                                                                          FILED
                             NOT FOR PUBLICATION                           JAN 15 2016

                                                                       MOLLY C. DWYER, CLERK
                     UNITED STATES COURT OF APPEALS                      U.S. COURT OF APPEALS



                            FOR THE NINTH CIRCUIT

UNITED STATES OF AMERICA,                        No. 13-17039

               Plaintiff - Appellant,            D.C. No. 2:07-cv-01154-RCJ-VCF

THOMAS SELEY; STEVEN
WILLIAMS,                                        MEMORANDUM*

               Real-parties-in-interest -
Appellants,

 v.

ESTATE OF E. WAYNE HAGE;
WAYNE N. HAGE,

               Defendants - Appellees.


                    Appeal from the United States District Court
                             for the District of Nevada
                    Robert Clive Jones, District Judge, Presiding

  Argued and Submitted December 9, 2015, as to Appellants and Estate of Hage**
                          San Francisco, California

Before: GRABER, WARDLAW, and MURGUIA, Circuit Judges.

           *
         This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
      **
          The panel unanimously concludes that this case is suitable for decision
without oral argument as to Appellants and Wayne N. Hage. Fed. R. App. P.
34(a)(2).
      Real-parties-in-interest Thomas Seley and Steven Williams appeal the

district court’s order finding them in contempt of court. Reviewing for abuse of

discretion, Hilao v. Estate of Marcos, 103 F.3d 762, 764 (9th Cir. 1996), we

reverse.

      1. We have appellate jurisdiction. The district court’s order did not become

final and effective until the entry of final judgment in 2013, and Seley and

Williams filed a timely notice of appeal from that judgment. Moreover, even if the

contempt order became final before entry of final judgment on the merits, a pre-

judgment appeal is discretionary. Legal Voice v. Stormans Inc., 738 F.3d 1178,

1182–84 (9th Cir. 2013). Seley and Williams had the option of waiting until entry

of final judgment and appealing "to the same extent a party can appeal such an

order." Id. at 1184.

      2. The district court grossly abused the power of contempt. See Int’l Union,

United Mine Workers of Am. v. Bagwell, 512 U.S. 821, 831 (1994) ("[T]he

contempt power . . . uniquely is liable to abuse. . . . Contumacy often strikes at the

most vulnerable and human qualities of a judge’s temperament, and its fusion of

legislative, executive, and judicial powers summons forth the prospect of the most

tyrannical licentiousness." (citation, internal quotation marks, and ellipsis

omitted)). The two "underlying concern[s] that gave rise to the contempt power"


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are "the disruption of court proceedings" and "disobedience to the orders of the

Judiciary." Young v. United States ex rel. Vuitton et Fils S.A., 481 U.S. 787, 798

(1987). Neither is implicated here, because the court imposed contempt sanctions

in response to out-of-court conduct that did not contravene any court order; indeed,

no injunctive or other proscriptive orders had been granted.

      Although we acknowledge that extreme circumstances may warrant the use

of contempt for out-of-court conduct unrelated to a court order, we emphasize that,

"[b]ecause of their very potency, inherent powers must be exercised with restraint

and discretion." Chambers v. NASCO, Inc., 501 U.S. 32, 44 (1991). For example,

attempting to bribe a witness might warrant the use of contempt powers (as well as

criminal sanctions). As another example, the Supreme Court twice recognized—in

cases at least 80 years old that we have never had occasion to apply—that

contempt was appropriate when a party destroyed the subject matter of the

litigation, thus interfering with the court’s administration of justice. See Lamb v.

Cramer, 285 U.S. 217, 219 (1932) (finding that contempt proceedings might be

brought against a person whose "receipt and diversion of [certain] property, which

was then [legally considered in the possession of the court], tended to defeat any

decree which the court might ultimately make in the cause" (citations omitted));

Merrimack River Sav. Bank v. City of Clay Ctr., 219 U.S. 527, 533 (1911) (finding


                                          3
parties in contempt when they took actions that "did thus destroy the subject-matter

of the suit").

       The actions by Seley and Williams come nowhere near meeting the correct

legal standard for contempt. They took lawful actions, within the scope of their

statutory and regulatory obligations, that had no effect whatsoever on the case

before the court. Of primary importance, and contrary to the district court’s

understanding, the district court did not have jurisdiction over Defendants’ water

rights. As we hold in the main appeal, Defendants’ water rights were irrelevant to

this case. But even assuming that they were relevant, the government did not

destroy or significantly affect even a single water right. Nor did Seley and

Williams interfere in any way with a witness’ testimony to the court or otherwise

interfere with the court’s administration of justice.

       In sum, the district court’s findings of contempt applied the wrong legal

standard, and it is clear that Seley and Williams never contravened the proper legal

standard.

       REVERSED.




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