Yelton et al v. PHI, Inc. et al
Filing
759
ORDER denying 708 Sikorsky's MOTION for APPEAL OF MAGISTRATE JUDGE DECISION to District Court and PHI's Objections to the Magistrate Judge's Decision (Rec. Doc. 709 ) are hereby OVERRULED. Signed by Judge Carl Barbier on 7/10/12. (Reference: 09-3144)(sek, )
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
KELLY and STEVEN YELTON,
INDIVIDUALLY AND ON BEHALF
OF THEIR MINOR CHILDREN,
K.D., L.Y. and L.R.L.Y., ET
AL.
CIVIL ACTION
VERSUS
NO: 09-3144
PHI, INC., ET AL.
SECTION: J(4)
ORDER
Before the Court are Defendant Sikorsky Aircraft Corp.
(“Sikorsky”)’s Motion for Appeal/Review of the Magistrate Judge’s
Decision on Defendant PHI, Inc. (“PHI”)’s Request for Sanctions
(Rec. Doc. 708), PHI’s Memorandum in Opposition to same (Rec.
Doc. 722), and Sikorsky’s Reply Memorandum (Rec. Doc. 734).
Also
before the Court are PHI’s Objections to the Magistrate Judge’s
Decision on its Request for Sanctions (Rec. Doc. 709) and
Sikorsky’s Memorandum in Opposition to same (Rec. Doc. 729).
Having considered the record, the Magistrate Judge’s order, the
parties’ arguments, and the applicable law, the Court finds that
the Magistrate’s ruling should be AFFIRMED.
DISCUSSION
Both Sikorsky and PHI request that this Court review and/or
set aside certain aspects of the Magistrate’s order (Rec. Doc.
706) granting in parting and denying in part PHI’s Motion for
Sanctions (Rec. Doc. 598).
As previously noted, the Magistrate’s
ruling disposed of a request for sanctions premised on certain
alleged discovery abuses by Sikorsky, which is generally
considered non-dispositive in nature.
See Merritt v. Int’l Bhd.
of Boilermakers, 649 F.2d 1013, 1018 (5th Cir. 1981); Bass v.
City of Jackson, Miss., No. 09-549, 2012 WL 954882, at *1 (S.D.
Miss. Mar. 20, 2012).
A magistrate judge’s ruling on a non-
dispositive motion may be appealed to the district court pursuant
to Rule 72(a) of the Federal Rules of Civil Procedure.
When
objections are raised to such a ruling, a district court must
consider them and “modify or set aside any part of the order that
is clearly erroneous or contrary to law.”
FED. R. CIV. P. 72(a).
Under this deferential standard, a magistrate judge’s decision
must be affirmed unless “on the entire evidence [the court] is
left with a definite and firm conviction that a mistake has been
committed.”
United States v. United States Gypsum Co., 333 U.S.
364, 395 (1948).
1.
Sikorsky’s Motion
Sikorsky’s motion argues that the Magistrate’s order is
contrary to law and/or clearly erroneous for essentially two
reasons:
first, because it imposed sanctions for spoliation of
evidence without an express finding of bad faith on the part of
Sikorsky; and second, because there is insufficient evidence in
the record to support such a finding.
It is settled that a sanction predicated upon spoliation of
evidence requires a showing that the party acted in bad faith.
See United States v. Wise, 221 F.3d 140, 156 (5th Cir. 2000);
King v. Ill. Cent. R.R., 337 F.3d 550, 556 (5th Cir. 2003).
It
is also true, as Sikorsky points out, that the Supreme Court’s
decision in Roadway Express, Inc. v. Piper indicates that a
“specific finding” of whether a party’s behavior constitutes or
is tantamount to bad faith must precede the imposition of
sanctions under a court’s inherent powers.
447 U.S. 752, 767
(1980).
However, nothing in the Roadway Express holding suggests
that such a finding may only be made in precisely those terms.
See Travelers Ins. Co. v. St. Jude Hosp. of Kenner, La., Inc., 38
F.3d 1414, 1417 n.6 (5th Cir. 1994) (holding that district court
“by implication” had made a finding of bad faith and improper
motive based on five paragraphs specifically addressing
plaintiff’s conduct); Stevenson v. Union Pac. R. Co., 354 F.3d
739, 750 (8th Cir. 2004) (“Sanctioning the ongoing destruction of
records during litigation and discovery by imposing an adverse
inference instruction is supported by either the court’s inherent
power or Rule 37 of the Federal Rules of Civil Procedure, even
absent an explicit bad faith finding . . .”).
Here, although the
Magistrate’s order never explicitly states “Sikorsky’s conduct
demonstrates bad faith,” it is impossible to read the opinion
without concluding that this was precisely the result that the
Magistrate reached.
In setting forth the applicable legal standard, the
Magistrate’s order expressly notes that evidence of bad faith is
required before a party may be sanctioned for spoliating
evidence.
See Rec. Doc. 706, p. 12 ("In order for this Court to
impose sanctions under its inherent power, however, it must find
bad faith . . . "); p. 25 (“Destruction or deletion of
information subject to a preservation obligation is not
sufficient for sanctions.
Bad faith is required.”).
Additionally, in determining that sanctions were warranted, the
Magistrate specifically found that Sikorsky had engaged in
"misconduct and intentional destruction of the data files.” Id.
at 28.
Such a finding is clearly tantamount to a finding of bad
faith, which is sufficiently specific to allow the imposition of
sanctions.
The Court also rejects Sikorsky's second argument that there
was insufficient evidence to support a finding of bad faith.
Over the course of several pages of reasoned analysis, the
Magistrate’s order identifies a variety of evidence indicating
that Sikorsky’s failure to preserve Dr. Kim's work was the
product of bad faith, and not mere negligence.
706, pp. 22-28.
See Rec. Doc.
The Court finds that the evidence upon which the
Magistrate Judge relied was sufficient to support a finding of
bad faith by a preponderance of the evidence.
Sikorsky's motion will be denied.
Accordingly,
2.
PHI’s Objection
The Court next turns to PHI’s objections to the Magistrate’s
ruling.
In contrast to the basis for Sikorsky’s motion, PHI
objects to the Magistrate’s decision not to award monetary
sanctions pursuant to Rule 37 of the Federal Rules of Civil
Procedure.
PHI originally moved for a monetary sanction of 80%
of the amount it paid to settle the Plaintiffs’ claims against it
pursuant to Rule 37 of the Federal Rules of Civil Procedure,
claiming that it would not have settled with the Plaintiffs nor
paid as much as it did, had Sikorsky properly and timely
disclosed Dr. Kim’s report.
Although the Magistrate sanctioned Sikorsky for spoliating
evidence, she refused to award monetary sanctions based on the
delayed production of Dr. Kim’s report, according to PHI, based
on her conclusion that “a monetary sanction cannot be awarded
under Rule 37 when there is no violation of a court order.”
Doc. 709, p. 1.
Rec.
PHI contends that the Magistrate Judge’s order
indicates that sanctions were not warranted because Sikorsky had
not violated a court order compelling the production of Dr. Kim’s
report, despite the fact that PHI had no basis upon which to file
a motion to compel the production of Dr. Kim’s report because
this evidence was wrongfully concealed by Sikorsky.
PHI argues
that this holding is contrary to Fifth Circuit precedent, which
permits sanctions under Rule 37 even in the absence of the
violation of a discovery order.
Accordingly, it submits that the
Magistrate’s order should be set aside and that it should be
awarded sanctions pursuant to Rule 37.
Having examined the Magistrate’s opinion, however, the Court
is not persuaded that PHI’s objection accurately characterizes
the basis for the refusal to award sanctions.
In support of its
objections, PHI relies on a single sentence from the Magistrate’s
order, which states: “In contrast, Rule 37 applies to
circumstances in which a party has violated a court order, such
as a discovery ruling."
Rec. Doc. 706, p. 11
Read in isolation,
this sentence may appear to suggest that the Magistrate held that
sanctions may only be imposed pursuant to Rule 37 where a party
has disobeyed a discovery order.
Read in context, however, it is
apparent that such is not the case.
First, the above-quoted sentence appears in the context of
the Magistrate’s discussion of the applicable legal authority for
awarding sanctions based on the spoliation of evidence,1 not in
the discussion of whether sanctions were proper based on
Sikorsky’s delayed disclosure of Dr. Kim’s report.
1
See id. at
Cases from sister courts within this circuit recognize
that bad-faith spoliation of evidence is behavior sanctionable
under a federal court’s inherent authority. See, e.g., Ashton v.
Knight Transp., Inc., 772 F. Supp. 2d 772, 779 (N.D. Tex. 2011)
(“A federal court has the inherent power to sanction a party who
has abused the judicial process. The spoliation of evidence is
one such abuse.”) (internal citations omitted); Tieken v.
Clearing Niagara, Inc., 1997 WL 88180 (N.D. Miss. Jan. 7, 1997)
(noting that spoliation sanctions may be imposed pursuant to a
district court’s inherent authority).
11-12.2
PHI does not object to the Magistrate’s ruling with
respect to the spoliation issue.3
Additionally, despite the fact
that the text of the sentence appears to reference Rule 37 as a
whole, the Magistrate’s order actually cites only Rule 37(b)(2),
which by its terms only applies where a party has violated a
court order.
Next, contrary to PHI’s characterizations, the Magistrate’s
refusal to award monetary sanctions does not appear to be
predicated on the fact that sanctions could not be awarded under
Rule 37 absent a finding that Sikorsky had violated a discovery
order.
Indeed, the Magistrate’s analysis of whether monetary
sanctions were warranted based on the delayed disclosure the Kim
report specifically recognizes that sanctions could be imposed
2
In the immediately following sentence, the Magistrate’s
Order goes on to state:
The Court’s own authority encompasses its “inherent
power to impose sanctions for abuse of the judicial
system, including the failure to preserve or produce
documents.” Barnhill v. United States, 11 F.3d 1360,
1367 (7th Cir. 1993) (stating that this power stems
from a court’s authority to manage its own affairs).
Here, PHI does not allege that Sikorsky violated any
discovery order or other directive by the Court. Thus,
their motions are properly stated pursuant to this
Court’s inherent powers, and not Rule 37. In order for
this Court to impose sanctions under its inherent
power, however, it must find bad faith - which is not
required under Rule 37. Sample v. Miles, 239 F. App’x.
14, 21 n.20 (5th Cir. 2007).
Rec. Doc. 706, pp. 11-12.
3
See Rec. Doc. 709, p. 1 (“PHI does not object to Judge
Roby’s decision to award an adverse inference and attorneys’ fees
and costs as a sanction for Sikorsky’s spoliation . . . .”).
pursuant to Rule 37(c).
See id. at 13 (“A party's failure to
supplement an earlier discovery response is sanctionable under
Rule 37(c).”).
omitted).
Id. at 13
(citation and internal quotation
The Magistrate then went on to explain, however, that
under the standards of Rule 37(c), sanctions were not warranted
because “PHI’s decision to settle the case for ‘a larger amount’”
was not causally related to Sikorsky’s failure to timely
supplement its discovery responses.
Id. at 14.4
The Magistrate
specifically noted that Sikorsky had not yet fully responded to
all of PHI’s outstanding discovery requests at the time PHI
agreed to settle the case, despite ongoing disputes over the
sufficiency of Sikorsky’s discovery responses.
Id.
Based on
these facts, the Magistrate found that PHI’s decision to settle
was not based on the fact that it had garnered full access to all
relevant information Sikorsky may provide and was instead “likely
due to the normal risks that are attendant in cases of this
magnitude.”
Id.
Thus, the Magistrate did not hold that
sanctions could not be awarded under Rule 37 for the delayed
production of the Kim report, but rather that they would not be
awarded because they were not warranted based on the facts of
4
It is true that the Magistrate’s analysis does reference
PHI’s failure to challenge the sufficiency of Sikorsky’s
discovery responses regarding information related to crash test
simulation reports. As the Court reads it, however, this
reference is merely intended to underscore the lack of a causal
relationship between Sikorsky’s misconduct and PHI’s decision to
settle for a particular amount, rather than suggesting that
sanctions were unavailable because PHI never filed a motion to
compel.
this case.
Based on the record before it, as well as the
Magistrate’s intimate familiarity with the facts of this case,
the Court finds no error in the decision not to award PHI
monetary sanctions.
CONCLUSION
Because neither Sikorsky nor PHI have shown Judge Roby’s
ruling to be “clearly erroneous or contrary to law,”
IT IS ORDERED that Sikorsky’s Motion for Appeal/Review of
the Magistrate Judge’s Decision on PHI’s Request for Sanctions
(Rec. Doc. 708) is hereby DENIED, and PHI’s Objections to the
Magistrate Judge’s Decision (Rec. Doc. 709) are hereby OVERRULED.
New Orleans, Louisiana this 10th day of July, 2012.
____________________________
CARL J. BARBIER
UNITED STATES DISTRICT JUDGE
9
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