United States of America v. Estate of E. Wayne Hage; Wayne N. Hage

NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
UNITED STATES OF AMERICA,
Plaintiff - Appellant,
THOMAS SELEY; STEVEN
WILLIAMS,
Real-parties-in-interest -
Appellants,
v.
ESTATE OF E. WAYNE HAGE;
WAYNE N. HAGE,
Defendants - Appellees.
No. 13-17039
D.C. No. 2:07-cv-01154-RCJ-VCF
MEMORANDUM*
Appeal from the United States District Court
for the District of Nevada
Robert Clive Jones, District Judge, Presiding
Argued and Submitted December 9, 2015, as to Appellants and Estate of Hage**
San Francisco, California
Before: GRABER, WARDLAW, and MURGUIA, Circuit Judges.
FILED
JAN 15 2016
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
* This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
** The panel unanimously concludes that this case is suitable for decision
without oral argument as to Appellants and Wayne N. Hage. Fed. R. App. P.
34(a)(2).

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Real-parties-in-interest Thomas Seley and Steven Williams appeal the
district court’s order finding them in contempt of court. Reviewing for abuse of
discretion, Hilao v. Estate of Marcos, 103 F.3d 762, 764 (9th Cir. 1996), we
reverse.
1. We have appellate jurisdiction. The district court’s order did not become
final and effective until the entry of final judgment in 2013, and Seley and
Williams filed a timely notice of appeal from that judgment. Moreover, even if the
contempt order became final before entry of final judgment on the merits, a pre-
judgment appeal is discretionary. Legal Voice v. Stormans Inc., 738 F.3d 1178,
1182–84 (9th Cir. 2013). Seley and Williams had the option of waiting until entry
of final judgment and appealing "to the same extent a party can appeal such an
order." Id. at 1184.
2. The district court grossly abused the power of contempt. See Int’l Union,
United Mine Workers of Am. v. Bagwell, 512 U.S. 821, 831 (1994) ("[T]he
contempt power . . . uniquely is liable to abuse. . . . Contumacy often strikes at the
most vulnerable and human qualities of a judge’s temperament, and its fusion of
legislative, executive, and judicial powers summons forth the prospect of the most
tyrannical licentiousness." (citation, internal quotation marks, and ellipsis
omitted)). The two "underlying concern[s] that gave rise to the contempt power"
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are "the disruption of court proceedings" and "disobedience to the orders of the
Judiciary." Young v. United States ex rel. Vuitton et Fils S.A., 481 U.S. 787, 798
(1987). Neither is implicated here, because the court imposed contempt sanctions
in response to out-of-court conduct that did not contravene any court order; indeed,
no injunctive or other proscriptive orders had been granted.
Although we acknowledge that extreme circumstances may warrant the use
of contempt for out-of-court conduct unrelated to a court order, we emphasize that,
"[b]ecause of their very potency, inherent powers must be exercised with restraint
and discretion." Chambers v. NASCO, Inc., 501 U.S. 32, 44 (1991). For example,
attempting to bribe a witness might warrant the use of contempt powers (as well as
criminal sanctions). As another example, the Supreme Court twice recognized—in
cases at least 80 years old that we have never had occasion to apply—that
contempt was appropriate when a party destroyed the subject matter of the
litigation, thus interfering with the court’s administration of justice. See Lamb v.
Cramer, 285 U.S. 217, 219 (1932) (finding that contempt proceedings might be
brought against a person whose "receipt and diversion of [certain] property, which
was then [legally considered in the possession of the court], tended to defeat any
decree which the court might ultimately make in the cause" (citations omitted));
Merrimack River Sav. Bank v. City of Clay Ctr., 219 U.S. 527, 533 (1911) (finding
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parties in contempt when they took actions that "did thus destroy the subject-matter
of the suit").
The actions by Seley and Williams come nowhere near meeting the correct
legal standard for contempt. They took lawful actions, within the scope of their
statutory and regulatory obligations, that had no effect whatsoever on the case
before the court. Of primary importance, and contrary to the district court’s
understanding, the district court did not have jurisdiction over Defendants’ water
rights. As we hold in the main appeal, Defendants’ water rights were irrelevant to
this case. But even assuming that they were relevant, the government did not
destroy or significantly affect even a single water right. Nor did Seley and
Williams interfere in any way with a witness’ testimony to the court or otherwise
interfere with the court’s administration of justice.
In sum, the district court’s findings of contempt applied the wrong legal
standard, and it is clear that Seley and Williams never contravened the proper legal
standard.
REVERSED.
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