Jerry and Patricia A. Dixon - Page 21




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          reckless or in bad faith.  See United States v. Associated                  
          Convalescent Enters. Inc., 766 F.2d 1342 (9th Cir. 1985); United            
          States v. Blodgett, 709 F.2d 608 (9th Cir. 1983); Barnd v. City             
          of Tacoma, 664 F.2d 1339, 1342-1343 (9th Cir. 1982).  But cf.               
          Reliance Ins. Co. v. Sweeney Corp., Maryland, 792 F.2d 1137, 1138           
          (D.C. Cir. 1986) (adopting a standard of "reckless indifference"            
          to the merits of a claim).                                                  
          In Oliveri v. Thompson, supra at 1272, the Court of Appeals                 
          for the Second Circuit likened the imposition of a sanction under           
          28 U.S.C. section 1927 to the imposition of an award under a                
          court's inherent power to regulate its own proceedings.  The                
          Court of Appeals identified the circumstances that might lead to            
          a finding of bad faith as follows:                                          
                    This bad-faith exception permitting an award of                   
               attorneys' fees is not restricted to cases where the                   
               action is filed in bad faith.  An inherent power award                 
               may be imposed either for commencing or for continuing                 
               an action in bad faith, vexatiously, wantonly, or for                  
               oppressive reasons.  "'[B]ad faith' may be found, not                  
               only in the actions that led to the lawsuit, but also                  
               in the conduct of the litigation." * * *                               
          Oliveri v. Thompson, supra at 1272 (citations omitted).                     
               Respondent concedes that Messrs. Sims and McWade engaged in            
          misconduct in the trial of the test cases.  We summarized the               
          Government misconduct in Dixon III as follows:                              
                    Messrs. Sims and McWade negotiated a series of                    
               contingent settlement agreements with Mr. DeCastro in                  
               respect of the Thompsons' tax liabilities in advance of                
               the trial of the test cases.  The final Thompson                       
               settlement agreement provided for a reduction in the                   





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