Opinion ID: 1125042
Heading Depth: 3
Heading Rank: 2

Heading: The Order Lifting Previous Protective Orders

Text: The Liability Defendants contend that the circuit court abused its discretion in sanctioning DuPont by ordering that protective orders concerning the confidentiality of DuPont documents be lifted with the exception of those documents which contained trade secrets. We disagree. We have utilized the following three factors in determining whether a discovery sanction was appropriate: (1) the offending party's culpability, if any, in destroying or withholding discoverable evidence that an opposing party had formally requested through discovery; (2) whether the opposing party suffered any resulting prejudice as a result of the offending party's destroying or withholding the discoverable evidence; and (3) the inequity that would occur in allowing the offending party to accrue a benefit from its conduct. Richardson, 76 Hawai`i at 507, 880 P.2d at 182. Applying these three factors to the instant case, we note that: (1) the circuit court specifically found that DuPont had intentionally withheld numerous documents in blatant violation of previous court orders compelling discovery of those documents, and, thus, DuPont was culpable in withholding the documents; (2) because the documents could be interpreted as demonstrating liability on the part of the Liability Defendants, DuPont's withholding these documents prejudiced the Plaintiffs; and (3) it would have been inequitable for DuPont to benefit from its own discovery misconduct and the Plaintiffs' inability to acquire possession of the inculpating documents prior to the commencement of trial. DuPont theoretically could have prevailed against the Plaintiffs as a direct result of its pattern of discovery abuse, which is a result that we will not tolerate in the courts of Hawai`i. Based on the three factors that we utilized in Richardson, DuPont clearly deserved severe discovery sanctions, including the order lifting protective orders concerning the confidentiality of DuPont documents. The Liability Defendants cite Richards v. Superior Court for Los Angeles County, 86 Cal.App.3d 265, 150 Cal.Rptr. 77 (1978), in which a California Court of Appeal held that a trial court abused its discretion by dissolving an existing protective order as a sanction for a party's failure to supply a sufficiently detailed statement in response to a discovery request. While the trial judge is vested with discretion to impose sanctions for failure of compliance with discovery orders, the sanction imposed must be appropriate to the dereliction, must be authorized by the discovery statutes, and must not exceed that which is necessary to protect the interests of the party entitled to but denied discovery. Id. 150 Cal.Rptr. at 79 (citation omitted). The Richards court held that, under the circumstances of that particular case, a court may not deny [a party] the protection of [a protective] order as a sanction for failure to comply with the mandates of the discovery statutes. Id. at 78. However, the circumstances in Richards are distinguishable from the instant case. While the protective orders in the instant case applied to information and documents that the Plaintiffs had sought primarily for the purpose of the adjudication of their substantive claims against the Liability Defendants, the protective orders in Richards applied only to information and documents regarding the financial status of defendants that the plaintiffs in Richards had sought for the purpose of helping the trial court determine punitive damages. Thus, the Richards court granted the defendants' petition for writ of mandamus under the following rationale: Discovery seeking financial information by reason of a claim for punitive damages is one classic instance of the manner in which civil discovery is used to achieve a litigation advantage never contemplated when the methodology was introduced into pretrial procedure. Causes of action for punitive damages have become very easy to allege. Response to discovery seeking financial information places a severe burden on the responder. As a minimum, there is the time and expense necessary to the compilation of a complex mass of information unrelated to the substantive claim involved in the lawsuit and relevant only to the subject matter of a measure of damages which may never be awarded. In addition, there is usually the potential that untoward disclosure of the information obtained may in some way or other react adversely against the disclosing party for reasons totally unrelated to the lawsuit. The possibilities run all the way from greater exposure to the not so gentle solicitations of some charitable organizations to the possibility of damage to the discloser in the competitive business arena. .... Given the presently broad test of discoverable matter, the burden incident to the compilation of information that may never be of value to any one seems built into the process. The potential of untoward disclosure of the financial information obtained in the discovery process is not. It seems a rare instance indeed that the potential of disclosure for purposes unrelated to the lawsuit or to persons other than counsel and their representatives serves any purpose except to give a tactical edge to the party who has obtained discovery of the information by allowing that party the benefit of pressure in settlement negotiations by threat or implication of disclosure. We hence conclude that where a party is compelled in civil discovery to reveal financial information because the information is relevant to the subject matter of a claim for punitive damages, that party is, upon his motion, presumptively entitled to a protective order that the information need be revealed only to counsel for the discovering party or to counsel's representative, and that once so revealed, the information may be used only for the purposes of the lawsuit. The burden is upon the opposing party to establish a substantial reason why the order should be denied. That reason must be related to the lawsuit. Id. at 80-81 (emphases added) (citations omitted). As stated, the protective orders in the instant case were not the result of a limited attempt to discover information about DuPont's financial status for the narrow purpose of determining punitive damages. The protective orders in the instant case related to discoverable information and documents that were directly relevant to the Plaintiffs' efforts to prove their substantive claims for compensatory damages against the Liability Defendants. More importantly, DuPont's dereliction in the instant case was much more extreme than the dereliction in Richards. The record shows that DuPont engaged in a pattern of discovery abuse by, among other things, violating the circuit court's discovery orders, dumping forty boxes of documents pursuant to one of the Plaintiffs' interrogatory requests, and intentionally withholding information and documents that DuPont should have produced during discovery. This inexcusable behavior by DuPont is very disturbing. Accordingly, we hold that the circuit court did not abuse its discretion in sanctioning DuPont by ordering that protective orders concerning the confidentiality of DuPont documents be lifted with the exception of those documents that contained trade secrets.