United States v. 2010-11-30 | 08-16941 | Ready Transportation, Inc. V. Aar Manufacturing, Inc. |…

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
 READY TRANSPORTATION, INC.;
AVAILABLE SHIPPERS, INC.; PROMPT
SHIPPERS, INC.; PREFERRED SHIPPERS,
INC.; QUICK TRANSPORTATION INC.,
Plaintiffs-Appellees, No. 08-16941
v. D.C. No.
AAR MANUFACTURING, INC.; AAR 2:06-cv-01053- MOBILITY SYSTEMS, GEB-KJM
Defendants-Appellants, OPINION
and
UNITED STATES OF AMERICA,
DEPARTMENT OF DEFENSE; DEFENSE
CONTRACT MANAGEMENT AGENCY,
Defendants. 
Appeal from the United States District Court
for the Eastern District of California
Garland E. Burrell, Jr., District Judge, Presiding
Submitted October 6, 2010*
San Francisco, California
Filed November 30, 2010
Before: Stephen Reinhardt and Marsha S. Berzon,
Circuit Judges, and Louis H. Pollak, Senior District Judge.**
*The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
**The Honorable Louis H. Pollak, Senior United States District Judge
for the Eastern District of Pennsylvania, sitting by designation.
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Opinion by Judge Pollak
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COUNSEL
Hans U. Stucki and Jake Schmidt, Epstein, Becker & Green,
Chicago, Illinois, for the defendants-appellants.
Timothy C. Riley, Pasadena, California, for the plaintiffs-
appellees.
OPINION
POLLAK, District Judge:
Defendants-Appellants (collectively “AAR”) appeal from
the District Court’s order denying a motion to strike from its
docket a confidential settlement agreement filed by Plaintiffs-
Appellees (collectively “Ready”). We reverse and remand for
further proceedings.
I
Ready sued AAR and others, including the federal govern-
ment, in a dispute, the precise nature of which is not pertinent
to our inquiry here, over shipping agreements between the
government and various defense contractors. All defendants
except AAR were dismissed from the case in its early stages.
Ready and AAR then settled their dispute under the terms of
a confidential settlement agreement. They stipulated to dis-
missal of all claims except for a disagreement over attorney’s
fees. The District Court dismissed the balance of the case with
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prejudice, and it “retain[ed] jurisdiction solely for the purpose
of hearing and ruling upon Plaintiffs’ application re legal enti-
tlement to attorney’s fees.”
In support of its motion for fees, Ready attempted to file
the confidential settlement agreement under seal, but the Dis-
trict Court denied the request and returned the document to
Ready. Two days later, Ready filed the confidential settlement
agreement on the public docket. AAR then filed a motion to
strike the confidential settlement agreement. The District
Court denied AAR’s motion because the “parties’ dispute
over . . . the confidentiality of the settlement agreement”
placed a motion to strike “outside the scope of the [Court’s]
retained jurisdiction.” The fee dispute was later resolved by
the District Court in AAR’s favor, and timely cross-appeals
were filed.
Presently, only the appeal related to the motion to strike
remains, the other appeal having been dismissed.1 Ready and
AAR filed a joint motion for summary reversal of the order
denying the motion to strike, but the Appellate Commissioner
of this Court denied the joint motion without prejudice to rais-
ing the argument in briefing before a merits panel. Only AAR
has filed briefs in this appeal, and there has been no renewed
motion for summary reversal.
II
In this case, we are asked whether a district court has the
inherent power to strike an improperly filed confidential doc-
ument. In the typical case, we review a district court’s exer-
cise of its inherent powers for an abuse of discretion.
1On June 11, 2009, pursuant to an order of the Clerk of this Court, the
appeal in No. 08-16850 was “dismissed for failure to prosecute pursuant
to Ninth Circuit Rule 42-1.” This case, the remaining appeal, was declared
“ready for calendaring and [would] be heard on the basis of defendants’
brief alone” because no briefs were filed by the plaintiffs.
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Chambers v. NASCO, Inc., 501 U.S. 32, 55 (1991); S. Cal.
Edison Co. v. Lynch, 307 F.3d 794, 807 (9th Cir. 2002). “The
Supreme Court has held that a district court abuses its discre-
tion when it makes an error of law,” United States v. Hinkson,
585 F.3d 1247, 1261 (9th Cir. 2009) (en banc) (citing Cooter
& Gell Co. v. Hartmarx Corp., 496 U.S. 384, 405 (1990)),
and we review questions of law de novo, see, e.g., Gen.
Dynamics Corp. v. United States, 139 F.3d 1280, 1283 (9th
Cir. 1998).
Therefore, while a district court’s decision to exercise its
inherent power is reviewed for an abuse of discretion, whether
a district court possessed that power is a question of law
reviewed de novo. See Unigard Sec. Ins. Co. v. Lakewood
Eng’g & Mfg. Corp., 982 F.2d 363, 367 (9th Cir. 1992)
(applying a similar dichotomy to the analysis of a district
court’s ability to exclude evidence under its inherent powers);
W. Sys., Inc. v. Ulloa, 958 F.2d 864, 867 (9th Cir. 1992)
(applying a similar dichotomy to the analysis of a district
court’s injunctive power). Because this case turns solely on
the scope of the inherent power, and not an exercise thereof,
our review is de novo.
III
We conclude that the District Court had jurisdiction to
grant the motion to strike pursuant to its inherent powers. The
inherent powers are mechanisms for “control necessarily
vested in courts to manage their own affairs so as to achieve
the orderly and expeditious disposition of cases.” Chambers,
501 U.S. at 43 (citations omitted).
[1] “It is well established that ‘[d]istrict courts have inher-
ent power to control their docket.’ ” Atchison, Topeka &
Santa Fe Ry. v. Hercules, Inc., 146 F.3d 1071, 1074 (9th Cir.
1998) (alteration in original) (quoting Hernandez v. City of El
Monte, 138 F.3d 393, 398 (9th Cir. 1998)). This includes the
power to strike items from the docket as a sanction for litiga-
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tion conduct. See, e.g., Lazy Y Ranch Ltd. v. Behrens, 546
F.3d 580, 586-87, 588 (9th Cir. 2008) (discussing, but declin-
ing to rule on, the ability of a district court to strike docu-
ments submitted as exhibits to a motion); Hambleton Bros.
Lumber Co. v. Balkin Enters., Inc., 397 F.3d 1217, 1224-26
(9th Cir. 2005) (upholding a district court’s grant of a motion
to strike deposition corrections and a declaration as a sanction
when a party had violated Fed. R. Civ. P. 30(e)); cf. Carrigan
v. Cal. State Legislature, 263 F.2d 560, 564 (9th Cir. 1959)
(discussing an appellate court’s inherent power to strike briefs
and pleadings “as either scandalous, impertinent, scurrilous,
and/or without relevancy”). Even though the District Court
retained only limited jurisdiction over a portion of the suit,
that did not deprive it of the ability to exercise its inherent
powers “necessary to the exercise of all others,” including the
“power to impose silence, respect, and decorum.” Chambers,
501 U.S. at 43.
Indeed, the inherent powers permit a district court to go as
far as to dismiss entire actions to rein in abusive conduct. See
Atchison, 146 F.3d at 1074 (recognizing inherent power to
dismiss an action to sanction abusive conduct such as judge-
shopping or failure to prosecute). It necessarily follows that,
as part of its power to “manage [its] own affairs,” Chambers,
501 U.S. at 43, a district court can use less drastic measures
such as striking documents from the docket to address litiga-
tion conduct that does not warrant outright dismissal. See id.
at 44-45 (“Because of their very potency, inherent powers
must be exercised with restraint and discretion. A primary
aspect of that discretion is the ability to fashion an appropriate
sanction for conduct which abuses the judicial process.” (cita-
tions omitted)); Thompson v. Hous. Auth. of Los Angeles, 782
F.2d 829, 830 (9th Cir. 1986) (per curiam) (requiring a district
court to weigh, among other factors, “the availability of less
drastic sanctions” before resorting to dismissal as a sanction);
Henderson v. Duncan, 779 F.2d 1421, 1423 (9th Cir. 1986)
(“Dismissal is a harsh penalty and is to be imposed only in
extreme circumstances.”); Anderson v. Air W., Inc., 542 F.2d
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522, 525 (9th Cir. 1976) (upholding dismissal where a district
court “concluded that ‘no lesser measure would repair the
damage plaintiff has done (to the defendants)’ ”).
[2] In light of the powers district courts possess to craft an
appropriate sanction for litigation conduct and, as well, to
determine what appears in the court’s records, we therefore
hold that the District Court erred when it concluded it was
powerless to strike the confidential settlement agreement from
the public docket.
IV
[3] Although AAR asks us to direct the District Court to
strike the offending document, we decline to direct it to act
one way or the other on the motion to strike because, in reach-
ing its erroneous conclusion that it lacked power to grant the
motion, the District Court did not actually exercise its discre-
tion. We thus reverse the District Court’s order and remand
for the exercise of its sound discretion in consideration of the
circumstances surrounding the filing of the confidential settle-
ment agreement.
REVERSED AND REMANDED.
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