Tag: Discovery Sanctions

If you don’t disclose it or produce it, you can’t use it.


Bryntesen v. CAMP AUTOMOTIVE, INC., Dist. Court, D. Idaho 2015 – Google Scholar.

There is an old saying in the legal world that “if you don’t produce it, you can’t use it at trial.” Here, the plaintiffs filed suit apparently against a company that sold or leased them an RV. There was a dispute about payment and, at some point, the plaintiffs were arrested by the police.  Plaintiffs failed to disclose in discovery videos of the arrest.

The court sanctioned the plaintiffs under Rule 37, and also awarded them legal fees and costs for brining the motion. Instead, the court held that the plaintiffs could not use the videos in their case because they deprived the defense of the opportunity of asking questions about the videos in discovery.

The pertinent quote is this one:

Plaintiffs only produced the videos after Sheree Bryntesen acknowledged their existence during her deposition. And only after disclosing the videos of the incident, did Plaintiffs’ counsel “investigate whether any other media files had also been inadvertently omitted from previous disclosure and discovery responses.” Plf. Br., at p. 5, Dkt. 76. “It was then that Plaintiffs’ counsel discovered that the video of the telephone conversation between Casey Bryntesen and Scott Grumbly had not yet been disclosed or produced.” Id.

Mistakes and oversights happen, but the number of mistakes and oversights here are troubling. Especially where the disclosure was not ultimately made until after the vast majority of the depositions occurred — depriving defense counsel of the opportunity to ask most witnesses, particularly the officers involved in the arrest, about the videos. Plaintiffs failed to timely disclose the videos as required by Rule 26(a) and (e). And, under these circumstances, the Court finds that the late disclosure was not substantially justified or harmless — as is necessary to avoid Rule 37 sanctions. Repeated oversights are not substantial justification, and defense counsel’s inability to question witnesses about the videos during their depositions is surely not harmless….

Here, the proper sanction is to preclude Plaintiffs from using the videos on a motion, at a hearing, or at trial. Defendants may still use the videos. However, if they do so, the Court will then allow Plaintiffs to use them as well — Defendants can make that choice.”

In, sum an excellent opinion discussing the rationale for the preclusion of evidence.

Edward X. Clinton, Jr.

www.clintonlaw.net

3rd Circuit affirms discovery sanction against foreclosure law firm


McLaughlin v. Phelan Hallinan & Schmieg, LLP, 756 F. 3d 240 – Court of Appeals, 3rd Circuit 2014 – Google Scholar.

This case arose out of a clerical error by a bank, which erroneously concluded that the plaintiff had defaulted on his mortgage. Plaintiff was not in default. However, the bank then sent the file to the defendant law firm which sent Plaintiff a demand letter.

Plaintiff then filed a putative class action against the law firm for alleged violations of the Fair Debt Collection Practices Act. The district court dismissed the FDCPA claims against the law firm, but it awarded plaintiff Rule 37 sanctions because the law firm violated an order requiring it to produce its legal bills. The defendant law firm did not comply with the order, but attached the bills to its own summary judgment motion. The district court awarded plaintiff Rule 37 sanctions. The third circuit affirmed. “The District Court, however, did find that PHS’s failure to produce the invoices during discovery was sanctionable under Fed.R.Civ.P. 37(b)(2)(A) and sua sponte ordered PHS to pay all expenses, including attorney’s fees, that McLaughlin had incurred in connection with his motion for reconsideration, reasoning that PHS’s action prevented full and timely investigation of the facts and led to additional briefing on the summary judgment motion.”

On appeal, the law firm argued that the sua sponte imposition of sanctions deprived it of an opportunity to be heard on the sanctions issue. The Third Circuit disagreed.  It explained:

“It is true that PHS did not receive notice that sanctions were being considered before the District Court initially imposed them and hence did not immediately have an opportunity to argue that its failure was substantially justified. PHS, however, eventually provided arguments why it believed its conduct was not sanctionable. More specifically, in connection with the briefing on the magnitude of sanctions, PHS explicitly laid out its arguments why its conduct was substantially justified and neither in bad faith nor willful and asked the newly assigned District Court Judge to “reevaluat[e] … the imposition ofsanctions.” ECF No. 111. The District Court considered these arguments, reaffirmed the relevance of the discovery sought and the impact of the tardy production, and, for those reasons “and for all of the reasons previously stated in” her predecessor’s decision, ordered sanctions in the form of attorney’s fees. Thus, PHS had notice of the conduct that the District Court found to be sanctionable, had an opportunity to be heard, and received review and a ruling from a different judge concerning their conduct. Accordingly, we conclude PHS received due process and we will affirm the sanctions order.”

The sanctions award was approximately $15,000.

Edward X. Clinton, Jr.

Jones Day Sanctions Order – Lawyer Sanctioned For Tedious Objections At Deposition – But Eighth Circuit Reverses Sanction


Jones Day Sanctions Order.

This is a lengthy opinion by a federal district court judge, Mark W. Bennett, in which he sanctions a Jones Day lawyer for excessive and tedious objections at a deposition. In writing the opinion, Bennett is clearly out to reform the entire discovery process. He writes: “Discovery-a process intended to facilitate the free flow of information between parties – is now too often mired in obstructionism. Today’s ‘litigators’ are quick to dispute discovery requests, slow to produce documents, and all-too-eager to object at every stage of the process.” He also criticizes judges for ignoring this misconduct and encouraging obstructionist tactics. He argues that the judiciary should step up to the plate and sanction obstructionist lawyers. “Obstructionist litigators, like Ivan Pavlov’s dogs, salivate when they see discovery requests and are conditioned to unleash their treasure chest of obstructive weaponry. Unlike Pavlov’s dogs, their rewards are not food but successfully blocking or impeding the flow of discoverable information. Unless judges impose serious adverse consequences, like court-imposed sanctions, litigators’ conditional reflexes will persist. The point of court-imposed sanctions is to stop reinforcing winning through obstruction.”

As an aside, I agree with Judge Bennett. There are too many objections and delays in the discovery process. That conduct slows down the court system and wastes resources. Judges who urge lawyers to meet and work it out need to remember that some lawyers won’t produce, no matter what happens. In Chicago, the most difficult firms to work with are often the so-called litigation boutiques.

In any event, Judge Bennett sanctioned a Jones Day lawyer for obstructionist conduct during depositions. First, the lawyer used speaking objections when questions were asked to disrupt the flow of questions and answers. Second, the lawyer excessively used what are known as “form” objections. Third, Judge Bennett concluded that the lawyer was using the objections to coach the witness on what to say.

Specifically, Judge Bennett found that the form objections were a waste of time and were not necessary. Furthermore, the form objections did not explain what the problem was so that the questioner could cure the problem. As the court explained, “counsel’s ‘form’ objections, however, amplified two other issues: witness coaching and excessive interruptions.” Page 17.  The court found that certain objections were used to coach the witness not to answer questions. Judge Bennett objected to the use of “vague and ambiguous” as an objection because it was used to coach the witness to refuse to answer on the ground that the question called for speculation.

Judge Bennett objected to objections such as “You can answer if you know.” He is correct to find this conduct sanctionable. Those type of objections are designed to coach witnesses to give certain types of answers.

The sanction ordered is that the lawyer make a video discussing proper deposition conduct. I think the sanction is very odd, given the behavior, but Judge Bennett is on to something – lawyers should not be coaching witnesses during a deposition.

Update: the Eighth Circuit reversed the ruling on the ground that the sanction was inappropriate and out of line.

The court was concerned about (a) the lack of any complaint from the other side’s attorneys (b) the lengthy delay before sanctions were imposed; and (c) the failure to notify Ghezzi that sanctions were being considered.  The Court explained its ruling in this abstract:

“Then, sixteen months after defense counsel participated in the Bottock and Barrett-Reis depositions, one year after fact discovery had closed, and nine months after Abbott had moved for summary judgment based on excerpts of key depositions, the trial judge assumed control of the case for the first time and criticized defense counsel’s deposition conduct. Seven months later she was sanctioned under Rule 30(d)(2)—some two years after she had defended the Bottock and Barrett-Reis depositions without complaint from opposing counsel or inquiry by the magistrate judge. Cf. Manual for Complex Litigation § 11.42; Federal Judicial Center, Civil Litigation Management Manual, Ch. 3 (2d ed. 2010).

With few exceptions, sanctions should be imposed “within a time frame that has a nexus to the behavior sought to be deterred.” Thomas v. Capital Sec. Servs., Inc., 836 F.2d 866, 881 (5th Cir. 1988); cf. Cooter & Gell, 496 U.S. at 395-96. Rule 30(d)(2) sanctions assessed near the time of violation deter both ongoing and subsequent abuses. See Craig, 384 F. App’x at 533. Prompt action “helps enhance the credibility of the rule,” and by deterring further discovery abuse, “achieve its therapeutic purpose.” Cf. Matter of Yagman, 796 F.2d at 1183-84. This is especially true when sanctions are imposed sua sponte after the fact, for delay allows potential violations to pass unchecked and undeterred. E.g., Thomas, 836 F.3d at 881. The primary purpose of Rule 30(d)(2) was not well served by the post hoc procedures here. See Matter of Yagman, 796 F.2d at 1184 (concluding that “the benefit provided by the policy of deterrence is lost if the [district court] postpones imposition of [discovery sanctions] until the end of the case”); see alsoCraig, 384 F. App’x at 533….”

The court discussed the failure to notify counsel in this passage:

Here, there was no real notice of the nature of the sanction the court had in mind. While the trial judge did provide defense counsel advance notice of his reasons for considering sanctions under Rule 30(d)(2), nothing was mentioned about their unusual nature requiring counsel to produce and distribute an instructional video addressing the impropriety of unspecified form objections, witness coaching, and excessive interruptions. Nor were any “probable consequences” discussed at the subsequent sanctions hearing. See Fisher, 526 F.2d at 1343. The nature of the sanction became apparent only in the court’s final published opinion in the matter. See In re Tutu Wells, 120 F.3d at 380; see also In re Prudential, 278 F.3d at 192-93.

Once information about an unusual sanction appears in public, the damage to the subject’s career, reputation, and future professional opportunities can be difficult if not impossible to repair. See Adams v. Ford Motor Co., 653 F.3d 299, 308-09 (3d Cir. 2011). Defense counsel’s reputation was one of her “most important professional assets,” see id. at 305, and the district court’s unusual sanction might leave an indelible and deleterious “black mark” on her career, see In re Tutu Wells, 120 F.3d at 381 n.10.”

The Eighth Circuit opinion can be found at this link. https://scholar.google.com/scholar_case?case=13463882856548559569&q=June+k.+ghezzi&hl=en&as_sdt=400006&as_ylo=2015

Comment: the sanction imposed by the District Court was harsh and unusual punishment. It is noteworthy that the Eighth Circuit did not vindicate the conduct of the attorney who made the tedious objections at the deposition. In my experience tedious objections of this sort are used to coach witnesses on how to answer questions and should be prohibited.

Edward X. Clinton, Jr.

Domanus v. Lewicki: 7th Circuit Upholds Default Judgment As Discovery Sanction


Seventh Circuit Affirms Default Judgment Against Litigant As Discovery Sanction

Domanus v. Lewicki, 13–2435 (7th Cir. 2014)

This is an appeal from a default judgment entered against the defendants in the litigation. The plaintiff were shareholders in a Polish entity, Krakow Business Park (KBP) that was formed to develop a business park in Krakow Poland. Plaintiffs alleged that the three defendants, Adam Swiech, Richard Swiech and Derek Lewicki caused “KBP to pay out millions of dollars to the defendants for services never performed, and that the defendants stole cash and property from the company.” Plaintiffs alleged that the defendants used the proceeds to acquire cash and property in Chicago, Illinois. Plaintiffs sued under the RICO statute.

Plaintiffs alleged that the defendants did not cooperate with discovery requests and they eventually requested a default judgment from Judge Bucklo. The defendants argued in the district court that it was impossible for them to comply with the court’s discovery orders.

The district judge did not agree with the defendants and imposed a default judgment of $413,000,000. Consistent with a recent trend to sanction litigants who do not cooperate with discovery orders, the Seventh Circuit affirmed the default judgment. It is important to remember that discovery sanctions are reviewed for an abuse of discretion, a more lenient standard. That standard is designed to allow the district judge to manager her caseload and docket.

Procedural History

The document discovery dispute centered on three issues, two bank accounts and one computer hard drive.

The first account was an account at the Julius Baer bank, a Swiss bank. Plaintiffs alleged that Adam Swiech owned this account and that some of the funds wrongfully removed from KBP had ended up in the account. Swiech denied ownership of the account and did not produce any documents in response to the discovery requests. Plaintiffs sought to hold Swiech in contempt for failing to produce documents. The magistrate judge found Swiech’s behavior sanctionable, but did not hold him in contempt. The district judge increased the penalty and held Swiech in contempt. The Seventh Circuit described her decision to do so as “sensible.”

The second bone of contention was the defendants’ failure to produce documents for a Polish HSBC account belonging to Lewicki. Lewicki told the plaintiffs that he was unable to obtain the documents. Again, plaintiffs moved to compel and for sanctions, but the magistrate judge declined to impose them. The district judge again disagreed and held Lewicki in contempt. She found Lewicki’s testimony that he could not gain access to the documents to be “incredible.” The Seventh Circuit agreed that there was clear and convincing evidence necessary to support a contempt finding.

The third issue concerned a computer hard drive. In May 2011, Defendants produced 1800 pages of documents. Plaintiffs suspected that the production was incomplete and the defendants produced another 21 CD-ROM discs. In February 2012, plaintiffs moved for sanctions. They asked the court to order the defendants to produce certain missing emails. The Defendants responded that the hard drive had been destroyed in 2009, which was impossible as they had already produced many documents from 2010 and 2011 from that same hard drive. The magistrate granted a spoliation of evidence instruction as a sanction. The spoliation instruction allows the jury to infer that whatever evidence was withheld was unfavorable to the party that wrongfully withheld it. A spoliation instruction is a traditional, but weak, sanction for discovery misconduct. The district judge again increased the sanction by barring the defendants from using any documents from the hard drive and ordering Richard Swiech and Lewicki to obtain all of their missing emails from the email providers. As the Seventh Circuit concluded “such a sanction appropriately mitigated the harm to the plaintiffs as a result of the defendants’ wrongdoing.”

After additional deposition-related misconduct (failing to show up for depositions), the district judge granted a motion for default judgement against the defendants. The Seventh Circuit affirmed the default finding, holding that the defendants’ discovery misconduct demonstrated “a clear record of delay or contumacious conduct,” and “willfulness, bad faith or fault.” Maynard v. Nygren, 332 F.3d 462 (7th Cir. 2003).

A litigant who obtains a default judgment must still prove damages. The Seventh Circuit upheld the damages calculations of plaintiffs, which were presented by an expert witness.  The damages were then trebled under the RICO Statute.

Conclusion

This case shows that the federal courts are now beginning to enforce significant sanctions, even the use of a default judgment, where one party fails to comply with discovery. One interesting facet of the case is that on two occasions Judge Bucklo increased the sanctions ordered by the magistrate judge, which is unusual. The Seventh Circuit held that Judge Bucklo acted reasonably. The defendants did not help themselves by first producing some documents from a hard drive and then claiming that the hard drive had been destroyed years earlier. Withholding documents has always been against the federal rules of civil procedure, but it has taken many years for the courts to clamp down and consider harsh sanctions for noncompliance.

Edward X. Clinton, Jr.

www.clintonlaw.net