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Tenth Circuit Turns a "Gimlet Eye" on Challenges to Sanction Orders

By Jesyca M. Westbrook, Litigation News Associate Editor – June 30, 2011

When should a federal appellate court interfere with a district court order dismissing claims or entering a default judgment for discovery misconduct? How many missed chances to comply with a discovery request and resulting orders compelling discovery are enough to warrant dismissal or a default judgment? According to the U.S. Court of Appeals for the Tenth Circuit, the answers are: not very often and three. Lee v. Max International, Inc. [PDF].

Three Strikes
In a colorful opinion authored by Judge Neil M. Gorsuch, the appellate court exhaustively detailed the three chances given to the plaintiffs to comply with their discovery obligations. Following a dismissal of the plaintiffs’ case under Federal Rule of Civil Procedure 37(b), the Tenth Circuit held that “three strikes are more than enough to allow the district court to call a litigant out.”

The underlying facts of the Lee decision highlight the type of discovery disputes that plague modern litigation. Indeed, as the appellate court noted, “[d]iscovery disputes are, for better or worse, the daily bread of magistrate and district judges in the age of the disappearing trial.”

The defendant served requests to produce on the plaintiffs. The defendant’s counsel was not satisfied with the production. After the defendant’s counsel filed a motion to compel, a magistrate judge ordered the plaintiffs to produce the requested documents before a set date. The plaintiffs produced a “trickle” of material, but failed to comply fully with the court order.

The defendant filed a motion for sanctions and sought dismissal of the plaintiffs’ claims. The magistrate judge noted that the plaintiffs had blatantly failed to comply with her order, but did not grant a dismissal. Instead, the magistrate judge gave plaintiffs “one more chance to produce the requested documents,” but warned that failure to comply could result in dismissal.

In response to the magistrate judge’s order, the plaintiffs filed a declaration of compliance with the court and certified, under penalty of perjury, that it had produced all the requested documents. The defendant’s counsel disagreed and noted several missing materials in a letter. When counsel for the plaintiffs failed to respond to the letter, the defendant renewed its motion for sanctions. It was only after receiving the renewed motion for sanctions that counsel for the plaintiffs produced some of the missing responsive documents.

The magistrate judge heard the renewed motion for sanctions and recommended that the district court dismiss the plaintiffs’ claims as a sanction due to the plaintiffs’ misconduct. The district court agreed and dismissed the case with prejudice.

Turning a “Gimlet Eye”
On appeal, Judge Gorsuch, writing for the panel, noted that the Tenth Circuit views “challenges to a district court’s discovery sanctions order with a gimlet eye.” Referring to an eye with the quality of a small tool used for boring holes, Gorsuch noted that appellate courts experience issues relating to discovery disputes “rarely and then only from a distance.” The court held that “the district court’s considerable discretion in this arena easily 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.”

The plaintiffs’ arguments on appeal appeared to seek a fourth strike by attacking the district court’s failure to cite or consider a specific list of factors set forth in the Tenth Circuit’s decision in Ehrenhaus v. Reynolds. That decision suggests a district court consider several factors, including the degree of actual prejudice to the defendant, the amount of interference with the judicial process, the culpability of the litigant, whether the court warned the party in advance that dismissal of the action would be a likely sanction for noncompliance, and the efficacy of lesser sanctions. The Tenth Circuit rejected the plaintiffs’ arguments, noted that the Ehrenhaus factors were not a “rigid test,” and held that a district court does not have to evaluate those factors or discuss them in its order, “so long as our independent review of the record confirms that the district court didn’t abuse its discretion.”

Karma and Discovery Misconduct
The Tenth Circuit pointedly noted, “Discovery is not supposed to be a shell game, where the hidden ball is moved round and round and only revealed after so many false guesses are made and so much money is squandered.” “[T]here is such a thing as discovery karma. Discovery misconduct often may be seen as tactically advantageous at first. But just as our good and bad deeds eventually tend to catch up with us, so do discovery machinations,” the court concluded.

“Here, the plaintiff had three opportunities to produce documents,” says Paul M. Kessimian, Providence, Rhode Island, a chair of the E-Discovery Subcommittee of the ABA Section of Litigation’s Commercial & Business Litigation Committee, but instead they “made a false certification to the court.” “Courts are becoming less patient with sophisticated lawyers and clients who misuse e-discovery and advancing technology to compete in litigation,” he says. “Discovery can become voluminous and complicated very quickly. Problems are not unusual for either side in a case, but if a lawyer is proactive and comes to court before it is too late, they may avoid the risk of sanctions.”

Kessimian advises attorneys to learn a lesson from Lee and notes, “you must comply with court orders, and as much as possible, adhere to discovery deadlines. If not, at least promptly notify the court and be forthcoming about discovery production issues. No one wants to see a case dismissed, but it is hard to take the side of plaintiff’s counsel, when you know they had several opportunities.” “This opinion tells young attorneys to walk the line in challenging discovery, but don’t cross it or risk facing Draconian sanctions,” Kessimian notes.

Lee is a textbook decision on the subject of discovery sanctions,” says Bruce A. Green, New York City, former chair of the Section of Litigation’s Ethics & Professionalism Committee and professor of law at Fordham Law School. “If I had not already chosen cases for my legal ethics and civil procedure case books, I would include Lee, as it is a useful lesson for lawyers and law students.”

Cult Status for Lee?
It seems some courts are emboldened by the Tenth Circuit’s acknowledgement of the district court’s discretion. The court’s decision in Lee, which was on appeal from the U.S. District Court for the District of Utah, has already been cited by numerous courts, including courts outside of the Tenth Circuit. As of the time this article went to press, Lee has been cited in decisions from the Southern District of Indiana, the District of Columbia, the District of Connecticut, and the Southern District of Mississippi.

Keywords: litigation, Tenth Circuit, discovery request, sanction orders

Related Resources

  • » Lee v. Max, Intl, No. 10-4129, 2011 U.S. App. LEXIS 8969 (10th Cir. May 3, 2011).
  • » Ehrenhaus v. Reynolds, 965 F.2d 916 (10th Cir. May 29, 1992).
  • » Ormond v. Anthem, Inc., 2011 U.S. Dist. LEXIS 56066 (S.D. Ind. May 24, 2011).
  • » DL v. District of Columbia, 2011 U.S. Dist. LEXIS 49788 (D.C. May 9, 2011).
  • » Archibald v. City of Hartford, 2011 U.S. Dist. LEXIS 49299 (D. Conn. May 9, 2011).
  • » Bell v. Texaco, 2011 U.S. Dist. LEXIS 33039 (D. Miss. June 15, 2011).

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