Court Opinion

ID: 9796442
Source: CourtListenerOpinion
Date Created: 2023-08-31 03:57:27.403759+00
Date Added: 2024-06-11T08:50:18.750210
License: Public Domain

Pickering, J.,
dissenting:
The majority’s decision to uphold the $30,000,000 default judgment in this case relies heavily on our deferential standard of review, and, in doing so, ignores the unanswered, material questions of whether Goodyear’s alleged discovery abuse was willful and whether it prejudiced Bahena. Without an evidentiary hearing to resolve those questions, striking Goodyear’s answer was an abuse of discretion and a violation of Goodyear’s due process rights.
*259I.
Although our review of discovery abuse sanctions is deferential, contrary to the majority’s view, that deference “does not automatically mandate adherence to [the district court’s] decision.” McDonald v. Western-Southern Life Ins. Co., 347 F.3d 161, 172 (6th Cir. 2003). “‘“Deferential review is not no review,” and “deference need not be abject.” ’ ” Id. (quoting Hess v. Hartford Life & Acc. Ins. Co., 274 F.3d 456, 461 (7th Cir. 2001) (quoting Gallo v. Amoco Corp., 102 F.3d 918, 922 (7th Cir. 1996))).
Our policy favoring disposition on the merits requires us to apply a heightened standard of review where the sanction imposed, as in this case, is liability-determining. Havas v. Bank of Nevada, 96 Nev. 567, 570, 613 P.2d 706, 707-08 (1980); Young v. Johnny Ribeiro Building, 106 Nev. 88, 92, 787 P.2d 777, 779-80 (1990). In Nevada Power Co. v. Fluor Illinois, we held that the district court abused its discretion when it dismissed a complaint and imposed other sanctions without first holding an evidentiary hearing on factual issues related to the meaning of discovery orders and whether those orders had been violated. 108 Nev. 638, 646, 837 P.2d 1354, 1360 (1992). In reversing the district court, we held that “[i]f the party against whom dismissal may be imposed raises a question of fact as to any of these factors, the court must allow the parties to address the relevant factors in an evidentiary hearing.” Id. at 645, 837 P.2d at 1359 (emphasis added).
While the majority distinguishes this case from Nevada Power by characterizing the sanctions as “non-case concluding,” the reality is that striking Goodyear’s answer did effectively conclude this case. The sanction resulted in a default liability judgment against Goodyear and left Goodyear with the ability to defend on the amount of damages only. Liability was seriously in dispute in this case,1 but damages, once liability was established, were not, given the catastrophic injuries involved. Thus, striking Goodyear’s answer was akin to a case concluding sanction, placing this case on the same footing as Nevada Power.
Surprisingly, the majority relies on Young v. Johnny Ribeiro Building. What it misses in Young is that we affirmed the claim-concluding sanctions there only because the district “court treated Young fairly, giving him a full evidentiary hearing.” 106 Nev. at 93, 787 P.2d at 780 (emphasis added). This case thus is not like Young but rather like Nevada Power, in that the district court erred as a matter of law in not holding an evidentiary hearing.
*260n.
When the district court struck Goodyear’s answer, Goodyear’s counsel had raised several factual questions about Goodyear’s willfulness and the extent of any prejudice to Bahena. However, the district court did not hold or conduct the evidentiary hearing required by Nevada Power and Young to resolve the questions of fact before striking Goodyear’s answer and all defenses to liability. This is, I submit, an example of “Sentence first — verdict afterwards,” that does not deserve deferential review. Lewis Carroll, Alice’s Adventures in Wonderland, Chapter XII “Alice’s Evidence” (MacMillan and Co. 1865).
The district court entered three discovery orders based on the Discovery Commissioner’s recommendations. Because the first order merely set the language for Goodyear’s protective order, it is not a discovery order that Goodyear could have violated. The remaining two orders were both entered by the district court on January 5, 2007, just four days prior to the district court’s decision to strike Goodyear’s answer.
The second order adopted the Discovery Commissioner’s December 5, 2006, recommendation that all counsel meet and review written discovery to reach an agreement as to what discovery obligations remained unfulfilled. Goodyear’s attorneys submitted affidavits averring that they met and conferred telephonically with Bahena on December 15, 2006. According to Goodyear, it requested that Bahena present it with a list of documents Bahena wanted authenticated and a list of any other discovery issues. Goodyear claims that Bahena failed to produce these lists. Nonetheless, even if Bahena had provided Goodyear with the lists, the terms of the recommendation gave Goodyear 30 days, or until January 15, 2007, to “conclusively respond to what was requested.” This order cannot justify the district court’s sanction order since the time for complying with its obligations (January 15, 2007) came six days after the district court ordered Goodyear’s answer stricken (January 9, 2007).
The third order similarly adopted a recommendation by the Discovery Commissioner, this one dated December 14, 2006, and recommending that by December 28, 2006, Goodyear produce a representative to authenticate the 74,000 adjustment and claims documents that Goodyear had produced months earlier under NRCP 34, as they were kept in the ordinary course of its business.2 Goodyear made a timely objection to this recommendation on *261January 3, 2007. This recommendation also is problematic as the predicate for the severe sanctions imposed. Significantly, in his December 14 recommendation, the Discovery Commissioner rejected Bahena’s request to strike Goodyear’s answer as sanctions and instead provided a self-executing “deemed authentic” noncompliance penalty.3 Also important, the parties disputed the meaning of — and consequence of violating — this recommendation. Bahena offered to seek clarification from the court — and did so on December 29, 2006, a day after Goodyear was supposed to comply with this third recommendation. The fact that Bahena, not Goodyear, sought clarification supports Goodyear’s position that an unresolved dispute existed among the lawyers as to what, precisely, the Discovery Commissioner had directed them to do. Further confusing things, the parties were not able to get back before the Discovery Commissioner over the holiday or thereafter because of his impending retirement, effective December 31.
The majority’s reasoning does not acknowledge the confusion surrounding these issues but instead defers to the district court’s finding that Goodyear failed to comply with the discovery recommendations. Based on Goodyear’s assertions, however, which it supported by affidavit, there are genuine, material questions of whether Goodyear willfully abused the discovery process. Without resolution of these questions through an evidentiary hearing, an ultimate sanction was premature.
HI.
Goodyear additionally raised questions of whether the alleged discovery abuse prejudiced Bahena. Goodyear maintains that Bahena was prepared for trial and therefore did not need the additional discovery sought to be compelled. Bahena admitted to being ready for trial on January 4, 2007, before the district court struck Goodyear’s answer.
Goodyear further contends that Bahena’s trial experts did not need Goodyear to provide more specificity with respect to the disputed documents, which comprised adjustment and claims data relating to various tires. Rather, Goodyear asserts that Bahena’s experts had already formed their opinions prior to Bahena’s request and were amply familiar with the documents as produced by Goodyear from other Goodyear products liability litigation in which the same set of documents had been produced. In a Sep*262tember 29, 2006, deposition, Bahena’s expert, Dennis Carlson, stated that all of his opinions were contained in his report and that he was prepared to give his expert testimony. Carlson further revealed that his opinions were not based on adjustment or claims data. Additionally, the My 5, 2006, report of another Bahena expert, Allan Kam, states that Kam supported his conclusions with claims data he already had for a nearly identical tire. Moreover, Bahena did not refute Goodyear’s assertion that its expert Kam, through prior litigation involving Goodyear and its adjustment and claims documents, already reviewed and produced reports on the same documents Goodyear produced elsewhere in other lawsuits without the index that became the source of the core discovery dispute in this case.
Goodyear also asserts that Bahena contributed to any prejudice it may have suffered by making delayed discovery requests and contributing to discovery and case management problems. Bahena served its third set of written discovery on November 10, 2006, less than 30 days before the December 7, 2006, discovery cutoff date.4 Goodyear responded to the discovery request on December 13, 2006, which was within 30 days, after allowing 3 days for mailing, missing the verification required by NRCP 33 but promising to supply it. Bahena filed its motion to compel answers to this third set of discovery on December 29, 2006. Goodyear opposed the motion on the grounds that Bahena filed it after the discovery cutoff date and that Bahena’s third discovery request came too close to trial.
The majority’s decision defers to the district court’s recitation that Bahena suffered prejudice. Without an evidentiary hearing to resolve the existence and extent of the prejudice — including whether imposing liability-terminating sanctions was required to stanch that prejudice — we have no findings to which deference is due.
IV.
This court would not affirm summary judgment where a party had raised factual disputes like those asserted here concerning *263willfulness and prejudice. However, the majority’s decision is analogous to affirming summary judgment despite the record presenting numerous unresolved factual issues..
While the majority relies on the district court’s inherent power to impose sanctions, due process requirements limit that power. See Wyle v. R.J. Reynolds Industries, Inc., 709 F.2d 585, 589 (9th Cir. 1983) (citing Hammond Packing Co. v. Arkansas, 212 U.S. 322, 349-54 (1909)). “Sanctions interfering with a litigant’s claim or defenses violate due process when imposed merely for punishment of an infraction that did not threaten to interfere with the rightful decision of the case.” Id. at 591 (citing G-K Properties v. Redevelopment Agency, Etc., 577 F.2d 645, 648 (9th Cir. 1978)). Put another way, the district court’s sanction must relate to the prejudice caused by the matter at issue in the discovery order. Id. With no evidentiary hearing to decide the disputed issues of fact, the benefit of the doubt on them should go to the party who lost, not the party who won. Applying this familiar summary judgment standard, striking Goodyear’s answer appears to have been an excessive penalty and was not proportional to Bahena’s discovery dispute claims. To uphold this ultimate sanction in the face of these factual questions and without the benefit of an evidentiary hearing violates the most fundamental of due process rights and for that reason, I respectfully dissent.

Goodyear avoided punitive damages in this case by arguing that a road hazard, rather than design or manufacturing defect, caused the tire failure from which this accident resulted. This suggests that its defenses to liability had a reasonable chance of success.

The core dispute appears to have been whether Goodyear was entitled to produce the documents as kept in the ordinary course of its business as NRCP 34 permits or should be required to create an index of the documents to facilitate their review, a dispute driven in part, according to Goodyear, by the breadth of the discovery sought.

The Discovery Commissioner included the following express noncompliance penalty in his December 14 recommendation, making it self-executing: “Any document Goodyear’s representative does not either affirm or deny as authentic will be deemed authentic.” Goodyear had no indication that noncompliance risked more serious penalty. Of note, Bahena did not file cross-objections to either of the Discovery Commissioner’s reports and recommen*262dations, in which the Discovery Commissioner denied Bahena’s requests for sanctions. While the majority tries to shore up the district court’s order by citing the Discovery Commissioner’s “findings” as those made by a “master,” the exercise fails because (1) the Discovery Commissioner didn’t hold an evidentiary hearing and (2) the relevant finding he made was that the discovery issues did not merit the severe sanctions Bahena sought, a finding Bahena accepted by not objecting to it.

The majority goes with the December 15, 2006, discovery cutoff date referenced in some of the motion papers in the district court. If the court-ordered discovery cutoff date of December 7, 2006, was extended to December 15, 2006, the order by which this extension was granted does not appear in the record. From what appears, the court-ordered cutoff was December 7, 2006.