Dreith v. Nu Image, Inc.
648 F.3d 779
| 9th Cir. | 2011Background
- Musicians Fund seeks residuals under the CBA for musicians who contributed to films in the secondary market.
- Assumption Agreements require signatories to permit inspection of books/records and pay the Fund; the Fund can seek injunctive relief and damages.
- Defendants engaged in extensive discovery misconduct, prompting the district court to issue sanctions and ultimately enter default against several defendants.
- After multiple rounds of orders, disclosures, and hearings, the district court awarded $1.1 million in damages after a thorough damages trial.
- Defendants appealed only the validity of the default order, not the damages judgment, arguing for remand on merits; the Ninth Circuit affirmed the default and damages order.
- The court held that Rule 37(b) sanctions and the Malone factors supported default and that the damages determination was properly based on a complete record.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the district court had authority to impose default as a sanction | Musicians Fund | Nu Image et al. | Yes; district court had power to impose default sanctions under Rule 37(b). |
| Whether the default sanction was an abuse of discretion | Musicians Fund demonstrates egregious discovery abuses; Malone factors favor dismissal | Defendants argue the sanction was too harsh or procedurally flawed | No; the district court properly weighed Malone factors and found egregious conduct justifying default. |
| Whether the defaulted liability ruling resolved the case on the merits or required remand | Damages hearing and liability issues fully litigated; liability conceded on ten films | Remand to address damages or merits anew | Resolved on the merits; no remand required; damages affirmed after full hearing. |
| Whether the damages award and related orders were properly supported by the record | Record fully supports damages calculation; comprehensive damages hearing. | Disclosures and calculations may have deficiencies previously | Yes; damages award is supported and affirmed. |
Key Cases Cited
- Malone v. United States Postal Service, 833 F.2d 128 (9th Cir. 1987) (five-factor test for dismissing or defaulting as sanctions)
- Adriana Int'l Corp. v. Thoeren, 913 F.2d 1406 (9th Cir. 1990) (dismissal factors; sanctions weigh against merits)
- S.M. v. J.K., 262 F.3d 914 (9th Cir. 2001) (abuse of discretion standard for sanctions; de novo review for power first step)
- United States v. Desert Gold Mining Co., 433 F.2d 713 (9th Cir. 1970) (non-final orders; reconsideration authority of district court)
- Atchison, Topeka and Santa Fe Ry. Co. v. Hercules Inc., 146 F.3d 1071 (9th Cir. 1998) (Rule 16 sanctions, scheduling orders, and dismissal authorities)
- In re Phenylpropanolamine (PPA) Products Liab. Litig., 460 F.3d 1217 (9th Cir. 2006) (teeth in scheduling order sanctions; merits-focused resolution)
- Henry v. Sneiders, 490 F.2d 315 (9th Cir. 1974) (illustrates binding nature of oral court orders as discovery directives)
- Unigard Sec. Ins. Co. v. Lakewood Eng'g & Mfg. Corp., 982 F.2d 363 (9th Cir. 1992) (definition of 'order' for Rule 37 sanctions; broad interpretation)
- Facebook, Inc. v. Pac. Nw. Software, Inc., 640 F.3d 1034 (9th Cir. 2011) (disposition goals of discovery and litigation must be prompt)
- Britton v. Coop. Banking Group, 916 F.2d 1405 (9th Cir. 1990) (Rule 55(c)/Rule 60(b) considerations; appealability of default judgment)
- Yourish v. Cal. Amplifier, 191 F.3d 983 (9th Cir. 1999) (factors for dismissal; need for explicit findings)
- United States v. 191.07 Acres of Land, 482 F.3d 1132 (9th Cir. 2007) (harmless error standard in appellate review)
- Obrey v. Johnson, 400 F.3d 691 (9th Cir. 2005) (harmless error; substantial rights requirement)