Litigation

Appellate Court Finds Trial Court Abused its Discretion by Failing to Impose Terminating Sanctions for Discovery Abuses, Directs Entry of Default Judgment

By reston, Gates and Ellis

Doppes v. Bentley Motors, Inc., 2009 WL 1578384 (Cal. Ct. App. June 8, 2009)

In this case arising from plaintiff's claims of a foul odor in his new car and defendant's failure to repair it, plaintiff repeatedly sought terminating sanctions from the trial court for defendant's repeated and egregious discovery abuses.  Instead, the trial court ordered the jury would be instructed regarding defendant's discovery failures and allowed to draw an adverse inference. Even when presented with additional evidence of defendant's failures during trial, the trial court refused to award terminating sanctions.  On appeal, the appellate court found that the trial court abused its discretion in failing to impose terminating sanctions and remanded the case with instructions to strike defendant's answer and enter default judgment, among other things.

Defendant's pre-trial discovery violations were numerous and resulted in several motions to compel and two pretrial motions for terminating sanctions.  Those violations included:

• repeated failure to timely produce responsive documents pursuant to court orders, including documents related to it's knowledge of the alleged odor;
• failure to produce responsive documents pursuant to court orders or to provide an explanation for such failure;
• destruction of relevant email;
• repeated misrepresentations that production was complete;
• refusal to produce documents from Bentley Motors Ltd. in the UK, from whom it regularly obtained documents for business purposes; and
• failure to provide plaintiff's counsel with court ordered access to its email files to allow counsel to '‘data-mine' the emails for references to the odor problem.'

Upon plaintiff's first motion for terminating sanctions, the court found that monetary sanctions were warranted.  Later, in the course of the parties' ongoing conflict surrounding discovery, the court appointed a discovery referee.  Despite acknowledging defendant's extensive violations as outlined above, the discovery referee ultimately recommended against terminating sanctions and instead fashioned an adverse inference instruction which was adopted by the court.

Approximately two weeks into trial, plaintiff asserted that defendant had not complied with the court's order to allow access to its emails and had failed to produce requested customer service history reports.  Plaintiff asked for a second order compelling access to the emails.  Thereafter, plaintiff and his attorney traveled to another state to review the emails.  While there, they discovered two highly relevant and previously unknown emails and their attachments.  Plaintiff's counsel also deposed one of defendant's executives for the first time.

Upon his return, plaintiff again requested terminating sanctions.  In support of his request, plaintiff relayed the following facts, revealed on his mid-trial trip:

• the deposed executive testified that there was a possibility that he had deleted relevant emails and that he had first seen an email implementing a litigation hold only three to four months prior;
• defendant's employees were instructed to move their emails to their personal folder files (.pst) which were not made available to plaintiff's counsel during his court ordered email inspection;
• despite multiple file cabinets containing customer complaints, no such files were produced prior to the executive's deposition and even then, only plaintiff's redacted file was produced;
• defendant failed to produce relevant customer service history reports, including plaintiff's and, according to the executive, failed to contact the customer service center responsible for maintaining the reports when responding to discovery;
• defendant failed to produce relevant database information, or even refer to a particular relevant database in its responses to discovery; and
• defendant failed to produce certain other relevant documents.

Despite these and other facts, the court again declined to order terminating sanctions but gave an additional 'special instruction' to the jury.  Plaintiff eventually prevailed on several but not all of his claims and subsequently filed his appeal.

Acknowledging the trial court's 'broad discretion' in choosing an appropriate sanction (and the attendant rarity of finding an abuse of that discretion), the court next focused its discussion on California's discovery statutes and their 'incremental approach' to the imposition of sanctions:

"Discovery sanctions ‘should be appropriate to the dereliction, and should not exceed that which is required to protect the interests of the party entitled to but denied discovery.'"  If a lesser sanction fails to curb misuse, a greater sanction is warranted:  continuing misuses of the discovery process warrant incrementally harsher sanctions until the sanction is reached that will curb the abuse.  "A decision to order terminating sanctions should not be made lightly. But where a violation is willful, preceded by a history of abuse, and the evidence shows that less severe sanctions would not produce compliance with the discovery rules, the trial court is justified in imposing the ultimate sanction.'  [Citations omitted.]

Turning to the facts before it, the appellate court first indicated its unwillingness to find the trial court had abused its discretion in denying plaintiff's motions for terminating sanctions prior to trial.  Regarding the later revelations of discovery abuse, however, the appellate court stated that they had revealed that defendant's conduct was 'worse than originally known' and went on to find that '[d]espite monetary and issue sanctions, [defendant] had flagrantly engaged in such further discovery abuses so as to compel the trial court to impose the next level of sanctions – terminating sanctions.'  According to the appellate court, once the trial court learned, during trial, 'that [defendant] had failed miserably to comply with discovery orders and directives…the trial court had to impose terminating sanctions.'

Therefore, the appellate court affirmed the jury's judgment as to those causes of action for which liability was found and reversed the jury's judgment in favor of defendant on the fraud cause of action with instructions to the trial court to enter a default and default judgment against defendant, among other things.

A copy of the full opinion is available here.

Note: this opinion also includes a discussion of plaintiff's motions for attorney's fees.

Full post as published by eDiscovery Law on June 17, 2009 (boomark / email).