10th Circuit Affirms Dismissal of Lawsuit As Discovery Sanction

In a new case, the Eleventh Circuit has affirmed the dismissal of a lawsuit as a sanction against a litigant who did not comply with discovery orders.

The case, Lee v. Max Internatinal, LLC, 638 F3d 1318 (10th Cir. 2011), was a routine breach of contract case filed by Mr. Lee and his wholly owned company against the Defendant.

Plaintiff filed the case in February 2009.  The Defendant obtained a court order requiring the Plaintiff to produce responsive documents in October 2009.  Plaintiff, however, did not comply with the order. Shortly thereafter, Defendant moved, pursuant to Rule 37 of the Federal Rules of Civil Procedure, for discovery sanctions, specifically dismissal of the complaint.  In January 2010, the magistrate found that the Plaintiff had flouted the court’s order and granted the plaintiff one more chance to produce the documents but warned that, if plaintiff did not comply, plaintiff could expect the “harshest of sanctions.”  On January 25, 2010, the plaintiff certified that it had produced the requested documents.  Defendant disagreed and renewed its motion for sanctions.  The magistrate recommended that the complaint be dismissed and the district court agreed.

The Tenth Circuit affirmed the order of dismissal. The Court explained its ruling as follows:  “We hold that the district court’s considerable discretion in this arena easily 1321*1321 embraces the right to dismiss or enter default judgment in a case under Rule 37(b) when a litigant has disobeyed two orders compelling production of the same discovery materials in its possession, custody, or control. Plaintiffs in this case were given no fewer than three chances to make good their discovery obligation: first in response to Max’s document requests, then in response to the October 2009 order, and finally in response to the January 2010 order. Plaintiffs failed at all three turns. And three strikes are more than enough to allow the district court to call a litigant out. Of course, our legal system strongly prefers to decide cases on their merits. Because of this, we have held that a dismissal or default sanctions order should be predicated on “`willfulness, bad faith, or [some] fault'” rather than just a simple “inability to comply.” Archibeque v. Atchison, Topeka & Santa Fe Ry., 70 F.3d 1172, 1174 (10th Cir.1995)(quoting Nat’l Hockey League, 427 U.S. at 640, 96 S.Ct. 2778). Likewise, the Federal Rules protect from sanctions those who lack control over the requested materials or who have discarded them as a result of good faith business procedures. See, e.g., Fed. R.Civ.P. 37(e) (providing a safe harbor for those who “fail[ ] to provide electronically stored information lost as a result of the routine, good-faith operation of an electronic information system”). But a party’s thrice repeated failure to produce materials that have always been and remain within its control is strong evidence of willfulness and bad faith, and in any event is easily fault enough, we hold, to warrant dismissal or default judgment.”

Edward X. Clinton, Jr.


Copyright 2011

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