Opinion ID: 901082
Heading Depth: 2
Heading Rank: 1

Heading: Dismissal as Sanction for Untimely Disclosure

Text: [¶ 11.] Dudley's attorney failed to comply with a prehearing order mandating the timely disclosure of his expert witnesses and their opinions. As a sanction, the ALJ struck the witnesses and granted summary judgment. See SDCL 15-6-37(b)(2)(B). This was the most drastic action available. See SDCL 15-6-37(b)(2)(C). Discovery rules are designed to compel the production of evidence and to promote, rather than stifle, the truth finding process. Magbuhat v. Kovarik, 382 N.W.2d 43, 45 (S.D.1986) (citing Chittenden & Eastman Co. v. Smith, 286 N.W.2d 314, 316 (S.D.1979)). The purpose of workers' compensation is to provide for employees who have lost their ability to earn because of an employment-related accident, casualty, or disease. Rawls v. Coleman-Frizzell, Inc., 2002 SD 130, ¶ 19, 653 N.W.2d 247, 252 (citing Sopko v. C & R Transfer Co., Inc., 1998 SD 8, ¶ 8, 575 N.W.2d 225, 229). [¶ 12.] The Department's administrative rules contain two provisions on sanctions for a party's noncompliance in discovery. The first rule, ARSD 47:03:01:16, provides: If a party or the party's attorney fails to obey a scheduling or prehearing order, if no appearance is made on behalf of the party at a scheduling or prehearing conference, or if a party or the party's attorney fails to participate in good faith, the Division of Labor and Management, upon motion or its own initiative, may make such orders with regard thereto that it considers just. The second rule, ARSD 47:03:01:05.02, provides: If any party fails to comply with the provisions of this chapter, the Division of Labor and Management may impose sanctions upon such party pursuant to SDCL 15-6-37(b). However, attorney fees may be imposed only for a violation of a discovery order. [] As with statutes, administrative rules are construed together to make them harmonious and workable. Nelson v. State Bd. of Dentistry, 464 N.W.2d 621, 624 (S.D.1991). We review an ALJ's decision to invoke sanctions under an abuse of discretion standard. Chittenden & Eastman Co., 286 N.W.2d at 316. Under SDCL 15-6-37(b), administrative sanctions must be just. See FRCP 37(b); see also Shelton v. American Motors Corp., 805 F.2d 1323, 1329-30 (8thCir.1986) (citing Insurance Corp. of Ireland v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 707, 102 S.Ct. 2099, 2106-07, 72 L.Ed.2d 492 (1982)). [¶ 13.] At the outset, we believe that the Department has no more leeway in disposing of cases and in exercising discretion than circuit courts have. See SDCL 1-26-18 and 19. See also Johnson v. Ford New Holland, Inc., 254 Neb. 182, 575 N.W.2d 392, 396 (1998). Considering the remedial nature of workers' compensation, sanctions for discovery violations in administrative proceedings should have at least the same restraints as comparable sanctions for discovery violations in civil courts. An ALJ should operate within the spirit of those cases applying § 37(b), when determining the appropriate sanction for a party violating a prehearing order. See Chittenden & Eastman Co., 286 N.W.2d at 316. After all, an ALJ's latitude in penalizing failures to comply may be broad, but it is not limitless. [¶ 14.] Courts are reluctant to uphold dismissals merely to sanction errant attorneys. Buck v. United States Dep't of Agric. Farmers Home Admin., 960 F.2d 603, 608 (6th Cir.1992). A dismissal should only be resorted to when the failure to comply has been due to... willfulness, bad faith, or any fault of petitioner. Chittenden & Eastman Co., 286 N.W.2d at 316 (citations omitted). When considering a discovery violation, the severity of the sanction must be tempered with a consideration of the equities. Id. at 316-17. Less drastic alternatives should usually be employed before imposing the severest sanction. Judges must balance the policy of giving parties their day in court against the policies of preventing undue delay, avoiding court congestion, and preserving respect for court procedures. Onkka v. Herman, 1997 WL 1037762 (D.Neb.1997) (quoting Tyler v. Iowa State Trooper Badge No. 297, 158 F.R.D. 632, 637 (N.D.Iowa 1994)). In deciding the appropriate sanction to be imposed, the court should consider the purposes to be served by the sanction. Resolution Trust Corp. v. Williams, 162 F.R.D. 654, 660 (D.Kan.1995). An ALJ has a duty to keep things moving, but moving toward a fair result on the merits, if possible. As this Court has noted, the clearing of calendars and the expeditious dispatch of cases are secondary concerns. Chicago & N.W. Ry. Co. v. Bradbury, 80 S.D. 610, 612, 129 N.W.2d 540, 542 (1964). [¶ 15.] Factors to consider when imposing sanctions for discovery violations include: (1) whether the party's failure to cooperate in discovery was attributable to willfulness, bad faith, or the fault of the client; (2) whether the adversary was prejudiced by the party's failure to cooperate in discovery; (3) whether there is a need for deterrence in a particular sort of noncompliance; (4) whether the party was warned that failure to cooperate could lead to dismissal; and (5) whether less drastic sanctions can be imposed before dismissal. Mut. Fed. Sav. & Loan Ass'n v. Richards & Assoc., Inc., 872 F.2d 88, 92 (4th Cir. 1989); Reg'l Refuse Sys., Inc. v. Inland Reclamation Co., 842 F.2d 150, 155 (6th Cir.1988). [¶ 16.] By failing to timely disclose experts and their reports, Dudley's counsel clearly engaged in sanctionable conduct. In considering the equities, we apply the above factors. First, although Dudley's attorney failed to comply with the prehearing order on expert opinions, the attorney did make an appearance on Dudley's behalf at the prehearing conference and it appears that the attorney participated in good faith. He also submitted medical records in partial compliance with the order. Second, the employer would not be prejudiced by Dudley's late disclosure of expert witnesses if the ALJ extended the employer's disclosure deadline. As to the third, fourth and fifth factors, the striking of the claimant's experts and the dismissal of the case was a harsh sanction for a late discovery disclosure: the record does not reflect whether the ALJ warned Dudley that failure to cooperate could result in dismissal or whether the ALJ considered less drastic sanctions. In light of these considerations, excluding expert evidence resulting in the dismissal of the case was an abuse of discretion. Commensurate with the purposes of workers' compensation, a less severe sanction that permits the case to be heard on the merits would better serve justice. [¶ 17.] In summary, the ALJ had authority to impose sanctions for failure to timely disclose; however, the sanction imposed here, which denied Dudley a hearing on the merits, was too harsh and constituted an abuse of discretion. Accordingly, the case is remanded to the Department with instructions to consider some lesser sanction, to allow Dudley's expert evidence, and to take such other action, as it deems proper, consistent with this opinion.