Litigant Should Have Moved to Compel – Sanctions Denied


This case, Finato v. Fink, 18-55044, Ninth Circuit February 18, 2020, is unpublished but does illustrate an important point. Finato sued his former lawyers for legal malpractice. They obtained summary judgment against him. He claimed that the district court erred in rejecting his Rule 37 sanctions motion because the defendant disclosed insufficient information about its attorney fees. The trial court and the Ninth Circuit disagreed.

The district court did not err by denying Finato’s motion for Rule 37 sanctions. We review a district court’s decision on “the imposition of discovery sanctions under Rule 37 for abuse of discretion,” Fjelstad v. Am. Honda Motor Co., 762 F.2d 1334, 1337 (9th Cir. 1985), giving “particularly wide latitude to the district court’s discretion,” Yeti by Molly, Ltd. v. Deckers Outdoor Corp., 259 F.3d 1101, 1106 (9th Cir. 2001). Under Rule 26(a)(1)(A)(iii), a party must provide in its initial disclosures “a computation of each category of damages claimed by the disclosing party—who must also make available for inspection . . . the documents or other evidentiary material . . . on which each computation is based.” If it does not, the party may be subject to Rule 37 sanctions, “unless the failure to disclose is `substantially justified or harmless.'” Ingenco Holdings, LLC v. Ace Am. Ins. Co., 921 F.3d 803, 821 (9th Cir. 2019) (quoting Fed. R. Civ. P. 37(c)(1)).

Finato moved for sanctions on the ground that KFA provided no notice of its claimed fees or how they were computed in its Rule 26 disclosures, but instead presented them for the first time at trial. KFA’s Rule 26 disclosures were brief and not at all detailed. But if Finato believed the computations needed to be more specific, he should have filed a motion to compel, not a Rule 37 motion for sanctions. Cf. Patelco Credit Union v. Sahni, 262 F.3d 897, 913 (9th Cir. 2001) (finding the defendants’ Rule 37 motion was, “in essence, a motion to compel discovery from plaintiffs,” and thus any “failure to obtain the requested documents [was] due to [defendants’] own lack of diligence” in not filing a motion to compel). In addition, Finato signed the final pretrial order, which explicitly stated that “[a]ll disclosures under [Rule] 26(a)(3) have been made.” Even if KFA violated Rule 26, any failure to disclose was harmless. The court had all the evidence before it at trial, including KFA’s estimates and the witnesses’ testimonies regarding the hours they worked, and Finato failed to show how not having this information prior to trial harmed his case. Thus, the district court did not abuse its discretion in denying Finato’s Rule 37 motion for sanctions.

The take-away here is that if you receive disclosures which are insufficient you must move to compel and obtain a court order requiring more information. Then, when the other party fails to comply with the court order, you can move for Rule 37 sanctions.

Edward X. Clinton, Jr.

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