Court Opinion

ID: 4175748
Source: CourtListenerOpinion
Date Created: 2017-06-08 17:04:14.963431+00
Date Added: 2024-06-11T14:39:27.588038
License: Public Domain

FOR PUBLICATION

  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT

LEROY HAEGER; DONNA HAEGER,             No. 12-17718
husband and wife; BARRY HAEGER;
SUZANNE HAEGER, husband and                D.C. No.
wife,                                   2:05-cv-02046-
                Plaintiffs-Appellees,        ROS

                 v.

GOODYEAR TIRE & RUBBER
COMPANY, an Ohio corporation,
             Defendant-Appellant,

                and

SPARTAN MOTORS, INC., a Michigan
corporation; GULFSTREAM COACH,
INC., an Indiana corporation,
                          Defendants,

                 v.

ROETZEL & ANDRESS, LPA; BASIL J.
MUSNUFF,
                        Movants.
2        HAEGER V. GOODYEAR TIRE & RUBBER CO.

LEROY HAEGER; DONNA HAEGER,                  No. 13-16801
husband and wife; BARRY HAEGER;
SUZANNE HAEGER, husband and                     D.C. No.
wife,                                        2:05-cv-02046-
                Plaintiffs-Appellees,             ROS

                   v.
                                                ORDER
GOODYEAR TIRE & RUBBER
COMPANY, an Ohio corporation,
             Defendant-Appellant.

      On Remand From the United States Supreme Court

                        Filed June 8, 2017

    Before: J. CLIFFORD WALLACE, MILAN D. SMITH,
         JR. and PAUL J. WATFORD, Circuit Judges.

                          Order;
            Dissent by Judge Milan D. Smith, Jr.
         HAEGER V. GOODYEAR TIRE & RUBBER CO.                       3

                          SUMMARY *

                       Waiver / Sanctions

    On remand from the U.S. Supreme Court in Goodyear
Tire & Rubber Co. v. Haeger, 137 S. Ct. 1178 (2017), the
panel vacated the district court’s $2.7 million sanctions
award, and remanded to the district court for proceedings
consistent with the Supreme Court’s opinion.

    Dissenting from the panel’s decision to remand, Judge
M. Smith would retain jurisdiction over the case, and decide
in the first instance whether Goodyear Tire waived any
causation challenge to the district court’s $2 million
contingency sanctions award. Judge M. Smith would find
that Goodyear Tire waived any causation challenge, and
conclude that because the district court’s contingency
sanctions award should stand, no further involvement by the
district court was necessary.

                           COUNSEL

Pierre H. Bergeron, Squire Sanders LLP, Cincinnati, Ohio;
George Brandon, Squire Sanders LLP, Phoenix, Arizona;
Jill G. Okun, Squire Sanders LLP, Cleveland, Ohio, for
Defendant-Appellant/Defendant The Goodyear Tire &
Rubber Company.

    *
      This summary constitutes no part of the opinion of the court. It
has been prepared by court staff for the convenience of the reader.
4       HAEGER V. GOODYEAR TIRE & RUBBER CO.

Mark I. Harrison, Jeffrey B. Molinar, Osborn Maledon, PA,
Phoenix, Arizona, for Movant/Movant-Appellant Basil J.
Musnuff.

Andrew M. Jacobs, Katherine V. Foss, Snell & Wilmer LLP,
Tucson, Arizona; James R. Condo, Lisa M. Coulter, Snell &
Wilmer LLP, Phoenix, Arizona, for Movant-Appellant
Graeme Hancock.

John J. Egbert, Jennings Strouss & Salmon, PLC, Phoenix,
Arizona; David L. Kurtz, The Kurtz Law Firm, Scottsdale,
Arizona, for Plaintiffs-Appellees.

                            ORDER

  Defendant-Appellant Goodyear Tire & Rubber
Company’s unopposed motion for supplemental briefing is
DENIED.

   Pursuant to the opinion of the Supreme Court in
Goodyear Tire & Rubber Co. v. Haeger, 137 S. Ct. 1178
(2017), the district court’s $2.7 million sanctions award is
VACATED, and, by vote of a majority of the panel judges,
the matter is REMANDED to the district court for
proceedings consistent with the Supreme Court’s opinion.

M. SMITH, Circuit Judge, dissenting:

    I respectfully dissent from the panel’s decision to remand
this case to the district court. The Supreme Court remanded
the case to us to determine, in the first instance, whether
Defendant-Appellant Goodyear Tire & Rubber Company
        HAEGER V. GOODYEAR TIRE & RUBBER CO.                   5

(Goodyear) waived any causation challenge to the district
court’s $2 million contingency sanctions award. See
Goodyear Tire & Rubber Co. v. Haeger, 137 S. Ct. 1178,
1190 (2017) (“The possibility of waiver should therefore be
the initial order of business below. If a waiver is found, that
is the end of this case. If not, the District Court must reassess
fees in line with a but-for causation requirement.”).
Plaintiffs-Appellees’ (the Haegers) theory of waiver is
premised on Goodyear raising a specific causation challenge
before the district court to only $722,406.52 of the fees and
costs sought by the Haegers. As such, the record is already
complete, and no additional fact finding is necessary.
Moreover, the Haegers specifically raised this theory of
waiver when the case was first before us, and Goodyear
responded. Accordingly, I would retain jurisdiction over this
case and decide the waiver claim in the first instance.

    On the merits of the waiver claim, Goodyear’s briefing
before the district court confirms that Goodyear failed to
challenge the entirety of the Haegers’ requested fees on
causation grounds. In its Response and Objections to
Plaintiffs’ Application for Attorneys’ Fees and Costs,
Goodyear reiterated its belief that “plaintiffs are only entitled
to recover fees resulting from Goodyear’s allegedly
sanctionable conduct.” Goodyear then identified only “the
entries relating to Spartan, Gulfstream or medical/damages”
as “wholly distinct from the issues at hand.” Goodyear
concluded that “[e]ntries which include this objection
amount to $722,406.52.” Nowhere in this brief did
Goodyear assert a causation challenge to the remaining costs
and fees requested by the Haegers.

    Nor am I persuaded that Goodyear preserved that
argument by including a footnote stating that its opposition
brief should not “be construed as waiving the impropriety of
6          HAEGER V. GOODYEAR TIRE & RUBBER CO.

[the district court’s order] requiring payment of all fees from
November 2006 onward as opposed to incremental fees
caused by Goodyear’s alleged discovery misconduct.” The
footnote expressly preserves Goodyear’s argument that fees
awarded to the Haegers must be “caused by Goodyear’s
alleged discovery misconduct.” However, whether fees
must be causally related to sanctionable conduct, and which
specific fees are causally related to the sanctionable conduct,
are separate issues. The footnote speaks only to the former,
while the circumscribed causation argument that follows in
the brief speaks to the latter. Thus, Goodyear failed not only
to raise the issue of whether the remaining $2 million in fees
requested by the Haegers were causally related to
Goodyear’s sanctionable conduct before the district court,
but also to preserve it for appeal. Accordingly, I believe that
the district court’s $2 million contingency sanctions award
should stand, and that no further involvement by the district
court is necessary.

    If the district court determines that there was no waiver
by Goodyear, I believe that the district court’s $2 million
contingency sanctions award has already met the new
standard the Supreme Court set in its partial overruling sub
silentio of Chambers v. NASCO, Inc., 501 U.S. 32 (1991).
In Chambers, the Supreme Court expressly rejected the
sanctionee’s request that it apply a but-for test, id. at 56–57,1

    1
        The relevant portion of Chambers reads as follows:

          Chambers claims that the fact that the entire amount of
          fees was awarded means that the District Court failed
          to tailor the sanction to the particular wrong. As
          NASCO points out, however, the District Court
          concluded that full attorney’s fees were warranted due
          to the frequency and severity of Chambers’ abuses of
          the judicial system and the resulting need to ensure
         HAEGER V. GOODYEAR TIRE & RUBBER CO.                      7

and we relied on that fact in our panel opinion. Haeger v.
Goodyear Tire & Rubber Co., 813 F.3d 1233, 1248–49 (9th
Cir. 2016), rev’d and remanded, 137 S. Ct. 1178 (2017).
Now, however, the Supreme Court recognizes that “[i]n
exceptional cases the but-for standard even permits a trial
court to shift all of a party’s fees, from either the start or
some midpoint of a suit, in one fell swoop,” and cites
Chambers as an illustration of such a permitted shift.
Goodyear Tire & Rubber Co., 137 S. Ct. at 1187. Moreover,
the Supreme Court clearly permits considerable flexibility in
the application of a Chambers-style “but-for” calculation:

        The award is then the sum total of the fees
        that, except for the misbehavior, would not
        have accrued. But as we stressed in Fox, trial
        courts undertaking that task “need not, and
        indeed should not, become green-eyeshade
        accountants” (or whatever the contemporary
        equivalent is). “The essential goal” in
        shifting fees is “to do rough justice, not to
        achieve auditing perfection.” Accordingly, a
        district court “may take into account [its]
        overall sense of a suit, and may use estimates

        that such abuses were not repeated. Indeed, the court
        found Chambers’ actions were “part of [a] sordid
        scheme of deliberate misuse of the judicial process”
        designed “to defeat NASCO’s claim by harassment,
        repeated and endless delay, mountainous expense and
        waste of financial resources.” It was within the court’s
        discretion to vindicate itself and compensate NASCO
        by requiring Chambers to pay for all attorney’s fees.

Chambers, 501 U.S. at 56–57 (citation omitted).
8       HAEGER V. GOODYEAR TIRE & RUBBER CO.

       in calculating and allocating an attorney’s
       time.”

Goodyear Tire & Rubber Co., 137 S. Ct. at 1187 (citations
omitted).

    The essential facts in Chambers are on all fours with the
facts in this case. There, the Supreme Court held that a
district court did not abuse its discretion in awarding
NASCO all of its attorneys’ fees as a result of Chambers’
misconduct. Chambers, 501 U.S. at 57. Chambers, like
Goodyear here, argued that because the award was for the
full amount of NASCO’s fees, the district court must have
failed to tailor the sanction to the harm caused by the wrong.
Id. at 56. The Supreme Court rejected this argument, and
held that the fees were warranted because Chambers’ bad
behavior so permeated the whole of the litigation that all of
NASCO’s attorney fees was an appropriate measure of
NASCO’s harm. Id. at 56–57. Like Chambers, Goodyear
and its attorneys engaged in an ongoing and “sordid scheme
of deliberate misuse of the judicial process.” Id. at 57. The
district court specifically found that Goodyear’s “troubling
behavior . . . began almost immediately after the case was
filed and continued throughout the entire litigation,
including post-dismissal.” I therefore believe that the
district court has already done “rough justice,” and the
$2 million contingency sanctions award fully satisfies the
“but-for” requirement now required in a Chambers-like
factual pattern.

    On a final note, I emphasize that the misconduct in this
case was egregious and in bad faith, as expressly found by
the district court in 49 pages of factual analysis. Indeed,
Goodyear did not contest the district court’s assessment of
the misconduct before the Supreme Court. Goodyear Tire
        HAEGER V. GOODYEAR TIRE & RUBBER CO.                  9

& Rubber Co., 137 S. Ct. at 1184 (“The court’s assessment
of Goodyear’s actions was harsh (and is not contested
here).”). The deceit and dishonorable conduct of Graeme
Hancock and Basil J. Musnuff in this case were unworthy of
members of the bar, and their disgrace serves as an
admonition to all members of the bar. As the district court
noted in its opinion: “Litigation is not a game. It is the time-
honored method of seeking the truth, finding the truth, and
doing justice. When a corporation and its counsel refuse to
produce directly relevant information an opposing party is
entitled to receive, they have abandoned these basic
principles in favor of their own interests. The little voice in
every attorney’s conscience that murmurs turn over all
material information was ignored.”