FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

LEROY HAEGER; DONNA HAEGER,

husband and wife; BARRY HAEGER;

SUZANNE HAEGER, husband and

wife,

Plaintiffs-Appellees,

v.

THE GOODYEAR TIRE & RUBBER

COMPANY, an Ohio corporation,

Defendant-Appellant,

and

SPARTAN MOTORS, INC., a Michigan

corporation; GULFSTREAM COACH,

INC., an Indiana corporation,

Defendants,

v.

ROETZEL & ANDRESS, LPA; BASIL J.

MUSNUFF,

Movants.

No. 12-17718

D.C. No.

2:05-cv-02046-

ROS
2 HAEGER V. GOODYEAR TIRE & RUBBER CO.

LEROY HAEGER; DONNA HAEGER,

husband and wife; BARRY HAEGER;

SUZANNE HAEGER, husband and

wife,

Plaintiffs-Appellees,

v.

THE GOODYEAR TIRE & RUBBER

COMPANY, an Ohio corporation,

Defendant-Appellant.

No. 13-16801

D.C. No.

2:05-cv-02046-

ROS

LEROY HAEGER; DONNA HAEGER,

husband and wife; BARRY HAEGER;

SUZANNE HAEGER, husband and

wife,

Plaintiffs-Appellees,

v.

THE GOODYEAR TIRE & RUBBER

COMPANY, an Ohio corporation;

SPARTAN MOTORS, INC., a Michigan

corporation; GULFSTREAM COACH,

INC., an Indiana corporation,

Defendants,

v.

BASIL J. MUSNUFF,

Movant-Appellant.

No. 13-16861

D.C. No.

2:05-cv-02046-

ROS
HAEGER V. GOODYEAR TIRE & RUBBER CO. 3

LEROY HAEGER; DONNA HAEGER,

husband and wife; BARRY HAEGER;

SUZANNE HAEGER, husband and

wife,

Plaintiffs-Appellees,

v.

THE GOODYEAR TIRE & RUBBER

COMPANY, an Ohio corporation;

SPARTAN MOTORS, INC., a Michigan

corporation; GULFSTREAM COACH,

INC., an Indiana corporation,

Defendants,

v.

FENNEMORE CRAIG, P.C.; GRAEME

HANCOCK,

Movants-Appellants.

No. 13-16862

D.C. No.

2:05-cv-02046-

ROS

OPINION

Appeal from the United States District Court

for the District of Arizona

Roslyn O. Silver, Senior District Judge, Presiding

Argued and Submitted

March 10, 2015—San Francisco, California

Filed July 20, 2015

Before: J. Clifford Wallace, Milan D. Smith, Jr.,

and Paul J. Watford, Circuit Judges.
4 HAEGER V. GOODYEAR TIRE & RUBBER CO.

Opinion by Judge Milan D. Smith, Jr.;

Dissent by Judge Watford

SUMMARY*

Sanctions

The panel affirmed the district court’s order imposing

monetary sanctions against attorneys Basil Musnuff and

Graeme Hancock and The Goodyear Tire & Rubber

Company, and non-monetary sanctions against Goodyear.

The panel held that it was not an abuse of discretion for

the district court to rely on its inherent power to sanction the

conduct at issue in this case, and to determine that Fed. R.

Civ. P. 37 did not provide the appropriate remedy, especially

since the discovery fraud was not discovered until after the

cases had settled.

The panel held that it was not abuse of discretion to find

that the Sanctionees each acted in bad faith. The panel also

held that the district court acted well within its discretion in

awarding all the attorneys’ fees and costs incurred by the

Plaintiffs after Goodyear served its supplemental responses

to Plaintiffs’ First Request.

The panel held that the district court did not abuse its

discretion in imposing non-monetary sanctions on Goodyear. 

The panel held that the district court’s imposition of

* This summary constitutes no part of the opinion of the court. It has

been prepared by court staff for the convenience of the reader.
HAEGER V. GOODYEAR TIRE & RUBBER CO. 5

non-monetary sanctions against Goodyear was balanced,

narrowly tailored, and imposed no sanctions beyond what

was necessary to remedy what the district court perceived as

an ongoing problem in Goodyear’s litigation.

Judge Watford dissented. He agreed with the majority

that the district court’s misconduct findings were supported

by the record, but he would nonetheless conclude that the

$2.7 million sanctions award must be vacated because

Goodyear and its lawyers were not afforded heightened

procedural protections before punitive sanctions were

imposed.

COUNSEL

Pierre H. Bergeron (argued), Squire Sanders LLP, Cincinnati,

Ohio; George Brandon, Squire Sanders LLP, Phoenix,

Arizona; Jill G. Okun, Squire Sanders LLP, Cleveland, Ohio,

for Defendant-Appellant/Defendant The Goodyear Tire &

Rubber Company.

Mark I. Harrison (argued), Jeffrey B. Molinar, Osborn

Maledon, PA, Phoenix, Arizona, for Movant/MovantAppellant Basil J. Musnuff.

Andrew M. Jacobs, (argued), Katherine V. Foss, Snell &

Wilmer LLP, Tucson, Arizona; James R. Condo, Lisa M.

Coulter, Snell &Wilmer LLP, Phoenix, Arizona, for MovantAppellant Graeme Hancock.

John J. Egbert (argued), Jennings Strouss & Salmon, PLC,

Phoenix, Arizona; David L. Kurtz, The Kurtz Law Firm,

Scottsdale, Arizona, for Plaintiffs-Appellees.
6 HAEGER V. GOODYEAR TIRE & RUBBER CO.

OPINION

M. SMITH, Circuit Judge:

On November 8, 2012, after a six-hour evidentiary

hearing, and after considering the record in the case and

fifteen briefs filed by the potentially-sanctionable parties,

then-Chief United States District Judge Roslyn O. Silver, of

the United States District Court for the District of Arizona,

handed down a sixty-six-page order (Order) imposing

sanctions ultimately calculated in the sum of $548,240

against attorneyGraeme Hancock (Hancock), and $2,192,961

jointly against attorney Basil J. Musnuff (Musnuff) and The

Goodyear Tire & Rubber Company (Goodyear) (collectively

the Sanctionees). In the Order, which included forty-nine

pages of findings of fact and seventeen pages of legal

analysis, Judge Silver found that “there is clear and

convincing evidence that sanctions are required to be imposed

against [] Hancock, [] Musnuff, and Goodyear. The Court is

aware of the unfortunate professional consequences that may

flow from this Order. Those consequences, however, are a

direct result of repeated, deliberate decisions by [] Hancock,

[] Musnuff, and Goodyear to delay the production of relevant

information, make misleading and false in-court statements,

and conceal relevant documents. [] Hancock, [] Musnuff, and

Goodyear will surely be disappointed, but they cannot be

surprised.”1

1 The district court began its order with the following powerful

declaration, which warrants the attention of all members of the bar: 

“Litigation is not a game. It is the time-honored method of seeking the

truth, finding the truth, and doing justice. When a corporation and its

counsel refuse to produce directly relevant information an opposing party

is entitled to receive, they have abandoned these basic principles in favor
HAEGER V. GOODYEAR TIRE & RUBBER CO. 7

Because the fraud and deceit practiced on the district

court and the Plaintiffs by the Sanctionees was not

discovered until after the underlying litigation had been

closed and Plaintiffs had settled with Goodyear based upon

the incomplete information provided by the Sanctionees, the

district court imposed the sanctions in reliance upon its

inherent power, and not under Federal Rule of Civil

Procedure 11, or 28 U.S.C. § 1927.

The Sanctionees appeal from the judgment awarding the

sanctions, arguing that the district court abused its discretion

in relying upon its inherent power to impose sanctions, and in

determining the amount and the nature of the sanctions

imposed.

We affirm both the district court’s monetary and nonmonetary sanctions imposed against the Sanctionees.

FACTUAL AND PROCEDURAL BACKGROUND

In June 2003, Leroy and Donna Haeger, and Barry and

Suzanne Haeger (collectively the Haegers, or Plaintiffs) were

all seriously injured when one of the Goodyear G159 tires on

the front of their motor home failed while they were driving

on a highway, which caused their vehicle to swerve off the

road and overturn. The Haegers retained attorney David

Kurtz (Kurtz), who filed suit against Goodyear in 2005 in

Arizona state court. The case was quickly removed to federal

court by Goodyear. Goodyear was represented by Musnuff,

who served as Goodyear’s “national coordinating counsel” on

all G159 cases, and Hancock, who served as Goodyear’s local

oftheir own interests.[] The little voice in every attorney’s conscience that

murmurs turn over all material information was ignored.”
8 HAEGER V. GOODYEAR TIRE & RUBBER CO.

counsel in Arizona. Musnuff and Goodyear’s in-house

counsel, Deborah Okey (Okey), were responsible for

reviewing and approving all discovery responses in the case.

Before releasing its G159 tire, Goodyear performed

FMVSS119 Department of Transportation (DOT) tests,

electronic post-production W84 high speed test data (High

Speed tests), L04 heat rise test results (Heat Rise tests), DOT

endurance tests, crown durability tests, and bead durability

tests on the tire. Throughout discovery, the Haegers

repeatedly sought the results of Goodyear’s tests on the G159

tire. However, as detailed below, Goodyear, Musnuff, and

Hancock failed to search for, and/or withheld these relevant

and responsive G159 testing documents in violation of their

discovery obligations to produce requested relevant

documents, and to supplement prior disclosures. See Fed. R.

Civ. Pro. 26, 34.

Goodyear served its Initial Disclosure Statement on the

Plaintiffs on December 15, 2005, pursuant to Rule 26. The

initial disclosures did not include testing information, and

Kurtz promptly requested that Goodyear produce “[t]esting

documentation regarding the G159 tires.” Nevertheless,

Goodyear did not supplement the disclosures in its Initial

Disclosure Statement. Goodyear propounded interrogatories

asking for, among other things, “each legal theory under

which you believe Goodyear is liable.” In response, on

August 18, 2006, the Haegers articulated their theory of the

case: “Prolonged heat causes degradation of the tire which,

under appropriate circumstances, can lead to tire failure and

tread separation even when the tire is properly inflated.”

Additionally, the Haegers stated that when the G159 tire was

used on motor homes, the tire produced a level of heat and
HAEGER V. GOODYEAR TIRE & RUBBER CO. 9

degradation “which the tire was not designed to endure,

leading to its premature failure.”

The Haegers served their First Request for Production of

Documents (First Request), pursuant to Rule 34, in

September 2006. “Request for Production Number 14”

requested “[a]ll test records for the G159 tires, including, but

no[t] limited to, road tests, wheel tests, high speed testing,

and durability testing.” Goodyear objected to this request

with a series of boilerplate objections, and failed to produce

any documents. However, on November 1, 2006, in its

supplemental response to “Request for Production Number

14,” Goodyear agreed to produce the FMVSS119 DOT tests

for the G159 tire. On December 20, 2006, Kurtz sent

Hancock a letter clarifying what had been requested:

Request for Production No. 14. We asked for

test records for the G159 275/70R 22.5,

including road tests, wheel tests, high speed

testing, and durability testing. You objected,

suggesting the test records were overly broad

and unduly burdensome. You have only

produced the DOT test data showing the tires

were tested at 30 mph. My interest is in

finding the rest of the test data. If there is any,

it is your obligation to disclose it.

On January 2, 2007, Hancock wrote an email to Musnuff

regarding “Request for Production Number 14,” stating:

We should either respond to any portions of

Kurtz’ 12.20 letter or figure out that we have

a fight on our hands on these points and

prepare a counter argument . . . RTP 14. [ . . .]
10 HAEGER V. GOODYEAR TIRE & RUBBER CO.

[t]est records for all testing on this size G159

tire. Again, was the only testing at 30 mph or

less? What speed testing/fleet testing did

Goodyear relyon? Can/should we supplement

since his theory is that this tire can’t operate at

75 mph in the southwest for long periods?

On January 5, 2007, the Haegers’s expert witness, David

Osborne (Osborne), identified speed as a contributing factor

in the G159 tire’s failure in his expert report. In response to

Osborne’s report, Musnuff wrote to Hancock:

Osborne appears to draw the conclusion that

the subject tire was only tested at speeds up to

30 mph from the fact that the only test data we

produced is the DOT test data. Of course, our

discovery response was limited to DOT test

data because plaintiff had not yet identified

their defect theory at that time. Now that

plaintiffs are pinpointing speed as an issue,

perhaps we need to supplement our discovery

responses to show the testing of this tire at

various speeds. Thoughts?

Musnuff also forwarded this email to Goodyear’s in-house

counsel, Okey, concluding “we should consider

supplementing our discovery responses to show the testing of

this tire at various higher speeds.” Despite Goodyear’s

understanding of its obligation to supplement its previous

discovery responses, they were not supplemented.

Also in January 2007, one of Goodyear’s tire engineers

located the G159 tire’s High Speed tests and Heat Rise tests.

It is clear that the engineer delivered at least the High Speed
HAEGER V. GOODYEAR TIRE & RUBBER CO. 11

tests to Musnuff because on February 12, 2007, Musnuff

emailed the High Speed tests to Hancock. Neither Musnuff

nor Hancock produced these tests to the Haegers. Instead, on

April 6, 2007, when Judge Silver asked Hancock “is there any

internal documentation that is available that has been

requested that your . . . clients have not provided,” Hancock

responded that Goodyear had “responded to all outstanding

discovery . . . if a document shows up, we’ll of course

produce it and supplement our answers.” This response to

Judge Silver was false. At the time of this statement, Hancock

had been sent the High Speed tests and had stated to Musnuff

that they should be produced promptly “given the accusation

of no high speed testing in the January report that put that at

issue in the case”; it was thus a false representation to state

that Goodyear had responded to all outstanding discovery.

Additionally, as a follow up to his receipt of the High

Speed tests, Musnuff emailed Goodyear’s tire engineer

requesting additional data, explaining “if we disclose any of

the [High Speed] testing – which is in our best interest – then

we need to produce all of it.” Despite the fact that these High

Speed testing documents were responsive to the Haegers’

discoveryrequest, Musnuff wasstill undecided about whether

they were going to be produced.

On May 8, 2007, the Haegers served a Third Request for

Production of Documents (Third Request) requesting tests

related to whether the G159 tire was suitable for use at a

speed of 75 mph. At a discovery dispute hearing on May 17,

2007, Hancock admitted that there were tests available

showing that the tire was tested for speeds above 30 mph, but

did not mention that Goodyear had been withholding these

tests from the Haegers for approximately four months.

Instead, Hancock represented that Goodyear would now
12 HAEGER V. GOODYEAR TIRE & RUBBER CO.

produce these tests because of the new obligation arising

from the Haegers’ Third Request. This was a

misrepresentation to the court as Hancock had known that

these High Speed tests were responsive to the First Request

since February 2007.

On May 21, 2007, Goodyear deposed Osborne, the

Haegers’ expert witness. Osborne was deposed while under

the impression that no high speed testing of the tire had been

done. Neither Hancock nor Musnuff disclosed that Goodyear

was withholding the High Speed tests. The district court

found that taking Osborne’s deposition “knowing that Mr.

Osborne was operating under incorrect assumptions and an

incomplete record,” could only have been done “to delay

production of the tests in hopes of gaining a tactical

advantage.”

Goodyear finally produced the High Speed tests on June

21, 2007, again representing that the production was in

response to the Third Request, when these tests were actually

responsive to the First Request.

On September 13, 2007, Richard Olsen (Olsen),

Goodyear’s Rule 30(b)(6) witness, testified during a

deposition that while additional tests had been undertaken to

determine if Goodyear could justify a speed rating of the

G159 tire at 75 mph, none of these additional tests was

available. Such tests were clearly in addition to the High

Speed tests that had been turned over to the Haegers. Shortly

after Olsen’s deposition, on October 19, 2007, Hancock

assured the court that there were no other tests in existence

beyond those already produced to the Haegers. Despite the

Haegers’ demands for production, during pre-trial discovery,
HAEGER V. GOODYEAR TIRE & RUBBER CO. 13

Goodyear disclosed only the FMVSS119 DOT tests and the

High Speed tests.

On April 14, 2010, the first day of trial, the Haegers and

Goodyear informed the court that they had reached a

settlement, and the court closed the case. Based on the

information derived from the results of at least one of the

Other G159 Cases (discussed below), without having the

relevant information in their possession due to the

Sanctionees’ deceit, the Haegers apparentlysettled for a small

fraction of what they might otherwise have done.

Some time after the case had settled, Kurtz saw an article

stating that Goodyear had produced internal heat and speed

testing in a separate case involving the G159 tire, and he

realized that Goodyear had withheld evidence it was required

to produce during discovery. Kurtz filed a motion for

sanctions on May 31, 2011. The motion for sanctions argued

that Goodyear had engaged in discovery fraud by “knowingly

conceal[ing] crucial ‘internal heat test’ records related to the

defective design of the G159.” Goodyear’s opposition to the

motion argued that it “never represented that the DOT test

data comprised the totality of testing with regard to the G159

tire.” Goodyear further argued:

Nor did Goodyear ever state or imply that it

would produce “all test records for the G159

tires” or identify all tests performed on the

G159 tires as sought in plaintiffs’ initial

discoveryrequests. Rather, Goodyear objected

to these requests and stated precisely which

test records it agreed to produce,

unambiguously indicating that it would not

produce all test data.
14 HAEGER V. GOODYEAR TIRE & RUBBER CO.

This argument came as a surprise to the district court and it

admitted that it “was under the impression that Goodyear had

produced all test data relevant to Plaintiffs’ claims.”

On October 5, 2011, finding that there were “serious

questions regarding [Goodyear’s] conduct in this case,” the

district court ordered Goodyear to produce “the test results at

issue.” Goodyear produced the Heat Rise tests, but did not

mention any additional tests.

On February 24, 2012, the district court issued a proposed

order sanctioning Goodyear based on Goodyear’s failure to

produce the Heat Rise tests and the repeated representations

made by Hancock to the district court that all responsive

documents had been produced. The district court’s proposed

order concluded that the Heat Rise tests should have been

produced in response to the First Request. In responding to

this proposed order, Goodyear, apparently by accident,

disclosed the existence of additional G159 tests – the crown

durability, bead durability, and DOT endurance tests – none

of which had been mentioned or produced in the litigation.

The court also discovered that Olsen, Goodyear’s Rule

30(b)(6) witness, knew about, but failed to mention, these

additional tests at his deposition. The district court held that

these tests should also have been produced as responsive to

the Haegers’ First Request.

The district court held an evidentiary hearing on March

22, 2012, at which both Musnuff and Hancock testified that

they had not knowingly engaged in discovery fraud. The

district court found their testimonies to be untruthful and

unreliable, and held that “Mr. Hancock, Mr. Musnuff, and

Goodyear engaged in repeated and deliberate attempts to

frustrate the resolution of this case on the merits.”
HAEGER V. GOODYEAR TIRE & RUBBER CO. 15

In its Order, the district court reviewed Goodyear’s

discovery responses in certain other G159 tire failure actions

(collectively the Other G159 Cases) against Goodyear in

order to compare what the Sanctionees knew, and when they

knew it, with regards to the G159 tests.2In Woods v.

Goodyear, No. CV 04-45 (Circuit Court of Hale County,

Alabama), in August 2007, a Goodyear employee informed

Musnuff that in addition to the High Speed tests, the tests

used to determine the suitability of the G159 to be driven at

65 mph included FMVSS119 DOT tests, Heat Rise tests, bead

durability tests, crown durability tests, W16 tests, W64 tests,

G09 tests, and L04 tests. In Schalmo v. Goodyear, No. 51-

2006-CA-2064-WS (Fla. Cir. Ct., 6th Cir., Pasco County), in

April 2008, Musnuff and Goodyear produced the Heat Rise

tests in response to a request to produce tests associated with

speed rating. Musnuff wrote an email in May 2009 stating

that the Schalmo plaintiffs “highlighted the Heat Rise testing

taken during the durability testing of the G159.” This case

ended in a plaintiff’s verdict of $5.6 million. Finally, in

Bogaert v. Goodyear, No. CV 2005-051486 (Sup. Ct. of

Maricopa County, Arizona), in response to an order from the

court to produce testing of the G159 tire’s suitability at

65 mph, Musnuff emailed Hancock in June 2008 stating that

the whole suitability testing package included: (1) the

extended DOT tests, (2) the Heat Rise tests, (3) the bead

durability tests, and (4) the crown durability tests. As in this

case, in each of the Other G159 Cases, Goodyear engaged in

lengthy discovery battles with the plaintiffs before it

produced the requested documents. Woods and Bogaert were

2 The district court considered Hancock, Musnuff, and Goodyear’s

conduct in the Other G159 Cases for the purpose of assessing credibility,

and determining the actors’ state of mind. It expressly did not base its

sanctions on the Sanctionees’ conduct in the Other G159 Cases.
16 HAEGER V. GOODYEAR TIRE & RUBBER CO.

ultimately settled, but the amount of the settlements is either

held under seal, or not reflected in the record of those cases.

As stated above, presumablywith the benefit of the Heat Rise

tests, Schalmo yielded a $5.6 million verdict to the plaintiffs.

The district court considered each of the Sanctionees’

conduct in the Other G159 Cases in light of their conduct in

the present case, and concluded that “Goodyear and its

counsel took positions in other G159 cases directly contrary

to the positions they now ask this Court to accept. The

positions taken in these other cases, when Goodyear and its

counsel were not attempting to avoid sanctions, are reliable.”

The district court concluded that sanctions under

28 U.S.C. § 1927 could not reach Goodyear’s conduct, and

that sanctions pursuant to Rule 11 were unavailable as they

should be imposed before a case is closed. Accordingly,

relying upon its inherent power, the district court determined

that the most appropriate sanction for “remedying a yearslong course of misconduct” would be “to award Plaintiffs all

of the attorneys’ fees and costs they incurred after Goodyear

served its supplemental responses to Plaintiffs’ First

Request.” The district court held that the supplemental

responses, in which Goodyear only produced the FMVSS119

DOT tests, “was the first definitive proof that Goodyear was

not going to cooperate in the litigation process.” The court

also noted that while it would be impossible to determine how

the litigation would have proceeded if Goodyear had made

the proper disclosures, the case more likely than not would

have settled much earlier, and, the Haegers believe, for

considerably more money.

The district court then conducted an exhaustive analysis

of the documentation submitted by Plaintiffs concerning the
HAEGER V. GOODYEAR TIRE & RUBBER CO. 17

time entries of its attorneys after Goodyear served its

supplemental responses to Plaintiffs’ First Request, and the

extensive objections made by Goodyear and its counsel to

these time entries. The district court “spent considerable time

reviewing each time entry and its associated objections in an

attempt to ensure the appropriate size of the award,” and with

painstaking attention to detail, made adjustments based on

Goodyear’s objections.Ultimately, using the lodestar method,

the district court found that the Haegers should be reimbursed

$2,741,201.16 in attorneys’ fees and costs. The district court

determined that Hancock would be responsible for twenty

percent of these fees and costs “[b]ased on his relatively

limited involvement, but in light of his repeated

misstatements and his failure to correct the record once he

learned his representations were false.” Musnuff and

Goodyear were held jointly responsible for the remaining

eighty percent of the fees and costs.

The district court also ordered Goodyear “to file a copy of

this Order in any G159 case initiated after the date of this

Order,” with a footnote indicating that “Goodyear may apply

to the court hearing the case to be excused from this

requirement.” The district court concluded that such filings

were necessary based on Goodyear’s history of engaging in

discovery misconduct during every G159 case that had been

brought to the court’s attention. The court reasoned that by

filing the Order in future G159 cases, Goodyear would “alert

plaintiffs and the courts” that it has not acted “in good faith

in the past when litigating such cases,” and give notice of the

tests Goodyear had “attempted to conceal in previous cases.”
18 HAEGER V. GOODYEAR TIRE & RUBBER CO.

STANDARD OF REVIEW AND JURISDICTION

“The district court’s award of sanctions and the amount

of the award are reviewed for abuse of discretion.” B.K.B. v.

Maui Police Dep’t, 276 F.3d 1091, 1108 (9th Cir. 2002)

(citing Chambers v. NASCO, Inc., 501 U.S. 32, 55 (1991)).

Since imposing a sanction under its inherent authority “is

within the sound discretion of the district court, we will not

overturn its decision unless the court committed an error of

law or the court’s factual determinations were clearly

erroneous.” Lasar v. Ford Motor Co., 399 F.3d 1101, 1109

(9th Cir. 2005).

We need not resolve whether a bad faith finding must be

supported by clear and convincing evidence, or whether a

lesser quantum of evidence suffices, because the district court

did not abuse its discretion in finding clear and convincing

evidence of bad faith by the Sanctionees in this case. See

Lahiri v. Universal Music and Video Distrib. Corp., 606 F.3d

1216, 1219 (9th Cir. 2010).

We have jurisdiction over the Sanctionees’ appeals

pursuant to 28 U.S.C. § 1291.

DISCUSSION

I. The District Court’s Inherent Power

“It has long been understood that [c]ertain implied powers

must necessarily result to our Courts of justice from the

nature of their institution, power which cannot be dispensed

with in a Court, because they are necessary to the exercise of

all others.” Chambers v. NASCO, Inc., 501 U.S. 32, 43 (1991)

(internal citations and quotation marks omitted). The
HAEGER V. GOODYEAR TIRE & RUBBER CO. 19

Supreme Court has specifically recognized that the “inherent

power of a federal court to investigate whether a judgment

was obtained by fraud, is beyond question.” Universal Oil

Prods. Co. v. Root Refining Co., 328 U.S. 575, 580 (1946)

(citing Hazel-Atlas Glass Co. v. Hartford Empire Co.,

332 U.S. 238 (1944)).

This inherent power is not limited by overlapping statutes

or rules. The Supreme Court explained “that the inherent

power of a court can be invoked even if procedural rules exist

which sanction the same conduct.” Chambers, 501 U.S. at 49.

Thus, the Sanctionees’ argument that the district court should

have relied on Federal Rule of Civil Produce 37 fails.3 While

3 Rule 37 provides that “[o]n notice to other parties and all affected

persons, a party may move for an order compelling disclosure or

discovery. The motion must include a certification that the movant has in

good faith conferred or attempted to confer with the person or party failing

to make disclosure or discovery in an effort to obtain it without court

action.” If the party fails to comply with a court order, Rule 37 provides

the following remedies: Rule 37(b)(2)(A) “If a party . . .fails to obey an

order to provide or permit discovery . . . the court where the action is

pending may issue further just orders. They may include the following:

(i) directing that the matters embraced in the order or other designated

facts be taken as established for purposes of the action, as the prevailing

party claims; (ii) prohibiting the disobedient party from supporting or

opposing designated claims or defenses, or from introducing designated

matters in evidence; (iii) striking pleadingsin whole or in part; (iv) staying

further proceedings until the order is obeyed; (v) dismissing the action or

proceeding in whole or in part; (vi) rendering a default judgment against

the disobedient party; or (vii) treating as contempt of court the failure to

obey any order except an order to submit to a physical or mental

examination”; Rule 37(b)(2)(C) “Instead of or in addition to the orders

above, the court must order the disobedient party, the attorney advising

that party, or both to pay the reasonable expenses, including attorney’s

fees, caused by the failure, unless the failure was substantially justified or

other circumstances make an award of expenses unjust.”
20 HAEGER V. GOODYEAR TIRE & RUBBER CO.

Rule 37 also provides a method to sanction a party for failing

to comply with discovery rules, it is not the exclusive means

for addressing the adequacy of a discovery response. See id.

The Sanctionees also argue that the court cannot impose

sanctions in this case because the Haegers failed to move to

compel disclosure or discovery under Rule 37, and thus the

Sanctionees never violated a district court order compelling

disclosure or discovery. More specifically, the Sanctionees

contend that absent such a motion to compel or order

requiring production, Goodyear and its counsel complied with

discovery rules, and thus the district court does not have

power to sanction the Sanctionees’ conduct. The Supreme

Court has expressly rejected this argument. “[N]either is a

federal court forbidden to sanction bad-faith conduct by

means of the inherent power simply because that conduct

could also be sanctioned under the statute or the Rules . . . if

in the informed discretion of the court, neither the statute nor

the Rules are up to the task, the court may safely rely on its

inherent power.” Id. at 50. We hold that it was not an abuse

of discretion for the district court to rely on its inherent power

to sanction the conduct at issue in this case, and to determine

that Rule 37 did not provide the appropriate remedy,

especially since the discovery fraud was not discovered until

after the case had settled.

Additionally, if a party fails to disclose or supplement an earlier

response, Rule 37(c)(1) states: “If a party fails to provide information . . .

the party is not allowed to use that information . . . to supply evidence on

a motion, at a hearing, or at a trial, unless the failure was substantially

justified or is harmless. In addition to or instead of this sanction, the court,

on motion and after giving an opportunity to be heard: (A) may order

payment of the reasonable expenses, including attorney’s fees, caused by

the failure; (B) may inform the jury of the party’s failure; and (C) may

impose other appropriate sanctions . . . .”
HAEGER V. GOODYEAR TIRE & RUBBER CO. 21

A. Bad Faith

Before awarding sanctions pursuant to its inherent power,

“the court must make an express finding that the sanctioned

party’s behavior ‘constituted or was tantamount to bad

faith.’” Leon v. IDX Sys. Corp., 464 F.3d 951, 961 (9th Cir.

2006). We have found bad faith in a variety of conduct

stemming from “a full range of litigation abuses.” Chambers,

501 U.S. at 47. For example “[a] party ‘demonstrates bad

faith by delaying or disrupting the litigation . . . .’ Primus

Auto. Fin. Servs., Inc. v. Batarse, 115 F.3d 644, 648 (9th Cir.

1997).” Leon, 464 F.3d at 961 (plaintiff demonstrated bad

faith by going to extraordinarymeasures to destroy evidence).

Actions constituting a fraud upon the court or actions that

cause “the very temple of justice [to be] defiled” are also

sufficient to support a bad faith finding. Chambers, 501 U.S.

at 46. For example, in Pumphrey v. K.W. Thompson Tool

Company, the decedent’s family brought a wrongful death

action against a gun manufacturer after the decedent dropped

the manufacturer’s gun with the safety devices engaged and

it fired, killing the decedent. 62 F.3d 1128, 1130 (9th Cir.

1995). During trial, the manufacturer introduced tests

showing that when the gun was dropped, the safeties

performed as designed and the gun never fired. Id. After the

trial concluded, Plaintiffs’ attorney learned that in a

subsequent, unrelated lawsuit, the manufacturer had produced

tests during which the gun had fired when dropped. Id. These

tests had not been produced during Plaintiffs’ litigation even

though they were available two months before trial, and

despite the manufacturer’s assurance that gun tests would be

made available upon their discovery. Id. at 1131. The

manufacturer also affirmatively mischaracterized the nature

of these tests during later discovery, and introduced testimony
22 HAEGER V. GOODYEAR TIRE & RUBBER CO.

during trial that it had never seen the gun fire when dropped.

Id. at 1132. Plaintiffs moved to set aside the trial verdict,

pursuant to Federal Rule of Civil Procedure 60(b). Id. at

1130. We upheld the district court’s grant of a new trial

finding that the manufacturer had “engaged in a scheme to

defraud the jury, the court, and [the Plaintiffs], through the

use of misleading, inaccurate, and incomplete responses to

discovery requests, the presentation of fraudulent evidence,

and the failure to correct the false impressions created . . . .”

Id. at 1132. We further held that the “end result of the scheme

was to undermine the judicial process, which amounts to

fraud upon the court.” Id. (citing Hazel-Atlas Glass Co. v.

Hartford Empire Co., 332 U.S. 238, 245–46, 250 (1944)

(deliberately planned scheme to present fraudulent evidence

constitutes fraud upon the court); Abatti v. C.I.R., 859 F.2d

115, 118 (9th Cir. 1988) (fraud upon the court involves

unconscionable plan or scheme to influence the court

improperly)). While the procedural posture of Pumphrey

differs from the one in this case, the similarities with this case

support the conclusion that the district court did not abuse its

discretion in concluding that Sanctionees engaged in fraud

upon the court in their scheme to avoid their discovery

obligations.

In B.K.B. v. Maui Police Department, we found

“counsel’s reckless and knowing conduct” to be “tantamount

to bad faith and therefore sanctionable under the court’s

inherent power.” 276 F.3d 1091, 1108 (9th Cir. 2002)

(emphasis in original). B.K.B. was a sexual harassment suit,

in which defense counsel introduced testimony in violation of
HAEGER V. GOODYEAR TIRE & RUBBER CO. 23

Federal Rule of Evidence 412.4 Defense counsel introduced

this testimony after two Rule 412 pre-trial motions had been

denied, and after he assured the district judge in a sidebar that

the anticipated testimony would not violate Rule 412. Id. at

1107. We concluded that “defense counsel’s introduction of

[the] testimony was a knowing and intentional violation of

Rule 412” and further held that “[i]f left unsanctioned,

defense counsel’s behavior in this case would undermine the

very purpose and force of Rule 412’s strictures.” Id. at 1108.

In this case, the district court did not abuse its discretion in

concluding that the Sanctionees’ failure to produce relevant

documents despite their affirmative obligations to do so

pursuant to Rules 26 and 34, and their misrepresentations in

numerous discovery disputes (which the district court

estimated took “approximately sixteen hours in court”), was

tantamount to bad faith. The Sanctionees’ conduct in this

matter undermines the very purpose of the federal rules

requiring disclosure of relevant and responsive documents.

It is clear the district court did not abuse its discretion in

concluding that Hancock, Musnuff, and Goodyear acted in

bad faith in this litigation. The Sanctionees, throughout

numerous discovery dispute filings and hearings, convinced

the district court that Goodyear had produced all test data

relevant to the Haegers’ claims. The district court noted that

“[i]n fact, at various points the Court became exasperated

with Plaintiffs’ apparently unsubstantiated claims that

additional information must exist.” It was not until the

4 Rule 412: “(a) Prohibited Uses. The following evidence is not

admissible in a civil or criminal proceeding involving alleged sexual

misconduct: (1) evidence offered to prove that a victim engaged in other

sexual behavior; or (2) evidence offered to prove a victim’s sexual

predisposition.”
24 HAEGER V. GOODYEAR TIRE & RUBBER CO.

sanctions proceedings that the district court realized that the

Sanctionees had

adopted a plan of making discovery as

difficult as possible, providing only those

documents they wished to provide, timing the

production of the small subset of documents

they were willing to turn over such that it was

inordinately difficult for Plaintiffs to manage

their case, and making false statements to the

Court in an attempt to hide their behavior.

The Haegers served their First Request in September

2006. The Sanctionees merely objected to this request, and

did not produce any documents. The Sanctionees then filed

supplemental responses in November 2006, which included

the production of only one group of tests – the FMVSS119

DOT tests. It was not an abuse of discretion for the district

court to find that production of just one group of tests meant

that the Sanctionees had failed to search properly for relevant

G159 tests in response to the Haegers’ First Request, and had

done so in bad faith.

The Sanctionees then failed to disclose promptly relevant

G159 tests after a proper search had been conducted. Musnuff

and Hancock had the High Speed tests in their possession at

the latest in February 2007, yet failed to disclose promptly the

High Speed tests to the Haegers. Instead, the Sanctionees

chose to depose the Haegers’ expert in May 2007, and then

produce the High Speed tests in June 2007. Musnuff was next

aware of more tests – including the Heat Rise tests, DOT

endurance tests, crown durability tests, and bead durability

tests — at least by August 2007, and Hancock was aware of

these same tests at least by June 2008. However, the
HAEGER V. GOODYEAR TIRE & RUBBER CO. 25

Sanctionees again failed to disclose properly these tests upon

their discovery. Without producing any of these additional

tests, Goodyear settled with the Haegers in April 2010.

The district court concluded that the Sanctionees should

have turned over the High Speed tests, Heat Rise tests, DOT

endurance tests, crown durability tests, and bead durability

tests as soon as they were discovered, as they were all

responsive to the First Request. The district court did not

abuse its discretion in concluding that this decision to

withhold documents “was a bad faith attempt to hide

responsive documents,” which would not have been

uncovered but for the sanctions proceedings. This finding of

bad faith is bolstered by Hancock’s repeated representations

to the district court that Goodyear was complying with all

discovery requests when in fact, Goodyear was withholding

relevant and responsive documents.

Any attempt by Goodyear to argue that the district court

abused its discretion in preventingGoodyear from passing the

blame on to its attorneys is unavailing. Goodyear “is deemed

bound by the acts of [its lawyers] and is considered to have

‘notice of all facts, notice of which can be charged upon the

attorney.’” Link v. Wabash R. Co., 370 U.S. 626, 634 (1962);

see also Lockary v. Kayfetz, 974 F.2d 1166, 1169–70 (9th Cir.

1992). Additionally, the district court did not abuse its

discretion in concluding that Goodyear participated directly

in the discovery fraud: Goodyear’s Rule 30(b)(6) witness,

authorized to testify on Goodyear’s behalf, falsely testified

during deposition that no additional tests were available

beyond the High Speed tests that had been turned over to the

Haegers; and Goodyear’s in-house counsel, Okey, maintained

responsibility for reviewing and approving all the incomplete

and misleading discovery responses.
26 HAEGER V. GOODYEAR TIRE & RUBBER CO.

We hold that it was not an abuse of discretion for the

district court to find that Hancock, Musnuff and Goodyear

each acted in bad faith.

B. Monetary Sanctions

Once a district court makes a finding of bad faith, it has

the discretion to “award sanctions in the form of attorneys’

fees against a party or counsel.’” Leon v. IDX Sys. Corp.,

464 F.3d 951, 961 (9th Cir. 2006) (quoting Primus Auto. Fin.

Servs., Inc. v. Batarse, 115 F.3d 644, 648 (9th Cir. 1997)). “A

primary aspect of that discretion is the ability to fashion an

appropriate sanction for conduct which abuses the judicial

process.” Chambers v. NASCO, 501 U.S. 32, 44–45 (1991).

In its analysis of sanctions, the district court noted that

due to the extent of the bad faith of the Sanctionees in this

case, had the misconduct “come to light while the case was

ongoing, entry of default judgment with a trial on damages

would have been the obvious solution.” However, since the

case was settled and closed before the misconduct was

discovered, the court instead was faced with the task of

determining the appropriate amount of sanctions to make the

Plaintiffs whole in the form of attorneys’ fees and costs. The

court found that the Sanctionees had engaged in a “years-long

course of misconduct,” which had made it difficult for the

court to “separate the fees incurred due to legitimate activity

from the fees and costs incurred due to Goodyear’s refusal to

abide by clear and simple discovery obligations.” The court

explained that “if Goodyear had responded to Plaintiffs’ First

Request with all responsive documents, Goodyear might have

decided to settle the case immediately,” and thus it was

possible to “conclude practically all of Plaintiffs’ fees and

costs were due to misconduct.” The district court concluded
HAEGER V. GOODYEAR TIRE & RUBBER CO. 27

that “[w]hile there is some uncertainty how the litigation

would have proceeded if Goodyear and its attorneys were

acting in good faith, based on Goodyear’s pattern and practice

in G159 cases, the case more likely than not would have

settled much earlier.” Thus the district court was informed in 

part by past settlement practices of Goodyear in the Other

G159 Cases in reaching its determination concerning

appropriate compensatory damages in this case. The district

court then determined, relying upon the reasoning in

Chambers, that while “[i]t is difficult to reconcile Chambers

with . . . Miller,” “the most appropriate sanction is to award

Plaintiffs all of the attorneys’ fees and costs they incurred

after Goodyear served its supplemental responses to

Plaintiffs’ First Request” as this “was the first definitive proof

that Goodyear was not going to cooperate in the litigation

process.” The district court held that “in these unique

circumstances, it is inappropriate to limit the award to the

fees and costs that could be directly linked to the misconduct;

proving that linkage is an almost impossible task given how

the misconduct permeated the entirety of this case.”

The Sanctionees claim that this determination was made

in error because sanctions must be directly linked to damage

caused by its bad faith conduct, citing Miller v. City of Los

Angeles, 661 F.3d 1024, 1029 (9th Cir. 2011). The

Sanctionees’ confidence in Miller is misplaced, for three

reasons: (1) Miller itself recognizes that it has limited

precedential value; (2) to the degree Miller can be read to

require that the specific amount of attorneys’ fees and costs

awarded when a court invokes its inherent powers must be

directly linked to the bad faith conduct, it flouts controlling

United States Supreme Court case law; and (3) under

Chambers, the district court did all it was required to do in

this case in determining the appropriate amount of fees to
28 HAEGER V. GOODYEAR TIRE & RUBBER CO.

award as sanctions to compensate the Plaintiffs for the

damages they suffered as a result of Sanctionees’ bad faith.

The panel majority’s opening paragraph in Miller

appropriately characterized its precedential value: “This is a

strange case. Its resolution hinges on the absence, as a factual

matter, of something we must accept as a legal matter. There

are unlikely to be many more like it, so this opinion’s

precedential value is probablylimited.” Id. at 1026. What was

missing? The answer: bad faith, an essential requirement for

invoking the district court’s inherent powers. Miller was a

wrongful death suit brought against the City of Los Angeles,

its police department, police chief, and a sergeant who shot

and killed the decedent. The district court “issued an in limine

order precluding defendants from arguing that the decedent

was armed when he was shot.” Id. at 1026. The district court

found that during the trial’s summation, defense counsel

violated its in limine order by stating that before decedent

was shot, decedent had shot another man, and awarded

sanctions under its inherent power for the entire cost of the

trial after the jury hung. Counsel conceded that he had

violated the court’s order, and even apologized for his error,

but the district court nevertheless construed counsel’s conduct

as “tantamount to bad faith,” granted plaintiffs’ motion for

sanctions, and sanctioned defendants $63,687.50. Id. There

was just one problem. A careful review of the record showed

that counsel hadn’t actually violated the court’s in limine

order, despite his confession that he had done so. That put the

majority of our panel into a quandary. What should one do

about a lawyer who confesses a non-existent error? In this

case, the panel majority concluded that it was bound by what

the lawyer had confessed, but that since the lawyer had not

conceded bad faith, and clearly had not actually violated the

court’s order, there could be no finding of bad faith. Put
HAEGER V. GOODYEAR TIRE & RUBBER CO. 29

another way, “you can’t have a bad faith violation without a

violation.” Id. at 1029. The case was over, and nothing more

needed to be said, since a district court cannot use its inherent

power to sanction a party without a finding of bad faith. The

balance of the panel’s opinion was dicta.

But even the dicta in Miller is of little help to the

Sanctionees here. The dicta in Miller addressed whether the

district court linked the alleged bad faith conduct to the harm

suffered, i.e, whether the district court found that the

attorney’s alleged statement caused the jury to hang. The

panel concluded that “without a finding that [defense

counsel’s violation] caused the first jury to hang, the district

court had no power to order defendants to compensate

plaintiffs for the attorneys’ fees and costs they spent on the

first trial.” Id. Thus, while the dicta in Miller suggests that

harm is necessary to compensate a party, Miller makes no

holding on the measure of attorneys’ fees allowed once it is

clear that the bad faith of a party has actually caused harm. 5

In this case, however, there is no doubt that the Sanctionees’

bad faith conduct caused significant harm in forcing the

Haegers to engage in sham litigation, and in their likely

foregoing millions of dollars in the settlement they accepted

under false pretenses of the Sanctionees, as found by the

district court in light of Goodyear’s conduct in the Other

G159 Cases.

5

In re Dyer, 322 F. 3d 1178 (9th Cir. 2003), also cited by the panel,

involved the violation of an automatic stay in bankruptcy, and a purported

sanctions award based on the bankruptcy court’s statutory contempt

power, granted by 11 U.S.C. §105(a). Our panel found that a bankruptcy

court has no authority to impose a non-compensatory “serious punitive”

sanction. Id. at 1195. This holding, of course, has no bearing on this case. 

B.K.B. v. Maui Police Dep’t, 276 F. 3d 1091, 1109 (9th Cir. 2002) also

referenced by the Miller panel, is discussed infra.
30 HAEGER V. GOODYEAR TIRE & RUBBER CO.

Even though Miller does not provide an answer, we next

consider how close a link is required between the harm

caused and the compensatory sanctions awarded when a court

invokes its inherent power. The question is squarelyanswered

by Chambers v. NASCO, Inc., the Supreme Court’s strongest

statement about the use of a court’s inherent power. 501 U.S.

32 (1991). In Chambers, the Supreme Court upheld a district

court’s determination that “full attorney’s fees were

warranted due to the frequency and severity of [the party]’s

abuses of the judicial system.” 501 U.S. at 56. The underlying

action in Chambers was a suit by NASCO seeking

Chambers’s specific performance of an agreement to sell a

television station’s facilities and broadcast license to

NASCO. Chambers responded to the suit by attempting to put

the properties at issue beyond the reach of the district court

through various transfers, ignoring the district court’s

preliminary injunction, filing meritless motions and

pleadings, attempting to conduct depositions in violation of

the Federal Rules of Civil Procedure, and engaging in other

behavior aimed at frustrating the possibility of specific

performance. The district court found these actions to be “part

of a sordid scheme of deliberate misuse of the judicial

process designed to defeat NASCO’s claim by harassment,

repeated and endless delay, mountainous expense and waste

of financial resources.” Id. at 57 (internal quotation marks

omitted).

The district court then awarded NASCO an amount

“which represented the entire amount of NASCO’s litigation

costs paid to its attorneys.” Id. at 40. The Supreme Court

dismissed Chambers’s argument, which was virtually

identical to the causation requirement claim the Sanctionees

are making in this case, that “the fact that the entire amount

of fees was awarded means that the District Court failed to
HAEGER V. GOODYEAR TIRE & RUBBER CO. 31

tailor the sanction to the particular wrong,” and instead

upheld the district court’s conclusion “that full attorney’s fees

were warranted due to the frequency and severity of

Chambers’s abuses of the judicial system and the resulting

need to ensure that such abuses were not repeated.” Id. at 57.

The Supreme Court further explained that it was within the

district court’s discretion to “compensate NASCO by

requiring Chambers to pay for all attorney’s fees.” Id. The

Supreme Court reasoned that the district court “imposed

sanctions for the fraud [Chambers] perpetrated on the court

and the bad faith he displayed toward both his adversary and

the court throughout the course of litigation.” Id. at 55

(internal citations and quotation marks omitted). And, such

sanctions both “vindicat[e] judicial authority without resort

to the more drastic sanctions available for contempt of court

and mak[e] the prevailing partywhole for expenses caused by

his opponent’s obstinacy.” Id. at 46 (internal citation and

quotation marks omitted); see also Hutto v. Finney, 437 U.S.

678, 691 (1978). As a United States Supreme Court case,

Chambers clearly trumps Miller, to the degree Miller’s dicta

conflicts with Chambers, as well as any other Ninth Circuit

case to the contrary. Thus, even though the district court

in this case struggled with how to reconcile Miller

with Chambers, it appropriately awarded the Haegers all

their attorneys’ fees and costs in prosecuting the action

once the Sanctionees began flouting their clear discovery

obligations and engaging in frequent and severe abuses of the

judicial system.

Given the teaching of Chambers, the district court’s

findings and ruling in this case regarding monetary sanctions

fully comply with law. First, the Supreme Court expressly

rejected the linkage argument made by the Sanctionees here

when it upheld the award for full attorney’s fees “due to the
32 HAEGER V. GOODYEAR TIRE & RUBBER CO.

frequency and severity of Chambers’s abuses of the judicial

system and the resulting need to ensure that such abuses were

not repeated.” Chambers, 501 U.S. at 57. Secondly, it made

clear that we review the district court’s determinations in

arriving at the proper measure of compensatory damages for

abuse of discretion. Id.

The district court here used the lodestar method to

calculate the appropriate amount of fees incurred as a result

of the Sanctionees’ bad faith, and noted that this “method

contemplates multiplying the ‘reasonable hourly rate’ by the

number of hours ‘reasonably expended.’ Morales v. City of

San Rafael, 96 F.3d 359, 363 (9th Cir. 1996).” The district

court then went to great lengths in reviewing the “240 pages

of time entries” submitted by the Haegers, and the

combination of objections by Goodyear and its attorneys to

“[a]lmost every time entry” to ensure “the appropriate size of

the award.” In a nineteen-page order, the district court

addressed each objection made by the Sanctionees to the

court’ s proposed award, and made five adjustments based on

these objections: 1) “out of an abundance of caution,” the

district court imposed a twenty percent reduction of $29,310

for recreation of time entries; 2) the district court held that

because some of the time entry descriptions were vague

and/or incomplete, it could not conclude that this time was

reasonably expended absent the appropriate information, and

reduced the award by $32,117; 3) the district court reduced

the award by $4,880.73, equaling the costs for which the

Haegers did not submit supporting documents; 4) the district

court subtracted $50,721 for time entries involving work of

a clerical nature; and 5) the district court found that

$25,827.50 should be reduced for excessive billing. 

Applying these adjustments, the district court awarded the

amount the court reasonably believed it cost the Haegers to
HAEGER V. GOODYEAR TIRE & RUBBER CO. 33

litigate against a party and attorneys during the time when

that party and those attorneys were acting in bad faith.

Nothing more is required under Chambers or our case law,

and, especially given the great care with which the court

reviewed the relevant data during its consideration of legal

fees, the court clearly did not abuse its discretion.

Our dissenting colleague suggests that Chambers’s

control over this case was undermined by International

Union, United Mine Workers v. Bagwell, 512 U.S. 821(1994),

and our own F.J. Hanshaw Enterprises, Inc. v. Emerald

River Development, Inc., 244 F. 3d 1128 (9th Cir. 2001). He

also suggests that the district court’s sanctions in this case

were punitive, not compensatory. With due respect, our

colleague is mistaken on both counts. Bagwell involved a

criminal contempt proceeding stemming out of a protracted

labor strike, in which a union was found to have violated the

trial court’s orders hundreds of times, as determined in eight

separate contempt hearings. Although the trial court labeled

the over $64 million it levied in fines against the union “civil

and coercive,” Bagwell, 512 U.S. at 824, once the union and

the companies settled their labor dispute, and moved to vacate

the contempt fines, the trial judge refused to do so, declaring

that they were “payable in effect to the public.” Id. at 825. 

The Supreme Court appropriately treated the fines as

punishment for “criminal contempt,” and required courts to

provide additional protections to the defendants in such cases.

Id. at 826. However, even though Chambers had been

decided only 3 years before by the Supreme Court, Bagwell

did not even mention Chambers, let alone overrule or

distinguish it. Contrary to the facts in this case, the Court

noted:
34 HAEGER V. GOODYEAR TIRE & RUBBER CO.

[N]either any party nor any court of the

Commonwealth has suggested that the

challenged fines are compensatory. At no

point did the trial court attempt to calibrate

the fines to damages caused by the union’s

contumacious activities or indicate that the

fines were to compensate the complainant for

losses sustained. The nonparty governments,

in turn, never requested any compensation or

presented any evidence regarding their

injuries, never moved to intervene in the suit,

and never actively defended the fines

imposed.

Id. at 834 (internal citation and quotation marks omitted).

F.J. Hanshaw, also cited by our dissenting colleague, is

extremely helpful in confirming the validity of the

compensatory damages awarded in this case. F.J. Hanshaw

involved a dispute between two wealthy brothers about a

partnership dissolution. 244 F.3d at 1132. Just as a courtappointed receiver was about to render an accounting to the

court, one of the brothers, Frederick J. Hanshaw (FJH),

allegedly offered the receiver a bribe of $100,000, as well as

future business. Id. at 1132–33. When the attempted bribe

came to the attention of the district court, the court referred

the matter to the FBI, which, after conducting several

interviews, decided not to proceed with formal criminal

charges against FJH. Id. at 1133. Thereafter, the district court

conducted two evidentiary hearings to determine whether

FJH had attempted to defraud the court and his brother. Id. at

1133–34. After weighing the evidence, the court concluded

that there had been an attempt by FJH to bribe the receiver,

and sanctioned FJH and his corporation $500,000, payable to
HAEGER V. GOODYEAR TIRE & RUBBER CO. 35

the United States, and imposed a $200,000 sanction against

them in favor of his brother, Gordon Hanshaw (GH). Id. at

1135. Relying on Bagwell, our court found that the $500,000

sanction was “clearly punitive and intended to vindicate the

court’s authority and the integrity of the judicial process. The

sanction was a substantial ‘flat, unconditional fine’; was not

intended to compensate [GH] but rather was made payable to

the United States . . . .” Id. at 1138. Since the $500,000

sanction was found to be punitive in nature, we reversed the

district court because FJH and his corporation did not receive

all the procedural protections to which they were entitled. Id.

at 1139–40, 1145.

However, we upheld the district court’s $200,000

sanction in favor of GH, despite FJH’s contention that it too

was criminal in nature and should be vacated. Id. at 1142,

1145. We noted that: (a) “[u]nlike a punitive sanction,

particularly one that is payable to the government or the

court, a compensatory award payable to a party does not

place the court in a prosecutorial role”; (b) “[w]hen

determining whether and how much to compensate a party,

the court sits in the same adjudicatory position it does when

it resolves most disputes. Although the court has an

institutional interest in the matter, the court in essence is

resolving a dispute between litigants: one party claims it was

wronged by the other and wants to be reimbursed by the

losses it sustained. For these reasons, when the court is

adjudicating a compensatory civil sanction, the traditional

procedural protections applicable to civil proceedings are

sufficient to satisfy the Constitution’s requirement of due

process”; (c) in concluding that the $200,000 award to GH

was compensatory, we reasoned that “[t]he award was

payable to [GH] . . . and was meant to offset the expenses he

incurred because of [FJH’s] misconduct. As a result of the
36 HAEGER V. GOODYEAR TIRE & RUBBER CO.

bribe attempt, the entire receivership process was delayed by

nearly six months and [GH] was forced to incur additional

attorney fees. The court had before it the billing reports from

[GH’s] attorneys and [GH] had asked the court for $824,000

in compensation . . . . Exercising its discretion, the court

awarded $200,000 to [GH]”; and (d) “[b]ased upon this

record, we conclude that the $200,000 award was intended to

compensate [GH] for losses sustained as a result of [FJH’s]

misconduct and is civil in nature.” Id. at 1142 (citing

Chambers, 501 U.S. at 56–58).

Just like the district court did in F.J. Hanshaw in its

$200,000 award to GH, the court here responded to a motion

filed by the Plaintiffs seeking damages for the Sanctionees’

bad faith, and awarded as compensatory damages the amount

of the attorneys’ fees and costs it carefully determined the

Haegers had actually incurred litigating against the

Sanctionees, during the time they were acting in bad faith.

“[W]hether a contempt is civil or criminal turns on the

‘character and purpose’ of the sanction involved,” meaning

a civil sanction is “for the benefit of the complainant,” while

a criminal sanction is “punitive, to vindicate the authority of

the court.” Bagwell, 512 U.S. at 827–28 (internal quotations

omitted). A fine is almost always civil it if “compensate[s]

the complainant for losses sustained,” Id. at 829 (internal

quotations omitted), whereas it is generally punitive in nature

when it “was not intended to compensate [the party] but

rather [is] made payable to the United States.” F.J. Hanshaw,

244 F.3d at 1138. Other Ninth Circuit cases affirm these

points. In B.K.B. v. Maui Police Department, the district

court found that the sanctionees had acted in bad faith in

violating the Federal Rules of Evidence while questioning a

witness about the Plaintiff during trial, and awarded “$5,000
HAEGER V. GOODYEAR TIRE & RUBBER CO. 37

to compensate Plaintiff for the pain and suffering caused by

the public embarrassment resulting from [the] testimony.”

276 F.3d 1091, 1099 (9th Cir. 2002). We upheld the sanction,

holding that “the amount the court imposed reflected its

assessment of the actual harm incurred by Plaintiff . . . [in]

emotional and reputational damage.” Id. at 1109. Because the

district court imposed the sanctions for the purpose of

compensation, they were within its discretion.

The district court in Lasar v. Ford Motor Company

imposed monetary sanctions to compensate “for unnecessary

costs and attorney’s fees.” 399 F.3d 1101, 1111 (9th Cir.

2005). In Lasar, the sanctionees’ attorney violated pretrial

orders during his opening statement, and the court granted

Lasar’s motion for mistrial and discharged the jury. Id. at

1106. The district court then instructed “Lasar’s attorneys to

prepare an affidavit detailingLasar’s costs and attorney’s fees

incurred over the previous two weeks.” Id. While it is unclear

why the district court determined that Lasar should be

compensated for two weeks of attorney’s fees, the sanctions

were upheld as we determined that “[t]he monetary sanctions

imposed . . . were compensatory in nature because they were

designed to compensate Lasar for unnecessary costs and

attorney’s fees.” Id. at 1111. Thus, it was within the district

court’s discretion to determine the time frame in which Lasar

sustained “losses.”

Collectively, these cases make clear that the sanctions

awarded here were entirely lawful and appropriate. Not one

dime was awarded to the government or the court. Just like

the district court in F.J. Hanshaw, the district court here

awarded compensatory damages after the aggrieved party

filed a motion, seeking compensation for damages suffered as

a result of the bad faith of the opposing party. In awarding
38 HAEGER V. GOODYEAR TIRE & RUBBER CO.

compensatory damages, the district court did not act as a

prosecutor, but instead allowed the accused and accusing

parties to file extensive briefs, and held extensive hearings to

determine the truth of what had happened. It took great care

in parsing and reducing the attorney fee claims of the

Plaintiffs. The accused were granted full due process and

afforded all the protections required in civil sanctions

hearings. While the district court had an institutional interest

in the proceedings (just like the district court did in F.J.

Hanshaw), its stated purpose was to properly compensate the

Plaintiffs for damages they suffered as the result of the

Sanctionees’ fraudulent conduct. In sum, the district court

acted well within its discretion in awarding all the attorneys’

fees and costs incurred by the Plaintiffs after Goodyear

served its supplemental responses to Plaintiffs’ First Request.

C. Non-Monetary Sanctions 

The district court also used its inherent power to order

Goodyear to file a copy of the Order in any G159 case

initiated after the date of that Order. The district court

reasoned that “[b]ased on Goodyear’s history of engaging in

serious discovery misconduct in every G159 case brought to

this Court’s attention, filing this Order in future G159 cases

will alert plaintiffs and the courts that Goodyear has, in the

past, not operated in good faith when litigating such cases.”

The district court found that this would “serve as a notice of

the existence of certain tests Goodyear attempted to conceal

in previous cases.” The district court did not limit this

requirement in either time or scope. Goodyear argues that this

sanction is too severe as it impacts the fairness of unrelated

proceedings, and thus should be reversed as an abuse of the

district court’s discretion.
HAEGER V. GOODYEAR TIRE & RUBBER CO. 39

Courts have the inherent power to impose various nonmonetary sanctions. See Thompson v. Hous. Auth. of Los

Angeles, 782 F.2d 829, 831 (9th Cir. 1986) (inherent power

includes power to “impose sanctions including, where

appropriate, default or dismissal”); Anheuser-Busch, Inc. v.

Natural Beverage Distribs., 69 F.3d 337, 348 (9th Cir. 1995)

(dismissal pursuant to inherent powers); Hester v. Vision

Airlines, Inc., 687 F.3d 1162 (9th Cir. 2012) (affirming order

striking answer and entering default judgment). However,

even if a given sanction is available, the scope of the sanction

must also be appropriate. Lewis v. Tel. Emps. Credit Union,

87 F.3d 1537, 1558 (9th Cir. 1996). A sanction should be

“carefully fashioned to deny [the party] the fruits of its

misconduct yet not to interfere with [the party’s future

rights].” Id.

In Hale v. U.S. Trustee, a bankruptcy court imposed a

sanction that regulated future conduct “in response to specific

and repeated acts of incompetent and irresponsible

representation.” 509 F.3d 1139, 1149 (9th Cir. 2007). The

court found a bankruptcy attorney to be “[u]nable or

unwilling to conform his conduct to the requirements

established by the Court’s prior decisions and ruling, and to

the standards by which all other debtors’ counsel in the

District abide.” Id. at 1145. We upheld the bankruptcy

court’s sanction which required that the attorney “not file, nor

shall he prepare or cause to be prepared for filing by a debtor,

any bankruptcy petitioner unless [the attorney] signs said

petition.” Id. Additionally, the attorney was directed not to

file, nor assist a debtor as counsel in filing, “any bankruptcy

petition unless [the attorney] commits to such debtor to meet

the ethical and professional obligations of a debtor’s attorney

and provide the reasonable and necessary services required to

properly represent a debtor in a bankruptcy case.” Id. Thus,
40 HAEGER V. GOODYEAR TIRE & RUBBER CO.

this chosen sanction regulated the attorney’s practice and

specific actions that the attorney was required to take with all

future clients. We held that “[u]nder the specific acts of this

case, we cannot say that the bankruptcy court abused its

inherent power to impose sanctions.” Id. at 1149.

We are persuaded by the reasoning of Hale. We are also

persuaded by the reasoning of Gallop v. Cheney, a Second

Circuit case addressing the same issue. 667 F.3d 226 (2d Cir.

2012). The Plaintiff’s claims in Gallop were dismissed by the

district court as frivolous, and the Second Circuit affirmed the

dismissal on appeal. Id. at 228. The Second Circuit then

ordered Plaintiff and her counsel, including Dennis

Cunningham, to show cause why the Court should not impose

sanctions for what it held to be a frivolous appeal. In

response, Plaintiff moved to “disqualify the three members of

the panel from considering her petition for rehearing and

rehearing in banc.” Id. The Court sanctioned Plaintiff’s

counsel for filing a frivolous appeal, and then imposed

additional sanctions for filing the frivolous motion to

disqualify. Id. at 230. The Court held that “Cunningham acted

in bad faith in demanding the recusal of the three panel

members and any like-minded colleagues,” and ordered

Cunningham to “provide notice of the sanctions imposed

upon him in this case . . . to any federal court in this Circuit

before which he appears or seeks to appear” for a period of

one year. Id.

The district court here imposed the non-monetary

sanction so that future plaintiffs and courts would be alerted

that Goodyear had previously not operated in good faith, and

so that future plaintiffs would be aware of the types of G159

tests available. We agree with the district court’s reasoning,

particularly in light of the fact that it is highly likely that most
HAEGER V. GOODYEAR TIRE & RUBBER CO. 41

future G159 litigation will be filed in state courts (see, e.g.,

the Other G159 Cases), and state court counsel will not

necessarilyinvestigate what might be contained in the Federal

Reporter about the conduct of Goodyear and its counsel. We

note also that the district court provided a form of safety

valve in its non-monetary sanctions because “Goodyear may

apply to the court hearing the case to be excused from [the

requirements of the Order].”

We find that the district court’s imposition of nonmonetarysanctions against Goodyear is balanced, is narrowly

tailored, and imposes no sanctions beyond what is necessary

to remedy what the district court properly perceived as an

ongoing problem in Goodyear’s G159 litigation. The district

court did not abuse its discretion in imposing non-monetary

sanctions on Goodyear.

CONCLUSION

For the reasons noted in this opinion, we hold that the

district court did not abuse its discretion in imposing

sanctions in the sum of $548,240 against Hancock, and

$2,192,961 jointly against Musnuff and Goodyear. The

district also did not abuse it discretion in imposing nonmonetary sanctions against Goodyear.

We affirm the monetary and non-monetary sanctions set

forth in the district court’s Order.

The Sanctionees shall bear all costs in this appeal.

AFFIRMED.
42 HAEGER V. GOODYEAR TIRE & RUBBER CO.

WATFORD, Circuit Judge, dissenting:

Goodyear and its lawyers were accused in this case of

perpetrating a fraud on the Haegers and the court. If

sustained, those charges could of course severely damage the

professional reputations of the lawyers involved. The district

court accordinglyapproached the task of determiningwhether

the charges were true with great thoroughness and care. After

conducting a lengthy evidentiary hearing and reviewing

multiple rounds of briefing, the court concluded that

Goodyear and its lawyers acted in bad faith when they failed

to produce test results that were responsive to the Haegers’

document requests. I agree with the majority that the district

court’s misconduct findings are supported by the record, but

I nevertheless conclude that the $2.7 million sanctions award

must be vacated.

The district court’s finding of bad faith authorized it to

levy sanctions under its inherent power. Chambers v.

NASCO, Inc., 501 U.S. 32, 50 (1991). Those sanctions could

have taken one of two forms: punitive sanctions, which are

criminal in nature and intended to vindicate the authority of

the court; or compensatory sanctions, which are civil in

nature and designed to compensate the injured party for

losses sustained as a result of the misconduct. Miller v. City

of Los Angeles, 661 F.3d 1024, 1029–30 (9th Cir. 2011); F.J.

Hanshaw Enterprises, Inc. v. Emerald River Development,

Inc., 244 F.3d 1128, 1136–42 (9th Cir. 2001).1

 

1 Sanctions may also be civil in nature if they are “designed to compel

future compliance with a court order.” International Union, United Mine

Workers v. Bagwell, 512 U.S. 821, 827 (1994). The sanctions imposed

here could not serve that function because the litigation between the

Haegers and Goodyear had long since ended.
HAEGER V. GOODYEAR TIRE & RUBBER CO. 43

The district court chose not to impose punitive sanctions. 

Doing so would have required the court to follow procedures

applicable in criminal cases, such as appointing an

independent prosecutor, affording the accused the right to a

jury trial, and demanding proof of misconduct beyond a

reasonable doubt. Miller, 661 F.3d at 1030. Compensatory

sanctions, by contrast, may be imposed by the court acting

alone after providing adequate notice and an opportunity to

be heard. Lasar v. Ford Motor Co., 399 F.3d 1101, 1110 (9th

Cir. 2005). That is the route the district court chose to follow

here. The question for us is whether the court correctly

labeled the sanctions compensatory. If it did not—if the

sanctions are instead punitive—they cannot stand. See

Miller, 661 F.3d at 1029–30; F.J. Hanshaw, 244 F.3d at

1141–42.

In my view, the $2.7 million sanctions award cannot be

deemed compensatory. The award could be compensatory

only if the record reveals a causal connection between the

misconduct the court found and the amount it awarded. See

Miller, 661 F.3d at 1029–30. The $2.7 million award

represents all of the attorney’s fees incurred by the Haegers

after Goodyear breached its discovery obligations, including

fees for the years of litigation that ensued before the parties

settled on the first day of trial. The court purported to find

the necessarycausal link between the misconduct and the fees

awarded on the theory that, if Goodyear had produced the test

results when it was supposed to, “the case more likely than

not would have settled much earlier.” I do not think that

finding is supported by the record.

Our decision in Miller v. City of Los Angeles, 661 F.3d

1024 (9th Cir. 2011), illustrates the deficiency. In that case,

the district court found that defense counsel violated an in
44 HAEGER V. GOODYEAR TIRE & RUBBER CO.

limine order by suggesting during closing arguments that the

decedent was armed when the defendant police officer shot

him. Id. at 1026. The trial ended in a hung jury. The district

court awarded the plaintiffs all fees incurred during the trial

as a compensatory sanction, presumably on the theory that

defense counsel’s improper closing argument caused the jury

to hang, thus necessitating a retrial and rendering all of the

fees incurred during the first trial a waste. We concluded that

the award could not be deemed compensatory. Id. at 1030. 

The record did not establish a causal connection between the

lawyer’s misconduct and the jury’s inability to reach a

verdict. It was simply impossible to know, on the record

compiled in that case, why the jury could not reach a verdict,

and the limited evidence available suggested that it was not

because of defense counsel’s improper remarks. Id.

The record in this case is similarly devoid of evidence

establishing a causal link between Goodyear’s misconduct

and the fees awarded. It’s anyone’s guess how the litigation

would have proceeded if Goodyear had disclosed all

responsive test results from the start. The case might have

settled right away, as the district court assumed, but that

seems unlikely. The test results did not provide conclusive

proof that the Haegers’ tire failed due to its defective design. 

To be sure, the test results were favorable to the Haegers: 

The results supported the Haegers’ theory that Goodyear sold

tires that were prone to failure when used on motor homes at

highway speeds, especially in hot driving conditions like

those prevailing at the time of the Haegers’ accident in

Arizona. But even if those test results had been put before

the jury, Goodyear still planned to argue that the Haegers’

own tire, which had endured more than 40,000 miles of wear

and tear, failed because it struck road debris, not because the

tire was defective. And Goodyear has consistently
HAEGER V. GOODYEAR TIRE & RUBBER CO. 45

maintained (whether rightly or wrongly) that the test results

it concealed do not accurately predict tire behavior in realworld driving conditions.

If anything, it seems more plausible to assume that the

case would have proceeded to trial had the test results been

timely disclosed. The Haegers’ grievance is that they

accepted a low-ball settlement from Goodyear on the eve of

trial under false pretenses. The concealed test results, they

contend, would have significantly strengthened their hand. 

That suggests the Haegers would have been willing to take

their case to the jury if Goodyear had refused to increase its

offer, but it does not suggest that Goodyear would have

thrown in the towel and met the Haegers’ demands. In fact,

the only relevant data point in the record supports the

opposite conclusion. In the Schalmo case, one of the other

motor home accident suits involving the same allegedly

defective tire, Goodyear produced the test results at issue, but

the plaintiffs and Goodyear elected to take the case to trial

(with the jury returning a sizeable verdict for the plaintiffs). 

Goodyear did not settle that case immediatelyupon disclosure

of the test results, as the district court assumed would have

happened here.

In short, we simply don’t know—and have no way of

reliably figuring out—what would have happened if timely

disclosure of the test results had occurred. Thus, I think the

district court clearly erred in finding that “the case more

likely than not would have settled much earlier” had

Goodyear disclosed the test results when it should have.

The majority does not contend that a causal connection

between Goodyear’s misconduct and the fees awarded has

been shown here, as required for the sanctions to be deemed
46 HAEGER V. GOODYEAR TIRE & RUBBER CO.

compensatory. The majority instead contends that any

language from Miller purporting to impose such a

requirement is dicta. Maj. op. at 29. I don’t think that

portion of Miller can be dismissed as dicta, but even if it

could, that wouldn’t matter. Miller’s discussion of causation

did not break new ground; it simply reflects the wellestablished principle that a sanction can be deemed

compensatory only if it compensates the injured party for

losses sustained as a result of the sanctionable misconduct. 

See, e.g., Lasar, 399 F.3d at 1111; F.J. Hanshaw, 244 F.3d at

1142. What we said about causation in Miller—whether dicta

or not—merely illustrates why the fees awarded in this case

were not sustained as a result of Goodyear’s misconduct.

The majority reads Chambers v. NASCO, Inc., 501 U.S.

32 (1991), as establishing a competing principle: that a fee

award may be deemed compensatory even if the fees were not

incurred as a result of the sanctionable misconduct, so long as

the misconduct involves “frequent and severe abuses of the

judicial system.” Maj. op. at 31. The majority assumes that

principle must be valid because, in its view, not all of the fees

awarded to NASCO were incurred as a direct result of

Chambers’ misconduct.

I see two problems with the majority’s reading of

Chambers. First, it is by no means clear as a factual matter

that the majority’s reading is correct. The district court in

Chambers expressly held that Chambers’ misconduct began

even before NASCO formally filed suit. After Chambers

informed NASCO that he would not honor the agreement to

sell his local television station, NASCO gave Chambers

notice on a Friday that it intended to file suit the following

Monday seeking specific performance. That advance notice

was required by court rules because NASCO also intended to
HAEGER V. GOODYEAR TIRE & RUBBER CO. 47

seek a temporaryrestraining order preventingChambers from

disposing of the station pending resolution of the suit. 

501 U.S. at 36. Rather than acknowledge that he had no valid

defense to the suit, and that he therefore had no business

putting NASCO to the expense of filing it, Chambers

embarked on what turned out to be a years-long campaign of

bad-faith litigation misconduct, beginning with his efforts

over the weekend to fraudulently transfer ownership of the

station in order to deprive the district court of jurisdiction. Id.

at 36–37. Because the district court found that Chambers

never had a good-faith basis for resisting the relief NASCO

sought, and that all of the actions he took in “defending” the

suit were aimed solely at obstructing and delaying the

inevitable sale of the television station, it seems fair to say

that all of NASCO’s attorney’s fees were incurred as a direct

result of Chambers’ misconduct. See id. at 50–51.

Second, even if some portion of NASCO’s attorney’s fees

were not incurred as a direct result of Chambers’ misconduct,

the majority incorrectly assumes that the Supreme Court

upheld the award as purely compensatory. The sanction

imposed there was not purely compensatory; it served the

“dual purpose” of (1) vindicating the court’s own authority

and (2) “mak[ing] the prevailing party whole for expenses

caused by his opponent’s obstinacy.” Id. at 46 (internal

quotation marks omitted). The first of these purposes, we

have subsequently held, is the domain of punitive sanctions,

and the Court in Chambersleft no doubt that punishment was

indeed a key purpose of the sanctions imposed in that case. 

See id. at 55 n.17 (“the sanctions imposed on Chambers were

aimed at punishing not only the harm done to NASCO, but

also the harm done to the court itself”). Because it was partly

punitive, the sanctions award did not need to be limited to

fees directly caused by Chambers’ misconduct.
48 HAEGER V. GOODYEAR TIRE & RUBBER CO.

I concede that the district court imposed the sanctions in

Chambers without applying the heightened procedural

protections we have subsequently held are necessary before

punitive sanctions may be imposed, and that the Supreme

Court nonetheless affirmed. I don’t think we can read

anything into that fact. The defendants in Chambers did not

raise any due process arguments, and the Supreme Court

therefore did not address whether the process afforded the

defendants was adequate. Moreover, the law has changed

since Chambers was decided. A few years later the Court

issued International Union, United Mine Workers v. Bagwell,

512 U.S. 821 (1994), the case from which we first derived the

rule that imposition of punitive sanctions must be

accompanied by the procedural protections applicable in

criminal cases. See F.J. Hanshaw, 244 F.3d at 1137–38. If

any doubts lingered about whether Chambers authorizes

imposition of so-called “dual purpose” sanctions without

following the procedures applicable in criminal cases, we put

those to rest in Miller. The dissent in Miller made that very

argument, 661 F.3d at 1039 (Ikuta, J., dissenting), but the

panel majority implicitly rejected it. See id. at 1030.

None of this is to suggest that compensatory sanctions

can’t be fashioned at all. There may well be other ways to

calculate the losses sustained by the Haegers as a result of the

misconduct. For example, the most direct loss the Haegers

sustained is that they probably settled their case for less than

it was really worth. It might be possible to use the Schalmo

case, and others like it if they exist, to calculate the difference

between what the Haegers actually received in settlement and

what they likely would have received—whether through an

enhanced settlement or a jury verdict—if the test results had

been disclosed in a timely manner. But going down that path

would obviously be fraught with proof problems of its own.
HAEGER V. GOODYEAR TIRE & RUBBER CO. 49

Alternatively, instead of attempting to calculate lost

settlement value, the district court could again focus on

attorney’s fees incurred by the Haegers, limiting the award to

fees that can be linked in a non-speculative way to the

misconduct. The fees that most readily spring to mind are

those wasted on expert discovery that took place under the

mistaken assumption that key test results supporting the

Haegers’ liability theory did not exist. Those and other fees

similarly traceable to the misconduct are no doubt

comparatively small, but I don’t think the district court was

right in suggesting that calculating them would be an

impossible task. Those fees can be calculated; it’s just that

they may produce a sanction smaller than seems warranted

given the severity of the misconduct the district court found.

If the sanctions that can properly be deemed

compensatory seem too paltry under the circumstances, the

district court could still fashion an award of punitive

sanctions, so long as it applies the corresponding heightened

procedural protections. See Miller, 661 F.3d at 1030–31; F.J.

Hanshaw, 244 F.3d at 1141–42. Because Goodyear and its

lawyers were not afforded those protections before punitive

sanctions were imposed, I dissent from the majority’s

affirmance of the $2.7 million award.