Miranda v. Southern Pacific Transportation Co.

710 F.2d 516, 36 Fed. R. Serv. 2d 1324

• Court: Court of Appeals for the Ninth Circuit
• Decided: July 12, 1983
• Docket: No. 80-5413
• Status: Published

Opinions

HUG, Circuit Judge:

Pfiester and Ford, opposing counsel in a civil case, appeal a district court’s order imposing sanctions of two hundred and fifty dollars on each of them for failing to comply with the local rules regarding the pretrial conference. On appeal, they contend that: (1) the district court has no authority to impose monetary sanctions without a finding of contempt; (2) the district court violated due process by imposing the sanctions without affording them notice, an opportunity to prepare a defense, and a hearing; and (3) the sanctions were invalid as contempt penalties because there was no evidence demonstrating their willful violation of the district court’s orders.

We hold that Local Rule 28 of the District Court for the Central District of California authorized the district court to impose monetary sanctions for failing to comply with the local rules. We reverse the order imposing the penalties and remand the case to allow the attorneys an opportunity to request a hearing and show cause why the sanctions should not be imposed.

FACTS

In June 1977, Miranda, an employee of the Southern Pacific Transportation Co., filed a negligence action against his employer under the Federal Employers’ Liability Act, 45 U.S.C. § 51 et seq. (1976). The attorneys submitted memoranda of contentions of law and fact and a proposed pretrial conference order in April 1980.

At the pretrial conference, the district court found the documents “totally unsatisfactory.” Specifically, the court found plaintiff’s Memorandum of Factual and Legal Contentions to be “rambling” and “prolix,” rather than concise, as required by Central District of California Local Rule 9.¹ The court also found that plaintiff’s exhibits were combined for identification, rather than being individually identified.² Finally, the court found that both parties had failed to comply with Local Rule 9 with respect to the expert witnesses’ qualifications and the substance of their testimony.³

With respect to the pretrial conference order, the court told the attorneys to “determine what documents you seek to exclude, stating the legal grounds for your objection, and state such further material with respect to that objection as is necessary to understand your position.”⁴ The court concluded by warning counsel to pay particular attention to the local rules if they wanted to avoid sanctions.

At the second pretrial conference in May 1980, the court found that the attorneys still had not complied with Local Rule 9, in part because both parties had again identified certain exhibits together. The court also found the pretrial conference order seriously deficient, and concluded by imposing sanctions of $250 on each counsel.

The attorneys paid the $250 sanctions. Eight days after the second pretrial conference, the parties stipulated to dismissal of the complaint. Two days later, the attorneys filed a notice of appeal with respect to the order assessing sanctions against them.

More than two months later, the attorneys moved the district court to remit their penalties. Both attorneys argued that the sanctions appeared to be criminal in nature, thus necessitating contempt proceedings. They also contended that contempt would not be a proper sanction because they had made a good faith effort to comply with the court’s orders.

On November 20,1980, the court rejected counsels’ request to remit the penalties:

Where, as here, both counsel are at fault and the remedy of sanctions against one party in favor of the other is unavailable, it is our view that the court’s inherent power to enforce its rules, orders and procedures and to impose appropriate sanctions for failure to comply may be invoked, that the sanctions here imposed were reasonable and appropriate and that contempt proceedings were unnecessary.

The court found that the attorneys did not make a good faith attempt to comply with its orders, but stated that it did not believe that good faith would bar the sanctions.

Counsel filed an amended notice of appeal from this order on February 3, 1981, more than sixty days after the district court’s order declining to remit the penalties.

DISCUSSION

I

Jurisdiction

The first notice of appeal, filed within 30 days of the district court’s order assessing the $250 sanctions, was timely.⁵ Fed.R.App.P. 4(a). Consequently, this court has jurisdiction to consider the appeal from the order imposing the sanctions. We do not have jurisdiction to consider the district court’s order denying the attorneys’ motion to remit their penalties. The district court lacked jurisdiction to consider the motion to remit because the timely filing of the notice of appeal from the original order imposing sanctions transferred the action to this court. See Davis v. United States, 667 F.2d 822, 824 (9th Cir.1982).⁶

II

Authority to Impose Sanctions

We first consider whether the district court had authority to impose the $250 sanctions. The district court apparently relied upon the local rules of the Central District of California as authority for levying the $250 sanctions for failure to comply with C.D.Cal.R. 9. C.D.Cal.R. 9.10 provides: “Failure of counsel to comply [with Rule 9] shall subject counsel to the sanctions provided by the provisions of Local Rule 28 and 28 U.S.C. Section 1927.” Because we find that C.D.Cal.R. 28⁷ authorizes the $250 sanctions here, we do not reach the question of whether 28 U.S.C. § 1927 authorizes the imposition of sanctions payable to the court.⁸

The appellants contend that we should follow 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). In Gamble, the district court imposed a $100 sanction on defendant’s counsel, payable to the United States, for filing his pretrial memorandum late. The district court acted under a “standing order” of the Eastern District of Pennsylvania that authorized the imposition of monetary sanctions and costs on counsel for failure to prepare for a pretrial conference. Id. at 730. The Third Circuit, sitting en banc, held that the Federal Rules do not authorize monetary sanctions to be imposed against attorneys in a civil litigation unless the attorneys are held in contempt under 18 U.S.C. § 401. Id. at 731. The majority reasoned that the sanction actually constituted a criminal penalty. Id. at 733.

Two judges dissented. Chief Judge Biggs stated that: (1) imposing monetary sanctions on counsel was more appropriate than penalizing a party for counsel’s negligence, which would occur if the court dismissed the action under the rationale of Link v. Wabash Railroad Co., 370 U.S. 626; 82 S.Ct. 1386, 8 L.Ed.2d 734 (1962); (2) the district court’s standing order was valid under Fed.R.Civ.P. 83 as a rule not inconsistent with the Federal Rules; and (3) the district court has the inherent power to impose appropriate and reasonable sanctions upon those admitted to its bar. Id. at 734-36. For the reasons stated by Judge Biggs, we decline to follow Gamble and uphold the authority of the district court to impose a monetary sanction for violation of local rules under C.D.Cal. Local Rule 28.

The Supreme Court recently cited Judge Biggs’s dissenting opinion with approval in Roadway Express, Inc. v. Piper, 447 U.S. 752, 100 S.Ct. 2455, 65 L.Ed.2d 488 (1980), where it reaffirmed the inherent power of the district courts to levy sanctions. Id. at 765, 766 & n. 12, 100 S.Ct. at 2464 & n. 12.⁹ Our holding is also supported by the Ninth Circuit rule that, before dismissing a case under Fed.R.Civ.P. 41(b) for failure to comply with an order of the court, the district court should consider less severe sanctions. Raiford v. Pounds, 640 F.2d 944, 945 (9th Cir.1981). We have previously suggested that the court may wish to consider disciplinary proceedings against the noncomplying attorneys as a penalty less severe than dismissal. Raiford, 640 F.2d at 945 n. I.¹⁰ We believe that imposing a monetary penalty on counsel is an appropriate sanction considerably less severe than holding counsel in contempt, referring the incident to the client or bar association, or dismissing the case. If we were to foreclose the district court from imposing this relatively mild penalty for violation of the local rules, district courts would be forced to resort to more severe sanctions. See, e.g., Chism v. National Heritage Life Insurance Co., 637 F.2d 1328, 1331-32 (9th Cir. 1981) (affirming dismissal of case with prejudice for plaintiff’s continual failure to comply with discovery rules, pretrial conference obligations, and local rules of court); C. Renfrew, Discovery Sanctions: A Judicial Perspective, 67 Calif.L.Rev. 264, 278 & n. 54 (1979). We also believe it is appropriate that sanctions such as these are dirécted at the lawyers responsible, rather than the litigants. See Flaksa v. Little River Marine Construction Co., 389 F.2d 885, 889 & n. 11 (5th Cir.), cert. denied, 392 U.S. 928, 88 S.Ct. 2287, 20 L.Ed.2d 1387 (1968); R. Rodes, K. Ripple, & C. Mooney, Sanctions Imposable for Violations of the Federal Rules of Civil Procedure, 70-73 (Federal Judicial Center 1981).

Local Rule 28 is not inconsistent with any federal law or the Federal Rules of Civil Procedure and therefore not invalid under 28 U.S.C. § 2071 and Fed.R.Civ.P. 83. See Transamerica Corp. v. Transamerica Bancgrowth Corp., 627 F.2d 963, 965-66 (9th Cir.1980). Moreover, C.D.Cal.R. 28 does not change any party’s substantive rights or alter the court’s jurisdiction in violation of Fed.R.Civ.P. 82 or 28 U.S.C. § 2072.

Local Rule 28 authorizes “appropriate discipline” for failure to conform with local rules, including “the imposition of costs and such attorney’s fees to opposing counsel as the court may deem proper under the circumstances.” District courts have broad discretion in interpreting and applying their local rules. Lance, Inc. v. Dewco Services, Inc., 422 F.2d 778, 783-84 (9th Cir.1970). Local Rule 28 does not limit “appropriate discipline” to the imposition of costs and attorney’s fees. Considering the more severe sanctions that may be imposed, a penalty of $250 against counsel may well qualify as “appropriate discipline” under the rule.

The bar bears a special administrative responsibility in the judicial process independent from the public at large. We frequently refer to attorneys as officers of the court. A monetary sanction for failure to carry out this special responsibility as an attorney differs from the more severe infractions of criminal contempt for which attorneys and members of the general public can become liable. The former is an unjustified failure to carry out an administrative responsibility as an officer of the court; the latter is an affront to the authority of the judge. Because the term “fine” is generally associated in common parlance with criminal offenses we utilize the term “monetary sanction” to avoid this connotation. Numerous sanctions can be imposed against the parties and attorneys for violation of court rules. 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. This may well be more appropriate on many occasions than penalizing the parties for the failures of their counsel.

We thus reject the Gamble holding that a district court is without authority to impose a monetary sanction against counsel absent a finding of contempt. Other circuits have also declined to follow this portion of Gamble. Martinez v. Thrifty Drug and Discount Co., 593 F.2d 992, 993-94 (10th Cir.1979); In re Sutter, 543 F.2d 1030, 1036-38 (2d Cir.1976); Flaksa v. Little River Marine Construction Co., 389 F.2d at 888 & n. 10; see generally Dove v. Codesco, 569 F.2d 807, (4th Cir.1978); Richman v. General Motors Corp., 437 F.2d 196, 199 & n. 4 (1st Cir.1971).¹¹ We hold that the district court had authority to impose a sanction of $250 on counsel.

Ill

Procedural Protections

The attorneys also argue that the summary nature of the sanction was improper because they were denied notice, an opportunity to respond, and a hearing. We agree that sanctions should not be imposed without these procedural protections. See Gamble, 307 F.2d at 731 (monetary sanctions against lawyers without affording them procedural safeguards violates due process). Absent extraordinary circumstances, procedural due process requires notice and hearing before any governmental deprivation of a significant property interest. Boddie v. Connecticut, 401 U.S. 371, 379, 91 S.Ct. 780, 786, 28 L.Ed.2d 113 (1971). One extraordinary circumstance is summary criminal contempt proceedings. We recently reiterated that summary contempt proceedings are unique to criminal procedure and are reserved for exceptional circumstances where “instant action is necessary to protect the judicial institution itself.” In re Gustafson, 650 F.2d 1017, 1022 (9th Cir.1981) (en banc) (quoting Harris v. United States, 382 U.S. 162, 167, 86 S.Ct. 352, 355, 15 L.Ed.2d 240 (1965)). Otherwise, the procedural protections of Fed.R.Crim.P. 42(b), which include notice, an opportunity to respond, and a hearing, are required before a finding of contempt.

Other forms of sanctions may not be imposed without affording similar procedural protections. For example, a court may not summarily disbar an attorney without notice and hearing, even when the disbarment results from a charge of contempt for which the court gave the attorney notice, an opportunity to prepare, and a hearing. Ex parte Bardley, 74 U.S. (7 Wall.) 364, 372-74, 19 L.Ed. 214 (1868). Although the financial repercussions of disbarment may be considerably more severe than the imposition of a $250 sanction, the requirements of procedural due process apply to deprivations of property worth far less. See Fuentes v. Shevin, 407 U.S. 67, 88-90 & n. 21, 92 S.Ct. 1983, 1998-1999 & n. 21, 32 L.Ed.2d 556 (1972); Sniadach v. Family Finance Corp., 395 U.S. 337, 342, 89 S.Ct. 1820, 1823, 23 L.Ed.2d 349 (1969) (Harlan, J., concurring); see also Comment, Financial Penalties Imposed Directly Against Attorneys in Litigation Without Resort to the Contempt Power, 26 U.C.L.A.L.Rev. 855, 882-91 (1979). Recently, the Supreme Court cautioned that “[l]ike other sanctions, attorney’s fees certainly should not be assessed lightly or without fair notice and an opportunity for a hearing on the record.” Roadway Express, Inc. v. Piper, 447 U.S. 752, 767, 100 S.Ct. 2455, 2464, 65 L.Ed.2d 488 (1980).

This court, in an analogous circumstance, will not impose monetary penalties or take other disciplinary actions for an attorney’s failure to comply with its orders until “after reasonable notice and an opportunity to show cause to the contrary, and after hearing, if requested .... ” Fed.R.App.P. 46(c); see United States v. Birtle, 521 F.2d 134 (9th Cir.1975), cert. denied, 426 U.S. 947, 96 S.Ct. 3165, 49 L.Ed.2d 1183 (1976). It is appropriate for the district courts to afford attorneys similar procedural protections before imposing monetary sanctions upon them.

There are, in fact, several compelling reasons why notice, an opportunity to prepare a defense, and a hearing are required before sanctioning counsel. These procedural requirements will ensure that: (1) the attorneys will have an opportunity to prepare a defense and to explain their questionable conduct at a hearing; (2) the judge will have time to consider the severity and propriety of the proposed sanction in light of the attorneys’ explanation for their conduct; and (3) the facts supporting the sanction will appear in the record, facilitating appellate review. See Weiss v. Burr, 484 F.2d 973, 983-87 (9th Cir.1973), cert. denied, 414 U.S. 1161, 94 S.Ct. 924, 39 L.Ed.2d 115 (1974).¹²

[¶] In conclusion, we hold that the district court does not have the power to impose monetary sanctions against attorneys without affording them procedural due process as protective as that afforded by Fed.R.App.P. 46(c).¹³ In this case, the district court did not provide the attorneys with an opportunity to show cause to the contrary before imposing the sanctions. We remand this case to the district court to give the attorneys an opportunity to request a hearing and show cause why the sanctions should not be imposed.¹⁴

REVERSED and REMANDED.

1 . The Local Rules of the Central District of California provide:

A. Statement of Case. The Memorandum shall contain a brief but full exposition of counsel’s theory of the case and a statement in narrative form of what the party expects to prove.

C.D.Cal.R. 9.7.1.

2 . C.D.Cal.R. 9.6.4 provides:

Exchange of Exhibits. If not previously exchanged, the parties shall exchange all exhibits to be used at trial other than those contemplated to be used for impeachment. EXHIBITS SHALL BE MARKED IN ACCORDANCE WITH THE PROCEDURES SET FORTH IN LOCAL RULE 8.

C.D.Cal.R. 8.6 provides:

Separate Number for Each Exhibit. Any version of an exhibit which is not an exact duplicate shall be marked and treated as a different exhibit bearing a different exhibit number.

3 . C.D.Cal.R. 9.6.6 provides:

Expert Witnesses. If expert witnesses are to be called at trial, the parties shall exchange short narrative statements of the qualifications of the expert and the testimony expected to be elicited at trial. If reports of experts to be called at trial have been prepared, they shall be exchanged but shall not substitute for the narrative statement required.

4 . C.D.Cal.R. 9.6.7 provides:

Evidentiary Matters. The parties shall attempt to resolve any objections to the admission of oral and documentary evidence.

C.D.Cal.R. 9.10.2 provides:

Form. The Pre-Trial Conference Order shall be substantially in the form shown in Pre-Trial Form 1 set forth in the Appendix hereto.

10. Exhibit lists of the parties are filed herewith under separate cover. Exhibit Nos. _ may be admitted without objection. Plaintiff objects to Exhibit Nos.__De- • fendant objects to Exhibit Nos.__The objections are separately stated and attached hereto.

5 . We need not decide whether the order assessing sanctions is an appealable interlocutory order. The order in this case is not interlocutory because the underlying action was dismissed according to stipulation before the first notice of appeal was filed.

6 . If the district court had had jurisdiction to consider the lawyers’ motion to remit, we would not have had jurisdiction to consider the court’s order denying the motion because the second notice of appeal was filed more than 30 days after the order denying the motion to remit penalties and was therefore untimely. See Fed.R.App.P. 4(a).

7 . C.D.Cal.R. 28 provides:

(a) The violation of or failure to conform to any of these local rules shall subject the offending party and his attorney, at the discretion of the court, to appropriate discipline including the imposition of costs and such attorney’s fees to opposing counsel as the court may deem proper under the circumstances.

(b) Failure of counsel for any party to appear before the court at pre-trial conference or to complete the necessary preparations therefor or to be prepared for trial on the date set may be considered an abandonment or failure to prosecute or defend diligently, and judgment may be entered against the defaulting party either with respect to a specific issue or on the entire case.

(Emphasis added.)

8 . It is apparent that the district court was imposing these sanctions for a violation of a specific local district court rule, Local Rule 9. We view the district court’s reference to its inherent powers to enforce its rules as a justification for the existence of Local Rule 28, providing for sanctions for failure to abide by the local rules. In the context of the district court’s statement, it would seem apparent that in imposing these sanctions for violation of Local Rule 9, the district judge relied upon the authority of Local Rule 28 to which Local Rule 9 specifically referred.

9 . We have recently reiterated that the district courts’ inherent powers include the power to assess attorney’s fees directly against counsel who conduct litigation in bad faith. Barnd v. City of Tacoma, 664 F.2d 1339, 1342 (9th Cir. 1982).

10 . The District of Columbia Circuit has suggested the following alternatives to dismissal: (1) the court may condition dismissal on counsel paying opponent’s costs and fees where the client is not responsible; (2) under 28 U.S.C. § 1927, the court may assess costs against counsel of an aborted pretrial conference and of appeal; (3) the court may use its disciplinary authority and contempt powers; (4) the court can communicate the lawyer’s action to the client or the bar association; and (5) the court may reprimand the lawyer, hold the lawyer in contempt, or prohibit the lawyer from practicing before the court for a limited time. Jackson v. Washington Monthly Co., 569 F.2d 119, 123 n. 24 (D.C.Cir.1977).

11 . Commentators have also criticized this portion of the Gamble holding. See, e.g., Comment, Financial Penalties Imposed Directly Against Attorneys in Litigation Without Resort to the Contempt Power, 26 UCLA L.Rev. 855, 876-78 (1979); Comment, Dismissal for Failure to Attend a Pretrial Conference and the Use of Sanctions at Preparatory Stages of Litigation, 72 Yale L.J. 819, 830 (1963); Note, Power of Federal Courts to Discipline Attorneys for Delay in Pre-Trial Procedure, 38 Notre Dame Law. 158, 161-66 (1963).

12 . In his concurring and dissenting opinion, Judge Wallace contends that adequate notice and opportunity to be heard was afforded in the context of the discussion the court had with the attorneys at the pretrial conference concerning the deficiencies in their compliance with the provisions of Local Rule 9. It is important, in my view, that before sanctions are imposed there be a separate hearing addressed to the particular issue of the imposition of sanctions, with notice of the rule violation charged, and an opportunity for the attorneys to respond.

In this case, the court, at the pretrial hearing, enumerated the deficiencies it found in compliance with Local Rule 9. However, no real opportunity was afforded the attorneys to respond with any arguments they may have had that they had complied with Local Rule 9, or to give other reasons why sanctions should not be imposed. The court had indeed warned the attorneys at the prior pretrial hearing that if they failed to comply with the local rules monetary sanctions would be imposed. However, in the later pretrial hearing, after the court enumerated the deficiencies it found, the court did not give the attorneys an opportunity to respond but merely stated:

Counsel, by reason of your failure to comply with the plainly-stated provisions of Local Rule 9, and to make any discernible attempt to comply with our own suggestions at the last pretrial conference, we and our staff have once again been required to spend a number of wasted hours. As a sanction for your failure to comply with Local Rule 9, the Federal Rules of Civil Procedure and this Court’s order regarding the pretrial conference, you are each ordered to pay to the Treasurer of the United States $250 through the clerk of this court no later than May 16, 1980.

This does not afford adequate due process.

13 . Fed.R.App.P. 46(c) states:

A court of appeals may, after reasonable notice and an opportunity to show cause to the contrary, and after hearing, if requested, take any appropriate disciplinary action against any attorney who practices before it for conduct unbecoming a member of the bar or for failure to comply with these rules or any rule of the court.

14 . Judge Wallace concurs with Parts I and II of this opinion, and Judge Alarcon concurs with Parts II and III of this opinion; therefore, a majority of the panel supports each portion of this opinion.