Natural Gas Pipeline Company of America, et al., Plaintiffs,natural Gas Pipeline Company of America, Plaintiff-appellee, v. Energy Gathering, Inc., et al., Defendants,john Fox, Movant-appellant, 2 F.3d 1397 (5th Cir. 1993)

Appellant John Fox (Fox) is a Mississippi attorney who has been the longtime associate, legal counsel, and business partner of Navarro Crowson (Crowson), a judgment debtor who owes millions of dollars to appellees, whom he defrauded. Thus far, Crowson has largely foiled his creditors' efforts to recover their judgments by concealing his assets and withholding documents that would reveal their extent and location. When Fox was ordered to turn over all Crowson-related business or financial records, he persistently failed to do so. The district court then ordered Fox to produce his personal tax returns for the last several years. Fox refused and was ultimately held in civil contempt pending compliance. Fox appeals, and we reverse in part and remand.

Facts and Proceedings Below

Until his discharge in 1985, Crowson, a resident of Mississippi, was an employee of appellees Mitchell Energy and Development Corp. (Mitchell Energy), Southwestern Gas Pipeline, Inc. (Southwestern Gas), and Winnie Pipeline Co. (Winnie Pipeline). It is alleged that while so employed Crowson took bribes and kickbacks in connection with the negotiation of oil and gas contracts. Following a grand jury investigation, Crowson was indicted in federal court in Texas. Crowson's counsel in these criminal proceedings was Fox, an attorney and resident of Houston, Mississippi, who had represented and had extensive business dealings with Crowson since at least 1985. Crowson eventually pleaded guilty to several counts of mail fraud.

On September 14, 1988, appellees Texas Industrial Energy Co. (TICO), and South Gulf Energy, Inc. (South Gulf), sued Crowson in the United States District Court for the Southern District of Texas, Houston Division, to recover damages incurred as a result of the kickback scheme. Crowson having filed no answer, on June 21, 1991, appellees moved for a default judgment. On September 17, 1991, Fox entered an appearance in the litigation on behalf of Crowson to oppose the entry of judgment.¹  On September 23, 1991, default judgment was awarded to TICO and South Gulf for approximately $1.28 million.² 

Having obtained their judgment, appellees attempted to discover the extent and location of Crowson's assets. Interrogatories and requests for production of documents were served upon Fox as Crowson's attorney of record. However, no answers or responsive documents were supplied. On January 15, 1992, the court ordered Crowson to respond to appellees' discovery requests. This order, too, was ignored. Finally, on June 8, 1992, the court held a show cause hearing at which Crowson was judged to be in contempt for failing to comply with post-judgment discovery and was incarcerated.

To gain release from contempt, on June 15, 1992, Crowson signed, and the court approved, an "Agreed Order," in which Crowson pledged to produce all of his financial and business records.³  The Agreed Order also "authorize [d]" third parties to release such records. Finally, the Agreed Order provided that Crowson would be reincarcerated in the event that he failed to comply with its terms or to cooperate fully with post-judgment discovery. Crowson, however, evidently had no intention of complying with the Agreed Order and quickly began to violate it. The record indicates that sometime after his release, Crowson removed financial records from his accountant's files. In response, TICO and South Gulf applied for an ex parte order requiring the turnover of Crowson's assets and documents. On July 14, 1992, the court ordered Crowson, his agents and attorneys, to turn over all of his assets to the United States Marshal Service.⁴  On July 21, 1992, the court held a hearing to determine whether to revoke Crowson's conditional release from contempt for violating the Agreed Order. At the hearing, the court ordered Crowson to produce all of his financial records and to direct his agents to do the same by August 18, 1992.⁵  The court did not, however, have Crowson reincarcerated. Rather than complying with the various court orders requiring him to surrender his assets, Crowson repaired to Mississippi where he filed for bankruptcy and voluntarily committed himself to a mental hospital. Seeing through this ruse, the court ordered that Crowson be reincarcerated.

At the same time that Crowson was engaged in this abuse of the discovery process, appellees were meeting with little more success with Fox. On June 18, 1992, TICO and South Gulf representatives, accompanied by a United States Marshal, had the Agreed Order served upon Fox in his office in Houston, Mississippi. Fox, however, denied being in possession of any of Crowson's requested records and produced nothing. On July 7, 1992, appellees and a marshal returned to Fox's office. Fox again denied being in possession of any documents responsive to the Agreed Order.⁶ 

Subsequently, appellees discovered that Fox was the trustee of a trust, established in 1990 by Crowson, known as the Crowson Children's 1990 Trust (the Children's Trust). On September 14, 1992, the court ordered Fox to turn over all of the trust's assets, all documents related to the trust, and all assets in his possession belonging to Crowson (the Trust Order).⁷  Fox responded to this order by filing an adversary proceeding in Crowson's bankruptcy action seeking a declaratory judgment that the Trust Order was null and void. The bankruptcy was subsequently transferred to the court below and dismissed.

On January 21, 1993, the court on its own motion ordered Fox to file a pleading clearly designating his capacity in the instant litigation. On February 5, 1993, Fox responded that he was not a party to the action and that, although he had made a brief appearance on Crowson's behalf in September 1991, he had since been replaced as Crowson's counsel by Bobby Mims, an attorney licensed in Texas.⁸  Unconvinced, the district ruled that Fox's response was "inadequate" and that he "remains attorney of record for Navarro Crowson in this action."

On February 8, 1993, appellees filed a motion for sanctions against Fox, who was ordered to appear and show cause why he should not be sanctioned for failing to produce the Crowson records pursuant to the Agreed Order and for failing to turn over the assets of the Children's Trust pursuant to the Trust Order. The show cause hearing was held on March 15, 1993. At the hearing, appellees sought to expose the implausibility of Fox's earlier assertion that he had no documents responsive to the Agreed Order by informing the court, on the basis of evidence obtained in this case in discovery from other sources, of Fox's extensive business dealings with Crowson. It was revealed, for example, that: the two maintained a joint account at a brokerage firm and had actively traded stocks together as Fox-Crowson Investments; that the two shared an interest in a condominium in Crested Butte, Colorado; and that Crowson had assigned to Fox a natural gas pipeline in Jefferson County, Texas.⁹  The court also heard testimony about Fox's activities as Crowson's attorney. Not only had Fox prepared the Children's Trust, but he had been Crowson's lawyer in a divorce settlement within the last few years.¹⁰  The evidence revealed that Fox's roles as attorney and business partner overlapped. For instance, Fox testified that Crowson had assigned him the gas pipeline as compensation for legal services, but that he (Fox) had forgotten about it.

It appears that this showing of Fox's deep involvement with Crowson as the latter's attorney and business partner convinced the court below of several things: that an agency relationship existed between Fox and Crowson;¹¹  that documents relating to their joint ventures must surely exist;¹²  that the disclosure of these documents would aid in the location of Crowson's assets;¹³  and, finally, that Fox had purposefully withheld documents from the court.¹⁴  Accordingly, the court ordered Fox to produce every document in his possession relating to Crowson or business he had done with Crowson. The court in this connection also required Fox to produce all of his own personal tax returns and schedules from 1984 to the present.¹⁵  The court commented in this regard:

"Your personal tax returns reflect income from Mr. Crowson, partnerships with Mr. Crowson, and I don't know what else.

"But Mr. Zivley [appellees' counsel] is going to know what else, because your tax returns show the treatment of property given to or received from Mr. Crowson........

"He is going to get your tax returns that show all the deals, so he can satisfy himself that there are not some other things that you don't recall, like this gas contract."

The court ordered that the motion for sanctions against Fox be carried over until April 12, 1993, at which time, if Fox had not complied with the court's order, he would be held in contempt.

Fox sought a stay from this Court. On April 8, 1993, we denied his motion on the ground that we lacked appellate jurisdiction.¹⁶  On April 12, 1993, Fox filed a motion to withdraw as Crowson's counsel. The court had not ruled on this motion as of the preparation of the record on appeal.

On April 13, 1993, the show cause hearing resumed. As of that time, Fox still had not produced any of the documents required of him. At the hearing, Fox initially agreed to turn over every record in his possession pertaining to Crowson, including his personal tax returns. After conferring with counsel, however, Fox recanted and declared that he would not produce his tax returns, at which point he was held in civil contempt. On April 15, 1993, we granted Fox a stay of the coercive portions of the order. Fox now appeals the court's judgment of contempt.¹⁷ 

Discussion

On appeal, Fox primarily argues that the contempt judgment against him must be reversed because the court below had no authority under the Federal Rules of Civil Procedure to order him to produce his tax returns. Because this order was invalid, Fox maintains, its violation cannot constitute grounds for contempt.

Fox argues that, because he is a non-party and because the documents at issue are located in Mississippi, Federal Rules 34 and 45 require that a subpoena for their production issue from a federal district court in Mississippi. Our inquiry must begin, however, not with Rule 34 or Rule 45, but with Rule 69, which governs the procedure for post-judgment discovery in federal courts. Rule 69 provides in relevant part as follows:

"In aid of the judgment or execution, the judgment creditor ... may obtain discovery from any person, including the judgment debtor, in the manner provided in these rules or in the manner provided by the practice of the state in which the district court is held." Fed. R. Civ. P. 69(a).

Thus, Rule 69 allows post-judgment discovery to proceed according to the federal rules governing pre-trial discovery, or according to state practice.

Although Texas Civil Practice & Remedies Code Sec. 31.002 has been construed to authorize turnover orders directed to third parties (see note 4 supra), the turnover contemplated thereby is only of property of the debtor and related records. Rule 621a of the Texas Rules of Civil Procedure, like Federal Rule 69, makes post-judgment discovery coextensive with pre-trial discovery.¹⁸  Texas Rule of Civil Procedure 167(4), which governs the pre-trial production of documents by non-parties, provides, among other things, that a court may order a non-party to produce documents.¹⁹  As stated below, we conclude that Texas practice only partially justifies the court's orders as applied to Fox. However, we first consider the federal rules and practice.

Fox's primary contention is that the court's order was not in keeping with Federal Rules 34 and 45. Rule 34 provides as follows:

"A person not a party to the action may be compelled to produce documents and things or to submit to an inspection as provided in Rule 45." Fed. R. Civ. P. 34(c).

Thus, under Rule 34 a non-party may be compelled to produce documents in accord with Rule 45. That rule, which governs the issuance of subpoenas, contains the following key sentence:

"If separate from a subpoena commanding the attendance of a person, a subpoena for production or inspection shall issue from the court for the district in which the production or inspection is to be made." Fed. R. Civ. P. 45(a) (2).

Relying on this text, Fox argues that a district court in Texas cannot order him to produce his tax returns, which are located in Mississippi.

We agree with Fox that a federal court sitting in one district cannot issue a subpoena duces tecum to a non-party for the production of documents located in another district. Cf. In re Guthrie, 733 F.2d 634, 637 (4th Cir. 1984). The fact that the court could not subpoena Fox's records under Rule 45, however, does not necessarily compel Fox's conclusion that the order at issue was invalid. After all, no subpoena was issued in this case; instead, the district court issued a direct order to Fox to produce his tax returns. At the end of the day, Fox's argument merely establishes that the court's order must be justified with reference to something other than Federal Rules 34 and 45. Appellees contend that the court order was a permissible exercise of the inherent power with which all federal courts are vested.

For nearly as long as the federal courts have existed, it has been understood that " [c]ertain implied powers must necessarily result to our courts of justice from the nature of their institution," powers "which cannot be dispensed with in a court because they are necessary to the exercise of all others." United States v. Hudson, 7 Cranch 32, 34, 3 L. Ed. 259 (1812). See also Anderson v. Dunn, 6 Wheat. 204, 227, 5 L. Ed. 242 (1821). The Constitution itself confers this authority upon all Article III courts as an incident to "The judicial Power." U.S. Const., Art. III, Sec. 1; see Chambers v. NASCO, Inc., --- U.S. ----, ----, 111 S. Ct. 2123, 2140, 115 L. Ed. 2d 27 (1991) (Scalia, J., dissenting); 1 J. Moore, Moore's Federal Practice p 0.60, at 637 (2d ed. 1988). The inherent powers of the federal courts are "governed not by rule or statute but by the control necessarily vested in courts to manage their own affairs so as to achieve the orderly and expeditious disposition of cases." Link v. Wabash R. Co., 370 U.S. 626, 630, 82 S. Ct. 1386, 1389, 8 L. Ed. 2d 734 (1962). At the same time, however, these powers must be exercised "with restraint and discretion." Roadway Express, Inc. v. Piper, 447 U.S. 752, 764, 100 S. Ct. 2455, 2463, 65 L. Ed. 2d 488 (1980). As we have said, inherent authority "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." NASCO, Inc. v. Calcasieu Television & Radio, Inc., 894 F.2d 696, 702 (5th Cir. 1990), quoted with approval and aff'd, --- U.S. ----, ----, 111 S. Ct. 2123, 2131, 115 L. Ed. 2d 27 (1991). In short, the inherent power springs from the well of necessity, and sparingly so.

Fox in essence argues that the Federal Rules of Civil Procedure completely describe the federal courts' power over civil procedure, displacing any inherent authority in this area. We cannot agree. As Judge Posner remarked concerning the relationship of inherent powers to positive law: "The motto of the Prussian state--that everything which is not permitted is forbidden--is not a helpful guide." United States v. Torres, 751 F.2d 875, 880 (7th Cir. 1984). A long line of cases establishes that the Rules are not always the exclusive source of a federal court's powers in civil cases. In Link v. Wabash, supra, the Supreme Court held that a district court has inherent power to dismiss a case sua sponte for failure to prosecute, even though Federal Rule 41(b) only provides for such dismissal on a defendant's motion. 370 U.S. at 629-32, 82 S. Ct. at 1388-89. In Chambers v. NASCO, supra, the Court held that the inherent power to impose sanctions for bad-faith conduct during litigation was not displaced by, and went beyond, such sanctioning mechanisms as Rule 11 and 28 U.S.C. § 1927. --- U.S. at ----, 111 S. Ct. at 2134-36. Supportive cases can also be found among the decisions of the courts of appeals. In G. Heileman Brewing Co. v. Joseph Oat Corp., 871 F.2d 648, 650-53 (7th Cir. 1989) (en banc), the court held that a district court has inherent power to order litigants to appear at a pre-trial settlement conference despite the fact that Rule 16(a) provides only that a court may direct a party's attorneys to attend such a conference. The court stated:

" [T]he Federal Rules of Civil Procedure do not completely describe and limit the power of the federal courts....

"The concept that district courts exercise procedural authority outside the explicit language of the rules of civil procedure is not frequently documented, but valid nevertheless....

. . . . .

"... [T]he mere absence of language in the federal rules specifically authorizing or describing a particular judicial procedure should not, and does not, give rise to a negative implication of prohibition." Id. at 651, 652.

For similar statements, see, e.g., Aoude v. Mobil Oil Corp., 892 F.2d 1115, 1119 (1st Cir. 1989); Landau & Cleary, Ltd. v. Hribar Trucking, Inc., 867 F.2d 996, 1002 (7th Cir. 1989); HMG Property Investors, Inc. v. Parque Indus. Rio Canas, Inc., 847 F.2d 908, 915 (1st Cir. 1988); Black Panther Party v. Smith, 661 F.2d 1243, 1281 & n. 4 (D.C. Cir. 1981) (MacKinnon, J., concurring in part and dissenting in part), vacated as moot, 458 U.S. 1118, 102 S. Ct. 3505, 73 L. Ed. 2d 1381 (1982).²⁰ 

We note, however, that although a court may have inherent power to do that which is not specifically provided for in the Rules, it may not do that which the Rules plainly forbid. Congress has the power to abrogate a lower court's inherent authority, although it must adequately express its intent to do so. See Chambers, --- U.S. at ----, 111 S. Ct. at 2134; Link, 370 U.S. at 630-31, 82 S. Ct. at 1389. Where such an expression has been made, a court "may not exercise its inherent authority in a manner inconsistent with rule or statute." G. Heileman Brewing, 871 F.2d at 652. "That is, where the rules directly mandate a specific procedure to the exclusion of others, inherent authority is proscribed." Landau & Cleary, 867 F.2d at 1002. See also United States v. One 1987 BMW 325, 985 F.2d 655, 661 (1st Cir. 1993); Strandell v. Jackson County, 838 F.2d 884, 886 (7th Cir. 1987).²¹ 

Here, the court's order was not in violation of the relevant rules because those rules, as was the case with Rule 41(b) in Link, contain only "permissive language." Link, 370 U.S. at 630, 82 S. Ct. at 1388. Rule 69(a) provides that post-judgment discovery "may" be obtained in the manner provided in the Rules. Similarly, Rule 34(c) provides that a non-party "may" be compelled to produce documents per the terms of Rule 45. In sum, Rule 69(a) and Rule 34(c) do not purport to define the sole means of obtaining post-judgment document discovery or production from a non-party.

Having concluded that the Rules of Civil Procedure do not foreclose the possibility that the court's orders might be justified as an exercise of inherent power, we now turn to whether the court in fact had such power. We first consider whether the order fell within the ambit of those inherent powers possessed by the courts to conduct discovery not recognized by rule or statute. In the civil²²  context, for example, it has been held (or stated in dicta) that courts have inherent power to issue such discovery orders as are necessary for a court to determine and rule upon its own jurisdiction,²³  to permit the taking and filing of post-trial depositions,²⁴  to subpoena witnesses for indigent civil litigants who cannot tender fees,²⁵  to issue letters rogatory to foreign courts,²⁶  and to order some forms of discovery in extradition,²⁷  forfeiture,²⁸  and habeas corpus²⁹  proceedings.³⁰ 

We decline today to add to this list a broad, general power to order non-parties beyond the forum district to produce documents.³¹  "Because inherent powers are shielded from direct democratic controls, they must be exercised with restraint and discretion." Roadway Express, 447 U.S. at 764-65, 100 S. Ct. at 2463. Accordingly, an argument for the existence of such a power must be grounded on more than mere judicial convenience. We have said that the inherent power "doctrine is rooted in the notion that a federal court, sitting in equity, possesses all of the common law equity tools of a Chancery Court (subject, of course, to congressional limitation) to process litigation to a just and equitable conclusion." ITT Community Development Corp. v. Barton, 569 F.2d 1351, 1359 (5th Cir. 1978) (citing Ex parte Peterson, 253 U.S. 300, 40 S. Ct. 543, 64 L. Ed. 919 (1920)).³²  One such chancery tool was the bill of discovery, which has been called the forerunner of all modern discovery procedures. See Hickman v. Taylor, 329 U.S. 495, 514, 67 S. Ct. 385, 395, 91 L. Ed. 451 (1947) (Jackson, J., concurring). Potent as it was, however, the bill of discovery could not be used to obtain documents (or other discovery) from someone who was not a party. See 6 J. Wigmore, Evidence Sec. 1859f, at 594-95 (J. Chadbourn rev. ed. 1976); id. Sec. 1856d, at 562 & n. 1 (citations); G. Ragland, Discovery Before Trial 16 (1932); Welling, Discovery of Nonparties' Tangible Things Under the Federal Rules of Civil Procedure, 59 Notre Dame L.Rev. 110, 134 & n. 125 (1983); Crew v. Saunders, 2 Str. 1005 (1735). Thus, although federal courts are vested with certain inherent discovery powers owing to the equitable power of Chancery courts to issue bills of discovery,³³  we conclude that there is no broad, general inherent power to order a non-party beyond the district to produce documents.³⁴ 

However, here, as the district court noted, "Fox is not a third party," but was rather Crowson's attorney of record in this very case, as well as his agent and attorney in other respects. See also note 11 supra. In these circumstances, we hold that Texas practice and the court's inherent powers combined to authorize the court to require Fox to turn over Crowson-related records, as specified in the June 15 Agreed Order. Fox argues that the Agreed Order only "authorizes" third parties to turn over Crowson's documents, but does not require them to do so. This was plainly not the plaintiffs' or the district court's understanding of the Agreed Order, as it applied to Fox. Crowson himself had testified at the July 21, 1992, hearing that, following the entry of the Agreed Order, "I called Mr. Fox the very first thing, and I told Mr. Fox that, as far as I was concerned, he needed to release any files that he had." In any event, the district court subsequently made fully clear to Fox at the March 15, 1993, hearing that he was required to turn over all of Crowson's records responsive to the Agreed Order.³⁵  Moreover, we conclude that the combined authority of Texas Civil Practice & Remedies Code Sec. 31.002 (note 4 supra) and Texas Rule 167(4) (note 19 supra) empowered the court to so order Fox, and that, as applied to Fox, after March 15, 1993, any failure to comply with all the procedural requirements of those provisions was not substantially prejudicial.

These considerations, however, do not suffice to sustain the district court's order that Fox produce his personal tax returns. This order, unlike the requirement that Fox produce Crowson's records, had never been requested by any of the parties and was ordered by the district court entirely sua sponte. For this reason, it is not within Texas Rule 167(4). Fox's own tax returns are not sufficiently related to his dealings with Crowson and thus, for the purposes of an order for their discovery, Fox would stand in the shoes of a non-party. The order is therefore not within section 31.002, which applies only to the debtor's property and records.

The district court may have ordered Fox to produce his tax returns as a sanction for refusing to comply with discovery orders. If possible and within reason, we will construe the district court's actions in a favorable (that is to say permissible) light. We review a court's imposition of sanctions for abuse of discretion. Chambers v. NASCO, Inc., --- U.S. ----, ----, 111 S. Ct. 2123, 2138, 115 L. Ed. 2d 27 (1991).

A review of the record persuades us that Fox's evasiveness and intransigence justified sanctions. The district judge found that Fox had disobeyed three separate turnover orders, two of which were entered before the March 15, 1993, order to Fox to produce his personal tax returns. The March 15, 1993, and April 13, 1993, hearings were noticed so as to include sanctions for failure to comply with the prior orders, including the Agreed Order of June 15, 1992. As previously noted, at least by the March 15, 1993, hearing, it was made plain to Fox by the court that the Agreed Order required him to turn over Crowson's records. At the April 13, 1993, hearing, Fox admitted that he still had not done this. Fox's failure to produce Crowson's records was a violation of the court's orders and of his duties as Crowson's attorney. Fox's motion to withdraw as counsel, filed on April 12, 1993, the day before he was held in contempt, has not been granted by the court below and is too little too late.³⁶  Fox remains an officer of the court until he is discharged or the litigation comes to an end. It is clear that the district court was justified in concluding that Fox had been evasive³⁷  and that, without some sanction, he could not be relied on to produce all the records of his extensive financial relationship with Crowson. Based on Fox's status as Crowson's agent, as well as the unique position he occupied as Crowson's attorney, the trial court had reasonable grounds to sanction Fox for his failure to comply with the post-judgment discovery and turnover orders related to the Crowson documents and assets.

When parties or their attorneys engage in bad faith conduct, a court should ordinarily rely on the Federal Rules as the basis for sanctions. Chambers, --- U.S. at ----, 111 S. Ct. at 2136. The Federal Rules do not explicitly provide an avenue to sanction attorneys who fail to comply with discovery orders. Rule 37(b) (2) is clearly directed to party failure to obey discovery orders, not attorney failure, although the attorney is subject to sanctions for obstructive advice.³⁸  There is, however, no finding of such advice by Fox. Furthermore, Fox had signed no objectionable court papers or discovery objections that might give rise to Rule 11 or Rule 26(g) sanctions. We find no sanction under the Federal Rules directly applicable to Fox's misconduct.

It was therefore proper for the district judge to resort to his inherent powers to discipline Fox's intransigence and complicity in his client's scandalous behavior. The inherent power to sanction bad faith conduct must extend to reach individuals and conduct not directly addressed by other mechanisms. Chambers, --- U.S. at ----, 111 S. Ct. at 2134. Although it is unclear whether the inherent power to sanction discovery abuses extends to abuses committed by non-parties,³⁹  there is no doubt that this power may be applied to attorneys in the case. "The inherent power of a court to manage its affairs necessarily includes the authority to impose reasonable and appropriate sanctions upon errant lawyers practicing before it." Flaksa v. Little River Marine Constr. Co., 389 F.2d 885, 888 n. 10 (5th Cir.), cert. denied, 392 U.S. 928, 88 S. Ct. 2287, 20 L. Ed. 2d 1387 (1968), cited with approval in Roadway Express, 447 U.S. at 766 n. 12, 100 S. Ct. at 2464 n. 12; see also Roadway Express, 447 U.S. at 766, 100 S. Ct. at 2464 ("The power of a court over members of its bar is at least as great as its authority over litigants.").

Although it was proper to invoke inherent powers to sanction Fox, the district judge abused his discretion by ordering Fox to produce his personal tax returns and schedules. See Chambers, --- U.S. at ----, 111 S. Ct. at 2132 (because of their potency, inherent powers must be exercised with restraint and discretion). Income tax returns are highly sensitive documents; courts are reluctant to order their routine disclosure as a part of discovery. SEC v. Cymaticolor, 106 F.R.D. 545, 547 (S.D.N.Y. 1985) (disclosure of tax returns for purposes of discovery ordinarily demands that the requesting party demonstrate relevancy and compelling need). Not only are the taxpayer's privacy concerns at stake, but unanticipated disclosure also threatens the effective administration of our federal tax laws given the self-reporting, self-assessing character of the income tax system. Commodity Futures Trading Commission v. Collins, 997 F.2d 1230, 1233 (7th Cir. 1993).

The intrusive nature of the sanction is compounded by its novelty. Although novel sanctions are not objectionable per se, they are subject to close examination on review simply because their reasonableness has not been demonstrated.

Several factors contribute to the order's unreasonableness. The district judge ordered Fox to produce his tax returns sua sponte. The judgment creditors had never included them in their discovery requests, a fact that suggests that the returns were believed inaccessible or irrelevant for the creditors' purposes. No evidence came to light in the sanction hearings that proved the particular usefulness of Fox's tax returns to indicate Crowson's financial position. The court engaged in a fishing expedition. Fox could not have anticipated that his conduct would result in such a sanction.

Further, the judge's order neither provided Fox with the opportunity to expunge sensitive or irrelevant portions of his returns before exposing them to opposing counsel, nor did it permit a review of the record in camera to protect their privacy. Even with such protections, however, a sanction that penalizes errant lawyers by demanding their personal tax returns risks untoward consequences. The threat of sanctions in the form of forced disgorgement of private information subjects uncooperative attorneys to judicial bludgeoning and humiliation above and beyond the consequences of a monetary order or an order directly related to the court proceedings.

The ultimate touchstone of inherent powers is necessity. Given the post-judgment posture of this case, the scandalous behavior of Crowson, and the evident complicity of Fox, his attorney, in the case, we concur that sanctions should have been imposed on Fox. Necessity did not, however, compel a sua sponte order to produce Fox's personal tax returns. Traditional sanctions--perhaps a monetary penalty that increased each day for Fox's noncompliance with the other post-judgment discovery orders--would have accomplished the court's purpose more properly.⁴⁰ 

Conclusion

For these reasons, the portion of the district court's order of March 15, 1993, directing Fox to turn over his personal tax returns (and the schedules thereto) for the years 1984 to the present is reversed, and, likewise, so much of the Civil Contempt Judgment signed April 14, 1993, as finds Fox in contempt for failing to turn over his said personal tax returns (and schedules), and as imposes confinement or other coercion until he does so, is also reversed. We find no fault with the balance of the March 15, 1993, order. We remand the balance of the April 14, 1993, Civil Contempt Judgment for reconsideration in light of our ruling as to Fox's personal tax returns.⁴¹ 

REVERSED in part and REMANDED.