Hamilton Copper & Steel Corp. v. Primary Steel, Inc.

• Decision Date: 23 March 1990
• Docket Number: 88-6021,Nos. 88-5834,s. 88-5834
• Citation: 898 F.2d 1428
• Parties: HAMILTON COPPER & STEEL CORPORATION, Plaintiff/counter-defendant/Appellant, v. PRIMARY STEEL, INC., Defendant/counter-claimant/Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1428

898 F.2d 1428

HAMILTON COPPER & STEEL CORPORATION Plaintiff/counter-defendant/Appellant, v. PRIMARY STEEL, INC., Defendant/counter-claimant/Appellee.

Nos. 88-5834, 88-6021.

United States Court of Appeals Ninth Circuit.

Argued and Submitted Nov. 2, 1989.

Decided March 23, 1990.

Robert E. Hinerfeld, Manatt, Phelps, Rothenberg & Phillips, Los Angeles, Cal., for plaintiff/counter-defendant/appellant.

John J. Lyons, Latham & Watkins, Los Angeles, Cal., for defendant/counter-claimant/appellee.

Appeal from the United States District Court for the Central District of California.

Before NORRIS, REINHARDT and TROTT, Circuit Judges.

WILLIAM A. NORRIS, Circuit Judge:

Background

Appellant Hamilton Copper & Steel Corp. ("Hamilton"), a steel pipe importer, alleged that Primary Steel, Inc. ("Primary"), a steel pipe wholesaler, breached its "contract" by failing to pay for steel pipe that was sold and delivered to Primary. The district court held a bifurcated trial in which the first issue presented to the jury was whether the documents and correspondence between Hamilton and Primary constituted a contract. The district court instructed counsel out of the presence of the jury not to refer to the documents as a contract or agreement because that was an issue to be decided by the jury.

During two and one-half days of trial, counsel for Hamilton made 52 references to the documents and on nine occasions he referred to them as a contract. On several of these occasions, the court admonished counsel for using the words contract or agreement and instructed the jury that whether the documents constituted a contract was an issue for the jury to decide.

On the opening of the third day of trial, Hamilton moved for a mistrial and Primary did not oppose it. Hamilton gave as the basis for its motion the judge's instructions to the jury about what constituted a contract. In particular, Hamilton argued that the judge's examples of unenforceable contracts "could be terribly prejudicial and misleading in the minds of the jury." Reporter's Transcript ("R.T.") at 5 (Feb. 4, 1988). The court granted the mistrial motion, and then immediately, without notice, the court sua sponte dismissed the action with prejudice because of attorney misconduct during the course of the trial. Hamilton attempted to withdraw the mistrial motion, but without success. The question on appeal is whether the district court abused its discretion in dismissing the action with prejudice because of attorney misconduct.

Discussion

District courts have "inherent power" to control their dockets. Thompson v. Housing Authority, 782 F.2d 829, 831 (9th Cir.), cert. denied, 479 U.S. 829, 107 S.Ct. 112, 93 L.Ed.2d 60 (1986). "In the exercise of that power they may impose sanctions including, where appropriate, ... dismissal of a case." Id. (citing Link v. Wabash Railroad Co., 370 U.S. 626, 82 S.Ct. 1386, 8 L.Ed.2d 734 (1962)). Dismissal, however, is a harsh remedy and should only be imposed in "extreme circumstances." Henderson v. Duncan, 779 F.2d 1421, 1423 (9th Cir.1986).

Among the factors that our circuit has advised district courts to consider before resorting to the harsh sanction of dismissal, see Thompson, 782 F.2d at 831, the two that are decisive in this case are the availability of less drastic sanctions and the lack of prejudice to the defendant. We hold it was an abuse of discretion for the district court to dismiss this action without considering and trying less drastic alternatives particularly in the absence of prejudice to the defendant and other exceptional circumstances.

The district judge had several alternatives available to him, including warnings about possible dismissal if counsel persisted, but he did not use less drastic sanctions before resorting to dismissal with prejudice. Alternative sanctions available to the judge included: " 'a formal reprimand, ... a fine, the imposition of costs or attorney fees, the temporary suspension of the culpable counsel from practice before the court, ... dismissal of the suit unless new counsel is secured[,] ... or the imposition of fees and costs upon plaintiff's counsel....' " Malone v. United States Postal Service, 833 F.2d 128, 132 n. 1 (9th Cir.1987) (quoting Titus v. Mercedes Benz of North America, 695 F.2d 746, 749 n. 6 (3d Cir.1982)), cert. denied sub nom. Malone v. Frank, --- U.S. ----, 109 S.Ct. 59, 102 L.Ed.2d 37 (1988).

Although the district judge admonished Hamilton's counsel for his use of the word "contract" and advised him not to use the word again, he never gave any warning that he was considering dismissal of the action with prejudice. At several points the judge reprimanded Hamilton's counsel in front of the jury:

The Court: Counsel, I have instructed you now at least four or five times not to use the word 'contracts.' I have explained to you that 'contracts' is a word of art and is the main issue that the jury has to decide. So in your questions do not assume that your version of the documents is the contract. That's the essential question here. I again instruct you not to use the term 'contracts.'

Mr. Reisman: Very well, your Honor. I'm sorry.

The Court: How many times do I have to tell you? I have been very patient with you but I'm beginning to lose my patience. I direct you not to use that term any further.

R.T. at 89 (Feb. 3, 1988).

On the third day of trial, after Hamilton moved for a mistrial, the district judge delivered some very strong remarks from the bench, but fell short of warning counsel about the possibility of dismissal as a sanction:

I have practiced law and been a Judge for a total of 24 years.... I have tried a lot more trials than the 10 to 20 you have, but I have never--except with the exception of one local attorney ... seen an attorney that has repeatedly defied the Court the way you have in this matter.

R.T. at 12 (Feb. 4, 1988).

Finally, after the district judge announced his sua sponte dismissal of the action with prejudice, he at no time offered any explanation for his decision. He simply concluded that Hamilton's counsel "deliberately induced prejudicial error into the case by a deliberate tactic," id. at 14, and that he did so by "deliberately us[ing] repeatedly the term 'contract' to the jury, in front of the jury, against the Court's admonition, and [he] ha[s] created the very situation that [he] now use[s] as a basis for a mistrial." Id. Furthermore, the district judge found that Hamilton's counsel had engaged in "willful misconduct" and "the deliberate attempt to interfere with the orderly administration of justice and the integrity of this Court's orders." Excerpt of Record ("E.R.") at 103. The judge said that he had considered lesser sanctions but failed to say what they were or why he had rejected them. Id.

Our circuit has looked to the following questions in determining whether a district court has considered alternatives to dismissal:

(1) Did the court explicitly discuss the feasibility of less drastic sanctions and explain why alternative sanctions would be inadequate? (2) Did the court implement alternative methods of sanctioning or curing the malfeasance before ordering dismissal? (3) Did the court warn the plaintiff of the possibility of dismissal before actually ordering dismissal?

Malone, 833 F.2d at 132.

With these questions to guide us, we conclude from our review of the record that the district judge did not engage in an inquiry about alternative sanctions. We also conclude that this case does not fit into the narrow exception created by Malone which provides that in "egregious circumstances" such an inquiry may not be necessary. Malone, 833 F.2d at 132; see United States for Use of Wiltec Guam, Inc. v. Kahaluu Construction Co., 857 F.2d 600, 604 (9th Cir.1988) ("the district court is generally required to discuss alternative sanctions; but in exceptional cases, where it is clear that no other alternative would have been reasonable, we may affirm a dismissal ... despite the absence of such a discussion"); Halaco Engineering Co. v. Costle, 843 F.2d 376, 381 (9th Cir.1988) ("consideration of less severe penalties must be a reasonable explanation of possible and meaningful alternatives"). Without any elaboration, the district...