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Law v. National
Collegiate Athletic Association,
1998.C10.0000101 <http://www.versuslaw.com> ¶ ;
134 F.3D 1438 (10th Cir. 1998).
[1]
UNITED STATES COURT OF APPEALS
[2]
No. 96-3340
[3]
(D.C. No. 94-2053-KHV)
[4]
1998.C10.0000101 <http://www.versuslaw.com>
[5]
January 26, 1998
[6]
Before EBEL, LOGAN, and KELLY, Circuit Judges.
[7]
TENTH CIRCUIT
[8]
NORMAN LAW, ANDREW GREER, PETER HERRMANN, MICHAEL JARVIS, JR.;
CHARLES M. RIEB, DOUG SCHREIBER, LAZARO
COLLOZZO, ROBIN DREIZLER, FRANK
CRUZ and WILLIAM HALL, on behalf of
themselves and all others similarly
situated,
Plaintiffs-Appellees, v. NATIONAL COLLEGIATE ATHLETIC
ASSOCIATION,
Defendant-Appellant.
[9]
APPEAL FROM THE UNITED STATES DISTRICT COURT
[10]
FOR THE DISTRICT OF KANSAS
[11]
William C. Barnard (Donald C. Biggs, Gayle A. Reindl
and Mary T.
Doherty, also of Sommer
& Barnard, Indianapolis,
Indiana; John
J. Kitchin
and Linda J. Salfrank of Swanson, Midgley, Gangwere, Kitchin & McLarney,
Kansas City, Missouri, with him
on the briefs) for DefendantAppellant.
[12]
Bonny E. Sweeney (Jan M. Adler and Dennis Stewart, also of Milberg
Weiss Bershad
Hynes & Lerach, San Diego, California;
W. Dennis Cross and
Lori R. Schultz,
Morrison & Hecker, Kansas City, Missouri;
Robert G.
Wilson of Cotkin & Collins, Los
Angeles, California,
with her on the
briefs) for
Plaintiffs-Appellees.
[13]
LOGAN, Circuit Judge.
[14]
Defendant National Collegiate Athletic Association (NCAA) and its
attorneys
William C. Barnard, Gayle A. Reindl, John J. Kitchin, and Linda
J. Salfrank,
appeal the district court's imposition of sanctions on them
for failure to
obey discovery orders in plaintiffs' antitrust actions. The
district court
has not entered a final judgment, *fn1 but the NCAA and its
counsel assert
that the sanctions are immediately appealable as a
criminal
contempt order.
They then argue that the district court imposed the
criminal
contempt sanctions without affording the NCAA and its counsel the
required
procedural protections and adequate notice that discovery
sanctions might
be imposed against them. *fn2 I
[15]
The sanctions order arose out of a discovery dispute over
plaintiffs'
attempts to obtain damages information and identify additional
plaintiffs.
Plaintiffs' third set of interrogatories sought information
about the
salaries and employment benefits that each of the Division I
*fn3 member schools provided to coaches
in every sport from 1985-1996. The
NCAA sought a protective order on the
basis that it had no obligation to
collect this
data; but the district court denied its motion. The court
ordered the NCAA
to send a survey to its members, but a dispute arose over
the contents of
a cover letter to that survey. Ultimately the district
court ordered
the NCAA to answer the interrogatories by February 26.
Asserting that the NCAA did not meet the
deadline, plaintiffs moved for
discovery
sanctions. The district court issued a show cause order, and
after a hearing
granted plaintiffs' motion and imposed sanctions against
both the NCAA
and its counsel. The district court order of May 29, 1996,
directed
Division I NCAA members to answer plaintiffs' interrogatories,
and publicly censured
and imposed monetary sanctions on the NCAA and its
counsel.
[16]
The NCAA filed for a writ of mandamus from this court which we
denied. *fn4
Later, however, we granted to state college and university
Division I member schools a writ of
prohibition, vacating the portion of
the district
court's order directing them to answer the interrogatories.
University of Texas at Austin
v. Vratil, 96 F.3d 1337 (10th Cir. 1996).
[17]
Thereafter the district court vacated its May 29 order and
reconsidered
plaintiffs' motion for sanctions. The district court rejected
the NCAA's argument that the information requested in the
interrogatories
was not
"available" under Fed. R. Civ. P. 33. The
court publicly censured
the NCAA and its
counsel and ordered both "to pay the reasonable expenses
and attorneys'
fees which plaintiffs incurred on account of their failure
to permit
discovery, plus a 25 percent surcharge." Appellant's App. 633.
The district court further ordered that
NCAA and its counsel pay "all
expenses and
attorneys' fees which plaintiffs reasonably incur in the
process of
deposing Division I members of the NCAA on the issue of
damages," including a "25 percent surcharge."
Id. The NCAA
and its counsel
appeal only the
portion of that order directing them to pay fees and costs
plus twenty-five
percent for their failure to permit discovery. *fn5 II
[18]
We first address whether we have jurisdiction over this appeal.
Sanctions, even if issued as civil
contempt orders, generally are not
deemed final appealable orders under 28 U.S.C. Section(s) 1291. See
G.J.B.
& Assocs.,
Inc. v. Singleton, 913 F.2d 824, 827-29 (10th Cir. 1990)
(counsel of
record may not file interlocutory appeal for imposition of
sanctions); D&H;Marketers, Inc. v. Freedom Oil & Gas, Inc., 744
F.2d 1443,
1445-46 (10th Cir. 1984) (parties may not
file interlocutory appeal from
imposition of
sanctions); see also Consumers Gas & Oil, Inc., v. Farmland
Indus., Inc., 84 F.3d 367, 370 (10th Cir.
1996) (party to a pending
proceeding may
appeal civil contempt order only as part of appeal from
final judgment).
Criminal contempt orders, however, are deemed final
orders that are
immediately appealable. Id. The NCAA and its counsel
assert that
although the district court's order did not expressly hold the
NCAA and its counsel in contempt, it
found that they acted in contempt of
court. They
further argue the court imposed criminal contempt sanctions
and thus we have
jurisdiction.
[19]
The order at issue followed a show cause hearing on plaintiffs'
motion for
sanctions under Fed. R. Civ. P. 37 (b)(2). *fn6 The
court found
that the NCAA
"affirmatively encouraged its members to withhold
information for
the purpose of defeating plaintiffs' legitimate
interrogatories,"
Appellant's App. 626, and that such conduct was "wilful,
in bad faith,
and expressly calculated to frustrate the Court's orders
with respect to
discovery." Id.;
see also id. at 597. The district court
stated that
"Rule 37(b)(2) provides that if a party fails to
obey an order
to provide
discovery under Rule 37(a), the Court `may make such orders in
regard to the
failure as are just . . . .' Rule 37(b)(2) sets forth
possible
sanctions, including orders that certain facts be taken as
established or
evidence excluded, that claims or defenses be unopposed or
pleadings
struck, that reasonable expenses caused by the recalcitrant
party be paid,
and that the party be held in contempt." Appellant's App.
627. The court then "publicly
censured" the NCAA and its counsel and
ordered them to
pay 125% of the expenses and attorneys' fees incurred in
making the
motion. Id. at 629-30. The district court reasoned:
[20]
A monetary award is also necessary to reimburse plaintiffs the
expenses and
attorneys' fees which they incurred in making the subject
motion to
compel. An unenhanced order for compensation would be
remedial,
and no circumstances
of record would render such an award unjust. Such an
order would have
no meaningful deterrent effect, however, for the NCAA,
its counsel or
others. As noted elsewhere in this opinion, the NCAA is
already subject
to liability for payment of all costs and fees which
plaintiffs have
incurred and will incur on account of the NCAA's
established
violation of federal antitrust law. The Court finds that a 25
percent
surcharge is a reasonable sanction and that it is the least severe
penalty that
will serve to deter future misconduct.
[21]
Id. at
630. *fn7
[22]
The district court clearly intended to impose the sanctions under
Rule 37. The
language ordering payment of "the reasonable expenses and
attorneys' fees
which plaintiffs incurred on account of their failure to
permit
discovery," Appellant's App. 633, tracks the language of the final
paragraph of
Rule 37(b)(2). This leaves the question of the basis
for the
twenty-five
percent surcharge ordered paid to plaintiffs. The NCAA and its
counsel assert
that the only monetary sanctions authorized by Rule
37(b)(2), absent contempt, are the compensatory sanctions
authorized by
its final
paragraph. Because the twenty-five percent is not compensatory,
they argue that
the court must have imposed that sanction based on a
contempt finding
under Rule 37(b)(2)(D). Plaintiffs counter that a
noncompensatory
monetary sanction is authorized under the provision that
the court
"may make such orders in regard to the failure [to comply with
discovery orders] as are just." Fed. R. Civ. P. 37(b)(2).
[23]
The Second Circuit noted that "[t]here is a split in authority on
the question
whether a district court can order non-compensatory sanctions
under Rule 37
without a finding of contempt." Satcorp Int'l
Group v. China
Nat'l Silk Import &
Export Corp., 101 F.3d 3, 5 (2d Cir. 1996). The Fourth
Circuit has held "that a Rule 37
fine is effectively a criminal contempt
sanction,
requiring notice and the opportunity to be heard." Hathcock v.
Navistar Int'l Transp.
Corp., 53 F.3d 36, 42 (4th Cir. 1995) (Rule 37
sanction of $5,000 imposed without prior notice or hearing
was effectively
criminal
contempt sanction) (citing Buffington v. Baltimore County,
913
F.2d 113, 133-35 (4th
Cir. 1990)). Similarly, the Third Circuit has held
that "[a]bsent contempt, the only monetary sanctions Rule 37
authorizes
are `reasonable
expenses' resulting from the failure to comply with
discovery."
Martin v. Brown, 63 F.3d 1252, 1263 (3d Cir. 1995).
Several
district courts,
however, have imposed a fine under Rule 37 without making
a finding of
contempt. See, e.g., Pereira
v. Narragansett Fishing Corp.,
135 F.R.D. 24, 26-28 (D. Mass. 1991)
(finding that under Rule 37(b)(2)
it
could impose a
monetary sanction "over and above an award of the opposing
party's costs and
attorney's fees" without a finding of contempt); J. M.
Cleminshaw Co. v. City of Norwich, 93 F.R.D.
338, 355-57 (D. Conn.
1981).
This position is bolstered by the First
Circuit's opinion in Media
Duplication Servs., Ltd. v. HDG
Software, Inc., 928 F.2d 1228, 1241-42
(1st Cir. 1991), which held that under
the Fed. R. Civ. P. 16(f) language
that a court
"may make such orders . . . as are just" a district court may
impose punitive
monetary sanctions, seemingly without a finding of
contempt.
[24]
Federal courts, of course, have power to impose sanctions and
adjudicate
contempt against parties and counsel on bases other than Rule
37. See Roadway Express, Inc. v. Piper,
447 U.S.
752 (1980). We need not
attempt to
distinguish between a sanction order that is not civil contempt
and one that is
civil contempt. If the district court's interlocutory
sanction order
is properly classified as civil, we have no jurisdiction to
review whether
it was appropriate. Conversely, if it is criminal contempt
it is appealable.
[25]
The distinction between criminal and civil contempt is important
because
"[c]riminal contempt is a crime in the ordinary
sense, and
criminal
penalties may not be imposed on someone who has not been afforded
the protections
that the Constitution requires of such criminal
proceedings."
International Union, United Mine Workers of America
v.
Bagwell, 512 U.S.
821, 826 (1994) (quotations and citation omitted).
Succinctly, "[c]ivil
as distinguished from criminal contempt is a sanction
to enforce
compliance with an order of the court or to compensate for
losses or
damages sustained by reason of noncompliance." McComb v.
Jacksonville Paper Co.,
336 U.S.
187, 191 (1949). The NCAA and its counsel
argue that the
district court's order constitutes criminal contempt
because the
twenty-five percent surcharge is a fine. We agree it is a fine
even though the
court ordered it paid to plaintiffs, not to the court.
[26]
United States v.
United Mine Workers of America,
330 U.S.
258
(1947), states:
[27]
Judicial sanctions in civil contempt proceedings may, in a proper
case, be
employed for either or both of two purposes: to coerce the
defendant into
compliance with the court's order, and to compensate the
complainant for
losses sustained. Where compensation is intended, a fine
is imposed,
payable to the complainant. Such fine must of course be based
upon evidence of
complainant's actual loss, and his right, as a civil
litigant, to the
compensatory fine is dependent upon the outcome of the
basic
controversy.
[28]
Id. at
303-04 (citation and footnotes omitted). Plaintiffs rely
upon the
statement in Hicks v. Feiock, 485 U.S. 624, 632 (1988): "If the
relief provided is a fine, it is remedial when it is paid to
the
complainant, and
punitive when it is paid to the court." Despite the
generalization
in Hicks we believe the district court could not make a
noncompensatory
fine civil simply by requiring it to be paid to the
complainant
instead of to the court.
[29]
Plaintiff also cites the following statement from Bagwell: Certain
indirect contempts nevertheless are appropriate for imposition
through
civil proceedings. Contempts such
as failure to comply with document
discovery, for
example, while occurring outside the court's presence,
impede the
court's ability to adjudicate the proceedings before it and
thus touch upon
the core justification for the contempt power. Courts
traditionally
have broad authority through means other than contempt--such
as by striking
pleadings, assessing costs, excluding evidence, and
entering default
judgment--to penalize a party's failure to comply with
the rules of
conduct governing the litigation process.
See, e.g., Fed.
Rules Civ. Proc. 11, 37. Such judicial sanctions never
have been
considered
criminal, and the imposition of civil, coercive fines to police
the litigation
process appears consistent with this authority.
[30]
512 U.S.
at 833 (emphasis added). The Bagwell
Court held that
fines ordered
paid to complainants and to the state and counties damaged
by unlawful
activities were criminal.
[31]
A civil fine is by definition either compensatory or coercive. The
Supreme Court has made this plain. A fine
payable to a complainant "must
of course be
based upon evidence of complainant's actual loss." United
Mine Workers, 330 U.S. at 304. The offending party is
punished, but a
critical feature
of civil contempt is that "the punishment is remedial."
Hicks, 485 U.S. at 631 (quoting Gompers v. Bucks Stove & Range Co., 221
U.S. 418, 441 (1911)). "A fine payable to the complaining
party and
proportioned to
the complainant's loss is compensatory and civil." Hicks,
485 U.S. at 646-47. One reason
given by the Supreme Court in Bagwell for
finding a fine
criminal was that no one "suggested that the challenged
fines are
compensatory." 512 U.S.
at 834; see also Yanish v. Barber, 232
F.2d 939, 944 (9th Cir. 1956) (civil fine
cannot exceed actual loss to
complainant).
[32] Courts have upheld as civil fines intended
to coerce, as long as
the offending
party can avoid them by complying with the court's order.
See Hicks, 485 U.S. at 632 (fine payable to the
court itself may be
remedial
"when the defendant can avoid paying the fine simply by
performing the
affirmative act required by the court's order"); NLRB v.
Local 825, Int'l Union of Operating Eng'rs, 430 F.2d 1225, 1229-30 (3d
Cir. 1970). *fn8
[33]
In the instant case the twenty-five percent surcharge above
plaintiffs'
actual costs was neither compensatory nor, as to the portion
of the order
appealed here, avoidable by complying with the court's order.
Thus it was criminal. When an order is partially
civil and partially
criminal, the
criminal aspect controls for purposes of review. See Hicks,
485 U.S. at 638 n.10; Lamar Fin. Corp. v. Adams, 918 F.2d 564 (5th Cir.
1990). We
therefore have jurisdiction to review the portion of the
district court's
order appealed here. III
[34]
The NCAA and its counsel argue that they did not receive the
required
procedural safeguards for a criminal contempt order.
[35]
[T]his Court has found that defendants in criminal contempt
proceedings must
be presumed innocent, proved guilty beyond a reasonable
doubt, and
accorded the right to refuse to testify against themselves;
must be advised
of charges, have a reasonable opportunity to respond to
them, and be
permitted the assistance of counsel and the right to call
witnesses; must
be given a public trial before an unbiased judge; and must
be afforded a
jury trial for serious contempts.
[36]
Young v. United States
ex rel. Vuitton et Fils S.A., 481 U.S. 787,
798- 99 (1987). "A criminal contempt
. . . shall be prosecuted on notice .
. . [which
shall] state . . . the essential facts constituting the
criminal
contempt charged and describe it as such." Fed.
R. Crim. P.
42(b).
[37]
Neither the motion for sanctions nor the show cause order included
notice that the
NCAA and its attorneys were subject to a criminal contempt
charge.
Plaintiffs' motion for sanctions did not request monetary
sanctions above
the reasonable "attorneys' fees and expenses" set out in
the last
paragraph of Rule 37(b)(2). The district court's show
cause
order, while it
did include the possibility that attorneys Barnard and
Reindl might be
denied their admission pro hac vice, or that Fed. R. Civ.
P. 11 sanctions might be imposed on
counsel, did not specifically name
attorneys Kitchin and Salfrank. Because
neither the NCAA nor its counsel
had adequate
notice that they might be held in criminal contempt and
liable for noncompensatory monetary sanctions, and were not afforded
the
process required
for criminal contempt, we must reverse the district
court's
sanctions order.
[38]
REVERSED and REMANDED.
Opinion Footnotes
[39]
*fn1 The district court granted summary
judgment to plaintiffs on
liability on May
24, 1995, ruling that the NCAA violated Section(s) 1 of
the Sherman Act. On January 8,
1996, the district court granted a
permanent
injunction against the NCAA enjoining it from enforcing
compensation
limits against the named plaintiffs, who are "restricted
earning
coaches." The NCAA appealed that injunction in case number
96-3034. In a
separate opinion issued this day this panel has affirmed the
district court's
order granting that injunction. See Law v. NCAA, No.
96-3034 (10th Cir. Jan. 23, 1998).
Because the issue of damages is still
pending the
district court has not entered a final order in the cases.
[40]
The district court also entered several other orders regarding
interim
attorneys' fees which are the subject of separate appeals in which
we issue
opinions this day. See Law v. NCAA, Nos. 96-3150, 96-3186,
96-3200 (10th Cir. Jan. 23, 1998).
[41]
*fn2 Alternatively, the NCAA and its counsel
contend that the
sanctions must
fall because the underlying discovery order was based on an
erroneous
finding that the information sought by plaintiffs' third
interrogatories
was "available" to the NCAA within the meaning of Fed. R.
Crim. P. 33(a).
Because we do not reach the issue of whether the
underlying
discovery order was erroneous we do not address this argument.
[42]
*fn3 Although the third set of interrogatories
to defendant
requested this
information for Division II schools as well, plaintiffs
later limited
the request to Division I schools.
[43]
*fn4 We concluded that the NCAA had an adequate
remedy at law
because it could
appeal the sanctions after entry of final judgment, the
monetary amount
of sanctions did not impose irreparable injury to the
NCAA, and no
alleged abuse of discretion by the district court amounted to
judicial
usurpation of power. NCAA v. Vratil, No. 96-3208
(10th Cir. June
27, 1996).
[44]
*fn5 Although the full amount of the discovery
sanctions has not
been set, see
Turnbull v. Wilcken, 893 F.2d 256, 258 (10th Cir.
1990)
(appeal from
imposition of sanctions may not be taken until amount has
been
determined), this does not present a jurisdictional problem in
addition to that
discussed hereafter. Defendant asserts that it paid
plaintiffs over
$48,000 after the May 29 order, and plaintiffs have not
challenged this
assertion. Defendant and counsel state they will appeal
that portion of the order directing them to pay for
attorneys' fees and
expenses
incurred by plaintiffs in deposing NCAA Division I members when
the district
court sets an amount.
[45]
*fn6 The motion requested sanctions for failing
to obey an order
to provide
discovery, and specifically requested:
[46]
1. striking defendant's opposition to
plaintiffs' motions for
class
certification and certifying the plaintiff classes; and
[47]
2. striking defendant's answers and rendering
final default
judgments
against defendant in each of these cases in amounts to be proven
up by plaintiffs
at a hearing to be held for that purpose.
[48]
Alternatively, plaintiffs seek an order:
[49]
1. allowing plaintiffs to prove class-wide
damages by means of
sampling and
averaging techniques and precluding defendant from offering
expert testimony
on the issue of damages or otherwise contesting such
techniques or the
sufficiency of the data used by plaintiffs in
calculating
damages; and
[50]
2. requiring defendant to pay (a) the
attorneys' fees and expenses
incurred by
plaintiffs to date in attempting to obtain information
responsive to
Plaintiffs' Third Set of Interrogatories, and (b) all
future
attorneys' fees
and expenses incurred by plaintiffs in obtaining such
information from
NCAA members, to be paid as they are incurred.,
Appellant's App. 251.
[51]
*fn7 The district court apparently overlooked
the possibility that
its finding of
an antitrust violation might be reversed on appeal. In that
event plaintiffs
would not be entitled to attorneys' fees as a prevailing
party. But
defendant and its counsel still would have to pay a properly
levied discovery
sanction, which could include plaintiffs' attorneys' fees
incurred in
pursuing the motion to compel.
[52]
*fn8 Even coercive fines that may be avoided by obeying the
court's orders
may be considered criminal if the sanctionable
conduct did
not occur in the
court's presence and elaborate fact finding is required.
See Bagwell, 512 U.S. 821; Hostak,
International Union, United Mine
Workers v. Bagwell, A Paradigm Shift in
the Distinction Between Civil and
Criminal Contempt, 81
Cornell L. Rev. 181 (1995).
19980126
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