No Precise Linkage Between Harm and Compensatory Sanctions Required, Where Discovery Abuse Was Frequent Or Severe.
This next case is a reminder of how one must be candid in discovery, with contrary positions and obstructionist litigation tactics possibly leading to large monetary sanctions against both client and client’s attorneys (as well as non-monetary sanctions).
In Haeger v. The Goodyear Tire & Rubber Co., No. 12-17718 (9th Cir. July 20, 2015) (published), a district court found that Goodyear and two of its attorneys had engaged in egregious discovery abuses in a tire failure case, taking contrary positions to positions they had taken in other cases where sanctions were not involved—in essence, a “fraud on the court.” The district judge levied large monetary sanctions under “the inherent power of the court,” finding that traditional FRCP 37 remedies were not well applied because the discovery fraud was discovered after the case the settled. The district judge assessed compensatory, monetary sanctions of $548,246 against one Goodyear attorney and the same type of sanctions of a little shy of $2.2 million against Goodyear and another Goodyear attorney on a joint and several basis. The district judge also ordered that the sanctions order be filed in other tire failure cases to alert plaintiffs’ attorneys to what happened in this one.
The monetary and non-monetary sanctions were affirmed by the Ninth Circuit, in a 2-1 published decision.
The majority decision, authored by Circuit Judge Milan Smith and concurred with by Circuit Judge Wallace, decided the sanctions were appropriate and that no precise linkage was required between the harm and compensatory sanctions awarded where the sanctionable conduct was frequent and severe. They found that Chambers v. NASCO, Inc., 501 U.S. 32, 57 (1991) so found under “inherent power of the court” situations, with this authority “trumping” contrary Ninth Circuit authority (Miller). The district judge also properly reduced the lodestar fee requests as follows: 20% for recreation of time entries; $32,470 for vague time entries; $4,880.73 for lack of proper substantiation; $50,721 for clerical tasks; and $25,827.50 for excessive billing.
In a dissent, Circuit Judge Watford believed that such substantial compensatory sanctions had to satisfy heightened procedural protections relating to penal sanctions (which were not utilized and should lead to a reversal), although the majority found his supporting authorities distinguishable in nature.
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