Societe Internationale pour Participations Industrielles et Commerciales, SA v. Rogers

Rule of Law:

Federal Rule of Civil Procedure 37 does not authorize a district court to dismiss a complaint with prejudice for a plaintiff's failure to comply with a production order when the failure is due to a good-faith inability to comply, rather than willfulness, bad faith, or fault. Such a dismissal for non-compliance beyond the party's control violates the Fifth Amendment's Due Process Clause.

Facts:

• During World War II, the U.S. government seized assets, including nearly all stock in the General Aniline & Film Corporation, believing they were owned by I.G. Farbenindustrie, a German enemy company.
• Societe Internationale (Interhandel), a Swiss holding company, sued for the return of the assets, claiming it was the true owner and, as a national of a neutral country, was entitled to their recovery under the Trading with the Enemy Act.
• The U.S. government alleged that Interhandel was merely a front for I.G. Farben and part of a conspiracy to hide German ownership of the assets to prevent wartime seizure.
• To prove this 'enemy taint,' the government sought access to the records of a private Swiss bank, Sturzenegger & Cie, which it alleged were under Interhandel's control.
• Interhandel asserted that producing these records was impossible because doing so would violate Swiss banking secrecy and economic espionage laws, exposing its employees to criminal prosecution.
• The Swiss government then issued an order 'confiscating' the bank records, which formally prohibited their disclosure to third parties while leaving them in the bank's physical possession.
• Despite the legal prohibition, Interhandel demonstrated good faith by making extensive efforts to comply, such as seeking waivers from bank customers, which resulted in the release of over 190,000 documents.

Procedural Posture:

• Societe Internationale sued the Attorney General in the U.S. District Court for the District of Columbia to recover seized assets.
• The government moved under FRCP 34 for a production order for Swiss banking records, which the District Court granted.
• When Societe Internationale failed to fully produce the records, the government moved to dismiss the complaint under FRCP 37(b) for non-compliance.
• A Special Master appointed by the court found that Societe Internationale had acted in good faith and its failure to produce was not due to collusion with the Swiss government.
• Despite the Master's findings, the District Court dismissed the complaint with prejudice.
• The U.S. Court of Appeals for the D.C. Circuit, as the intermediate appellate court, affirmed the dismissal, holding that the court had the authority to dismiss under FRCP 41(b) and its inherent power.
• The U.S. Supreme Court granted certiorari to review the appellate court's decision.