## Facts

- Joseph C. Steffan was a midshipman at the United States Naval Academy.
- An administrative board recommended discharge based solely on Steffan’s statements identifying himself as homosexual; he was not charged with homosexual conduct.
- Steffan resigned from the Academy in 1987 after the board’s recommendation.
- In 1988, Steffan sued federal officials, alleging constructive discharge and challenging the constitutionality of regulations permitting separation of admitted homosexuals.
- During discovery, the government sought to depose Steffan about whether he engaged in homosexual conduct during or after his time at the Academy.
- Steffan refused to answer, asserting Fifth Amendment privilege and arguing the questions were irrelevant because the separation was based only on his statements, not conduct.
- After warning Steffan, the district court dismissed the action under Federal Rule of Civil Procedure 37(b)(2) as a sanction for noncompliance with its discovery order.

## Issues

1. Whether the district court abused its discretion under Federal Rule of Civil Procedure 37 by dismissing the complaint for refusing to answer deposition questions about homosexual conduct.
2. Whether questions about Steffan’s alleged homosexual conduct were legally relevant to review of the administrative decision when the Academy acted solely on his admission of homosexual status.

## Decision

- The D.C. Circuit reversed the Rule 37 dismissal and remanded.
- The court held that Rule 37 sanctions cannot be upheld when based on an error of law.
- The court concluded the district court’s relevance determination was legally erroneous because judicial review of administrative action is confined to the grounds on which the agency relied.
- Because the Academy’s action rested solely on Steffan’s statements, discovery into alleged conduct improperly expanded the record and rationale beyond the agency’s stated basis.
- Steffan’s refusal to answer legally irrelevant questions could not support dismissal.

## Legal Principles

- A district court has broad discretion in selecting Rule 37 sanctions, but a sanction may not be upheld if predicated on an error of law.
- Judicial review of administrative action is limited to the grounds disclosed by the record as the basis for the agency’s decision; courts may not sustain or reframe agency action on alternative or hypothetical rationales.
- In challenges to agency action, discovery relevance is constrained by the proper scope of review; discovery cannot be used to develop facts aimed at justifying the agency decision on grounds the agency did not invoke.

## Conclusion

The court reinstated Steffan’s suit because the dismissal sanction rested on a legally mistaken view of relevance: when the administrative separation was based only on Steffan’s statements, compelled discovery into alleged conduct could not justify terminating the case under Rule 37.


Steffan v. Cheney, 920 F.2d 74 (D.C. Cir. 1990)