Court Opinion

ID: 3029849
Source: CourtListenerOpinion
Date Created: 2015-10-13 22:43:29.235063+00
Date Added: 2024-06-11T11:48:04.566848
License: Public Domain

United States Court of Appeals
                           FOR THE EIGHTH CIRCUIT
                                    ___________

                                    No. 01-3606
                                    ___________

Tandy Hairston; Truitt Glasper, doing   *
business as Loan Store Corp., doing     *
business as Loan Store Corp., Inc.,     *
                                        * Appeal from the United States
             Appellants,                * District Court for the
                                        * Eastern District of Missouri.
      v.                                *
                                        *
Alert Safety Light Products, Inc.,      *
                                        *
             Appellee.                  *
                                   ___________

                              Submitted: April 18, 2002

                                   Filed: October 10, 2002
                                    ___________

Before WOLLMAN, BEAM, and LOKEN, Circuit Judges.
                          ___________

WOLLMAN, Circuit Judge.

     Plaintiffs appeal the district court’s order dismissing their suit with prejudice.
We reverse and remand for further proceedings.1

      1
        In light of the basis upon which we affirm the district court, we deny
plaintiffs’ motion to strike Alert’s appendix.
                                           I.

      In 1993, a fire damaged the Loan Store Corp., a Florissant, Missouri, business
owned and operated by plaintiffs Tandy Hairston and Truitt Glasper. On May 9,
2000, plaintiffs brought suit against Alert Safety Light Products, Inc. (Alert), the
manufacturers of a power strip that plaintiffs alleged was the cause of the fire.

        During the discovery phase of the litigation, Alert subpoenaed Hairston and
plaintiffs’ accountant Joseph Joyner, or any other representative of plaintiffs’
accountant McKinley, Jones & Associates (McKinley Jones) for depositions to be
taken on June 13, 2001. Neither Hairston nor Joyner appeared for the deposition. On
July 18, 2001, Alert moved for an order to show cause why Hairston, Joyner, and
McKinley Jones should not be held in contempt for failure to appear for their
depositions. On July 31, 2001, plaintiffs filed an untimely request for an extension
of time to respond to the motion. The district court denied the plaintiffs’ motion on
August 1, 2001, noting that it had entered the show cause orders that day. Those
orders directed Hairston and Joyner, or any other agent, officer or representative of
McKinley Jones, to show cause on or before August 10, 2001, why they should not
be held in contempt for their failure to attend the June 13 deposition. The order
issued to Hairston recited the possible sanctions, including the dismissal with
prejudice of the claim, that could be imposed upon a finding of contempt. Hairston,
Joyner, and McKinley Jones filed no response to the show cause orders. Hairston did
finally give a deposition on August 16, 2001, the same day that the court found
Hairston, Joyner, and any other representative of McKinley Jones to be in contempt
for failing to appear for the June 13 depositions and for failing to respond to the show
cause orders. The district court dismissed the entire case with prejudice and ordered
plaintiffs to pay Alert’s fees and costs for the show cause proceedings. The court
subsequently denied plaintiffs’ motions to set aside and reconsider the dismissal.

                                          -2-
                                           II.

       We review the district court’s imposition of the sanction of dismissal for abuse
of discretion.2 Martin v. DaimlerChrysler Corp., 251 F.3d 691, 694 (8th Cir. 2001).
The court should resort to the sanction of dismissal only “when the ‘failure to comply
has been due to . . . willfulness, bad faith, or any fault of petitioner.’” Edgar v.
Slaughter, 548 F.2d 770, 772 (8th Cir. 1977) (quoting Societe Internationale v.
Rogers, 357 U.S. 197, 212 (1958)). The court’s “discretion is bounded by the
requirement of Rule 37(b)(2) that the sanction be ‘just’ and relate to the claim at issue
in the order to provide discovery.” Avionic Co. v. General Dynamics Corp., 957 F.2d
555, 558 (1992) (citing Shelton v. Am. Motors Corp., 805 F.2d 1323, 1329 (8th Cir.
1986)).

       Plaintiffs contend that these facts are similar to those in Edgar v. Slaughter, and
assert that the dismissal sanction was not “just.” See Edgar, 548 F.2d at 772. Our
examination of the record reveals that the facts of this case fall somewhere between
those in Edgar and those in cases in which the district court clearly did not abuse its
discretion. See Everyday Learning Corp. v. Larson, 242 F.3d 815, 817-18 (8th Cir.
2001); Avionic Co., 957 F.2d at 558; Denton v. Mr. Swiss of Mo., Inc., 564 F.2d
236, 240-41 (8th Cir. 1977). In those cases, the plaintiffs had numerous opportunities
to respond to the courts’ orders and repeatedly failed to do so. Here, although
plaintiffs should have responded to the district court’s show cause order, it appears
that plaintiffs’ counsel were attempting to try to work out arrangements for Hairston’s
deposition and for the resolution of discovery disputes. Thus, plaintiffs’ conduct and
lack of responsiveness did not rise to the level of that which occurred in the foregoing
three cases.

      2
       The district court did not explicitly specify under what authority it dismissed
the suit. The parties have proposed three possibilities. It is clear to us from the
court’s order that the dismissal was entered under Rule 37 by way of a sanction for
discovery violations.

                                           -3-
       In Avionic and Everyday Learning, we stated that in cases of willfulness and
bad faith “the district court need not investigate the propriety of a less extreme
sanction.” Everyday Learning, 242 F.3d at 818; see also Avionic, 957 F.2d at 558.
Nowhere in its three rulings concerning the dismissal of this action does the district
court state that it found the action of plaintiffs to be willful and in bad faith.3 Without
first making this essential finding, the district court dismissed the action in its entirety
with prejudice without any contemplation of a lesser sanction.

       Plaintiffs’ willful and bad faith conduct must also be the source of prejudice
to the defendant. Denton, 564 F.2d at 241 (finding that defendants were clearly
prejudiced by plaintiffs’ noncompliance with discovery orders). The district court
stated in the August 16 dismissal order that Hairston and McKinley Jones failure to
appear to be deposed “severely jeopardized the ability of the defendant . . . to
adequately defend this lawsuit and prepare for the October 9, 2001 trial date.”
Although Hairston did fail to appear for his June 13 deposition, he had been deposed
by the time the district court issued dismissal order. Thus, any prejudice to Alert had
been ameliorated.

       Furthermore, we are concerned that in denying the plaintiffs’ motion to set
aside the dismissal order, the district court did not take the opportunity to more fully
explain the basis for the dismissal, but instead addressed new “facts” that had come
to light after its issuance of the order. Rule 59(e) motions permit the court after
reconsideration to correct manifest errors of law or fact. See Lupo v. R. Rowland &
Co., 857 F.2d 482, 485 (8th Cir. 1988) (citing White v. N.H. Dep’t of Employment
Sec., 455 U.S. 445, 450 (1982)). In denying the motion, the court stated that Hairston
had no interest in the case because he had assigned his litigation interest to Glasper,

       3
       Although the court’s statement that the “lawsuit from its inception has been
fraught with serious pleading defects, bordering on fraudulent” might be read as
bearing upon the question of willfulness and bad faith, it lacks the explicitness with
which a finding of willfulness and bad faith should be expressed.

                                            -4-
that the Loan Store was a defunct corporation, and that Glasper had no interest in the
case because the true nature of the action was one of subrogation. Thus, the district
court declared that “[a]s this lawsuit stands now, . . . none of the named plaintiffs are
the real parties-in-interest.” Although this may or may not be true, we do not believe
it was an appropriate ground upon which to deny the motion to set aside, for in effect
it constituted a ruling on the sufficiency of the pleadings rather than a finding upon
which a judgment of contempt could properly be based.

        Although we recognize that the district court has wide discretion in these
matters, and while we can certainly understand the district court’s frustration with the
manner in which this case has proceeded, we conclude that the district court went
beyond the bounds of its discretion in this case. The crux of Edgar is that the district
court should use the dismissal sanction sparingly. Here, however inartfully the case
has been pleaded and however dilatorily prosecuted, we believe that the imposition
of lesser sanctions, for example, the assessment of appropriate monetary terms (which
we note counsel have offered to pay as a condition of reinstatement of the complaint),
the striking of pleadings, limitations on discovery or in the admission of evidence,
would constitute both an adequate vindication of the district court’s orders and a
deterrent to any future lack of diligence in complying with discovery requests and
trial schedules.

      Accordingly, the order is reversed, and the case is remanded for further
proceedings not inconsistent with the views set forth in this opinion.

LOKEN, Circuit Judge, dissenting.

      I respectfully dissent.

      In Part II of its opinion, the court analyzes this case as though it involved a
more typical discovery sanctions dispute of the following nature:

                                          -5-
      • Plaintiff fails to attend a properly noticed deposition. Defendant files a Rule
        37(a) motion to compel discovery. The district court orders plaintiff to
        attend the deposition.

      • Plaintiff fails to attend the rescheduled deposition. Defendant files a Rule
        37(b) motion for sanctions for failure to comply with the court order.

      • The court issues a sanction order dismissing the case with prejudice, as
        authorized by Rule 37(b)(2)(C). See Boogaerts v. Bank of Bradley, 961
F.2d 765, 768 (8th Cir. 1992). On that same day, the parties complete the
        disputed deposition.

      • Plaintiff moves for reconsideration, arguing dismissal is too severe a
        sanction, as the discovery has been completed. The court summarily denies
        this motion, and plaintiff appeals.

       If the record reflected the above scenario, I would join the court’s opinion,
agreeing that dismissal is too severe a sanction when most of the prejudice can be
remedied by a money sanction and there is little or no evidence of bad faith. But here
the record reflects far more serious misconduct by plaintiffs and their attorney:

      • Defendant Alert first noticed plaintiff Hairston’s deposition on November
        22, 2000. After the deposition was rescheduled and renoticed four times,
        Alert served its sixth notice of deposition along with a subpoena
        commanding Hairston to appear for a deposition on June 13, 2001.

      • When Hairston failed to obey the subpoena, Alert moved for an order to
        show cause why he should not be held in contempt of court. See Rule 45(e).
        The court granted the motion on August 1, ordering plaintiff Hairston to
        show cause by August 10 and warning that a finding of contempt “allows the
        imposition of sanctions, including but not limited, to . . . dismissal with
        prejudice of plaintiff’s claim in this case.”

                                         -6-
      • When Hairston failed to respond to the show cause order, the court issued
        its August 16 order finding him in contempt and dismissing the claims of all
        plaintiffs with prejudice as a contempt sanction.

      • Plaintiffs moved to set aside the dismissal on two grounds, that Hairston had
        been dismissed from the lawsuit in March 2001 because he was not a proper
        party, and that Hairston’s deposition had been completed on August 16, the
        date of the court’s dismissal order. In support, plaintiffs submitted an
        affidavit by Aaron I. Mandel, one of their attorneys, stating that he “prepared
        and filed a memorandum with the Court in March 2001 dismissing Mr.
        Hairston’s claim.” That statement was false.

      • On September 10, the court denied the motion to set aside the dismissal
        because (i) Hairston and the other plaintiffs failed to respond to the court’s
        show cause order directed to Hairston, and to another show cause order
        directed to their accountant; (ii) plaintiffs lied to the court about the March
        filing of a memorandum dismissing Hairston; and (iii) plaintiffs’ discovery
        abuses and their deception regarding the proper parties made it impossible
        to meet the court’s October 9 trial date, which had been set in December
        2000.

       We deal in this case with the proper sanctions for a plaintiff who disobeys a
subpoena and then ignores a show cause order, and whose attorney then lies to the
court under oath in attempting to set aside a sanction imposed for contempt of the
court. When Hairston ignored the show cause order, Rule 45(e) expressly authorized
the court to find him in contempt for disobeying the subpoena. As Hairston was a
party, at a minimum the court could impose as a civil contempt remedy the sanctions
authorized in Rule 37(b)(2)(A)-(C) plus the assessment of Alert’s reasonable
expenses and attorneys’ fees in pursuing this discovery. See Daval Steel Prods. v.
M/V Fakredine, 951 F.2d 1357, 1364-65 (2d Cir. 1991). Dismissal with prejudice,
though authorized by Rule 37(b)(2)(C), is of course a more punitive sanction and
therefore may trigger the closer scrutiny reserved for criminal contempt remedies,
including the right to immediate appeal. See Marrese v. Am. Acad. of Orthopaedic
Surgeons, 706 F.2d 1488, 1493 (7th Cir. 1983). Thus, I do not criticize plaintiffs for

                                         -7-
challenging the severity of this sanction by moving the district court to set aside its
August 16 dismissal order.

       But then in challenging the dismissal order, plaintiffs lied to the court in an
attorney affidavit addressing a highly relevant fact. There can be no doubt that
dismissal is an authorized sanction for a party whose attorney has undermined the
integrity of the judicial process by lying to the court. See Wyle v. R.J. Reynolds
Indus., Inc., 709 F.2d 585, 589 (9th Cir. 1983) (“courts have inherent power to
dismiss an action when a party has willfully deceived the court and engaged in
conduct utterly inconsistent with the orderly administration of justice”); see generally
Chambers v. NASCO, 501 U.S. 32, 44-45 (1991) (noting that contempt and dismissal
are sanctions within district courts’ inherent authority to enforce their orders). Thus,
the district court’s reasons for denying the motion to set aside its prior dismissal order
fully justified the severe sanction that was thereby upheld.

      When dealing with violations of Rule 37 discovery orders, we give the district
courts “a large measure of discretion in deciding what sanctions are appropriate for
misconduct.” Hutchins v. A.G. Edwards & Sons, Inc., 116 F.3d 1256, 1260 (8th Cir.
1997) (quotation omitted). We should be equally deferential to a district court’s
determination of what sanction is appropriate to protect the integrity of the judicial
process when a party or his attorney has abused the discovery process, been found in
contempt of court, and then lied to the court under oath. See Nat’l Hockey League
v. Metro. Hockey Club, Inc., 427 U.S. 639, 642-43 (1976); Chrysler Corp. v. Carey,
186 F.3d 1016, 1021-22 (8th Cir. 1999). The court faults the district court for failing
to make an explicit finding that plaintiffs’ misconduct was willful and in bad faith.
“When the facts show willfulness and bad faith,” we will uphold a Rule 37(b)(2)
dismissal sanction despite the lack of an explicit finding of bad faith. Avionic Co. v.
Gen. Dynamics Corp., 957 F.2d 555, 558 (8th Cir. 1992); see Everyday Learning
Corp. v. Larson, 242 F.3d 815, 817-18 (8th Cir. 2001). Here, when the attorney for

                                           -8-
a party previously found in contempt lied to the court under oath, an explicit finding
of bad faith would be stating the obvious.

      For the foregoing reasons, I would affirm the judgment of the district court.

      A true copy.

         Attest:

                   CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.

                                         -9-