Article III, Section 1:
The judicial Power of the United States, shall be vested in one supreme Court, and in such inferior Courts as the Congress may from time to time ordain and establish. The Judges, both of the supreme and inferior Courts, shall hold their Offices during good Behaviour, and shall, at stated Times, receive for their Services, a Compensation, which shall not be diminished during their Continuance in Office.
Long recognized by the courts as inherent powers are those authorities that are necessary to the administration of the judicial system itself, of which the contempt power just discussed is only the most controversial. 1 Courts, as elements of an independent and coequal branch of government, once they are created and their jurisdiction established, have the authority to do what courts have traditionally done in order to accomplish their assigned tasks. 2 Of course, these inherent powers may be limited by statutes and by rules, 3 but, just as noted above in the discussion of the same issue with respect to contempt, the Court asserts both the power to act in areas not covered by statutes and rules and the power to act unless Congress has not only provided regulation of the exercise of the power, but also has unmistakably enunciated its intention to limit the courts' inherent powers. 4
Thus, in Chambers v. NASCO, Inc., the Court upheld the imposition of monetary sanctions against a litigant and his attorney for bad-faith litigation conduct in a diversity case. Some of the conduct was covered by a federal statute and several sanction provisions of the Federal Rules of Civil Procedure, but some was not, and the Court held that, absent a showing that Congress had intended to limit the courts, they could use their inherent powers to impose sanctions for the entire course of conduct, including shifting attorneys' fees, which is ordinarily against the common-law American rule. 5 Nonetheless, the Court has clarified that because a court's order directing a sanctioned litigant to reimburse the legal fees and costs incurred by the wronged party as a result of bad faith conduct is compensatory, rather than punitive, in nature, a fee award may go no further than to redress the wronged party
for losses sustained. 6 In another case, a party failed to comply with discovery orders and a court order concerning a schedule for filing briefs. The Supreme Court held that the attorneys' fees statute did not allow assessment of such fees in that situation, but it remanded for consideration of sanctions under both a Federal Rule of Civil Procedure and the trial court's inherent powers, subject to a finding of bad faith. 7 But bad faith is not always required for the exercise of some inherent powers. Thus, courts may dismiss an action for an unexplained failure of the moving party to prosecute it. 8