Title: OWEN v F A BUTTREY CO

State: montana

Issuer: Montana Supreme Court

Document:

No. 8 0 - 1 4 1 I N THE SUPREME COURT OF THE STATE OF MONTANA 1 9 8 1 FRANCES L. OWEN, P l a i n t i f f and R e s p o n d e n t , F . A. BUTTREY CO., a M o n t . C o r p . , and CHARLES REVSON, I N C . , a Foreign C o r p . , D e f e n d a n t s and A p p e l l a n t s . A p p e a l f r o m : D i s t r i c t C o u r t of t h e F o u r t h J u d i c i a l D i s t r i c t , I n and for the C o u n t y of Missoula, T h e H o n o r a b l e James B. Wheelis, Judge presiding. C o u n s e l of R e c o r d : For A p p e l l a n t : C o r e t t e , S m i t h , P o h l m a n & A l l e n , B u t t e , M o n t a n a F o r R e s p o n d e n t : T i p p , H o v e n & S k j e l s e t , P.O. B o x 3 7 7 8 , M i s s o u l a ; M o n t a n a . - - S u b m i t t e d on B r i e f s : M a r c h 11, 1-981 F i l e d : MAY 1 1 19.81 Mr. J u s t i c e John Conway H a r r i s o n d e l i v e r e d t h e Opinion o f t h e Court. Defendant Revson a p p e a l s a j u r y v e r d i c t and judgment of t h e Missoula County District C o u r t , c h a l l e n g i n g t h e t r i a l c o u r t ' s d i s c o v e r y p r o c e d u r e s . F r a n c e s Owen f i l e d s u i t i n August 1976 a l l e g i n g t h a t s h e had s u f f e r e d s e v e r e a l l e r g i c r e a c t i o n t o t h e a p p l i c a t i o n of c e r t a i n Revson c o s m e t i c s which a r e d i s t r i b u t e d i n Montana by d e f e n d a n t B u t t r e y . The j u r y r e t u r n e d a $2,300 v e r d i c t f o r p l a i n t i f f Owen, and judgment was e n t e r e d a c c o r d i n g l y . Defendant Revson m a i n t a i n s on a p p e a l t h a t t h e t r i a l c o u r t committed r e v e r s i b l e e r r o r i n t h e i m p o s i t i o n o f s a n c t i o n s under Rule 3 7 , M.R.Civ.P. The D i s t r i c t Court found t h a t Revson had r e p e a t e d l y f a i l e d t o s u f f i c i e n t l y comply w i t h Owen's d i s c o v e r y r e q u e s t s . D i s c o v e r y i n t h i s c a s e p r o c e e d e d p r i m a r i l y through w r i t t e n i n t e r r o g a t o r i e s . Among t h e i n t e r r o g a t o r i e s o r i g i n a l l y submitted t o Revson i n December 1976 was a r e q u e s t t h a t Revson submit a l i s t of a l l p e r s o n s known t o t h e company who claimed t o have s u f f e r e d i n j u r y a s a r e s u l t o f u s i n g t h e c o s m e t i c s i n i s s u e . Owen a l s o s o u g h t i n f o r m a t i o n from Revson r e g a r d i n g any knowledge on t h e p a r t of t h e company t h a t t h e p r o d u c t s were indeed d e f e c t i v e . Due t o R e v s o n ' s i n c a l c i t r a n c e i n r e s p o n d i n g t o p l a i n t i f f ' s i n t e r r o g a t o r i e s , t h e D i s t r i c t Court i s s u e d a s e r i e s of o r d e r s t o compel d i s c o v e r y and impose s a n c t i o n s . I n an A p r i l 30, 1979, o r d e r t h e D i s t r i c t Court commanded Revson t o show c a u s e why a d e f a u l t judgment should n o t be e n t e r e d a g a i n s t it f o r f a i l u r e t o comply w i t h d i s c o v e r y r e q u e s t s . The c o u r t f u r t h e r o r d e r e d t h a t Revson p r e s e n t w i t n e s s e s t o persuade t h e c o u r t t h a t t h e r e c o r d s r e g a r d i n g o t h e r a l l e g e d l y i n j u r e d c l a i m a n t s d i d n o t e x i s t and could n o t be made a v a i l a b l e by r e c o n s t r u c t i o n . On June 1 5 , 1979, t h e D i s t r i c t Court deemed a d m i t t e d t h e f a c t t h a t a s u b s t a n t i a l number o f p e r s o n s had indeed been i n j u r e d a s a r e s u l t of u s i n g t h e c o s m e t i c p r o d u c t s which had a l l e g e d l y i n j u r e d Owen. Revson was s p e c i f i c a l l y precluded from i n t r o d u c i n g any e v i d e n c e c o n t r a r y t o t h e f a c t s now admitted. The o r d e r a l s o d i r e c t e d Revson t o make a company e x e c u t i v e , Dr. E a r l e B r a u e r , a v a i l a b l e i n Missoula, Montana, f o r t h e purpose of d e p o s i t i o n . The company was t o bear a l l expenses o f p r e s e n t i n g Dr. Brauer i n Missoula. On September 27, 1979, t h e c o u r t i s s u e d its o p i n i o n and o r d e r g r a n t i n g s a n c t i o n , d e n y i n g p r o t e c t i v e o r d e r , s e t t i n g s c h e d u l e f o r d i s c o v e r y , and showing c a u s e f o r h e a r i n g . The o r d e r provided t h a t t h e i n f o r m a t i o n and r e c o r d s requested i n I n t e r r o g a t o r y Nos. 40 through 48 were n o t d e s t r o y e d and could i n some way be r e c o n s t r u c t e d . The D i s t r i c t Court found t h a t Revson had y e t t o comply w i t h t h e c o u r t ' s o r d e r s compelling d i s c o v e r y ; t h a t it caused an e a r l i e r t r i a l d a t e t o be continued; and t h a t i t s f a i l u r e t o comply w i t h d i s c o v e r y and o r d e r s o f t h e c o u r t was w i l l f u l d i s o b e d i e n c e . I n l i g h t of t h e f o r e g o i n g , t h e c o u r t denied Revson's motion f o r a p r o t e c t i v e o r d e r r e g a r d i n g t h e Dr. Brauer d e p o s i t i o n . F u r t h e r , t h e c o u r t r u l e d t h a t Owen's c o u n s e l was e n t i t l e d t o r e a s o n a b l e a t t o r n e y fees. F i n a l l y , t h e c o u r t o r d e r e d t h a t c e r t a i n p a r a g r a p h s o f Revson's answer were s t r i c k e n which, i n e s s e n c e , r e q u i r e d t h e admission t h a t t h e p r o d u c t s involved were d e f e c t i v e l y designed s o t h a t a l l e r g i c r e a c t i o n s and i n j u r i e s would be caused t o consumers and t h a t Revson had p r i o r knowledge of t h e d e f e c t i v e n a t u r e of t h e p r o d u c t . On appeal Revson r e q u e s t s t h i s C o u r t t o d e t e r m i n e i f t h e D i s t r i c t Court abused i t s d i s c r e t i o n under Rule 37, M.R.Civ.P., i n i s s u i n g t h e s e d i s c o v e r y o r d e r s and imposing s a n c t i o n s a g a i n s t t h e company. I d e n t i c a l t o t h e c o r r e s p o n d i n g f e d e r a l r u l e , Rule 3 7 ( d ) , M.R.Civ.P., p r o v i d e s i n a p p l i c a b l e p a r t : " F a i l u r e o f p a r t y t o a t t e n d a t own d e p o s i t i o n o r s e r v e a n s w e r s t o i n t e r r o g a t o r i e s o r ........................... ---------- r e s p o n d t o r e q u e s t f o r i n s p e c t i o n . I f a p a r t y o r an o f f i c e r , d i r e c t o r , o r managing a g e n t of a p a r t y o r a person d e s i g n a t e d under Rule 3 0 ( b ) ( 6 ) o r 3 1 ( a ) t o t e s t i f y on b e h a l f of a p a r t y f a i l s (1) t o appear b e f o r e t h e o f f i c e r who is t o t a k e h i s d e p o s i t i o n , a f t e r being served w i t h a proper n o t i c e , o r ( 2 ) t o s e r v e answers o r o b j e c t i o n s t o i n t e r r o g a - t o r i e s submitted under Rule 33, a f t e r p r o p e r s e r v i c e of t h e i n t e r r o g a t o r i e s , o r ( 3 ) t o s e r v e a w r i t t e n response t o a r e q u e s t f o r i n s p e c t i o n s u b m i t t e d under Rule 3 4 , a f t e r proper s e r v i c e of t h e r e q u e s t , t h e c o u r t i n which t h e a c t i o n is pending on motion may make such o r d e r s i n r e g a r d t o t h e f a i l u r e a s a r e j u s t , and among o t h e r s it may t a k e any a c t i o n a u t h o r i z e d under p a r a g r a p h s ( A ) , ( B ) , and ( C ) of s u b d i v i s i o n ( b ) ( 2 ) of t h i s r u l e . . ." (Emphasis added.) W e p r e f a c e our r u l i n g i n t h i s m a t t e r w i t h a g e n e r a l d i s c u s s i o n of Rule 37 s o t h a t t h e f u l l and sober l e s s o n of t h i s d e c i s i o n is n o t l o s t on t h e p r a c t i t i o n e r s a t whom it is d i r e c t e d . I n r e c e n t y e a r s , j u d i c i a l indulgence i n abuses of t h e d i s c o v e r y p r o c e s s h a s b e e n i n c r e a s i n g l y r e p l a c e d by a t o u g h e r , l e s s t o l e r a n t a t t i t u d e t o w a r d p a r t i e s who f r u s t r a t e , r a t h e r t h a n f a c i l i t a t e , d i s c o v e r y . T r i a l c o u r t s , e x a s p e r a t e d by t h e s e a b u s e s , have h e r a l d e d a new d i r e c t i o n i n t h e i r d i s c o v e r y p o l i c i e s . F e d e r a l D i s t r i c t Court Judge P o r t e r , i n S C M S o c i e t a Commerciale S.P.A. v. I n d u s t r i a l and Commercial Research Corp. (N.D. Tex. 1 9 7 6 ) , 72 F.R.D. 110, 112, writes: "This c a s e makes it abundantly c l e a r t h a t t h e supposedly s e l f - e x e c u t i n g f e d e r a l d i s c o v e r y r u l e s a r e being abused. A p p a r e n t l y my p r i o r p o l i c y , which i n c l u d e d a r e l u c t a n c e t o u s e Rule 37 s a n c t i o n s , h a s n o t worked. Hence- f o r t h I w i l l embark on a d i f f e r e n t c o u r s e l i b e r a l l y u s i n g t h e f u l l range o f Rule 37 s a n c t i o n s i n a p p r o p r i a t e c i r c u m s t a n c e s . " Indeed, it h a s been argued t h a t j u d i c i a l l e n i e n c y i n a p p l y i n g s a n c t i o n s is one o f t h e primary shortcomings o f t h e d i s c o v e r y p r o c e s s . S e e D i s c o v e r y S a n c t i o n s Under t h e F e d e r a l R u l e s o f C i v i l P r o c e d u r e : A Goal-Oriented Mission f o r Rule 3 7 , 29 Case Western Reserve Law Rev. 603, 622 ( 1 9 7 9 ) . H e s i t a n c y t o impose s a n c t i o n s h a s been a t t r i b u t e d t o a concern f o r a d i s p o s i t i o n of c a s e s on t h e i r m e r i t s and a r e l u c t a n c e t o p u n i s h p a r t i e s w i t h o u t a b s o l u t e a s s u r a n c e t h a t noncompliance is n o t somehow j u s t i f i a b l e . W. G l a s e r , P r e t r i a l Discovery and t h e Adversary System, 154-156 ( 1 9 6 8 ) . Crowded d o c k e t s have l e d more and more c o u r t s t o overcome t h a t r e l u c t a n c e and r e e m p h a s i z e t h e j u d i c i a l r e s p o n s i b i l i t y t o t h e p u b l i c . Note, Rule 1, M.R.Civ.P., p r o v i d i n g t h a t t h e Rules of C i v i l Procedure be i n t e r p r e t e d t o " s e c u r e t h e j u s t , speedy and i n e x p e n s i v e d e t e r m i n a t i o n o f e v e r y a c t i o n . " T h i s Court r e c o g n i z e s t h a t a p r e d i s p o s i t i o n toward d i s c o v e r y s a n c t i o n s , wherein w e would r e s o l v e d o u b t s about c o n s t i t u t i o n a l l i m i t a t i o n s and t h e purpose o f o u r p r o c e d u r a l r u l e s i n f a v o r of r e s t r a i n t , may be i n c r e a s i n g l y i n a p p r o p r i a t e g i v e n t h e c o m p e l l i n g n e e d t o m a i n t a i n e f f i c i e n t and f a i r j u d i c i a l a d m i n i s t r a t i o n . I n a d o p t i n g a p o s i t i o n t h a t d i l a t o r y d i s c o v e r y a c t i o n s a r e no l o n g e r t o be d e a l t w i t h l e n i e n t l y , w e a r e i n accord w i t h t h e r e c e n t t r e n d of c a s e s i n t e n t upon p u n i s h i n g t r a n s g r e s s o r s r a t h e r t h a n p a t i e n t l y t r y i n g t o encourage t h e i r c o o p e r a t i o n . W e a r e guided by what h a s become a hallmark o f j u d i c i a l a c t i v i s m i n d i s c o v e r y p r o c e e d i n g s - - t h e U n i t e d S t a t e s Supreme Court d e c i s i o n i n N a t i o n a l Hockey League v. M e t r o p o l i t a n Hockey Club, I n c . ( 1 9 7 6 ) , 427 U.S. 639, 96 S . C t . 2778, 49 L.Ed.2d 747 ( p e r c u r i a m ) . T h e r e , r e s p o n d e n t s , p l a i n t i f f s i n a m u l t i d i s t r i c t a n t i t r u s t a c t i o n , f a i l e d f o r s e v e n t e e n months t o respond t o t h e s a t i s f a c t i o n o f t h e o t h e r p a r t i e s o r t h e c o u r t t o hundreds o f i n t e r - r o g a t o r i e s . I n Re P r o f e s s i o n a l Hockey A n t i t r u s t L i t i g a t i o n (E.D. Pa. 1 9 7 4 ) , 63 F.R.D. 641. I n t h e f a c e o f s t e r n admonishment by t h e t r i a l c o u r t , f u r t h e r d e l a y s o c c u r r e d ; y e t , t h e t r i a l c o u r t r e f r a i n e d from imposing s a n c t i o n s s i n c e a l l p a r t i e s w e r e a t t e m p t i n g t o r e a c h a s e t t l e m e n t . Moreover, r e s p o n d e n t s , a t whom t h e d i s c o v e r y was d i r e c t e d , changed counsel and claimed t h a t t h e t r a n s i t i o n h i n d e r e d t h e i r a b i l i t y t o comply. F i n a l l y , a f r u s t r a t e d t r i a l judge d i s m i s s e d t h e i r a c t i o n f i n d i n g " f l a g r a n t bad f a i t h " and " c a l l o u s d i s r e g a r d " of t h e i r r e s p o n s i b i l i t i e s . The Court o f Appeals r e v e r s e d t h e t r i a l c o u r t ' s d i s m i s s a l , concluding t h a t i n view of e x t e n u a t i n g c i r c u m s t a n c e s , t h e r e was i n s u f f i c i e n t b a s i s f o r t h e t r i a l c o u r t ' s a c t i o n . I n Re P r o f e s s i o n a l Hockey A n t i t r u s t L i t i g a t i o n ( 3 r d C i r . 1 9 7 6 ) , 531 F.2d 1188. The United S t a t e s Supreme Court r e v e r s e d t h e C i r c u i t Court of Appeals, r u l i n g t h a t t h e i m p o s i t i o n o f s a n c t i o n s was a d i s c r e t i o n a r y d e c i s i o n of t h e t r i a l judge which must be l e f t u n d i s t u r b e d i n t h e absence o f a f l a g r a n t abuse o f discretion. The Court criticized the traditional leniency of the judiciary as improperly founded on the principle that parties will, if given one more chance, comply with requests long ignored. In a major change of direction, the Court insisted that unconditional impositions of these sanctions are crucial in deterring "other parties to other lawsuits" from willfully flouting the "discovery orders of other district courts." 427 U.S. at 643. Except for emphasizing the deterrence function of Rule 37, the Supreme Court did not delete the requirement of willfulness, nor did it materially lower the willfulness standard. See Societe Internationale v. Rogers (1958), 357 U.S. 197, 78 S.Ct. 1087, 2 L.Ed.2d 1255. National Hockey League constitutes a pivotal case in the development of Rule 37 as a punitive and deterrent mechanism. It signifies a subordination of leniency in favor of the theory that noncompliance can be deterred by the unhesitant use of harsh sanctions. The decision establishes that deterrence is not only permissible but perhaps mandatory as an objective of Rule 37. Deterrence is no longer envisioned as a merely incidental effect of remedial sanctions but as an affirmative instrument in the judicial arsenal to be used in providing the "just, speedy and inexpensive determination of every action. " Rule 1, Fed.R.Civ.P., and also Rule 1, M.R.Civ.P. In spite of what is, in our view, the dispositive teaching of National Hockey League, that the imposition of sanctions for dilatory abuse of discovery is to be regarded with favor, the willfulness standard has been problematic for some courts. Some trial judges continue to be reluctant t o impose s a n c t i o n s . No r e a d i l y d i s c e r n i b l e s t a n d a r d s f o r w i l l f u l n e s s have emerged e x c e p t i n c o u r t s of t h e N i n t h C i r c u i t . The t r i a l c o u r t s i n t h i s c i r c u i t a r e ready and w i l l i n g t o pursue t h e new d i r e c t i o n of N a t i o n a l Hockey League. Indeed, even n e g l i g e n t f a i l u r e t o comply h a s m e t w i t h p u n i t i v e s a n c t i o n . Marquis v. C h r y s l e r Corp. ( 9 t h C i r . The Ninth C i r c u i t has gone t o such a l e n g t h a s t o f i n d t h a t even subsequent compliance w i t h a compelling o r d e r w i l l n o t s e r v e t o c u r e a breach o f t h a t o r d e r . I n G-K P r o p e r t i e s v. Redevelopment Agency of t h e C i t y of San J o s e ( 9 t h C i r . 1 9 7 8 ) , 577 F.2d 645, Judge Kennedy w r i t e s : "Here t h e Court d i s m i s s e d t h e p l a i n t i f f s ' a c t i o n w i t h p r e j u d i c e . I t a c t e d p r o p e r l y i n - - s o d o i n g . W e - e n c o u r a g e s u c h o r d e r s . L i t i g a n t s who a r e w i l l f u l i n h a l t i n g t h e d i s c o v e r y p r o c e s s a c t i n o p p o s i t i o n t o t h e a u t h o r i t y of t h e c o u r t and c a u s e impermis- s i b l e p r e j u d i c e t o t h e i r opponents. It is even more important t o n o t e , i n t h i s e r a of crowded d o c k e t s , t h a t t h e y a l s o d e p r i v e o t h e r l i t i g a n t s of an o p p o r t u n i t y t o use t h e c o u r t s a s a s e r i o u s d i s p u t e - s e t t l e m e n t mechanism. Here t h e a p p e l l a n t s ' l a s t - m i n u t e t e n d e r of r e l e v a n t documents c o u l d n o t c u r e t h e problem t h e y had p r e v i o u s l y c r e a t e d . " 577 F.2d a t 647. (Emphasis added. ) The c o u r t s of t h e Ninth C i r c u i t have set a t e n o r t h a t s i g n a l s t h e u n a c c e p t a b i l i t y of d i s c o v e r y abuses. T h i s Court a d o p t s a s i m i l a r p o s i t i o n . When l i t i g a n t s u s e w i l l f u l d e l a y , e v a s i v e r e s p o n s e , and d i s r e g a r d o f c o u r t d i r e c t i o n a s p a r t and p a r c e l of t h e i r t r i a l s t r a t e g y , t h e y must s u f f e r t h e consequences. The c a s e b e f o r e us e x e m p l i f i e s t h e p r i n c i p l e s we have d i s c u s s e d . Owen sought a $25,000 judgment. The j u r y awarded her $2,300. T h i s was a r e l a t i v e l y s t r a i g h t f o r w a r d a c t i o n s e e k i n g a r e a s o n a b l e compensation. Y e t , l a r g e l y beaause of Revson's c o n t i n u a l f r u s t r a t i o n o f t h e d i s c o v e r y p r o c e s s , Owen's c a u s e involved t h r e e y e a r s of p r o t r a c t e d p r e t r i a l l i t i g a t i o n . The r e c o r d b e f o r e us c a s t s o n l y a s p e r s i o n s on Revson's " p u r i t y of h e a r t . " W e a r e p e r s u a d e d , b a s e d upon R e v s o n ' s o b v i o u s r e l u c t a n c e t o f a c i l i t a t e d i s c o v e r y and its f a i l u r e t o come forward and j u s t i f y its d i l a t o r y a c t i o n s , t h a t n o t o n l y were t h e o r d e r s o f t h e D i s t r i c t C o u r t w h o l l y w i t h i n i t s d i s c r e t i o n a r y powers, b u t t h a t more s e v e r e s a n c t i o n s may have been c a l l e d f o r . I n any e v e n t , when it is n o t p o s s i b l e f o r t h i s Court t o make a ready, c o n f i d e n t , and a c c u r a t e d e t e r m i n a t i o n o f a p a r t y ' s good f a i t h i n t h e d i s c o v e r y p r o c e s s , w e presume t h e c o r r e c t n e s s o f t h e D i s t r i c t C o u r t ' s a c t i o n under Rule 37. N a t i o n a l Hockey League, s u p r a . See a l s o Lumby v. Doetch ( 1 9 7 9 ) , Mont. - , 600 P.2d 200, 202, 36 St.Rep. 1684, 1687. F i n a l l y , w e n o t e t h a t t h e s a n c t i o n s imposed were n o t t h e most s e v e r e s a n c t i o n s a t t h e c o u r t ' s d i s p o s a l under Rule 37, and t h a t most of t h e s a n c t i o n s imposed were o f a kind which would a i d i n t h e d i s c o v e r y p r o c e s s . The D i s t r i c t Court a c t e d wbll w i t h i n t h e c o n f i n e s of its d i s c r e t i o n . W e a f f i r m t h e judgment o f t h e District Court and remand t h e c a u s e f o r a d e t e r m i n a t i o n and award t o respondent of a t t o r n e y f e e s and c o s t s on a p p e a l i n accordance w i t h t h i s o p i n i o n . W e concur: C h i e f J u s t i c e