Category: Discovery Sanctions

Discovery Abuses Merit A Default Judgment, Says New York District Court


In this case, the Magistrate and the District Judge found that the defendants’ refusal to participate in discovery amounted to intransigence and entered a default judgment against them.  The plaintiff were a union of bricklayers who sued a contruction firm. The opinion does not reveal what the case was about, but the plaintiffs needed the defendants’ records to determine whether or not they had claims. The court panned the conduct of the defendants and explained:

Over the course of a discovery period that was protracted unnecessarily because of Defendant’s intransigence, Defendant refused to make available the books and records needed to complete the audit required to assess Plaintiffs’ claims. As a result of Defendant’s obstruction, the March 2015 Opinion ordered Defendant to submit to an audit under the threat of being found in contempt and having sanctions imposed for failure to cooperate. (March 2015 Opinion.) After Defendant continued to defy clear and unambiguous court orders, the March 2016 Opinion granted Plaintiffs’ motion to hold Defendant in civil contempt of court and to impose sanctions for failing to comply with the directives of the March 2015 Opinion. (March 2016 Opinion.) Specifically, the Court ordered sanctions in the amount of $250.00 per day to be imposed on Defendant for each day after May 2, 2016, that Defendant failed to produce the requested records to Plaintiffs’ auditors. (March 2016 Opinion.)

After Defendant still failed to produce the records after May 2, 2016, the Court granted Plaintiffs leave to file a motion for default judgement, which was done on August 24, 2016. (Mot. for Default J. (“Plaintiffs’ Motion” or “Pls. Mot.”), Dkt. Entry No. 36.) The next day, on August 25, 2016, the Court referred the motion to the magistrate judge for the preparation of a report and recommendation. While the motion was pending, the Court ordered Defendant to show cause why the sanctions ordered in the March 2016 Opinion should not be imposed. At the conclusion of the order to show cause hearing held on October 19, 2016, before this Court and Magistrate Judge Tiscione, the Court imposed sanctions of $250.00 per day from May 2, 2016 to October 19, 2016.

On January 12, 2017, the magistrate judge issued the thorough and well reasoned R&R, recommending that this Court find default judgment appropriate under both Federal Rules of Civil Procedure 37 and 55. (R&R.) With respect to Rule 37, the magistrate judge weighed the pertinent factors and found that sanctions were appropriate, inter alia, because of “the willfulness of Defendant’s failure to comply with the Court’s discovery orders,” and the extent of its noncompliance. (R&R at 10-16.) The magistrate judge further held that, even if this were not a situation where Rule 37 sanctions were appropriate, Defendant had not met the “good cause” standard to defend against default judgment under Rule 55. (Id. at 16-20.) Ultimately, the magistrate judge recommended that the Court enter judgment awarding Plaintiffs $288,979.42, consisting of: (i) $130,386.48 in unpaid contributions; (ii) $79,121.47 in accrued interest as of the date of the R&R, plus $35.72 per day until the date judgment is entered; (iii) $79,121.47 in accrued interest as of the date of the R&R, plus $35.72 per day until the date judgment is entered, in lieu of liquidated damages; and (iv) $350 in costs and disbursements. (Id. at 27-28.) The magistrage judge further recommended that Plaintiffs not be awarded attorney’s fees. (Id. at 28

The District court entered judgment against the defendants and awarded damages to the plaintiffs.

Source: BRICKLAYERS INSURANCE AND WELFARE FUND v. PPL CONSTRUCTION SERVICES CORP., Dist. Court, ED New York 2017 – Google Scholar

California District Court Dismisses Lawsuit As A Sanction For Repeated Discovery Violations


This case is unusual because the court dismissed a lawsuit with prejudice and revoked the pro hac vice admission of plaintiff’s counsel. Dismissal is the most extreme sanction, of course, but the Court provides a detailed discussion of the reasons for the dismissal.

The case appears to be a trade secrets/unfair competition case. The court summarized the lack of cooperation among the parties:

From the beginning, this case has been marked by a level of dysfunction and inability to work together that is unprecedented in the Court’s experience. See, e.g., Dkt. Nos. 96 & 98 (parties filed separate case management statements in contravention of Local Rule 16-9); Dkt. No. 101 (inability to conduct Rule 26(f) Meet and Confer); Dkt. No. 157 at 47-57 (Plaintiff’s counsel blocked emails from Defendants, choosing to accept only faxes, letters, and phone calls from opposing counsel, because receiving emails from Defendants was too “intrusive”); Dkt. No. 288 (Defendants requested a discovery referee because Plaintiff allegedly “refuses to discuss any items beyond Loop’s own agenda” during meet-and-confer meetings). Magistrate Judge Donna M. Ryu attempted to “impose a workable structure on the parties’ discovery dispute resolution process,” Dkt. No. 271 at 2, and the docket highlights the Court’s many, many attempts to advance this litigation in a productive way.[1] Over the course of the last two years, the Court has tried numerous approaches, such as ordering court-supervised discovery management conferences, Dkt. No. 136 at 2; ordering the parties to audio record meet and confer sessions, Dkt. No. 156 at 2; instituting standing meetings each week to encourage substantive and meaningful meet-and-confer sessions, Dkt. No. 271 at 2; and eventually requiring the parties to provide dial-in information and agendas for the weekly meet-and-confer teleconferences, so that the Court could monitor the parties’ conduct by joining the calls, Dkt. No. 415 at 2.

As described more fully below, Plaintiff’s insubordination, through its counsel Valeria C. Healy, was and continues to be particularly egregious, posing a significant obstacle to the progress of this case. The Court has given Plaintiff many chances to litigate in a professional and productive manner, and has been consistently confronted with counsel’s utter disregard for the Court’s authority and her persistent refusal to comply with the Court’s orders and the Federal Rules. The following section details the key discovery orders serving as the basis of this order.

The court listed many issues, including the refusal to produce documents and the refusal to answer interrogatories. However, the deposition misconduct is unusual and worth quoting at some length.

Witness coaching happens all the time in depositions. It is rare for a court to find that the lawyer exceeded the bounds of permissible conduct.

As early as December 2015, Judge Ryu gave specific warnings with respect to the issue of privilege during depositions: “there can be no instructions to not answer except for privilege. . . . And it has to be clearly privilege. Because if it’s not, again there will be sanctions.” Dkt. No. 335 at 46.

On January 25, 2016, Almawave first deposed Plaintiff’s co-founder and CEO Gianmauro Calafiore. Dkt. No. 884 at 1 (“Order 884”). After reviewing the deposition transcript, Judge Ryu issued an order regarding Healy’s conduct during the deposition. Dkt. No. 436 (“Order 436”).

[The deposition transcript] is replete with examples of inappropriate behavior by Plaintiff’s counsel, Valeria Calafiore Healy. Ms. Healy made speaking objections, instructed the deponent not to answer questions for reasons other than the invocation of privilege, and repeatedly objected without stating a basis for the objection. The deponent, Gianmauro Calafiore, was often argumentative and uncooperative in providing testimony, thereby delaying the deposition process. Ms. Healy and Mr. Calafiore’s obstructionist conduct repeatedly stymied Alma[w]ave USA’s attempts to obtain discovery through this key deposition.Id. at 1. Judge Ryu sanctioned the Plaintiff, ordering five additional hours of deposition and requiring Plaintiff to bear the cost. Id. The order again provided specific instructions:

In the future, Ms. Healy, and indeed, all attorneys defending depositions in this litigation (1) shall state the basis for an objection, and no more (e.g., “relevance,” “compound,” “asked and answered”); (2) shall not engage in speaking objections or otherwise attempt to coach deponents; and (3) shall not direct a deponent to refuse to answer a question unless the question seeks privileged information.Id. at 2. Judge Ryu further warned that “[g]iven Ms. Healy’s repeated inappropriate conduct in her defense of the Calafiore deposition, any further breach” would result in sanctions. Id.

On August 25, 2016, Judge Ryu issued an order regarding Healy’s continued conduct during the deposition of Calafiore, as well as Loop AI’s other executives Bart Peintner and Patrick Ehlen. Dkt. No. 884. Leading up to this order, Judge Ryu had already twice directed Plaintiff to produce Peintner and Ehlen for depositions as they “appeared to be percipient witnesses.” See Dkt. No. 465 (March 10, 2016); Dkt. No. 526 (March 25, 2016). Judge Ryu’s March 25 order included specific dates, ordering that Ehlen and Peintner appear on March 29 and March 30, and that Calafiore and any of Plaintiff’s 30(b)(6) witnesses appear either on March 31 or April 1. Dkt. No. 526. This Court denied Plaintiff’s motion for relief from Judge Ryu’s nondispositive order regarding the deposition dates. Dkt. No. 533. Plaintiff nonetheless failed to follow Judge Ryu’s orders. See Dkt. No. 555 (Almawave’s letter brief indicating that “Loop and its witnesses refused to appear for deposition as ordered”). On April 4, 2016, Judge Ryu again ordered Plaintiff to make witnesses Calafiore, Ehlen, and Plaintiff’s corporate representative available. Dkt. No. 564.

Order 884 is based on Judge Ryu’s review of the deposition transcripts of these witnesses. Judge Ryu found that “[i]n direct contravention of the court’s February 29, 2016 order, Healy instructed witnesses to refuse to answer questions on grounds other than privilege.” Order 884 at 4 (noting, for example, that Healy “instructed Plaintiff’s 30(b)(6) designee (Calafiore) not to answer certain questions, unilaterally deciding that the questions were outside the scope of the noticed Rule 30(b)(6) topics”); id. at 5 (“[W]hen Almawave asked Ehlen, `Can you tell us how your particular algorithms work?’, Healy instructed him not to answer on the basis of relevance, again unilaterally taking the topic off the table.”). Judge Ryu cited Healy’s “numerous improper speaking objections, in direct contravention of this court’s order that counsel confine objections to a statement of their basis, (e.g., `compound,’ or `asked and answered’), and not engage in speaking objections or otherwise attempt to coach the witness.” Id. at 5. Order 884 found “Healy’s coaching was so effective that the witnesses occasionally repeated her objections, sometimes verbatim, to the examining attorney,” and that “[o]n other occasions, Healy actually attempted to answer the question for the witness.” Id. at 6-7.Order 884 held that Healy improperly asserted attorney-client privilege to prevent witnesses from answering, noting that Healy “inexplicably refused to allow the witnesses to respond to questions about their own discussions with other Loop employees or third parties,” and “refused to allow Plaintiff’s witnesses to answer questions about their document collection and production in this litigation” on the basis of attorney-client privilege. Id. at 7-8. Judge Ryu concluded that Healy’s conduct, “including instructions not to answer questions and speaking objections and coaching, was both improper and in direct violation of the court’s February 29, 2016 order regarding the conduct of depositions” and “[a]ccordingly, it is sanctionable.” Id. at 9. Judge Ryu deferred to this Court as to what sanction should be imposed. Id.

In sum, this case will draw coverage in the media and in legal publications which discuss discovery shenanigans.

Source: LOOP AI LABS INC. v. Gatti, Dist. Court, ND California 2017 – Google Scholar

Effort to Sanction United States Under Rule 30(b)(6) Fails


Rule 30(b)(6) allows a party to serve a deposition notice on an organization and the organization must tender a witness who can answer questions. The party serving the notice sets forth the issues it will cover in the deposition and the responding party is required to identify and produce a witness who has knowledge of said matters.

In this case, the United States tendered a Rule 30(b)(6) witness, but the plaintiff claimed that the witness was a “Know Nothing Witness” who did not provide useful information. The court rejected that argument and denied the sanctions motion and explained:

Plaintiff alleges that Mr. Whitaker was not prepared for his RCFC 30(b)(6) deposition. When asked to explain how he had prepared for the RCFC 30(b)(6) deposition, Mr. Whitaker stated that he had seen the list of plaintiff’s RCFC 30(b)(6) deposition topics only the day before his deposition, and that, in order to familiarize himself with the topics, he looked at each one of the admissions and the spreadsheets produced by defendant in discovery. Mr. Whitaker also testified that he had not thoroughly reviewed the contract between Securiforce and DLA Energy before his deposition.

Plaintiff points to different statements made by Mr. Whitaker during his RCFC 30(b)(6) deposition to demonstrate that the “government’s designated witness, Mr. Whitaker, had no firsthand knowledge concerning the specified topics and had undertaken no investigation as to what was `reasonably known to the organization.'” Specifically, Mr. Whitaker testified that he had no personal knowledge as to whether fuel was delivered to any of Securiforce’s sites between September 7, 2011 and October 24, 2011, and that his knowledge regarding specific fuel deliveries was based on the information contained in the spreadsheets that were produced to plaintiff in July 2013. When asked about the process for ordering and delivering fuel in Iraq, however, Mr. Whitaker articulated a developed understanding of this process and its nuances, including how the process could be different based on the source of the fuel. Furthermore, Mr. Whitaker was able to testify to the information contained in defendant’s response to interrogatory 16, including the data systems used to compile the spreadsheets.

The transcript of Mr. Whitaker’s deposition demonstrates that he offered a thorough knowledge of the spreadsheets prepared by DLA and previously turned over to plaintiff. The spreadsheets purportedly captured the fuel deliveries to the Securiforce Department of State sites in Iraq during the relevant time period according to defendant’s information when the spreadsheets were prepared. Mr. Whitaker stated that he was familiar with the various databases listed on the spreadsheets, including “DLA Energy’s fuels enterprise server, DLA Energy’s defense fuel, automated management system, and DLA Energy’s automated voucher examination and dispersing system” and was able to explain the systems to plaintiff’s counsel when asked. The dialogue contained in the deposition transcript indicates that Mr. Whitaker could speak intelligently about the information contained in the spreadsheets. Mr. Whitaker answered many questions posed by plaintiff’s counsel about specific, detailed information contained in the spreadsheets based on his ability to decipher the spreadsheets. Specifically, Mr. Whitaker could read the codes used in the spreadsheets to identify countries of origin, invoice numbers, billing codes, delivery sites, delivery dates, funding codes, stock numbers, fuel quantities, and fuel grades. Mr. Whitaker’s knowledgeable deposition testimony about the spreadsheets and fuel deliveries in Iraq indicates that he was prepared to discuss a broad range of the topics plaintiff included in the RCFC 30(b)(6) deposition notice based on the information contained in DLA Energy’s records.

It is clear from Mr. Whitaker’s deposition testimony that, although he could not provide specific details for all of plaintiff’s counsel’s questions, he testified about information reasonably known by the government, based on DLA Energy’s records, and was responsive to a significant portion of plaintiff’s identified RCFC 30(b)(6) topics. Because Mr. Whitaker testified knowledgably about the DLA-prepared spreadsheets, and the information contained therein, his deposition testimony as a RCFC 30(b)(6) witness was not such that he was, as alleged by plaintiff, a “No-show” witness. Moreover, it would be hard to argue that only one witness could have testified to DLA Energy headquarters’ records and whether onsite deliveries in the conflict theater of Iraq actually occurred, as well as to possible fuel deliveries by the Army. The government offered to provide additional RCFC 30(b)(6) witnesses, and identified possible further witnesses, but plaintiff declined to depose any additional witnesses who could speak to the onsite fuel deliveries in Iraq. Instead, plaintiff chose to file its motion for sanctions and seek monetary compensation.

The case is interesting because it shows what work must be done by the party producing the Rule 30(b)(6) witness to make sure the witness knows what he is talking about. Source: SECURIFORCE INTERNATIONAL AMERICA, LLC v. US, Court of Federal Claims 2016 – Google Scholar

Court Grants Default Judgment Against Litigant Who Refuses to Appear for Deposition


STERLING CROSS DEFENSE SYSTEMS, INC. v. DOLARIAN CAPITAL, INC., Dist. Court, ED California 2015 – Google Scholar.

The defendant in this case must have a really good reason not to appear for his deposition.

Neither the witness nor his lawyer appeared at the date and time when the deposition was noticed. The district court awarded sanctions and ordered the client and his lawyer to appear at a show cause hearing to explain why they should not be held in contempt. From there things went downhill:

“The Court determined, with reference to the website of the State Bar of California, that Defendant’s counsel had been ordered inactive by the State Bar as of February 27, 2015 and is no longer eligible to practice in the State of California.[1]Smith never advised the Court of this development, nor did he withdraw as attorney of record for Plaintiff. Plaintiff’s counsel, Jeff Reich, informed the Court, both at the hearing and via declaration, that Smith had been non-responsive to his communication attempts for some time. (Declaration of Jeff Reich ¶ 11, ECF No. 32.)

The Court granted Plaintiff’s request for monetary sanctions in the amount of $1,625.00 and issued an order to show cause why further sanctions, including the striking of all responsive pleadings and entry of default, should not be imposed based on Smith’s failures to appear, both at the deposition and at the hearing on the motion to compel. The order, which was directed at both Dolarian and Smith, required each to file separate responses to the order to show cause no later than June 25, 2015. It also provided Dolarian the opportunity to request a continuance if he required time to retain new counsel. (ECF No. 36.) Finally, the order required personal appearances by both Dolarian and Smith. The order to show cause hearing was set for July 10, 2015.

The U.S. Marshals Service was directed to personally serve both Dolarian and Smith with the order and succeeded in doing so on June 8, 2015; the two were served in adjacent suites in the building housing Smith’s law offices. (ECF No. 37.) Neither Smith nor Dolarian filed any response to the order to show cause. Neither Smith nor Dolarian appeared at the order to show cause hearing.”

The Ninth Circuit uses a five-factor test to determine whether a case should be dismissed pursuant to Rule 37.

” In re Exxon Valdez, 102 F.3d 429, 432 (9th Cir.1996). In determining whether to dismiss an action or enter default pursuant to Rule 37(b)(2)(C), a district court must consider five factors:

(1) the public’s interest in expeditious resolution of litigation; (2) the court’s need to manage its docket; (3) the risk of prejudice to the [opposing party]; (4) the public policy favoring disposition of cases on their merits; and (5) the availability of less drastic sanctions.’ Payne,121 F.3d at 507, quoting Malone v. U.S. Postal Serv., 833 F.2d 128, 130 (9th Cir.1987). Where a court order is violated, the first and second factors will favor sanctions and the fourth will cut against them.Id.

Computer Task Group, Inc. v. Brotby, 364 F.3d 1112, 1115 (9th Cir.2004).”

Because neither the defendant nor his lawyer appeared for the show cause hearing the court entered a default judgment against the defendant. This is an ugly outcome for the defendant. One must wonder why he would use a lawyer who was not licensed to practice law and why he failed to appear at the show cause hearing and explain his predicament to the judge. The defendant/deponent could have appeared before the judge and claimed that he did not know that his lawyer was no longer allowed to practice law. The judge would then have been required to give time to obtain new counsel and complete the deposition.

In sum, this is an ugly outcome that could have been prevented with even a minimum of courtesy to the court and opposing counsel.

Edward X. Clinton, Jr.

Trial Court Denies Motion in Limine To Exclude A Witness Who Was Not Listed On Witness List


NORFOLK SOUTHERN RAILWAY COMPANY v. PITTSBURGH & WEST VIRGINIA RAILROAD, Dist. Court, WD Pennsylvania 2015 – Google Scholar.

This opinion raises an issue that can arise in litigation – a party fails to disclose the identity of a witness and the opposing party moves to bar the witness from testifying. Here the court rejected that argument because the defendant was aware of the identity of the witness (even though he was not on the witness list) and failed to take the appropriate deposition.

The court explains: “Bearing those standards in mind, the Court will deny Defendant’s motion in limine to exclude Chastek from testifying at trial. Where, as here, a party fails to list a potential witness in its initial disclosures, courts have not imposed the harsh sanction of excluding his or her testimony at trial so long as the opposing party knows of that witness well in advance of trial. …

At the first step, Defendants are hard-pressed to claim surprise. As Plaintiffs discuss at length in their brief, Defendants knew of Chastek’s identify and position at Wheeling & Lake Erie during the discovery period and could have easily noticed his deposition. But they apparently chose not to do so. Defendants also questioned Wheeling & Lake Erie’s then-Rule 30(b)(6) designee, Michael Mokodean, its Chairman and CEO, Larry Parsons, and its Director of Real Estate, Taxes and Industrial Development, Clarence Jaeger, about Chastek during their respective depositions and introduced an article quoting Chastek (and identifying his position) as an exhibit in no less than two of those deposition. In addition, Chastek was identified on numerous documents (i.e., various e-mail chains) produced to Defendants by Plaintiffs and third-party Chesapeake throughout the discovery phase of this litigation.”

Thus, the court refused to bar the witness because the defendants could have solved the problem themselves by taking the deposition of the witness.

This case is important because it shows how good lawyering by the plaintiff defeated a motion based on a technicality. While its true that the witness was not listed on the witness list, defendants should have been aware that the witness existed given the volume of discovery materials that were produced concerning the witness. This is a demonstration of good lawyering by plaintiff’s counsel.

Edward X. Clinton, Jr.

Copyright Infringement Case Implodes Due To Rule 37(c) Violations


BWP MEDIA USA INC. v. RICH KIDS CLOTHING COMPANY, LLC, Dist. Court, WD Washington 2015 – Google Scholar.

This is a fairly routine case in which BWP sued Rich Kids alleging that Rich Kids infringed its copyrights on three photographs. To support its claim of copyright infringement, BWP produced three screen shots of Rich Kids’ website allegedly showing that BWP’s photographs were copied without permission.

Rich Kids responded to the motion for summary judgment by arguing that the screen-grab exhibit should be stricken because it was not produced during discovery. Rich Kids also filed its own summary judgment motion in which it argued that BWP failed to produce admissible evidence upon which a reasonable jury could find copyright infringement.

The district court granted Rich Kids’ motion for summary judgment based on its finding that BWP violated Rule 37. That finding was, in turn, based on a finding that BWP had failed to comply with the Rule 26(a)(1)(A) automatic disclosure requirements. The Court explained:

“Federal Rule of Civil Procedure 26(a)(1)(A) requires a party to make certain initial disclosures to other parties “without awaiting a discovery request[.]” Those disclosures include “a copy — or a description by category and location — of all documents, electronically stored information, and tangible things that the disclosing party has in its possession, custody, or control and may use to support its claims[.]” Fed. R. Civ. P. 26(a)(1)(A)(ii). Parties are further required, under Rule 26(e), to supplement or correct initial disclosures on an ongoing basis.

In this case, BWP indicated in its initial disclosures its “possession of materials relevant to Defendant’s commission of copyright infringement on its website, including digital files of screen shots of the website depicting Defendant’s commission of copyright infringement.” (Dkt. 28-1 at 3.) No materials were included in the disclosures. RKCC submits evidence showing it sought production of the materials identified in plaintiff’s initial disclosures, and that BWP failed to comply with that request. Specifically, in an email dated October 30, 2014, the deadline for filing discovery-related motions and some two weeks prior to the close of discovery, counsel for RKCC reminded counsel for BWP that he had “never received any documents at all from BWP[,]” other than the exhibit attached to the complaint, described above. (Dkt. 24-1 at 2.) Defendant’s counsel indicated he was considering filing a motion to compel, which would be withdrawn when documents were produced. (Id.) In an email later that same day, RKCC’s counsel reiterated:

As to the documents, I’m referring to any documents envisioned by the initial disclosure rules “all documents, electronically stored information, and tangible things that the disclosing party has in its possession, custody, or control and may use [sic] to support its claims or defenses, unless the use would be solely for impeachment[.]”

(Dkt. 24-1 at 3.) He added: “Of course, if BWP doesn’t plan to rely on any documents other than the pleadings to support its claims, that’s fine. I guess I would just ask for confirmation.” (Id.) Counsel for RKCC attests that counsel forBWP provided the requested confirmation by telephone that BWP would not rely on any documents other than those included in the pleadings. (Dkt. 24, ¶4.)

…..

In sum, the Court concludes that, pursuant to Rule 37(c), BWP is foreclosed from relying on the evidence attached to its motion for summary judgment and is restricted to relying on the evidence attached to its complaint and/or otherwise properly produced during the course of discovery. Within that framework, the Court proceeds to the pending motions for summary judgment.”

The court held that BWP violated Rule 26 by failing to disclose the screen-grab exhibit and held that, pursuant to Rule 37(c), BWP had no admissible evidence to support its claims of copyright infringement.

Separately, the Court denied Rich Kids’ motion for Rule 11 sanctions because Rich Kids did not comply with the safe harbor (providing the other party 21 days in which to withdraw the claims) and did not file the sanctions motion as a separate motion.

In sum, an excellent opinion on these issues.

Edward X. Clinton, Jr.

Rule 37 Sanctions Awarded Where Defendant Alters An Engineer’s Report


http://scholar.google.com/scholar_case?case=3229138459727806220&hl=en&lr=lang_en&as_sdt=400006&as_vis=1&oi=scholaralrt

Raimey v. Wright National Flood Insurance (E.D. NY 2014).

The plaintiffs sued the defendant flood insurance carrier for breach of contract. They alleged that their home was damages by flooding during Hurricane Sandy and that the defendant wrongfully denied plaintiffs’ claim.

The defendant was sanctioned because it concealed a report by its engineer who found that the home was damaged beyond repair by Hurricane Sandy. The defendant did not produce the report in discovery. Instead, the defendant altered the report so that it reached the opposite conclusion.  The Magistrate Judge sanctioned the defendant and its counsel and the district court upheld the sanctions.

The district judge held (a) that prior court orders required the defendant to disclose the original unedited engineering report (b) that the failure to produce the report was improper; (c) that the failure to produce the report prejudiced the plaintiffs and made the litigation more costly; and (d) defendant’s counsel attempted to curtail the magistrate’s inquiry concerning the report during a hearing on the issue.

In sum, this is a textbook case of Rule 37 sanctions.