The opinion of the court was delivered by: Lamberth, District Judge.
Upon consideration of the evidence presented and
representations made at the contempt trial and contained in
both parties' briefs, the court finds that Secretary Babbitt,
Secretary Rubin, and Assistant Secretary Gover are in civil
contempt of this court's First Order of Production of
Information, issued November 27, 1996 and subsequent Scheduling
order of May 4, 1998. Accordingly, the court will impose
compensatory, monetary sanctions on the defendants and will
appoint a special master to oversee the administration of this
case, as discussed and ordered below. The court finds these
remedies to be necessary in light of the defendants' flagrant
disregard for the orders of this court and the defendants'
corresponding lack of candor in concealing their wrongdoing.
II. Legal and Factual Background
A. Applicable Civil Contempt Standards
A federal district court has two bases for finding a party or
its attorneys in civil contempt of that court's discovery
order. First, pursuant to Rule 37(b)(2) of the Federal Rules of
Civil Procedure, the court can hold in contempt and sanction a
party for "fail[ing] to obey an order to provide . . .
discovery." FED.R.CIV.P. 37(b)(2). Second, the court has the
"inherent power to protect [its] integrity and prevent abuses
of the judicial process" by holding parties in contempt and
ordering sanctions for violations of the court's orders.
Webb v. District of Columbia, 146 F.3d 964, 971 (D.C. Cir.
1998) When the source of the potential civil contempt is a
failure to comply with a discovery order, the analysis under
both of these bases is "essentially the same." Id.
Two requirements must be met before a party or its attorneys
may be held in civil contempt. First, the court must have
fashioned an order that is clear and reasonably specific.
Armstrong v. Executive Office of the President, Office of
Administration, 1 F.3d 1274, 1289 (D.C. Cir. 1993). Second, the
defendant must have violated that order. Food Lion v. United
Food and Commercial Workers Internat'l Union, 103 F.3d 1007,
1016-17 (D.C. Cir. 1997); Shuffler v. Heritage Bank,
720 F.2d 1141, 1146 (9th Cir. 1983); In re Baum, 606 F.2d 592, 593 (5th
Cir. 1979). Generally, to properly hold a party or its
attorneys in civil contempt, the court must find facts meeting
these two elements by clear and convincing evidence. NLRB v.
Blevins Popcorn Co., 659 F.2d 1173, 1183-84 (D.C. Cir. 1981);
Washington-Baltimore Newspaper Guild v. The Washington Post
Co., 626 F.2d 1029, 1031 (D.C. Cir. 1980).*fn2 In this
circuit, a finding of bad faith by the contemnor is not
required, and "the [contemnor's] failure to comply with the
court decree need not be intentional." Food Lion, 103 F.3d at
1016 (quoting Blevins Popcorn Co., 659 F.2d at 1183)).
To rebut a prima facie showing of civil contempt, the
contemnor may assert the defense of "good faith substantial
compliance."*fn3 To prove this defense, the
contemnor bears the burden of proving that it "took all
reasonable steps within [its] power to comply with the courts
order." Food Lion, 103 F.3d at 1017 (citations omitted).
Importantly, the defense has two distinct components — (1) a
good faith effort to comply with the court order at issue; and
(2) substantial compliance with that court order. See id. A
good faith effort may be a factor in deciding whether a
contemnor has substantially complied, and it may be relevant to
mitigation of "damages;" however, good faith alone does not
excuse contempt. Id. at 1017-18. Moreover, "[c]ourts have been
particularly unsympathetic to purported excuses for less-than
substantial compliance where the contemnor has participated in
drafting the order against which compliance is measured."
United States v. Tennessee, 925 F. Supp. 1292, 1302 (W.D.Tenn.
1995). When a party participates in drafting the relevant
order, it does (or is held to have done) so "with an
understanding of what it can reasonably accomplish." Id. When
that same party fails to live up to its own expectations which
have subsequently been embodied in a court order, it should, at
the very least, notify the court and move for an enlargement of
time. For if the party and its attorneys sit idly by, they run
the risk of contempt of court.
A civil contempt action is "a remedial sanction used to
obtain compliance with a court order or to compensate for
damages sustained as a result of noncompliance." Food Lion, 103
F.3d at 1016. Upon a finding of civil contempt, the court has
several remedies at its disposal to meet the dual purposes of
compliance and compensation. In this regard, Rule 37(b)(2)
specifically authorizes the following:
[T]he court in which the action is pending may
make such orders in regard to the failure [to
comply] as are just, and among others the
(A) An order that the matters regarding which
the order was made or any other designated facts
shall be taken to be established for the purposes
of the action in accordance with the claim of the
party obtaining the order;
(B) An order refusing to allow the disobedient
party to support or oppose designated claims or
defenses, or prohibiting that party from
introducing designated matters in evidence;
(C) An order striking out pleadings or parts
thereof, or staying further proceedings until the
order is obeyed, or dismissing the action or
proceeding or any part thereof, or rendering a
judgment by default against the disobedient party;
(D) In lieu of any of the foregoing orders or in
addition thereto, an order treating as a contempt
of court the failure to obey any orders except an
order to submit to a physical or mental
In lieu of any of the foregoing orders or in
addition thereto, the court shall require the
party failing to obey the order or the attorney
advising that party or both to pay the reasonable
expenses, including attorney's fees, caused by the
failure, unless the court finds that the failure
was substantially justified or that other
circumstances make an award of expenses unjust.
FED.R.CIV.P. 37(b)(2). Thus, Rule 37 provides some specific,
nonexclusive remedies available to the court, with the
parameters of the available measures being "such orders in
regard to the failure as are just." See id.
The remedies available for a citation of civil contempt of
court based upon the inherent powers of the court are largely
the same. As the Court of Appeals for the District of Columbia
Circuit has stated, "the inherent power enables courts to
protect their institutional integrity and to guard against
abuses of the judicial process with contempt citations, fines,
awards of attorneys, fees, and such other orders and sanctions
as they find necessary, including
even dismissals and default judgments." Shepherd, 62 F.3d at
1472; see also id. at 1475 ("The inherent power encompasses the
power to sanction attorney or party misconduct. . . . Other
inherent power sanctions available to courts include fines,
awards of attorneys' fees and expenses, contempt citations,
disqualifications or suspensions of counsel, and drawing
adverse evidentiary inferences or precluding the admission of
evidence."). The remedies drawn upon under the inherent power,
however, should be exercised only when the rules do not provide
the court with sufficient authority to protect their integrity
and to prevent abuses of the judicial process. Id. at 1474
(citing Chambers v. NASCO, Inc., 501 U.S. 32, 46, 111 S.Ct.
2123, 115 L.Ed.2d 27 (1991)). Therefore, when a discovery order
has been violated, the court should turn to its inherent powers
only as a secondary measure.
The underlying facts in this case are discussed at length in
one of this court's earlier opinions in this matter. See Cobell
v. Babbitt, 30 F. Supp.2d 24 (D.D.C. 1998). For this reason, the
court will begin by highlighting only a few of the basic
background facts pertinent to the discussion at hand. The
opinion will then turn to the pertinent background facts
regarding document storage and production.
This class-action suit stems from the government's alleged
mismanagement of the Individual Indian Money (IIM) trust
accounting system. In this system, the United States acts as
trustee of accounts that hold money on behalf of individual
Indian beneficiaries. These accounts allegedly hold
approximately four billion dollars.
The IIM accounts hold money that originates from various
sources, but a majority of the funds are derived from income
earned off individual land allotments. These allotments date
back to 1934, pursuant to a United States government policy of
breaking up Indian tribes and tribal lands. In implementing
this policy, the bulk of the tribal lands were divided into
tracts, generally of 80 or 160 acres. These tracts were
patented to individual Indians, with legal title held by the
United States as trustee. The government's involvement was
originally intended to provide banking services for "legally
incompetent Indian adults" and Indian children without legal
guardians. See Misplaced Trust: The Bureau of Indian Affairs'
Mismanagement of the Indian Trust Fund, H.R. No. 102-499
(1992). These land allotments held in trust by the government
generated income by the lease of their grazing, farming,
timber, and mineral rights.
At the most general level, this suit involves the
government's management of the IIM trust accounting system.
This court has already certified the named plaintiffs under
FED.R.CIV.P. 23(b)(1)(A) and (b)(2) as representatives of a
class consisting of all present and former beneficiaries of the
IIM accounts. This class purportedly includes at least 300,000
individual Indian beneficiaries.
The plaintiffs generally seek two types of relief. First, in
what has become known as the "retrospective" prong of the case,
the plaintiffs seek a formal accounting of the IIM accounting
system. Second, in the so-called "prospective" component, the
plaintiffs seek a court order requiring the government to bring
their accounting practices in conformity with their trust
obligations under statutory and common law.
Because the matter currently before the court arises out of
civil contempt proceedings related to document production in
the underlying case, a general background discussion on the
current structure of the management and document storage
systems administered by the defendants is required.
While OST must manage the financial aspects of the IIM
system, the Bureau of Indian Affairs (BIA) — which is
completely independent of OST — takes responsibility for the
realty side of the trust management system throughout the
country. BIA is divided up into twelve area offices around the
nation; each area contains agency offices, of which there are
approximately 92 in the United States.
It should be noted that this description of the Department of
Interior structure with regard to IIM administration is an
oversimplification. Other branches of the Department clearly
manage records that are relevant to IIM administration. For
example, the Minerals Management Services and the Bureau of
Land Management each have custody and control over certain
documents that pertain to the IIM system, such as producing oil
and gas leases. Moreover, the Federal Records Centers and the
Federal Archives may each house a substantial number of IIM
trust-related documents, since each of the relevant
governmental entities may send their archived documents to
Within this decentralized structure, the document storage
situation becomes even more intricate. In short, OST and BIA
each maintain documents that the other needs. The most general
example would be a lease on a piece of land owned by an IIM
beneficiary. BIA would need the lease from the realty
management standpoint, but OST would also need the lease
because it may generate income that would be credited to the
lessor's IIM account. Today, OST houses most of the financial
documents relevant to the five named plaintiffs in its
warehouses in Albuquerque, New Mexico. The BIA, however, still
maintains its documents at the area and agency levels
throughout the country.
In terms of document production and trust administration,
this decentralized system — which the Department of Interior
(with the help of Congress) has created for itself — clearly
places a premium on coordination and management. To
effectively, efficiently, and reasonably produce documents
responsive to the court's orders, clear and accurate
instructions would need to be given by the attorneys to the
field staff, who would ultimately carry out the actual document
production. Of course, if the defendants' attorneys handling
this matter needed reasonable enlargements of time along the
way, they would be well advised to be candid with the court.
Unfortunately, the well coordinated, closely managed, and
candid approach required for reasonable document production and
case management has not been taken by the defendants or their
attorneys. The defendants must suffer the consequences for
The issue before the court today is whether the defendants
should be held in
contempt for not complying with two of the court's document
production orders, one of which was issued over two years ago.
The defendants' document production failures are undoubtedly
related to the plaintiffs' allegations of trust mismanagement
because the defendants' recordkeeping "system" is so
decentralized and disorganized that it will not allow them to
produce documents with the normal effort that it should take a
responsible trustee. The testimony of Paul Homan, former
Special Trustee, substantiates this proposition. Homan
testified that "[t]he recordkeeping system [for the IIM
accounts] is the worst that I have seen in my entire life."
Transcript at 639. This is especially credible testimony,
coming from the person appointed by the President and confirmed
by the Senate, whose specific task was to oversee and reform
the IIM trust system which the plaintiffs attack. Moreover,
Homan has a vast experience in trust management and with
failing financial institutions. For five years, Homan directly
supervised the trust operations of the Comptroller of the
Currency, which licenses and supervises trust companies owned
by national banks. Transcript at 599. Homan also served as
chief executive officer of First Florida Bank, which had a
trust department that exceeded $5 billion, and as chief
executive officer of Riggs Bank. Thus, given Homan's unique
duties and relevant experience, his commentary on the IIM
system's disarray is extremely noteworthy.
More immediately troubling, however, are Homan's statements
that, in his opinion, the OST will become less, rather than
more, responsive, due to a reorganization of OST by Secretary
Babbitt. See supra note 4 (discussing OST's reorganization).
Homan's prediction has already come to fruition in one concrete
aspect. At the November 24, 1998 hearing, John Miller, Deputy
Special Trustee for Policy, OST, was called by the government
to testify on the time needed for OST to complete document
production. Miller testified that the document "clean-up"
effort — i.e., completing the protocol to eliminate the
potential for hantavirus infection — would be finished in
February 1999, so that OST boxes could begin being searched at
that time. See Transcript of November 24, 1998 Hearing, at 91.
Miller stressed that this estimate could be followed (or else
he would notify the court to the contrary) because the
Assistant Secretary had dedicated $6.9 million for Miller to
carry out this project. Id. at 119. Secretary Babbitt's
reorganization of OST, however, has stripped Miller of his
authority (and funding) to carry out his prior representations,
thereby preventing the clean-up effort from being finished on
the represented time frame. For this reason, Miller wrote a
letter to the court and the parties stating that he will be
unable to carry out the document production efforts as he
represented at the November hearing due to Secretary Babbitt's
recent reorganization of OST. See Letter of January 8, 1999,
from John M. Miller to the Court (filed January 11, 1999).
Miller explicitly stated in this letter as the reason for his
inability to timely comply that "Secretary [Babbitt] has
transferred the funds out of my control and withdrew my line
authority." Id. In short, Miller's recent statements provide
strong support for Homan's prediction that the Secretary's
reorganization will hinder defendants' compliance with this
court's orders. Indeed, the prediction has already come true,
as the OST documents will not begin to be searched until at
least March 1999. See Transcript of February 16, 1999 Status
Call, at 7-8. This lends further credence to the court's
finding of contempt in this case, which stems from the
noncompliance, lack of good faith, cover-up, and misconduct
discussed with specificity below.
The court's response to this, and the plaintiffs' rallying
cry for decades with regard to IIM trust management, can only
be that actions speak louder than words. The Assistant
Secretary himself paraphrased this idea when he testified that
he "manages by results." Transcript at 1190. Whether the
measuring stick is the defendants' actions or the results they
have achieved, the grade is the same — the defendants have
The defendants' statements regarding the importance of this
litigation are belied by their actions, as discussed in detail
below. As usual, and aside from the true issues at the contempt
trial, the defendants continue to represent that the check is
in the mail with regard to document production. The defendants
point to Kenneth Rossman as one of the answers to their
problems. Rossman is the newly installed Director of the
recently created Office of Trust Litigation Support and Records
for OST. This position was created during the recent OST
reorganization. See supra note 4. Yet, even the circumstances
of Rossman's appointment contradict the notion that the
defendants care about complying with this court's orders.
Rossman was originally detailed on October 13, 1998, from the
State Department to do a study on document management reform
for the IIM system as a whole. Although the defendants had been
in defiance of this court's orders for four months at that
point, the defendants still chose to spend Rossman's efforts
for the following three months on the defendants' long range
plan, as opposed to bringing the defendants into compliance
with this court's orders. Given this type of highlevel
decisionmaking at the Department of the Interior, the
defendants to this contempt proceeding would be well advised to
make sure that their respective Departments' actions live up to
their words. For if they do not, the defendants will suffer
consequences far greater than those being handed down today.
Like the Assistant Secretary of the Interior, this court will
be managing by results.
Before turning to the contempt analysis, it is useful to
briefly address how the order to show cause came to be issued.
The court notes that it had no desire to hold the defendants in
contempt unless absolutely necessary. Indeed, plaintiffs'
counsel states that, to his knowledge, no sitting Secretary in
modern times has been held in contempt of court. Transcript at
Contrary to the impression some would seek to create, I do
not relish holding these cabinet officials in contempt. And I
do so today more out of sadness than anger. But courts have a
duty to hold government officials responsible for their conduct
when they infringe on the legitimate rights of others. These
officials are responsible for seeing that the laws of the
United States are faithfully executed. In this case, the laws
— the orders of this court — were either ignored or thwarted
at every turn by these officials and their subordinates. The
court must hold such government officials accountable;
otherwise, our citizens — as litigants — are reduced to mere
supplicants of the government, taking whatever is dished out to
them. That is not our system of government, as established by
the Constitution. We have a government of law, and government
officials must be held accountable under the law.
The court tried to take reasonable alternative steps to allow
the defendants to bring themselves into compliance with the
court's stipulated document production order of November 27,
1996 ("First Order of Production of Information"), and its
subsequent Scheduling Order of May 4, 1998, which placed the
final deadline on the pertinent document production. But the
court is left with little choice when the
alternative avenues have been exhausted without avail.
The situation crystalized at the end of the second day of a
November 1998 hearing the court held regarding setting a trial
date in the retrospective part, of this case. This hearing was
yet another attempt by the court, in part, to allow the
defendants to explain their noncompliance. But at the end of
the hearing, when the court was trying to set another status
conference on the state of document production compliance by
defendants, the following exchange occurred:
[The Court:] Okay. Let's plan on 10:00 a.m. on the
4th, and this will be on the status of compliance
with plaintiffs, the five plaintiffs' records.
[Mr. Wiener:] Your Honor, is it possible to
schedule this at a point where plaintiffs can at
least submit something in writing, so we know what
the issues are? I kind of feel like we've been
[The Court:] They said you haven't given them
everything I've ordered produced. I think that's
[Mr. Wiener:] Well, but is that the issue? I mean,
it seems to be somewhat of a moving target here,
and if that's the issue, that's fine.
[The Court:] Let's do it this way. He wants a
written submission. File a motion for an order to
show cause why I shouldn't hold the government in
contempt. Get that in, and I'll set a hearing on
the contempt motion, and we'll have it all in
writing that way.
Transcript of Hearing, Nov. 24th, 1998, at 213-14.
The orders of this court are simply not moving targets.
Because twenty-six months had passed since the original
production order was issued and the defendants had not even
come close to bringing themselves into compliance, as discussed
below, the court's last available option was to proceed by
But before formally issuing the order to show cause, the
court was willing to give the defendants one final opportunity
to avoid a contempt trial. At the status call held December 15,
1998, one week after plaintiffs filed their motion for an order
to show cause, the defendants reported to the court on the
state of document production. When defendants' lead counsel,
Lewis Wiener, ended his report without mentioning a word about
the potential for an Order to Show Cause, the following
[The Court:] In the Motion for Order to Show
Cause, you wanted written specifications. So
you've got it here filed December 9. What is
your proposal ...