Commercial Litigation and Arbitration

Does Inherent Power Extend to Non-Parties Who Have Not Violated a Court Order? No Sanctions Imposed on Court-Appointed Monitor Who Engaged in Improper Communications with the Principal of a Party

From U.S. v. City of Detroit, 2010 U.S. Dist. LEXIS 134852 (E.D. Mich. Dec. 21, 2010):

This civil rights action — now in its seventh year — involves an ongoing effort to enforce and implement two Consent Judgments that were agreed upon by the City of Detroit ("City") and the Department of Justice ("DOJ"). These Consent Judgments arose in response to accusations by the DOJ that the City, through its Police Department ("DPD"), had engaged in a pattern or practice of (1) using unlawful levels of force in its arrests and detentions, and (2) providing unconstitutional or otherwise unlawful living conditions to prisoners who had been confined in its holding cells.

On the same day that the Consent Judgments were entered, the Court appointed Sheryl L. Robinson (now known as Sheryl Robinson Wood), assisted by Kroll, Inc., 1 to serve as the independent federal monitor in this case. On July 23, 2009, the Court accepted the resignation of Robinson Wood from her position as the independent federal monitor following its review of documents in camera which led it to conclude that she "had engaged in conduct which was totally inconsistent with the terms and conditions of the two Consent Judgments . . . ." *** The conduct to which the Court had alluded included "undisclosed communications, as well as meetings of a personal nature, with the former City of Detroit Mayor Kwame Kilpatrick during the term of the Consent Judgments," as well as "inappropriate discussions with [Kilpatrick] about this lawsuit." ***

The City has now filed a motion in which it requests that the Court impose sanctions upon Robinson Wood and the Firms in the form of a disgorgement of all the payments — totaling $10,049,493.33 — that the City made during the six years prior to her resignation. Thereafter, the DOJ, as the sole Plaintiff in this litigation, filed a response in which it generally supported the City's request. However, the DOJ submits that the requested disgorgement should be limited only to the portion of the payments that is attributable to Robinson Wood. ***

Furthermore, the Court has very serious reservations regarding its authority to order — and to enforce — the relief that the City seeks to obtain in its motion. Neither Robinson Wood nor the Firms are parties to this case. Although many courts have addressed the issue of whether the inherent authority of a court to sanction litigants extends to non-parties, no clear rule has emerged, especially with respect to non-parties who did not violate any specific court order. See, e.g., In re So. Mich. Assocs., 175 B.R. 976, 981-87 (Bankr. N.D. Ill. 1994) (reviewing conflicting decisions regarding whether district courts' inherent authority to impose sanctions extends to non-parties, and holding that "as a matter of law [the court] is unable to impose sanctions under its inherent authority against . . . a non-party expert witness who has not appeared before this court nor violated a court order). Compare Amerisource Corp. v. Rx USA Int'l Inc., No. 02-CV-2514, 2010 WL 2730748, at *5-6 (E.D.N.Y. July 6, 2010) (although non-parties are ordinarily not subject to court's inherent authority to impose sanctions, ordering sanctions against non-party because, "as the majority shareholder, chief executive, and only person affiliated with [the defendant] to have a substantive role in this litigation, [purported non-party] is [the defendant]"), with Feldman v. Davidson, 2009 WL 995473, at *2 (S.D. Fla. Apr. 13, 2009) (citation omitted) ("The court's inherent power to sanction includes sanctioning non-parties for bad faith conduct. However, additional safeguards may be warranted when a non-party is being sanctioned.").

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