Undisclosed Expert Opinion Survives Rule 37 Motion


The case, Centrella v. Ritz-Craft Corporation, 16-729- cv, decided by the Second Circuit on November 5, 2019 (unpublished) allowed a party to present an undisclosed opinion of its expert at trial despite a motion to exclude that opinion. The district court took active measures to allow the other side to cross-examine and rebut the opinion. The Second Circuit affirmed the judgment.

Ritz-Craft argues that the district court erred by permitting the Centrellas’ expert, James Bradley, to testify regarding an opinion that Bradley did not include in his expert report. The district court responded to Bradley’s undisclosed testimony by permitting Ritz-Craft to cross-examine Bradley on his undisclosed testimony and allowing Ritz-Craft’s expert to rebut Bradley’s undisclosed testimony.

Federal Rule of Civil Procedure 37 permits the court to sanction a party that fails to make the disclosures that Federal Rule of Civil Procedure 26 requires. Fed. R. Civ. P. 37(c)(1). “A district court has wide discretion to impose sanctions, including severe sanctions, under Federal Rule of Civil Procedure 37, and its ruling will be reversed only if it constitutes an abuse of discretion.” Design Strategy, Inc. v. Davis, 469 F.3d 284, 294 (2d Cir. 2006). We consider four factors to determine whether the district court’s Rule 37 sanctions in this case were an abuse of discretion: “(1) the party’s explanation for the failure to comply with the disclosure requirement; (2) the importance of the testimony . . .; (3) the prejudice suffered by the opposing party as a result of having to prepare to meet the new testimony; and (4) the possibility of a continuance.” Patterson v. Balsamico, 440 F.3d 104, 117 (2d Cir. 2006) (alteration omitted) (internal quotation marks omitted). The Centrellas have not offered any explanation for their failure to disclose Bradley’s opinion prior to his testimony, and the testimony, an expert’s opinion that Ritz-Craft modular homes could not meet Vermont energy code because of a design flaw, was certainly important to the case. These factors support a strong sanction. However, Ritz-Craft agrees in its brief on appeal that the trial court’s “effort[] in permitting Ritz-Craft’s experts to testify on this issue was sufficient to cure any error,” Appellant’s Br. at 30, and there is no indication that Ritz-Craft sought a continuance to meet the testimony. Given these considerations, the district court acted within its substantial discretion by permitting Ritz-Craft to cross-examine Bradley on his undisclosed testimony and permitting Ritz-Craft’s expert to offer an opinion in response.

This is an interesting opinion, which cannot be cited because it was unpublished. It does offer a pathway for a lawyer who mistakenly omits an opinion to correct that error at trial.

Ed Clinton, Jr.

http://www.clintonlaw.net

You Gotta Warn Em First


In Smith v. Fischer, 13-cv-6127 (September 30, 2019), the defendant moved for Rule 37 sanctions – specifically dismissal when the plaintiff did not comply with discovery requests.

The result – motion denied because the court had not given the plaintiff a warning.

Under Rule 37(b), a court may dismiss a case or impose other sanctions if a party does not obey an order to provide or permit discovery. Residential Funding Corp. v. DeGeorge Fin. Corp., 306 F.3d 99, 106-07 (2d Cir. 2002). In evaluating whether to dismiss a case for this reason, a court considers: “1) the willfulness of the non-compliant party or the reason for noncompliance; 2) the duration of the period of non-compliance; 3) whether the non-compliant party had been warned of the consequences of noncompliance; and 4) the efficacy of lesser sanctions.” Ferrer v. Fischer, No. 9:13-CV-0031 NAM/ATB, 2014 WL 5859139, at *2 (N.D.N.Y. Nov. 12, 2014) (citation omitted). Dismissal is a “harsh remedy” to be used “only in extreme situations.” Id. (citation omitted).

The Court declines to analyze each factor here because it finds that the third factor precludes dismissal; that is, Plaintiff has not been warned that his non-compliance with Defendants’ discovery demands could result in the dismissal of his case. The Second Circuit has repeatedly affirmed that courts may not dismiss a pro selitigant’s case under Rule 37 without warning him of the consequences of not complying with discovery obligations. See, e.g., S.E.C. v. Setteducate, 419 F. App’x 23, 24 (2d Cir. 2011) (“[e]ven the most severe Rule 37 sanctions may be imposed even against a plaintiff who is proceeding pro se, so long as a warning has been given that noncompliance can result in a sanction”) (quotation marks omitted and emphasis added) (summary order); Agiwal v. Mid Island Mortg. Corp.,555 F.3d 298, 302 (2d Cir. 2009) (same).

Consistent with this settled authority, courts routinely deny motions to dismiss based on a pro se litigant’s non-compliance with discovery orders where the litigant had not been warned in advance that his non-compliance could result in dismissal. See, e.g., Velazquez v. Vermont Dep’t of Corr., No. 2:07 CV 244, 2009 WL 819445, *2 (D. Vt. 2009) (declining to order dismissal where pro se plaintiff did not appear for a deposition or respond to written discovery requests but “ha[d] not yet been warned that his failure to participate in discovery might result in the dismissal of his case”); Burke v. Miron, No. 3:07CV1181(RNC), 2009 WL 952097, *1 (D. Conn. 2009) (declining to dismiss the pro se plaintiff’s case for non-compliance with discovery, even though he was “a prolific and experienced litigator” because “Second Circuit precedent require[es] a clear warning to pro selitigants” that their case may be dismissed). Accordingly, the Court denies Defendants’ motion to dismiss this case.

Comment: A warning is required before you can move for dismissal.

Edward X. Clinton, Jr.

Don’t Sue the Court Reporter


In Karageorge v. Urlacher, 18 C 3146 (ND IL) the plaintiff was engaged in state court litigation with the father of her child. She then filed a federal lawsuit against Urlacher, his lawyers and the court reporter. She alleged that the court reporter had altered a transcript. Karageorge was pro se, but the district court dismissed the case and granted the court reporter’s motion for Rule 11 sanctions.

It is completely understandable that the child custody proceedings were extremely upsetting to Karageorge. But even considering her pro se status, Karageorge’s distress in connection with those proceedings did not give her license to file a lawsuit making factually dubious and legally unsupportable allegations against a court reporter, forcing her to spend time and money fighting the suit. As the court explained in its dismissal order, Karageorge’s legal theories against Miyuskovich were clearly meritless, Doc. 49 at 2; in fact, Karageorge did not even bother to defend them. Karageorge’s factual allegations against Miyuskovich were neither tested nor debunked in discovery or at summary judgment or trial, but that is only because this case did not make it past the pleading stage. On their face, Karageorge’s factual allegations were extraordinarily farfetched, and given the chance to present supporting evidence in her response to Miyuskovich’s sanctions motion, Karageorge presented none, confirming that they were groundless. Under these circumstances, Rule 11 sanctions are warranted. See Fed. R. Civ. P. 11(b)(2)-(3); Bell v. Vacuforce, LLC, 908 F.3d 1075, 1080-81 (7th Cir. 2018) (affirming sanctions against a party that sought relief based on an “infirm factual foundation”) (internal quotation marks omitted);

Edward X. Clinton, Jr.

Rule 37 Dismissal Sanction Unavailable In Absence of A Court Order Compelling Discovery


The case of King v. Harwood, 15-cv-762 WD Kentucky September 30, 2019 presents an interesting question – can a defendant obtain dismissal of a case where the plaintiff refuses to answer questions in her deposition? Here the court answered this question with a “No.”

King brought a civil rights case against Harwood after she was exonerated of a murder. During her deposition, King refused (on Fifth Amendment grounds) to answer certain questions concerning bullet holes in her floor. The Defendant moved under Rule 37 for the dismissal of the case because King did not answer those questions.

The Magistrate and the District Judge rejected the Rule 37 motion because Harwood never moved to compel. Because he did not move to compel, there was no court order requiring King to answer the questions. Because she did not violate a court order, the Rule 37 sanction of dismissal was not available.

Fed. R. Civ. P. 37(b) provides that if a party “fails to obey an order to provide or permit discovery, including an order under Rule 26(f), 25, or 37(a), the court where the action is pending may issue further just orders.” Fed. R. Civ. P. 37(b)(2)(A). Such “just orders” may include “dismissing the action or proceeding in whole or in part.” Id. at 37(b)(2)(A)(v). However, the Sixth Circuit has stated that “[b]y its terms, Rule 37(b) requires a party seeking a sanction of default against a party to secure a court order compelling disclosure or discovery.” Burley v. Gagacki, 729 F.3d 610, 618 (6th Cir. 2013). In Burley, the Sixth Circuit affirmed the district court’s denial of a motion for a sanction of default under Rule 37, because the moving party had never moved to compel discovery even though “it was apparent that [the opposing party] did not fully respond to the interrogatories.” Id. at 618. That being the case, there was no violation of a court order to justify any sanction under Rule 37. Id.Further, the Sixth Circuit has made clear that dismissal is the sanction of last resort. See id.; Beil v. Lakewood Eng’g and Mfg. Co., 15. F.3d 546, 552 (6th Cir. 1994).

The court also determined that the bullet holes found in the floor of King’s home were not relevant to the lawsuit. The bullet holes were not fired by the same gun used in the murder and were found years after the murder had occurred.

Comment: if you wish to obtain Rule 37 sanctions, you should move to compel and obtain an order compelling discovery. Once that order is violated, you can move for Rule 37 sanctions.

If you have any questions about Rule 37 or federal procedure, do not hesitate to contact me.

Edward X. Clinton, Jr.

http://www.clintonlaw.net

District Court Awards Sanctions for Spoliation of Evidence


The defendant in this lawsuit allowed a key item to be destroyed and sold for scrap – after it had notice that the item was relevant to discovery requests. The court ordered an award of attorney fees and costs and also permitted plaintiff an adverse inference instruction to be read to the jury.

This is a breach of contract case. TVI sued Harmony Enterprises and alleged that a baler manufactured by Harmony was defective. Defendant sold the baler for scrap.

It is undisputed that Defendant had control over the Mt. Vernon baler when it sold it for scrap, and Defendant does not dispute that the Mt. Vernon baler was relevant to this litigation. (See Dkt. No. 30 at 1, 7-9.) Defendant argues that it did not have an obligation to preserve the Mt. Vernon baler and could not have acted with a culpable state of mind because Plaintiff asked Defendant to dispose of it on October 3, 2017. (Dkt. No. 30 at 8-9; see Dkt. No. 20 at 8.) But Plaintiff’s initial request was followed by multiple indications that Defendant had a duty to preserve the Mt. Vernon baler, including Plaintiff’s October 10, 2017 letter reserving its right to pursue legal or equitable remedies related to the Mt. Vernon baler’s failure and Defendant’s own inspection of the Mt. Vernon baler that revealed unnecessary welds that contributed to its failure. (See id. at 2-4, 31-32; Dkt. No. 21 at 14-15, 25.) Further, Defendant shared a summary of its inspection with its counsel, who may have informed Defendant of the possibility of future litigation. (Dkt. No. 21 at 20-22.) All of this occurred while Defendant was still in possession of the Mt. Vernon baler. (See Dkt. No. 21 at 19.) Thus, Defendant was on notice of its obligation to preserve the Mt. Vernon baler, and consciously disregarded that obligation when it sold the Mt. Vernon baler for scrap. See Apple Inc., 888 F. Supp. 2d. at 989, 998Surowiec, 790 F. Supp. 2d at 1005.[2] The Court finds that Plaintiff has carried its burden of establishing that Defendant spoliated the Mt. Vernon baler….

Defendant had exclusive control over the Mt. Vernon baler, was on notice of the obligation to preserve it, and consciously disregarded its obligation by selling the baler for scrap. See supra. Plaintiff has been substantially prejudiced by Defendant’s destruction of the Mt. Vernon baler, as Plaintiff cannot conduct its own examination following Defendant’s disclosures about the reasons for the baler’s failure during discovery. See Apple Inc., 888 F. Supp. 2d at 992.[3] Thus, the Court finds that an adverse jury instruction regarding Defendant’s spoliation of the Mt. Vernon baler is an appropriate sanction. The instruction shall inform the jury that Defendant was on notice that it had an obligation to preserve the Mt. Vernon baler, that Defendant destroyed the Mt. Vernon baler before Plaintiff could inspect it, that the Mt. Vernon baler was relevant to Plaintiff’s claims, and that an inspection of the Mt. Vernon baler would have corroborated Plaintiff’s claim that it was defective.

Defendant then moved for reconsideration. That motion was denied. The explanation:

Defendant moves for reconsideration of the Court’s order, arguing that the Court committed manifest error in imposing its spoliation sanction and awarding Plaintiff attorney fees. (See generally Dkt. No. 42.) ….Defendant contends that the Court committed manifest error when it found that Plaintiff is entitled to an adverse jury instruction following Defendant’s spoliation of the Mt. Vernon baler. (Dkt. No. 42 at 10-13.) Defendant argues that the Court erred by looking only to Defendant’s conscious disregard of its discovery obligations to determine that Defendant’s degree of fault warranted an adverse jury instruction. (See id. at 10-12.) But the Court’s order looked beyond Defendant’s conscious disregard in finding that an adverse jury instruction was warranted. Specifically, the Court considered: Defendant’s exclusive control over the Mt. Vernon baler; Defendant’s substantial prior notice that it had an obligation to preserve the Mt. Vernon baler; and Defendant’s subsequent conscious disregard of that obligation when it sold the Mt. Vernon baler for scrap. (See Dkt. No. 39 at 2-3, 6.) Defendant’s remaining arguments opposing the Court’s evaluation of Defendant’s degree of fault simply restate those it raised in its response to Plaintiff’s original motion. (Compare Dkt. No. 42 at 11-12, with Dkt. No. 30 at 8-9.) Thus, Defendant has not identified a manifest error in the Court’s evaluation of Defendant’s degree of fault in spoliating the Mt. Vernon baler. See Premier Harvest, Case No. C17-0784-JCC, Dkt. No. 61 at 1; W.D. Wash. Local Civ. R. 7(h)(1).

The case is TVI, Inc. v. Harmony Enterprises, Inc. Case No. C18-1461-JCC. (D. W.D. Washington).

This case is instructive for any lawyer handling litigation involving an allegedly defective product. Preserve the product until both sides have had an opportunity to examine it. Failing to preserve the product risks a spoliation of evidence instruction to the jury and an award of fees and costs.

Lawyer Sanctioned by 8th Circuit For Forging Document


The case is SPV-LS, LLC v. TransAmerica Life, 912 F.3d 1106 (8th Cir. 2018). The plaintiff estate sued TransAmerica and lost on summary judgment. The outcome of the case was not at issue in the sanctions motion. This case is from a year ago, but it is important and I am including it in this blog.

The discussion of the forgery of an engagement letter is below:

Fed. R. Civ. P. 26(g)(1) requires attorneys and pro se litigants to certify that every disclosure is “complete and correct at the time it was made” and that every discovery request, response, and objection is consistent with the Federal Rules of Civil Procedure, nonfrivolous, not submitted for an improper purpose, and not unreasonable or unduly burdensome. Fed. R. Civ. P. 26(g)(3) imposes “appropriate” sanctions on attorneys or parties who violate Rule 26(g)(1). Such sanctions may include monetary penalties, such as expenses and attorneys’ fees, Johnson Int’l Co. v. Jackson Nat. Life Ins. Co., 19 F.3d 431, 438 (8th Cir. 1994), and are particularly appropriate when an attorney submits a forged discovery document. See Perkins v. Gen. Motors Corp., 965 F.2d 597, 600 n.5 (8th Cir. 1992). Unlike § 1927 sanctions, these sanctions are nondiscretionary. Fed. R. Civ. P. 26(g)(3); Perkins, 965 F.2d at 600 n.5; see also Rojas v. Town of Cicero, 775 F.3d 906, 909 (7th Cir. 2015) (“Rule 26(g)(3) gives the judge discretion over the nature of the sanction but not whether to impose one.”); Chudasama v. Mazda Motor Corp., 123 F.3d 1353, 1372 (11th Cir. 1997) (“The decision whether to impose sanctions under Rule 26(g)(3) is not discretionary.”).

SPV’s key evidence supporting Rule 26(g) sanctions is an allegedly-forged discovery document and the associated metadata produced by Attorney Kroll. SPV presents no evidence that Attorney Donahoe participated in this violation of Rule 26(g)(1). We therefore decline to find that the district court abused its discretion in denying Rule 26(g) sanctions against Attorney Donahoe.

In response to a discovery request, Attorney Kroll provided SPV with a redacted copy of the retainer agreement between himself and the Estate’s personal representative. After filing a motion to compel production in a related proceeding against Attorney Kroll in the United States District Court for the Central District of California, SPV obtained an unredacted draft of the same retainer agreement. This draft showed Attorney Kroll would receive a contingency fee if either the Estate or the Trust prevailed in obtaining the death benefits payable under the Policy, supporting SPV’s theory that the Estate and Trust were controlled by the same parties in interest. When SPV produced the unredacted draft to the district court, the Estate claimed that draft was not a correct copy and produced its own unredacted copy of the retainer agreement. The Estate’s copy omitted the provision awarding Attorney Kroll a contingency fee if the Trust prevailed.

SPV requested Rule 26(g)(3) sanctions based on document metadata, taken directly 1114*1114 from Attorney Kroll’s computer by his e-discovery vendor. The metadata showed that the retainer agreement produced by the Estate, while purportedly signed by the Estate’s personal representative in August 2015, was not created until July 20, 2016—two days before Attorney Kroll produced the document to the court. Therefore, SPV argued, the document was forged. The district court acknowledged that fabricating discovery documents is grounds for sanctions, see SPV-LS, LLC v. Transamerica Life Ins. Co., No. CIV 14-4092, 2017 WL 3668765, at *3 (Aug. 23, 2017), but it denied sanctions against Attorney Kroll. It did so under the mistaken belief that SPV relied on a document examiner’s report to prove forgery, stating that SPV should have produced that report. However, SPV never claimed that it relied on a document examiner’s report; in fact, it indicated that it never consulted a document examiner and relied solely on the document’s metadata. Because the district court based its denial of sanctions on SPV’s failure to introduce a nonexistent report into evidence, it clearly conducted an erroneous assessment of the evidence. See, e.g., MDU Res. Grp. v. W.R. Grace & Co., 14 F.3d 1274, 1280 (8th Cir. 1994) (finding the district court clearly conducted an erroneous assessment of evidence when it misunderstood the purpose for which the evidence was offered). It therefore abused its discretion in denying Rule 26(g) sanctions against Attorney Kroll on this basis.

This is an unfortunate finding. The forgery was discovered because of the metadata that is present in every document.

If you have any questions about discovery obligations or your responsibilities as a lawyer, do not hesitate to contact me at ed@clintonlaw.net.

Ed Clinton, Jr.

8th Circuit Reverses Discovery Sanctions Dismissal


In Akins v. Southern Glazers Wine & Spirits of Arkansas, LLC, 18-1957, the 8th Circuit vacated a case dismissed for a violation of Rule 37. Akins filed a pro se employment case against his former employer. The Defendant noticed his deposition for two days. Akins appeared both days but left the deposition on at 5:00 p.m. on the second day to go to work. Defendant claimed that it had 15 more minutes of questioning. Defendant moved for dismissal pursuant to Rule 37(b)(2)(A) and the district court granted the motion.

The 8th Circuit reversed on the ground that the district court abused its discretion in dismissing the case. The 8th Circuit faulted the district court for failing to determine whether Akins acted in bad faith and whether a lesser sanction would suffice.

Rule 37 authorizes dismissal as a sanction if there is (1) an order compelling discovery, (2) willful violation of that order, and (3) prejudice. Before dismissing a case as a discovery sanction, the court must investigate whether less extreme sanctions would suffice, unless the failure was deliberate or in bad faith. Fed. R. Civ. P. 37. Dismissals are reviewed for an abuse of discretion. Comstock v. UPS Ground Freight, Inc., 775 F.3d 990, 992 (8th Cir. 2014). Factual findings of willful or intentional failure to comply with a court order are reviewed for clear error. Smith v. Gold Dust Casino, 526 F.3d 402, 404 (8th Cir. 2008).
Akins did not violate the “fails to appear” discovery order, nor did he act in bad faith. He appeared for his deposition both days at the ordered time, and was deposed for nearly six hours over the two days. Both the discovery order and notice of deposition were silent about when the deposition would end. Akins had reason to believe the deposition would end at 5:00 because Southern’s counsel erroneously told him depositions must occur between 9 a.m. and 5 p.m., and he requested that his deposition be scheduled between 2 and 5 p.m. each day. Southern did not identify the additional questions counsel would ask if the deposition continued past 5 p.m. so Southern did not demonstrate prejudice. This court concludes that the dismissal of Akins’s complaint was an abuse of discretion because his conduct did not violate the district court’s discovery order, and the court erred when it failed to consider sanctions less severe than dismissal with prejudice.

Comment: this case, while unpublished, is very unusual for two reasons. First, the district court appears to have acted abruptly in dismissing the case and not ordering Akins to sit for a further deposition. Second, I have never seen a dismissal where the Plaintiff did what he was supposed to do – he sat for his deposition on the days he was told to be there.

Ed Clinton, Jr.

http://www.clintonlaw.net