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Court May Not Invoke Inherent Power to Sanction Misconduct before Administrative Tribunal

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From Children’s Ctr. for Devel. Enrichment v. Machle, 2010 U.S. App. LEXIS 14600 (6th Cir. July 16, 2010):

Courtland and Michelle Bishop and their minor disabled son CB brought suit against the private school to which CB had been assigned after the school expelled CB. The district court dismissed the claims, and the Bishops initiated administrative proceedings. The administrator entered a final decision dismissing the school as an improper party to the action; the administrator later issued two additional final decisions reiterating that the school was dismissed as an improper party. The school filed this action as an appeal of the administrator's decision and to assert separate claims for legal fees. The district court reasoned that the appeal was untimely and attorney's fees were not authorized and dismissed the case. ***

CCDE argues that the district court erred by concluding that it did not have the authority to award attorney's fees under general principles of equity. In general, "the prevailing litigant is ordinarily not entitled to collect a reasonable attorneys' fee from the loser." Alyeska Pipeline Serv. Co. v. Wilderness Soc'y, 421 U.S. 240, 247 (1975). Congress, not the judiciary, may create exceptions to this "American Rule." See id. at 249-50. Thus, "absent statute or enforceable contract, litigants pay their own attorneys' fees." Id. at 257.

Despite this rule, federal courts have inherent power to manage their cases, which includes the power to sanction conduct that abuses the judicial process. Chambers v. NASCO, Inc., 501 U.S. 32, 44-45 (1991); see id. at 43-46 (discussing the inherent powers of federal courts). Consequently, "'in narrowly defined circumstances federal courts have inherent power to assess attorney's fees against counsel,' even though the so-called 'American Rule' prohibits fee shifting in most cases." Id. at 45 (quoting Roadway Express, Inc. v. Piper, 447 U.S. 752, 765 (1980)). This inherent power to assess attorney's fees, however, arises from the court's authority "'to manage [its] own affairs so as to achieve the orderly and expeditious disposition of cases.'" Id. at 49 (emphasis added) (quoting Link v. Wabash R.R. Co., 370 U.S. 626, 630-31 (1962)). This rationale does not extend to cases in other courts. The inherent power of a court to manage its own affairs by assessing attorney's fees does not also empower it to assess fees in cases litigated in other venues. In fact, such a conclusion would infringe on the inherent power of other judges to manage their own affairs. Thus, the district court was right to conclude that even though it has inherent authority to award attorney's fees in exceptional cases before it, the "inherent authority of a court to award attorney fees applies only to those matters originally heard by that court."

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New York Attorneys JHA handles range the gamut of complex financial and commercial litigation and arbitration, including securities, RICO, corporate and contract disputes, credit default swaps, derivatives, and class, mass, and derivative actions. The firm also represents law firms in major disputes.
New York Attorneys JHA handles range the gamut of complex financial and commercial litigation and arbitration, including securities, RICO, corporate and contract disputes, credit default swaps, derivatives, and class, mass, and derivative actions. The firm also represents law firms in major disputes.

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