# Appendix — Chambers v. Nasco, Inc.

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Appendix
- **Published:** January 1, 1991
- **Citation:** 501 U.S. 32

## Text

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.

A-14
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:

A-39
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

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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

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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,

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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

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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

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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

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§ 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

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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.

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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-

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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.

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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

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385013_0020%3A03. Public record. Not legal advice.