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Subject: 90-256 -- OPINION, CHAMBERS v. NASCO, INC.




NOTICE: This opinion is subject to formal revision before publication in
the preliminary print of the United States Reports.  Readers are requested
to notify the Reporter of Decisions, Supreme Court of the United States,
Washington, D. C. 20543, of any typographical or other formal errors, in
order that corrections may be made before the preliminary print goes to
press.

SUPREME COURT OF THE UNITED STATES


No. 90-256



G. RUSSELL CHAMBERS, PETITIONER v.
NASCO, INC.


on writ of certiorari to the united states court of appeals for the fifth
circuit

[June 6, 1991]



    Justice White delivered the opinion of the Court.
    This case requires us to explore the scope of the inherent power of a
federal court to sanction a litigant for bad-faith conduct.  Specifically,
we are asked to determine whether the District Court, sitting in diversity,
properly invoked its inherent power in assessing as a sanction for a
party's badfaith conduct attorney's fees and related expenses paid by the
party's opponent to its attorneys.  We hold that the District Court acted
within its discretion, and we therefore affirm the judgment of the Court of
Appeals.

I
    This case began as a simple action for specific performance of a
contract, but it did not remain so. {1}  Petitioner G. Russell Chambers was
the sole shareholder and director of Cal casieu Television and Radio, Inc.
(CTR), which operated television station KPLC-TV in Lake Charles,
Louisiana.  On August 9, 1983, Chambers, acting both in his individual
capacity and on behalf of CTR, entered into a purchase agreement to sell
the station's facilities and broadcast license to respondent NASCO, Inc.,
for a purchase price of $18 million.  The agreement was not recorded in the
parishes in which the two properties housing the station's facilities were
located.  Consummation of the agreement was subject to the approval of the
Federal Communications Commission (FCC); both parties were obligated to
file the necessary documents with the FCC no later than September 23, 1983.
By late August, however, Chambers had changed his mind and tried to talk
NASCO out of consummating the sale.  NASCO refused.  On September 23,
Chambers, through counsel, informed NASCO that he would not file the
necessary papers with the FCC.
    NASCO decided to take legal action.  On Friday, October 14, 1983,
NASCO's counsel informed counsel for Chambers and CTR that NASCO would file
suit the following Monday in the United States District Court for the
Western District of Louisiana, seeking specific performance of the
agreement, as well as a temporary restraining order (TRO) to prevent the
alienation or encumbrance of the properties at issue.  NASCO provided this
notice in accordance with Federal Rule of Civil Procedure 65 and Rule 11 of
the District Court's Local Rules (now Rule 10), both of which are designed
to give a defendant in a TRO application notice of the hearing and an
opportunity to be heard.
    The reaction of Chambers and his attorney, A. J. Gray III, was later
described by the District Court as having "emas culated and frustrated the
purposes of these rules and the powers of [the District] Court by utilizing
this notice to prevent NASCO's access to the remedy of specific
performance."  NASCO, Inc. v. Calcasieu Television & Radio, Inc., 623 F.
Supp. 1372, 1383 (WD La. 1985).  On Sunday, October 16, 1983, the pair
acted to place the properties at issue beyond the reach of the District
Court by means of the Louisiana Public Records Doctrine.  Because the
purchase agreement had never been recorded, they determined that if the
prop erties were sold to a third party, and if the deeds were recorded
before the issuance of a TRO, the District Court would lack jurisdiction
over the properties.
    To this end, Chambers and Gray created a trust, with Chambers' sister
as trustee and Chambers' three adult children as beneficiaries.  The pair
then directed the president of CTR, who later became Chambers' wife, to
execute warranty deeds conveying the two tracts at issue to the trust for a
recited consideration of $1.4 million dollars.  Early Monday morning, the
deeds were recorded.  The trustee, as purchaser, had not signed the deeds;
none of the consideration had been paid; and CTR remained in possession of
the properties.  Later that morning, NASCO's counsel appeared in the
District Court to file the complaint and seek the TRO.  With NASCO's
counsel present, the District Judge telephoned Gray.  Despite the judge's
queries concerning the possibility that CTR was negotiating to sell the
properties to a third person, Gray made no mention of the recordation of
the deeds earlier that morning.  NASCO, Inc. v. Calcasieu Television &
Radio, Inc., 124 F. R. D. 120, 126, n. 8 (WD La. 1989).  That afternoon,
Chambers met with his sister and had her sign the trust documents and a
$1.4 million note to CTR.  The next morning, Gray informed the District
Court by letter of the recordation of the deeds the day before, and
admitted that he had intentionally withheld the information from the
court.
    Within the next few days, Chambers' attorneys prepared a leaseback
agreement from the trustee to CTR, so that CTR could remain in possession
of the properties and continue to operate the station.  The following week,
the District Court granted a preliminary injunction against Chambers and
CTR and entered a second TRO to prevent the trustee from alienating or
encumbering the properties.  At that hearing, the District Judge warned
that Gray's and Chambers' conduct had been unethical.
    Despite this early warning, Chambers, often acting through his
attorneys, continued to abuse the judicial process.  In November 1983, in
defiance of the preliminary injunction, he refused to allow NASCO to
inspect CTR's cor porate records.  The ensuing civil contempt proceedings
resulted in the assessment of a $25,000 fine against Chambers personally.
NASCO, Inc. v. Calcasieu Television & Radio, Inc., 583 F. Supp. 115 (WD La.
1984).  Two sub sequent appeals from the contempt order were dismissed for
lack of a final judgment.  See NASCO, Inc. v. Calcasieu Television & Radio,
Inc., No. 84-9037 (CA5, May 29, 1984); NASCO, Inc. v. Calcasieu Television
& Radio, Inc., 752 F. 2d 157 (CA5 1985).
    Undeterred, Chambers proceeded with "a series of mer itless motions and
pleadings and delaying actions."  124 F. R. D., at 127.  These actions
triggered further warnings from the court.  At one point, acting sua
sponte, the District Judge called a status conference to find out why
bankers were being deposed.  When informed by Chambers' counsel that the
purpose was to learn whether NASCO could afford to pay for the station, the
court canceled the depositions consistent with its authority under Federal
Rule of Civil Procedure 26(g).
    At the status conference nine days before the April 1985 trial date,
{2} the District Judge again warned counsel that further misconduct would
not be tolerated. {3}  Finally, on the eve of trial, Chambers and CTR
stipulated that the purchase agreement was enforceable and that Chambers
had breached the agreement on September 23, 1983, by failing to file the
necessary papers with the FCC.  At trial, the only defense presented by
Chambers was the Public Records Doctrine.
    In the interlude between the trial and the entry of judgment during
which the District Court prepared its opinion, Chambers sought to render
the purchase agreement meaningless by seeking permission from the FCC to
build a new transmission tower for the station and to relocate the
transmission facilities to that site, which was not covered by the
agreement.  Only after NASCO sought contempt sanctions did Chambers
withdraw the application.
    The District Court entered judgment on the merits in NASCO's favor,
finding that the transfer of the properties to the trust was a simulated
sale and that the deeds purporting to convey the property were "null, void,
and of no effect."  623 F. Supp., at 1385.  Chambers' motions, filed in the
District Court, the Court of Appeals, and this Court, to stay the judgment
pending appeal were denied.  Undeterred, Chambers convinced CTR officials
to file formal oppositions to NASCO's pending application for FCC approval
of the transfer of the station's license, in contravention of both the
District Court's injunctive orders and its judgment on the merits.  NASCO
then sought contempt sanctions for a third time, and the oppositions were
withdrawn.
    When Chambers refused to prepare to close the sale, NASCO again sought
the court's help.  A hearing was set for July 16, 1986, to determine
whether certain equipment was to be included in the sale.  At the beginning
of the hearing, the court informed Chambers' new attorney, Edwin A. McCabe,
{4} that further sanctionable conduct would not be tolerated.  When the
hearing was recessed for several days, Chambers, without notice to the
court or NASCO, removed from service at the station all of the equipment at
issue, forcing the District Court to order that the equipment be returned
to service.
    Immediately following oral argument on Chambers' appeal from the
District Court's judgment on the merits, the Court of Appeals, ruling from
the bench, found the appeal frivolous.  The court imposed appellate
sanctions in the form of attorney's fees and double costs, pursuant to
Federal Rule of Appellate Procedure 38, and remanded the case to the
District Court with orders to fix the amount of appellate sanctions and to
determine whether further sanctions should be imposed for the manner in
which the litigation had been conducted.  NASCO, Inc. v. Calcasieu
Television & Radio, Inc., 797 F. 2d 975 (CA5 1986) (per curiam)
(unpublished order).
    On remand, NASCO moved for sanctions, invoking the District Court's
inherent power, Fed. Rule Civ. Proc. 11, and 28 U. S. C. MDRV 1927.  After
full briefing and a hearing, see 124 F. R. D., at 141, n. 11, the District
Court determined that sanctions were appropriate "for the manner in which
this proceeding was conducted in the district court from October 14, 1983,
the time that plaintiff gave notice of its intention to file suit to this
date."  Id., at 123.  At the end of an extensive opinion recounting what it
deemed to have been sanc tionable conduct during this period, the court
imposed sanctions against Chambers in the form of attorney's fees and
expenses totaling $996,644.65, which represented the entire amount of
NASCO's litigation costs paid to its attorneys. {5}  In so doing, the court
rejected Chambers' argument that he had merely followed the advice of
counsel, labeling him "the strategist," id., at 132, behind a scheme
devised "first, to deprive this Court of jurisdiction and, second, to
devise a plan of obstruction, delay, harassment, and expense sufficient to
reduce NASCO to a condition of exhausted compliance," id., at 136.
    In imposing the sanctions, the District Court first considered Federal
Rule of Civil Procedure 11.  It noted that the alleged sanctionable conduct
was that Chambers and the other defendants had "(1) attempted to deprive
this Court of jurisdiction by acts of fraud, nearly all of which were
performed outside the confines of this Court, (2) filed false and frivolous
pleadings, and (3) attempted, by other tactics of delay, oppression,
harassment and massive expense to reduce plaintiff to exhausted
compliance."  Id., at 138.  The court recognized that the conduct in the
first and third categories could not be reached by Rule 11, which governs
only papers filed with a court.  As for the second category, the court
explained that the falsity of the pleadings at issue did not become
apparent until after the trial on the merits, so that it would have been
impossible to assess sanctions at the time the papers were filed.  Id., at
138-139.  Consequently, the District Court deemed Rule 11 "insufficient"
for its purposes.  Id., at 139.  The court likewise declined to impose
sanctions under MDRV 1927, {6} both because the statute applies only to
attorneys, and therefore would not reach Chambers, and because the statute
was not broad enough to reach "acts which degrade the judicial system,"
including "attempts to deprive the Court of jurisdiction, fraud, misleading
and lying to the Court."  Ibid.  The court therefore relied on its inherent
power in imposing sanctions, stressing that "[t]he wielding of that
inherent power is particularly appropriate when the offending parties have
practiced a fraud upon the court."  Ibid.
    The Court of Appeals affirmed.  NASCO, Inc. v. Calcasieu Television &
Radio, Inc., 894 F. 2d 696 (CA5 1990).  The court rejected Chambers'
argument that a federal court sitting in diversity must look to state law,
not the court's inherent power, to assess attorney's fees as a sanction for
badfaith conduct in litigation.  The court further found that neither 28 U.
S. C. MDRV 1927 nor Federal Rule of Civil Procedure 11 limits a court's
inherent authority to sanction bad faith conduct "when the party's conduct
is not within the reach of the rule or the statute."  {7}  894 F. 2d, at
702-703.  Although observing that the inherent power "is not a broad
reservoir of power, ready at an imperial hand, but a limited source; an
implied power squeezed from the need to make the court function," id., at
702, the court also concluded that the District Court did not abuse its
discretion in awarding to NASCO the fees and litigation costs paid to its
attorneys.  Because of the importance of these issues, we granted
certiorari, 498 U. S. --- (1990).

II
    Chambers maintains that 28 U. S. C. MDRV 1927 and the various
sanctioning provisions in the Federal Rules of Civil Procedure  {8} reflect
a legislative intent to displace the inherent power.  At least, he argues
that they obviate or foreclose resort to the inherent power in this case.
We agree with the Court of Appeals that neither proposition is persuasive.

A
    It has long been understood that "[c]ertain implied powers must
necessarily result to our Courts of justice from the nature of their
institution," powers "which cannot be dispensed with in a Court, because
they are necessary to the exercise of all others."  United States v.
Hudson, 7 Cranch 32, 34 (1812); see also Roadway Express, Inc. v. Piper,
447 U. S. 752, 764 (1980) (citing Hudson).  For this reason, "Courts of
justice are universally acknowledged to be vested, by their very creation,
with power to impose silence, respect, and decorum, in their presence, and
submission to their lawful mandates."  Anderson v. Dunn, 6 Wheat. 204, 227
(1821); see also Ex parte Robinson, 19 Wall. 505, 510 (1874).  These powers
are "governed not by rule or statute but by the control necessarily vested
in courts to manage their own affairs so as to achieve the orderly and
expeditious disposition of cases."  Link v. Wabash R. Co., 370 U. S. 626,
630-631 (1962).
    Prior cases have outlined the scope of the inherent power of the
federal courts.  For example, the Court has held that a federal court has
the power to control admission to its bar and to discipline attorneys who
appear before it.  See Ex parte Burr, 9 Wheat. 529, 531 (1824).  While this
power "ought to be exercised with great caution," it is nevertheless
"incidental to all Courts."  Ibid.
    In addition, it is firmly established that "[t]he power to punish for
contempts is inherent in all courts."  Robinson, supra, at 510.  This power
reaches both conduct before the court and that beyond the court's confines,
for "[t]he underlying concern that gave rise to the contempt power was not
. . . merely the disruption of court proceedings.  Rather, it was
disobedience to the orders of the Judiciary, regardless of whether such
disobedience interfered with the conduct of trial."  Young v. United States
ex rel. Vuitton et Fils S.A., 481 U. S. 787, 798 (1987) (citations
omitted).
    Of particular relevance here, the inherent power also allows a federal
court to vacate its own judgment upon proof that a fraud has been
perpetrated upon the court.  See Hazel-Atlas Glass Co. v. Hartford-Empire
Co., 322 U. S. 238 (1944); Universal Oil Products Co. v. Root Refining Co.,
328 U. S. 575, 580 (1946).  This "historic power of equity to set aside
fraudulently begotten judgments," Hazel-Atlas, 322 U. S., at 245, is
necessary to the integrity of the courts, for "tampering with the
administration of justice in [this] manner . . . involves far more than an
injury to a single litigant.  It is a wrong against the institutions set up
to protect and safeguard the public."  Id., at 246.  Moreover, a court has
the power to conduct an independent investigation in order to determine
whether it has been the victim of fraud.  Universal Oil, supra, at 580.
    There are other facets to a federal court's inherent power.  The court
may bar from the courtroom a criminal defendant who disrupts a trial.
Illinois v. Allen, 397 U. S. 337 (1970).  It may dismiss an action on
grounds of forum non conveniens, Gulf Oil Corp. v. Gilbert, 330 U. S. 501,
507-508 (1947); and it may act sua sponte to dismiss a suit for failure to
prosecute, Link, supra, at 630-631.
    Because of their very potency, inherent powers must be exercised with
restraint and discretion.  See Roadway Express, supra, at 764.  A primary
aspect of that discretion is the ability to fashion an appropriate sanction
for conduct which abuses the judicial process.  As we recognized in Roadway
Express, outright dismissal of a lawsuit, which we had upheld in Link, is a
particularly severe sanction, yet is within the court's discretion.  447 U.
S., at 765.  Consequently, the "less severe sanction" of an assessment of
attorney's fees is undoubtedly within a court's inherent power as well.
Ibid.  See also Hutto v. Finney, 437 U. S. 678, 689, n. 14 (1978).
    Indeed, "[t]here are ample grounds for recognizing . . . that in
narrowly defined circumstances federal courts have inherent power to assess
attorney's fees against counsel," Roadway Express, supra, at 765, even
though the so-called "American Rule" prohibits fee-shifting in most cases.
See Alyeska Pipeline Service Co. v. Wilderness Society, 421 U. S. 240, 259
(1975).  As we explained in Alyeska, these exceptions fall into three
categories. {9}  The first, known as the "common fund exception," derives
not from a court's power to control litigants, but from its historic equity
jurisdiction, see Sprague v. Ticonic National Bank, 307 U. S. 161, 164
(1939), and allows a court to award attorney's fees to a party whose
litigation efforts directly benefit others.  Alyeska, 421 U. S., at
257-258.  Second, a court may assess attorney's fees as a sanction for the
" `willful disobedience of a court order.' "  Id., at 258 (quoting
Fleischmann Distilling Corp. v. Maier Brewing Co., 386 U. S. 714, 718
(1967)).  Thus, a court's discretion to determine "[t]he degree of
punishment for contempt" permits the court to impose as part of the fine
attorney's fees representing the entire cost of the litigation.  Toledo
Scale Co. v. Computing Scale Co., 261 U. S. 399, 428 (1923).
    Third, and most relevant here, a court may assess attorney's fees when
a party has " `acted in bad faith, vexatiously, wantonly, or for oppressive
reasons.' "  Alyeska, supra, at 258-259 (quoting F. D. Rich Co. v. United
States ex rel. Industrial Lumber Co., 417 U. S. 116, 129 (1974)).  See also
Hall v. Cole, 412 U. S. 1, 5 (1973); Newman v. Piggie Park Enterprises,
Inc., 390 U. S. 400, 402, n. 4 (1968) (per curiam).  In this regard, if a
court finds "that fraud has been practiced upon it, or that the very temple
of justice has been defiled," it may assess attorney's fees against the
responsible party, Universal Oil, supra, at 580, as it may when a party
"shows bad faith by delaying or disrupting the litigation or by hampering
enforcement of a court order,"  {10} Hutto, 437 U. S., at 689, n. 14.  The
imposition of sanctions in this instance transcends a court's equitable
power concerning relations between the parties and reaches a court's
inherent power to police itself, thus serving the dual purpose of
"vindicat[ing] judicial authority without resort to the more drastic
sanctions available for contempt of court and mak[ing] the prevailing party
whole for expenses caused by his opponent's obstinacy."  Ibid.

B
    We discern no basis for holding that the sanctioning scheme of the
statute and the rules displaces the inherent power to impose sanctions for
the bad-faith conduct described above.  These other mechanisms, taken alone
or together, are not substitutes for the inherent power, for that power is
both broader and narrower than other means of imposing sanctions.  First,
whereas each of the other mechanisms reaches only certain individuals or
conduct, the inherent power extends to a full range of litigation abuses.
At the very least, the inherent power must continue to exist to fill in the
interstices.  Even the dissent so concedes.  See post, at 5.  Second, while
the narrow exceptions to the American Rule effectively limit a court's
inherent power to impose attorney's fees as a sanction to cases in which a
litigant has engaged in bad-faith conduct or willful disobedience of a
court's orders, many of the other mechanisms permit a court to impose
attorney's fees as a sanction for conduct which merely fails to meet a
reasonableness standard.  Rule 11, for example, imposes an objective
standard of reasonable inquiry which does not mandate a finding of bad
faith. {11}  See Business Guides, Inc. v. Chromatic Communications
Enterprises, Inc., 498 U. S. ---, --- (1991) (slip op. at 15).
    It is true that the exercise of the inherent power of lower federal
courts can be limited by statute and rule, for "[t]hese courts were created
by act of Congress."  Robinson, 19 Wall., at 511.  Nevertheless, "we do not
lightly assume that Congress has intended to depart from established
principles" such as the scope of a court's inherent power.  Weinberger v.
Romero-Barcelo, 456 U. S. 305, 313 (1982); see also Link, 370 U. S., at
631-632.  In Alyeska we determined that "Congress ha[d] not repudiated the
judicially fashioned exceptions" to the American Rule, which were founded
in the inherent power of the courts.  421 U. S., at 260.  Nothing since
then has changed that assessment, {12} and we have thus reaffirmed the
scope and the existence of the exceptions since the most recent amendments
to MDRV 1927 and Rule 11, the other sanctioning mechanisms invoked by NASCO
here.  See Pennsylvania v. Delaware Valley Citizens' Council for Clean Air,
478 U. S. 546, 561-562, and n. 6 (1986).  As the Court of Appeals
recognized, 894 F. 2d, at 702, the amendment to MDRV 1927 allowing an
assessment of fees against an attorney says nothing about a court's power
to assess fees against a party.  Likewise, the Advisory Committee Notes on
the 1983 Amendment to Rule 11, 28 U. S. C. App., p. 575, declare that the
Rule "build[s] upon and expand[s] the equitable doctrine permitting the
court to award expenses, including attorney's fees, to a litigant whose
opponent acts in bad faith in instituting or conducting litigation," citing
as support this Court's decisions in Roadway Express and Hall. {13}  Thus,
as the Court of Appeals for the Ninth Circuit has recognized, Rule 11 "does
not repeal or modify existing authority of federal courts to deal with
abuses . . . under the court's inherent power."  Zaldivar v. Los Angeles,
780 F. 2d 823, 830 (CA9 1986).
    The Court's prior cases have indicated that the inherent power of a
court can be invoked even if procedural rules exist which sanction the same
conduct.  In Link, it was recognized that a federal district court has the
inherent power to dismiss a case sua sponte for failure to prosecute, even
though the language of Federal Rule of Civil Procedure 41(b) appeared to
require a motion from a party:

"The authority of a court to dismiss sua sponte for lack of prosecution has
generally been considered an `inherent power,' governed not by rule or
statute but by the control necessarily vested in courts to manage their own
affairs so as to achieve the orderly and expeditious disposition of cases.
That it has long gone unquestioned is apparent not only from the many state
court decisions sustaining such dismissals, but even from language in this
Court's opinion in Redfield v. Ystalyfera Iron Co., 110 U. S. 174, 176.  It
also has the sanction of wide usage among the District Courts.  It would
require a much clearer expression of purpose than Rule 41(b) provides for
us to assume that it was intended to abrogate so well-acknowledged a
proposition."  370 U. S., at 630-632 (footnotes omitted).


    In Roadway Express, a party failed to comply with dis covery orders and
a court order concerning the schedule for filing briefs.  447 U. S., at
755.  After determining that MDRV 1927, as it then existed, would not allow
for the assessment of attorney's fees, we remanded the case for a
consideration of sanctions under both Federal Rule of Civil Procedure 37
and the court's inherent power, while recognizing that invocation of the
inherent power would require a finding of bad faith. {14}  Id., at 767.
    There is, therefore, nothing in the other sanctioning mechanisms or
prior cases interpreting them that warrants a conclusion that a federal
court may not, as a matter of law, resort to its inherent power to impose
attorney's fees as a sanction for bad-faith conduct.  This is plainly the
case where the conduct at issue is not covered by one of the other
sanctioning provisions.  But neither is a federal court forbidden to
sanction bad-faith conduct by means of the inherent power simply because
that conduct could also be sanctioned under the statute or the rules.  A
court must, of course, exercise caution in invoking its inherent power, and
it must comply with the mandates of due process, both in determining that
the requisite bad faith exists and in assessing fees, see Roadway Express,
supra, at 767.  Furthermore, when there is bad faith conduct in the course
of litigation that could be adequately sanctioned under the rules, the
court ordinarily should rely on the rules rather than the inherent power.
But if in the informed discretion of the court, neither the statute nor the
rules are up to the task, the court may safely rely on its inherent power.
    Like the Court of Appeals, we find no abuse of discretion in resorting
to the inherent power in the circumstances of this case.  It is true that
the District Court could have employed Rule 11 to sanction Chambers for
filing "false and frivolous pleadings," 124 F. R. D., at 138, and that some
of the other conduct might have been reached through other rules.  Much of
the bad-faith conduct by Chambers, however, was beyond the reach of the
rules, his entire course of conduct throughout the lawsuit evidenced bad
faith and an attempt to perpetrate a fraud on the court, and the conduct
sanctionable under the rules was intertwined within conduct that only the
inherent power could address.  In circumstances such as these in which all
of a litigant's conduct is deemed sanctionable, requiring a court first to
apply rules and statutes containing sanctioning provisions to discrete
occurrences before invoking inherent power to address remaining instances
of sanctionable conduct would serve only to foster extensive and needless
satellite litigation, which is contrary to the aim of the rules themselves.
See, e. g., Advisory Committee Notes on the 1983 Amendment to Rule 11, 28
U. S. C. App., pp. 575-576.
    We likewise do not find that the District Court's reliance on the
inherent power thwarted the purposes of the other sanctioning mechanisms.
Although the dissent makes much of the fact that Rule 11 and Rule 26(g)
"are cast in mandatory terms," post, at 6, the mandate of these provisions
extends only to whether a court must impose sanctions, not to which
sanction it must impose.  Indeed, the language of both rules requires only
that a court impose "an appropriate sanction."  Thus, this case is
distinguishable from Bank of Nova Scotia v. United States, 487 U. S. 250
(1988), in which this Court held that a district court could not rely on
its supervisory power as a means of circumventing the clear mandate of a
procedural rule.  Id., at 254-255.

III
    Chambers asserts that even if federal courts can use their inherent
power to assess attorney's fees as a sanction in some cases, they are not
free to do so when they sit in diversity, unless the applicable state law
recognizes the "bad-faith" exception to the general rule against fee
shifting.  He relies on footnote 31 in Alyeska, in which we stated with
regard to the exceptions to the American Rule that "[a] very different
situation is presented when a federal court sits in a diversity case.
`[I]n an ordinary diversity case where the state law does not run counter
to a valid federal statute or rule of court, and usually it will not, state
law denying the right to attorney's fees or giving a right thereto, which
reflects a substantial policy of the state, should be followed.'  6 J.
Moore, Federal Practice MDRV 54.77[2], pp. 1712-1713 (2d ed. 1974)
(footnotes omitted)."  421 U. S., at 259, n. 31.
    We agree with NASCO that Chambers has misinterpreted footnote 31.  The
limitation on a court's inherent power described there applies only to
fee-shifting rules that embody a substantive policy, such as a statute
which permits a prevailing party in certain classes of litigation to
recover fees.  That was precisely the issue in People of Sioux County v.
National Surety Co., 276 U. S. 238 (1928), the only case cited in footnote
31.  There, a state statute mandated that in actions to enforce an
insurance policy, the court was to award the plaintiff a reasonable
attorney's fee.  See id., at 242, and n. 2.  In enforcing the statute, the
Court treated the provision as part of a statutory liability which created
a substantive right.  Id., at 241-242.  Indeed, Alyeska itself concerned
the substantive nature of the public policy choices involved in deciding
whether vindication of the rights afforded by a particular statute is
important enough to warrant the award of fees.  See 421 U. S., at 260-263.
    Only when there is a conflict between state and federal substantive law
are the concerns of Erie R. Co. v. Tompkins, 304 U. S. 64 (1938), at issue.
As we explained in Hanna v. Plumer, 380 U. S. 460 (1965), the "outcome
determinative" test of Erie and Guaranty Trust Co. v. York, 326 U. S. 99
(1945), "cannot be read without reference to the twin aims of the Erie
rule: discouragement of forum-shopping and avoidance of inequitable
administration of the laws."  380 U. S., at 468.  Despite Chambers'
protestations to the contrary, neither of these twin aims is implicated by
the assessment of attorney's fees as a sanction for bad-faith conduct
before the court which involved disobedience of the court's orders and the
attempt to defraud the court itself.  In our recent decision in Business
Guides, Inc. v. Chromatic Communications Enterprises, Inc., 498 U. S., at
--- (slip op., at 19), we stated, "Rule 11 sanctions do not constitute the
kind of fee shifting at issue in Alyeska [because they] are not tied to the
outcome of litigation; the relevant inquiry is whether a specific filing
was, if not successful, at least well founded."  Likewise, the imposition
of sanctions under the bad-faith exception depends not on which party wins
the lawsuit, but on how the parties conduct themselves during the
litigation.  Consequently, there is no risk that the exception will lead to
forum-shopping.  Nor is it inequitable to apply the exception to citizens
and noncitizens alike, when the party, by controlling his or her conduct in
litigation, has the power to determine whether sanctions will be assessed.
As the Court of Appeals expressed it, "Erie guarantees a litigant that if
he takes his state law cause of action to federal court, and abides by the
rules of that court, the result in his case will be the same as if he had
brought it in state court.  It does not allow him to waste the court's time
and resources with cantankerous conduct, even in the unlikely event a state
court would allow him to do so."  894 F. 2d, at 706.
    As Chambers has recognized, see Brief for Petitioner 15, in the case of
the bad-faith exception to the American Rule, "the underlying rationale of
`fee shifting' is, of course, punitive."  Hall, 412 U. S., at 4-5.  Cf.
Pavelic & LeFlore v. Marvel Entertainment Group, 493 U. S. 120, 126 (1989).
"[T]he award of attorney's fees for bad faith serve[s] the same purpose as
a remedial fine imposed for civil contempt," because "[i]t vindicate[s] the
District Court's authority over a recalcitrant litigant."  Hutto, 437 U.
S., at 691.  "That the award ha[s] a compensatory effect does not in any
event distinguish it from a fine for civil contempt, which also compensates
a private party for the consequences of a contemnor's disobedience."  {15}
Id., at 691, n. 17.
    Chambers argues that because the primary purpose of the sanction is
punitive, assessing attorney's fees violates the State's prohibition on
punitive damages.  Under Louisiana law, there can be no punitive damages
for breach of contract, even when a party has acted in bad faith in
breaching the agreement.  Lancaster v. Petroleum Corp. of Delaware, 491 So.
2d 768, 779 (La. App. 1986).  Cf. La. Civ. Code Ann., Art. 1995 (West
1987).  Indeed, "as a general rule attorney's fees are not allowed a
successful litigant in Louisiana except where authorized by statute or by
contract."  Rutherford v. Impson, 366 So. 2d 944, 947 (La. App. 1978).  It
is clear, though, that this general rule focuses on the award of attorney's
fees because of a party's success on the underlying claim.  Thus, in Frank
L. Beier Radio, Inc. v. Black Gold Marine, Inc., 449 So. 2d 1014 (La.
1984), the state court considered the scope of a statute which permitted an
award of attorney's fees in a suit seeking to collect on an open account.
Id., at 1015.  This substantive state policy is not implicated here, where
sanctions were imposed for conduct during the litigation.
    Here the District Court did not attempt to sanction petitioner for
breach of contract, {16} but rather imposed sanctions for the fraud he
perpetrated on the court and the bad faith he displayed toward both his
adversary and the court throughout the course of the litigation. {17}  See
124 F. R. D., at 123, 143.  We agree with the Court of Appeals that "[w]e
do not see how the district court's inherent power to tax fees for that
conduct can be made subservient to any state policy without transgressing
the boundaries set out in Erie, Guaranty Trust Co., and Hanna," for
"[f]ee-shifting here is not a matter of substantive remedy, but of
vindicating judicial authority."  894 F. 2d, at 705.

IV
    We review a court's imposition of sanctions under its inherent power
for abuse of discretion.  Link, 370 U. S., at 633; see also Cooter & Gell
v. Hartmarx Corp., 496 U. S. ---, --- (1990) (slip op., at 17-18) (Rule
11).  Based on the circumstances of this case, we find that the District
Court acted within its discretion in assessing as a sanction for Chambers'
bad-faith conduct the entire amount of NASCO's attorney's fees.
    Relying on cases imposing sanctions under Rule 11, {18} Chambers
proffers five criteria for imposing attorney's fees as a sanction under a
court's inherent power, and argues that the District Court acted improperly
with regard to each of them.  First, he asserts that sanctions must be
timely in order to have the desired deterrent affect, and that the
postjudgment sanction imposed here fails to achieve that aim.  As NASCO
points out, however, we have made clear that, even under Rule 11, sanctions
may be imposed years after a judgment on the merits. {19}  Id., at ---
(slip op., at 9).  Interrupting the proceedings on the merits to conduct
sanctions hearings may serve only to reward a party seeking delay.  More
importantly, while the sanction was not assessed until the conclusion of
the litigation, Chambers received repeated timely warnings both from NASCO
and the court that his conduct was sanctionable.  Cf. Thomas v. Capital
Security Services, Inc., 836 F. 2d 866, 879-881 (CA5 1988) (en banc).
Consequently, the District Court's reliance on the inherent power did not
represent an end run around the notice requirements of Rule 11.  The fact
that Chambers obstinately refused to be deterred does not render the
District Court's action an abuse of discretion.
    Second, Chambers claims that the fact that the entire amount of fees
was awarded means that the District Court failed to tailor the sanction to
the particular wrong.  As NASCO points out, however, the District Court
concluded that full attorney's fees were warranted due to the frequency and
severity of Chambers' abuses of the judicial system and the resulting need
to ensure that such abuses were not repeated. {20}  Indeed, the court found
Chambers' actions were "part of [a] sordid scheme of deliberate misuse of
the judicial process" designed "to defeat NASCO's claim by harassment,
repeated and endless delay, mountainous expense and waste of financial
resources."  124 F. R. D., at 128.  It was within the court's discretion to
vindicate itself and compensate NASCO by requiring Chambers to pay for all
attorney's fees.  Cf. Toledo Scale, 261 U. S., at 428.
    Third, Chambers maintains that the District Court abused its discretion
by failing to require NASCO to mitigate its expenses.  He asserts that had
NASCO sought summary disposition of the case, the litigation could have
been concluded much sooner.  But, as NASCO notes, Chambers himself made a
swift conclusion to the litigation by means of summary judgment impossible
by continuing to assert that material factual disputes existed.
    Fourth, Chambers challenges the District Court's imposition of
sanctions for conduct before other tribunals, including the FCC, the Court
of Appeals, and this Court, asserting that a court may sanction only
conduct occurring in its presence.  Our cases are to the contrary, however.
As long as a party receives an appropriate hearing, as did Chambers, see
124 F. R. D., at 141, n. 11, the party may be sanctioned for abuses of
process occurring beyond the courtroom, such as disobeying the court's
orders.  See Young, 481 U. S., at 798; Toledo Scale, supra, at 426-428.
Here, for example, Chambers' attempt to gain the FCC's permission to build
a new transmission tower was in direct contravention of the District
Court's orders to maintain the status quo pending the outcome of the
litigation, and was therefore within the scope of the District Court's
sanctioning power.
    Finally, Chambers claims the award is not "personalized," because the
District Court failed to conduct any inquiry into whether he was personally
responsible for the challenged conduct.  This assertion is flatly
contradicted by the District Court's detailed factual findings concerning
Chambers' involvement in the sequence of events at issue.  Indeed, the
court specifically held that "the extraordinary amount of costs and
expenses expended in this proceeding were caused not by lack of diligence
or any delays in the trial of this matter by NASCO, NASCO's counsel or the
Court, but solely by the relentless, repeated fraudulent and brazenly
unethical efforts of Chambers" and the others.  124 F. R. D., at 136.  The
Court of Appeals saw no reason to disturb this finding.  894 F. 2d, at 706.
Neither do we.
    For the foregoing reasons, the judgment of the Court of Appeals for the
Fifth Circuit is

Affirmed.








------------------------------------------------------------------------------
1
    The facts recited here are taken from the findings of the District
Court, which were not disturbed by the Court of Appeals.

2
    The trial date itself reflected delaying tactics.  Trial had been set
for February 1985, but in January, Gray, on behalf of Chambers, filed a
motion to recuse the judge.  The motion was denied, as was the subsequent
writ of mandamus filed in the Court of Appeals.

3
    To make his point clear, the District Judge gave counsel copies of
Judge Schwarzer's then-recent article, Sanctions Under the New Federal Rule
11 -- A Closer Look, 104 F. R. D. 181 (1985).

4
    Gray had resigned as counsel for Chambers and CTR several months
previously.

5
    In calculating the award, the District Court deducted the amounts
previously awarded as compensatory damages for contempt, as well as the
amount awarded as appellate sanctions.  124 F. R. D., at 133-134.
    The court also sanctioned other individuals, who are not parties to the
action in this Court.  Chambers' sister, the trustee, was sanctioned by a
reprimand; attorney Gray was disbarred and prohibited from seeking
readmission for three years; attorney Richard A. Curry, who represented the
trustee, was suspended from practice before the court for six months; and
attorney McCabe was suspended for five years.  Id., at 144-146.  Although
these sanctions did not affect the bank accounts of these individuals, they
were nevertheless substantial sanctions and were as proportionate to the
conduct at issue as was the monetary sanction imposed on Chambers.  Indeed,
in the case of the disbarment of attorney Gray, the court recognized that
the penalty was among the harshest possible sanctions and one which derived
from its authority to supervise those admitted to practice before it.  See
id., at 140-141.

6
    That statute provides:
    "Any attorney . . . who so multiplies the proceedings in any case
unreasonably and vexatiously may be required by the court to satisfy
personally the excess costs, expenses, and attorneys' fees reasonably
incurred because of such conduct."  28 U. S. C. MDRV 1927.

7
    The court remanded for a reconsideration of the proper sanction for
attorney McCabe.  894 F. 2d, at 708.

8
    A number of the rules provide for the imposition of attorney's fees as
a sanction.  See Fed. Rule Civ. Proc. 11 (certification requirement for
papers), 16(f) (pretrial conferences), 26(g) (certification requirement for
discovery requests), 30(g) (oral depositions), 37 (sanctions for failure to
cooperate with discovery), 56(g) (affidavits accompanying summary judgment
motions).  In some instances, the assessment of fees is one of a range of
possible sanctions, see, e. g., Fed. Rule Civ. Proc. 11, while in others,
the court must award fees, see, e. g., Fed. Rule Civ. Proc. 16(f).  In each
case, the fees that may be assessed are limited to those incurred as a
result of the rule violation.  In the case of Rule 11, however, a violation
could conceivably warrant an imposition of fees covering the entire
litigation, if, for example, a complaint or answer was filed in violation
of the rule.  The court generally may act sua sponte in imposing sanctions
under the rules.

9
    See also Pennsylvania v. Delaware Valley Citizens' Council for Clean
Air, 478 U. S. 546, 561-562, and n. 6 (1986); Summit Valley Industries,
Inc. v. Local 112, United Brotherhood of Carpenters & Joiners of America,
456 U. S. 717, 721 (1982); F. D. Rich Co. v. United States ex rel.
Industrial Lumber Co., 417 U. S. 116, 129-130 (1974).

10
    In this regard, the bad-faith exception resembles the third prong of
Rule 11's certification requirement, which mandates that a signer of a
paper filed with the court warrant that the paper "is not interposed for
any improper purpose, such as to harass or to cause unnecessary delay or
needless increase in the cost of litigation."

11
    Indeed, Rule 11 was amended in 1983 precisely because the subjective
bad-faith standard was difficult to establish and courts were therefore
reluctant to invoke it as a means of imposing sanctions.  See Advisory
Committee Notes on the 1983 Amendment to Rule 11, 18 U. S. C. App., pp.
575-576.  Consequently, there is little risk that courts will invoke their
inherent power "to chill the advocacy of litigants attempting to vindicate
all other important federal rights."  See post, at 9.  To the extent that
such a risk does exist, it is no less present when a court invokes Rule 11.
See Cooter & Gell v. Hartmarx Corp., 496 U. S. ---, --- (1990).

12
    Chambers also asserts that all inherent powers are not created equal.
Relying on Eash v. Riggins Trucking Inc., 757 F. 2d 557, 562-563 (CA3 1985)
(en banc), he suggests that inherent powers fall into three tiers: (1)
irreducible powers derived from Article III, which exist despite contrary
legislative direction; (2) essential powers that arise from the nature of
the court, which can be legislatively regulated but not abrogated; and (3)
powers that are necessary only in the sense of being useful, which exist
absent legislation to the contrary.  Brief for Petitioner 17.  Chambers
acknowledges that this Court has never so classified the inherent powers,
and we have no need to do so now.  Even assuming, arguendo, that the power
to shift fees falls into the bottom tier of this alleged hierarchy of
inherent powers, Chambers' argument is unavailing, because we find no
legislative intent to limit the scope of this power.

13
    The Advisory Committee Notes to the 1983 Amendments to other rules
reflect a similar intent to preserve the scope of the inherent power.
While the Notes to Rule 16, 28 U. S. C. App., p. 591, point out that the
sanctioning provisions are designed "to obviate dependence upon Rule 41(b)
or the court's inherent power," there is no indication of an intent to
displace the inherent power, but rather simply to provide courts with an
additional tool by which to control the judicial process.  The Notes to
Rule 26(g), 28 U. S. C. App., p. 622, point out that the rule "makes
explicit the authority judges now have to impose appropriate sanctions and
requires them to use it.  This authority derives from Rule 37, 28 U. S. C.
MDRV 1927, and the court's inherent power."  (Citations omitted).

14
    The decision in Societe Internationale Pour Participations Industri
elles et Commerciales, S.A. v. Rogers, 357 U. S. 197 (1958), is not to the
contrary.  There it was held that the Court of Appeals had erred in relying
on the District Court's inherent power and Rule 41(b), rather than Federal
Rule Civil Procedure 37(b)(2)(iii), in dismissing a complaint for a
plaintiff's failure to comply with a discovery order.  Because Rule 37
dealt specifically with discovery sanctions, id., at 207, there was "no
need" to resort to Rule 41(b), which pertains to trials, or to the court's
inherent power.  Ibid.  Moreover, because individual rules address specific
problems, in many instances it might be improper to invoke one when another
directly applies.  Cf. Zaldivar v. Los Angeles, 780 F. 2d 823, 830 (CA9
1985).

15
    Consequently, Chambers' reformulated argument in his reply brief that
the primary purpose of a fee shift under the bad-faith exception "has
always been compensatory," Reply for Petitioner 15-16, fails utterly.

16
    We therefore express no opinion as to whether the District Court would
have had the inherent power to sanction Chambers for conduct relating to
the underlying breach of contract, or whether such sanctions might
implicate the concerns of Erie.

17
    Contrary to Chambers' assertion, the District Court did not sanction
him for failing to file the requisite papers with the FCC in September
1983, although the District Court did find that this conduct was a
deliberate violation of the agreement and was done "in absolute bad faith,"
124 F. R. D., at 125.  As the court noted, "the allegedly sanctionable acts
were committed in the conduct and trial of the very proceeding in which
sanctions [were] sought," id., at 141, n. 11, and thus the sanctions
imposed "appl[ied] only to sanctionable acts which occurred in connection
with the proceedings in the trial Court," id., at 143.  Although the
fraudulent transfer of assets took place before the suit was filed, it
occurred after Chambers was given notice, pursuant to court rule, of the
pending suit.  Consequently, the sanctions imposed on Chambers were aimed
at punishing not only the harm done to NASCO, but also the harm done to the
court itself.  Indeed, the District Court made clear that it was policing
abuse of its own process when it imposed sanctions "for the manner in which
this proceeding was conducted in the district court from October 14, 1983,
the time that plaintiff gave notice of its intention to file suit."  Id.,
at 123.

18
    See, e. g., In re Kunstler, 914 F. 2d 505 (CA4 1990), cert. denied, 499
U. S. --- (1991); White v. General Motors Corp., Inc., 908 F. 2d 675 (CA10
1990); Thomas v. Capital Security Services, Inc., 836 F. 2d 866 (CA5 1988)
(en banc).

19
    Cf. Advisory Committee Notes on the 1983 Amendment to Rule 11, 28 U. S.
C. App., p. 576 ("The time when sanctions are to be imposed rests in the
discretion of the trial judge.  However, it is anticipated that in the case
of pleadings the sanctions issue under Rule 11 normally will be determined
at the end of the litigation, and in the case of motions at the time when
the motion is decided or shortly thereafter").

20
    In particular, Chambers challenges the assessment of attorney's fees in
connection with NASCO's claim for delay damages and with the closing of the
sale.  As NASCO points out, however, Chambers' bad-faith conduct in the
course of the litigation caused the delay for which damages were sought and
greatly complicated the closing of the sale, through the cloud on the title
caused by the fraudulent transfer.