Jackson v. Murphy, 2012 U.S. App. LEXIS 4993 (7th Cir. Mar. 7, 2012):

We next turn to the district court's use of its inherent power to sanction Jackson by dismissing his remaining medical claims. We review that dismissal for abuse of discretion. Judson Atkinson Candies, Inc. v. Latini-Hohberger Dhimantec, 529 F.3d 371, 386 (7th Cir. 2008). The severity of a sanction should be proportional to the gravity of the offense, Williams v. Adams, 660 F.3d 263, 265-66 (7th Cir. 2011); Allen v. Chi. Transit Auth., 317 F.3d 696, 703 (7th Cir. 2003), and before it sanctions a litigant under its inherent power a court must find that the party "willfully abused the judicial process or otherwise conducted litigation in bad faith." Salmeron v. Enter. Recovery Sys., Inc., 579 F.3d 787, 793 (7th Cir. 2009); see Methode Elecs., Inc. v. Adam Techs., Inc., 371 F.3d 923, 928 (7th Cir. 2004). "As a fraud on the court, perjury may warrant the sanction of dismissal," Montano v. City of Chicago, 535 F.3d 558, 564 (7th Cir. 2008); see Oliver v. Gramley, 200 F.3d 465, 466 (7th Cir. 1999); Brown v. Oil States Skagit Smatco, 664 F.3d 71, 77-79 (5th Cir. 2011) (perjury); Garcia v. Berkshire Life Ins. Co. of Am., 569 F.3d 1174, 1180 (10th Cir. 2009) (submission of falsified evidence to the court); Monsanto Co. v. Ralph, 382 F.3d 1374, 1381 (Fed. Cir. 2004) (destruction of evidence and perjury); Martin v. DaimlerChrysler Corp., 251 F.3d 691, 695 (8th Cir. 2001) (perjury), unless it was harmless to the litigation, was quickly discovered, or other parties had also perjured themselves, Allen, 317 F.3d at 703.

Here, the sanction of dismissal was entirely warranted. Jackson both perjured himself and forged a document critical to the prosecution of his case. His fraud was uncovered only after a costly and contested hearing. "[I]n a case in which the plaintiff's fraud is criminal in character and would if undetected destroy a legitimate and dispositive defense," a district court need not consider lesser sanctions, Oliver, 200 F.3d at 466, but here the court did. It considered dismissing Jackson's unexhausted claims with prejudice and adding a monetary fine, see Dotson v. Bravo, 321 F.3d 663, 667 (7th Cir. 2003), but reasonably concluded that those alternatives were inadequate because the opportunity to timely grieve those claims had passed and he was indigent. Also, although it need not have considered the prejudice to the defendants, see Salmeron, 579 F.3d at 797; Barnhill v. United States, 11 F.3d 1360, 1368 (7th Cir. 1993), the court did this as well. Jackson created a factual dispute where there was none, costing the defendants time and resources. Finally, the court properly considered the need "to deter future parties from trampling upon the integrity of the court." Dotson, 321 F.3d at 668; see Salmeron, 579 F.3d at 797.

Jackson makes much of the district court's failure to warn before dismissing his case, but a warning to testify honestly was not required. The warning requirement is designed to provide notice in cases of dismissal, such as those for failure to prosecute, where a plaintiff might not realize the significance of a missed deadline, see Ball v. City of Chicago, 2 F.3d 752, 755 (7th Cir. 1993), and even in those cases it is not a rigid rule. See Kasalo v. Harris & Harris, Ltd., 656 F.3d 557, 562 (7th Cir. 2011); Fischer v. Cingular Wireless, LLC, 446 F.3d 663, 665 (7th Cir. 2006). A court may punish particularly egregious misconduct by dismissing a case without advanced warning. See Bolt v. Loy, 227 F.3d 854, 856 (7th Cir. 2000). This is such a case because Jackson, like any litigant, required no notification that he may not forge documents and must tell the truth when testifying in an affidavit.