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Supreme Court of the United States
February 27, 1991, Argued ; June 6, 1991, Decided
[*35] [***39] [**2128] JUSTICE WHITE delivered the opinion of the Court.
This case requires us to explore the scope of the inherent power of a federal court to sanction a litigant for bad-faith conduct. Specifically, we are asked to determine whether the District Court, sitting in diversity, properly invoked its inherent power in assessing as a sanction for a party's bad-faith conduct attorney's fees and related expenses paid by the party's opponent to its attorneys. We hold that the District Court acted within its discretion, and we therefore affirm the judgment of the Court of Appeals.
This case began as a simple action for specific performance of a contract, but it did not remain so. 1 Petitioner G. Russell Chambers was the sole shareholder and director of Calcasieu [****10] Television and Radio, Inc. (CTR), which operated television station KPLC-TV in Lake Charles, Louisiana. On August 9, 1983, Chambers, acting both in his individual capacity and on behalf of CTR, entered into a purchase agreement [*36] to sell the station's facilities and broadcast license to respondent NASCO, Inc., for a purchase price of $ 18 million. The agreement was not recorded in the parishes in which the two properties housing the station's facilities were located. Consummation of the agreement was subject to the approval of the Federal Communications Commission (FCC); both parties were obligated to file the necessary documents with the FCC no later than September 23, 1983. By late August, however, Chambers had changed his mind and tried to talk NASCO out of consummating the sale. NASCO refused. On September 23, Chambers, through counsel, informed NASCO that he would not file the necessary papers with the FCC.
[****11] NASCO decided to take legal action. On Friday, October 14, 1983, NASCO's counsel informed counsel for Chambers and CTR that NASCO would file suit the following Monday in the United States District Court for the Western District of Louisiana, seeking specific performance of the agreement, as well as a temporary restraining order (TRO) to prevent the alienation or encumbrance of the properties at issue. NASCO provided this notice in accordance with Federal Rule of Civil Procedure 65 and Rule 11 of the District Court's Local Rules (now Rule 10), both of which are designed to give a defendant in a TRO application notice of the hearing and an opportunity to be heard.
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501 U.S. 32 *; 111 S. Ct. 2123 **; 115 L. Ed. 2d 27 ***; 1991 U.S. LEXIS 3318 ****; 59 U.S.L.W. 4595; 91 Cal. Daily Op. Service 4222; 91 Daily Journal DAR 6585; 19 Fed. R. Serv. 3d (Callaghan) 817
G. RUSSELL CHAMBERS, PETITIONER v. NASCO, INC.
Prior History: [****1] ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT.
Disposition: 894 F.2d 696, affirmed.
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