Republic of the Philippines v. Westinghouse Electric Corp.

Opinions of the United
1994 Decisions States Court of Appeals
for the Third Circuit
12-20-1994
Phillipines v. Westinghouse Elec. Corp.
Precedential or Non-Precedential:
Docket 93-5667
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UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
___________
No. 93-5672
___________
THE REPUBLIC OF THE PHILIPPINES; NATIONAL
POWER CORPORATION
Appellants,
vs.
WESTINGHOUSE ELECTRIC CORPORATION;
WESTINGHOUSE INTERNATIONAL PROJECTS COMPANY;
BURNS AND ROE ENTERPRISES, INC.
Appellees.
___________
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
(D.C. Civil No. 88-cv-05150)
___________
ARGUED MAY 13, 1994
BEFORE: BECKER and LEWIS, Circuit Judges,
and POLLAK, District Judge*
(Filed December 20, 1994)
___________
*
Honorable Louis H. Pollak, United States District Judge for
the Eastern District of Pennsylvania, sitting by designation.
David J. Cynamon
William P. Barr (ARGUED)
Shaw, Pittman, Potts & Trowbridge
2300 N Street, N.W.
Washington, DC 20037
Attorneys for Appellants
Richard W. Clary (ARGUED)
Cravath, Swaine & Moore
825 Eighth Avenue
Worldwide Plaza
New York, NY 10019-7415
Attorney for Appellees, Westinghouse Electric
Corporation and Westinghouse International
Projects Company
Glenn A. Mitchell
Stein, Mitchell & Mezines
1100 Connecticut Avenue, N.W.
Suite 1100
Washington, DC 20036
Attorney for Appellee, Burns and Roe
Enterprises, Inc.
___________
OPINION OF THE COURT
___________
LEWIS, Circuit Judge.
This case raises important issues at the intersection
of two principles: our deep-seated belief that a district court
must be permitted to protect the integrity of its fact-finding
process, and the settled considerations which courts in the
United States must heed when considering whether to enjoin the
executive activities of a foreign sovereign carried out in that
sovereign's own territory. The district court found that the
Republic of the Philippines was harassing witnesses who had
testified against it in a suit it had brought in federal court in
New Jersey. Thus, the court enjoined the Republic from
continuing this harassment. The court also denied interlocutory
certification of an underlying jury verdict so as to enforce its
injunction, and ordered that any settlement in the case be
conditioned upon acceptance of the court's continuing
jurisdiction to enforce its injunctions. Because the district
court exceeded its authority, we will reverse.
I.
A.
In 1988, the Republic of the Philippines (the
"Republic") and the National Power Corporation ("NPC") filed a
complaint against Westinghouse Electrical Corporation and
Westinghouse International Projects Company (collectively
"Westinghouse") and Burns and Roe Enterprises, Inc. ("Burns and
Roe") concerning the construction of a nuclear power plant in
Bagac, Bataan. The fifteen-count complaint alleged breach of
contract, fraud, tortious interference with fiduciary duties,
negligence, civil conspiracy, violations of state and federal
racketeering statutes, and violations of the Robinson-Patman Act
and the New Jersey Consumer Fraud Act. The district court
determined that all but two of the counts against Westinghouse
were subject to international arbitration. Republic of the
Philippines v. Westinghouse Electric Corp., 714 F. Supp. 1362
(D. N.J. 1989). Thus, most of the Republic's claims against
Westinghouse were referred to arbitration under the Rules of
Conciliation and Arbitration of the International Chamber of
Commerce.1 In the remaining two counts, the Republic and NPC
alleged that Westinghouse and Burns and Roe had conspired to
bribe then-President Ferdinand Marcos in order to win the power
plant contract, and had thus tortiously interfered with the
fiduciary duties that Marcos had owed the people of the
Philippines.
1
. The court ruled that only one count of the plaintiffs'
complaint against Burns and Roe was subject to arbitration, but
While preparation for the trial on the tortious
interference counts proceeded in New Jersey, arbitration
implicating the other counts proceeded apace in Geneva. In late
1991, reaching the bribery allegations in the context of the
Republic's challenge to the validity of the contract's
arbitration clause, the arbitrators found that the Republic had
failed to show that Westinghouse had bribed President Marcos.
When the arbitrators included this finding in a preliminary award
for Westinghouse and Burns and Roe, entered in December, 1991,
the defendants moved for summary judgment in the district court,
claiming the arbitrators' preliminary award collaterally estopped
the Republic and NPC from litigating the bribery and tortious
interference claims. The district court denied the motion and,
when settlement discussions broke down, the case went to trial in
March, 1993.
As the district court noted in the opinion supporting
the order now before us, "[f]rom all accounts in the Philippine
press, [the filing of the suit against Westinghouse and Burns and
Roe and the arbitration in Geneva] assumed enormous importance in
the eyes of Philippines leaders." District Court Opinion ("Op."
at 5. The court explained that "[c]onstruction of the power
plant had been undertaken to help solve the desperate electrical
power shortage in the Philippines. Huge foreign loans were
incurred to pay for the project." Id. When Marcos left the
(..continued)
nevertheless stayed all of the non-bribery counts against Burns
and Roe in the interest of judicial economy.
Philippines and the Aquino government suspended construction of
the power plant, "the Republic found itself with a partially
completed plant which was producing no electricity, an ever
worsening shortage of electrical power, and a huge foreign debt
burden on which, it is said, interest alone amounts to $300,000
each day." Id. Thus, the court surmised that "[i]t appears that
the leaders of the Republic looked to a judgment in this case and
in the arbitration proceedings as the solution to these
staggering problems." Id. The court further surmised that this
factual context "may provide some explanation of the untoward
events which transpired after the jury rendered a verdict against
the Republic." Id.
During the trial, two Filipino Westinghouse workers,
Pedro A. Padre, Jr. and Jerry R. Orlina, testified for
Westinghouse. In addition, Westinghouse introduced an affidavit
from Perfecto V. Fernandez, a professor of law at the government-
owned University of the Philippines. The affidavit had been
rendered two years prior to the trial, when Westinghouse had
moved for summary judgment, and discussed Philippine law relevant
to the issues in the case. This testimony, the subsequent
actions threatened and taken by the Republic against the
witnesses, and the court's responses are the subjects of this
appeal.
B.
After a lengthy trial, the jury returned a verdict for
Westinghouse and Burns and Roe on the bribery and tortious
interference counts. Because the other claims were still stayed
pending arbitration, the Republic filed a motion for
certification pursuant to Fed. R. Civ. P. 54(b) to appeal the
issues that had been adjudicated. At a hearing held on June 28,
1993 to consider this motion, the court was inclined to grant
certification, stating that "there is no case more appropriate
for certification than this one" (Joint Appendix ("J.A.") at 41)
and that "clearly [the case] should be certified" (J.A. at 44).
However, Westinghouse then advised the court that it
had evidence that Padre, Orlina and Fernandez were being harassed
and subjected to retaliation by Philippine officials because of
their testimony on behalf of Westinghouse. When these
allegations were brought to its attention, the court abruptly
changed its mind about certification, stating that although the
facts needed to be developed,
if there is a basis to [the allegation of
harassment], it is a very, very serious
charge, because nobody could come into this
Court and then abuse people who come and
testify. Some very dramatic, drastic
remedies would have to be provided . . . It
would be destructive of our whole system. No
foreign government should be allowed to use
our court system and then not play fair with
the witnesses in the case. I can't think of
anything more destructive of our system, and
simply could not permit it.
J.A. at 49-50. The court concluded that it must "hold off" on
signing the Rule 54(b) certification because it would lose
jurisdiction once the notice of appeal was filed. Id. at 50.
The court ordered briefing and requested a motion from
Westinghouse formally requesting relief from the court.
Westinghouse filed a motion requesting that the court (1) enjoin
the Republic from further harassing any witnesses, (2) sanction
the Republic by barring it from further prosecuting its claims
before the district court or appealing the adverse jury verdict,
and (3) grant Westinghouse its attorneys' fees incurred on the
motion.
The court held a hearing in early July, 1993, at which
argument was presented on the documentary evidence submitted by
the parties relating to the Westinghouse motion, including
affidavits of various parties, transcripts of television
programs, news clippings, and other data. In correspondence with
the parties after the hearing, the court explained that, having
considered materials submitted by the Republic with a renewed
motion for certification, it believed that "the Republic ha[d]
anticipated some of the requirements which are contained in my
proposed order [addressing the allegations of harassment],
although others remain to be fulfilled." J.A. at 107. Thus, the
court circulated its proposed opinion and order and scheduled
another hearing for September 27, 1993, at which it heard
argument about the actions the Republic had taken to address the
court's concerns. Not fully satisfied with the Republic's
explanations at this final hearing, however, the district court
indicated that it would finalize its opinion and order shortly.
On October 4, 1993, the court filed the opinion and
order. The court found that, since the jury verdict, Orlina,
Padre, and Professor Fernandez had been "the target of
vilification in the public press inspired by officials in the
Philippines government and each has been the target of actual or
threatened government action." Op. at 15. The court stated that
the "attack[s]" were "spearheaded" by Francisco A. Villa, Overall
Deputy Ombudsman of the Republic, a presidential appointee whose
duties include initiating investigations and directing "any
public official to perform any act required by law and to request
assistance from any governmental agency." Id. at 16.
The court found that Deputy Ombudsman Villa had
threatened on numerous occasions to take legal action for tax
fraud against Padre and Orlina as a result of their testimony on
behalf of Westinghouse. The court found that both Padre and
Orlina had faced public censure and lost business opportunities
because of the Republic's actions, and that they would be
financially ruined if tax evasion charges were brought against
them. In this regard, the court also found it significant that
another Filipino who had been involved in the same activities as
Padre and Orlina had agreed to testify for the Republic -- and
was then granted immunity from prosecution for tax evasion. Op.
at 13, 19.
The court also documented that Villa had initiated
disciplinary proceedings against Professor Fernandez for having
allegedly violated Philippine law by testifying against the
government while under its employ. Although the Republic had
known about Fernandez' affidavit when it was submitted to the
court in 1991, Villa filed charges relating to the affidavit on
May 31, 1993, twelve days after the verdict. Villa charged that,
by filing an affidavit on behalf of Westinghouse, Fernandez had
violated his duty as a public officer "to be loyal at all times
to the Republic and the Filipino people . . . ." Op. at 21,
quoting administrative complaint. The court noted that the
administrative complaint concluded by stating that Fernandez, "in
a cowardly attempt to escape the clutches of the law, whimpered
``I'm not even a government official. I'm just a lowly college
professor.'" Op. at 21, quoting administrative complaint, which
quotes Philippines Daily Inquirer (May 20, 1993). The complaint
also quoted approvingly from a news columnist who had written
that "Professor Fernandez should not only be fired from the State
University but should be hanged in public at the courtyard of the
Nuclear Plant in Morong, Bataan . . . ." Id. The court
additionally found that Villa had called Fernandez a traitor "on
a number of occasions, including a television show," and that
"this characterization was repeated in the Philippine press."
Id. Based on the tone and substance of the administrative
complaint, as well as the circumstances surrounding its filing,
the court concluded that the charges against Fernandez were
"motivated by rage at the jury verdict rather than considered
judgment . . . ." Id.
The Republic had submitted an affidavit from Villa
purporting to establish that he did not institute proceedings
against Fernandez because of the jury verdict, that Padre's and
Orlina's fears are unwarranted, and that the Ombudsman's Office
has not harassed any witness and had no intention of doing so.
Op. at 24. However, the court found that Villa lacked
credibility. Given the evidence of record, "for [Villa] to state
that ``[Padre's and Orlina's] fears and apprehensions are
unfounded' is poppycock." Id. at 25. Furthermore, according to
the court, the statements about Fernandez in Villa's affidavit
continued to "reflect the Republic's rage at losing the case and
its intent to strike out at one of the three persons seized upon
as scapegoats for that loss." Id. And the court found that
Villa's assertion that the Ombudsman's Office was not guilty of
harassment was "simply not true." Id. at 25.
Although the evidence of harassment centered on Villa,
the court determined that other members of the Philippines
government had supported Villa's efforts. The court found ample
evidence that Villa "was acting in accordance with the policies
of the Office of the Executive, President Ramos." Op. at 22.
The court also found that the harassment was not confined to the
executive branch of government. Id. at 17 (noting that a
Philippine senator had urged a study of the "culpability" of the
three witnesses).
The court acknowledged that the Republic had submitted
evidence purporting to show that the government did not support
any action designed to harass or intimidate witnesses, and that
the government specifically did not intend to pursue any charges
against Padre, Orlina, or Fernandez.2 The court noted that the
evidence demonstrated "a partial retreat from the retaliatory
conduct" the court had documented and indicated that the Republic
intends "not to pursue the retaliatory conduct further against
Padre and Orlina." Op. at 28. However, the court noted that the
proceedings against Fernandez "continue[d] unabated." Id. at 30.
Because the court found that the Republic's actions
"threaten[] both the integrity of a United States District Court
and the foundations of our system of justice" (Op. at 32), it
concluded that it must take action. Accordingly, it (1) enjoined
the Republic from harassing any witness who had given evidence or
will give evidence in this case or the arbitration proceeding;
(2) directed the Republic to renounce and abandon its retaliatory
actions, and to advise Padre and Orlina officially of its actions
and intended actions with respect to their personal income taxes;
(3) denied certification under Fed. R. Civ. P. 54(b) ("Rule 54(b)
certification") until the Republic established that it was in
compliance with the injunctive provisions of the court's order
and that the proceedings against Fernandez were resolved "in a
2
. With the renewed motion for certification, the Republic
submitted a press release and statement noting that the Republic
did not condone any retaliation against any past or future
witness in any legal proceeding; documents purporting to show
that Villa's proceedings against Fernandez were not in
retaliation for his affidavit, but because Fernandez violated the
law, and that Villa acted independently of the Executive; and
statements purporting to establish that the government had taken
steps to correct any mistaken impression that it intends to
retaliate against any witness.
manner which cures the retaliatory actions"; and (4) directed
that any settlement in the case must provide that the parties
agree to the court's retention of jurisdiction to enforce the
provisions of the order. Op. at 35-36; Order at 1-3.3 The
Republic appeals this order in its entirety.
II.
The Republic's challenge to the district court's order
presents three issues: (1) whether the district court exceeded
its authority in issuing the injunctive portions of its order;
(2) whether the district court erred in refusing Rule 54(b)
certification; and (3) whether the district court exceeded its
authority in ordering that if the parties settle, they must
stipulate to the district court's continuing jurisdiction to
enforce its order. We have jurisdiction over the injunctive
portions of this order under 28 U.S.C. § 1292(a)(1),4 and because
of our resolution of the Republic's challenge to the injunctions,
we find that the Rule 54(b) issue becomes moot.
3
. The court denied without prejudice Westinghouse's motion to
bar the Republic from proceeding with this case, as well as
Westinghouse's request for attorneys' fees.
4
. 28 U.S.C. § 1292(a)(1) provides that, with exceptions not
relevant here, "the courts of appeals shall have jurisdiction of
appeals from: (1) Interlocutory orders of the district courts of
the United States . . . granting, continuing, modifying, refusing
or dissolving injunctions . . . ."
III.
A.
The Republic has not adequately presented the
issue of whether the district court's factual findings constitute
clear error.5 Nevertheless, it is clear from the briefing that
the Republic disputes the district court's factual conclusions,
and we reach the Republic's challenge because of the significance
of this case not only to a foreign sovereign, but also to our
domestic legal system. We believe the evidence supports the
district court's conclusion that Deputy Ombudsman Villa, with the
support of other members of the Philippines government, pursued a
campaign designed to smear Padre, Orlina, and Fernandez as
scapegoats for the Republic's failure to achieve victory in the
district court.
5
. Although the Republic stated in its initial briefing that
it "strongly disagrees" with the district court's findings "that
Philippine government officials engaged in retaliation against or
harassment of witnesses in this case" (Appellant's Br. at 19), it
did not squarely challenge those findings as clearly erroneous.
See Burns and Roe Br. at 14 (noting Republic's failure to
challenge findings). The Republic did raise the issue of clear
error in its reply brief (Appellant's Reply Br. at 10-16), but
that was one brief too late: we have often instructed that
"appellants are required to set forth the issues raised on appeal
and to present an argument in support of those issues in their
opening brief." Kost v. Kozakiewicz, 1 F.3d 176, 182 (3d Cir.
1993); Institute for Scientific Info., Inc. v. Gordon & Breach,
Science Publishers, Inc., 931 F.2d 1002, 1011 (3d Cir. 1991);
Daggett v. Kimmelman, 811 F.2d 793, 795 n.1 (3d Cir. 1987); see
also Fed. R. App. P. 28(a)(3) (requiring appellant to provide in
brief "[a] statement of the issues presented for review"); Third
Cir. Loc. App. R. 28.1(a)(i) (noting that party must comply with
Fed. R. App. P. 28(a)(3) by designating where in record the issue
presented for appeal was raised and what standard of review
applies).
We further agree with the district court's observation
that such behavior had "a doubly subversive effect. First,
witnesses, who should have been able to rely upon both the
implicit and explicit assurances of th[e district] court that
they could testify fully and freely without fear of any
retaliatory actions, have been betrayed." Op. at 33.
Additionally, "witnesses from the Philippines will fear to
testify for Westinghouse and against the Republic in the
arbitration proceedings and in any future proceedings in th[e
district] court, preventing each tribunal from receiving all the
facts." Id. We therefore find no error in the district court's
conclusion that the Republic's harassment created a "situation
that no court can tolerate, and that effective relief must be
granted." Id. at 34.
Before we turn to the question of whether the district
court's chosen relief was an abuse of its discretion, however, we
note certain facts of significance. Although the district court
found that the Republic's acts were retaliatory, it did not find
that they were without foundation. In other words, the district
court did not find that Padre and Orlina could not, under normal
circumstances, be prosecuted for the activities they admitted to
in open court in New Jersey. The court also stated that it
accepted for purposes of its order that "under normal
circumstances" Villa could file charges against Fernandez for his
acceptance of compensation for providing an affidavit in this
case. Op. at 34.6
The court also concluded that by the time it filed its
order, the Republic had taken steps to "cure the effects of the
retaliatory actions against Padre and Orlina and any additional
steps which may be required can be taken readily." Id. The only
element of the challenged conduct that remained was the
administrative complaint against Fernandez.
Additionally, the court concluded for the purposes of
its order that the Ombudsman's Office is independent of the
Executive Branch. Op. at 34. Thus, it tacitly accepted the
argument that the Republic could not compel Villa to withdraw his
complaint against Fernandez (see id.), and for the purposes of
this opinion, we make the same assumption.7
We also note a subsequent factual development not
considered by the district court. During the pendency of this
matter before us, we were informed by counsel for the Republic
6
. We reach no conclusion about whether the evidence provided
at trial, or the fact of Fernandez' providing affidavits to
Westinghouse, constitute evidence of wrongdoing under Philippines
law. We note only that the district court did not conclude that
the charges against Padre, Orlina, and Fernandez were meritless,
whatever the motivations may have been in threatening or bringing
them.
7
. Indeed, there appears to be substantial support for this
proposition. See Constitution of the Philippines Art. XI, § 5
(1987) (Office of the Ombudsman established as independent
office); In re Raul M. Gonzalez, 160 S.C.R.A. 771, 775 (1988)
(Ombudsman and deputies may be removed only through impeachment
in Congress for "culpable violation of the Constitution, treason,
bribery, graft and corruption, other high crimes, or betrayal of
the public trust").
that the administrative proceeding that had been initiated by
Villa against Fernandez had been dismissed by the President of
the University of the Philippines. Noting that Fernandez had
offered his opinion on a matter of public importance, the
President of the University wrote that while
[i]t is conceded that Prof. Fernandez' point
of view may appear to be unacceptable to some
or more Filipinos[,] . . . the role of
academe is to continually engender varying
thoughts, positions, theories and postulates
on various key issues and concerns affecting
the nation. This is not the first time that
a dissenting voice has been put forth against
the position taken by officials of the
Republic and if the University is to remain
at all one of the bastions of free thought
and speech, it most certainly will not be the
last.
Order, In re Complaint of Deputy Ombudsman Francisco Villa v.
Prof. Perfecto V. Fernandez of the College of Law 6 (May 5,
1994).8
With these facts in mind, we now address whether the
injunctive portions of the court's order were lawful exercises of
the court's discretion.
8
. Cessation of the Republic's threats of tax fraud
investigations against Padre and Orlina, and dismissal of the
administrative complaint against Fernandez, do not moot the
Republic's appeal of the injunctive portions of the order, since
the district court's order is still in effect and that order
reaches conduct targeted at other individuals, as well as the
three named. Yet these facts may play a role in the district
court's assessment of a proper sanction of the Republic.
B.
The district court's findings force us to confront
fundamental issues involving a federal court's power to control
litigants who come before it. As discussed below, a district
court's power to sanction or exercise other forms of judicial
control over a foreign sovereign is not coterminous with its
power to regulate or punish other litigants. Here, in issuing an
order which purports to supervise and control the law enforcement
activities of a foreign sovereign nation against its own citizens
on its own soil, the district court exceeded the boundaries of
its lawful discretion.
1.
Our legal system will endure only so long as members of
society continue to believe that our courts endeavor to provide
untainted, unbiased forums in which justice may be found and
done. Thus, it is beyond peradventure that district courts have
broad authority to preserve and protect their essential function.
To ensure that district courts have tools available to protect
their truth-seeking process, the Federal Rules of Civil Procedure
allow district courts to sanction parties who fail to meet
minimum standards of conduct in many different contexts. E.g.,
Fed. R. Civ. P. 11 (groundless pleadings and other papers); 16(f)
(failing to abide by pretrial orders); 26(g), 30(g), 37(d), and
37(g) (discovery abuses), 41(b) (involuntary dismissal for
failure to prosecute, failure to follow rules, or failure to obey
court order); 45(f) (disobeying subpoena); 56(g) (providing
affidavit at summary judgment in bad faith or for delay).
Congress has also enacted laws providing additional powers to
district courts to police misconduct. E.g., 18 U.S.C. § 401
(contempt power); 28 U.S.C. § 1927 (punishing attorneys who
vexatiously multiply proceedings). See generally Chambers v.
NASCO, Inc., 501 U.S. 32, 111 S. Ct. 2123, 2142 (1991) (Kennedy,
J., dissenting) (listing sources of sanctioning authority).
Nor do those formal rules and legislative dictates
exhaust district courts' power to control misbehaving litigants.
To the contrary, the Supreme Court recently reaffirmed that a
district court has inherent authority to impose sanctions upon
those who would abuse the judicial process. Chambers, 111 S. Ct.
at 2132. In Chambers, a private party challenged a district
court's order making him liable to his opponent for attorneys'
fees of nearly $1 million expended because of the party's bad
faith conduct during the course of litigation. The Court
rejected the challenge, finding that the order was an appropriate
exercise of the court's inherent powers to control litigants.
The Court explained that "[i]t has long been understood that
``certain implied powers must necessarily result to our Courts of
justice from the nature of their institution,' powers ``which
cannot be dispensed with in a Court, because they are necessary
to the exercise of all others.'" Id., quoting United States v.
Hudson, 11 U.S. (7 Cranch) 32 (1812).9 Such salutary powers, the
Court noted, "are ``governed not by rule or statute but by the
control necessarily vested in courts to manage their own affairs
so as to achieve the orderly and expeditious disposition of
9
. The Court, in fact, unanimously recognized that district
courts have inherent authority to fashion sanctions against
parties in certain circumstances. Justice Scalia disagreed with
the majority's interpretation of the order at issue in the case
and therefore dissented, but nevertheless agreed with the
majority that a court has the ability to "enter orders protecting
the integrity of its proceedings." Chambers v. NASCO, Inc., 501
U.S. 32, 111 S. Ct. 2123, 2140 (1991). And while Justice
Kennedy, in a dissent joined by the Chief Justice and Justice
Souter, believed that a district court must first exhaust express
grants of sanctioning power before utilizing its inherent
authority (id. at 2141), he did not gainsay that district courts
have such authority and may use it to combat abuses of the
judicial process when other, express sources of authority fail
(id. at 2141, 2149).
cases.'" Chambers, 111 S. Ct. at 2132, quoting Link v. Wabash R.
Co., 370 U.S. 626, 630-31 (1962).10
Of course, "[b]ecause of their very potency, inherent
powers must be exercised with restraint and discretion."
Chambers, 115 L. Ed. 2d at 45. "A primary aspect of [a district
court's] discretion is the ability to fashion an appropriate
sanction for conduct which abuses the judicial process" (id.
(emphasis added)). Thus, a district court must ensure that there
is an adequate factual predicate for flexing its substantial
muscle under its inherent powers, and must also ensure that the
sanction is tailored to address the harm identified. In
exercising its discretion under its inherent powers, the court
should be guided by the same considerations that guide it in the
imposition of sanctions under the Federal Rules. First, the
court must consider the conduct at issue and explain why the
10
. Illustrating the variety of powers exercised by a district
court, the Supreme Court noted that courts can discipline
attorneys, punish contempt, vacate judgments obtained by fraud,
investigate whether a fraud upon the court has been committed,
bar from the courtroom those who disrupt proceedings, dismiss
actions on the ground of forum non conveniens, and dismiss a suit
for failure to prosecute. Chambers, 111 S. Ct. at 2132-33. In
the same spirit, we have noted that a district court may dismiss
a suit outright in response to litigation abuses. Eash v.
Riggins Trucking Inc., 757 F.2d 557, 566 (3d Cir. 1985) (in
banc); see also, e.g., Frumkin v. Mayo Clinic, 965 F.2d 620, 627
(8th Cir. 1992) (court likely would not have abused discretion if
it had dismissed suit because plaintiff had intimidated
witnesses); National Hockey League v. Metropolitan Hockey Club,
Inc., 427 U.S. 639, 643 (1976) (per curiam) (dismissal under Fed.
R. Civ. P. 37 not an abuse of discretion). And certainly, in
appropriate circumstances, a district may enjoin a wrongdoing
party from continuing its wrongful conduct or direct it to take
corrective action. Cf. Gregory v. Depte, 896 F.2d 31 (3d Cir.
1990) (contempt sanction).
conduct warrants sanction.11 If an attorney, rather than a
client, is at fault, the sanction should ordinarily target the
culpable attorney. Carter v. Albert Einstein Med. Center, 804
F.2d 805, 807 (3d Cir. 1986); Dunbar v. Triangle Lumber and
Supply Co., 816 F.2d 126, 128-29 (3d Cir. 1987). Cf. Poulis v.
State Farm Fire and Casualty Co., 747 F.2d 863, 868 (3d Cir.
1984) (court must consider "the extent of the party's personal
responsibility," but this factor "is not dispositive, because a
client cannot always avoid the consequences of the acts or
omissions of its counsel"). Obviously, a pattern of wrongdoing
may require a stiffer sanction than an isolated incident; a grave
wrongdoing may compel a more severe sanction than might a minor
infraction; and wrongdoing that actually prejudices the
11
. Although we stated in Landon v. Hunt, 938 F.2d 450 (3d Cir.
1991), that "a prerequisite for the exercise of the district
court's inherent power to sanction is a finding of bad faith
conduct" (id. at 454), that statement should not be read to
require a finding of bad faith in every case, regardless of the
sanction contemplated. Landon addressed the propriety of
assessing attorneys' fees against a litigant; thus, we followed
the Supreme Court's decision in Chambers, which also involved
assessment of attorneys' fees. Landon, 938 F.2d at 454. Under
the American Rule, attorneys' fees ordinarily may not be shifted
to a losing party. However, the Court in Chambers had relied on
an exception to that rule allowing fees to be shifted when the
losing party exhibited "bad faith." Chambers, 111 S. Ct. 2133.
As Justice Scalia pointed out in his dissent, however, the fact
that fee-shifting as a sanction requires a finding of bad faith
"in no way means that all sanctions imposed under the courts'
inherent authority require a finding of bad faith." Id. at 2140.
Thus, a court need not always find bad faith before sanctioning
under its inherent powers: "[s]ince necessity does not depend
upon a litigant's state of mind, the inherent sanctioning power
must extend to situations involving less than bad faith." Id.;
see generally Estate of Leon Spear v. Commissioner of IRS, No.
93-7727, __ F.3d __, 1994 WL 656893 at *9-*10 (3d Cir. Nov. 21,
1994) (discussing role of bad faith in sanctioning).
wrongdoer's opponent or hinders the administration of justice may
demand a stronger response than wrongdoing that, through good
fortune or diligence of court or counsel, fails to achieve its
untoward object. Furthermore, there may be mitigating factors
that must be accounted for in shaping the court's response.
Second, having evaluated the conduct at issue, the
district court must specifically consider the range of
permissible sanctions and explain why less severe alternatives to
the sanction imposed are inadequate or inappropriate. Although
the court need not "exhaust all other sanctioning mechanisms
prior to resorting to its inherent power" (Landon v. Hunt, 938
F.2d at 450, 454 (3d Cir. 1991)), the court must explain why it
has chosen any particular sanction from the range of alternatives
it has identified. See Poulis, 747 F.2d at 868 (sanctions under
Fed. R. Civ. P. 16 and 37).
2.
The district court did not explain under what authority
it was proceeding in enjoining the Republic. We deduce from the
circumstances, and assume for purposes of evaluating the
injunctive provisions of the district court's order, that it was
acting under its inherent authority. "We review a district
court's imposition of sanctions under its inherent power for
abuse of discretion" (Chambers, 111 S. Ct. at 2138), but we have
made it clear that "a district court ``would necessarily abuse its
discretion if it based its ruling on an erroneous view of the law
or on a clearly erroneous assessment of the evidence.'" Garr v.
U.S. Healthcare, Inc., 22 F.3d 1274, 1279 (3d Cir. 1994), quoting
Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 405 (1990).
At their core, the injunctive portions of the district
court's order implicate international comity, that elusive
doctrine -- something more than mere international manners, but
less than obligation -- which attempts to mediate the frictions
inherent in a community of sovereign states. Comity, in the
words of Justice Gray,
is the recognition which one nation allows
within its territory to the legislative,
executive, or judicial acts of another
nation, having due regard both to
international duty and convenience, and to
the rights of its own citizens or of other
persons who are under the protection of its
laws.
Hilton v. Guyot, 159 U.S. 113, 164 (1895). The doctrine "is a
nation's expression of understanding which demonstrates due
regard both to international duty and convenience and to the
rights of persons protected by its own laws." Somportex Ltd. v.
Philadelphia Chewing Gum Corp., 453 F.2d 435, 440 (3d Cir. 1971).
Consequently, "comity serves our international system like the
mortar which cements together a brick house. No one would
willingly permit the mortar to crumble or be chipped away for
fear of compromising the entire structure." Laker Airways Ltd.
v. Sabena, Belgian World Airlines, 731 F.2d 909, 937 (D.C. Cir.
1984).
Comity cannot be the source of a disability that
prevents a district court from having the power to address
wrongdoing that impacts a domestic court. As Hilton makes clear,
comity must yield to domestic policy: "no nation will suffer the
laws of another to interfere with her own to the injury of her
citizens . . . ." Hilton, 159 U.S. at 164. Thus, "from the
earliest times, authorities have recognized that the obligation
of comity expires when the strong public policies of the forum
are vitiated by the foreign act." Laker Airways, 731 F.2d at
937.
But while it is true that principles of comity cannot
compel a domestic court to uphold foreign interests at the
expense of the public policies of the forum state, it can -- and
does -- force courts in the United States to tailor their
remedies carefully to avoid undue interference with the domestic
activities of other sovereign nations. Comity is essentially a
version of the golden rule: a "concept of doing to others as you
would have them do to you . . . ." Lafontant v. Aristide, 844 F.
Supp. 128, 132 (S.D. N.Y. 1994); see Mitsubishi Motors Corp. v.
Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 631 (1985). Thus,
it may be permissible to prescribe and enforce rules of law in a
foreign country, but unreasonable to do so in a particular manner
because of the intrusiveness of a particular type of sanction.
That is the case here: the district court had the power to
sanction the Republic for its wrongdoing, but it should not have
entered the injunctive provisions at issue here.
The mere fact of sovereignty does not insulate a
litigant from sanction for failure to abide by the rules
governing litigation in American courts. It would be perverse to
allow a foreign sovereign litigant to "take our law free from the
claims of justice." National City Bank of New York v. Republic
of China, 348 U.S. 356, 362 (1955). The Republic's actions,
although taken in a foreign country, undeniably had effects in
the United States. Under general principles of international
law, a tribunal may prescribe laws with respect to "conduct
outside its territory that has or is intended to have substantial
effect within its territory." Restatement (Third) of the Foreign
Relations Law of the United States §402(c) (1987) (the
"Restatement"). And where a court may prescribe, it may also
enforce. Id. § 431(1) ("A state may employ judicial or
nonjudicial measures to induce or compel compliance or punish
non-compliance with its laws or regulations, provided it has
jurisdiction to prescribe in accordance with §§ 402 and 403");
see also United States v. Davis, 767 F.2d 1025, 1036 (2d Cir.
1985). Thus, because the district court found that the
Republic's actions compromised the court's ability to adjudicate
fairly the claims before it, the district court had the power to
address the retaliatory conduct notwithstanding that it
transpired on foreign soil half a world away.
However, any exercise of jurisdiction to prescribe and
enforce sanctions based on the effects of foreign activity in a
domestic court requires the court to balance the interests it
seeks to protect against the interests of any other sovereign
that might exercise authority over the same conduct. See Romero
v. Int'l Terminal Operating Co., 358 U.S. 354, 383 (1959)
(interpreting Jones Act in light of "due recognition of our self-
regarding respect for the relevant interests of foreign nations
in the regulation of maritime commerce"); Mannington Mills, Inc.
v. Congoleum Corp., 595 F.2d 1287, 1296 (3d Cir. 1979) (noting
with respect to United States antitrust laws that "[w]hen foreign
nations are involved . . . it is unwise to ignore the fact that
foreign policy, reciprocity, comity, and limitations of judicial
power are considerations that should have a bearing on the
decision to exercise or decline jurisdiction"); Timberlane Lumber
Co. v. Bank of America, 549 F.2d 597, 613 (9th Cir. 1976)
(endorsing "jurisdictional rule of reason" in potential
extraterritorial application of United States antitrust laws);
Restatement § 402, 403. Consequently, although the courts of
appeals have occasionally approved orders issued by district
courts enjoining proceedings in foreign countries that would
interfere with the proper exercise of district court
jurisdiction, they have recognized that such action must be
exercised only in rare cases, and must be premised on a thorough
analysis of the interests at stake.12
This balancing is evident in the principal cases
advanced by both the Republic and Westinghouse in support or
12
. The Restatement provides a useful, non-exclusive list of
factors that should be considered when a court contemplates
extending its reach to punish extraterritorial conduct:
(a) the link of the activity to the territory of the
regulating state, i.e., the extent to which the
activity takes place within the territory, or has
substantial, direct, and foreseeable effect upon or in
the territory;
(b) the connections, such as nationality, residence, or
economic activity, between the regulating state and the
person principally responsible for the activity to be
regulated, or between that state and those whom the
regulation is designed to protect;
(c) the character of the activity to be regulated, the
importance of the regulation to the regulating state,
the extent to which other states regulate such
activities, and the degree to which the desirability of
such regulation is generally accepted;
(d) the existence of justified expectations that might be
protected or hurt by the regulation;
(e) the importance of the regulation to the international
political, legal, or economic system;
(f) the extent to which the regulation is consistent with
the traditions of the international system;
(g) the extent to which another state may have an interest
in regulating the activity; and
(h) the likelihood of conflict with regulation by another
state.
Restatement (Third) of the Foreign Relations Law of the United
States § 403(2) (1987). As the Restatement makes clear, this
list is "not exhaustive." Id., comment b.
their respective positions. For example, in United States v.
Davis, 767 F.2d 1025 (2d Cir. 1985), Davis, a United States
citizen, was charged with money laundering. Prior to trial, the
United States government issued a subpoena to the Cayman Islands
branch of the Bank of Nova Scotia, directing it to produce
documents relating to Davis' activities. When it appeared that
the bank would comply with the subpoena, Davis filed an action
seeking a temporary restraining order in the Cayman Islands to
prevent the bank from disclosing the records, claiming that the
district court action was improper and that the bank's compliance
with the subpoena would violate a Cayman Islands law. In
response, the district court ordered Davis to cease his legal
proceedings in the Cayman Islands.
The Second Circuit held that the district court had
properly exercised its discretion in enjoining Davis from
pursuing the Cayman Islands litigation. Davis, 767 F.2d at 1037.
The Court provided three reasons: (1) the Cayman Islands
litigation "had a direct, substantial and foreseeable effect on
the United States," in that it was "instituted and pursued with
the express purpose of" frustrating the United States action;
(2) Davis had close links to this country and was thus subject to
the court's jurisdiction; and (3) "the United States had a strong
national interest in safeguarding the integrity of its criminal
process." Id.
The Davis court warned, however, that because orders
enjoining parties from pursuing litigation in foreign tribunals
"often restrict[] the jurisdiction of the foreign tribunal," such
orders "should . . . be used sparingly." Davis, 767 F.2d at
1038. Accordingly, the court emphasized that "because an order
enjoining a litigant from continuing a foreign action is facially
obstructive, international comity demands that this extraordinary
remedy be used only after other means of redressing the injury
sought to be avoided have been explored." Id.
Laker Airways Ltd. v. Sabena, Belgian World Airlines,
731 F.2d 909 (D.C. Cir. 1984), is quite similar. Laker Airlines
("Laker") filed a private antitrust suit in the United States
against four American defendants, two British defendants, a
Belgian defendant, and a Swiss defendant. In response, the
foreign defendants filed suit in Britain and secured an
injunction prohibiting Laker from pursuing its case against them
in the United States court. Laker, in turn, requested and
secured a restraining order in the United States prohibiting the
American defendants from instituting similar preemptive suits in
the United Kingdom. Laker then filed another antitrust suit in
the same United States district court naming two additional
defendants, one Dutch and the other Belgian, and sought and
received a restraining order prohibiting these defendants from
seeking relief from suit in Britain.
The Dutch and Belgian defendants in the second American
action appealed the injunction, claiming that the district court
had exceeded its jurisdiction to prescribe and enforce -- and
violated principles of international comity -- in enjoining the
defendants from seeking relief in the British courts. The
District of Columbia Circuit affirmed, finding the injunction was
proper because litigation in Britain was designed solely to
terminate the United States litigation and deprive the United
States court of its rightful jurisdiction. Laker Airways, 731
F.2d at 930. However, the Laker Airways court stressed that
comity required that the power to issue anti-suit injunctions be
used "only in the most compelling circumstances," because such
injunctions "effectively restrict the foreign court's ability to
exercise its jurisdiction." Laker Airways, 731 F.2d at 927.
In Compagnie des Bauxites de Guinea v. Ins. Co. of
North America, 651 F.2d 877 (3d Cir. 1981), we faced an
injunction similar to those addressed in Davis and Laker Airways,
but we reversed the district court. In Compagnie des Bauxites,
Compagnie des Bauxites de Guinea ("CBG") brought a claim against
several insurance companies because they would not honor a claim
on policies issued to CBG. Almost four years later, the
insurance companies filed a suit in the High Court of Justice,
Queen's Bench Division in London, seeking a declaratory judgment
rescinding the contract on the ground that CBG had failed to
disclose material facts. The district court enjoined prosecution
of the action in England, finding that the second action was
duplicative, harassing and vexatious.
On appeal, we declined to "determine that the district
court lacks the power to enjoin parties from pursuing an action
in another jurisdiction in every case." Compagnie des Bauxites,
651 F.2d at 887. We found, however, that the sole reasons for
the district court's injunction -- "duplication of issues and the
insurers' delay in filing the [foreign] action" -- were
insufficient to justify "the breach of comity among the courts of
separate sovereignties." Id.
Thus, what we recognized in Compagnie des Bauxites,
like the courts in Davis and Laker Airways, is that the exercise
of a power to prescribe and enforce requires a balancing in each
case. The domestic court's purpose in protecting a particular
interest must be set against the interests of any other sovereign
that might exercise authority over the same conduct.13
Westinghouse urges that Compagnie des Bauxites, Laker
Airways, and Davis demonstrate that the district court's
injunction in this case was a permissible exercise of its power
to protect "the proper exercise of its jurisdiction."
Westinghouse Br. at 36, 37-38. The Republic correctly counters
that the injunction in this case was very different from those
issued in the cases relied upon by Westinghouse. We assume,
without deciding, that the district court had the power to
provide the injunctive relief it purported to provide here. Our
focus, however, is on comity. Unlike the district courts in
Compagnie des Bauxites, Laker Airways, and Davis, the court here
did not simply enjoin private litigants from pursuing parallel
litigation in foreign jurisdictions. Here, the district court's
injunctions purport to place the court in the position of
supervising the law enforcement activities of a foreign sovereign
13
. Similar balancing is also evident in the other principal
case relied upon by Westinghouse. See Mutual Service Casualty
Ins. Co. v. Frit Indus., Inc., 805 F. Supp. 919, 923 (M.D. Ala.
1992) (recognizing need to balance interests at stake in
respective jurisdictions).
nation against its own citizens on its own soil. The injunctive
paragraphs of the district court's order provide the following:
(1) the Republic is "permanently enjoined
from taking any action against any
witness who has testified or will
testify" in this action or the
arbitration "where that action is in
retaliation for such testimony or has
the intent or effect of harassing such a
witness for his or her testimony or
intimidating such a witness to change or
withhold his or her testimony"; and
(2) The Republic is "directed to take
appropriate steps to renounce and
abandon the retaliatory actions which
the court has found to have taken place,
which steps shall include officially
advising Pedro A. Padre, Jr. and Jerry
R. Orlina of the Republic's actions and
intended actions with respect to their
personal income taxes . . . ."
(3) "Should the parties settle this case, the
agreement of settlement and any judgment
implementing it shall contain a provision that
each party accepts the continuing jurisdiction of
th[e district] court to enforce the provisions of
this order."
Op. at 35; Order at 1-3.
The first two injunctive provisions thrust the district
court into the internal affairs of the Republic.14 The district
court acknowledged that the first injunctive paragraph, which
prohibits retaliation against not only Padre and Orlina, but "any
witness who has testified or will testify" in this action or the
arbitration, could place it in the position of acting, as the
14
. The third injunctive paragraph, concerning settlement, is
addressed infra pp. 38-39
.
Republic's counsel put it to the district court, as "a special
master over at least 50 witnesses who have already participated
for both sides and are participating today in the arbitration, as
well as literally hundreds of potential witnesses . . . ." J.A.
92. If any of those Filipinos received a traffic citation, or
was involved in a tax fraud investigation, or had any other
scrape with the law, the court acknowledged that it could be
called upon by the individual to make a finding as to whether the
Republic's prosecution was intended to harass or intimidate the
witness. J.A. 93. And although the court did not go so far as
to find that tax charges against Padre and Orlina would be
unfounded (see supra p. 14), the second injunctive paragraph
effectively directs the Republic to grant Padre and Orlina
immunity from prosecution for past tax law violations.15
We are unaware of any court in the United States -- or
elsewhere -- that has ever attempted to inject itself in this
manner into the internal law enforcement activities of a foreign
15
. Recalling that comity is like the golden rule, one could
imagine the profound legal -- indeed, constitutional -- issues
that would arise if the Executive Branch of the United States
government were enjoined by a foreign court the way the district
court has enjoined the Republic here. Were the shoe on the other
foot, we would surely find it intolerable for a court in the
Philippines to order the President of the United States to
provide immunity for witnesses who had testified in a Philippines
proceeding, silence members of Congress who called for an
investigation of those witnesses, prevent members of Congress
from even speaking in a manner that could be interpreted as
harassment of those witnesses, or fire an independent prosecutor
who had threatened or initiated proceedings against such
witnesses.
sovereign.16 The unique nature of the district court's
injunctions is demonstrated by comparison to background precepts
of international relations. Although countries sometimes
exercise jurisdiction to prescribe and enforce laws that reach
extraterritorial conduct, it is nevertheless widely accepted that
each sovereign nation has the sole jurisdiction to prescribe and
administer its own laws, in its own country, pertaining to its
own citizens, in its own discretion. This principle was
articulated in by Chief Justice Marshall in The Schooner Exchange
v. M'Fadden, 11 U.S. (7 Cranch) 116 (1812):
The jurisdiction of the nation within its own
territory is necessarily exclusive and
absolute. It is susceptible of no limitation
not imposed by itself. Any restriction upon
it, deriving validity from an external
source, would imply a diminution of its
sovereignty to the extent of the restriction,
and an investment of that sovereignty to the
same extent in that power which could impose
such restriction.
Id. at 136. In his classic text on conflict of laws, Joseph
Story agreed with his former colleague. Synthesizing the views
of many publicists, Justice Story concluded that "it is an
essential attribute of every sovereignty, that it has no admitted
superior, and that it gives the supreme law within its own
dominions on all subjects appertaining to its sovereignty."
16
. Despite the facial similarity of this case to those decided
under the act of state doctrine, this case is not cognizable
under that rubric. The act of state doctrine is confined to
cases in which a litigant seeks to challenge the validity of a
public act of a foreign sovereign. W.S. Kirkpatrick & Co., Inc.
v. Environmental Tectonics Corp., 493 U.S. 400, 406 (1992).
Story on Conflict of Laws § 8 (7th ed. 1872). And more recently,
Professor Charles Hyde echoed Justice Story in explaining that
"[i]ndependent States are equal in the sense that they resemble
each other in possessing and enjoying the same privilege of
freedom from external control in the management of their domestic
or foreign affairs." Charles C. Hyde, 1 International Law § 11
at 27 (2d rev. ed. 1951). He added that "[a] State which
habitually contents itself with less ceases to be the equal of
independent States and finds itself in an inferior class." Id.
at 28.17
The principle also finds recognition in the
Restatement: "[u]nder international law, a state has . . .
17
. In addition to Story and Hyde, other scholars and
publicists have long recognized the principle that a state is not
subject to outside legal control of its internal legal affairs.
E.g., Hugo Grotius, The Law of War and Peace 102 (Kelsey ed.
1925) ("That power is called sovereign whose actions are not
subject to the legal control of another"); 4 Blackstone's
Commentaries 66 (Sharswood ed. 1879) ("no[] . . . state[] will
allow a superiority in the other"); Lassa F.L. Oppenheim, 1
International Law § 125 at 288 (8th ed. 1955) ("in the absence of
treaty provisions to the contrary, a State is not allowed to
interfere in the management of [other States'] internal or
international affairs, nor to prevent them from doing or to
compel them to do certain acts in their domestic relations or
international intercourse"); Hedley Bull, The Anarchical Society:
A Study of Order in World Politics 70 (1977) ("At the heart of
th[e] complex of rules [of international coexistence] is the
principle that each state accepts the duty to respect the
sovereignty or supreme jurisdiction of every other state over its
own citizens and domain, in return for the right to expect
similar respect for its own sovereignty from other states");
Urban G. Whitaker, Jr., Politics and Power 411 (1964) ("Of all
[the] elements bearing on problems of jurisdiction, the most
important is territory. Once it is decided which state controls
what territory, it is possible to determine whose laws apply,
whose courts may sit in judgment and who may enforce the law").
sovereignty over its territory and general authority over its
nationals[.]" § 206(a). The Restatement explains that the term
"sovereignty" is used in section 206(a) to imply "a state's
lawful control over its territory generally to the exclusion of
other states, authority to govern in that territory, and
authority to apply law there." Id. comment (a).18
18
. This fundamental principle is also reflected in our law of
sovereign immunity. Courts of the United States no longer apply
the "absolute" theory of sovereign immunity which once prevailed,
supported by broad dicta in The Schooner Exchange, under which
foreign states were deemed completely immune to suit in the
United States. The Schooner Exchange v. M'Fadden, 11 U.S.
(7 Cranch) 116, 136-37 (1812). However, the doctrine of
sovereign immunity still has profound effects upon the
jurisdiction of domestic courts. The more modern, "restrictive"
theory of foreign sovereign immunity, which was "largely
codifi[ed]" by the Foreign Sovereign Immunity Act of 1976
(Republic of Argentina v. Weltover, Inc., __ U.S. __, 112 S. Ct.
2160, 2165 (1992), provides that "a state is immune from the
jurisdiction of foreign courts as to its sovereign or public acts
(jure imperii), but not as to those that are private or
commercial in character (jure gestionis)." Saudi Arabia v.
Nelson, __ U.S. __, 113 S. Ct. 1471, 1479 (1993) (citations
omitted). Thus, the Act embodies the fundamental principle that
sovereigns are generally immune from interference by courts in
the United States. As the Supreme Court recently explained in
Saudi Arabia, 113 S. Ct. 1471, "[u]nder the Act, a foreign state
is presumptively immune from the jurisdiction of United States
courts; unless a specified exception applies, a federal court
lacks subject-matter jurisdiction over a claim against a foreign
state." Id. at 1476 (citations omitted).
Certainly when, as in this case, a sovereign brings suit in
the United States, it subjects itself to jurisdiction over
matters incident to the suit, including counterclaims by the
defendant (subject to limitations in the Foreign Sovereign
Immunities Act). See generally 28 U.S.C. § 1607; Nat'l City Bank
of New York v. Republic of China, 348 U.S. 356, 361-63 (1955).
But even in such circumstances, it cannot be seriously suggested
that the plaintiff sovereign gives up its essential attributes of
sovereignty, including in particular its authority to administer
in its sole discretion its own laws respecting its own citizens
within its own territory.
It is fundamental that law enforcement is a core
function of government, and a court should be loathe to interfere
with a foreign sovereign's exercise of such power if alternatives
are available that may achieve the same result with less
derogation of sovereignty. As we have made clear, supra n.10 and
accompanying text, the district court had substantial power at
its disposal in this case. It could have imposed monetary
sanctions to signal its disapproval of the Republic's conduct and
its intolerance of any future harassment or intimidation. It
could also have dismissed the case. See supra n.10 (discussing
Chambers, Eash, and National Hockey League v. Metropolitan Hockey
Club, Inc., 427 U.S. 639 (1976) (per curiam)).19 To have
exercised its discretion consistent with its authority, however,
the district court should have balanced the interests at stake.
This the court did not do,20 and thus it failed to recognize that
19
. Although we have stated that "[d]ismissal must be a
sanction of last, not first, resort" (Poulis v. State Farm Fire
and Casualty Co., 747 F.2d 863, 869 (3d Cir. 1984)), we did not
mean to imply that it was, in all circumstances, the most extreme
penalty possible. This case illustrates the exception: here,
although dismissal would prevent the Republic from going forward
with its claims, it would be less intrusive into the internal
affairs of the Republic -- and therefore significantly less
harmful to principles of international comity -- than the
injunctive alternative chosen by the district court. Thus,
Westinghouse misconceives the impact of the injunction in this
case in arguing that because the district court had the "greater"
power to dismiss this case, it could also enter the injunction as
an exercise of a "lesser" power. Westinghouse Br. at 42.
20
. The court recognized that its power to influence the
proceedings against Fernandez was cabined by the "limits which
United States courts impose upon themselves when asked to enjoin
proceedings in other nations." Op. at 34, citing Compagnie des
Bauxites de Guinea v. Ins. Co. of North America, 651 F.2d 877 (3d
Cir. 1981). The court found that it could avoid any limitations
the extraordinarily intrusive nature of its injunctive provisions
made such relief inappropriate.
Additionally, in this case as in any other, the
district court should have noted what alternative sanctions were
available, and at the very least should have explained why those
options would not have achieved the results desired. See Davis,
767 F.2d at 1038. Yet the record is devoid of evidence that the
district court considered any sanctions less drastic than the
injunctive provisions it adopted.
The district court's error was compounded by its
response when the Republic came forward, before the court's order
was formalized, with evidence that it had achieved substantial
compliance with paragraphs (1) and (2) of the draft order, at
least with respect to Padre and Orlina. At that point, it was
particularly inadvisable for the district court to have followed
(..continued)
on its authority by addressing Fernandez' situation "without
enjoining the proceedings against him. I will simply defer
granting the Republic's Rule 54(b) motion until I am satisfied
that in one way or another the proceedings against Professor
Fernandez have been resolved in a manner which cures the
retaliatory actions described above." Op. at 34-35.
The court stated, however, that it did not "even want to
hear anything about" the viability of its injunctive provisions,
because it "[knew] that [it] ha[d] the authority to do it.
Anybody who is a litigant here is subject to the jurisdiction of
the Court." J.A. 103-04. The court further believed that any
sovereign immunity the Republic had was waived when it filed suit
in New Jersey, making the Republic exactly like any other
litigant. Thus, the court stated that it did not "even want any
research on that," because if the Republic did not have to submit
to the court's authority, "I might as well pack up and go home."
J.A. at 104.
through by entering those portions of its order because there was
evidence that they were no longer even necessary.
Consequently, those portions of the court's order must
be vacated. Although the district court could sanction the
Republic for taking lawful actions for retaliatory reasons, the
court could not interpose itself into the Republic's law
enforcement functions as it attempted to do in its order. As
explained below, we will remand for a redetermination of
sanctions.
Because we are vacating the principal injunctive
portions of the district court's order, it is also necessary to
vacate its third injunctive provision, in which the court
required that any settlement include a provision acknowledging
the district court's continued jurisdiction to enforce its order.
That provision no longer has any purpose once the other
injunctions are vacated.21
21
. Additionally, we note that under Fed. R. Civ. P.
41(a)(1)(ii), parties to a civil action may stipulate to a
dismissal of an action at any time. A court has no authority to
disapprove or place conditions on any such dismissal. First
Nat'l Bank v. Marine City, Inc., 411 F.2d 674, 677 (3d Cir.
1969). As the Eighth Circuit recognized in Gardiner v. A.H.
Robins Co., Inc., 747 F.2d 1180 (8th Cir. 1984), such an attempt
would "deprive[] the parties of their unconditional right to a
Rule 41(a)(1)(ii) dismissal by stipulation." Id. at 1190.
 C.
The district court's order also provided that the
Republic's motion for certification under Rule 54(b) would "not
be granted until it establishes that it is in full compliance
with" the principal injunctive portions of the order, discussed
above, and "until the Court finds that the proceedings against
Professor Perfecto V. Fernandez have been resolved in a manner
which cures the retaliatory actions described above." Order at
2. The Republic asks us to find that the district court erred in
refusing to certify the Republic's appeal under Rule 54(b). We
find, however, that the Republic's challenge to this portion of
the order is moot. We have invalidated the provisions of the
order with which the Republic had to comply, and, as explained
above, supra p. 15-16, the proceedings against Professor
Fernandez were resolved in a manner that completely vindicated
him. Thus, we need not reach the thorny issue of whether -- and
how -- we could assert jurisdiction over a district court's
denial of a motion to certify under Rule 54(b).
Of course, we are not directing the district court to
certify any portion of this case for interlocutory review at this
time. The decision to certify must be reached, if at all, after
a sound exercise of the district court's discretion upon motion
by one or both of the parties after remand.
IV.
The Republic should be sanctioned for having retaliated
against Padre, Orlina, and Fernandez. The district court moved
with commendable expedition and firmness to address the trespass
on its authority and integrity embodied in the retaliation by the
Republic against Padre, Orlina and Fernandez. An American court
cannot tolerate litigants' intimidation of witnesses, regardless
of whether a litigant happens to be a foreign sovereign.
However, for the reasons given, we conclude that the central
elements of the district court's order went too far, and,
accordingly, that order will be vacated. On remand, the district
court shall reassess what sanctions should be imposed upon the
Republic consistent with international comity as described in
section III(B), supra. The district court should take into
consideration the status of the Republic's actions regarding
Padre, Orlina, and Fernandez, but we do not prejudge what
sanctions should be imposed. In all events, however, when
evaluating the issue of sanctions the district court shall set
forth its findings in accordance with our discussion of
sanctioning procedure in section III(B)(1), supra.
We will not instruct the district court to certify the
jury verdict at this time. That question will be left to the
district court's sound discretion upon proper motion by the
Republic.