Bartles v. Hinkle
Annotate this CaseJanuary 1996 Term
_________
No. 23062
_________
DENNIS BARTLES AND MARIA BARTLES,
Plaintiffs Below, Appellees
V.
MORGAN A. HINKLE, WILLIAM P. HINKLE,
AND M. PIZZA, INC.,
Defendants Below
DOMINO'S PIZZA, INC.,
Defendant Below, Appellant
_______________________________________________________________
APPEAL FROM THE CIRCUIT COURT OF BERKELEY COUNTY
HONORABLE DAVID H. SANDERS, JUDGE
CIVIL ACTION NO. 90-C-300
AFFIRMED
_______________________________________________________________
Submitted: May 2, 1996
Filed: June 14, 1996
Gilbert Wilkes III Walter M. Jones III
Wilkes & Associates E. Kay Fuller
Martinsburg, West Virginia Martinsburg, West Virginia
Kenneth Behrend Attorneys for Appellant
Behrend & Ernsberger
Pittsburgh, Pennsylvania
Attorneys for Appellees
JUSTICE CLECKLEY delivered the Opinion of the Court.
SYLLABUS BY THE COURT
1. Although Rules 11, 16, and 37 of the West Virginia Rules of Civil
Procedure do not formally require any particular procedure, before issuing a sanction, a court
must ensure it has an adequate foundation either pursuant to the rules or by virtue of its
inherent powers to exercise its authority. The Due Process Clause of Section 10 of Article
III of the West Virginia Constitution requires that there exist a relationship between the
sanctioned party's misconduct and the matters in controversy such that the transgression
threatens to interfere with the rightful decision of the case. Thus, a court must ensure any
sanction imposed is fashioned to address the identified harm caused by the party's
misconduct.
2. In formulating the appropriate sanction, a court shall be guided by equitable
principles. Initially, the court must identify the alleged wrongful conduct and determine if
it warrants a sanction. The court must explain its reasons clearly on the record if it decides
a sanction is appropriate. To determine what will constitute an appropriate sanction, the
court may consider the seriousness of the conduct, the impact the conduct had in the case and
in the administration of justice, any mitigating circumstances, and whether the conduct was
an isolated occurrence or was a pattern of wrongdoing throughout the case.
3. "Under Rule 37(b)(2)(E) of the West Virginia Rules of Civil Procedure, a court shall require a party failing to obey the order or the attorney advising him or both to pay the reasonable expenses, including attorney fees, caused by the failure. This provisions allows attorney's fees to be excused unless the failure was substantially justified or such an award would be unjust. The rule clearly states that such sanctions may be imposed in lieu of or in addition to any other sanctions." Syl. pt 7, State Farm Mut. Auto. Ins. Co. v. Stephens, 188 W. Va. 622, 425 S.E.2d 577 (1992).
4. An attorney's fee awarded as a sanction that explicitly is authorized by Rule 37(b) of the West Virginia Rules of Civil Procedure rests in the sound discretion of the trial court, and the exercise of that discretion will not be disturbed on appeal except in cases of abuse.
Cleckley, Justice:
Domino's Pizza, Inc. (Domino's), one of the defendants below and the
appellant herein, appeals the February 1, 1995, order of the Circuit Court of Berkeley
County.(1) This order imposed a ten thousand dollar ($10,000) sanction against Domino's in
favor of Dennis Bartles and Maria Bartles, the plaintiffs below and appellees herein. The
trial court ordered the sanction after finding the defendant did not comply with discovery
orders during the underlying case. On appeal, Domino's asserts the trial court abused its
discretion and acted beyond its jurisdiction in imposing the sanction. For the following
reasons, we affirm the trial court.
I.
FACTUAL AND PROCEDURAL BACKGROUND
The underlying action arose from an automobile accident on May 20, 1988,
between Morgan A. Hinkle, an employee of M. Pizza, Inc., a Domino's franchisee, and the
plaintiffs. The plaintiffs sued Morgan Hinkle; his father, William P. Hinkle; M. Pizza, Inc.;
and Domino's, for personal injuries. The plaintiffs sought both compensatory and punitive
damages. The trial court bifurcated the punitive damage issue of the trial and directed a
verdict of liability against the defendant Morgan Hinkle. At the close of the trial, the jury
found no liability against M. Pizza, Inc., or Domino's and returned no award on the
contested damage issue.
In its February 1, 1995, order, the trial court found that prior to trial the
plaintiffs filed three motions requesting the production of documents. According to a "TIME
LINE" attached to Domino's brief, Domino's moved for a protective order on February 27,
1992. Domino's asserts it sought a protective order because the plaintiffs wanted certain
documents, including internal writings and publications, many of which Domino's believed
contained trade secrets. Domino's also insisted the plaintiffs sign a Confidentiality
Agreement before Domino's turned over the requested documents.
It is apparent the Confidentiality Agreement became a source of contention
between the parties. Domino's claims counsel for the plaintiffs stated in a telephonic hearing
held on March 13, 1992, he had "'no problem with the Confidentiality Order.'" Domino's
then asked the trial court to enter the order so the documents could be produced. The trial
court refused this request stating it would rather the parties appear in person to enter the
order. Domino's contends it drafted an order on March 18, 1992, and it was clear to the
parties the documents would not be produced until after the Confidentiality Agreement was
executed. The plaintiffs state that on March 13, 1992, the trial court ordered Domino's to
produce the documents.
On June 9, 1992, a pretrial hearing was held. At that hearing, Domino's
motion for a protective order was discussed and, in part, was granted. However, Domino's
states it insisted the Confidentiality Agreement be signed before the documents would be
released. Domino's maintains the plaintiffs did not object to its version of the
Confidentiality Agreement until June 10, 1992, when the parties met following the pretrial
conference. It appears from the plaintiffs' brief that some documents were disclosed on June
9, 1992, and the plaintiffs discovered significant portions of those documents were redacted
or blacked out of view. Therefore, on June 10, 1992, the plaintiffs claim they presented a
"Motion to Compel Further Production of Documents and Sanction for Domino's wilful
failure to comply with the [trial court's] Orders regarding the Production of Documents."
The plaintiffs assert that, after hearing their motion, the trial court found Domino's was not
in compliance and ordered and directed Domino's to immediately comply with the trial
court's previous orders concerning discovery of documents. Moreover, according to the
plaintiffs, a pretrial status conference was held on June 19, 1992, and, for a third time, the
trial court ordered Domino's to produce the requested documents.
The version of the Confidentiality Agreement drafted by Domino's and at issue
between the parties contained a provision stating the plaintiffs and their counsel could be
subject to criminal sanctions if the order was violated. The plaintiffs sought to strike that
provision. The plaintiffs state the trial judge was not from Berkeley County, where the trial
was being held, and only would hold hearings from time to time when he traveled to the area.
Thus, the plaintiffs claim the first opportunity they had to discuss the criminal sanctions
provision with the trial judge was on June 22, 1992, the first day of trial.(2) Ultimately, the
provision was removed and the Confidentiality Agreement was executed on June 22, 1992.
The plaintiffs state Domino's then provided them with 187 pages of documents, however,
substantial portions of those pages were redacted.
The plaintiffs allege Domino's violated the trial court's order because it only was permitted to black out trade secrets which did not deal with its delivery policy and procedure and/or collisions. Therefore, on the second day of trial, the plaintiffs moved for sanctions. The plaintiffs assert that once again the trial court ordered Domino's to provide the documents, and the trial court scheduled an evidentiary hearing for June 25, 1992 (the fourth morning of trial), to discuss discovery issues. The plaintiffs state that on June 24, 25, and 27 Domino's produced about two thousand pages of documents in compliance with the previous orders. In their brief, the plaintiffs allege Domino's is in possession of other documents which should have been produced.
Domino's maintains the trial court's orders continually were expanded as time
passed. Domino's insists it immediately complied with each expansion of the orders. At the
June 9, 1992, pretrial hearing, the plaintiffs' request for Domino's "Operating Manual" was
discussed. Domino's informed the trial court the manual contained information beyond the
delivery policy at issue, and the trial court informed Domino's it could black out everything
not pertaining to its thirty-minute delivery policy. After the Confidentiality Agreement was
signed, Domino's provided the plaintiffs a redacted version of the manual.
Thereafter, on June 23, 1992, Domino's states the trial court enlarged its order
to include the entire manual without regard to the fact the trial court previously held parts
of the manual were not to be produced because of trade secrets. Plaintiffs told the trial court
Domino's improperly excluded sections entitled "delivery; pre-shift setup; delivery; fast, free
delivery; delivery time; delivery costs; friendliness and Domino's products/services."
However, Domino's argues those sections were in the 1985 manual and not in the 1988
manual which was in effect at the time the underlying automobile accident occurred.
Domino's attempted to explain the situation to the trial court but was told by the trial court
"it couldn't be much different." Consequently, Domino's produced the entire manual.
Another issue discussed at the June 9, 1992, hearing was the plaintiffs' request
for all writings over the past ten years dealing with pizza delivery automobile accident
lawsuits naming Domino's as a defendant. The trial court ordered Domino's to run a
computerized legal search to produce a list of cases. Domino's interpreted the request as a
Westlaw search and explained to the trial court the search only would generate appellate
decisions. Domino's apparently believed this search would be satisfactory to fulfill the trial
court's order. However, Domino's asserts that, during the trial, the court expanded its
decision (or at least Domino's interpretation of what it was supposed to produce) and ordered
the Michigan law firm which monitors Domino's cases to create a document containing all
trial court cases against Domino's.
Another document requested by the plaintiffs was the Pepperoni Press.
Domino's states this document "is a newspaper style publication of approximately 25 pages
per edition which has been published weekly for approximately 20 years." In its
memorandum in support of a protective order, Domino's argues, in part, it would be cost
prohibitive to copy all the editions, there were only limited copies available, and the
information in the documents is irrelevant. Domino's alleges the trial court first ruled
Domino's did not have to produce the editions because the information contained therein
could be obtained from another source. Subsequently, Domino's states the trial court
changed its ruling and Domino's had to accumulate copies of the publication and fly them
to Martinsburg to be reviewed by plaintiffs' counsel over a weekend break.
Domino's asserts that throughout the plaintiffs' renewed discovery requests
the plaintiffs also sought sanctions. The trial court deferred all rulings on sanctions until the
verdict was rendered. After the jury returned its verdict awarding no damages to the
plaintiffs, the plaintiffs filed a motion for a new trial. This motion was denied, so the
plaintiffs filed an appeal with this Court. Attached to the appeal was the plaintiffs' third
motion for sanctions. Their appeal to this Court was denied on April 21, 1993. Up until this
time, the plaintiffs did not receive a final ruling from the trial court on the issue of sanctions.
The plaintiffs continued to pursue sanctions at the trial court level after the appeal was
denied by this Court.
The plaintiffs state the trial court encouraged the parties to resolve the
sanctions issue between themselves, however, no amicable resolution could be met. On May
13, 1994, a hearing was held before the trial court. At that hearing, the trial court found, in
part:(3) (1) the plaintiffs made three motions for the production of documents; (2) Domino's
refused to produce certain documents unless the plaintiffs signed a Confidentiality
Agreement which included criminal penalties for violation of the agreement; (3) the criminal
penalty provision was stricken and Domino's produced some documents; (4) the plaintiffs
found the documents did not comply with the trial court's order because some documents
were not supplied while other documents were redacted which necessitated the plaintiffs
filing another motion to compel the production of documents; (5) Domino's argued the
redacted and blacked-out material were trade secrets, but subsequent discovery contradicted
Domino's argument and showed the excluded material had nothing to do with trade secrets
and, in fact, was damaging to Domino's; (6) the issue of sanctions remained with the trial
court despite the appeal; and (7) "there was not much question in the [trial court's] mind that
there was a system by Domino's Pizza Inc. to stall and delay production of the documents,
which did cause hardship and inconvenience to the Plaintiffs."(4) Therefore, the trial court
concluded as a matter of law that Domino's willfully failed to comply, stone-walled, and
purposefully stalled with regard to the discovery orders. In addition, Domino's redacted and
blacked out areas without justification. The trial court found Domino's acted willfully and
in bad faith and "took very little interest in trying to explain their inaction." For these
reasons, the trial court imposed the $10,000 sanction against Domino's.
II.
DISCUSSION
On appeal, Domino's argues (1) the trial court lacked jurisdiction; (2) the trial
court abused its discretion in awarding the $10,000 sanction for discovery violations because
Domino's action did not amount to disobedience or misconduct; and (3) any violation of the
discovery orders was excusable and did not prejudice the plaintiffs. We are persuaded the
trial court did not abuse its discretion under these circumstances in resorting to the sanction.
As the trial court stated: "As I remember what occurred, this was a complicated case and
was pretty full of emotion on counsel on both sides, and we were all determined to try to get
it to a jury." Indeed, the need for deterrence and the corresponding need for expeditious and
orderly progress of the litigation were particularly pronounced in this case. Therefore, we
affirm the decision of the trial court.
A.
Jurisdiction
Domino's argues the trial court lacked jurisdiction to entertain the issue of
sanctions after this Court refused the plaintiffs' petition for appeal. The plaintiffs attached
a motion for sanctions to the petition and, therefore, Domino's asserts the refusal of the
petition is final and should have concluded all litigation. In its February 1, 1995, order, the
trial court found the issue of sanctions was a collateral matter not directly related to the
appeal which was denied by this Court. This issue need not detain us.
Of course, insofar as subject matter jurisdiction is concerned, both a trial court
and an appellate court must be satisfied with their power to adjudicate in every case and at
every stage of the proceedings. Courts are never bound by the acts or agreements of the
parties. James M.B. v. Carolyn M., 193 W. Va. 289, 456 S.E.2d 16 (1995). A trial court is
deprived of jurisdiction only when it has entered a "final" order within the contemplation of
W. Va. Code, 58-5-1 (1925), and the final order has been appealed properly to this Court.
"The required finality is a statutory mandate, not a rule of discretion." Province v. Province,
___ W. Va. ___, ___, ___ S.E.2d ___, ___ (No. 22689 5/17/96) (Slip. op. at 8). Our cases
consistently hold a final order is one that "'leaves nothing to be done but to enforce by
execution what has been determined.'" James M.B., 193 W. Va. at 292, 456 S.E.2d at 19.
(Citation omitted).
At the time of the appeal, there remained pending in the trial court a viable
motion. Under these circumstances, unless the trial court certified the issues pursuant to
Rule 54(b) of the West Virginia Rules of Civil Procedure, it was this Court and not the trial
court that lacked jurisdiction to act. It must be assumed that the petition for appeal was
denied, in part, because this Court believed it had no appellate jurisdiction to hear the appeal.
The initial appeal, as it stood before this Court, was "no different than it would be had the
order complained of not been entered." Baker v. Gaskin, 124 W. Va. 69, 71, 19 S.E.2d 92,
93 (1942) (an order of a trial court rendering judgment for costs alone but not adjudicating
the merits is not a final judgment).(5)
To be clear, a trial court cannot write its own jurisdictional ticket, but it must
act within the confines of constitutional as well as statutory limits on its jurisdiction. In this
case, we find the trial court possessed subject matter jurisdiction to decide the sanction issue.
We hold the "rule of mandate," which is incorporated implicitly into W. Va. Code, 58-5-20
(1923), and W. Va. Code, 58-5-29 (1923), allows a trial court to decide anything not
foreclosed by our appellate mandate. Under this rule, a trial court cannot give relief beyond
the scope of our ruling, but it may act on matters left open by our final decision. We,
therefore, proceed to the merits of this appeal.
B.
Standard of Review
for the Imposition of Sanctions
Discovery orders lie within the sound discretion of a trial court. See Syl. pt.
4, Cox v. State, 194 W. Va. 210, 460 S.E.2d 25 (1995).(6) The purpose of Rule 11 and Rule
37 of the West Virginia Rules of Civil Procedure is to allow trial courts to sanction parties
who do not meet minimum standards of conduct in a variety of circumstances. Cox, 194 W.
Va. at 218, 460 S.E.2d at 33. (Cleckley, J., concurring). Nevertheless, it is clear "[b]ecause
of their very potency, . . . [sanction] powers must be exercised with restraint and
discretion. . . . A primary aspect of . . . [a trial court's] discretion is the ability to fashion an
appropriate sanction for conduct which abuses the judicial process." Chambers v. NASCO,
Inc., 501 U.S. 32, 44-45, 111 S. Ct. 2123, 2132-33, 115 L. Ed. 2d 27, 45 (1991). (Citation
omitted; emphasis added). A trial court abuses its discretion if its ruling is based on an
erroneous assessment of the evidence or the law. Cox, 194 W. Va. at 218 n.3, 460 S.E.2d
at 33 n.3. (Cleckley, J., concurring).
It is hard to find an area of the law in which the governing rules are, and
probably have to be, so vague. Admittedly, a trial court has broad authority to enforce its
orders and to sanction any party who fails to comply with its discovery rulings. Doulamis
v. Alpine Lake Property Owners Ass'n, 184 W. Va. 107, 399 S.E.2d 689 (1990);
W.Va.R.Civ.P. 16(f) & 37(b)(2). The difficulty is that the range of circumstances is so vast,
and the problems so much matters of degree, as to defy mechanical rules. Taken together,
the cases set forth a list of pertinent considerations. Among those commonly mentioned are
the public's interest in the expeditious resolution of litigation, the court's need to manage its
docket, the severity of the violation, the legitimacy of the party's excuse, the repetition of
violations, the deliberateness vel non of the misconduct, mitigating excuses, prejudice to the
other side and to the operations of the court, and the adequacy of other sanctions. See 9
Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure 2370 (2nd ed.
1995). Mindful that case management is a fact-specific matter within the ken of the trial
court, reviewing courts have reversed only for a clear abuse of discretion. A trial court's
factual findings may not be set aside unless they are clearly erroneous. In particular, a trial
court's credibility determinations are entitled to special deference.
The choice of imposition of sanctions for failing to comply with a court order
lies with the trial court, and we will not lightly disturb that decision. Unless excused or the
award is unjust, this Court leaves undisturbed an award of reasonable attorney's fees and
costs caused by the failure of a party to comply with discovery orders. See State Farm Mut.
Auto, Ins. Co. v. Stephens, 188 W. Va. 622, 425 S.E.2d 577 (1992) (attorney's fees may be
imposed as a sanction in lieu of or in addition to any other sanction). On the appeal of
sanctions, the question is not whether we would have imposed a more lenient penalty had
we been the trial court, but whether the trial court abused its discretion in imposing the
sanction. See National Hockey League v. Metropolitan Hockey Club, 427 U.S. 639, 642,
96 S. Ct. 2778, 2780, 49 L. Ed. 2d 747, 751 (1976). It does not mean, however, that we will
rubber stamp the sanction decisions of a trial court. Both Rule 16(f) and 37(b) of the Rules
of Civil Procedure allow the imposition of only those sanctions that are "just." See generally
State v. Cox, 194 W. Va. at 218, 460 S.E.2d at 33 (Cleckley, J., concurring); State Farm
Mut. Auto, Ins. Co., supra.
There is also a procedural dimension. Although Rules 11, 16, and 37 of the
Rules of Civil Procedure do not formally require any particular procedure, before issuing a
sanction, a court must ensure it has an adequate foundation either pursuant to the rules or by
virtue of its inherent powers to exercise its authority. A court also must ensure any sanction
imposed is fashioned to address the identified harm caused by the party's misconduct. Cox,
194 W. Va. at 218, 460 S.E.2d at 33. (Cleckley, J., concurring). In formulating the
appropriate sanction, a court shall be guided by equitable principles. See e.g. Hillig v.
Comm'r of Internal Revenue, 916 F.2d 171, 174 (4th Cir. 1990). Initially, a court must
identify the alleged wrongful conduct and determine if it warrants a sanction. The court
must explain its reasons clearly on the record if it decides a sanction is appropriate. Republic
of the Philippines v. Westinghouse Elec. Corp., 43 F.3d 65, 74 (3rd Cir. 1994). As we
suggested earlier, to determine what will constitute an appropriate sanction, a court may
consider the seriousness of the conduct, the impact the conduct had in the case and in the
administration of justice, any mitigating circumstances, and whether the conduct was an
isolated occurrence or was a pattern of wrongdoing throughout the case. Cox, 194 W. Va.
at 218-19, 460 S.E.2d at 33-34. (Cleckley, J., concurring). Although evidence of similar
conduct in other cases may show the absence of mistake or accident of a party, a trial court
cannot sanction a party for conduct exhibited in cases not before the court. On the other
hand, counsel's disregard of a prior warning from the court in the same case exacerbates the
offense, as the lack of warning sometimes mitigates against it. Ordinarily, a plaintiff is given
an opportunity to explain the default or to argue for a lesser penalty, but, again, there is no
mechanical rule.
The party seeking sanctions under Rule 37(b) has the burden of proving
noncompliance with a discovery order. If established, the burden of proof shifts to the
noncompliant party to demonstrate either that it was unable to comply or that special
circumstances exist which make the imposition of sanctions unjust. Syl. pt. 3, Bell v. Inland
Mut. Ins. Co., 175 W. Va. 165, 332 S.E.2d 127, cert. denied sub nom., Camden Fire Ins.
Ass'n v. Justice, 474 U.S. 936, 106 S. Ct. 299, 88 L. Ed. 2d 277 (1985). See also Falstaff
Brewing Corp. v. Miller Brewing Co., 702 F.2d 770, 784 (9th Cir. 1983) ("[t]he party
against whom an award of expenses is sought has the burden of showing the special
circumstances that make his or her failure to comply substantially justified"). If it is
demonstrated that a noncompliant party intentionally or with gross negligence failed to obey
a court order, the full range of sanctions under Rule 37(b) is available to the court. Syl. pt.
4, Bell, supra; Syl. pt. 2, Smallwood v. Raleigh General Hosp., 194 W. Va. 48, 459 S.E.2d 159 (1995). A party cannot be sanctioned, however, if the underlying discovery order is
shown to be invalid. State Farm Mut. Auto. Ins. Co., 188 W. Va. at 631, 425 S.E.2d at 586.
In the present case, Domino's asserts the documents sought by the plaintiffs
went solely to the issue of punitive damages and, because the trial was bifurcated, this aspect
of the trial was eliminated when the jury returned a verdict awarding no compensatory
damages. See Garnes v. Fleming Landfill, Inc., 186 W. Va. 656, 667, 413 S.E.2d 897, 908
(1991), overruling Syl. pt. 3, Wells v. Smith, 171 W. Va. 97, 297 S.E.2d 872 (1982), "to the
extent that it stands for the proposition that a jury may return an award for punitive damages
without finding any compensatory damages. (Emphasis in original). Therefore, even if there
were discovery violations, Domino's contends the plaintiffs were not impeded in the
presentation of their case and, under the circumstances, the issue of nondisclosure is moot
and cannot give rise to either sanctions or a new trial. The plaintiffs disagree with the
characterization of the evidence it sought through discovery and argues the evidence was
relevant to the issues in the trial of this case.
It is hard to view Dominos' argument as anything but disingenuous. Regardless
of whether the materials the plaintiffs requested were to be used during the first or second
half of the bifurcated trial, Domino's defiance of the trial court's orders constituted an
independent wrongful action upon which sanctions may be issued. We are not dealing with
the issue of a new trial under Rule 59 of the Rules of Civil Procedure. Of course, the Due
Process Clause of Section 10 of Article III of the West Virginia Constitution requires that
there exist a relationship between the sanctioned party's misconduct and the matters in
controversy such that the transgression threatens to interfere with the rightful decision of the
case. Here, due process concerns are not implicated because there is a close nexus between
Domino's misconduct and the merits of the case. More importantly, sanctions under a
court's inherent powers are justified in response to abusive litigation conduct and to insure
the orderly administration of justice and the integrity of the court's order. Domino's cannot
relieve itself of its legal obligation to adhere to the Rules of Civil Procedure because the
plaintiff was unsuccessful in obtaining compensatory damages.
To hinge a court's authority to issue a sanction for the violation of a discovery
order on the outcome of the underlying action would defy logic and wreak havoc in the
administration of justice. Whether the timely and complete release of the documents would
have changed the outcome of the trial is not the issue in determining prejudice for sanctions.
It is enough if the violation merely threatens to interfere with the rightful decision of the
case. Where documents relevant to the merits of the litigation are concealed or their delivery
delayed, it is appropriate to presume the deception or delay casts doubt on the concealing
party's case. We squarely reject the notion that a failure to comply with the rules of
discovery is purged by belated compliance. The last minute tender of documents does not
cure the prejudice to the opponents nor does it restore to other litigants on a crowded docket
the opportunity to use the court.
Domino's argues the trial court abused its discretion by imposing the sanction
for its noncompliance with discovery orders because the trial court continuously was
expanding or vacating its prior rulings. Consequently, Domino's asserts it "was forced to
play 'catch up'" each time the trial court reversed a prior decision. Moreover, in spite of this
disadvantage, Domino's states it made every effort to comply with each order issued.
Domino's basic argument is that it should not be punished for the trial court's indecisiveness.
Domino's further alleges the trial court's findings are without analysis and support and,
therefore, should be reversed.
At the May 13, 1994, hearing on the sanctions, the trial court concluded there
was clear evidence Domino's practiced a pattern of "stonewalling" and exhibited a "willful
failure to comply with the legitimate [court] orders[.]" The trial court found Domino's
deliberately stalled discovery until the materials sought by the plaintiffs were of little value
once they were disclosed. The trial court determined certain documents were redacted to the
point "they were not legible or didn't make any sense" and Domino's claim of "industrial
secrets," which it argued necessitated redacting certain information, was without "any
apparent justification insofar as anything that any other company could use when the full
document was finally received from time to time." In this regard, the trial court said it was
convinced Domino's acted in a "willful manner" and in "bad faith[.]" At one point during
the hearing, the trial court announced Domino's practice of "stonewalling" and "not
delivering . . . material quickly enough so that counsel for the Plaintiffs had adequate time
to absorb it and to make use of it in the case" was so clear in the record it was "established
in concrete." Finding sufficient evidence of noncompliance, the trial court stated the burden
of proof shifted to Domino's for it to justify its actions, but the trial court found Domino's
took "very little interest in trying to explain [its] inaction" and it failed to meet its burden of
proof. Therefore, the trial court granted the plaintiffs' motion for sanctions.
Upon review of the record before this Court, we cannot hold the trial court
abused its discretion by issuing the sanction against Domino's. To the contrary, we believe
the record leads inexorably to the conclusion reached by the trial court. On appeal, Domino's
raises numerous justifications to explain why it failed to comply with the trial court's orders;
however, Domino's failed to raise a single one of these justifications during the May 13,
1994, hearing when the trial court was deciding the sanction issue.(7) Indeed, as previously
mentioned, the trial court stated that Domino's took "very little interest in trying to explain
their inaction." The only relevant matter discussed in the hearing transcript was Domino's
assertion the trial court did not have jurisdiction to impose sanctions because of this Court's
prior denial of the petition for appeal of the underlying case. Thus, the need for a remand
is not evident. The trial court found Domino's was at fault. Therefore, the monetary
sanction was clearly within the trial court's discretion. Again, it is only on appeal that
Domino's offers excuses for all these episodes. Had Domino's launched a factual attack
below and the trial court failed to make specific findings to resolve the factual dispute, we
would remand with specific directions.
We emphatically reject any notion that a monetary sanction is inappropriate
in the absence of a showing of prejudice, such as the loss of evidence or a witness.(8) In our
view such a specific showing of prejudice would aggravate the misconduct, but it is not
necessary to justify the imposition of a monetary sanction. Repeated disobedience of a
scheduling order is inherently prejudicial because disruption of the court's schedule and the
preparation of other parties nearly always results. The pattern of behavior reasonably can
be construed as an indication of Domino's lack of interest in vindicating whatever rights or
defenses it might have had. The repetition involved in their inaction suggests conduct of a
deliberate rather than an inadvertent nature. The sanction in this case finds specific
justification because the recovering attorneys had to expend time and effort unnecessarily
merely to get Domino's to comply with a discovery order of the court.
Likewise, we do not find the sanction to be too severe in these circumstances. We underscore again that the trial court imposed the lesser of all sanctions. There might be some merit to Domino's position if the sanction imposed was that of default, but even then, it would be excessive only if we were faced with a single instance of careless conduct. A succession of violations, however, indicating a general unwillingness to comply with a court-imposed scheduling order, is enough for us even to justify a default. Calendars are simply too crowded for parties to treat scheduling and discovery orders as optional and to conduct preparations at their own convenience. Not only did the trial court find willful disobedience of its order, but Domino's arrogated control of discovery for itself and changed the date of compliance to suit its own convenience. If such conduct was condoned by a slap on the wrist, the trial court might well find the lawyers and their clients calling the time of discovery schedules. "The day has long since passed when we can indulge lawyers the luxury of conducting lawsuits in a manner and at a pace that best suits their convenience." Damiani v. Rhode Island Hospital, 704 F.2d 12, 16 (1st Cir. 1983).
The absence of a prior warning that the court was considering sanctions may
be a pertinent factor in evaluating a sanction, especially if the conduct in question did not
violate a clearly preexisting requirement. In this case, we find the directives of the trial court
to be clear and by its terms the trial court required Domino's to act timely. A court need not
provide warning that a sanction will result from repeated violations of such an order. Also,
a trial court is not necessarily required to take less severe action before imposing a harsher
sanction.
In determining the amount of sanctions to award the plaintiffs, the trial court made the following remarks:
"I have examined and gone through the itemized
bills which [were] submitted in connection with the Motion for
Sanctions, and I do fully realize that when one reviews this, it
looks like a tremendous amount of time spent just on this
particular subject.
"But taking into consideration the punitive aspect in the attorney's fees, I'm going to award the sum of $10,000."
We find no error in the trial court's application of the facts and the law in awarding attorney's fees. The award of attorney's fees was in the nature of a sanction against Domino's. Rule 37 recognizes that the normal limitation on the recovery of attorney's fees does not apply to claims of fees awarded as a sanction. In Syllabus Point 7 of State Farm Mutual Automobile Insurance Co., supra, we explicitly stated:
"Under Rule 37(b)(2)(E) of the West Virginia
Rules of Civil Procedure, a court shall require a party failing to
obey the order or the attorney advising him or both to pay the
reasonable expenses, including attorney's fees, caused by the
failure. This provision allows attorney's fees to be excused
unless the failure was substantially justified or such an award
would be unjust. The rule clearly states that such sanctions may
be imposed in lieu of or in addition to any other sanctions."
(Emphasis added).
We are satisfied that the award given here was well within the trial court's discretion. To be
specific, for purposes of appellate review, an attorney's fee awarded as a sanction that
explicitly is authorized by the Rule 37(b) rests in the sound discretion of the trial court, and
the exercise of that discretion will not be disturbed on appeal except in cases of abuse. The
trial court carefully scrutinized the assessment of attorney's fees in the amount of $10,000,
and we find no abuse of discretion in its judgment.(9)
Visiting the sins of attorneys on the client is inherent in the nature of the adversary system. Although we should be reluctant to impute the misconduct of counsel to the client in cases where there have been only relatively minor instances of disobedience,(10) we have less reluctance here where the trial court found a need for expedition and expressly stated "there is not much question that there was a system by [Domino's] itself, not the counsel, to stall and kind of fire and fall back, delay and not get this information out, and that it was an inconvenience to this Plaintiff."
III.
CONCLUSION
The trial court did not err in holding the actions of Domino's constituted willful
misconduct and an abuse of the discovery rules. Domino's has not persuaded us that the
monetary amount of the sanction was excessive, and, thus, we affirm the ruling of the Circuit
Court of Berkeley County granting a sanction in the amount of $10,000.
Affirmed.
1. 1Following the death in August of 1994 of the Honorable W. Robert Abbot, who presided over the case below, the Honorable David H. Sanders entered the order on February 1, 1995, after he reviewed the transcript of the May 13, 1994, hearing and reviewed counsel's letters regarding the same.
2. 2Domino's claims the plaintiffs submitted their own version of the Confidentiality Order on June 18, 1992.
3. 3These findings were entered in the February 1, 1995, order.
4. 4The trial court also found local counsel for Domino's was not responsible for noncompliance with the discovery orders.
5. 5Domino's also suggests that this Court had before it the sanction issue and the rejection by this Court of the appeal was a rejection of plaintiffs' sanction request. Domino's presumably is relying on the "law of the case" doctrine. Law of the case principles do not bar a trial court from acting unless an appellate decision was issued on the merits of the claim sought to be precluded. See Shore v. Warden, Stateville Prison, 942 F.2d 1117, 1123 (7th Cir. 1991), cert. denied, 504 U.S. 922, 112 S. Ct. 1973, 118 L. Ed. 2d 573 (1992). Thus, when a dispositive procedural deficiency has obviated or deflected consideration of the underlying merits of a claim, the law of the case doctrine does not reach through the procedural ruling to enshrine a substantive determination never in fact made.
6. 6See also Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 110 S. Ct. 2447, 110 L. Ed. 2d 359 (1990), superseded by rule as stated in Photocircuits Corp. v. Marathon Agents, Inc., 162 F.R.D. 449 (E.D.N.Y. 1995); Stevens v. Lawyers Mutual Liability Ins. Co., 789 F.2d 1056 (4th Cir. 1986); Syl. pt. 1, McDougal v. McCammon, 193 W. Va. 229, 455 S.E.2d 788 (1995); Syl. pt. 1, Bell v. Inland Mut. Ins. Co., 175 W. Va. 165, 332 S.E.2d 127, cert. denied sub nom., Camden Fire Ins. Ass'n v. Justice, 474 U.S. 936, 106 S. Ct. 299, 88 L. Ed. 2d 277 (1985).
7. 7In this instance, our main concern is that, despite an apparent pattern of noncompliance by Domino's, no factual disputes exist over the extent of the misconduct because Domino's failed to present the issues they now raise to the trial court at the hearing on May 13, 1994. If we were dealing with a dismissal of a lawsuit or the entrance of default judgment rather than a monetary sanction, procedural deficiencies would, of course, be entitled to more weight. Here, however, we deal only with one of the lesser sanctions that can be imposed for discovery violations.
8. 8Admittedly, decisions around the country send conflicting signals as to
whether prejudice to a party moving for sanctions must be demonstrated. While some opinions refer to prejudice as "purely optional" and "not required" but an important factor, other opinions describe prejudice as a "key factor" and "essential." We decline to enter the fray over whether legal prejudice is or is not required. The record supports the conclusion that the plaintiffs were prejudiced by Domino's suppression of the requested documents. As suggested above, a plaintiff suffers prejudice if a defendant's actions impair the plaintiff's ability to go to trial or threaten to interfere with the rightful decision of the case. The trial court found the plaintiffs were burdened unnecessarily by pursuing discovery that should have been given to them earlier pursuant to the court's order. We accord substantial deference to the trial court's findings and conclusions as, having presided over the trial, the trial court is in the best position to access prejudice.
9. 9The equities weigh heavily against Domino's in this case. Not only have the plaintiffs endured expenses, time, and effort as a result of the discovery violations, they have incurred additional expenses, efforts, and expenses to defend against this unsuccessful appeal. Under these circumstances, we believe the $10,000 fee is well deserved. In their brief, the plaintiffs ask this Court to grant them a new trial or enter a greater amount of sanctions. The plaintiffs' claims likewise are denied. The adage "to leave well enough alone" has particular force in this case.
10. 10See Cox, 194 W. Va. at 220 n.6, 460 S.E.2d at 35 n.6. (Cleckley, J., concurring).
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