Leroy Haeger v. the Goodyear Tire & Rubber Co
813 F.3d 1233
| 9th Cir. | 2016Background
- Haegers sued Goodyear for a motor-home tire (G159) failure; Goodyear (represented by Musnuff and local counsel Hancock) removed to federal court and litigated through discovery and settlement on the first day of trial.
- Plaintiffs repeatedly requested all test records for the G159 tire; Goodyear produced only DOT test data initially and later selectively produced additional tests long after requests and depositions.
- Goodyear’s counsel received internal High Speed and Heat Rise tests and other durability tests but delayed/withheld production, made affirmative misrepresentations to the court about completeness of production, and deposed plaintiff experts while knowing records existed.
- After settlement, plaintiff learned from other G159 cases that more test data existed and moved for sanctions; district court found bad faith discovery fraud and deceit and imposed monetary sanctions (attorneys’ fees and costs) and a non-monetary order requiring Goodyear to file the sanction order in future G159 cases.
- District court awarded full fees after a specified date ($2,741,201.16 total) allocated between Hancock (20%) and Musnuff/Goodyear (80%); Ninth Circuit affirmed the monetary and non-monetary sanctions.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether district court properly invoked inherent power vs. Rules/§1927 | Inherent power appropriate because fraud was discovered after settlement and Rules remedies were inadequate | Sanctionees argued Rule 37 or §1927 should govern and court abused discretion in using inherent power | Court: Inherent power properly invoked; not an abuse of discretion |
| Whether facts support bad-faith finding necessary for inherent-power sanctions | Haegers: counsel knowingly withheld and misrepresented existence of responsive tests, amounting to fraud on the court | Sanctionees denied knowing fraud; argued no deliberate intent and compliance with discovery | Court: Clear and convincing evidence of bad faith; withholding and misrepresentations tantamount to fraud on the court |
| Scope/measure of monetary sanctions (must be linked to harm) | Haegers sought full fees after supplemental response date because misconduct permeated litigation and made tracing fees impossible | Sanctionees relied on Miller and argued sanctions must be directly linked to specific harm caused by misconduct | Court: Chambers controls; compensatory award of all fees after cutoff was within discretion and not improperly punitive |
| Validity of non-monetary sanction requiring filing the Order in future G159 cases | Plaintiffs: notice to future courts/claimants appropriate to prevent repeated misuse and to disclose concealed tests | Goodyear: sanction overbroad and prejudicial to unrelated proceedings | Court: Non-monetary sanction narrowly tailored, provides mechanism to seek relief, and was within inherent power |
Key Cases Cited
- Chambers v. NASCO, 501 U.S. 32 (1991) (federal courts have inherent power to sanction bad-faith litigation conduct and may award attorneys’ fees to vindicate the court and compensate victims)
- Hazel-Atlas Glass Co. v. Hartford-Empire Co., 322 U.S. 238 (1944) (fraud on the court by presentation of fraudulent evidence warrants relief)
- Universal Oil Prods. Co. v. Root Refining Co., 328 U.S. 575 (1946) (inherent power includes investigating whether a judgment was obtained by fraud)
- Miller v. City of Los Angeles, 661 F.3d 1024 (9th Cir. 2011) (discusses limits on inherent-power sanctions and requirement that compensatory sanctions be tied to harm caused)
- F.J. Hanshaw Enterprises, Inc. v. Emerald River Dev., 244 F.3d 1128 (9th Cir. 2001) (distinguishes punitive vs. compensatory sanctions and due-process protections for punitive fines)
- B.K.B. v. Maui Police Dep’t, 276 F.3d 1091 (9th Cir. 2002) (counsel’s reckless and knowing conduct can be tantamount to bad faith and sanctionable)
- Lasar v. Ford Motor Co., 399 F.3d 1101 (9th Cir. 2005) (upholding monetary sanctions as compensatory for unnecessary costs and fees)
- International Union, United Mine Workers v. Bagwell, 512 U.S. 821 (1994) (distinguishes civil/compensatory sanctions from criminal/punitive contempt and requires procedural protections for punitive fines)