Appendix — Chambers v. Nasco, Inc.

en res

NO. 2

50888. —

In the *

Supreme Court of the United States

OCTOBER TERM. 1990

G. RUSSELL CHAMBERS

Petitioner,

V.

NASCO, INC.

Respondent.

PETITION FOR WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

APPENDIX

MACK BARHAM*

ROBERT E. ARCENEAUX

The Barham Law Firm, P.C.

650 Poydras Street

Suite 2700

New Orleans, LA 70130

(504) 525-4400

RUSSELL T. TRITICO, P.C.

714 Pujo Street

Lake Charles, LA 70602

(318) 436-6648

Attorneys for Petitioner

*Counsel of Record

— — — . — —vtL— — — — — —

A B Letter Service, Inc., 327 Chartres St., New Orleans, La. (504) 581-5555

2

i

TABLE OF CONTENTS

Page

APPENDIX:

Appendix A

r m-! e oe eeede A-l

Appendix B

Court of Appeal Opinion...................... A-59

Appendix C

Court of Appeal Per Curiam Denying Rehearing . . A-84

~ A-l

APPENDIX A

IN THE UNITED STATES DISTRICT COURT FOR

THE WESTERN DISTRICT OF LOUISIANA

LAKE CHARLES DIVISION

FILED

JAN 23 1989

NASCO, INC. : CIVIL ACTION

s- NO. 83-2564

CALCASIEU TELEVISION : JUDGE SCOTT

AND RADIO, INC., ET AL

OPINION

This matter is before us on a Motion to Fix Compen-

satory Damages Pursuant to Contempt Judgment, To Fix

Appellate Sanctions, and To Impose Santions.! The mover

is NASCO, Inc. (NASCO). The respondents include G.

Russell Chambers (Chambers), A. J. Gray, III (Gray), Ed-

win A. McCabe (McCabe), Mabel Christine Baker (Baker),

and Richard A. Curry (Curry).

1. By order dated Fegruary 1, 1988, we fixed the contempt damages

previously awarded to NASCO in the amount of $6,233.27, together

with legal interest thereon at the rate of 7.14% per annum from

February 1, 1988, until paid. (The $6,233.27 amount includes $4,754.00

in attorney's fees and expenses and $1,479.27 in out-of-pocket expenses

incurred by NASCO’s director James Smith in testifying at the con-

tempt hearing). That issue is therefore not addressed herein.

A-2

Nasco filed this action in diversity on October 17,

1983 for the specific enforcement of an August 9, 1983 Pur-

chase Agreement providing for the sale of television sta-

tion KPLC-TV in Lake Charles, Louisiana to NASCO and

for injunctive relief to prohibit the transfer of the proper-

ties to any third party in violation of the Purchase Agree-

ment. Due notice of NASCO’s application for injunctive

relief was given to the attorneys for sellers prior to Sunday,

October 16, 1983, and sellers on that day created a trust

and transferred properties to the trust in violation of the

Purchase Agreement and for the admitted purpose of plac-

ing these properties beyond the jurisdiction of this Court.

The defendants in the underlying action are Calcasieu

Television and Radio, Inc. (CTR),2 the owner and

defaulting seller; Chambers, the sole shareholder and sole

Director of CTR, who signed the Purchase Agreement on

behalf of CTR and in his individual capacity, and who caus-

ed the corporation to breach the Agreement; and Baker,

Chambers’ sister and the Trustee of the Facility Trust, an

entity created by Chambers on the eve of this litigation to

receive simulated ownership of certain station properties in

order to prevent judicial enforcement of the sale.

The litigation was tried to the Court without a jury

on April 17, 1985. NASCO prevailed.* This Court’s refusal

to stay execution of the judgment pending appeal was sus-

tained by the Appellate Court.

2. Calcasieu Television and Radio, Inc. (CTR), an original defendant in

the underlying litigation, was liquidated following the sale of KPLC-TV

to NASCO. It is thus not a respondent in the instant matter.

3. This Court issued its Opinion on the merits on November 8, 1985,

NASCO, Inc. v. Calcasieu Television and Radio, Inc., 623 F. Supp. 1372

(W.D.La. 1985), and Judgment was signed on November 27, 1985.

A-3

On August 6, 1986, the United States Court of Ap-

peals for the Fifth Circuit, at the close of oral argument,

ruled from the bench, per curiam, affirming this Court's

judgment on the merits, declaring the defendants’ appeals

to be frivolous, imposing appellate sanctions against

Chambers and Baker pursuant to Fed. R. App. P. 38 in the

form of attorney’s fees and double costs, and remanding

the case with instructions to fix the amount of the ap-

pellate sanctions and to determine whether further sanc-

tions should be imposed against the defendants and/or

their counsel for the manner in which the litigation was

conducted in the district court.‘

Continued resistance by Chambers, his employees

and agents, including McCabe after our November 27, 1985

judgment on the merits, delayed completion of the sale un-

til August 27, 1986. Thereafter NASCO’s claims for

damages under La. C.C. Art. 1986 (specific performance) as

a result of Chambers’ breach of the agreement were dispos-

ed of before NASCO could prepare and file, on December

29, 1987, the motion now before us, first, to fix the amount

of the appellate santions imposed against Chambers and

Baker by the Fifth Circuit, and, second, to impose ap-

propriate sanctions against the respondents, including

Chambers, Gray, McCabe, Baker, and Curry, for the man-

ner in which the defense of this action was conducted in the

trial court. NASCO seeks appropriate sanctions — in-

cluding all attorney 's fees, costs, and expenses it incurred

during the course of the entire proceedings. These sanc-

tions are sought under the aegis of the Court's inherent

equ‘table

4. See NASCO, Inc. v. Calcasieu Television and Radio, Inc, No. 86-4003

(5th Cir. Aug. 6, 1986) (per curiam) (unpublished order); Jd. (5th Cir. Aug.

11, 1986) (per curiam) (unpublished order amending Order of Aug. 6,

1986); Id. (5th Cir. August 27, 1986) (per curiam) (unpublished opinion

affirming judgment on the merits).

A-4

powers, and the provisions of 28 U.S.C. § 1927 and Fed. R.

Civ. P. 11.

An evidentiary hearing was held on April 11, 1988.

Suggested findings and conclusions as well as authorities

(including additional authorities requested by us on

December 12, 1988) have been submitted by all parties and

are now before us.

ISSUES

The issues before the Court are as follows:

A. Fixing the amount of attorney’s fees and of dou-

ble court esste en appeal decreed an canctions by the Court

of Appeals.

B. Determining whether sanctions are appropriate

for the manner in which this proceeding was conducted in

the district court from October 14, 1983, the time that

plaintiff gave notice of its intention to file suit to this date

and, if sanctions are appropriate, to determine what party

or parties should be sanctioned and the character of sanc-

tions to be assessed.

FINDINGS OF FACT

A. Preliminary History:

1. On August 9, 1983, NASCO, as buyer, and CTR

and Chambers, as sellers, entered into an Agreement to

convey the television facilities and the broadcast license of

KPLC-TV in Lake Charles, Louisiana for the purchase

price of $18 million dollars. The Agreement has never been

recorded in Calcasieu and Jefferson Davis Parishes where

the properties are located.

A-5

2. The Agreement provided that time is of the

essence in the performance of the Agreement, Paragraph

31, and provided specifically that consummation of the

Agreement is subject to the approval of the Federal Com-

munications Commission; that the parties shall proceed as

expeditiously as possible to file all requisite applications

and other necessary instruments, to process said applica-

tions with all reasonable diligence and to cooperate and use

their best efforts to obtain the requisite consent and ap-

proval of the Commission and to carry out the provisions

of the Agreement. In no event was the joint application to

the Commission to be filed later than forty-five days from

the date of the Agreement, namely September 23, 1983.

Chambers, the sole stockholder and sole member of

the Board of CTR, and his attorney, Jonathan Golden, who

was also assistant secretary of CTR, negotiated and con-

summated the Agreement on behalf of CTR. In fact, they

were the only CTR employees or representatives having

knowledge of the existence of the Agreement until

Chambers’ meeting with NASCO representatives in Lake

Charles, Louisiana on August 22, 1983.

3. On that date, Brian Byrnes and Jim Smith, who

signed the Agreement on behalf of NASCO, visited KPLC-

TV at the invitation of Chambers ior the purpose of draft-

ing an appropriate public announcement of the Agreement.

Until he left the meeting, Chambers had been most

cooperative in carrying out the Agreement.

Rita Guillory, President of CTR, had no part in the

negotiations and was not consulted regarding the Agree-

ment. At this meeting she learned for the first time that

5. Rita Guillory became Rita Chambers after her marriage to G. Russell

Chambers on or about November 1983.

A-6

KPLC-TV was to be sold and that she would lose her job

as President. CTR’s cooperation ceased the minute that

Chambers left the meeting. Byrnes and Smith left and no

representatives of NASCO would be present at the station

again until sometime after September 23, 1983.

4. Chambers called Bill Cook, chairman of NASCO,

on August 29, 1983 and tried to talk him out of going

through with the Agreement, offered to reimburse all of

NASCO’s expenses and pay some additional money. Cook

declined.

5. On September 2, 1983, NASCO informed CTR and

Chambers that NASCO’s portion of the Assignment Ap-

plication was ready and in suitable form for filing with the

FCC.

6. On or about September 7, 1983, Chambers had a

telephone conversation with Brian Byrnes in which he ask-

ed What would you say if I didn’t file? Byrnes replied

that NASCO had been ready to file its portion of the FCC

application since September 1 or 2, and that he would be

very disappointed.

7. Byrnes and Chambers spoke again on Monday,

September 12, 1983. When Chambers asked what Byrnes

thought of Chambers’ remark on September 7th, Byrnes

replied that, based on his brief contacts with Chambers, he

thought that Chambers would do what the Agreement pro-

vided. Chambers answered that he recognized that he

(CTR) had a contractual obligation to file CTR’s portion of

the FCC application.

In a letter (Ex. P2) dated September 16, 1983,

NASCO (Brian Byrnes) referred to the content of the con-

versations {paragraphs 5-7 supra) in detail, and again

A-7

notified CTR and Chambers that the assignee’s part of the

application had been ready and in suitable form for filing

since September 2nd and requested that CTR ‘‘immediate-

ly prepare, have executed and forwarded the assignor’s por-

tion of the assignment application prior to September 23,

1983.“

Chambers replied on September 21, 1983 (Ex. P3)

that the Agreement speaks for itself and that he

understood that his “attorney has contacted your at-

torney. He did not deny any of the content of the

September 16, 1983 letter (Ex. P2).

9. On September 23, 1983, NASCO’s FCC counsel,

John Stewart, was informed by Chambers’ (CTR) FCC

counsel, Roy Russo, that the assignor’s portion of the Ap-

plication would not be filed on that date. On that same date

Stewart caused a letter to be hand delivered to Russo,

stating again that NASCO was ready and willing to file the

assignee’s portion of the Application and that Russo

should notify him if and when the assignor’s portion was

received. ,

10. From August 9, 1983, the date that the Agree-

ment was executed by the parties, until September 23,

1983, the date by which CTR was to submit its portion of

the FCC application, there was no default or violation of

the Agreement on the part of NASCO. In fact, all parties,

including Chambers, were performing and ready to go for-

ward on August 22, 1983. When Chambers called Bill Cook

on August 29, 1983 (see paragraph 4 supra), they talked

some forty-five minutes. Chambers did not complain then

or thereafter of the violation of any pre-August 9, 1983

understanding or of the Agreement or interference with

station operations or harassment of personnel or any dif-

ficulty with ascertainment interviews - all of which have

A-8

been alleged by defendants following the institution of this

suit. He simply tried to generate with Cook some terms on

which he could buy out of the Agreement. Cook was

adamant.

11. In Chambers’ conversations and correspondence

with Byrnes after August 29, 1983, he never once alluded

to any such breaches by NASCO, he talked only of an

unrelated bond problem as the reason for his admitted

reluctance to file CTR’s portion of the FCC application.

Although he admitted that he and CTR were bound by the

Agreement (now a stipulated fact, see paragraph 25 infra),

Chambers suggested on September 7, 1983 for the first

time that he (CTR) might refuse to file timely his portion

of the FCC application (paragraphs 6, 7 and 8 supra). His

(CTR’s) acts after August 29, 1983 finally culminated in his

(CTR’s) unjustified and arbitrary refusal to file CTR’s por-

tion of the FCC application by Septeraber 23, 1983. This

refusal was a deliberate violation of the obligations under

Paragraphs 6 and 31 of the Agreement. Their refusal or

failure to file was in absolute bad faith.

12. Several weeks prior to October 17, 1983

Chambers sought the advice of Camp, Carmouche, Barsh,

Hunter, Gray & Hoffman, his Lake Charles attorneys who

had not represented him previously in this matter, to

discover a way to defeat the August 9, 1983 Agreement

and retain title and possession of the properties described

therein for CTR. Upon investigation and discovery that the

Agreement was not recorded, Gray, who had assumed the

duties of trial attorney, suggested that the Public Records

Doctrine might be an effective solution. The plan was sim-

ple. If CTR could sell the station site and the tower site to

a third party prior to the recordation of the Agreement or

the issuance of an injunction, the Court would be forced to

recognize that title and possession of the properties was no

A-9

longer in CTR; was beyond the jurisdiction of the Court so

that the Court could not enforce specific performance

against CTR.

B. The Initial Fraud:

13. On Friday, October 14, 1983, counsel for NASCO

notified Jonathan Golden, an attorney for Chambers and

CTR and an officer of CTR, that it would file suit in the

United States District Court for the Western District of

Louisiana in Alexandria, Louisiana on Monday, October

17, 1983, seeking specific performance of the Purchase

Agreement and that counsel for NASCO would appear in

Alexandria at approximately noon on that date to request

injunctive relief to preserve the status quo by enjoining the

alienation or encumbrance of the subject properties until a

judicial resolution of the dispute could be obtained. This in-

formation was transmitted to Chambers through his Lake

Charles attorneys on Saturday, October 15, 1983.

This notice to the defendants Chambers, CTR and

Gray, pursuant to the requirements of Fed. R. Civ. P. 65(b)

and Rule II of the Local Rules of this Court, is designed to

allow a defendant in an application for a temporary

restraining order to be present at the hearing and defend

his interests.

On the afternoon of Sunday, October 16, 1983,

Chambers and Gray knowingly and deliberately took ad-

vantage of this notice to form and set into motion an illegal

and fraudulent scheme and conspiracy which they have ad-

mitted was designed to place the operating properties of

CTR beyond the reach and jurisdiction of this Court

through the medium of the Louisiana Public Records Doc-

trine and to deprive NASCO of a judicial detemination of

its rights to specific performance and still maintain CTR in

A-10

possession and in a position to continue its operations

without interruption.® Their first act in furtherance of the

conspiracy was the formation and execution of an act of

donation in trust with a corpus of $1,000.00;’ appointing

Chambers’ sister, Baker, as Trustee and naming

Chambers’ three adult children as beneficiaries. Chambers,

Rita Guillory and Gray were fully aware on October 16,

1983 that the two tracts of land on which the TV station

and the transmitters were located were to be sold to

NASCO under the Agreement of August 9th. Yet, contem-

poraneously with the drafting of the Trust, Chambers, the

sole member of the Board of Directors and the sole

stockholder of CTR, by resolution directed Rita Guillory,

the President of CTR, to execute duplicate warranty deeds

conveying the two tracts to Baker, Trustee, for a recited

consideration of $1.4 million dollars. The president of CTR

complied.

14. On the evening of Sunday, October 16, 1983,

Chambers telephoned his sister, Baker, in Birmingham,

Alabama and informed her of the creation of the Trust and

that it was his wish that she act as Trustee. He did not

refer to the duplicate deeds which had been executed by

Rita Guillory on bel.alf of CTR. After she consented to be

Trustee, Chambers told Baker that he would be coming to

Birmingham the next day to have her sign some

documents.

15. The deeds were recorded at 8:30 a.m. on Monday,

October 17, 1983; with no signature by the purchaser,

6. See Transcript of April 11, 1988 hearing pp. 114-118; 152-159.

7. There is evidence that the $1,000 corpus was never paid into the

Trust. This omission may have rendered the Trust invalid. La. R. S.

9:1731. See restatement 2d Trusts § 74 and Comment (b) to La. R. S.

9:1822.

A-11

Trustee Baker; with none of the consideration having been

paid, and with CTR still in undisturbed possession despite

the recordation of the deeds. All this was accomplished at

the sole direction of Chambers and Gray.

16. Late on the morning of Monday, October 17,

1983, NASCO’s counsel appeared before us in Alexandria,

Louisiana and filed NASCO’s complaint against CTR and

Chambers seeking as part of the relief against those parties

specific performance of the Agreement and a Temporary

Restraining Order (TRO) to enjoin those parties from

alienating or encumbering the properties covered by the

Agreement. Gray had requested by a telephone call to the

Clerk of Court’s office that morning that he be informed

when NASCO’s counsel arrived. We personally called

Gray, informed him that NASCO’s counsel were present

and that NASCO’s counsel had stated to us that notice had

been given to Gray of the injunctive relief sought by

NASCO. Gray did not plead surprise or lack of notice. Had

he done so, we, considering the substance of the relief

sought, would have delayed action until he could be pre-

sent. This was not considered, however, because Gray

stated that he did not intend to be present and that he was

making no statements or representations on behalf of his

client. However, he did participate fully in the conference.

We informed him of the nature of the injunctive relief

sought, read to him verbatim that section of the suggested

TRO which pertained to inspection of records. Gray sug-

gested alterations, all of which were agreed to by NASCO’s

counsel. They were incorporated into the TRO which was

then signed by us, with Gray’s consent, at 1:34 p.m. A

hearing for a preliminary injunction was set for October 24,

1983. Gray participated in the TRO conference by

telephone as fully as he could have done if personally pre-

sent. His participation was, in effect, a waiver of notice.

Although Gray, during this discussion, was then deeply

A-12

involved in Chambers’ scheme to place the property

beyond the reach and jurisdiction of this Court, he made no

mention of this to the Court.® Ex. P.10.

17. At or about 4:30 on the afternoon of Monday, Oc-

tober 17, 1983, after the deeds had been recorded, and after

the TRO had been signed in Alexandria, Chambers flew to

Birmingham, Alabama and met Baker at the airport. He

directed her to sign her acceptance of the office of trustee

and the $1.4 million note to CTR. She did as directed. She

does not recall being told about the sale or receiving a copy

of it. She signed the note without knowledge of what she

was signing, what it was for, or how she was going to pay

it. Baker was given no explanation and she did not ask for

any.

18. On Tuesday, October 18, 1983, Gray admitted by

letter the recordation of the duplicate deeds at 8:30 a.m. on

Monday, October 17, 1983 and that he had intentionally

concealed that fact from the Court prior to, during and

after the issuance of the TRO.

8. Unbeknownst to the Court, Gray surreptitiously tape recorded these

telephone conferences. Transcripts of those tape recordings were attach-

ed as exhibits to Chambers’ Memorandum in Opposition to Request For

Sanctions. See Chambers Memorandum Exhibit A. Those transcripts

reveal a telling exchange during the course of Gray's discussions with

the Court on the scope of the proposed injunctive strictures:

Judge [Scott]: I have an understanding of the representation

bid [sic], you are not trying to sell to someone else.

Gray: I have made no representation.

Id., P. 2 (second conversation) (emphasis added).

No clearer opportunity to reveal the truth could have been offered to

Gray. No clearer evidence of deliberate and devious concealment could

be found.

A-13

19. Chambers’ attorneys prepared a leaseback agree-

ment from Baker, Trustsee, to CTR covering the same pro-

perties allegedly conveyed to Baker in the duplicate deeds

of October 16, 1983. Rita Guillory signed this instrument

on behalf of CTR on October 22, 1983 and forwarded it to

Baker, directing her to sign and return it. Baker had no

notice or other reason to expect the receipt of this lease.

Baker knew nothing of its terms or contents and she had

no part in any negotiations. No explanation accompanied

the lease; Baker had no conversation with or advice from

Rita Guillory, Chambers or anyone else. She simply signed

and returned the lease on October 25, 1983. It is not shown

in the record, even at this late date, that Baker was aware

of the October 16, 1983 sale from CTR or the identity of

the property covered by that sale.

20. On Monday, October 24, 1983, we granted a

preliminary injunction against CTR and Chambers, and

entered a second temporary restraining order directed

against Baker to prevent her from selling, transferring, or

in anyway encumbering the CTR properties. Mr. Gray ap-

peared as counsel for CTR and Chambers but denied

representation of Baker. NASCO’s counsel, having assum-

ed Gray would represent her, then made attempts to con-

tact Baker prior to the Court’s issuance of the order. Fail-

ing such notice, the court, in the interest of justice, granted

such TRO against Baker, as Trustee of the Facility Trust

at 10:37 a.m. on October 24, 1983.

21. At this same meeting, although we were not yet

aware of the lease-back agreement, we, for the first time,

warned Gray that the acts of Chambers and himself on Oc-

tober 16 and 17, including Gray’s concealment of those

events, were reprehensible and unethical and that no acts

of that nature should be repeated in the future. We felt that

Gray would abide by that warning.

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C. The Pretrial Skirmishes:

22. Our expectations were short-lived. In November

1983 Chambers, acting on the advice of Gray, refused to

allow an inspection of corporate records in direct defiance

of the standing preliminary injunction. The ensuing con-

tempt proceedings, NASCO, Inc. v. Calcasieu Television &

Radio, Inc., 583 F. Supp. 115 (W.D. 1984), vindicated

NASCO’s rights, but only at the price of significant ex-

pense, delay, and waste of resources. That price was made

more dear by Gray’s vigorous prosecution on behalf of

Chambers of two separate and independent appeals which

were dismissed by the appellate court without considera-

tion of the merits. See NASCO, Inc. v. Calcasieu Television

and Radio, Inc., 752 F.2d 157, 157-58 (5th Cir. 1985).

23. Subsequently a series of meritless motions and

pleadings and delaying actions were initiated by

defendants.

a. Two motions for summary judgment filed by Gray

and Boland on behalf of Chambers (CTR).

b. Motion for summary judgment filed by Curry on

behalf of the Trustee followed by Motion to Strike and a

supplemental motion thereto; a motion to reconsider (no

new grounds).

c. Motion for protective order and clarification filed

by Gray on behalf of Chambers (CTR).

d. Chambers (CTR) through Gray filed baseless

charges and counterclaims against NASCO alleging fraud,

harassment, interference with TV station operations,

spreading of misinformation, public disapproval of the sale

and of plaintiff as owner-operator of the station.

A-15

Also charged were unnamed breaches of the Purchase

Agreement by NASCO and NASCO’s disregard for a non-

existent oral side- agree ment with Chambers (CTR).

e. Chambers (CTR) through Gray injected pointless

new issues: NASCO’s conduct of its FCC ascertainment

survey; its ability to pay the purchase price; its plans for

the future management of the station; its commitment to

the community interest.

f. Absolutely needless depositions of officials of the

bank that was to finance the purchase price were noticed

by Gray and taken by McCabe on behalf of Chambers

(CTR).

g. Depositions of the entire NASCO board of direc-

tors were noticed and five were taken.

h. Throughout the course of these proceedings prior

to the trial on the merits, Chambers (CTR) and Gray

sought repeatedly, sometimes sucessfully, continuances of

trial dates, extensions of deadlines and deferments of

scheduled discovery.

All of the motions mentioned above in a, b and c re-

quired research and opposition by NASCO and considera-

tion by the Court. All were filed in absolute bad faith by at-

torneys who conceived The Initial Fraud (Gray) or had

become intimately familiar with it through instruction, the

record and depositions (Curry). Chambers (CTR), Baker

(Trustee) and these attorneys, as a basis for these motions,

brazenly and deliberately urged upon this Court as uncon-

troverted fact, the attempted simulated and fraudulent

sale to the Trustee Baker which all of them knew was

fraudulent and was attempted for the sole purpose of

depriving NASCO of its right to specific performance by

A-16

placing the property beyond the jurisdiction of the Court.

The charges mentioned in d above were deliberate

untruths and fabrications by Chambers. They were, on

their face, improbable and unrealistic. Yet these attorneys,

without any investigation whatsoever, filed them. We find,

under the circumstances, that these attorneys knew, at the

time that they were filed, that they were false.

The acts described above in e, f, g and h were simply

part of the sordid scheme of deliberate misuse of the

judicial process; to defeat NASCO’s claim by harrassment,

repeated and endless delay, mountainous expense and

waste of financial resources.

24. Having held a pretrial conference and several

status conferences and ruled on several motions in prepara-

tion for a trial on the merits set for February 27, 1985, we

were confronted on January 28, 1985 by a motion filed on

behalf of Chambers (CTR) by Gray to recuse the trial judge

for bias and prejudice. An expedited evidentiary hearing

was had; we considered and denied the motion. A writ of

mandamus to compel disqualificataion was filed with the

U.S. Court of Appeals for the Fifth Circuit by Gray for

Chambers (CTR). Curry, on behalf of the Trustee, filed an

„answer in which he urged the granting of the writ. The

writ was denied as being meritless, but trial on the merits

again was delayed.

25. Finally, on the eve of trial, Chambers (CTR),

Baker, and their counsel stipulated that the Purchase

Agreement was valid and enforceable, and that Chambers

(CTR) had breached the agreement on September 23, 1983.

No clearer indication could be found that all of the

i asserted affirmative defenses, all of the

previously asserted counterclaims, all of the multitudinous

A-17

pleadings and motions and oppositions prosecuted so

fervently by the defendants, were untruths and distortions

and were absolutely devoid of substantive merit. Defen-

dants obtained no tactical or strategic benefit by this

stipulation. They suddenly were faced with the necessity of

producing evidence to sustain the charges and the fact that

Chambers’ testimony in support of those allegations would

be perjury. Of the 100 witnesses listed by Chambers prior

to trial, only two appeared to testify. Of all the multitude

of allegations and counterclaims asserted by Chambers and

filed by Gray and Curry prior to trial, only one defense was

manufactured as part of The Initial Fraud

C. The Posttrial Skirmishes:

26. After the Apr. 985 trial on the merits and dur-

ing the delay for submission of authorities, suggested fin-

dings and conclusions and our consideration of the merits,

Chambers (CTR) and his attorneys continued to use every

means, every subterfuge, every ruse possible to avoid per-

formance of the Purchase Agreement.

a. Chambers, without notice to NASCO, petitioned

the FCC for permission to construct a new transmission

tower for the station, and to relocate the station s

transmission facilities to that site. This would have been a

material alteration of the status quo. The tower sites would

be covered no longer by the Purchase Agreement. Only the

informal intervention of this Court, and !' ASCO’s threat of

further contempt sanctions, persuaded Chambers to

withdraw the application.

b. Following the rendition of judgment on November

27, 1985, Chambers and Baker, acting through Gray and

Curry, moved this Court to stay its judgment pending their

A-18

contemplated appeals. Extensive memoranda, and no less

than three status conferences, ensued. All parties having

admitted that the Purchase Agreement was legal, valid and

enforceable, the Public Records Doctrine having been re-

jected and all other baseless defenses having been

withdrawn, the plaintiff having suffered delay, harassment

and enormous expense since October 17, 1983, we refused

steadfastly and absolutely to grant a stay. Curry, on behalf

of the Trust, filed a petition for a writ of mandamus to the

Fifth Circuit in an attempt to force this Court to grant the

stay. Chambers petitioned the Fifth Circuit directly. Both

were denied. Chambers then petitioned (via his

Washington lawyers) the Honorable Byron R. White,

Associate Justice of the United States Supreme Court, to

stay our merits judgment. That petition, too, was denied.

c. During the pendency of the defendants’ appeals,

Chambers (CTR) renewed his efforts to circumvent the

merits judgment by fomenting opposition to the pending

application for FCC approval of the transfer of the station

license. Specifically, formal oppositions were lodged with

the FCC, and were subsequently prosecuted, by two cor-

porate officers of CTR — in direct violation of both the in-

junctive orders and the merits judgment. NASCO was thus

compelled to seek contempt sanctions for a third time.

Again, by informal intervention by us, the oppositions

were withdrawn.

d. Gray resigned as counsel for Chambers and CTR

on April 2, 1986. Thereafter Chambers (CTR) continued his

refusal to begin preparation to close the sale. NASCO, on

July 1, 1986, again was forced to seek judicial assistance

and hearing was fixed for July 16, 1986. Thereupon

Chambers called upon his Boston, Massachusetts attorney,

Edwin McCabe, to command his campaign of defiance,

delay, harrassment and expense. McCabe had

A-19

represented Chambers (CTR) previously in the pointless

depositions of bankers who had done business with

NASCO. McCabe proved to possess unethical abilities

equal to the job.

e. On July 21, 1986, we sustained NASCO’s motion

to quash the subpoena duces tecum filed on behalf of

Chambers and CTR directing NASCO to produce confiden-

tial financial information pertaining to discussions bet-

ween plaintiff and financing institutions with whom plain-

tiff had conferred concerning the financing of the purchase

price for television station KPLC-TV.

f. At the commencement of the July 16, 1986 hearing

we informed McCabe that we had encountered much sanc-

tionable conduct in the trial of this case and we would not

tolerate or countenance any additional conduct of that

nature, and that the hearing would be limited to the trial

of Chambers’ (CTR) contention that certain operating

equipment, which had replaced equipment listed in Exhibit

B on August 9, 1983, should not be included in the sale.

McCabe had already filed an opposition and prehearing

memorandum, raising a multitude of irrelevant arguments;

a request for a trial by jury on the pending motions, and a

motion in limine to exclude any evidence pertaining to sta-

tion assets not listed in Exhibit B to the Purchase Agree-

ment. We denied all of these prehearing motior:s.

g. The July 16, 1986 hearing went into recess for

several days and during that recess the defendants

unilaterally, and without notice to the Court, or opposing

counsel, removed from service all of the equipment at issue

in the hearing. That action was undertaken at McCabe’s

direction and was an attempt by Chambers (CTR) and

McCabe to resolve extrajudicially and through self-help the

very issues then! ‘ore the Court. On July 22, 1986, we

A-20

ordered that the equipment previously removed be return-

ed to service, and to remain so during the remaining

pendency of the litigation. The July 16, 1986 hearing was

itself a case study in deception. CTR’s accountant, and two

of its corporate officers (Rita Guillory Chambers,

Chambers’ wife, and his longtime employee, Albert Smith)

gave false and perjured testimony concerning the owner-

ship and use of the disputed assets. Seventeen fraudulent

equipment leases were introduced by McCabe to prove that

the disputed equipment did not belong to CTR but to

another Chambers corporation and was merely leased to

CTR. Ultimately these leases were found by us to be

nothing more than instruments of deception.”

h. On July 28, 1986 — despite the pendency of

NASCO’s motion for judicial assistance, despite our clear

and repeated orders that the status quo would be preserv-

ed, and despite the fact that we had taken NASCO’s mo-

tion under advisement for the rendition of judgment

McCabe caused a letter to be sent to NASCO’s counsel

stating Chambers’ unilateral intention to close the sale of

KPLC-TV on August 4, 1986, and to convey only those

assets listed on Agreement Exhibit B — expressly ex-

cluding the disputed equipment that was the subject of the

pending motion for judicial assistance. That letter was

nothing more and nothing less than an attempt to

maneuver NASCO into position for the termination of the

sale by Chambers under Paragraph 16 of the Purchase

Agreement. On July 31, 1986 we granted NASCO’s pen-

ding motion seeking relief from the timing and termination

provisions of Paragraph 16 of the Agreement.

i. On August 5, 1986, McCabe caused to be filed (1)

an appeal from our order of July 31 (granting relief from

the timing and termination provisions of Paragraph 16); (2)

a separate appeal from our order of July 24, 1986 (ordering

A-21

Chambers to restore the disputed equipment to service);

and (3) a motion to vacate our merits judgment of

November 27, 1985 for the specific performance. On the

same date, Chambers’ New Orleans counsel moved the

Court of Appeals for the Fifth Circuit to upset and continue

the oral argument on the pending appeals, then scheduled

for August 6, 1986. That motion was summarily denied by

the appellate court.

The basis for McCabe’s motion to vacate the merits

judgment was the termination provisions of the Purchase

Agreement; in essence, an argument that NASCO had

breached the Purchase Agreement by declining to close the

sale on August 4, 1986 in submission to Chambers’

unilateral demand, and that, because Chambers had

managed to delay both FCC approval of the license transfer

and the closing, Chambers was entitled to terminate the

contract.

27. This Court throughout this proceeding has at-

tempted to restrain the fraudulent and unethical conduct of

the defendants and their attorneys.

a. As previously stated, paragraph 21 supra, we

warned Gray of his unethical actions (The Initial Fraud) on

October 24, 1983.

b. The judgment of this Court after the contempt

hearing a month and a half later was, by its inherent

nature, a warning against any similar conduct in the

future.

c. Some months after that we called, on our own in-

itiative, a status conference to determine why deposit:ons

of a number of bankers had been noticed and whether these

were actually necessary. When we were informed by

A-22

defendants’ counsel that the purpose was to test NASCO’s

ability to meet the $18 million dollar purchase price men-

tioned in the Purchase Agreement, we informed them that

that was not a relevant issue and that a more positive and

less expensive way to determine that issue was an offer by

defendants to perform the Purchase Agreement. We

cancelled the uncompleted depositions consistent with our

powers under Fed. R. Civ. P. 26(g). This was another

warning. vA

d. On January 28, 1985, about a month prior to the

then current trial date of February 27, 1985, Chambers and

Gray filed a motion to disqualify the trial judge. Although

the motion was dismissed by us because the supporting af-

fidavit by defendant Chambers was legally insufficient, we

felt that the motion actually was frivolous and had been fil-

ed for tactical purposes. We also felt that, because of the

nature of the proceeding, a renewal of the warning was

inappropriate.

e. We called a status conference on April 8, 1985, nine

days prior to the final trial date of April 17, 1985. At this

conference we again gave warning and distributed to the

attorneys copies of Judge Schwartzer’s article, Sanctions

Under the New Federal Rule 11 - A Closer Look’’, 104

F.R.D. 181 (1985).

f. At the commencement of the hearing held July 16,

1986, we again repeated our warning, this time specifically

to McCabe. McCabe’s reaction is described above,

paragraph 26f-i.

28. Little more need be said about the role of

Chambers and Gray in this sordid, dishonest and

deliberately unethical chain of events called a lawsuit. In

the memoranda of authorities submitted by them on the

A-23

sanction phase of this suit, each vigorously assails the

character and credibility of the other as if this automatical-

ly places his own character and credibility beyond

reproach. But the record itself establishes that both are

capable of any fraud that is necessary for a given purpose,

and that neither is worthy of belief.

On Sunday, October 16, 1983, one day after they had

received notice that NASCO was applying for injunctive

relief against CTR and Chambers, Chambers and Gray

formed a conspiracy for the sole and dishonest purpose of

defeating the Purchase Agreement which both of them

knew at the time to be absolutely legal and enforceable.

Both of them were admirably equipped to carry out the

purposes of the conspiracy since neither of them was

restrained by any sense of honesty, integrity or ethics. The

very first act of the conspiracy, the so-called Public

Records Doctrine defense, set the ethical tone of all of its

acts which followed. It was a web of berate fabrications,

misrepresentations and fraud, some of which were intended

to mislead the public in general while others were aimed on-

ly at the Court and opposing counsel. One of the original

representations to the Court and opposing counsel was

that the Trust had been contemplated for years and that its

confection on October 16, 1983 was simply coincidental.

Though not actually a Cash Sale, the form of the sale was

drafted and crafted to have the appearance of a Cash Sale

so that it could be recorded without the signature of the

vendee on Monday morning, October 17, 1983, before the

TRO, prohibiting such transfer, could be granted by the

Court. It was absolutely null and void because the recited

purchase price had not been paid and the vendor had not

delivered possession of the property. In his conversations

with the Court, Gray did not disclose the existence of the

Trust or the existence of the sale from CTR to the Trustee.

Without the knowledge or permission of the Court, he

A-24

recorded that conversation with the Court. Although he

knew that the TRO had issued at 1:39 p.m. on Monday, and

that Chambers was making a trip to Birmingham,

Alabama to secure the Trustee’s signature on an accep-

tance of the Trust and on the worthless $1.4 million dollar

note, he made no effort to warn Chambers that these acts

in completion of the sale had been restrained by the is-

suance of the TRO. The leaseback agreement executed

some days later, in absolute contempt of the TRO and the

injunction, sought to complete the sale by delivering con-

structive possession of the properties to the Trustee and to

give the Trustee money to pay for the property which CTR

itself had sold to the Trustee. All of the activities to be per-

formed thereafter by conspirators and those who joined

them later, namely, McCabe, Baker and Curry, in connec-

tion with the trial of this lawsuit were performed in connec-

tion with and in the furtherance of the conspiracy.

Chambers continued his activities through August of 1986.

In absolute violation of the injunction and of our Judgment

of November 27, 1985, two of the officers of CTR filed op-

positions to the joint applications for transfer which had

been filed with the FCC by the Order of this Court. Little

over a month before the appellate court issued its decree in

favor of NASCO and finding sanctions, Chambers hired

McCabe who immediately rekindled the flames of harass-

ment, delay and expense and McCabe, on behalf of

Chambers, engineered the removal of equipment at the Ju-

ly 16, 1986 hearing and induced Chambers’ wife, Rita

Guillory Chambers, still President of CTR, another officer

of CTR and CTR’s CPA to perjure themselves as has

previously been set forth. See Opinion dated August 7,

1986, Rec. 306.

Chambers has repeated ad nauseum that he knows

nothing of courts or the law, that if he is guilty of any im-

proper act, it is only because he has been led astray by the

A-25

improper advice of his counsel. His own statement ab-

solutely refutes that contention, Record Pleading 139. Mr.

Chambers has been involved frequently in the preparation

of defenses in many lawsuits, he testifies and often is the

principal witness. He is completely at home in court. In

fact, in January and the first part of February, 1985, alone

he was involved in preparation of defenses and was

scheduled to testify in the following cases:

1. Powers Medical Systems, Inc. v. Intermedics,

Inc., Civ. No. 82-623, U.S. District Court for the

District of Oregon. Docketed for trial beginning

on January 8, 1985. Mr. Chambers is a major

witness.

2. American Pacemaker Corporation v. Fairchild

Camera and Instrument Corporation et al, Civ.

No. 448521, Superior Court of California, Santa

Clara County; and Fairchild Camera and Instru-

ment Corporation v. American Pacemaker Cor-

poration et al, Civ. No. 526893, Superior Court of

California, Santa Clara County. Trial in enforce-

ment suit set to begin January 15, 1985. Mr.

Chambers is a witness.

3. Philip R. Beutel v. Intermedics, Inc., et al, Civ.

No. 79C3022, 23rd Judicial District Court of

Brazoria County, Texas. Trial scheduled to begin

on January 28, 1985. Mr. Chambers is a principal

witness.

4. Intermedics, Inc. v. Cara E. Barer, Independent

Executrix of the Estate of Albert P. Beutel, II,

Civ. No.83-F-1153, 149th Judicial District Court

of Brazoria County, Texas. Trial to begin before

February 1985. Mr. Chambers is a witness.

5. Charles Moore, M.D. v. Intermedics, Inc. and

A-26

Intermedics Intraocular, Inc., Civ. No. 80-F-1320,

149th Judicial District Court in Brazoria County,

Texas. Trial set to begin on February 18, 1985.

Mr. Chambers is a principal witness.

He deliberately allowed his wife and three other employees

to perjure themselves at the hearing of July 16, 1986. He

has been very deeply involved in the defense of this case.

He was the strategist. Gray was the tactician.

Gray was the second most important schemer and

conspirator. As the conspiracy’s tactician, he was perfectly

willing to and did employ tactics involving abuse of the

judicial machinery and process, fraud and untruths to the

Court and unethical methods to achieve the purposes of the

conspiracy as has been outlined above.

McCabe was the third schemer and conspirator.

Although he had taken part earlier in the suit, his principal

involvement occurred in July and August of 1986 at a time

when the Court was using every means at its disposal to en-

force its judgment of November 27, 1985 and complete the

sale to NASCO. During his brief term as Chambers’ at-

torney he displayed talents very similar to those of Gray.

His unsavory actions, see paragraph f-i supra, convinced

this Court that it could expect another prolonged campaign

of harassment, delay and expense. Plaintiff and this Court

can be very thankful that the Appellate Court’s decree of

August 6, 1985 had the effect of cutting the duration of his

term of office to a period of little over a month.

Baker was certainly a conspirator. Although she did

not have full knowledge of the conspiracy and did not

independently and aggressively pursue the goals of the

conspiracy, she was, as Trustee-Owner of the res involved

in the initial fraud, indispensable to the success of the

A-27

conspiracy and the Public Records Doctrine defense in par-

ticular. She was the unfailing tool of her brother, the chief

conspirator, and performed his every request without in-

quiry or question.

Curry also was a schemer and conspirator.

Throughout this proceeding he has posed as the attorney

for Baker, the individual, as if the limits of her overall

knowledge and contact with the origin, purposes and pro-

gress of the conspiracy and litigation was in some manner

reflected on him. Nothing can be further from the truth.

Curry represented the Trust before he ever heard from

Baker. He was contacted/hired directly by Gray to assist

and defend the Public Records Doctrine defense contrived

by Gray in which Chambers (settlor) established a Trust so

that Chambers (sole stockholder and director of CTR) could

authorize Chambers (CTR) to sell CTR’s operating proper-

ties to Chambers (Trustee). Gray himself already

represented all of the Chambers’ identities except the

Trust, but even with the separate representation of the

Trust by Curry, it was painfully transparent that the sale

and lease involving the Trust were a mere sham. Curry

knowingly and enthusiastically followed each tacit by Gray

with a similar me too tactic on behalf of the Trust. His

support was vital to the fraudulent Public Records Doc-

trine defense and valuable to the harassment tactics of

Gray and Chambers, but he introduced no new or addi-

tional tactics to the defense. His role was one of passive but

enthusiastic support.

The record is bare of one instance in which he truly

advised his client. She knew no more about her respons-

ibilities as trustee or about the details of this law suit on

November 8, 1985 than she did at its inception. Curry’s

sole responsibility was to assure that she remained the

unfailing tool of her brother. In this endeavor h. was an

A-28

admirable success.

29. As a direct result of the initial fraud upon the

trial court, and the subsequent bad faith, dilatory defense

tactics in the trial court, NASCO has incurred legal fees,

costs, and expenses totalling $996,644.65:

(Attached hereto as 27(a) and 27(b)

A-29

LAW FIRM: SCOFIELD, BERGSTEDT, GERARD,

MOUNT & VERNON

Total Fees* 486,901.25

Total Expenses* 52,508.55

Minus Fees and Expenses

Awarded as Contempt

Damages -4,454.00

Minus Fees and Expenses

Awarded as Appellate

Sanctions -48,633.57

NET TOTAL 486,322.23

*Includes fees and expenses of $18,703.43 for the instant

proceeding.

LAW FIRM: NEAL & HARWELL

Total Fees* 424,795.00

Total Expenses* 55,262.57

Minus Fees and Expenses

Awarded as Contempt

Damages -300.00

Minus Fees and Expenses

Awarded as Appellate

Sanctions -17,589.45

NET TOTAL 462,168.12

*Includes fees and expenses of $34,756.25 for the instant

proceeding.

A-30

LAW FIRM: CROWELL & MORING

Total Fees 44,563.00

Total Expenses 3,591,30

NET TOTAL 48,154.30

TOTAL FEES

AND EXPENSES 996,644.65

A-31

30. NASCO’s evidentiary submissions show that the

fees, expenses, and costs incurred in responding to the

defendants’ frivolous appeals total $66,223.02. Of that

total, the sum of $63.63 is attributable to costs, as that

term is defined in Fed. R. App. P. 39 (specifically, $59.63,

in printing costs for the appellee’s brief, and $4.00 in costs

paid to the Clerk of the Fifth Circuit). The remainder,

$66,159.39, is attributable to attorney's fees and expenses.

(1) Double costs $ 127.26

(2) Attorney’s fees and expenses $66.159.39

TOTAL $66,286.65

E. SUMMARY COMMENT:

31.a. First Phase - This suit, as filed on October 17,

1983, was very simple and straightforward. NASCO alleg-

ed that Chambers and CTR had breached the Agreement

by their failure to join with NASCO, on or before

September 23, 1983, in an application to the FCC for the

transfer of the KPLC-TV license as provided in the Agree-

ment and demanded as follows:

A. Specific performance of the Purchase Agreement

along with damages against defendants for their failure to

perform the Agreement.

B. An expedited discovery schedule and expedited

hearing.

C. Injunctive relief to preserve the status quo and

NASCO’s access to the records of CTR.

A-32

D. Alternatively, and should the Court find that

specific performance was not an appropriate remedy,

damages for defendants’ refusal to perform.

Although many preliminary matters were presented

and were considered, tried and decided by us (see Third

Phase infra), the incredible fact is that the First Phase, the

merits of this suit, was never tried.

b. Second Phase - After our conversation with Gray

and the issuance of the TRO on October 17, 1983, the case

still looked simple and we were prepared to expedite the

trial of the case as requested as soon as defendants’ answer

was filed. We soon discovered, however, that we no longer

had the simple suit which we expected.

NASCO’s notice to attorney Golden on Friday, Oc-

tober 14, 1983 was transmitted to Chambers, CTR and

Gray on Saturday, October 15, 1983, and provoked a

meeting in Gray's office on the afternoon of Sunday, Oc-

tober 16, 1983 at which Chambers and Gray, along with

other members and employees of Gray’s firm, conspired to

give birth and did give birth to the despicable and

unethical chain of events which we have identified as The

Initial Fraud. These acts, along with the lies and

misrepresentations to the Court which accompanied them,

made the suit more complicated and more difficult. By Oc-

tober 24, 1983, the date of the preliminary injunction con-

ference, it was clear that NASCO had to make Baker a par-

ty defendant and it was most important to include her on

an emergency basis in the injunction since the Trust was

now the apparent record-owner of CTR’s operating proper-

ties. Although NASCO’s cause of action remained specific

performance, that issue could not be addressed by us until

we resolved the question of whether this Court has the

power to restore the status quo existing at the time that

\

A-33

NASCO delivered its notice to Golden, that is, the power to

rescind the sale to the Trust so that title reverted to the

defendant CTR. This Second Phase, whether the

fraudulent saie from CTR to the trust had deprived this

Court of jurisdiction, was the only issue before the court in

the trial on the merits of April 17, 1985.

c. Third Phase - This phase is the informal and poten-

tially effective defense of delay, harassment and the

generation of mountainous expense so as to reduce the

plaintiff to exhausted compliance. Chambers, Gray, Curry

and McCabe initiated, provoked, pursued and tried any and

every collateral side issue that human ingenuity could con-

trive. Although there was some legal basis for some of

these defenses, when we view them in context with the en-

tire record, it is quite obvious that defendants’ true pur-

pose was delay, harassment and killing expense. To borrow

a phrase from the appellate court’s unpublished opinion of

August 27, 1986. As judges, we cannot check our common

sense in the robing room and allow disingenuous

arguments to characterize as serious an appeal as

manipulative as is this one before us.

Because of the admonition and warning which we

voiced to Gray on October 24, 1983, and hie apparent ac-

ceptance of that warning, we were confident that no addi-

tional untoward incidents would occur. We were confident

that the expeditious resolution of this suit, as con-

templated originally, could be accomplished.

We were dismayed and disappointed when NASCO

on December 15, 1983 filed a Petition to Show Cause why

defendants CTR and Chambers should not be held in con-

tempt for their refusal to allow NASCO to examine certain

records of CTR. This refusal was based on the advice of

Gray on grounds that there was an ambiguity in Paragraph

A-34

19 of the Agreement and in the injunction and that the

specific examination sought by NASCO was not authoriz-

ed by the language of those instruments.? We ruled in

favor of NASCO on the grounds that if there was an am-

biguity it should be clarified by application to the Court

and not by the unilateral action of defendants. The in-

terlocutory appeal was denied by the Appellate Court on

June 8, 1984.

Thereafter, Gray, on behalf of Chambers and CTR,

and Curry, on behalf of the Trustee, filed a number of

meritless and pointless motions, including a summary

judgment motion filed by Gray on June 15, 1984, followed

on July 6, 1984 by a similar motion by Curry demanding

dismissal of the suit on grounds that the joinder of an alleg-

ed indispensable Louisiana defendant would destroy diver-

sity. They filed baseless, affirmative defenses and

counterclaims (later destroyed by their own stipulations),

pointless new issues, irrelevant or unnecessary depositions,

all as is described in more detail in paragraphs 23-27 supra.

Untruths and misrepresentations were asserted mainly as

affirmative defenses and counterclaims. At the time they

were filed, the record was bare of any evidence that they

were baseless. This was not known to the Court until the

filing of stipulations immediately prior to trial. Not all of

these demanded a great deal of court time but they were

costly to NASCO in terms of harassment, time, prepara-

tion and expense.

As related in pararaph 24 supra, on January 28,

1985, approximately one month prior to the then current

trial date of February 27, 1985, Chambers and CTR filed a

9. This, incidentally, was the specific language incorporating Gray's

comments and read verbatim to him and approved by him prior to our

signing the TRO on October 17, 1983. The same language appears in the

injunction issued by us by consent of the parties on October 24, 1983.

A-35

motion to disqualify the trial judge. Although the mover

was well prepared, NASCO, because of the expedited pro-

cedure adopted by the Court to avoid delay, had to utilize

extraordinary efforts by its attorneys to provide an opposi-

tion to the motion. The matter was heard and the motion

denied for reasons recited in open court. A Writ of Man-

damus to compel disqualification was filed with the U. S.

Court of Appeals for the Fifth Circuit, supported by an

Answer filed by Curry on behalf of the Trustee. Although

writs were denied, the desired effect was attained. The trial

was continued and did not begin until April 17, 1985.

All briefs and authorities had been submitted by the

middle of June. Because of a personal difficulty we were ab-

sent from our office for a period of over three months and

could not begin consideration of these authorities until the

end of September when we were involved also in our trial

calendar. Our Opinion issued November 8, 1985 and Judg-

ment on the Merits was signed November 27, 1985. We re-

tained jurisdiction and refused to stay proceedings so as to

implement the completion of the sale at the earliest possi-

ble date. Petition for Writs of Mandamus or Prohibition

were denied on appeal.

Throughout the period of trial we adhered and main-

tained our objective to try the specific performance case as

expeditiously as possible. Suit was filed on October 17,

1983 and our final opinion on the merits was rendered

November 8, 1985, a period of slightly over two years, in-

cluding the period of the Court’s absence in the summer of

1985. We hold that the extraordinary amount of costs and

expenses expended in this proceeding were caused not by

lack of diligence or any delays in the trial of this matter by

NASCO, NASCO’s counsel or the Court, but solely by the

relentless, repeated fraudulent and brazenly unethical ef-

forts of Chambers, Gray and their co-conspirators acting

A-36

with them, namely, McCabe, Baker and Curry, in their ef-

forts, first, to deprive this Court of jurisdiction and, se-

cond, to devise a plan of obstruction, delay, harassment,

and expense sufficient to reduce NASCO to a condition of

exhausted compliance.

Although our Opinion of November 8, 1985 and our

Judgment of November 27, 1985 should have terminated

all further resistance to the specific performance of the Pur-

chase Agreement (after all, the validity of the Agreement

and its breach by Chambers (CTR) had been stipulated and

the fraudulent Public Records defense had not deprived the

Court of jurisdiction), this did not occur. Although Gray

retired from his representation of Chambers (CTR) on April

2, 1986, Chambers continued with renewed vigor and

vengeance his campaign of oppression, delay, harassment

and massive expense. Wi.hout again discussing these in-

cidents, they include: opposition by two CTR officers to the

joint application of the transfer; renewal of discovery to

determine NASCO’s financial condition; the attempt,

without informing the Court or opposing counsel, to

substitute worn-out or obsolete equipment for the

operating equipment in place on July 16, 1986; the perjured

testimony in open court by Chambers’ wife Rita Guillory

Chambers, his long-time CTR officer-employee, and his

employment of McCabe to rekindle and renew the cam-

paign of harassment, oppression, delay and massive

expense.

It would be impossible within the limits of this opinion

to develop an accurate picture of this massive and absolute-

ly unnecessary lawsuit forced on NASCO by Chambers’ ar-

bitrary and arrogant refusal to honor and perform this

perfectly legal and enforceable contract. The record in this

Court alone consists of 23 volumes of pleadings and 14

fully-packed expansion files of evidentiary material.

A-37

Even these voluminous records do not reflect a host

of informal conferences on such subjects as requests for

delays and extensions, the authority of Byrnes to sign the

Purchase Agreement on behalf of NASCO; the waiver of

certain of plaintiff's initial demands; bifurcation; whether

defendants were entitled to a jury trial; whether Tennessee

law applied; defendants’ allegation that this Court was in-

vading the exclusive jurisdiction of the FCC; Chambers’

application to the FCC to remove the broadcast towers to

a site not covered by the Purchase Agreement; this Court’s

informal action to avoid contempt proceedings against two

CTR officers who had filed with the FCC oppositions to the

transfer of the KPLC-TV license to NASCO. These opposi-

tions were filed in open defiance of the injunction affecting

CTR and Chambers and the injunctive provisions of our

judgment on the merits of November 27, 1985 in which this

Court retained jurisdiction during the period of appeal for

the purpose of implementing specific performance of the

contract. These are instances of Chambers’ continued op-

position and continued refusal to comply with the Purchase

Agreement even after he had been ordered to do so in our

executory and unstayed judgment on the merits of

November 27, 1985. Nor do they reflect the considerable

and successful efforts of NASCO, Chambers and their at-

torneys to settle the amount of delay damages to which

NASCO was entitled under the specific performance

statutes of Louisiana. Or the records of the Appellate

Court in the petitions for mandate and the several appeals

filed by Gray and by Curry on behalf of Chambers (CTR).

Or the records of the FCC in the several forays made into

that agency. All this needless delay, harassment and ex-

pense; this despicable and unethical use and misuse of the

judicial machinery and process was initiated by Chambers

and Gray and was voluntarily and enthusiastically adopted

by their co-conspirators, Curry and McCabe.

A-38

On August 6, 1986 the United States Court of Ap-

peals for the Fifth Circuit affirmed the trial Court’s judg-

ment on the merits, found the appeal to be frivolous and

assigned sanctions, and directed the trial court to deter-

mine whether sanctions for the proceedings held before it

were appropriate. This decree of the Appellate Court halted

effectively all further efforts of obstruction by defendants

and their attorneys, and additional appeals then pending

were withdrawn. The sale, under close Court supervision,

was completed on August 27, 1986.

Even after the sale had been completed on August

27, 1986, two unresolved matters had to be concluded,

namely, (a) the determination of the monetary amount of

damages which had to be paid to NASCO under Louisiana

law for Chambers’ delay in performance of the contract and

(b) sanctions - determination of the monetary amount of the

sanctions decreed by the Appellate Court and a determina-

tion of whether sanctions were appropriate against defen-

dants and their attorneys for the manner in which the

defense was conducted in the trial court and the character

and amount of such sanctions if they were held to be ap-

propriate. As stated previously, item (a), delay damages

under Louisiana law has been disposed of. We now address

the sole remaining issue - sanctions. 10

10. We were somewhat uncertain on the methodology to be utilized by

us in determining the sanction issues as they related to proceedings

before the district court. We were mindful that the responsibilities of the

judge in a case of this kind are quite distinct and incompatible with

those of an attorney-investigator in such case. Neither research nor our

discussions with the Justice Department or the Administrative Office

produced a solution. We also realized that an attorney would be the

necessary and proper person to defend this court’s judgment in case of

appeal. The Third Circuit has recognized the problem in the context of

Rule 11 appeals:

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CONCLUSIONS OF LAW

32. There are three methods under which we may

consider the issue of sanctions: Federal Rule of Civil Pro-

cedure 11 (Rule 11), 28 U.S.C. § 1927, and the inherent

powers of the Court.

33. Rule 11: Rule 11, as amended in 1983, provides in

pertinent part, as follows:

Every pleading, motion, and other paper of a par-

ty represented by an attorney shall be signed by

at least one attorney of record in the attorney’s

individual name. . . The signature of an attorney

or party constitutes a certificate by the signer

Footnote 10 continued.

Short of relying on or i to con

ere

- a step we have not taken - we are left in an uncomfortable

position. We must play not only our accustomed and proper

role of neutral adjudicator, but also (albeit temporarily) the

role of adversary to the appellant in order to test the asser-

tions made on appeal. Our role is further ated by the

institutional association we share with appellant's

adversary in fact: the district judge. We are surprised that

this problem has attracted no attention. We offer no solu-

tions to it, but simply note its existence.

Snow Machines, Inc. v. Hedco, Inc., 838 F.2d 718, 726 (3d Cir. 1988) (see

footnotes 6 and 7, also at p. 726 but omitted in the above quote). W

finally decided that NASCO’s counsel would certainly make application

for sanctions in the form of attorney 's fees and expenses. The Court

would rely on that application and the oppositions filed by defendants

for investigation and the appropriateness of that kind of sanction. The

Court would rely on its own research and any additional research that

we might request of the parties regarding the imposition of other types

of sanctions. On appeal, NASCO’s counsel is to defend the entire judg-

ment of this Court, including sanctions other than attorney 's fees and

expenses. If sanctions are found and become final, they shall include the

attorney's fees and expenses of NASCO’s counsel in representing

NASCO and the public in the sanction phase of this suit.

A-40

that the signer has read the pleading, motion, or

other paper; that to the best of the signer’s

knowledge, information, and belief formed after

reasonable inquiry it is well grounded in fact and

is warranted by existing law or a good faith argu-

ment for the extension, modification, or reversal

of existing law, and that it is not interposed for

any improper purpose, such as to harass or to

cause unnecessary delay or needless increase in

the cost of litigation . . . If a pleading, motion,

or other paper is signed in violation of this rule,

the court, upon motion or upon its own initiative,

shall impose upon the person who signed it, a

represented party, or both, an appropriate sanc-

lem ....

Fed. R. Civ. P. 11.

The rule became effective August 1, 1983 and this

case was filed less than two and a half months later. It is

well established that Rule 11 prior to its amendment in

1983 was rarely applied. The amendment was intended to

reduce the reluctance of Courts to impose sanctions by em-

phasizing the responsibilities of attorneys and reenforcing

those obligations through the imposition of sanctions,

Thomas v. Capital Sec. Services, Inc., 836 F. 2d 866 (5th Cir.

1988). Although it broadened responsibilities, it did so in a

narrow area. Rule 11 appears in Section III of the Federal

Rules of Civil Procedure entitled ‘‘Pleadings and Motions.

The topical title of Rule 11 itself is Signing of Pleadings,

Motions, and Other Papers; Sanctions.” It is concerned on-

ly with the certification implied in the initial signing of a

‘pleading, motion, or other paper. It tests the attorney s

conduct only at the time the paper is signed. As was noted

by the Second Circuit:

While the drafters of the rule could easily have

A-41

further extended its application by referring to

the entire conduct of the proceedings, they failed

to do so and instead chose to expand only the

categories of papers to which the rule applies.

Oliveri v. Thompson, 803 F.2d 1265, 1274 (2d Cir. 1986).

The problems of this case have little to do with the cer-

tification involved in the signing of a ‘‘pleading, motion, or

other paper.’’ On the contrary NASCO has alleged that the

defendants have: (1) attempted to deprive this Court of

jurisdiction by acts of fraud, nearly all of which were per-

formed outside the confines of this Court, (2) filed false and

frivolous pleadings, and (3) attempted, by other tactics of

delay, oppression, harassment and massive expense to

reduce plaintiff to exhausted compliance. Clearly the acts

alleged under 1 above do not involve certification and

cannot be considered under Rule 11. The two most impor-

tant instances of charge (2) are the absolutely false asser-

tions knowingly and deliberately made by Chambers (CTR)

and his attorneys in their answers and counterclaims and

in their motion to disqualify. There was no evidence in the

record establishing the falsity of these allegations until the

beginning of the trial of the merits. Thus sanctions under

Rule 11 at the time of filing of the answers and

counterclaims in November 1983 and October 1984 were

impossible. Certainly the Court could not have used Rule

11 to dispose of the motion to disqualify. Nor could the

charges (3), such as the applications to the FCC to remove

the communication towers to another site purchased by

CTR, or any other acts referred to in (3) have been reached

by Rule 11. We find and agree with the parties to this sanc-

tion proceeding that Fed. R. Civ. P. 11 does not furnish a

basis for the consideration of the sanctionable acts alleged

by NASCO. We find that Fed. R. Civ. P. 11 for the levying

of sanctions at this time, at the time of the Appellate

Court’s decree on August 6, 1986, and at the time the acts

A-42

themselves were committed, to be insufficient for our pur-

poses here.

34. 28 U.S.C. § 1927: This statute provides in perti-

nent part:

Any attorney . . who so multiplies the pro-

ceedings in any case unreasonably and vexatious-

ly may be required by the court to satisfy per-

sonally the excess costs, expenses, and attorney’s

fees reasonably incurred because of such conduct.

28 U.S.C. § 1927.

The sanctionable acts alleged by NASCO are certain-

ly outside the reach of this statute. First and most impor-

tant, only sanctionable acts alleged against attorneys can

be considered. Chambers, the principal conspirator, the

driving force, and the only person whose interests were

served by the conspiracy and the sanctionable acts alleged,

is outside the scope of the statute. This alone is sufficient

to reject the statute as a basis for our consideration of sanc-

tions. In addition, the act is not broad enough to cover

substantive acts against the Court: acts which degrade the

judicial system; atttempts to deprive the Court of jurisdic-

tion, fraud, misleading and lying to the Court, and surrep-

titious taping of conversations with the Court. In addition,

the only type of sanction provided is excess costs, expenses

and attorney’s fees. Sanctions other than expenses and at-

torney’s fees may be more appropriate. We find 28 U.S.C.

§ 1927 insufficient as a basis for our consideration of the

acts alleged in this proceeding to be sanctionable.

35. Inherent Powers. It is well established that

Courts possess the inherent power to levy sanctions in

response to abusive litigation practices. Rodeway Express,

\/

A-43

Inc. v. Piper, 447 U.S. 752, 100 S.Ct. 2455, 65 L.Ed.2d 488

(1980). See Batson v. Neal Spelce Associates, 805 F. 2d 546,

550 (5th Cir. 1986); Huddleston v. Herman & MacLean, 640

F.2d 534, 559-60 (5th Cir. 1981). See also, Link v. Wabash

Railroad Co., 370 U.S. 626, 82 S.Ct. 1386, 8 L.Ed.2d 734

(1962); Miranda v. Southern Pacific Transportation Co.,

710 F.2d 516 (9th Cir. 1983); McCandless v. Great Atlantic

and Pacific Tea Co., Inc., 697 F.2d 198 (7th Cir. 1983).

The wielding of that inherent power is particularly

appropriate when the offending parties have practiced a

fraud upon the court.

The inheren rr

vestigate w a judgment was obtained by

fraud, is beyond question. Hazel-Atlas Glass Co.

v. Hartford-Empire Co., 322 U.S. 238, 88 L.Ed.

1250, 64 S.Ct. 997... No doubt, if the court finds

after a proper hearing that fraud has been practic-

— — tonal of Susie bas

been defiled, the entire cost of the proceedings

could justly be assessed against the guilty par-

ties. Such is precisely a situation where for

dominating reasons of justice a court may

assess counsel fees as part of the taxable costs.

Sprague v. Ticonic Nat. Bank, 307 U.S. 161, 167,

83 L.Ed. 1184, 1187, 59 S.Ct. 777.

Universal Oil Products Co. v. Root Ref g Co., 328 U.S. 575,

66 S.Ct. 1176, 90 L.Ed. 1447, 1452 (1946) (emphasis added).

See Hazel-Atlas Glass Co. v. Hartford-Empire Co., 322 U.S.

238, 245, 64 S.Ct. 997, 88 L.Ed. 1250, 1255 (1944); Jupfer-

man v. Consolidated Research & Mfg. Corp., 459 F.2d 1072,

1078 (2d Cir. 1972); United Bus. Communications v. Racal-

Milgo, Inc., 591 F. Supp. 1172, 1187 (D. Kan. 1984); Eppes

v. Snowden, 656 F. Supp. 1267, 1277-79, 1281-82 (E.D. Ky.

1986).

A-44

Such power is incident to the court’s duty to pro-

tect the integrity of the judicial process. Delphin Plumb-

ing Co. v. Financial Corp. of North America, 508 F. 2d 1326,

1327 (5th Cir. 1975). See Eash v. Riggins Trucking, Inc.,

757 F.2d 557, 562-63 (3d Cir. 1985) (inherent power derives

from judicial powers pursuant to Article III.“ from the

nature of the court. and from necessity or practicality).

Accordingly, the inherent power of a court over members

of its bar is at least as great as its authority over litigants.

Rodeway Express, 447 U.S. at 766, 65 L.Ed.2d at 501. The

Fifth Circuit has held:

The inherent power of a court to manage its af-

fairs necessarily includes the authority to impose

reasonable and appropriate sanctions upon errant

lawyers practicing before it. The Woodham case

[Woodham v. American Cystoscope Co., 335 F. 2d

551 (5th Cir. 1964)] at p. 557, says that courts

may resort to disciplinary action against the err.

ing attorney, and quotes with approval the

following from Sanctions at Pre-Trial Stages, 72

Yale L. Jour. 819, 830:

“* * * In addition, alternative modes of

discipline against the attorney might in-

clude: (1) a reprimand by the court, (2) a fin-

ding of contempt, or (3) a prohibition against

— — at cee he

whose was neglected or disregarded. It

seems fairly clear that the judicious use of

such measures would tend to promote at-

torney compliance in the first instance.

Flaksa v. Little River Marine Construction Co., 389 F.2d

885, 888-889 (5th Cir. 1968), cert. denied, 392 U.S. 928, 88

S.Ct. 2287, 20 L.Ed.2d 1387 (1968) (footnote omitted).

A-45

The Flaksa court quoted with approval the dissent of

Chief Judge Biggs in Gamble v. Pope & Talbert, 307 F.2d

729, 735 (3d Cir. 1962) (en banc):

The power of a court to discipline members of its

own bar can scarcely be doubted seriously. An at-

torney is under no obligation to seek admission to

the bar of a United States district court. He is at

liberty to abstain from membership in that or any

other bar. But when he does apply and is admit-

ted he secures certain privileges and also assumes

definite obligations.

The power of a court to impose

reasonable sanctions upon cap oe py

bar is a familiar phenomenon and lies within the

inherent power of any court of record. * * *”’

Flaksa, 389 F.2d at 888 n.10. See also, Rodeway Express,

477 U.S. at 766 n.12, 65 L.Ed.2d at 501 n.12 (citing Chief

Judge Biggs’ dissent in Gamble with approval). In Gamble,

the Third Circuit held that, absent formal contempt pro-

ceedings, a district court lacked inherent power to sanction

an attorney for violating a court rule. Recently, the Third

Circuit noted that Gamble had been roundly criticized and

rejected and so, over-ruled Gamble: the importance and

necessity of some kind of sanction as one of the reasonable

and flexible instruments for curbing abuse of the judicial

process suggests that Gamble should no longer control . .

..”’ Eash v. Riggins Trucking, Inc., 757 F.2d 557, 568 (3d

Cir. 1985) (en banc). In short, our inherent authority to

discipline attorneys in response to abusive litigation prac-

tices cannot, at this late date, be questioned. See, Ex Parte

Burr, 22 U.S. (9 Wheat.) 529, 6 L.Ed. 152 (1824); Ex Parte

Secombe, 60 U.S. (19 How.) 9, 15 L.Ed. 565 (1856).

A-46

We do not doubt the power of the court to punish

attorneys as officers of the same, for misbehavior in the

practice of the profession. This power has been recognized

and enforced ever since the organization of courts, and the

admission of attorneys to practice therein. Ex Parte

Bradley, 74 U.S. (7 Wall.) 364, 19 L.Ed. 214 (1869). See

State v. Cannon, 206 Wis. 374, 240 N.W. 441 (1932) (review-

ing cases from the Middle Ages to the nineteenth century

on inherent power of courts to disbar attorneys). ‘The

court’s control over a lawyer’s professional life derives

from his relation to the responsibilities of a court. Theard

v. U.S., 354 U.S. 278, 281, 77 S.Ct. 1274, 1 L.Ed.2d 1342,

1344 (1957).

The authority of the court over its attorneys and

counselors is of the highest importance. They con-

stitute a profession essential to society. Their aid

is required, not merely to represent suitors before

the courts, but in the more difficult transactions

of private life. The highest interests are placed in

their hands and confided to their management.

The confidence which they receive and the respon-

sibilities which they are obliged to assume, de-

mand not only ability of a higher order, but the

strictest integrity. The authority which the

courts hold over them, and the qualifications re-

quired for their admission, are intended to secure

those qualities.

Randall v. Brigham, 74 U.S. (7 Wall.) 528, 540, 19 L.Ed.

285, 293 (1869). Finally, as noted by the Supreme Court,

‘“[clourts have long recognized an inherent authority to sus-

pend or disbar lawyers.” In re Snyder, 472 U.S. 634, 643,

105 S.Ct. 2874, 86 L.Ed.2d 504, 512 (1985) (citing Ex Parte

Garland. 4 Wall 333, 378-79, 18 L.Ed. 366 (1867) and Ex

Parte Burr, 9 Wheat 529, 531, 6 L.Ed. 152 (1824)). See also,

Local Rule 3, Disbarment; U.S. v. Klubock, 832 F.2d

A-47

649, 652 (Ist Cir. 1987).!!

court when, on August 6, 1986, it found the appeal in this case to be

sanctionable. The court has the power, without prior notice, to assess

sanctions in order to regulate and protect its jurisdiction and the orderly

and judicious conduct of proceedings before it.

This sanction proceeding is based upon an existing, or pre-existing,

record. The defendants have full knowledge of that record. No prior

grounds ‘from those which support a court's power to punish for con-

tempt. Cammer v. U.S., 350 U.S. 399, 408 n.7, 76 S.Ct. 456, 100 L.ED.

474, 480 n.7 (1956) (quoting Ex Parte Robinson, 86 U.S. (19 Wall.) 505,

512, 22 L.Ed. 205 (1873)). Therefore, we hold that criminal contempt pro-

cedures are not here required. See Donaldson v. Clark, 819 F.2d 1551

(Iich Cir. 1987). Cf Ex Parte Wall 107 U.S. 265, 288, 2 S.Ct. 569, 27

L.Ed. 552, 561 (1883) (The proceeding is not for the purpose of punish-

at, ee See of preserving the courts of justice from the

persons unfit to practice in them).

Nonetheless, we set a hearing for April 11, 1988 to (1) determine the

monetary total of double costs and attorney's fees assessed as sanctions

—— NN defendants Court. All

and the conduct of in our

—— — 14 — to ted tn te Oras on he

record and the proceedings in this case, including NASCO’s memoran-

dum of fees and expenses, which the Court ordered to be filed on or

before March 8, 1988. Also on order of the Court, NASCO and the sanc-

tioned defendants filed suggested findings of fact and conclusions of

law. Not one of these defendants presented a defense based on lack of

due process or lack of notice of the specific charges. In fact, due process

has never been an issue in this matter. However, in our consideratior of

whether sanctions were appropriate, we determined that the conduct of

certain of these defendants and their abuse and misuse of judicial

machinery and procedures might require disbarment or suspension from

appearance in this Court Such a sanction obviously would involve

governmental deprivation of a liberty or property interest. With this in

mind, on December 12, 1988 we notified the parties of the legal basis for

A-48

36. On our own initiative and utilizing the inherent

powers of this Court, we have found sanctions, as well as

the type and amount of sanctions, and in doing so have

foliowed the following criteria:

a. When we have used the word delay in our

discussions above, we refer to that period ending on the

date on which the Act of Sale was finally executed, namely,

August 27, 1986. That is the day on which the sale original-

ly envisioned in the Purchase Agreement was finally com-

pleted. Although the suit continued thereafter, this con-

tinuation was necessary only for the purpose of deter-

Footnote 11 continued.

sanctions and of the range of sanctions, including disbarment, which we

were considering. We invited the parties to submit memoranda of

authority on or before December 22, 1988 and such memoranda were du-

ly received from NASCO and from the defendant attorneys.

We have so acted because procedural due process requires notice and

an opportunity to be heard before any governmental deprivation of a

liberty or property interest. Biddie v. Connecticut, 401 U.S. 371, 379, 91

S.Ct. 780, 28 L.Ed. 2d 113, 119 (1971). Ex Parte Bradley, 74 U.S. (7

Wall.) 364, 372-74, 19 L.Ed. 214 (1869). But the very nature of due pro-

cess negates any concept of inflexible procedures universally applicable

to every imaginable situation. Cafeteria & Restaurant Workers Union

v. McElroy, 367 U.S. 886, 895, 81 S.Ct. 1743, 6 L.Ed. 2d 1230, 1236

(1961). See also, Morrissey v. Brewer, 408 U.S. 471, 481, 92 S.Ct. 2593,

2600, 33 L.Ed. 2d 484 (1972); Mathews v. Eldridge, 424 U.S. 319, 334,

96 S.Ct. 893, 902, 47 L.Ed. 2d 18 (1976). Instead, the “adequacy of

notice and hearing respecting proceedings that may affect a party's

rights turns, to a considerable extent, on the knowledge which the cir-

cumstances show such party may be taken to have of the consequences

of his own conduct. Link v. Wabash Railroad Co., 370 U.S. 626, 632,

82 S.Ct. 1386, 8 L.Ed.2d 734, 739 (1962).

Given the full knowledge of the record possessed by all defendants,

given the hearing held on April 11, 1988, and given the opportunity af.

forded defendants to file further memoranda on or before December 22,

1988, we hold that the requirements of due process have been amply met

in this matter.

A-49

mining delay damages due NASCO under the laws of the

State of Louisiana for CTR’s failure to complete the sale

until August 27, 1986, and secondly, for the determination

of sanctions which is still in progress. The attorney's fees

and expenses charged to NASCO by its attorneys for both

of these procedures flowed from and were a direct result of

this suit. We shall include them in the attorney’s fees sanc-

tions. See note 11 supra.

b. We have limited sanctions against attorneys to

those attorneys who were designated or acted as the trial

attorneys in this matter. Numerous other attorneys in the

firms of these trial attorneys have filed and/or signed

pleadings and other papers which appear of record. They

may be guilty of sanctionable acts but the record does not

disclose the character or the extent of participation by

these attorneys. It is certain that many of them signed

and/or filed pleadings and papers as a matter of conve-

nience or by the direction of the trial attorney. We consider

sanctions in this suit to be a very heavy penalty which

should be imposed only after serious consideration based

on unimpeachable and weighty evidence and a definite con-

viction that they are necessary and appropriate under the

circumstances in which the sanctioned acts were

performed.

c. Certain attorneys may have been charged or men-

tioned in the sanction proceedings. Considering the fact

that these are not criminal proceedings, that this Court is

considering very heavy sanctions, that the very fact that

the attorney was charged could bring upon him the sting of

disrepute, we have determined to make no mention of

charges or the names of such attorneys against whom no

sanctions are imposed.

d. All attorneys who have been admitted to the bar

A-50

of the United States District Court for the Western

District of Louisiana and who, therefore, appear on the list

of attorneys who have been accepted for practice before

this Court take either an affirmation or oath of the follow-

ing tenor: I do solemnly swear (or affirm) that I will de-

mean myself as an attorney and counsel of this Court,

uprightly and according to law, and that I will support the

Constitution of the United States. So Help Me God. One

attorney, McCabe, is a resident of and a member of the bar

of the State of Massachusetts; was by special order of this

Court allowed to represent CTR and Chambers in this pro-

ceeding; did not take the oath above but did, we are sure,

take a similar oath when he was formally qualified to prac-

tice. He, like the other attorneys, is considered an officer of

the Court and expected by the Court to conduct himself as

such.

e. We have stated above that Fed. R. Civ. P. 11 was

amended in 1983 to reduce the reluctance of courts to im-

pose sanctions by emphasizing the responsibilities of at-

torneys and reenforcing those obligations through the im-

position of sanctions. Thomas v. Sec. Services, Inc., supra.

The spirit which induced the amendment of Rule 11 in 1983

should not be limited to that Rule. The Courts should not

hesitate to address and sanction similar transgressions in

whatever the judicial theater they may occur. This case is

as classic an example of vicious, deliberate, deceitful,

fraudulent and sanctionable conduct as the Courts can

produce.

37. Trial by ordeal, that most ancient, most archaic

and barbaric practice, has been for centuries in disrepute.

We have before us its modern counterpart. Although

NASCO did not have to survive the ordeal of boiling water

or searing flame without visible harm, it has suffered its

modern counterpart. NASCO possessed an admittedly

A-51

legal and valid contract. Chambers arbitrarily and without

legal cause refused to perform, forcing NASCO to bring its

suit for specific performance. Chambers, through his at-

torneys, filed answers and counterclaims alleging defaults

by NASCO which both Chambers and his attorneys knew

were false at the time they were filed. We have referred

previously to the immense volume of pleadings and eviden-

tiary material in this and other Courts. NASCO suffered

delay damages which by agreement of the parties

amounted to $850,000.00. NASCO has been forced to

spend approximately a million dollars in attorney’s fees

and expenses in this Court alone to win a suit in which

defendants did not introduce one item of evidence to

dispute its right to specific performance. This is a trial by

ordeal. How many plaintiffs could suffer the oppression

and harassment required to fight this case to a finish? The

attorneys who engineered this mockery are a disgrace to

the profession. This is not rhetoric. This is fact. This is

tragedy. Sanctions should be sufficiently severe to con-

vince others that such tactics shall not be tolerated in the

Courts of these United States. The sanctions assigned and

established in this paragraph apply only to sanctionable

acts which occurred in connection with the proceedings in

the trial Court.

a. G. Russell Chambers - We need not review the con-

duct of Chambers. Although this entire opinion is a

chronical of his sanctionable acts, these acts, as well as

those of the other sanctioned defendants, are recapitulated

in brief form in paragraphs 26-28 supra. Chambers, know-

ing that NASCO had a good and valid contract, hired Gray

to find a defense and arbitrarily refused to perform,

thereby forcing NASCO to bring its suit for specific perfor-

mance and injunctive relief. Chambers and Gray misused

the notice by NASCO of its application for injunctive relief

to set up the fraudulent public records defense. This was

A-52

the first battle in their long and arduous campaign of fraud,

deceit, delay, harassment, oppression and expense,

culminating finally on August 27, 1986 when the sale to

NASCO finally was completed. We assess as sanctions for

Chambers’ unlawful conduct attorney’s fees and expenses

of $996,644.65. This sum is exclusive and does not include

fees and expenses previously awarded by this Court in the

-contempt proceedings in the amount of $4,754.00, or the at-

torney’s fees and expenses awarded as sanctions by the

Court of Appeals which we have determined to be

$66,223.02. The figure does include, however, $53,459.68 in

attorney’s fees and expenses paid by NASCO for services

rendered in connection with the sanctions portion of this

suit. This latter portion of the fees and expenses, like the

balance of such fees and expenses included in the sanctions,

would not have been incurred by NASCO if Chambers had

not defaulted and forced NASCO to bring this suit. There

is absolutely no reason why Chambers should not reim-

burse in full all attorney’s fees and expenses that NASCO,

by Chambers’ action, was forced to pay. 12

These fees and expenses were paid by NASCO to its

attorneys. They were assembled, documented and sent to

each of the defendants by order of the court on March 8,

1988 and prior to the hearing of April 11, 1988. NASCO

paid them without protest and Chambers has not chal-

lenged the amount. Nor is it required that the attorney’s

12. We have also considered monetary sanctions to compensate the

United States for waste of judicial resources caused by this suit. Such

sanctions are not without precedent, at least under Rule 11. See Robin-

son v. Moses, 644 F. Supp. 975, 982 (N.D. Ind. 1986); Dominguez v.

Figel, 626 F. Supp. 369, 374 N. D. Ind. 1986); Thiel v. First Federal Sav-

ings & Loan Assoc. of Marion, 646 F. Supp. 592, 598 (N.D. Ind. 1986).

In fact, Courts have routinely ordered an award of a part of such costs

when settlements are reached on the first day of trial and jury costs are

awarded.

A-53

fees meet the standard set forth in Johnson v. Georgia

Highway Express, Inc., 448 F.2d 714 (5th Cir. 1974). Davis

v. Veslan Enterprises, 765 F.2d 494 (5th Cir. 1985), and

Hornbuckle v. Arco Oil & Gas Co., 732 F.2d 1233 (5th Cir.

1984).

The amount of the sanction is substantial but it is no

more substantial than were the bills when NASCO was

obliged to pay them. We agree with the statement of Judge

Goldberg in Schwartz v. Folloder, 767 F.2d 125, 133-134

(5th Cir. 1985), as follows:

After Alexander Grant’s attorney requested at-

torney’s fees, the court sarcastically commented,

Lou mean to say your client has spent four hun-

dred thousand dollars defending a lawsuit that it

determined a long time ago was frivolous?’ 13

Rec. at 4. Given this statement, it is possible that

the court denied attorney’s fees on the ground

that Grant was wrong to spend so much money in

defending a suit that had been frivolously filed. If

so, the district court was in error. We agree with

the sentiments expressed in Dayan v.

McDonald’s Corp., No. 70CH 2258 (Ill. Cir. Ct.

March 1, 1983):

It is unbecoming for the plaintiffs to hail the

defendant into court by means of false

allegations and then to complain when the

defendant hires skillful, experienced and ex-

pensive advocates to defend against those

allegations. Having wrongfully kicked the

snow loose at the top, [the plaintiff] must

bear the consequences of the avalanche at

the bottom.

The shoe fits a frivolous defense as well as it does a

frivolous cause of action.

A-54

b. Mable Christine Baker - Baker was an indispen-

sable and willing party to the scheme and conspiracy,

although she knew none or little of the significance of her

participation. Her sanction is our reprimand.

c. A. J. Gray, III - The defendants in this case who

are attorneys are distinctly different from the other defen-

dants under consideration. An attorney is schooled in the

law. Because of his unique relationship with his clients and

with the public, he is taught ethics and governed by rules

of professional ethics. The Court has a right to expect him,

as an officer of the Court, to lend his assistance in preserv-

ing order and decorum in the Court; to be truthful and for-

thright with the Court and other counsel; to be truthful and

not mislead the court or other counsel. His signature cer-

tifies that pleadings and other documents filed by him are

to the best of the signer’s knowledge, information, and

belief formed after reasonable inquiry it is well grounded in

fact and is warranted by existing law or a good faith argu-

ment for the extension, modification, or reversal of existing

law and that it is not interposed for any improper purpose,

such as to harass or to cause unnecessary delay or needless

increase in the cost of litigation. Rule 11. He is bound to

preserve the integrity of the law and the Constitution of

the United States and the several states and to seek justice

in his representation of clients before the Court. In his con-

duct in this case, Gray has actively violated almost every

one of these ethical and professional responsibilities. He ac-

cepted and tried a case for the explicit purpose of doing in-

justice, i.e., he used every means at his disposal to defeat

a perfectly legal and enforceable purchase contract against

which he well knew his client had no defenses. He misused

the injunction notice given by NASCO. He devised a

fraudulent and illegal scheme to deprive this Court of the

jurisdiction which it had at the time NASCO’s notice was

delivered on Friday, October 14, 1983. The sale to the Trust

A-55

as attempted was an absolute simulation and totally void

and incomplete at the time it was recorded. It was recorded

in haste for the purpose of rendering the impending injunc-

tion ineffective. He not only failed to disclose essential and

pertinent facts, he actively misled the Court and recorded

his conversation with the Court without disclosing to the

Court his intent to do so. By these actions the Court was

forced to delay action on the merits until it was determined

by trial that the Court again had jurisdiction. During this

delay Gray utilized his legal skills and experience to lead,

on behalf of Chambers, a campaign of harassment, oppres-

sion and delay sufficient to force NASCO to spend over a

million dollars in attorney's fees and expenses to defend its

rights to the performance of a perfectly legal and en-

forceable contract. More amazing, this was accomplished

without the introduction by defendants of one single item

of evidence against the validity of the Purchase Agree-

ment. This case is unique. The manner in which it was con-

ducted by Gray is a disgrace to the legal profession. It is

our reluctant duty as a sanction to disbar Gray from prac-

tice as an attorney in the Western District of Louisiana; to

order that his name be stricken from the roll of the at-

torneys authorized to practice before this Court, and that

he be prohibited, for a period of three years from the date

upon which this case becomes final, from making applica-

tion for readmission to the rolls of the this Court.

d. Richard A. Curry - Curry knew all the details of the

public records defense and participated in the campaign of

harassment and oppression. But, he initiated nothing on

behalf of Chambers. Customarily he filed his pleadings

merely in support of pleadings previously filed by Gray.

Under his representation the Trustee, Baker, remain-

ed the willing tool of Chambers through the duration of the

litigation and knew no more about her responsibilities as

A-56

Trustee at the end of the litigation than she did the first

day that Curry was hired. We assign as a sanction that

Curry be suspended from practice as an attorney in the

Western District of Louisiana for a period of six (6) months

but that his name remain on the rolls of the attorneys

qualified and admitted to the practice before this Court so

there will be no need for an application for readmittance.

e. Edwin A. McCabe - McCabe is a resident of and

practices law in Boston, Massachusetts. He does not ap-

pear on the rolls of the attorneys authorized to practice

before this Court but by the order of this Court on July 16,

1986 he was admitted for the purpose of representing

Chambers in this specific suit. On this date, some eight

months after the issuance of our Judgment on the Merits

of November 27, 1985, Chambers was still resisting perfor-

mance of the purchase contract. We, on motion of NASCO,

were lending our assistance to promote that performance.

The sole issue to be tried at the July 16, 1986 hearing was

whether operating equipment which had replaced worn or

outdated equipment described in the 1983 Purchase Agree-

ment was to be included in the sale to NASCO. The Court

had overruled several pretrial motions filed by McCabe

and, before commencing the actual hearing, warned

McCabe that we had experienced a great deal of unethical

conduct throughout the trial of this case and would tolerate

no further acts of that nature. Despite these warnings, two

highly unethical acts occurred during the hearing. During

a three day recess after the 16th, all of the equipment at

issue in the hearing was removed and taken off line and the

worn-out or outmoded equipment described in the 1983

Purchase Agreement was placed in operation. This was

done on the admitted advice of McCabe without the con-

sent of the Court or opposing counsel and, indeed without

informing either of them. We deemed this to be an act of ar-

rogance, in direct violation of the warning by the Court,

A-57

and we ordered the immediate reinstallation of the equip-

ment which had been removed.

Thereafter, an attempt was made to prove that the

equipment in question was not owned by CTR but was

owned by another corporation wholly owned by Chambers

and leased at various times since August 1983 by that cor-

poration to CTR. Three witnesses, Mrs. Chambers, CTR's

independent CPA and a long-time employee of CTR,

testified in support of this contention. It was proved

beyond doubt that all of this testimony was perjury, that

all of the leases were fraudulent. None of the leases had

been drafted or executed prior to 1986, a date which, in-

cidentally, followed our final judgment on the merits.

Thereafter McCabe filed other baseless pleadings

and appealed our deision on the July 16 hearing, all as is

described in more detail in paragraphs 26, 27 and 28 supra.

McCabe terminated his representation when the Appellate

Court issued its decree of August 6, 1986. His appeal and

all of his pleadings were immediately recalled by him.

Nevertheless, his transgressions were serious and we

assign as a sanction our severest reprimand against him for

his actions, and declare him ineligible to practice in the

Western District of Louisiana for a period of five (5) years.

38. We determine the amount of attorney's fees and

double costs assessed as sanctions by the United States

Court of Appeals for the Fifth Circuit against appellant G.

Russell Chambers to be attorney's fees in the amount of

$66,159.39, and double costs in the amount of $127.26, ac-

curing in sum to $66,286.65.

39. A certified copy of this Opinion and the Judg-

ment to follow shall be sent by the Clerk of Court to: (1) the

Office of Bar Counsel, Daniel Klubach, Board of Bar

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Overseers of the Supreme Judicial Court, 11 Beacon Street,

Boston, Massachusetts 02108, and (2) the Supreme Court

of Louisiana, 109 Supreme Court Building, 301 Loyola

Avenue, New Orleans, Louisiana 70112-1887.

DONE AND SIGNED at Alexandria, Louisiana,

this 23rd day of January, 1989.

copy sent - 1-25-89

/s/ Norman Scott

UNITED STATES DISTRICT JUDGE

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APPENDIX B

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 89-4137

NASCO, INC.,

Plaintiff-Appellee,

CALCASIEU TELEVISION & RADIO,

INC., and G. RUSSELL CHAMBERS,

Defendants-Appellants,

and

RICHARD A. CURRY, EDWIN A.

McCABE, and A.J. GRAY, III,

Appellants.

Appeals from the United States District Court for the

Western District of Louisiana

(February 6, 1990)

Before WISDOM, JOHNSON, and HIGGINBOTHAM,

Circuit Judges.

HIGGINBOTHAM, Circuit Judge:

Calcasieu Television and Radio, Inc. and its sole

shareholder and director, Russell Chambers, appeal the

district court’s award of attorneys’ fees to NASCO based

on Chamber’s bad faith in conducting his defense to

NASCO’s breach of contract suit. We find that the district

A-60

court has inherent power to prevent frustration of its

judicial duty by a party. We also conclude that although

jurisdiction in this suit rested on diversity of citizenship

the district court may without reference to Louisiana law

award attorneys’ fees to the party forced by the obstruc-

tive tactics to incur them. A. J. Gray, Edwin McCabe, and

Richard Curry appeal the district court’s order disbarring

them for various periods for their conduct of the defense.

We hold that the district court afforded them due proces,

that its findings are supported by clear and convincing

evidence, and affirm the disbarment order. In setting th_

length of McCabe’s disbarment the district court con-

sidered that he is a resident of Massachusetts and woul4

seldom have occasion to appear in the Western District of

Louisiana. After the order was issued, however, the

Massachusetts Bar ordered McCabe to show cause why it

should not impose identical discipline. We do not know

whether this turn of events may work an unintended result.

In the interest of fairness, we remand to enable the district

court to consider the length of McCabe’s disbarment in

light of this development.

I

On August 9, 1983, CTR and NASCO agreed to the

sale to NASCO of CTR’s television station. The agreement

required CTR to file required forms with the FCC by a

specified date, but it did not do so.

On Friday, October 14, 1983, NASCO notified

Chambers that it would file suit in the district court seek-

ing specific performance and would request a temporary

cumbering property subject to the contract. Over the

weekend, Chambers and his attorney, Gray, created a trust

with Chambers’s sister, Mabel Baker, as trustee. CTR then

A-61

conveyed to the trust all of its immovable property subject

to the contract of sale. On Monday morning, Chambers and

Gray filed warranty deeds in the proper parish offices

showing the transfer to the trust. NASCO filed its suit

later that morning. At noon, the district judge conducted

a telephone conference with NASCO’s attorney and Gray

regarding a temporary restraint of property transfers.

Gray did not disclose in the conference that CTR was

already transferring property to the trust.

On Monday afternoon, Chambers flew to Birm-

ingham, where Baker signed the documents necessary to

her appointment as trustee. She then signed a $1.4 million

note on behalf of the trust for the purchase of the property.

On Tuesday, Gray informed the court of the

transfers and that he had withheld the information during

the telephone conference. NASCO amended its complaint

to name Baker as a defendant and on October 24, the

listrict bi — injunction enjoini

Chambers and CTR from encumbering the property, and an

order restaining Baker from alienating or otherwise en-

cumbering the property. On the next day, baker never-

theless entered into a leaseback agreement with CTR.

In November 1983, NASCO sought access to CTR’s

general ledger and 1982 income tax return, but Chambers

through Gray, refused. The October 24 preliminary injunc-

tion ordered CTR and Chambers to grant NASCO access to

any documents or records related to the assets purchased

were clearly within the scope of the injunction and fined

Chambers and CTR after NASCO instituted a civil con-

tempt proceeding. NASCO, Inc. v. Calcasieu Television &

Radio, 583 F. Supp. 115 (W.D. La. 1984). Chambers

brought two unsuccessful appeals of this order, under

A-62

§ 1292(b) and § 1291. See NASCO, Inc. v. Calcasieu Televi-

sion & Radio, slip op. No. 84-9037 (5th Cir. May 29, 1984)

and NASCO, Inc. v. Calcasieu Television & Radio, Inc., 752

F.2d 157 (5th Cir. 1985).

The attorneys then filed four motions for summary

judgment. Gray filed two on behalf of Chambers, Curry fil-

ed one on behalf of Baker, and Gray filed one on behalf of

Chambers and Baker. In each motion, they argued that

since the deeds of the station’s property to the trust had

been recorded before the NASCO-CTR contract, the public

records doctrine barred specific enforcement of the con-

tract. Before the hearing on the motions for summary j

ment, NASCO filed an affidavit attacking Baker’ — me 4

ty which Curry moved to strike; the court denied the mo-

tion. The district court then concluded that the transfer to

the trust was a sham and denied summary judgment.

In August 1984, Gray moved for a protective order

and for clarification of the scope of the October 24

preliminary injunction. After a hearing, the court denied

that motion as well. Gray then filed on behalf of Chambers

several compulsory counterclaims which proved to be

baseless; indeed some had no relevance to the proceeding.

For example, these claims included arguments that

NASCO’s conduct of its FCC ascertainment survey was

improper, that NASCO would be unable to pay the pur-

chase price, that NASCO had misrepresented its plans for

the station, and that NASCO was not committed to the

community interest. Chambers and Gray did not drop

these claims until the eve of trial, wher. they admitted the

contract was valid.

About the same time, Gray noticed the depositions

of officials of Manufacturers Hanover, the financing bank

for NASCO’s purchase. McCabe, Chambers’s Boston

A-63

counsel, asserted that he took these depositions to deter-

mine NASCO’s ability to pay the purchase price. Gray also

took the depositions of five members of NASCO’s board of

directors, to determine whether the NASCO officer who

had signed the purchase contract had been authorized to do

so. 1

Throughout, Gray sought continuances, extensions

of pleading deadlines, and deferments of scheduled

discovery. After the district court finally set trial for

February 27, 1985, Gray filed a motion to recuse the trial

judge for bias and prejudice, which the trial court denied.

Chambers and CTR sought a writ of mandamus from this

court ordering recusal. Curry filed an answer to the peti-

tion on behalf of Baker, who was technically a respondent,

in which he also urged that the writ be granted. This court

denied the petition, calling it meritless. Jn re Calcasieu

Television & Radio, Inc. and G. Russell Chambers, slip op.

No. 85-4128 (5th Cir. February 25, 1985). The motion and

the petition again delayed the trial. Chambers then listed

100 trial witnesses in the pretrial order. The case went to

trial April 17-18, 1985 and only two of the 100 appeared to

testify.

At trial, Chambers, CTR, and Baker argued only the

public records doctrine defense. The district court rendered

judgment on November 8, 1985, restoring the status quo

and ordering specific performance. NASCO, Inc. v.

Calcasieu Television & Radio, Inc., 623 F.Supp. 1372 (W.D.

La. 1985). Chambers, Baker, and CTR appealed.

Soon after judgment, Chambers, without notice to

NASCO, petitioned the FCC to construct a new transmis-

sion tower for the station and to relocate the station's

transmission facilities. This change to a new site was not

covered by the purchase contract, and would have material-

A-64

ly altered the status quo in violation of the district court’s

judgment. The district court’s informal intervention and

NASCO’s threat to seek further contempt sanctions per-

suaded Chambers to drop his petition.

On November 27, 1985, Chambers and Baker,

through Gray and Curry, moved for a stay of the execution

of the judgment pending appeal. The trial court denied the

motion, and this court denied writs of mandamus sought

by Chambers and by Curry on behalf of the trust.

Chambers then petitioned Justice White to stay the judg-

ment. Justice White denied the petition. In re Calcasieu

Television & Radio, Inc. and G. Russell Chambers v.

NASCO, Inc., No. A-611 (White, J., in Chambers, February

18, 1986) (unpublished opinion). Chambers and CTR fired

Gray in March 1986 and Russell Tritico replaced him as

their counsel of record. Tritico was later joined by McCabe.

In late spring 1986, While the appeal to this court

from the judgment on the merits was still pending, a

dispute arose between Chambers and NASCO over the sta-

tion’s equipment to be transferred under the contract. In

the nearly three years since the agreement for the sale,

several pieces of equipment listed in the contract had been

taken out of service. NASCO contended that replacement

equipment had to be conveyed, but Chambers refused.

NASCO requested the court’s aid in completing the sale.

On the morning of the resulting hearing, McCabe filed a

motion in opposition and a supporting memorandum, a re-

quest for jury trial on the motion, and a motion in limine

to exclude evidence of assets not listed in the contract. The

trial court denied these motions, finding them to be

frivolous. The court also warned McCabe, who was making

his first full appearance in the case, that the defense had

already engaged in bad faith, dilatory tactics and the court

would tolerate no more.

A-65

During the hearing, from July 16-22, Chambers and

CTR, at McCabe's direction, removed all of the disputed

equipment from service at the station. McCabe now argues

that this was to prove that the equipment was not

necesssary to the station’s operations and thus not subject

to the contract. Whatever the reason, removing the equip-

ment, without any notice to the court or NASCO, directly

violated the orders of the district court. The district court

ordered Chambers and CTR to restore the equipment to

service.

At the hearing, two CTR officials, called by McCabe,

testified concerning the use and ownership of the disputed

assets as part of an effort to prove CTR did not own them

but rather leased them from another Chambers corpora-

tion, CAL-TV. McCabe introduced seventeen equipment

leases as part of this effort. The trial court denied the mo-

tion, concluding that the leases were fraudulent and the

testimony false. The trial court granted NASCO’s motion.

On July 28, 1986, with NASCO’s motion pending,

McCabe sent a letter to NASCO’s counsel stating

Chambers intended to close the sale on August 4, 1986 and

convey only the assets originally listed in the contract.

This apparent effort to set up a termination of the sale by

Chambers under the termination provisions of the contract

failed. The trial court granted NASCO relief from the tim-

ing and termination provisions of the contract.

On August 6, 1986, this court affirmed the district

court’s judgment on the merits, imposed sanctions under

Fed. R. App. P. 38 for a frivolous appeal, and remanded for

a determination of the amount of these sanctions. The re-

mand included an instruction to consider the applicability

of Rule 11, Fed. R. Civ. P., and 28 U.S.C. § 1927 to

Chambers, Baker, or their counsel for their conduct in the

A-66

trial court. We did not intend by this specific instruction to

limit the district court’s sanctioning power to that provid-

ed in the statute. NASCO v. Calsasieu Television and

Radio, slip op. No. 86-4003 (5th Cir. August 6, 1986).

- On December 29, 1987, NASCO moved for sanctions

against Chambers, Baker, McCabe, Gray, and Curry

resting on_section 1927, Rule 11, and the court’s inherent

power. The court held an evidentiary hearing on the motion

on April 11, 1988. All of the parties filed briefs and submit-

ted documentary evidence, affidavits, and testimony. On

December 12, 1988, the court filed a minute entry soliciting

additional arguments on the availability and propriety of

non-monetary sanctions, namely suspension and disbar-

ment of the attorneys. Each party except McCabe

responded.

On January 23, 1989, the district court ordered

Chambers to pay $66,286.65 in appellate sanctions and

$996,644.65 in attorney’s fees and related expenses,

reprimanded Baker, disbarred Gray for three years and

Curry for six months, and declared McCabe ineligible to

practice in the Western District of Louisiana for five years.

The court did not rest on statute or rule but found that it

had the inherent power to issue the order. Louisiana and

Massachusetts have ordered Gray and McCabe respect-

fully to show cause why they should not impose identical

discipline. Those orders have been stayed pending the out-

come of this appeal.

II

Chambers argues hat the district court’s award of

attorneys’ fees was not authorized by controlling Louisiana

law. He contends that in a diversity case, a district court

may not impose attorney’s fees for bad faith litigation

A-67

practices under its inherent power, but must look to state

law. Louisiana allows attorneys’ fees only when a contract

or statute specifically provides for them. Quealy v. Paine,

Webber, Jackson, and Curtis, Inc., 475 So. 2d 756 (La.

1985); Huddleston v. Bossier Bank and Trust Co., 475

So.2d 1082 (La. 1985). It does not recognize an exception

for bad faith practice. It is undisputed that neither the con-

tract nor any Louisiana statute here provides for at-

torneys’ fees.

In Alyeska Pipeline Service Co. v. Wilderness Society,

421 U.S. 240 (1975), the Court noted that federal courts

follow the American Rule that the prevailing party is not

permitted to recover attorneys’ fees, with a few exceptions,

including an inherent power to impose attorneys’ fees upon

a losing party who has acted in bad faith, vexatiously,

wantonly, or for oppressive reasons. 421 U.S. at 258-259

(quoting F.D. Rich Co., Inc. v. United States ex rel. In-

dustrial Lumber Co., 417 U.S. 116, 129 (1974)). This excep-

tion applies both when the bad faith occurs in the transac-

tion giving rise to the suit and when a party litigates in bad

faith. Roadway Express, Inc. v. Piper, 447 U.S. 752, 766

(1980). A footnote, however, confuses the Alyeska ruling at

least in divesity cases:

Im an ordinary diversity case where the state

law does not run counter to a valid federal statute

or rule of court, and usually it will not, state law

denying the right to attorney’s fees or giving a

right thereto, which reflects a substantial policy

of the state, should be followed. Prior to the deci-

sion in Erie R. Co. v. Tompkins, 304 U.S. 64

(1938), this Court held that a state statute requir-

ing an award of attorneys’ fees should be applied

in a case removed from the state courts to the

federal courts: “‘[I}t is clear that it is the policy of

the state to allow plaintiffs to recover an at-

A-68

torney’s fee in certain cases, and it has made that

policy effective by making the allowance of the

fee mandatory on its courts in those cases. It

would be at least anomalous if this policy could be

thwarted and the right so plainly given destroyed

by removal of the cause to the federal courts.

We see nothing after Erie requiring a departure

from this result. The same would clearly hold for

a judicially created rule, although the question of

the proper rule to govern awarding attorneys’

fees in federal diversity cases in the absence of

state statutory authorization loses much of its

practical significance in light of the fact that

most States follow the restrictive American rule.

421 U.S. at 259, n.31 (citations omitted).

We are not persuaded that the Court intended to

upset the view, nigh unchallenged in the history of the

country, that federal courts have inherent power to police

themselves by civil contempt, imposition of fines, the awar-

ding of costs and the shifting of fees. Specifially, we are

unpersuaded that the award of fees to a party injured by

the opposing party’s conducting a civil suit in a manner

obstructive of justice necessarily implicates the substan-

tive policy of states in diversity cases.

It is a given that federal courts enjoy a zone of im-

plied power incident to their judicial duty. From the

Judiciary Act of 1789 forward its functional necessity has

not been seriously questioned. Rather, the task is one of

defining its limits. As we see it, the dimensions of the zone

are best grasped by taking both a horizontal and a vertical

look. The immediate cor.tention, that awarding fees im-

plicates Louisiana’s substantive policy, raises a question of

vertical limits. But its answer requires the informing

presence of horizontal limits; that is, the relationship

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between the source of the power and its particularization in

rules governing sanctions such as Rule 11 and Rule 37 Fed.

R. Civ. Proc., in rules governing contempt, and in statutes

such as 28 U.S.C.A. § 1927. We turn first to the relation-

ship between the courts’ inherent power to prevent

obstructive conduct and particular rules that respond to

such conduct at various stages of the litigation process. We

limit our discussion to the problem before us—whether

Rule 11 and Section 1927 bar a district court from assess-

ing fees against a party under its inherent power, when the

party’s conduct is not within the reach of the rule or the

statute. We express no opinion whether, when the conduct

is within the reach of either, the court may exceed these

boundaries under the auspices of its inherent power.

It could be argued that the inferior federal courts

may look only to rules of procedure and specific statutes

providing remedies for obstructive conduct. The argument

rests on the idea that Congress has the power to define the

limits of the authority of inferior courts and that § 1927

and applicable rules adopted under the enabling acts reflect

a congressional decision to confine the courts to the par-

ticular rules and statutes. After all, the argument goes,

there is little point in defining procedures and remedies by

particular rules if the courts retain a much broader in-

herent power. We are not persuaded.

To the extent that inherent power is seen as a pro-

duct of necessity, it contains its own limits. It is not a

broad reservoir of power, ready at an imperial hand, but a

limited source; an implied power squeezed from the need to

make the court function. It is power ‘‘necessary to the exer-

cise of all others, Roadway Express, Inc. v. Piper, 447

U.S. 752, 766 (1980) (quoting United States v. Hudson, 11

U.S. (7 Cranch), 32, 34 (1812) and governed not by rule or

statute but by the control necessarily vested in courts to

A-70

manage their own affairs.’’ Link v. Wabash R. Co., 370 U.S.

626, 630 (1962) (emphasis supplied).

Despite its linkage to necessity it is not apparent

that the inherent power incident to duty is exhausted by

rules addressing particular sets of problems such as Rule

11. It is true that, to the extent conduct violates an explicit

statute or rule, there is no necessity for resorting to power

inherent in the judicial assignment. At the same time it

does not necessarily follow that inherent power starts

where rule or statute ends. Conduct may be of the genre ad-

dressed by the rule, such as an inadequate investigation

preparatory to the filing of a complaint or bad faith pro-

secution of a claim, but outside its particulars such as the

required signing under Rule 11 or conduct by a party

rather than the lawyer under § 1927.

Accepting that Congress can limit the power, the

question inevitably turns to the intended purpose of the

rule. Yet, the scope of displacement intended by a rule is

often uncertain. Indeed, it is likely to be uncertain unless

the statute or rule explicitly describes its preemptive reach.

This is so because adopting a rule of procedure such as Rule

37 is not necessarily inconsistent with simultaneously ac-

cepting a court’s inherent power to shift fees for wanton

and vexatious conduct. First, adopting a rule alters the

analysis of judicial reach in diversity cases, at least since

Hanna v. Plumer, 380 U.S. 460 (1965). For this reason

alone, the inference that an addition of congressional

authority to the inherent judicial power was intended by

the promulgation of a rule is at least equally as compelling

as the inference that adopting the rule was intended to sup-

plant the court’s inheren: power. Indeed, were the power at

issue here reflected in a rule of procedure, much of our

analysis would be unnecessary.

A-71

Second, the positive heuristic values of particulariz-

ing conduct that could without the rule be dealt with by a

court’s exercise of inherent power also dispels the notion

that adopting a rule necessarily infers an intent to displace

inherent power.

Third, and finally, adopting particular rules sup-

plements inherent power in another positive manner that is

the essence of rulemaking. A rulemaker may sum ex-

periences such as inadequate investigation preparatory to

the filing of a pleading and condemn its practice despite the

fact that singly the acts might not be so obstructive as to

warrant ad hoc judicial responses. For example, that

misconduct by parties as distinguished from their lawyers

had not been found to be sufficiently widespread as to war-

rant a rule hardly compels the inference that when it does

occur, the court lacks inherent power to deal with it

because the subject was addressed by a rule and the rule

omitted parties. Similarly, a rule maker may reach for prac-

tices in their bud, before they come to flower. So, where a

rule leaves off and the zone of inherent power picks up is

not definable across the board—for all rules and statutes—

and is often uncertain. That uncertainty is a reflection of

uncertainty in the very idea of inherent power. At the very

least it leads us to not venture beyond functional necessity

as its source.

Given this uncertainty, it ought not be surprising,

and it is the case that, viewed horizontally, inherent power

is not a tidy doctrinal package. Two cases make the point.

In Link the Court sustained a lower court finding of the in-

herent power of a district court to sua sponte dismiss a case

involuntarily. That Rule 41(b) dealt with involuntary

dismissals and appeared to require a motion to dismiss did

not trouble the Court. Justice Harlan observed that Rule

41 was not the source of the power to dismiss. Rather, the

A-72

district court had exercised its inherent power. On the

other hand, the Court in Ex parte Robinson , 86 U.S. (19

Wall.) 505 (1873), suggested that the rules for contempt, a

specie of inherent power, were the sole source of district

court authority to find contempt. That the district court

could not have proceeded with contempt except by the

rules for contempt does not necessarily mean, however,

that it had no authority to otherwise remedy the conduct.

So read, Ex parte Robinson, and Link are not inconsistent.

By this reconciliation, when a court is faced with bad con-

duct frustrating its ability to discharge its judicial duty, it

is not confined to the process of criminal contempt, but

may impose other sanctions in order to control the litiga-

tion before it.

Our task here is not so large that we must quiet these

uncertainties. Rather, it is sufficient that we explain our

caution by describing concerns surrounding the inherent

power of federal courts. Having said this, and despite the

uncertainty of the inherent power’s full reach, we are per-

suaded that the rules of civil procedure and § 1927 did not

displace a district court’s power to shift fees for bad faith

wanton and vexatious conduct in the prosecution of the

case. We quickly take comfort from the reality that this

much is implicit in Alyeska.

We turn now to the vertical view and our immediate

issue—whether, as Chambers argues, the Alyeska Court

read Erie R. Co. v. Tompkins, 304 U.S. 64 (1938), and its

progeny as compelling district courts to look to state law

in awarding attorney’s fees for bad faith litigation prac-

1. We need not grapple here with the preclusive effect of the Rule 42 Fed.

R. Crim. P. and 18 U.S.C. § 401. This was not a criminal contempt pro-

ceeding and there is no suggestion that the full range of conduct could

be remedied by civil contempt.

A-73

tices in diversity cases. We are not persuaded that it did.

Erie broadly commanded federal diversity courts to

apply state substantive law and federal procedural law.

The current state of the Erie doctrine is reflected in

Guaranty Trust Co. v. York, 326 U.S. 99 (1945) and Hanna

v. Plumer, supra. In Guaranty Trust Co., the Court held

that, in diversity cases, Erie required issues significantly

affecting the outcome of the litigation to be decided under

and means of enforcing the state-created substantive right

in federal court were to be determined by federal law. 326

U.S. at 109. In Hanna, the Court refined this analysis after

conceding that every procedural issue could be outcome-

determinative in the proper context. The Court stated that

when, as here, no federal rule controls and Erie analysis is

therefore necessary, the outcome-determination test can-

not be read without reference to the twin aims of the Erie

rule— discouragement of forum shopping and avoidance of

inequitable administration of the laws.’’ 380 U.S. at 468.

Predictably, the circuits have not been even in their

treatment of the issue. In Tryforos v. Icarian Development

Co., S. A., 518 F.2d 1258 (7th Cir. 1975), cert. denied, Manta

v. Tryforos, 423 U.S. 1091 (1976), the court considered a fee

award in a shareholder’s derivative action under state law

for misappropriation. The plaintiff shareholders changed

attorneys frequently during the litigation and otherwise

sought to avoid a trial on the merits in the district court,

apparently preferring some other forum. Finally, they sold

their stock and, despite some objections from another

shareholder, the district court dismissed the action with

prejudice for failure to prosecute. The district court retain-

ed jurisdiction to award defendants $92,500 in attorneys’

fees. The Seventh Circuit reversed. The court rejected the

defendants’ assertion that federal law governed the award,

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concluding that the Alyeska footnote required it to apply

Illinois law. 518 F.2d at 1265, n.27. The court concluded

that the Illinois statute allowing fees in that circumstance

did not cover the plaintiff's conduct. Jd. at 1266.

In Lewis v. SL & E., Inc., 629 F.2d 764 (2d Cir.

1980), the court reversed a judgment on the merits in favor

of the defendants in a shareholder’s derivative action. The

court also reversed the attorneys’ fee award, saying that it

could not find a New York statute that allowed the defen-

dants to recover their fees in this kind of derivative action;

and if the district court made the award because it thought

the plaintiffs brought the action in bad faith, the reversal

on the merits removed that basis for the award. 629 F. 2d

at 773. In a footnote, the court stated In this diversity ac-

tion, state law governs the question of attorneys’ fees,

citing the Alyeska footnote. Jd., n. 21.

In LaRouche v. National Broadcasting Co., 780 F.2d

1134 (4th Cir.), cert. denied, 479 U.S. 818 (1986), the plain-

tiff sued NBC, the Anti-Defamation League of B Nai

B’Rith, and others in a diversity action alleging defama-

tion. He lost, and the Anti-Defamation League moved for

sanctions in the form of attorneys’ fees against plaintiff

and his attorneys under Rule 11, § 1927, and the district

court’s inherent power to cope with bad faith litigation.

The district court denied the motion and the Fourth circuit

affirmed, finding no abuse of discretion. The court ap-

parently assumed the district court could have imposed

sanctions under its inherent power. See 780 F.2d at 1140.

In Montgomery Ward v. Pacific Indemnity Co., 557

F. 2d 51 (3d Cir. 1977), the defendant insurer Pacific refused

to defend Montgomery Ward in a products liability action.

Montgomery Ward sought a declaratory judgment that

Pacific was required to defend or indemnify and to recover

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attorneys’ fees for both the products liability action and

the declaratory judgment action. The products liability ac-

tion was settled and Pacific indemnified Montgomery

Ward and paid its counsel fees for that action. Mont-

gomery Ward continued to prosecute the declaratory judg-

ment action to recover its fees for that action. The district

court awarded the fees for what it found to be Pacific's bad

faith, based on its own inherent power rather than any

authority derived from state law. The Third Circuit affirm-

ed the award because it was valid under state law, but

noted the district court’s use of its inherent power was im-

proper in that state law governs attorneys’ fees awards in

diversity cases. 557 F.2d at 56-58. Judge Gibbons concur-

red in the judgment, but did not agree that federal courts

were Erie-bound to apply state law when the bad faith

amounted to an abuse of process:

I do not agree, however, that in a state which

would not [recognize the bad faith exception], a

federal forum would be precluded from awarding

attorneys’ fees for what amounts to a vexatious

abuse of its process. I regard the award of at-

torneys’ fees [here] as more in the nature of costs

than are such awards under the other exceptions

to the Ame can Rule. Certainly the notions of

federalism which underlie the Erie rule do not re-

quire that a federal forum accept the public policy

of the state in which it happens to sit on a matter

such as the award of costs for abuse of its process.

557 F.2d at 61.

Judge Gibbons viewed Pacific’s refusal to defend or

indemnify, and its defense of that position in the

declaratory judgment action, as an abuse. The district

court took the same approach in Republic of Cape Verde v.

A. & A. Partners, 89 F.R.D. 14, 20 n.12 (S.D.N.Y. 1980).

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Judge Gibbons did not distinguish between two

aspects of the bad faith exception. As we see it, bad faith

in an underlying transaction and bad faith in the prosecu-

tion of a claim present quite different problems. That is not

to say that conduct in prosecuting a claim is inevitably a

non-substantive matter. Federal judgments about whether

a contention is substantial or frivolous can quickly im-

plicate state choices of policy. The “‘procedural’’ trace of

state policy in a federal decision is evident in the use by

states of private attorneys general to enforce state stan-

dards. A state may set a low threshold to encourage such

policing. A finding of bad faith prosecution as a predicate

for fee-shifting when it rests on the substantiality of the

contention is intertwined with state choices among means

of enforcing standards for corporate conduct. Tryforos and

Lewis, supra, (shareholder derivative actions) may be ex-

plained in these terms. In sum, the dichotomy of underly-

ing transaction versus trial does not evenly separate

substance from procedure and we do not suggest that it

does. This is also the rationale of this circuit. Perkins State

Bank v. Connolly, 632 F.2d 1306 (5th Cir. 1980) is not con-

trary. It bears emphasis that the question before the panel

in Perkins was whether bad faith in the commercial tran-

saction giving rise to the suit triggered feeshifting. Fee-

shifting is in that circumstance a substantive policy choice

by the state. The Panel properly looked to Florida law for

the answer.

In this case, however, the award was based on

Chambers’s bad faith in the manner of conducting the

litigation; it did not rest on a federal measuring of the merit

in Chamber’s defense. We do not see how the district

court’s inherent power to tax fees for that conduct can be

made subservient to any state policy without transgress-

ing the boundaries set out in Erie, Guaranty Trust Co., and

Hanna. Fee-shifting here is not a matter of substantive

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remedy, but of vindicating judicial authority. Of course,

use of inherent power is outcome determinative in the sense

that Chambers owes fees he would not have owed had Loui-

siana law applied; but that is not the question after Hanna.

Erie does not compel a federal court to tolerate abuses in

diversity cases that the court would not tolerate in other

cases; nor does it limit the range of measures at the court's

disposal to vindicate its authority. It is not the business of

the state and federal courts to run the other’s courtroom.

Courts have approved other uses of the inherent

power to control the litigation in diversity cases. In Link v.

Wabash R. Co., supra, for example, there is no discussion

of the effect of state law on the court’s power to dismiss

that diversity suit. We approved the exercise of the in-

herent power in a diversity case to declare parties absent

from docket call ready for trial, again without discussion of

state law. Williams v. New Orleans Public Service, Inc.,

728 F.2d 730 (5th Cir. 1984). In Jochum v. Schmidt, 570

F.2d 1229 (5th Cir. 1978), a diversity case, we affirmed the

district court’s exercise of its inherent power to condition

a voluntary nonsuit on the payment of costs, including at-

torneys’ fees.

In Sibaja v. Dow Chemical Co., 757 F.2d 1215 (11th

Cir.), rehearing denied 765 F.2d 154, cert denied 474 U.S.

948 (1985), the court held that federal forum non conve-

niens doctrine applied in diversity actions, in the face of an

Erie challenge. A dismissal under that doctrine is an exer-

cise of the court’s inherent power. See Gulf Oil Corp. v.

Gilbert, 330 U.S. 501 (1947).

The point is that the exercise of the federal inherent

power in these cases, as in this one, in an effort to control

the litigation does not foster the forum shopping and

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inequitable administration of the laws Erie was designed to

prevent. Erie guarantees a litigant that if he takes his state

law cause of action to federal court, and abides by the rules

of that court, the result in his case will be the same as if he

had brought it in state court. It does not allow him to waste

the court’s time and resources with cantankerous conduct,

even in the unlikely event a state court would allow him to

do so.

III

Chambers contends there was insufficient evidence

to support the district court’s conclusion that he litigated

in bad faith. We disagree. He was the central figure in the

creation of the trust, the sham transfer of the station’s

assets to it, and the almost immediate leaseback. While

some of this conduct arguably occured before the lower

court acquired jurisdiction, it continued thereafter. In

arguing the baseless recusal motion, Gray indicated he had

filed it at Chambers’s insistence. Chambers’s petition to

the F.C.C. to build a new transmission tower was in direct

violation of the district court’s order.

There was also evidence to support the district

court’s conclusion that Chambers was heavily involved in

the fraudulent leases and false testimony presented at the

hearing on the motion for judicial assistance. The corpora-

tion that allegedly owned the disputed equipment had no

employees and had never engaged in production activities.

The leases were rather obviously backdated—for instance,

Chambers's wife signed one of them in her married name,

but it was dated before their marriage.

Even making the dubious assumption that

Chambers had nothing to do with the other litigation tac-

tics the attorneys tiindertook, this evidence sufficiently sup-

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ports a finding of bad faith. The district court did not err.

Finally, Chambers contends the amount of the sanc-

tions was an abuse of discretion. We disagree. NASCO’s

expenses throughout this litigation were without exception

the product of Chambers’s bad faith tactics. The award

reflects the amount of these expenses.

IV

Gray, McCabe, and Curry argue that the disbarment

proceedings violated due process. They say they did not

have adequate notice that the court was considering

-disbarment; they assert that they participated in the sanc-

tions hearing under the impression that they were defen-

ding only against monetary sanctions and did not know un-

til the minute entry of December 12 that they also faced

disbarment. Gray and Curry contend they were not given

adequate notice of the conduct for which they faced disbar-

ment. Finally, Gray argues that April 11 hearing was in-

adequate for disbarment purposes because it was limited to

one day and it was prosecuted by NASCO’s attorneys.

A

The appellants rely primarilly on Jn Re Ruffalo, 390

. U.S. 544 (1969), to support their claim that the notice of

their potential disbarment in the minute entry was inade-

quate. Ruffalo had been disbarred by the Supreme Court of

Ohio on two charges relating to his alleged solicitation of

clients for FELA cases. One charge had originally been

presented to the state Board of Commissioners on

Grievances and Discipline; the board added the other dur-

ing the hearing, after Ruffalo had presented his defense.

The Sixth Circuit then disbarred him based solely on the

charge the board added during the hearing. The Court held

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the Sixth Circuit erred because Ruffalo had not been given

adequate notice of this charge or an opportunity to defend

it. 390 U.S. at 550-551.

Here, Gray, McCabe, and Curry were informed of the

charges for which they were subject to sanctions when

NASCO filed its motion for sanctions on December 28,

1987. They presented their defenses to the charges at the

hearing on monetary sanctions on April 11, 1988. They

were later informed that the court was considering disbar-

ment for the same offenses and were allowed to file briefs

on that question.

We hold the appellants were afforded due process.

They had adequate notice of the charges and were allowed

to present a defense to each one of them at the hearing. The

only question they were not allowed to argue at the hearing

was whether their conduct subjected them to disbarment.

The district court remedied that by allowing them to file

briefs devoted to the issue after the minute entry. We see

no defect in these proceedings.

B

Gray and Curry claim that NASCO’s motion did not

adequately inform them of the charges, but merely made

vague and general allegations of misconduct over the

course of the litigation by all of its opponents. We disagree.

NASCO’s motion contained four pages of allegations of

specific instances of misconduct. Gray or Curry or both

were alleged to be responsible for many of the acts listed.

C

Finally, Gray’s argument that the hearing was inade-

quate also fails. First, we see no indication that he was in

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any way prejudiced because the hearing lasted only one

day. Since the misconduct alleged occurred in the court,

there was no need for elaborate proof of the facts, and the

parties offered none. Gray was given an opportunity to call

any witnesses he wished and to take the stand himself. He

chose not to. Second, we are not persuaded that NASCO’s

prosecution of the sanctions proceeding violated the

strictures of Young v. United States, 481 U.S. 787, 107

S.Ct. 2124 (1987). There the Court held the appointment of

the opposing counsel in the underlying litigation to pro-

secute a criminal contempt proceeding violated due pro-

cess. The Court reasoned that counsel could not adequately

represent the interests of the government and the interests

of his private client at the same time. 107 S.Ct. at

2135-2139. Gray argues that because we have characteriz-

ed a disbarment proceeding as quasi-criminal, Jn Re

Thalheim, 853 F.2d 383, 388 (5th Cir. 1988), the reasoning

in Young should apply.

We are unable to find any authority to support

Gray’s contentions and he points us to none. Further, we

conclude that the danger present in Young, that private

counsel would be overzealous in the contempt proceedings

in an effort to further the interest of his client, was not pre-

sent here. The arguments of counsel at the hearing were

devoted entirely to the issue of monetary sanctions. The

court later relied on its own research, aided by any briefs

the parties wished to file, in determining the propriety of

nonmonetary sanctions. 124 F.R.D. at 137, n.10. The court

thus avoided placing NASCO’s counsel in the role of pro-

secutor for the disbarment proceedings.

V

Gray, McCabe, and Curry next argue that the

evidence was insufficient to support their disbarment. The

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district court could have disbarred them only on the

strength of clear and convincing evidence that they com-

mitted a disbarment offense. In Re Thalheim, supra, 853

F.2d at 389, n.9. We hold there was sufficient evidence to

disbar.

There is no dispute that the appellants did

everything the district court said they did. The district

court found that they did it in bad faith, for the purpose of

delaying an inevitable judgment against their clients. We

have examined the record, and have concluded that clear

and convincing evidence supported that finding. All three

men repeatedly urged the frivolous public records doctrine

defense. McCabe displayed disregard for the authority of

the court by removing the disputed equipment from service

at the station. McCabe also introduced fraudulent leases

and testimony, characterized by the district court as per-

jury.“ Gray and Curry made baseless arguments for

recusal of the district judge. Gray noticed numerous

needless depositions. Every act they undertook was to fur-

ther the fraud on NASCO and on the court begun by the

sham transfer to the trust. Their protestations that they

acted in a good faith effort to defend their clients are not

sufficient to overturn their disbarment in the face of this

evidence.

VI

Finally, McCabe argues the district court abused its

discretion by disbarring him for five years. He cites

Thalheim to support his contention that his conduct did

not render him morally unfit to practice law, and he should

not have been disbarred, or at least not for that long.

We note that the district court, in denying all mo-

tions for new trial on the sanctions issue, stated ‘‘McCabe’s

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sanction was affected by the fact that he is a non-resident

of the State of Louisiana, is not a member of the bar of this

court; and by the probability that he rarely appears before

this court. R.3762. We are concerned that the district

court may not have anticipated that the Massachusetts

Bar would similarly discipline McCabe. Therefore, without

expressing an opinion on the propriety of a five year period

of disbarment on the facts of this case, we remand to allow

the district court to further consider the length of

McCabe’s disbarment in light of any action, or con-

templated action, by the Massachusetts Bar. :

AFFIRMED AND REMANDED.

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APPENDIX C

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

Filed May 4, 1990

No. 89-4137 ’

NASCO, INC.,

Plaintiff-Appellee,

versus

CALCASIEU TELEVISION & RADIO,

INC., and G. RUSSELL CHAMBERS,

Defendants-Appellants.

and

RICHARD A. CURRY, EDWIN A.

McCABE, and A.J. GRAY, III,

Appellants.

Appeals from the United States District Court for the

Western District of Louisiana

ON PETITIONS FOR REHEARING AND

SUGGESTIONS FOR REHEARING EN BANC

(Opinion February 6, 1990, 5th Cir., 1990 F. 2d)

(May 4. 1990)

Before WISDOM, JOHNSON, and HIGGINBOTHAM,

Circuit Judges.

PER CURIAM:

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The petitions for rehearing en banc are denied, no ac-

tive member of the court having requested a poll. The peti-

tions for panel rehearing are denied except upon further

consideration of Richard A. Curry’s petition for panel

rehearing, we remand the case, as to Curry only, to the

district court for reconsideration.

Curry vehemently denies that his conduct subjected

him to suspension under the court’s inherent powers; he

protests that he did little more than sign pleadings. He in-

sists that he did not receive an adequate opportunity to de-

fend himself. We are persuaded that we should remand the

case as to Curry only. On remand the district court will

allow Curry to offer any relevant argument and evidence he

may have. The district court may then reinstate, supple-

ment or change its present findings and any ordered sanc-

tions as it finds appropriate. We do not hold that the im-

posed sanction was an inappropriate response to the

district court’s perception of Curry’s role. Curry seeks a

further opportunity to dispel that perception. We do no

more than allow him to do so, perhaps out of an excess of

caution.

.