Opinion ID: 559511
Heading Depth: 2
Heading Rank: 3

Heading: Improper Discovery Sanction

Text: 26 During the trial, the district court precluded certain sales and inventory evidence offered by Collectors' Guild that was relevant to establishing the amount of income earned by Collectors' Guild on the sale of the reproductions. This income figure was necessary to calculate Werbungs' damages because, under the first contract, Werbungs was entitled to one-half of the income earned on the sale of the lithographs. As discussed above, the court believed that the precluded evidence was responsive to Werbungs' discovery request and should have been produced during discovery, not during trial. In addition to excluding this evidence, the court instructed the jury that in evaluating the evidence on damages it could consider whether Collectors' Guild engaged in any wrongful [discovery] conduct that contributed to Werbungs' inability to establish its damages with certainty. On appeal, Collectors' Guild contends that both the preclusionary rulings and the jury instruction constituted an improper discovery sanction. See Fed.R.Civ.P. 37(b). We first address the propriety of the court's jury instruction. 27 As with the jury instruction on contract interpretation, Collectors' Guild failed to object to the damages instruction at trial. Accordingly, we can review Collectors' Guild's claim of error, and reverse on this ground, only if the court's instruction constitutes plain error. Proteus Books, 873 F.2d at 514; Cohen, 478 F.2d at 124. 28 Pursuant to Fed.R.Civ.P. 37(b), a federal district court can sanction a party for failing to obey an order to provide or permit discovery. See Fed.R.Civ.P. 37(b); see also Bobal v. Rensselaer Polytechnic Inst., 916 F.2d 759, 764 (2d Cir.1990), cert. denied, --- U.S. ----, 111 S.Ct. 1404, 113 L.Ed.2d 459 (1991); Thomas E. Hoar, Inc. v. Sara Lee Corp., 900 F.2d 522, 525 (2d Cir.), cert. denied sub nom. Greenspan, Jaffe & Rosenblatt v. Sara Lee Corp., --- U.S. ----, 111 S.Ct. 132, 112 L.Ed.2d 100 (1990). A district court's imposition of sanctions under Rule 37 is reviewed under an abuse of discretion standard. Thomas E. Hoar, 900 F.2d at 525. 29 In the instant case, the district court exercised its discretion under Rule 37 to sanction Collectors' Guild by precluding the introduction of certain sales and inventory evidence. Assuming, without deciding, that this sanction was proper, the district court abused its discretion and committed plain error when through its instruction it allowed the jury, in effect, to sanction Collectors' Guild again for its late production of documents. By broadly instructing the jury that it could find that Collectors' Guild had engaged in any wrongful conduct during discovery and that it could consider such conduct in evaluating the evidence on damages, the court essentially permitted the jury to penalize Collectors' Guild for discovery abuse and to disregard even the sales and inventory evidence that was properly admitted. As the district court explained in its post-trial opinion, the court's concern was that, absent such an instruction, the jury might find even the limited amount of [Collectors' Guild's] financial data that had been admitted more persuasive than [Werbung's] circumstantial theory.... Werbungs, 728 F.Supp. at 983. We believe that the district court went too far in attempting to assure that Collectors' Guild did not benefit from its late production of documents. The court's instruction, which Werbungs apparently did not request, contributed to what was clearly a punitive damage award. Accordingly, we hold that the district court's jury instruction constituted reversible error. 30 Despite the punitive nature of the damages, the district court concluded that granting a remittitur would cure the jury's excessive award. Remittitur is appropriate to reduce verdicts only in cases in which a properly instructed jury hearing properly admitted evidence nevertheless makes an excessive award. Shu-Tao Lin v. McDonnell Douglas Corp., 742 F.2d 45, 50 (2d Cir.1984). It is not designed to compensate for excessive verdicts in cases where, as here, error has infected the jury's entire consideration of the evidence on damages. See id. Accordingly, the district court's use of remittitur did not cure the court's defective jury instruction. 31 As a result of our disposition of the jury instruction issue, we need not reach Collectors' Guild's remaining claim of error concerning the court's preclusion rulings. However, to ensure a more orderly retrial on damages, the district court may, in its discretion, permit the parties to conduct further discovery for a reasonable period of time. In addition, the parties are directed to indicate before trial the evidence they plan to introduce and to notify the district court before trial of all reasonably anticipated evidentiary objections.