In Re Tutu Wells Contamination Litigation

Opinions of the United
1997 Decisions States Court of Appeals
for the Third Circuit
7-22-1997
In Re: Tutu Wells
Precedential or Non-Precedential:
Docket 96-7385,96-7392
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Recommended Citation
"In Re: Tutu Wells" (1997). 1997 Decisions. Paper 163.
http://digitalcommons.law.villanova.edu/thirdcircuit_1997/163
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iled July 22, 1997
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
NOS. 96-7385, 96-7386, 96-7387, 96-7388
96-7389, 96-7390, 96-7391, 96-7392
IN RE: TUTU WELLS CONTAMINATION LITIGATION
ESSO STANDARD OIL S.A. LTD.; ESSO VIRGIN ISLANDS,
INC.; ESSO STANDARD OIL CO., (PUERTO RICO)
APPELLANTS IN NO. 96-7385
GOLDMAN, ANTONETTI & CORDOVA; FRANCIS TORRES,
ESQUIRE; JOSE CEPEDA, ESQUIRE
APPELLANTS IN NO. 96-7386
EUGENIO C. ROMERO, AN ATTORNEY AT LAW,
APPELLANT IN NO. 96-7387
L'HENRI, INC.,
APPELLANT IN NO. 96-7388
RHODA HARTHMAN; CHARLOTTE A. LABARRE;
ALBERT E. HARTHMAN; ARTHUR E. HARTHMAN;
AUSTIN E. HARTHMAN; EDGAR A. HARTHMAN;
SAMMY E. HARTHMAN; P.I.D., INC.;
TUTU SERVICES, LIMITED,
APPELLANTS IN NO. 96-7389
RAMSAY MOTORS, INC.,
APPELLANT IN NO. 96-7390
TEXACO INC.; TEXACO CARIBBEAN, INC.;
VERNON MORGAN,
APPELLANTS IN NO. 96-7391
FOUR WINDS PLAZA PARTNERSHIP,
APPELLANTS IN NO. 96-7392
On Appeal From the United States District Court
of the Virgin Islands
Division of St. Thomas
(D.C. Civ. No. 89-cv-00107)
Argued: March 11, 1997
Before: BECKER, SCIRICA, and ALITO, Circuit Judges.
(Filed July 22, 1997)
KELL M. DAMSGAARD, ESQUIRE
(ARGUED)
TERRI JACOBSEN, ESQUIRE
Morgan, Lewis & Bockius LLP
2000 One Logan Square
Philadelphia, PA 19103-6996
DOUGLAS L. CAPDEVILLE,
ESQUIRE
2107 Company Street
Lot No. 4
Christiansted, St. Croix, VI 00820
Attorneys for Appellants
Esso Standard Oil S.A. Ltd.,
Esso Virgin Islands, Inc.,
Esso Standard Oil Co. (Puerto Rico)
2
DANIEL RIESEL, ESQUIRE
Sive, Paget & Riesel, P.C.
460 Park Avenue
New York, New York 10022
VINCENT J. APRUZZESE,
ESQUIRE (ARGUED)
Apruzzese, McDermott, Mastro &
Murphy
Somerset Hills Corporate Center
25 Independence Blvd.
Liberty Corner, New Jersey 07938
EDWARD H. JACOBS, ESQUIRE
Jacobs & Brady
7 Church Street
Christiansted, St. Croix
U.S. Virgin Islands 00820
Attorneys for Appellants Goldman,
Antonetti & Cordova, Francis Torres,
Esquire, and Jose A. Cepeda,
Esquire
JOEL H. HOLT, ESQUIRE (ARGUED)
Holt & Russell
2132 Company Street, Suite 2
Christiansted, St. Croix
U.S. Virgin Islands 00820
Attorney for Appellant
Eugenio C. Romero
3
NANCY D'ANNA, ESQUIRE
(ARGUED)
Law Office of Nancy D'Anna
P.O. Box 8330
St. John, U.S. Virgin Islands 00831
Attorney for Appellants L'Henri, Inc.,
Rhoda J. Harthman, Charlotte A.
Lebarre, Albert E. Harthman,
Austin E. Harthman, Edgar A.
Harthman, Sammy E. Harthman PID,
Inc., Water Services, Limited and
Tutu Park, Limited
CAROL ANN RICH, ESQUIRE
(ARGUED)
Campbell, Areliano & Rich
4A&B Kongens Gade
P.O. Box 11899
Charlotte Amalie, St. Thomas
U.S. Virgin Islands 00820
Attorney for Appellant
Ramsay Motors, Inc.
JOHN K. DEMA, ESQUIRE
(ARGUED)
CAREY-ANNE MOODY, ESQUIRE
Law Offices of John K. Deman, P.C.
1236 Strand Street, Suite 103
Christiansted, St. Croix
U.S. Virgin Islands 00820-5008
Attorneys for Four Winds Plaza
Partnership
4
ADDISON J. MEYERS, ESQUIRE
(ARGUED)
O'Connor & Meyers, P.A.
2801 Ponce de Leon Blvd., 9th Floor
Coral Gables, Florida 33134
Attorneys for Appellants Texaco Inc.
and Texaco Caribbean Inc.
JOHN ZEBEDEE, ESQUIRE
Hymes & Zebedee, P.A.
P.O. Box 990
Emancipation Garden Station
Charlotte Amalie, St. Thomas
U.S. Virgin Islands 00804-0990
Attorneys for Vernon Morgan
JOHN R. COON, ESQUIRE
(ARGUED)
Wright, Coon & Cunningham, P.A.
377 Fore Street
P.O. Box 7526
Portland, Maine 04112-7526
Attorneys for Appellee
Western Auto Supply Co.
JULIO A. BRADY, ESQUIRE
Attorney General
Government of the Virgin Islands
Department of Justice
6040 Castle Coakley
Christiansted, St. Croix
U.S. Virgin Islands 00820
Attorneys for Amicus Curiae
5
OPINION OF THE COURT
BECKER, Circuit Judge.
This is an appeal from an order of the district court
imposing heavy sanctions upon a law firm, several of its
partners, and its client for discovery violations in
connection with a large environmental lawsuit. The client,
Esso, is charged in the underlying complaint with having
poisoned "the wells" in the Estate Tutu area in the eastern
end of St. Thomas by releasing from the Esso Tutu service
station petroleum hydrocarbons and chlorinated
hydrocarbons into the Tutu aquifer which supplies drinking
water to much of the east end of the island. The discovery
abuse primarily involves the alleged suppression by Esso's
former counsel in the litigation, the San Juan, Puerto Rico
law firm of Goldman, Antonetti, Ferraiuoli & Axtmayer, of a
report by Jose Agrelot, a professional engineer,
summarizing the results of soil and liquid tests he had
performed at the Esso Tutu site in December 1989. The
suppression of this report is claimed to have dramatically
increased the discovery time and expense for other parties
in connection with their prosecution of the case. There are
also other alleged, though less aggravated, instances of
obdurate discovery-related behavior.
What specially marks this case is the character and
magnitude of the sanctions imposed. Eschewing the
auspices of Fed. R. Civ. P. 37, which authorizes sanctions
for failure to make disclosure or cooperate in discovery, the
district court imposed the challenged sanctions under its
inherent power. The sanction imposed on the lawyers was
suspension from practice in the District Court of the Virgin
Islands: Jose Cepeda and Francis Torres for three years,
and Eugenio Romero for one year. The sanction imposed
upon Esso was the payment of $750,000 to a "Community
Service Sanction Account" to be utilized to fund
construction of a halfway house on St. Thomas, the
training of inmates, and renovation of the St. Thomas
Criminal Justice Complex. The sanction imposed upon
Goldman Antonetti was the payment of $250,000 to the
6
Community Service Sanction Account (for the same
purpose), and the sum of $120,000 as counsel fees and
costs ($30,000 incurred by each of four moving parties for
time they spent in connection with the sanctions
proceedings themselves). Esso was similarly assessed a
sanction of $30,000 to be paid to each of four other
movants, but Esso has paid that sum and does not
challenge it on this appeal.
Goldman Antonetti, its three named partners, and Esso
appeal the sanctions imposed against them on a variety of
grounds. The parties who were awarded sanctions to
compensate them for the time expended in the sanctions
hearings have cross-appealed, alleging that they are entitled
to sizable additional sanctions for discovery misconduct
that caused harm in other phases of the lawsuit, and that
the district court abused its discretion in summarily
dismissing these other sanctions requests on the grounds
that the moving papers were insufficiently specific. Finally,
several parties against whom Esso has brought claims
for contribution in the Comprehensive Environmental
Response, Compensation and Liability Act ("CERCLA")
aspect of the underlying district court proceeding (that is all
that remains, since the common law claims have been
settled) have cross-appealed from the district court's refusal
to dismiss those claims as a sanction against Esso for its
discovery misconduct.
We will vacate the suspensions imposed upon Cepeda,
Torres, and Romero for procedural reasons. They did not
receive notice prior to the sanctions hearing that
suspension was being considered as a possible sanction.
Concomitantly, they did not have the opportunity to
properly defend against such a sanction and introduce
mitigating evidence. As a result, the court's imposition of
sanctions against Cepeda, Torres, and Romero violated due
process requirements.
We will also vacate the provision of the district court's
order requiring Esso and Goldman Antonetti to pay a total
of $1,000,000 to the Community Service Sanction Account.
The court simply had no power to order Esso and Goldman
Antonetti to pay money to benefit the St. Thomas penal
system.
7
We do, however, affirm the sanction of $120,000 against
Goldman Antonetti. Although Goldman Antonetti has made
quite forceful arguments that its discovery misconduct with
respect to the Agrelot summary memo could not have
caused all of the costs and expenses claimed by the
movants, particularly in view of its having disclosed the 800
pages of technical material on which the memo was based,
we cannot say, reviewing the record as a whole, that the
district court abused its discretion in awarding sanctions of
$120,000. We also reject Goldman Antonetti's contention
that it is relieved of the obligation to pay this sanction by
a release by which several of the parties gave up claims
against Esso and its attorneys. The district court did not
clearly err in concluding that the language in the release
was not broad enough to cover Goldman Antonetti, Esso's
former attorneys, and that the context of the release did not
suggest otherwise.
We are also satisfied that the district court did not abuse
its discretion in refusing to award additional sanctions
because of the failure of the movants to provide papers
adequate to assess the harm caused by the violation.
District courts, which are extremely busy, should not be
burdened with re-inventing the wheel in incredibly complex
litigation in order to sort out voluminous sanctions claims.
The foregoing threshold summary effectively disposes of
all appeals except the cross-appeals seeking dismissal of
the claims for contribution. However, we do not have
appellate jurisdiction over these cross-appeals. Because our
review of that aspect of the district court's order would
necessarily involve an analysis of the merits of the
underlying dispute and because the district court's order is
reviewable only after final judgment, we do not have
jurisdiction over this non-final order under the only
potentially viable basis therefor -- the collateral order
doctrine. See Cohen v. Beneficial Indus. Loan Co., 337 U.S.
541 (1949). We note in this regard that this aspect of the
case differs from the appeal of Goldman Antonetti. Under
Eavenson, Auchmuty & Greenwald v. Holtzman, 775 F.2d
535 (3d Cir. 1985), we have appellate jurisdiction over an
order that finally resolves the imposition of sanctions
against attorneys no longer in the underlying case. We also
8
review those aspects of the appeal not brought by, but
inextricably intertwined with, the issues raised by Goldman
Antonetti, i.e., Esso's contentions pertaining to the
Community Service Sanction Account and the claims of
other parties pertaining to the level of monetary sanctions
awarded them, under the doctrine of pendent appellate
jurisdiction. See Kershner v. Mazurkiewicz, 670 F.2d 440(3d Cir. 1982).
We would prefer to be able to adjudicate the cross-
appeals concerning the contribution claims because we
have spent a great deal of time both in brief reading and at
oral argument in familiarizing ourselves with the case.
However, as a court of limited jurisdiction, we do not
dispose of matters that are not properly the subject of
appellate jurisdiction. We also do not encourage a§ 1292(b)
certification because the complexion of the issues involved
in these other appeals may change as matters proceed
before the district court. The extraordinarily able district
judge, who has been adroitly managing this complex and
vexatious case for a number of years now, may be able, by
subsequent rulings, to put these matters in a sufficiently
different light as to render them susceptible to more facile
disposition down the road.
I. FACTS AND PROCEDURAL HISTORY
A. Background And Overview
In the summer of 1987, a water well owner noticed the
smell of gasoline emanating from his well. He contacted
local environmental officials who, with the help of the
federal government, began an investigation into possible
contamination of the Tutu aquifer. Investigators discovered
the presence of gasoline and chlorinated organics in the
aquifer. Government officials thereafter closed many of the
wells.
The discovery of the contamination led to a number of
private lawsuits. Detailed explication of the anatomy of the
various suits is unnecessary; it is sufficient to note that the
private litigation seeks to assign responsibility for the
contamination between and among a number of possible
9
contaminators, including but not limited to two automobile
service stations, an automobile dealer, a shopping plaza, a
dry cleaner, and a former textile plant. That private
litigation also includes claims for contribution under
CERCLA. The parties in the litigation include both possible
contaminators and businesses and landowners allegedly
harmed by the contamination.1 The law firm of Goldman,
Antonetti, Ferraiuoli & Axtmayer ("Goldman Antonetti")
represented Esso for much of the period in question but no
longer does so.2
Discovery began in 1989. During this discovery, Esso and
Goldman Antonetti employed practices the district court
found to be sanctionable. In its three opinions regarding
the sanctions, the district court grouped the discovery
violations into three categories. First, the court found that
Esso and its attorneys engaged in a strategy that kept the
various other parties in the litigation from obtaining needed
information in a timely fashion. See In re Tutu Wells
Contamination Litig., 162 F.R.D. 46, 70-71 (D.V.I. 1995)
[hereinafter "Tutu I"]. Without delving into the specifics of
individual abuses, the court noted that Esso and Goldman
Antonetti met many discovery requests with legal tactics
intended to delay, oppress, or harass their opponents.
Often, Esso and Goldman Antonetti would refuse to turn
over requested documents until forced to do so by court
_________________________________________________________________
1. The parties relevant to our discussion, are Esso Standard Oil, S.A.
Ltd., Esso Virgin Islands, Inc., and Esso Standard Oil Co. (Puerto Rico)
(collectively "Esso"); Rhoda Harthman, Charlotte Labarre, Albert
Harthman, Arthur Harthman, Austin Harthman, Edgar Harthman,
Sammy Harthman, P.I.D., Inc., and Tutu Services Limited (collectively
"PID/Harthman") (owners of a shopping center); Texaco, Inc. and Texaco
Caribbean, Inc. (collectively "Texaco"); Vernon Morgan; Laga Industries,
Ltd., Duplan Corp., Panex Company, Paul Lazare, and Andreas Gal
(collectively "the Laga Defendants") (operators of a former textile plant);
Four Winds Plaza Partnership ("Four Winds") (owners of a shopping
center); Ramsay Motors, Inc. ("Ramsay Motors"); L'Henri, Inc. ("L'Henri")
(a dry cleaner); and Western Auto Supply Company ("Western Auto").
Excluded from this list are the plaintiffs from the so-called Total Vision
case. None of the plaintiffs in that case are involved in the sanctions
dispute.
2. Goldman Antonetti has since changed its name, and is now called
Goldman, Antonetti & Cordova.
10
order. According to the court, the level of judicial
involvement in the discovery process was consequently
unusually high, requiring the court unnecessarily to devote
significant resources to resolving ordinary discovery
disputes.
Second, the court focused on the handling of the so-
called Agrelot memorandum. In December 1989, Soil Tech,
a company that specializes in environmental analyses of
soil, took samples from the soil at the Esso Tutu Service
Station ("ETSS") and from liquid in a holding tank at ETSS.
Soil Tech sent those samples to the Environmental Testing
and Certification Corp. ("ETC") for analysis. ETC returned
the results of the investigation to Soil Tech shortly
thereafter. The results revealed some contamination. Jose
Agrelot, President of Soil Tech, received the preliminary
results and summarized them in a memorandum, which he
forwarded to Goldman Antonetti in anticipation of a
meeting in January 1990. ETC produced the final results of
the testing shortly after the meeting had occurred. Agrelot
testified that he discussed the memorandum with attorneys
at Goldman Antonetti, including Jose Cepeda and Francis
Torres. It is not clear from the record, however, whether
Cepeda ever actually saw the Agrelot memorandum at that
time. The results were also discussed at a May, 1990
meeting at which Eugenio Romero was present along with
Cepeda, Torres, and Agrelot, among others.
Although for the most part the Agrelot memorandum
merely summarized the information contained in the ETC
findings, the memorandum did include a map pinpointing
the locations of the soil borings from which the tested soil
was taken. It appears from the record that, without the
Agrelot memorandum, someone examining the ETC data
could not determine with precision the location of the
borings. The record does, however, give some indication
that there is enough information in the ETC supporting
data that was made available to determine that the ETC
analyzed soil from ETSS rather than from some other
location above the Tutu aquifer. Esso and its attorneys
11
produced the full ETC report on which the Agrelot
memorandum was based.3
However, neither Esso, Goldman Antonetti, nor Soil Tech
turned over the Agrelot memorandum during discovery
until October 1993. Prior to that time, various parties had
specifically requested all reports generated from soil and
groundwater testing in the Tutu area, but the responses to
such requests, either signed by or reviewed by Esso
employees or Goldman Antonetti attorneys, made no
mention of the Agrelot memorandum. The reasons for this
omission are not clear. Lawyers from Goldman Antonetti
testified that the Agrelot memorandum had been indexed
incorrectly in their computer database; Agrelot himself
testified that the memorandum had been labeled incorrectly
and therefore misfiled in his office. The district court found
that the failure to produce the Agrelot memorandum was
intentional. See Id. at 65-66. At all events, only after Agrelot
had searched his files in the fall of 1993 to assist Esso in
negotiating a case management order did he find the
memorandum and turn it over to Esso, who revealed it to
its new counsel Archer & Greiner. It was Archer & Greiner
that finally notified the other parties of its existence.
The third category of violations occurred in connection
with an attempted inspection underneath the surface of the
ETSS site. In particular, the plaintiffs wished to determine
whether an underground storage tank was located on the
_________________________________________________________________
3. It is also not clear from the record, and the parties disagreed at oral
argument, when each of the parties received the ETC data and whether
Esso and its attorneys complied with court orders governing the
production of such material. It seems that the confusion arises because
Esso and its attorneys apparently did not physically produce the ETC
data to each and every party who may have requested it. However, at
oral argument Esso and its attorneys plausibly asserted that court
orders managing discovery envisioned that the parties seeking such
reports would coordinate among themselves examination of such reports.
According to Esso and its attorneys, to avoid duplicative and
unnecessary production of lengthy documents (for example, the ETC
report exceeds 800 pages) they needed only produce to late-coming
parties a list or catalogue of reports already produced, and those parties
could then examine the reports in the possession of other parties. We do
not resolve this issue here.
12
site, and also to trace the pipes leading out of the oil/water
separator located on the site. The parties refer to this
aspect of the discovery as the "anomaly investigation." In
May, 1992, the plaintiffs employed ground penetrating
radar ("GPR") to examine the area beneath the ETSS. The
GPR turned up an anomalous shadow in the corner of the
site, possibly indicating the presence of an underground
storage tank. Esso claimed that the GPR produced a false
result because of interference from overhead power lines or
from a reinforcing bar in a nearby retaining wall. The
magistrate judge ultimately ordered an excavation of the
site to determine once and for all if such a tank existed. It
did not.
Excavation of the site was to occur in accordance with
the magistrate judge's order. However, according to the
district court, Esso failed to comply with this order. See Id.
at 52-53. Instead, Esso began the excavation after a delay
of several hours and did not have the necessary tools or
machinery ready for the investigation. Further, Esso did not
adequately conduct the pipe tracing phase of the
investigation. This failure led to months of wrangling among
the parties and between Esso and the court until Esso
finally conducted the investigation to the satisfaction of the
court, nearly 10 months after the investigation was
scheduled to be completed.
B. The District Court's Opinions and Orders
In three separate opinions, the district court discussed
its findings with respect to these violations and issued
orders imposing sanctions for them. In the first of the three
opinions, the court began by detailing the anomaly
investigation, see id. at 51-54, and the Agrelot
memorandum affair, see id. at 54-62. The court went on to
describe briefly the sources of law on which it planned to
rely in imposing sanctions: its inherent powers; Federal
Rules of Civil Procedure 11, 26(g), and 37; and 28 U.S.C.
§ 1927. See id. at 62-63. The court next found that the
failure to produce the Agrelot memorandum was not
inadvertent and that this failure was non-responsive to
discovery requests, notwithstanding the fact that the ETC
13
data on which the memorandum relied was actually
produced. See id. at 65-71.
Finally, the court examined the possible sanctions. It
observed that monetary awards for the fees and costs
associated with the attempts to find evidence of the release
of contaminants from the ETSS, the investigation costs
resulting from the failure to produce the Agrelot
memorandum, and the fees and costs incurred as part of
the sanctions proceedings were all potentially recoverable.
See id. at 72-73. After reviewing the controlling case of
Poulis v. State Farm Fire & Cas. Co., 747 F.2d 863 (3d Cir.
1984), the court reasoned that dismissal of Esso's CERCLA
contribution claims against the other parties was also
possible. See id. at 73-78. It concluded its discussion of
possible sanctions by finding that Cepeda, Romero, and
Torres could be sanctioned for their role in the discovery
violations. See id. at 78-80.
Instead of imposing sanctions at that time, the court
ordered that Esso, Goldman Antonetti, Cepeda, Romero,
and Torres show cause why the court should not sanction
them for their actions. The court also provided the parties
with the opportunity to negotiate a mutual resolution of the
monetary sanctions prior to the hearing to show cause. See
id. at 81.
In its next opinion on the matter, the court disposed of
motions from Esso, Goldman Antonetti, Cepeda, Romero,
and Torres seeking clarification, reconsideration, and
modification of its earlier orders. First, the court disposed
of claims that its hearings with respect to sanctions were
conducted without due process. The court engaged in a
detailed review of the orders, discussions, and hearings
leading up to the sanctions proceedings and concluded
that, taken together, the process provided ample notice of
and opportunity to be heard regarding the sanctions faced
by the various parties. See In re Tutu Wells Contamination
Litig., 162 F.R.D. 81, 83-88 (D.V.I. 1995) [hereinafter "Tutu
II"]. Next, the court held that the moving parties had
produced no evidence sufficient to warrant a reexamination
of its earlier factual findings. See id. at 88-89. Finally, the
court rescribed its earlier holding that the actions of the
moving parties prejudiced the other parties. See id. at 90-
14
91. Esso, Goldman Antonetti, Cepeda, Romero, and Torres
therefore still were required to show cause why monetary
sanctions and dismissal of claims should not be imposed
on them. See id. at 91.
In its third and final opinion on the matter, the court
decided what sanctions to impose on each of the parties. It
began by finding that neither Esso, Goldman Antonetti,
Cepeda, Romero, nor Torres had shown sufficient cause for
the court not to impose some sanction on each of them. See
In re Tutu Wells Contamination Litig., 166 F.R.D. 331, 334-
39 (D.V.I. 1996) [hereinafter "Tutu III"]. Instead, the court
found that severe sanctions were merited. Because of the
need to impose such severe sanctions, the court decided to
rely exclusively on its inherent power to sanction. See id. at
337. As for non-monetary sanctions, the court first held
that dismissing the CERCLA contribution claims would be
inappropriate because doing so would place too great a
burden on Esso to clean up the contamination of the
aquifer (the court apparently believed that other parties
shared responsibility for the contamination). Instead, the
court reasoned that monetary sanctions would be adequate
to achieve the goals of sanctioning. See id. at 339-40. Next,
the court suspended Cepeda, Romero, and Torres from
practicing before the District Court of the Virgin Islands.
See id. at 339-41.4 Cepeda and Torres received three-year
suspensions. Because of contrition expressed to the court,
Romero received a suspension of only one year. See id. at
341.
As for monetary sanctions, the court declined to award
substantial sanctions in favor of the parties to the lawsuit
(who had been unable to settle the monetary sanctions).
See id. at 341-45. The parties to whom sanctions might be
paid had submitted their requests for fees and costs to the
court for review. The court found, however, that the
submissions, which were voluminous but quite generalized,
failed to make clear the basis for the parties' claims and
_________________________________________________________________
4. Romero and Torres were admitted to practice before the court pro hac
vice. There is some dispute as to whether Cepeda was technically
admitted. Because of the particular manner in which we resolve the
appeal of the suspensions, we do not resolve this issue here.
15
failed to provide records sufficient to justify the requested
awards as sanctions. Instead of examining the submissions
line-by-line, which the court did not feel obliged to do given
the failure of the parties to be sufficiently specific, the court
denied the bulk of the requests. See id. at 342-43. However,
the court did believe that some sanction was warranted. It
held that the costs associated with the sanctions
proceedings themselves would be an appropriate sanction.
To determine those costs, the court, expressing admiration
for the stewardship of Nancy D'Anna, counsel for L'Henri,
used the submissions of L'Henri as a model.
L'Henri sought approximately $30,000 as costs for the
sanctions proceedings. The court decided that such an
award was reasonable, and awarded all eight parties
seeking monetary sanctions $30,000 each. See id. at 344.
Because Esso and Goldman Antonetti were equal partners
in the discovery violations, the court reasoned, each should
bear equally the burden of the sanction. See id. Therefore,
the court ordered Esso to pay $30,000 each to Ramsay
Motors, L'Henri, PID/Harthman, and Vernon Morgan. See
id. Since Esso had already negotiated a settlement with
these four parties as to monetary sanctions, and paid them
a total of approximately $170,000, the court considered
this portion of Esso's sanction to be satisfied. See id. at 344
n.13. The court ordered Goldman Antonetti to pay $30,000
each to the other movants, Four Winds, the Laga
Defendants, Western Auto, and Texaco. See id. at 344.
Finally, the court determined that additional sanctions
against Esso and Goldman Antonetti were required. See id.
at 345-52. Recognizing that it was adopting a novel
approach to sanctioning, the court ordered Esso to pay
$750,000 and Goldman Antonetti to pay $250,000 to a
Community Service Sanction Account that would be used
to fund construction of a halfway house on St. Thomas, the
training of inmates, and renovation of the St. Thomas
Criminal Justice Complex. See id. The court opined that the
parties truly harmed by the contamination of the Tutu
aquifer and the delay in resolving responsibility over the
contamination were the citizens of the Virgin Islands.
Therefore, the most appropriate beneficiary of a sanction
award, it reasoned, would be the Virgin Islands itself. And,
16
because the Criminal Justice Center was in such great
need of additional resources, it would be, the court
believed, a suitable project towards which the funds could
be directed.
C. Anatomy of the Appeals
These appeals ensued. The following is a capsule
summary of those appeals. Esso and Goldman Antonetti
appeal the court's decision to use its inherent powers to
require that they pay a total of $1,000,000 towards the
Criminal Justice Center. Goldman Antonetti also appeals
the imposition of the $120,000 monetary sanction payable
to the other parties in the case. Cepeda, Romero, and
Torres appeal their suspensions from practicing law in the
Virgin Islands. Four Winds, L'Henri, Vernon Morgan,
PID/Harthman, Ramsay Motors, and Texaco appeal the
court's decision to award only $30,000 to each of them as
a sanction from either Esso or Goldman Antonetti; all of
these parties argue that they are entitled to additional
awards. Neither the Laga Defendants nor Western Auto has
appealed, though Western Auto argues that should we
determine that parties are entitled to additional sanctions,
it should be similarly entitled.5 The Department of Justice
of the Virgin Islands has submitted an amicus curiae brief
urging us to uphold the sanction award directed towards
the Criminal Justice Center.
Some aspects of our appellate jurisdiction over this
matter are complicated. Because our jurisdiction in this
case depends on the particular aspect of the appeal that we
are examining, we will discuss jurisdiction together with
each aspect of the merits.
_________________________________________________________________
5. Because we find that no party is entitled to additional sanctions, we
do not reach the question whether Western Auto would be entitled to
additional sanctions even though it has not appealed.
17
II. SUSPENSIONS OF ATTORNEYS CEPEDA,
ROMERO, AND TORRES
A. Appellate Jurisdiction
Appellate jurisdiction over the appeals of Cepeda,
Romero, and Torres arises from 28 U.S.C. § 1291, which
provides that the United States Court of Appeals for the
Third Circuit has jurisdiction over appeals of final decisions
of the District Court of the Virgin Islands. "[A] decision is
ordinarily considered final and appealable under § 1291
only if it ``ends the litigation on the merits and leaves
nothing for the court to do but execute the judgment.' "
Quackenbush v. Allstate Ins. Co., ___ U.S. ___, 116 S. Ct.
1712, 1718 (1996) (quoting Catlin v. United States, 324 U.S.
229, 233 (1945)). In this case, the decision to suspend
Cepeda, Romero, and Torres is not final in the usual sense.
The claims for CERCLA contribution still exist; therefore,
the litigation on the merits has not ended and the court has
more to do than simply execute the judgment.6
Under the collateral order doctrine, however, an
otherwise non-final decision can be appealed if it finally
and conclusively determines the disputed question, resolves
an important issue separate from the underlying merits,
and is effectively unreviewable after final judgment. See
Cohen, 337 U.S. at 546. It is unquestionable that the order
from which Cepeda, Romero, and Torres appeal finally and
conclusively determines the issue of their suspensions. We
turn to whether the order resolves an important issue
completely separate from the merits that is effectively
unreviewable after final judgment.
Addressing these issues slightly out of order, we begin
with the question whether the order suspending Cepeda,
Romero, and Torres is effectively reviewable after final
judgment. Subsequent to the actions that gave rise to their
suspensions, their former client, Esso, retained other
counsel. Cepeda, Romero, and Torres are no longer in the
underlying litigation at all. In Eavenson, Auchmuty &
_________________________________________________________________
6. The claims for CERCLA contribution were separated from the
common-law claims and have been stayed.
18
Greenwald v. Holtzman, 775 F.2d 535 (3d Cir. 1985), we
held that an order imposing Rule 11 sanctions against an
attorney no longer representing a party in a case was
collaterally final under Cohen. See id. at 538-40. In that
case, we reasoned that the attorney could not effectively
appeal the sanctions after final judgment because the
parties to the suit might not appeal, leaving open the
possibility that the attorney would be unable to appeal his
sanction, and, even if he were able to appeal, the attorney
may be unaware of the entry of final judgment, leaving
open the possibility that he would be unable to file a timely
notice of appeal. See id. at 538-39. Eavenson Auchmuty
therefore controls our inquiry and leads us to conclude that
the order from which Cepeda, Romero, and Torres appeal is
effectively unreviewable after final judgment.
The next question is whether our review of the order
imposing sanctions will force us to examine the merits of
the underlying case thereby rendering the appeal not
completely separate from the merits. We have followed the
rule that a "finding of separateness [in this regard] is
dependent on the facts" in any given case. Martin v. Brown,
63 F.3d 1252, 1261 n.11 (3d Cir. 1995).7 Here, our review
of the order suspending Cepeda, Romero, and Torres would
not force us to examine the merits of the case at all.
Cepeda, Romero, and Torres each argue that the district
court failed to afford them due process of law. Reviewing
such a claim would require our examining the notice the
court gave to Cepeda, Romero, and Torres, and the
opportunity it gave them to be heard on the matter. This
_________________________________________________________________
7. The rule in Martin is derived in part from two of our prior cases. In
Eavenson Auchmuty, the Rule 11 sanction arose from the alleged
violation of a court order, and resolution of the sanctions issue therefore
did not touch on the merits of the underlying case. Rather, the sanctions
issue turned on the interpretation of the order. See id. at 538, 541-43.
We distinguished the facts of Eavenson Auchmuty from those in Eastern
Maico Distribs., Inc. v. Maico-Fahrzeugfabrik, G.m.b.H., 658 F.2d 944 (3d
Cir. 1981), where the validity of the sanction turned in part on whether
the material requested during discovery was relevant to the merits of the
litigation. See id. at 947. Neither Eastern Maico nor Eavenson Auchmuty
adopted a bright-line rule. Rather, taken together, the two cases suggest
that a determination of separateness in this context must be on a case-
by-case basis.
19
review of the process by which the court imposed the
sanctions in no way touches on the merits.
Finally, we must consider whether the process due an
attorney prior to a court's suspending him is important in
the Cohen sense. "[A]n issue is important if the interests
that would potentially go unprotected without immediate
appellate review of that issue are significant relative to the
efficiency interests sought to be advanced by adherence to
the final judgment rule." In re Ford Motor Co., 110 F.3d
954, 959 (3d Cir. 1997). We addressed this very issue in
Martin, and concluded that protection of the
constitutionally recognized right of due process in this
context is sufficiently important to warrant immediate
appeal. See Martin, 63 F.3d at 1261. This is especially true
where, as here, the sanction imposed is not a mere
monetary fine but the more severe sanction of the
suspension of an attorney from practicing before a court.
Suspension, much more than a fine, "impose[s] significant
burdens on the reputation and career opportunities of the
sanctioned attorney." Id. Therefore, relying on Martin, we
hold that the issue raised by Cepeda, Romero, and Torres
on appeal satisfies the importance prong of the Cohen test.
In sum, because we believe that the order suspending
Cepeda, Romero, and Torres is collaterally final under
Cohen, we hold that we have jurisdiction over the appeal of
that order.
B. The Process Due Prior to Suspending an Attorney
Cepeda, Romero, and Torres submit that their
suspensions cannot stand because the district court did
not afford them particularized notice of the form of the
sanctions they faced. They had no way of knowing, they
contend, that the possibility of suspension as a sanction
existed. Therefore, they conclude, their right to due process
was infringed. Our review is plenary. See Martin, 63 F.3d at
1262.
In considering the suspension of an attorney as a
sanction, courts must provide the attorney with due
process. Eash v. Riggins Trucking, Inc., 757 F.2d 557, 570
(3d Cir. 1985) (noting that the imposition of a sanction on
20
an attorney, including disbarment and other disciplinary
actions, implicates due process concerns); cf. Roadway
Express, Inc. v. Piper, 447 U.S. 752, 767 (1980) ("Like other
sanctions, attorney's fees certainly should not be assessed
lightly or without fair notice and an opportunity for a
hearing on the record."); Rogal v. American Broad. Cos., 74
F.3d 40, 44 (3d Cir. 1996) ("The imposition of monetary
sanctions by a court implicates fundamental notions of due
process . . . ."). Although the precise contours of the
process that is due varies given the particular context, "the
fundamental requirements of due process -- notice and an
opportunity to respond -- must be afforded before any
sanction is imposed." Martin, 63 F.3d at 1261. Similarly,
prior to the suspension of an attorney from practicing
before the District Court of the Virgin Islands because of
misconduct as defined by local rule, an attorney must be
provided "notice and an opportunity to be heard." D.V.I. R.
83.2(b)(4)(A).
The party against whom sanctions are being considered
is entitled to notice of the legal rule on which the sanctions
would be based, the reasons for the sanctions, and the form
of the potential sanctions. See Simmerman v. Corino, 27
F.3d 58, 64 (3d Cir. 1994). Without such notice, the
opportunity to be heard would be meaningless: "[o]nly with
this information can a party respond to the court's
concerns in an intelligent manner." Id. In other words, a
party cannot adequately defend himself against the
imposition of sanctions unless he or she is aware of the
issues that must be addressed to avoid the sanctions. As
one treatise writer has explained, "[d]ramatic differences in
the relief being considered by the district court may lead to
substantially different (e.g., more detailed, differently
directed) responses by the alleged offender." Gregory P.
Joseph, Sanctions: The Federal Law of Litigation Abuse
§ 17(D)(1)(d), at 343 (2d ed. 1994) (discussing Rule 11
sanctions in particular).
A brief examination of three of our cases illustrates the
operation of this notice rule and the policy justifications
supporting it. In Fellheimer, Eichen & Braverman, P.C. v.
Charter Technologies, Inc., 57 F.3d 1215 (3d Cir. 1995), we
rejected a party's argument that he was denied adequate
21
notice because of the failure to notify him that sanctions
under 28 U.S.C. § 1927, in addition to those under Rule 11,
were being considered. We noted that a showing of bad
faith conduct is required to impose sanctions under § 1927
but is not required under Rule 11. See id. at 1225. Without
notice that possible § 1927 sanctions were at stake, a party
might not employ his opportunity to be heard to rebut
charges of bad faith. However, our examination of the
context and the factual background of the case revealed
that the party was well aware that he was being charged
with bad faith conduct. See id. at 1226-27. That he was
unaware of the possible § 1927 sanctions was immaterial,
for he knew that he would need to confront the charge of
bad faith conduct to defend himself in the sanction
proceeding. In short, our concern in Fellheimer was that the
party in fact had the opportunity to mount a meaningful
defense. When it became evident that under the
circumstances he did, we determined that the notice had
been adequate.
In our discussion in Fellheimer, we distinguished Jones v.
Pittsburgh National Corp., 899 F.2d 1350 (3d Cir. 1990). In
Jones, the party was not explicitly notified of the possibility
of § 1927 sanctions, nor did the context or factual
background of the case suggest that he was charged with
bad faith conduct. See id. at 1357. Because the party was
not "on notice as to the particular factors that he must
address if he is to avoid sanctions," notice was inadequate.
See id.
Although in both Fellheimer and Jones we focused on
notice as to the legal rule on which the sanctions were
based, particularized notice must also be given as to the
form of the contemplated sanction, as is illustrated in
Gagliardi v. McWilliams, 834 F.2d 81 (3d Cir. 1987) (per
curiam). In Gagliardi, the party moving for sanctions under
Rule 11 sought attorney's fees, dismissal of the underlying
claim, and other relief the court might deem appropriate.
See id. at 83. The court granted the sanctions in the form
of an injunction. We explained that the general request for
other appropriate relief did not put the party on notice that
injunctive relief was possible. See id.8 Therefore, we vacated
the award of sanctions and remanded so that the party
_________________________________________________________________
8. We noted that the party against whom sanctions were imposed was
proceeding pro se; however, we also noted that "[e]ven an experienced
attorney would not have expected this type of injunctive sanction
without some more specific notice." See Gagliardi, 834 F.2d at 83.
22
could be notified of the possibility of an injunction and
respond accordingly. See id.In the present case, neither Cepeda, Romero, nor Torres
received particularized notice that the court was
contemplating suspending them from practicing law as a
sanction. Although the court made clear the legal rules on
which it would base sanctions and the reasons for the
sanctions, the court limited its discussion of the form of the
possible sanctions to monetary sanctions and dismissal of
claims. See, e.g., Tutu II, 162 F.R.D. at 91. As far as we can
tell, the possibility of suspension arose for the first time in
the court's third and final published opinion on the matter,
when the court actually imposed the suspensions. Neither
did the parties moving for sanctions seek suspension; their
papers before the district court sought only monetary
sanctions and dismissal.9
A number of parties have pointed to two judicial
pronouncements that they contend should have put
Cepeda, Romero, and Torres on at least constructive notice
of the possibility of suspension. Even assuming that
constructive notice would be sufficient, a doubtful
proposition, we find these pronouncements to be
inadequate. First, the court did mention, in passing during
an October 28, 1993, hearing, the possible "breach of the
Canon of Ethics." The court did not elaborate nor did it ever
again raise the "Canon of Ethics." This mention is simply
too vague, inconclusive, and preliminary to put Cepeda,
Romero, or Torres on notice of the possible sanction of
suspension.
Second, the court noted that it planned to utilize its
inherent powers as a basis for sanctions. A number of
parties submit that, because a court may employ its
inherent powers to suspend an attorney, Cepeda, Romero,
and Torres should therefore have been on notice that the
court was considering suspension. We are unpersuaded. As
we discuss infra, a court's inherent powers put at its
disposal a wide range of possible sanctions. Surely we
cannot expect a party to defend against each and every one
_________________________________________________________________
9. We are here relying on the assertions of Romero in his Brief of
Appellant, and no party has asserted anything to the contrary.
23
of these possible sanctions simply because a court signals
its intention to rely on such powers. Rather, more
particularized notice is required. In this respect, we rely
upon Gagliardi, 834 F.2d at 83. Just as in Gagliardi, in
which we held that a request for any remedy the court
might deem appropriate was too general to put a party on
notice that an injunction might issue, we hold that the
mere mention of a court's inherent powers does not put a
party on notice that suspension is a possible sanction.
Knowing that they faced possible suspension as well as
possible monetary sanctions would have been vitally
important to Cepeda, Romero, and Torres as they prepared
for the sanctions proceedings. In addition to presenting
legal and factual arguments pertaining to the particular
conduct that gave rise to the sanctions proceedings and
their individual culpability, the attorneys likely would have
presented evidence concerning their professional careers,
their contributions to the legal profession and the
community, their character, and the like. The proceedings
would have followed a different path as the alleged
offenders led the court to consider a wider array of
information. Put differently, had Cepeda, Romero, and
Torres been on notice that they faced suspension, they
doubtless would have utilized their opportunity to be heard
to raise different matters. As it happened, because of the
lack of notice, the attorneys' opportunity to be heard was
less than meaningful; they were not given the appropriate
opportunity to present relevant defenses to the penalties
which they were ultimately assessed.
We conclude that neither Cepeda, Romero, nor Torres
received the particularized notice to which they were
entitled. Because their rights to due process were violated,
we will vacate that portion of the order on appeal
suspending them from practice in the District Court of the
Virgin Islands.10
_________________________________________________________________
10. Any suspension from practice, even in a jurisdiction in which an
attorney does not regularly practice, would leave an indelible and
deleterious imprint on the attorney's career, reputation, and future
opportunities. Although we do not reach the question, we do express our
doubt that, even on the record as developed, the extreme sanction of
24
III. THE COMMUNITY SERVICE SANCTION
A. Appellate Jurisdiction
As we discussed supra, part II, section A, although the
order from which Esso and Goldman Antonetti appeal,
which imposes on them a monetary sanction payable to the
Community Service Sanction Account, is not final for the
purposes of § 1291, the order as to Goldman Antonetti is
collaterally final under the Cohen doctrine, for the same
reasons the appeal of Cepeda, Romero, and Torres was
collaterally final. See supra part II, section A.11 However, the
collateral order doctrine does not provide us jurisdiction
over Esso's appeal. Esso remains a party in the underlying
litigation and can therefore bring an effective appeal after
final judgment. In other words, Esso does not fall within
the ambit of Eavenson, Auchmuty, and its appeal fails the
third prong of the Cohen test. However, as we shall explain,
we have pendent appellate jurisdiction over Esso's appeal.
The doctrine of pendent appellate jurisdiction, in its
broadest formulation, allows an appellate court in its
discretion to exercise jurisdiction over issues that are not
independently appealable but that are intertwined with
issues over which the appellate court properly and
_________________________________________________________________
suspension from practice was justified for the individual actions (or
inactions) of Cepeda, Romero, and Torres. It would unduly prolong an
already lengthy opinion to detail our reasons for this doubt, predicated
as it is on a large record. We do, however, note that we do not suggest
that district judges should never use suspension as a sanction. We also
do not reach the issue whether Cepeda's pro hac vice status, see supra
note 4, has any bearing on the ability of the court to suspend him.
11. The only difference is whether the issue is important in the Cohen
sense. We have held that resolution of a serious and unsettled question
of law satisfies the importance criterion of Cohen. See In re Ford, 110
F.3d at 961. Here, Esso and Goldman Antonetti appeal the district
court's use of its inherent powers to require them to fund a Community
Service Sanction Account for the benefit of the Virgin Islands, a third
party to the litigation. We are unaware of any appellate decision that
addresses this question. And, without guidance, the novel approach
adopted by the district court might be emulated. The appeal, therefore,
implicates a serious and unsettled question.
25
independently exercises its jurisdiction. See, e.g., 16
Charles Alan Wright, Arthur R. Miller, & Edward H. Cooper,
Federal Practice and Procedure § 3937, at 684-85 (2d ed.
1996). We recognize the doctrine of pendent appellate
jurisdiction and have on a number of occasions discussed
its scope. See, e.g., Nat'l Union Fire Ins. Co. v. City Sav.
F.S.B., 28 F.3d 376, 382-83 & n.4 (3d Cir. 1994); Hoxworth
v. Blinder, Robinson & Co., 903 F.2d 186, 208-09 (3d Cir.
1990); United States v. Spears, 859 F.2d 284, 287 (3d Cir.
1988); Kershner v. Mazurkiewicz, 670 F.2d 440, 445-59 (3d
Cir. 1982).
We have held that the discretionary exercise of pendent
appellate jurisdiction is appropriate when the issue over
which we have jurisdiction cannot be resolved without
reference to the otherwise nonappealable issue. See
Kershner, 670 F.2d at 449. In that sense, the exercise of
pendent appellate jurisdiction ensures that our review of
the independently appealable issue is meaningful. See Nat'l
Union Fire, 28 F.3d at 382. Unfortunately, our
jurisprudence in this area is not systematic, and it is not
clear how broadly the doctrine applies in our circuit. It
does, however, apply here.12
_________________________________________________________________
12. There are other matters that need mention with respect to our
exercise of pendent appellate jurisdiction. The appeal in question here is
pendent to a collaterally final order, rather than to an order the
interlocutory appeal of which is permitted by statute. The Supreme
Court has stated that pendent appellate jurisdiction in such cases and
under certain circumstances is not permitted. See Swint v. Chambers
County Comm'n, ___ U.S. ___, 115 S. Ct. 1203, 1209-11 (1995); Abney v.
United States, 431 U.S. 651, 663 (1977). However, those cases deal with
pendent issues, not pendent parties. And, at least in Swint, the Court
made clear that its holding did not necessarily extend to circumstances
in which the issues on appeal were "inextricably intertwined" or in which
review of the otherwise nonappealable issue "was necessary to ensure
meaningful review of the" independently appealable issue. Swint, 115 S.
Ct. at 1212. In Spears, we employed the doctrine of pendent appellate
jurisdiction in a case in which the independently appealable order was
appealable only because of the collateral order doctrine. See Spears, 859
F.2d at 286-88. We noted there that there was sufficient overlap in the
facts relevant to the issues to allow us to exercise pendent appellate
jurisdiction. See id. at 287-88.
26
This case presents for our consideration two appeals
raising the identical legal challenge, one appeal that is
collaterally final (Goldman Antonetti's) and one that is not
(Esso's). Should we decline to exercise jurisdiction over
Esso's appeal, we would surely face the issue again, after
final judgment, at which time our resolution of Goldman
Antonetti's appeal -- either because of collateral estoppel,
the doctrine of the law of the case, or our own precedent --
would govern the outcome. In other words, for all practical
purposes, our resolution of Goldman Antonetti's appeal
resolves Esso's appeal. It makes little practical sense, then,
to dismiss Esso's appeal for lack of jurisdiction, and we
shall not do so. See Spears, 859 F.2d at 288 ("In these
circumstances, considerations of judicial economy, the
litigant's interests, and practicality demand that we exercise
jurisdiction over the [otherwise nonappealable] appeal.").
As a final note on this subject, the use of the doctrine
here would constitute pendent party appellate jurisdiction.
See 16 Wright, Miller & Cooper, supra, § 3937, at 690-96.
Pendent appellate jurisdiction has heretofore only been
employed to allow our review of an otherwise non-
appealable issue related to an appealable issue, both issues
having been appealed by the same party. Here, we employ
pendent appellate jurisdiction to allow our review of related
issues that have been appealed by two different parties.
However, the case for exercising pendent (party) appellate
jurisdiction here is so compelling and the circumstances of
this appeal so unusual that we do not extend the law by
much in holding that pendent appellate jurisdiction applies.
B. The Appropriateness of the Community
Service Sanction
As previously noted, the district court employed its
inherent powers to sanction Esso and Goldman Antonetti.
A threshold question, then, might be whether the court's
resort to the inherent powers, in lieu of the rule-based and
statute-based sanctions -- e.g., Fed. R. Civ. P. 11, 16, and
37, or 28 U.S.C. § 1927 -- was appropriate.13 We need not
_________________________________________________________________
13. In Chambers v. NASCO, Inc., 501 U.S. 32 (1991), the Supreme Court
discussed at length the inherent powers of a court to sanction and their
27
reach this question, however. As we shall discuss more
fully below, the court had no authority under its inherent
powers to impose the type of sanction it did. We are here
reviewing a pure question of law; therefore, our standard of
review is plenary. See Public Interest Research Group of New
Jersey, Inc. v. Windall, 51 F.3d 1179, 1184 (3d Cir. 1995)
[hereinafter "PIRG"].
The permissible scope of inherent powers is somewhat
unclear; we have earlier observed that "the notion of
inherent power has been described as nebulous, and its
bounds ``shadowy.' " Eash v. Riggins Trucking Inc., 757 F.2d
557, 561 (3d Cir. 1985) (en banc) (citation omitted).
However, "courts under their inherent powers have
developed a wide range of tools to promote efficiency in
their courtrooms and to achieve justice in their results." Id.
at 564. The Supreme Court has furnished us with at least
a partial list of a court's inherent powers. Employing its
inherent powers, a court can control admission to its bar,
discipline attorneys, punish for contempt, vacate its own
judgment upon a finding of fraud, bar a criminal defendant
from a courtroom for disruptive behavior, dismiss a suit on
forum non conveniens grounds or for failure to prosecute,
and assess attorney's fees. See Chambers v. NASCO, Inc.,
501 U.S. 32, 43-46 (1991).
In addition to those mentioned by the Supreme Court,
other inherent powers include the power to fine, to
disqualify counsel, to preclude claims or defenses, and to
limit a litigant's future access to the courts. See Joseph,
supra § 28, at 440-47; see also Republic of the Philippines
v. Westinghouse Elec. Corp., 43 F.3d 65, 73 n.10 (3d Cir.
1994) (listing the inherent powers available to a court).
With these many bows in their sanctioning quivers, courts
_________________________________________________________________
relationship to rule-based and statute-based powers to sanction, e.g.,
Rule 11, Rule 16, Rule 37, and § 1927. To oversimplify somewhat, the
Court held that the existence of rule-based or statute-based powers does
not preclude a court's employing its inherent powers. See id. at 46-51.
The Court observed, but apparently did not require, that normally a
court should look first to those rule-based or statute-based powers
before turning to its inherent powers, reserving the inherent powers for
instances in which the rule-based or statute-based powers are not "up
to the task." See id. at 50.
28
have frequently invoked their inherent powers "to regulate
the conduct of the members of the bar as well as to provide
tools for docket management." Eash, 757 at 561.
Notwithstanding the variety of tools available to a court
under its inherent powers, we believe that an order
directing a party to the litigation to remit funds to a third
party is outside the scope of a court's inherent powers. We
begin our analysis by noting that "[b]ecause of their very
potency, inherent powers must be exercised with restraint
and discretion." Chambers, 501 U.S. at 44. That "inherent
powers are shielded from direct democratic controls" makes
this exercise of restraint and discretion even more
important. Roadway Express, Inc. v. Piper, 447 U.S. 752,
764 (1980).
"A primary aspect of that discretion is the ability to
fashion an appropriate sanction for conduct which abuses
the judicial process." Chambers, 501 U.S. at 44-45(emphasis added). Whether creation of the Community
Service Sanction Account before us here is appropriately
within the scope of a court's inherent powers turns on the
source of a court's inherent powers. The Supreme Court
discussed the genesis and nature of inherent powers in
Chambers. Inherent powers derive from the very nature of
courts of justice. See id. at 42. Necessarily incident to the
act of creating courts is the act of imbuing these
institutions with certain indispensable powers to " ``manage
their own affairs so as to achieve the orderly and
expeditious disposition of cases.' " Id. (quoting Link v.
Wabash R.R. Co., 370 U.S. 626, 630-31 (1962)). Inherent
powers are sometimes described, in other words, as those
"necessary to the exercise of all others." Id. (quoting United
States v. Hudson, 11 U.S. (7 Cranch) 32, 34 (1812)). In
Eash, we described the source of inherent powers in
slightly different words. We suggested that inherent powers
fall into three distinct categories: powers arising from
Article III, powers arising from the nature of the court, and
powers arising from historical notions of the courts of
equity. See Eash, 757 F.2d at 562-64.14
_________________________________________________________________
14. Because Eash's categorization scheme was intended largely as a
means of explaining the relationship between inherent judicial powers
29
No matter where one places their origin, it is clear that
the power exercised in this case cannot be derived from a
court's inherent powers. The district court's actions are
essentially legislative in nature. Although we recognize that
the line between a judicial act and legislative act is difficult
to fix with certainty, see, e.g., Mistretta v. United States,
488 U.S. 361, 380-408 (1989); see also Clinton v. Jones, ___
U.S. ___, ___ S. Ct. ___, No. 95-1853, 1997 WL 273679, at
*10 (U.S. Sup. Ct. May 27, 1997) ("Of course the lines
between the powers of the three branches are not always
neatly defined."), the district court's sanction here falls on
the legislative side of whatever line we may draw. The court
ordered the reallocation of resources from private entities to
an agency of the public sector not a party in the case.15 It
_________________________________________________________________
and legislatively granted judicial powers, and because it is not necessary
to tackle the difficult question of that relationship, see supra n.12, we
have no occasion to revisit this categorization here. See also Chambers,
501 U.S. at 47 n.12 (describing Eash's categorization scheme and
concluding that discussion of it is unnecessary).
15. We have addressed a similar question in the criminal context. See,
e.g., United States v. John Scher Presents, Inc., 746 F.2d 959 (3d Cir.
1984). In that case, we rejected a district court's conditioning probation
on the donation of $100,000 to charity. We held that the power of the
court to place a defendant on probation arose from the probation
statute, not from inherent powers. See id. at 961. We further held that
the probation statute did not give courts the power to condition
probation on the donation of money to a charity. See id. at 963-64. This
decision was consistent with the decisions of other circuits addressing
the same issue. See, e.g., United States v. Missouri Valley Constr. Co.,
741 F.2d 1542, 1546-51 (8th Cir. 1984) (en banc); United States v.
Wright Contracting Co., 728 F.2d 648, 650-53 (4th Cir. 1984).
Although decided on facts somewhat analogous to those presented
here, these cases provide little guidance. They do not discuss the scope
of a court's inherent powers except to note that the power to suspend a
criminal sentence and impose probation is not a power inherent in the
courts. Rather, the focus of these cases is on whether the statutory grant
of power to impose probation allows the courts to condition probation on
a payment of charity. Here, by contrast, we know that the power to
sanction is inherent in the courts. We are thus concerned with the scope
of inherent, not statutory, powers. Therefore, that a district court cannot
condition probation on the payment of charity does not control whether
a district court can require the payment of charity as a sanction. Put
differently, the existence of a limit on a court's statutory powers does not
necessarily mean that there is a corresponding limit on a court's
inherent powers.
30
chose from whom the resources would be taken and to
whom the resources would redound, without regard to the
anatomy of the case before it. In so doing, the court
ventured well beyond the case and controversy before it.16
We do not find persuasive the argument that a court's
inherent powers include the wielding of what is essentially
a legislative power. We believe that it is not in the nature of
courts of justice normally to engage in the redistribution of
wealth to parties outside of the litigation. We find nothing
in Article III that allows for such a power. Further, we do
not believe that such a power is necessary for the efficient
functioning of a court. Fines made payable to the court
would do just as well in ensuring that parties do not
interfere with that functioning. From the standpoint of the
sanctioned party, the disciplining effect of a fine made
payable to the court is no different from the disciplining
effect of a sanction made payable to some third party; the
sanctioned party is out of pocket the same amount either
way. Finally, we have been directed to no historical
evidence demonstrating that courts of equity had this
power, and given that the inherent powers must be
exercised with restraint, we see no reason to permit this
power now.
As our discussion makes clear, the court redistributed a
portion of the wealth in the Virgin Islands, not from one
party in the litigation to another, but from one party in the
litigation to another party of the court's choosing. We
acknowledge that this reallocation occurred under the aegis
of a sanctions proceedings; however, we may not be
_________________________________________________________________
16. In the context of administrative law, commentators have drawn the
line between legislative and adjudicative functions by referring to the
factual evidence on which the relevant government body relies in making
its decision. See 2 Kenneth Culp Davis & Richard J. Pierce, Jr.,
Administrative Law Treatise § 9.2, at 7-8 (3d ed. 1994). "[L]egislative facts
are the general facts that help a government institution decide questions
of law, policy, and discretion." Id. These are facts that concern more
than just an individual. See id. Here, the court had to rely on facts
outside of those provided it by the parties to determine that the Virgin
Islands prison system was an appropriate recipient of funding. In that
sense, the court was searching for legislative facts. It was, in that same
sense, engaging in a nonadjudicatory function.
31
prevented from looking beyond mere labels to the
underlying reality of the particular exercise of governmental
power. See Mistretta, 488 U.S. at 393. The reality in this
case involved the exercise of legislative power.
We appreciate the sense of outrage that motivated the
district court's decision to impose the community service
sanction. The contamination of the Tutu aquifer was tragic,
and the delay in determining responsibility for that
contamination is doubtless frustrating. The community
service sanction, at least on its face, is attractive because it
seeks to punish those who have caused, at least in part,
that delay and assist those who might have been harmed
by the contamination. In that sense, the district court's
actions were admirable. However, a court does not always
do well by doing good. Though we applaud the district
court's motives, we are constrained to find fault with its
remedy.17
In sum, we hold that the district court's inherent powers
can not support the imposition of the community service
sanction.18
_________________________________________________________________
17. Our conclusion that the creation of the Community Service Sanction
Account was beyond the powers of the district court is bolstered by our
canvass of the law of our sister circuits. We are unaware of any court of
appeals that has imposed this type of community service sanction. Nor
do we find helpful the sources to which the district court cites for
support of its proposed sanction. The district court could cite only to a
law review article. See Brent Fisse, Reconstructing Corporate Criminal
Law: Deterrence, Retribution, Fault, and Sanctions , 56 S. Cal. L. Rev.
1141 (1983). The article itself cited to two district court criminal cases
in which, the article claimed, the courts imposed monetary sanctions
directed to a community service project. See United States v. Olin Corp.,
Crim. No. 78-30, slip op. (D. Conn. June 1, 1978); United States v. Allied
Chem. Corp., 420 F. Supp. 122 (E.D. Va. 1976). We find no support in
those cases for imposing such a sanction here. The opinions themselves
do not discuss the sanctions at all, though the law review article claims
that the monetary sanctions were imposed as conditions for probation or
nonprosecution. We cannot say for certain because of the lack of
discussion by each of the courts on the matter, but we suspect that the
courts' actions would be impermissible under the (old) probation statute.
See supra note 15.
18. Moreover, we have serious doubts that one could plausibly argue
that Congress provided the courts -- by statute or by rule -- the power
32
IV. MONETARY SANCTIONS
A. Appellate Jurisdiction
We have jurisdiction over Goldman Antonetti's appeal
challenging the imposition of the monetary sanctions
directed to the other parties in the litigation pursuant to
Eavenson Auchmuty. See supra part II, section A; part III,
section A.19 As for the appeals of the remaining parties, we
believe that we have jurisdiction over these appeals under
the pendent appellate jurisdiction doctrine.20
As we discuss more fully infra part IV, section B, the
remaining appeals (other than Goldman Antonetti's)
contend that in imposing those sanctions the district court
failed to account for the full extent of the harm caused by
Esso's and Goldman Antonetti's discovery violations. These
appeals are closely intertwined with Goldman Antonetti's
appeal. The appropriate level of monetary sanctions for
discovery abuse payable to a party in the litigation (the
substance of the remaining parties' appeals) is, in part,
dependent on the costs associated with the conduct giving
_________________________________________________________________
to impose the type of sanction imposed here. In order to provide such
power, we believe three criteria must be satisfied: (1) this must be a
power that Congress can constitutionally delegate to a coordinate
branch; (2) Congress must clearly indicate its intent to delegate this
power; and (3) Congress must provide intelligible principles to guide the
courts in the exercise of this power. None of these criteria is satisfied
here."
19. The substantive issues we will discuss here, see infra part IV, section
B, are separate from the merits of the case. Therefore, there is no
concern that the second prong of the Cohen test, which includes the
requirement that the issue on appeal be separate from the merits of the
underlying dispute, is not satisfied. The issues we discuss concern
primarily the propriety of basing a sanction award on the costs
associated with the sanctions proceedings themselves and the
responsibility an aggrieved party has to detail for the court the harm a
discovery violation caused him. Neither of these issues touches the
merits of the underlying dispute. Further, because the circuit law on
these subjects is somewhat unsettled, we believe that the substantive
issues are important enough for immediate review.
20. As we noted above, Esso does not appeal from that part of the order
imposing monetary sanctions on it.
33
rise to the sanctions (the substance of the Goldman
Antonetti appeal). We therefore cannot conclusively and
finally determine whether the sanctions imposed on
Goldman Antonetti are too harsh without also determining
whether those same sanctions adequately accounted for the
harm caused to the other parties.
In exercising jurisdiction here, we are exercising
jurisdiction over the appeals by the parties to whom Esso
was directed to pay sanctions. Because Esso has not
appealed this aspect of the district court's order, the
reasons for our use of pendent appellate jurisdiction are
slightly different from the reasons for our use of that
doctrine to review the appeals of the parties to whom
Goldman Antonetti was directed to pay sanctions. First, the
harm, if any, caused by Goldman Antonetti's discovery
violations affected all of the parties, though to a varying
degree; that some of those parties were to be paid by Esso
rather than Goldman Antonetti had nothing to do with
whether Esso or Goldman Antonetti had harmed them. Put
differently, the question whether Goldman Antonetti's
discovery violations caused harm affects all the parties to
whom sanctions were directed. Therefore, for the same
reasons that Goldman Antonetti's appeal and the appeals of
the parties to whom Goldman Antonetti was directed to pay
sanctions are closely intertwined, so too are the appeals of
the parties to whom Esso was directed to pay sanctions
closely intertwined with Goldman Antonetti's appeal.
Second, we resolve these appeals, see infra part IV,
section B, by reference to the same issue that governs the
appeals of the parties to whom Goldman Antonetti was
directed to pay sanctions, namely, the responsibility an
aggrieved party has to specify for the court the harm
caused by a discovery violation. Therefore, as with our
review of the district court's use of inherent powers, see
supra part III, section A, practical realities strongly suggest
that we exercise jurisdiction over all the appeals here.
Otherwise, as above, we would surely face the issue again,
after final judgment, at which time our resolution of the
appeals of the parties to whom Goldman Antonetti was
directed to pay sanctions -- either because of collateral
estoppel, the doctrine of the law of the case, or our own
34
precedent -- would govern the outcome as to the parties to
whom Esso was directed to pay sanctions.
In sum, our resolution of these appeals resolves the
remaining appeals. It makes little practical sense to dismiss
some of these appeals for lack of jurisdiction, hence we
shall not do so. See Spears, 859 F.2d at 288 ("In these
circumstances, considerations of judicial economy, the
litigant's interests, and practicality demand that we exercise
jurisdiction over the [otherwise nonappealable] appeal."). As
in part III, section A, the case for exercising pendent (party)
appellate jurisdiction here is so compelling and the
circumstances of this appeal so unusual that we do not
extend the law by much in holding that pendent appellate
jurisdiction applies here. We therefore will review that part
of the district court's order imposing monetary sanctions
directed to parties to the litigation.
B. Was the Monetary Sanction Appropriate? 21
1. Introduction and Standard of Review
Our review of the award of monetary sanctions must
address dual concerns. First, we must examine the
sanctions award from the standpoint of Goldman Antonetti,
which contends that the district court erred in imposing
sanctions at all. Second, the parties to whom the court
awarded sanctions argue that the sanctions were
inadequate to account for the full scope of the harm they
suffered as a result of Esso's and Goldman Antonetti's
discovery violations.
The standard governing the district court's award of
sanctions is a legal question subject to plenary review. See
PIRG, 51 F.3d at 1184; cf. Martin, 63 F.3d at 1262(subjecting a claim that a sanction proceeding violated due
process requirements to plenary review). If a district court
applies the proper legal standard, then the award of
_________________________________________________________________
21. The analysis that follows in the text does not make a distinction
between inherent powers sanctions and statute-based or rule-based
sanctions. In respects relevant to our discussion, the sanctioning tools
are the same.
35
sanctions, including the extent of those sanctions, is within
the discretion of the district court. See PIRG , 51 F.3d at
1184; see also Chambers, 501 U.S. at 55 ("We review a
court's imposition of sanctions under its inherent powers
for abuse of discretion."). "An abuse of discretion is a ``clear
error of judgment,' and not simply a different result which
can arguably be obtained when applying the law to the
facts of the case." United Telegraph Workers, AFL-CIO v.
Western Union Corp., 771 F.2d 699, 703 (3d Cir. 1985)
(quoting Citizens to Preserve Overton Park, Inc. v. Volpe, 401
U.S. 402, 416 (1971)). To determine whether a district court
abused its discretion, "we evaluate the court's factual
determinations, legal conclusions, and choice of an
``appropriate sanction' with substantial deference,
considering not whether we would make the same precise
determinations, but only whether those determinations are
contrary to reason or without a reasonable basis in law and
fact." Simmerman, 27 F.3d at 62.
2. Did the District Court Abuse its Discretion in
Sanctioning Goldman Antonetti?
Goldman Antonetti submits that the district court made
a number of factual and legal errors serious enough to
warrant our reversing its decision to impose sanctions.
First, the firm argues that costs and expenses associated
with the sanctions hearings themselves are not recoverable
as sanctions. Next, it contends that the district court failed
to identify the individual acts for which it is liable for
sanctions. Even assuming that there were individual acts
that might be sanctionable, Goldman Antonetti further
contends that such acts caused the moving parties no
prejudice. At all events, it concludes, the parties seeking
sanctions had already released the firm from liability.
a. Can Sanctions be Based on the Costs of
Sanctioning Proceedings?
Goldman Antonetti argues that the district court
impermissibly awarded sanctions based on the costs and
expenses arising from the sanctions proceedings
themselves. In the firm's submission, such an award
36
constitutes improper fee shifting. We disagree. It is beyond
dispute that attorney's fees are, in certain circumstances,
properly awarded as a sanction. We are unaware of
precedent in this circuit that categorically excludes from
such an award attorney's fees arising from the sanctions
proceedings themselves (though, as we discuss below, there
is precedent in other circuits that bears on this issue).22
Nor do we believe such a categorical exclusion is wise. The
time, effort, and resources expended in bringing
sanctionable conduct to light would have been unnecessary
had the sanctionable conduct never occurred. These costs
are as much a harm to a party in the litigation as is the
delay in the litigation or the substantive prejudice caused
by the conduct. If we exclude from a possible award the
costs of sanctions proceedings, we would undermine the
compensatory goal of a sanctions award.
Further, if a party is aware ex ante that the costs he
incurs in exposing sanctionable conduct will never be
recouped, that party may decide to forgo a sanctions
proceeding altogether. In doing so, however, that party
might allow otherwise sanctionable conduct to go
unaddressed. In such cases, the deterrent goal of a
sanction award has been lost; parties who know that the
likelihood of facing a sanction proceeding are low may
engage in sanctionable conduct more often. Therefore, we
believe a district court, in the exercise of its discretion, may
award attorney's fees arising from sanctions proceedings.
We are aware of precedent in other circuits that has
disallowed such awards in the Rule 11 context. See, e.g.,
Zimmerman v. Bishop Estate, 25 F.3d 784, 790 (9th Cir.
_________________________________________________________________
22. In Chambers, in which the Supreme Court affirmed in all respects
the award of sanctions in the case, see Chambers, 501 U.S. at 55-58,
the district court employed its inherent powers to award sanctions based
in part on the costs associated with the sanctions proceedings
themselves. See NASCO, Inc. v. Calcasieu Television & Radio, Inc., 124
F.R.D. 120, 143 (W.D. La. 1989), aff'd, 894 F.2d 696 (5th Cir. 1990),
aff'd sub nom., Chambers v. NASCO, Inc., 501 U.S. 32 (1991). Although
the Supreme Court did not directly address the precise issue we address
here, and there is no indication that the parties raised it, the Court at
least implicitly approved of a sanction award based on the costs
associated with the sanctions proceedings themselves.
37
1994); Pan-Pacific and Low Ball Cable Television Co. v.
Pacific Union Co., 987 F.2d 594, 597 (9th Cir. 1993);
Lockary v. Kayfetz, 974 F.2d 1166, 1177-78 (9th Cir. 1992);
Brubaker v. City of Richmond, 943 F.2d 1363, 1387 (4th
Cir. 1991); Blue v. United States Dept. of the Army, 914
F.2d 525, 548-49 (4th Cir. 1990).23 However, better
reasoned precedent in still other circuits supports our view
that the costs associated with the sanctions proceedings
themselves can be recoverable. See, e.g., Kirk Capital Corp.
v. Bailey, 16 F.3d 1485, 1491 (8th Cir. 1994); Silva v.
Witschen, 19 F.3d 725, 733 n.15 (1st Cir. 1994); Brandt v.
Schal Assocs., Inc., 960 F.2d 640, 649-51 (7th Cir. 1992);
In re Stauffer Seeds, Inc., 817 F.2d 47, 50 (8th Cir. 1987)
(Rule 37).
In addition, in 1993, Rule 11 was amended to add
language that would allow sanctions for the costs
associated with presenting or opposing a motion for Rule
11 sanctions. See Joseph, supra, § 16(B)(17), at 278. The
_________________________________________________________________
23. A number of these cases take guidance from Cooter & Gell v.
Hartmarx Corp., 496 U.S. 384 (1990), in which the Supreme Court held
that Rule 11 does not allow the recovery of the costs associated with
defending a sanction award on appeal. See id. at 406-09. We believe that
reliance on Cooter & Gell to hold that Rule 11 does not allow recovery of
the costs associated with the sanctions proceedings themselves is
misplaced. The Court in Cooter & Gell was moved by a number of
context-based factors. First, the Court noted that Rule 11 does not apply
to appeals, and that applying Rule 11 to appeals would upset the
scheme, contained in the Federal Rules of Appellate Procedure, for
sanctioning frivolous appeals. See id. at 406, 408. Allowing a Rule 11
award based on the sanctions proceedings themselves, would not,
however, implicate the Rules of Appellate Procedure at all because such
proceedings inhere in the district court. Further, borrowing from the
proximate cause theories of tort law, the Court noted that costs on
appeal were a result of the sanction itself and the appeal, not a result of
the improper filing. See id. at 406-07. The costs of the sanctions
proceedings, however, are more properly characterized as the result of
the improper filing. Finally, the Court feared that allowing recovery of the
costs of appeal would discourage sanctioned parties from pursuing
meritorious appeals. See id. at 407. Allowing recovery of the costs
associated with the sanctions proceedings has no effect on the pursuit
of meritorious appeals and, as we note in the text, allowing such
recovery might encourage parties to bring sanctionable conduct to light.
38
language in Rule 11 now states that "the court may award
to the party prevailing on the motion the reasonable
expenses and attorney's fees incurred in presenting or
opposing the motion." Fed. R. Civ. P. 11(c)(1)(A). That
amendment seems to have effectively overruled cases that
held that it is an abuse of discretion to award sanctions
based on the costs of sanctions proceedings.24
b. Actions Giving Rise to Sanctions Against
Goldman Antonetti
Goldman Antonetti is correct in pointing out that the
district court did not identify with specificity many of the
acts that caused it to infer that Esso and Goldman
Antonetti were engaged in a pattern of delay. The court did,
however, make extensive findings as to the Agrelot
memorandum and the anomaly investigation. With respect
to both of those matters, the district court's findings were
not unreasonable. The undisputed fact is that the Agrelot
memorandum did not surface until well after discovery had
begun and until well after parties to the litigation had made
repeated requests that clearly covered the document.
Goldman Antonetti advances a plausible explanation for
why the Agrelot memorandum was produced so late in the
litigation. It is certainly possible that no attorney from
Goldman Antonetti knew of the Agrelot memorandum until
it was found in October 1993, notwithstanding testimony to
the contrary; it is equally possible that the Agrelot
memorandum was misfiled by both Soil Tech and by
Goldman Antonetti. That is not to say, however, that the
court's findings, which are based on an inference that
Goldman Antonetti intentionally withheld the Agrelot
memorandum, are unreasonable. There is evidence in the
record that Goldman Antonetti attorneys knew of the
memorandum's existence. Those same attorneys responded
to the discovery requests covering such memorandum, and
yet the document was not produced.
_________________________________________________________________
24. We are aware of only one case decided after the 1993 amendment to
Rule 11 that disallowed such an award; however, the opinion did not cite
the amendment and uncritically applied prior circuit precedent. See
Zimmerman, 25 F.3d at 790 (citing Lockary).
39
With respect to the anomaly investigation, our analysis is
similar. Goldman Antonetti relies on a report by a
magistrate judge concluding that the firm's actions during
the investigation amounted to nothing more than zealous
advocacy in representation of its clients and therefore did
not warrant sanctions. The firm submits that the district
court had no basis to disagree with the magistrate judge's
conclusions. However, the district court in that instance did
not owe the magistrate judge any deference. Further, the
undisputed evidence makes it clear that it was not
unreasonable for the district court to conclude that the
delays in the investigation were willful and in bad faith. The
investigation began late, was aborted prematurely because
of the failure of the parties to arrive with appropriate
equipment, and was not completed for many months.
Goldman Antonetti's next argument -- that the failure to
produce the Agrelot memorandum caused no harm to the
other parties in the litigation -- suffers the same fate. The
firm here stresses that it produced the entire ETC report, of
which the Agrelot memorandum was merely a summary. If,
Goldman Antonetti questions, a full report has been
produced, how can the failure to produce a summary of the
report cause any harm to a party that can easily
summarize the report for itself? The firm has a good point,
but it does not mean that the district court's conclusion
was contrary to reason. The ETC report was both complex
and voluminous. Examining it required significant costs. A
summary prepared by an expert would have reduced these
costs and identified the problems that could only have been
discovered by imposing a considerable burden on those
examining the report for the first time. We concede, as did
the district court, that the summary, timely produced,
might have provided the parties to the litigation with less
assistance than they claim. Still, it would have provided
assistance, and that is the crux of the harm caused by the
failure of Esso and Goldman Antonetti to produce the
Agrelot memorandum.
c. Was Goldman Antonetti Released from Sanctions?
Goldman Antonetti also argues that three of the parties
seeking sanctions from it -- Four Winds, Laga, and Western
40
Auto Supply -- have already released the firm from liability.
Goldman Antonetti bases this argument on the settlement
agreement reached between Esso and these parties in
which the parties settled the underlying litigation and
released Esso and "their . . . attorneys" from liability.
Because Goldman Antonetti served as Esso's attorneys, it
follows, Goldman Antonetti reasons, that the settlement
agreement eliminates the possibility that these parties can
collect a sanctions award from Goldman Antonetti. The
district court disagreed. "Because the interpretation of
contractual language to discern contractual intent is a
question of fact, our review is limited to a determination
whether the district court's findings are clearly erroneous."
Painewebber Inc. v. Hartmann, 921 F.2d 507, 510 (3d Cir.
1990).
The issue, then, is whether the parties intended the term
"attorneys" in the settlement agreement to refer only to
counsel representing Esso at the time of the signing of the
agreement, or also to refer to counsel who had represented
Esso previously. The district court held that the release --
a contract -- does not cover Goldman Antonetti for two
reasons. First, by the time the settlement agreement came
into force, Esso had already severed its relationship with
Goldman Antonetti. Because the term "attorneys" plainly
refers only to counsel representing Esso at the time of the
settlement agreement, the term must not encompass
Goldman Antonetti. Second, even assuming that the
examination of extrinsic evidence is appropriate here either
to explain the term "attorneys" or to show that the parties
attached some special meaning to "attorneys," there is no
extrinsic evidence that the parties to the settlement
intended it to cover Goldman Antonetti. Goldman Antonetti
offers and our review of the record suggests nothing-- save
the language of the settlement agreement, which does not,
by its terms, cover Goldman Antonetti -- that would lead
us to conclude that the district court's findings were clearly
erroneous under any legal standard governing
interpretation of a contractual term.
In sum, we are satisfied that the district court did not
abuse its discretion in concluding that Goldman Antonetti
is subject to some form of sanction and that $120,000 was
an appropriate sanction.
41
3. The Process of Determining the Extent of Harm
Caused by Discovery Violations
The movants appeal the measure of the sanctions the
court awarded to them. They argue that the process the
court undertook to determine the extent of the harm
caused by the sanctionable conduct was in error, first
because the district court ruled that their submissions
detailing their harm were inadequate, and second because
the district court awarded a uniform level of sanction based
on the submission of one party. It would be useful, then, to
begin by briefly describing that process.
Having held that the discovery violations caused harm,
the court examined the papers these parties submitted that
purported to describe the extent of that harm. The court
believed that the papers "suffer[ed] from two shortcomings."
Tutu III, 166 F.R.D. at 342. First, the papers did not
adequately categorize the claimed harm within the
framework the court had created for addressing the
sanctionable conduct. The court found it difficult to
determine whether the moving parties were seeking costs
and expenses from (1) discovery violations related to the
search for evidence of contamination at ETSS; (2) the
failure to disclose the Agrelot memo; or (3) the sanctions
proceedings themselves, the three broad areas into which
the court held sanctionable conduct fell. Second, the court
faulted the parties for their general failure to provide it with
documentation "that adequately and efficiently explained to
the court how those expenses could be justified as a
sanction." Id.
These shortcomings led the court to award only a portion
of the sanctions sought. The court declined to scrutinize
the voluminous submissions of the parties in order to
perform the categorization it had requested the parties to
perform. Instead, the court simply denied the award of
sanctions arising from (1) discovery violations related to the
search for evidence of contamination at ETSS; and (2) the
failure to disclose the Agrelot memo. The court did,
however, award sanctions arising from the sanctions
proceedings themselves. The court set a uniform level of
sanction award based on L'Henri's request. The court did so
42
because it believed that L'Henri's request was clear, well
supported, and, in all, "unassailable."
a. The Failure of the Submission
We believe that the district court was well within its
discretion to deny the requested sanctions based upon the
parties' submissions. Our independent review of the
submissions generally confirms the district court's view
that they are less than helpful. The submissions are
voluminous, are not well organized, and, at bottom, are
unclear. It would take an enormous effort to impress upon
them the order necessary for a reasoned decision, including
the making of a reasoned judgment as to the validity of the
requests contained therein. Although we suspect that, had
the district court chosen to undertake such an effort, the
material submitted might ultimately have supported the
award of additional sanctions, we do not believe that it was
unreasonable or a clear error of judgment for the district
court to refuse such a huge task.
Engaging the submissions on their own terms would
cause great delays in a complex case already delayed by
discovery violations and already taxing judicial resources.
In short, the district court exercised its discretion in such
a manner so as to prevent "a second major litigation."
Hensley v. Eckerhart, 461 U.S. 424, 437 (1983) (discussing
a request for attorney's fees in civil rights litigation). We do
not believe that by doing so the district court abused its
discretion.
Instructive in this regard are cases addressing requests
for attorney's fees under civil rights or other similar
statutes that allow for fee shifting in certain circumstances.
These cases make clear that the applicant for fees has an
affirmative responsibility to assist the court in sorting
through, organizing, and evaluating a fee request. The
Supreme Court has stated that in such cases the "fee
applicant bears the burden of establishing entitlement to
an award and documenting the appropriate hours expended
and hourly rates." Id. In submitting an application, the
applicant must exercise "billing judgment" by making a
"good-faith effort to exclude from a fee request hours that
43
are excessive, redundant, or otherwise unnecessary." Id. at
434. As we stated in Hall v. Borough of Roselle, 747 F.2d
838 (3d Cir. 1984), "members of the bar are quasi-officers
of the court and they are expected to be careful . .. in their
representations to the court." Id. at 841-42. Busy district
judges cannot be expected to do lawyers' work.
In sum, as with requests for attorney's fees, in assessing
the harm discovery violations may have caused to litigants,
district courts deserve the conscientious assistance of
lawyers. Although a court is free to do so, it is not
incumbent upon a district court to devote its own valuable
time, energy, and resources to remedy the shortcomings of
movants' submissions if that assistance falls short. Nor will
we require the court to do so here. We thus do not believe
the district court abused its discretion in refusing to award
sanctions based on the submissions of the movants.
b. Basing the Sanctions on L'Henri's Request
We also believe that the district court was within its
discretion to award each party a uniform level of sanction
to compensate the parties for their participation in the
sanctions proceedings, and to base that uniform level on
the submission of L'Henri. The decision to impose a
uniform level of sanction suggests that the court believed
that the amount of effort appropriately expended in
preparing for and participating in the sanctions proceedings
was uniform across the various parties. Such a belief was
not unreasonable here since the parties were similarly
situated.
According to the court, L'Henri's counsel, Nancy D'Anna,
submitted well-reasoned, thoroughly researched, and
adequately documented material to the court throughout
the sanctions proceedings. What is more, the court
continued, L'Henri produced such material efficiently and
relatively cheaply. In deciding to base the uniform level of
sanction on L'Henri's request, the district court implicitly
found that each party could have produced similarly well-
reasoned, thorough, and adequately documented material
for no greater cost than that incurred by L'Henri. We
believe that it is not an abuse of discretion for the district
44
court to assume that all parties can produce work of
L'Henri's quality for approximately the same cost.
In sum, we believe the district court acted within its
discretion in awarding only a portion of the monetary
sanctions sought by the moving parties.
V. CLAIMS FOR CERCLA CONTRIBUTION
Unfortunately, we have no appellate jurisdiction over that
portion of the district court's order rejecting the motion to
dismiss Esso's claims for CERCLA contribution as a
sanction under Poulis v. State Farm Fire and Casualty Co.,
747 F.2d 863 (3d Cir. 1984). Poulis sets out a six-factor
balancing test to guide a court's analysis as to whether to
dismiss a claim as a sanction. See id. at 868. One of those
factors requires that we examine the "meritoriousness of the
claim or defense." Id. (emphasis in original). However, the
CERCLA claims have never been filed, though they
undoubtedly will be. The district court, in an effort to stem
the voluminous paper flow, has apparently asked counsel
to withhold moving forward on the CERCLA claims until a
more propitious point in the litigation. Therefore, under the
current posture of the case we would be hard pressed to
find some means to review contentions with respect to
these claims.
If this problem did not exist, the parties might argue that
we have jurisdiction over the Poulis claim under the
collateral order doctrine as set forth in Cohen.25 However,
the Cohen test would allow us to exercise jurisdiction only
if, inter alia, our review would not require us to examine
the merits of the underlying litigation that remains to be
adjudicated. To review the Poulis claim, we would need to
do just that because Poulis requires us to examine the
merits of the underlying CERCLA litigation.
Additionally, the Cohen test does not allow our exercise of
appellate jurisdiction over a non-final order if the order can
be appealed effectively after final judgment. Here, there can
be little dispute that the parties can appeal the Poulis claim
_________________________________________________________________
25. As we explain supra section II, part A, the district court's order is not
final for appellate jurisdiction purposes.
45
after final judgment, by which time the claim will likely be
better defined. We therefore have no jurisdiction over that
part of the district court's order denying the motion to
dismiss Esso's claim for contribution as a sanction, and
will dismiss the appeals challenging that part of the order.
VI. CONCLUSION
The order of the district court will be affirmed insofar as
it imposes a $120,000 sanction on Goldman Antonetti and
insofar as it rejects the claims for additional sanctions
against Esso and Goldman Antonetti, but will be reversed
insofar as it orders the suspension of Cepeda, Romero, and
Torres and insofar as it requires Esso and Goldman
Antonetti to fund a Community Service Sanction Account.
The appeals relating to the refusal of the district court to
dismiss Esso's claims for contribution will be dismissed.
A True Copy:
Teste:
Clerk of the United States Court of Appeals
for the Third Circuit
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