In Re: FEMA Trailer

Filing

UNPUBLISHED OPINION FILED. [09-31038 Affirmed ] Judge: CDK , Judge: WG , Judge: WED Mandate pull date is 01/03/2011 [09-31038]

In Re: FEMA Trailer Case: 09-31038

Document: 00511291419 Page: 1 Date Filed: 11/11/2010

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IN THE UNITED STATES COURT OF APPEALS United States Court of Appeals FOR THE FIFTH CIRCUIT Fifth Circuit FILED
N o . 09-31038 November 11, 2010 Lyle W. Cayce Clerk I N RE: FEMA TRAILER FORMALDEHYDE PRODUCTS LIABILITY P L A IN T I F F 'S LIAISON COUNSEL; ET AL Plaintiffs v. D E F E N D A N T 'S LIAISON COUNSEL; ET AL Defendants

M A R Y C. DEVANY, Movant - Appellant -----------------------------------------------------------------C H A R L I E AGE; ET AL Plaintiffs v. G U L F STREAM COACH, INC; ET AL Defendants M A R Y C. DEVANY Movant - Appellant

Dockets.Justia.com

Case: 09-31038 Document: 00511291419 Page: 2 Date Filed: 11/11/2010

No. 09-31038 A p p e a l from the United States District Court for the Eastern District of Louisiana N o . 2:07-MD-1873 B e fo r e KING, GARWOOD and DAVIS, Circuit Judges. P E R CURIAM:* M a r y C. DeVany was an expert witness in a multi-district products l i a b ility litigation before the United States District Court for the Eastern D is t r ic t of Louisiana. The district court imposed sanctions on DeVany relating t o her testimony in an unrelated Washington State administrative court p r o c e e d in g . DeVany appeals from the sanctions order. We vacate the order of t h e district court. I. BACKGROUND T h is appeal comes to us from an order of the district court in Age, et al v. G u lf Stream Coach, Inc., et al, No. 2:09-CV-02892, a bellwether suit within the m u lt i-d is t r ic t litigation In Re: FEMA Trailer Formaldehyde Products Liability L itig a tio n , No. 2:07-MD-1873 ("FEMA Trailer"). Plaintiffs are individuals who r e s id e d in emergency housing units, or FEMA trailers, provided by the Federal E m e r g e n c y Management Agency ("FEMA") after Hurricanes Katrina and Rita. Plaintiffs in the instant action brought suit against Gulf Stream Coach, Inc. ("G u lf Stream"), Fluor Enterprises, Inc., and the United States, seeking damages fo r injuries resulting from exposure to dangerous levels of formaldehyde or fo r m a ld e h y d e vapors allegedly released from the FEMA trailers. The FEMA Trailer Plaintiffs' Steering Committee retained appellant Mary C . DeVany ("DeVany") as an expert witness in the field of industrial hygiene. She was designated as a fact and expert witness for the class certification

Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not be published and is not precedent except under the limited circumstances set forth in 5TH CIR. R. 47.5.4.

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No. 09-31038 h e a r in g and, after class certification was denied, as one of many expert w it n e s s e s for the plaintiffs in the bellwether trial. Gulf Stream filed a motion in limine to exclude DeVany's expert opinions fr o m the trial. In support of its motion, Gulf Stream notified the district court t h a t DeVany had inflated her educational credentials and exaggerated her role in the FEMA Trailer litigation in an unrelated matter before the Board of I n d u s t r ia l Insurance Appeals ("BIIA") in the State of Washington (the "Vaughn p r o c e e d in g s " ).1 In her testimony before the BIIA, DeVany averred that she was c h o s e n , at the district court's request, to be "the one" expert witness "to help [the d is t r ic t court] evaluate the science behind formaldehyde . . . and explain the c h e m is t r y , physiology and toxicology of formaldehyde." The district court denied Gulf Stream's motion in limine in part, p e r m it t in g DeVany to offer opinions relating to her expertise in industrial h y g ie n e . However, the district court also urged plaintiffs' counsel to reconsider c a llin g DeVany as a witness at trial. The district court expressed great concerns a b o u t DeVany's "completely false representation" to the BIIA that DeVany was c h o s e n to assist the district court, at its request, in evaluating the science behind t h e plaintiffs' claims. The district court ordered Gulf Stream to produce the t r a n s c r ip t of DeVany's testimony in the Vaughn proceedings, stating that if Gulf S t r e a m 's characterization of her testimony was accurate, "[c]ounsel will be a llo w e d to voir dire DeVany and bring out such prior testimony at trial, which w ill, without a doubt, warrant the Court's correction of such testimony before the ju r y , and admonishment of this witness for making such self-aggrandizing s t a t e m e n t s ." 2

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In Re: Steven R. Vaughn, Docket No. 07-13382, Claim No. Y-965493.

In her testimony in the Vaughn proceedings, which Gulf Stream provided for the district court, DeVany stated the following: A. I'm currently involved in, umm, a large federal case--series of federal

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No. 09-31038 A t trial on September 15, 2009, before plaintiffs' counsel called DeVany to t e s t ify , the district court informed counsel during a bench conference that it had r e a d DeVany's testimony in the Vaughn proceedings and intended to admonish h e r in front of the jury. Consequently, plaintiffs chose not to call DeVany as a w itn e s s . On September 17, 2009, DeVany met with the district court in

c h a m b e r s , where she "apologized for what she considered an error and pledged h e r cooperation to rectify the situation." On September 24, 2009, the jury e n te r e d a verdict for the defendants, and that same day, the district court issued

cases--actually, approximately thirty thousand federal cases, involving, umm, individual exposures to people that were given FEMA trailers and portable housing units in response to Katrina--hurricanes Katrina and Rita. And I'm the expert witness coordinating all the expert work for all the litigation in the entire gulf coast for the plaintiffs. ... Q. So, in terms of the multi-party litigation you just mentioned, did all the attorneys for the parties involved in that litigation have to agree upon you as an expert, did the Judge appoint you, how did that work? Judge [Engelhardt] had--he's the Federal Judge, umm, in that whole jurisdiction, umm--I don't want to say complained severely, but what--it was actually, he complained to all the--the, uhh, parties involved saying since it wasn't a--it's not a class action, all these different lawsuits are clogging up his Federal court system. There are truly an excess of thirty thousand of them. And--and so, he told these--all these law firms along the whole gulf coast to get together and to form one central committee, and to present to him, since the cases are so similar--present to him one Complaint, one Request for Interrogatories and Discoveries, you know, one Motion every time something comes up. And, to agree upon one expert witness that he could work with to help him evaluate the science behind formaldehyde, how formaldehyde's measured, its toxic effect, how it got into the trailers in the first place, and someone he could rely upon to produce Affidavits to, umm, evidentiary hearings before him and explain the chemistry, physiology and toxicology of formaldehyde. And these law firms along the gulf coast got together and decided I should be the one.

A.

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No. 09-31038 a n Order and Rule to Show Cause reprimanding DeVany for her statements in t h e Vaughn proceedings. That order is the subject of this appeal. In the order, the district court found that D e V a n y 's statements in the Vaughn matter served to grossly o v e r s t a t e her importance in this litigation, and to incorrectly p o r t r a y herself as the single expert exclusively advising this Court, a n d upon whom this Court would rely. Without a doubt, DeVany k n e w that she had not been granted such status, and that she did n o t work with the undersigned in any way regarding the science b e h in d formaldehyde, etc. Moreover . . . it is clear that DeVany s o u g h t to exaggerate the role of the undersigned, and then attach h e r s e lf to that exaggerated position. . . . In order to facilitate this im a g e , DeVany created the fiction of an overwhelming court docket in order to further support a motivation for the Court to crown her a s that handpicked expert in this case. She wrongly presented h e r s e lf to have the imprimatur of this Court in asserting her c r e d e n tia ls. I t concluded that DeVany was a sophisticated and experienced expert witness w it h extensive qualifications, "all of which discount the notion that her t e s t im o n y was an unintentional departure from the reality of her role in this lit ig a t io n ." The district court ordered DeVany to send a copy of the order, along with a written statement setting forth accurate facts, to the judge and attorneys in v o lv e d in the Vaughn proceedings within fifteen days, and to provide to the d is t r ic t court sworn certification that she had complied. If she did not comply w it h the order, the district court would order her to show cause in writing, w it h in fifteen days, why she should not be sanctioned in the amount of $5,000. DeVany filed a notice of appeal on October 2, 2009.

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No. 09-31038 I I . DISCUSSION A. J u r is d ic tio n A s a threshold matter, we must determine our jurisdiction over this a p p e a l.3 We have jurisdiction over "appeals from all final decisions of the district c o u r t s . " 28 U.S.C. § 1291. "[A] decision is not final, ordinarily, unless it `ends t h e litigation on the merits and leaves nothing for the court to do but execute the ju d g m e n t .'" Cunningham v. Hamilton Cnty., 527 U.S. 198, 204 (1999) (quoting V a n Cauwenberghe v. Biard, 486 U.S. 517, 521­22 (1988)). DeVany argues that the district court's order amounted to a criminal c o n t e m p t order, and is therefore immediately appealable as a final order under § 1291. Lamar Fin. Corp. v. Adams, 918 F.2d 564, 566 (5th Cir. 1990) (noting t h a t criminal contempt orders are appealable final orders). This order is not im m e d ia t e ly appealable under this theory because, for the reasons discussed in t h e following section, we find that the district court's order is not a criminal c o n t e m p t order. In the alternative, DeVany contends that we have jurisdiction over this a p p e a l pursuant to the collateral order doctrine. See Cohen v. Beneficial Indus. L o a n Corp., 337 U.S. 541, 546 (1949). Under the collateral order doctrine, we h a v e jurisdiction under § 1291 over a "small category of decisions that . . . do not e n d the litigation," which "includes only decisions that are conclusive, that r e s o lv e important questions separate from the merits, and that are effectively u n r e v ie w a b le on appeal from the final judgment in the underlying action."

We note at the outset that the district court's order presents a reviewable appellate issue. In Walker v. City of Mesquite, 129 F.3d 831, 832 (5th Cir. 1997), we recognized that a district court's finding of blatant misconduct by an attorney resulted in injury to the lawyer's reputation that was reviewable on appeal, "being persuaded beyond peradventure that one's professional reputation is a lawyer's most important and valuable asset." The district court's finding of misconduct in this case results in a similar harm to DeVany's professional reputation as an expert witness, and would likewise be appealable even if not accompanied by a monetary penalty. Id. at 832­33.

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No. 09-31038 S w in t v. Chambers Cnty. Comm'n, 514 U.S. 35, 42 (1995) (quoting Cohen, 337 U .S . at 546). "The collateral order doctrine is best understood not as an

e x c e p t io n to the `final decision' rule laid down by Congress in § 1291, but as a `p r a c t ic a l construction' of it." Digital Equip. Corp. v. Desktop Direct, Inc., 511 U .S . 863, 867 (1994) (quoting Cohen, 337 U.S. at 546)). Typically, sanctions orders are not themselves final orders and do not meet t h e criteria of the collateral order doctrine. See Click v. Abilene Nat'l Bank, 822 F .2 d 544, 545 (5th Cir. 1987). A district court's finding of sanctionable conduct in the course of litigation will frequently be "inextricably intertwined with the m e r it s of the action," Cunningham, 527 U.S. at 205, and therefore "can be and r o u t in e ly [will be] appealed when merged in the district court's final judgment." Click, 822 F.2d at 545. Permitting an immediate appeal from such sanctions o r d e r s would undermine the district court's discretion in managing litigation b e fo r e it, "forestall resolution of the case as each new sanction would give rise t o a new appeal," and lead to "the very sorts of piecemeal appeals and c o n c o m it a n t delays that the final judgment rule was designed to prevent." Cunningham, 527 U.S. at 209.4 T h e s e concerns are not implicated here. First, although the district court's o r d e r is not final in the sense that it ends litigation on the merits, the order is

Cunningham concerned a sanction for discovery violations imposed on an attorney under Federal Rule of Civil Procedure 37(a). We have since applied Cunningham to preclude collateral order review of other sanctions orders assessed against attorneys for conduct during the course of litigation. See, e.g., Conerly v. Ordeneaux, 143 F.App'x 575, 576­77 (5th Cir. 2005) (per curiam) (order imposing sanctions on an attorney under Rule 16(f) or the court's inherent power was not an appealable collateral order); Williams v. Midwest Emp'rs Cas. Co., 243 F.3d 208, 210 (5th Cir. 2001) (per curiam) (Rule 11 sanction imposed on party's attorney was neither a final order nor an appealable collateral order). These cases are distinguishable because here the order concerns a sanction imposed on a witness, rather than an attorney, for conduct unrelated to the underlying litigation. Cf. Cunningham, 527 U.S. at 207 (in dicta, noting that unlike attorneys, "witnesses['] . . . interests may differ substantially from the parties'," and that "[t]he effective congruence of interests between clients and attorneys counsels against treating attorneys like other nonparties for purposes of appeal").

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No. 09-31038 fin a l as to DeVany, because the district court conclusively determined that she " w r o n g fu lly presented herself to have the imprimatur of [the district court] in a s s e r t in g her credentials" in the Vaughn proceedings. Furthermore, the

s a n c t io n s order has no bearing on the merits of the FEMA Trailer litigation, like a Rule 11 or discovery sanction would; rather, it addresses only DeVany's t e s t im o n y in the Vaughn proceedings before the BIIA. Therefore, review of the a p p e a l would not impede, and indeed has not impeded, final resolution of the u n d e r ly in g proceedings. Finally, because the sanctions order is unrelated to the u n d e r ly in g suit, DeVany has an interest in challenging the sanctions order that is not shared by the parties; as a non-party, it is unclear that she would be able t o obtain review of the order from the final judgment.5 Given these unique c ir c u m s t a n c e s , we find that the order at issue fits within the collateral order d o c t r in e , and accordingly, that we have jurisdiction over this appeal. B. T h e District Court's Authority to Sanction DeVany W e review the district court's imposition of sanctions for abuse of d i s c r e t io n . Chambers v. NASCO, Inc., 501 U.S. 32, 55 (1991); Natural Gas P ip e lin e Co. of Am. v. Energy Gathering, Inc., 2 F.3d 1397, 1410 (5th Cir. 1993). D eV a n y contends that because the district court's sanctions were punitive, the order is best characterized as a criminal contempt order. However, nothing in the record or the district court's order suggests that the district court intended t o punish DeVany for contempt. "A party commits contempt when he violates a definite and specific order of the court requiring him to perform or refrain from p e r fo r m in g a particular act or acts with knowledge of the court's order." SEC v . First Fin. Grp. of Tex., 659 F.2d 660, 669 (5th Cir. Oct. 1981). We can find no

For this reason, the sanctions order at issue here is analogous to a civil contempt order imposed upon a non-party, which we likewise consider to be "final" for purposes of appeal under § 1291. See Southern Ry. Co. v. Lanham, 403 F.2d 119, 124 (5th Cir. 1968) ("an adjudication of civil contempt is final and appealable as to a non-party who would be unable to appeal from the final decision on the merits").

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No. 09-31038 o r d e r of the district court that DeVany may have defied, and the district court r e fe r e n c e s none. As DeVany herself points out, a sanction for contempt does not fit the conduct punished here. See 18 U.S.C. § 401(1)­(3).6 Consequently, we fin d no reason to construe the district court's sanction as an exercise of its c o n t e m p t powers. In its order, the district court did not identify the Federal Rule of Civil P r o c e d u r e or statutory authority upon which it relied in imposing sanctions on D e V a n y . As no rule or statute appears to apply to DeVany's conduct, we assume t h a t the district court relied on its inherent power in reprimanding DeVany.7 " W h e n a party's deplorable conduct is not effectively sanctionable p u r s u a n t to an existing rule or statute, it is appropriate for a district court to r e ly on its inherent power to impose sanctions." Carroll v. The Jaques Admiralty L a w Firm, P.C., 110 F.3d 290, 292 (5th Cir. 1997) (citing Chambers, 501 U.S. at 5 0 ). The inherent sanctioning power is "based on the need to control court p r o c e e d in g [s ] and [the] necessity of protecting the exercise of judicial authority in connection with those proceedings." Citizens Bank & trust Co. v. Case (In re C a s e ), 937 F.2d 1014, 1023 (5th Cir. 1991) (citation omitted). Therefore, the d is t r ic t court's inherent power "is not a broad reservoir of power, ready at an im p e r ia l hand, but a limited source; an implied power squeezed from the need

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18 U.S.C. § 401 states: A court of the United States shall have power to punish by fine or imprisonment, or both, at its discretion, such contempt of its authority, and none other, as-(1) Misbehavior of any person in its presence or so near thereto as to obstruct the administration of justice; (2) Misbehavior of any of its officers in their official transactions; (3) Disobedience or resistence to its lawful writ, process, order, rule, decree or command. DeVany points to one possible contender, Rule 11. However, as Rule 11 sanctions may only be imposed upon an "attorney, law firm, or party" that violates the Rule, it does not apply to allow a district court to sanction a witness for testimony in an unrelated proceeding before another court. See FED. R. CIV. P. 11(c)(1).
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No. 09-31038 t o make the court function." NASCO, Inc. v. Calcasieu Television & Radio, Inc., 8 9 4 F.2d 696, 702 (5th Cir. 1990), aff'd sub nom Chambers v. NASCO, Inc., 501 U .S . 32 (1991). The district court's inherent power "must be exercised with r e s t r a in t and discretion," Chambers, 501 U.S. at 44, and "may be exercised only if essential to preserve the authority of the court." Natural Gas Pipeline Co. of A m . v. Energy Gathering, Inc. 86 F.3d 464, 467 (5th Cir. 1996). "Inherent power must arise from the litigation before [the sanctioning] c o u r t , " and a district court abuses its discretion for sanctioning conduct that c a n n o t be construed as part of the proceedings before it. Case, 937 F.2d at 1024. In Case, we held that a bankruptcy court's inherent sanctioning power did not e x t e n d to a debtor's improper conduct in a state court proceeding that was " c o m p le t e ly collateral to the proceedings in the bankruptcy court." Id. at 1023. Although the debtor employed the same bad-faith litigation tactics against the s a m e creditor in the state court action as in the bankruptcy court, we found that t h e "conduct of the parties in the state action cannot be said to affect the exercise o f the judicial authority of the bankruptcy court or limit the bankruptcy court's p o w e r to control the behavior of parties and attorneys in the litigation before it." We therefore held that the bankruptcy court abused its discretion in sanctioning c o n d u c t that occurred outside the litigation before it by awarding attorneys' fees in c u r r e d in the state court action. Id. at 1023­24. We affirmed the limited reach of the district court's inherent sanctioning p o w e r in FDIC v. Maxxam, Inc., 523 F.3d 566, 593 (5th Cir. 2008). Vacating the d is t r ic t court's sanctions assessed against a party for its conduct relating to a c o lla t e r a l administrative court proceeding, we held that a court's "inherent p o w e r to police itself" does not "grant a district court the power to police the a d m in is t r a t iv e courts . . . when those courts do not threaten the court's own ju d ic ia l authority or proceedings." Id. (internal quotation omitted); see also P o s itiv e Software Solutions, Inc. v. New Century Mortg. Corp., ­F.3d­, 2010 WL 10

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No. 09-31038 3 5 3 0 0 1 3 , at *5 (5th Cir. Sept 13, 2010) (holding that a district court lacked in h e r e n t authority to sanction an attorney for misconduct that took place during a related arbitration proceeding, because the misconduct was neither before the d is t r ic t court nor in direct defiance of its orders). In accordance with this caselaw, it is clear that the district court abused it s discretion in sanctioning DeVany for her testimony before the Washington S t a te BIIA. Her testimony in the Vaughn proceedings was not a part of the p r o c e e d in g s before the sanctioning court. We have even less reason to affirm D e V a n y 's sanctions than in Case, Maxxam, and Positive Software Solutions b e c a u s e , unlike the collateral proceedings in those cases, the Vaughn p r o c e e d in g s were wholly unrelated to the underlying litigation in the FEMA T r a ile r litigation. While the district court may consider conduct in collateral p r o c e e d in g s in determining whether the conduct before it was taken in bad faith o r undertaken with an improper motive, see Travelers Ins. Co. v. St. Jude Hosp. o f Kenner, La., Inc., 38 F.3d 1414, 1417­18 (5th Cir. 1994), the district court did n o t do so here. Rather, it reprimanded DeVany solely for testimony in the V a u g h n proceedings and made no findings that she acted improperly in the in s t a n t action. DeVany's testimony in the Vaughn proceedings concerning her r o le in the FEMA Trailer litigation neither interfered with the FEMA Trailer p r o c e e d in g s nor threatened the district court's authority to manage those p r o c e e d in g s . Therefore, it cannot be said that the exercise of the district court's s a n c t io n in g power in the instant case was "essential to preserve the authority o f the court." Natural Gas Pipeline, 86 F.3d at 467. The district court was understandably troubled by the substance of D e V a n y 's testimony in the Vaughn proceedings. Our vacation of the district c o u r t's sanctions order should not be construed as endorsing DeVany's t e s t im o n y . We merely hold, as our caselaw compels, that the district court's in h e r e n t power to sanction bad-faith litigation conduct did not reach DeVany's 11

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No. 09-31038 t e s t im o n y before the BIIA.8 Because we hold that the district court abused its d is c r e t io n in sanctioning DeVany for her testimony in the Vaughn proceedings, w e do not reach her argument that the district court failed to provide her due p r o c e s s prior to entering its sanctions order. III. CONCLUSION F o r the foregoing reasons, we VACATE the order of the district court.

We do not address whether it would have been proper for the district court to admonish DeVany during trial if opposing counsel brought out her prior testimony during examination; as plaintiffs' counsel chose not to call her as a trial witness, the issue is not before us.

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