penalized for merely defending or prosecuting a lawsuit." Fleischmann Distilling Corp. v. Maier Brewing Co., 386 U.S. 714, 718 (1967). When a federal court, through invocation of its inherent powers, sanctions a party for bad-faith prelitigation conduct, it goes well beyond the exception to the American Rule and violates the Rule's careful balance between open access to the federal court system and penalties for the willful abuse of it.
By exercising inherent power to sanction prelitigation conduct, the District Court exercised authority where Congress gave it none. The circumstance that this exercise of power occurred in a diversity case compounds the error. When a federal court sits in diversity jurisdiction, it lacks constitutional authority to fashion rules of decision governing primary contractual relations. See Erie R. Co. v. Tompkins, 304 U.S. 64, 78 (1938); Hanna v. Plumer, 380 U. S., at 471-472. See generally Ely, The Irrepressible Myth of Erie,
The full effect of the District Court's encroachment on state prerogatives can be appreciated by recalling that the rationale for the bad-faith exception is punishment. Hall v. Cole, 412 U.S. 1, 5 (1973). To the extent that the District Court imposed sanctions by reason of the so-called bad-faith breach of contract, its decree is an award of punitive damages for the breach. Louisiana prohibits punitive damages "unless expressly authorized by statute," International Harvester Credit Corp. v. Seale, 518 So.2d 1039, 1041 (La. 1988); and no Louisiana statute authorizes attorney's fees for breach of contract as a part of damages in an ordinary case, Ogea v. Loffland Brothers Co., 622 F.2d 186, 190 (CA5 1980); Rutherford v. Impson, 366 So.2d 944, 947 (La. App. 1978). One rationale for Louisiana's policy is its determination that "an award of compensatory damages will serve the same deterrent purpose as an award of punitive damages." Ricard v. State, 390 So.2d 882, 886 (La. 1980). If respondent had brought this suit in state court it would not have recovered extra damages for breach of contract by reason of the so-called willful character of the breach. Respondent's decision to bring this suit in federal rather than state court resulted in a significant expansion of the substantive scope of its remedy. This is the result prohibited by Erie and the principles that flow from it.
As the Court notes, there are some passages in the District Court opinion suggesting its sanctions were confined to litigation conduct. See ante, at 55, n. 17. ("[T]he sanctions imposed `appl[ied] only to sanctionable acts which occurred in
My discussion should not be construed as approval of the behavior of petitioner and his attorneys in this case. Quite the opposite. Our Rules permit sanctions because much of the conduct of the sort encountered here degrades the profession and disserves justice. District courts must not permit this abuse and must not hesitate to give redress through the Rules and statutes prescribed. It may be that the District Court could have imposed the full million dollar sanction against petitioner through reliance on Federal Rules and statutes, as well as on a proper exercise of its inherent authority. But we should remand here because a federal court must decide cases based on legitimate sources of power. I would reverse the Court of Appeals with instructions to remand
The court also sanctioned other individuals, who are not parties to the action in this Court. Chambers' sister, the trustee, was sanctioned by a reprimand; attorney Gray was disbarred and prohibited from seeking readmission for three years; attorney Richard A. Curry, who represented the trustee, was suspended from practice before the court for six months; and attorney McCabe was suspended for five years. Id., at 144-146. Although these sanctions did not affect the bank accounts of these individuals, they were nevertheless substantial sanctions and were as proportionate to the conduct at issue as was the monetary sanction imposed on Chambers. Indeed, in the case of the disbarment of attorney Gray, the court recognized that the penalty was among the harshest possible sanctions and one which derived from its authority to supervise those admitted to practice before it. See id., at 140-141.
"Any attorney . . . who so multiplies the proceedings in any case unreasonably and vexatiously may be required by the court to satisfy personally the excess costs, expenses, and attorneys' fees reasonably incurred because of such conduct." 28 U. S. C. § 1927.