Hyde & Drath v. Baker

• Decision Date: 25 July 1994
• Docket Number: Nos. 92-15863,92-15867 and 92-15870,s. 92-15863
• Parties: , RICO Bus.Disp.Guide 8561 HYDE & DRATH, a Professional Corporation, Plaintiff-Appellant, v. Kenneth R. BAKER, et al.; Olivia Decker; W.C. Baker; Colonial Title Guaranty Company; Michael Salter; Jay Hinrichs; John Murren; Contempo Realty, Defendants-Appellees. TUNGSTEN CONTACT MANUFACTURING CO., et al., Plaintiffs, GW Development Corporation, Ltd., Plaintiff-Appellant, v. Kenneth R. BAKER, et al., Defendants-Appellees. TUNGSTEN CONTACT MANUFACTURING COMPANY, World Union Corp., Ltd.; Stonehaven Investments, Ltd.; Plaintiffs-Appellants, v. Kenneth R. BAKER, et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1162

24 F.3d 1162

28 Fed.R.Serv.3d 1318, RICO Bus.Disp.Guide 8561

HYDE & DRATH, a Professional Corporation, Plaintiff-Appellant, v. Kenneth R. BAKER, et al.; Olivia Decker; W.C. Baker;

Colonial Title Guaranty Company; Michael Salter;

Jay Hinrichs; John Murren; Contempo

Realty, Defendants-Appellees.

TUNGSTEN CONTACT MANUFACTURING CO., et al., Plaintiffs, GW Development Corporation, Ltd., Plaintiff-Appellant, v. Kenneth R. BAKER, et al., Defendants-Appellees.

TUNGSTEN CONTACT MANUFACTURING COMPANY, World Union Corp., Ltd.; Stonehaven Investments, Ltd.; Plaintiffs-Appellants, v. Kenneth R. BAKER, et al., Defendants-Appellees.

Nos. 92-15863, 92-15867 and 92-15870.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Oct. 4, 1993.

Decided May 20, 1994.

As Amended July 25, 1994.

Thomas F. Hyde and Sharon B. Futerman, Hyde & Drath, San Francisco, CA, for plaintiffs-appellants.

Stephen Kaus, Cooper, White & Cooper, San Francisco, CA, for defendant-appellee Baker.

Gary Nadler, Hirschfield & Nadler, Petaluma, CA, for defendant-appellee Decker.

Anthony Cohen, Clement, Fitzpatrick & Kenworthy, Santa Rosa, CA, for defendants-appellees Colonial and Salter.

Clayton W. Brunsell, Oakland, CA, for defendants-appellees Hinrichs, Murren and Contempo Realty.

Appeal from the United States District Court for the Northern District of California.

Before: BOOCHEVER, THOMPSON, and O'SCANNLAIN, Circuit Judges.

Opinion by Judge O'SCANNLAIN

O'SCANNLAIN, Circuit Judge:

We must decide whether the district court properly dismissed a complaint and imposed sanctions because of repeated failure to attend scheduled depositions.

I

From 1989 until 1992, plaintiffs-appellants Tungsten Contact Manufacturing Company ("Tungsten"), Grover Investments, Ltd. ("Grover"), World Union Corporation, Ltd. ("World Union"), Stonehaven Investments, Ltd. ("Stonehaven"), and GW Development Corporation, Ltd. ("GW") engaged in litigation with defendants-appellees on claims of fraud and violations of the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. Secs. 1961-68, involving several Northern California real estate deals. Grover, World Union, Stonehaven, and GW are Hong Kong corporations. Tungsten is a New Jersey corporation wholly owned by Mr. L.K. K'ung, a resident of New York. Appellants were represented by attorneys from the law firm of Hyde & Drath.

After having stayed discovery, the district court on October 6, 1989, ordered the depositions of Grover, World Union, Stonehaven, and GW to proceed. On December 1, 1989, the court ordered the depositions to be completed no later than February 10, 1990. Appellees attempted to make arrangements to take appellants' depositions in Hong Kong in compliance with the court order, but World Union and GW proposed dates for depositions after February 10, and Stonehaven offered no date. Appellees found these dates unacceptable because they contravened the court order. No depositions were taken in February 1990.

After the February 10, 1990 deadline had passed, appellees filed a motion to compel discovery based on the December 1, 1989 order. In June 1990, the special master assigned to this case ordered discovery to take place in the Northern District of California, where appellants had filed suit, so that the court could oversee and enforce the deposition schedule.

In March 1990, GW moved to have its claims dismissed, arguing that the cost of pursuing the litigation outweighed the potential recovery. The court denied the motion until GW fully complied with outstanding discovery orders, reasoning that GW's participation was necessary for the preparation of appellees' defense.

In July 1990, appellees again noticed Stonehaven, World Union, Grover, and GW for depositions scheduled from mid-September to October 1990 in San Francisco. Ten days before the first deposition date, the attorneys for these appellants, Hyde & Drath, informed appellees that none of the parties would attend. They reported their clients' view that no representatives of the companies had useful information, so there was no point to the depositions. No depositions occurred in September or October 1990.

In November 1990, appellees filed a motion to enforce the court-ordered depositions. In a January 1991 recommendation, the special master found appellants' responses to the notices of depositions inadequate and ordered that the four corporations make representatives available for depositions in San Francisco. He also recommended that GW and Grover jointly and severally pay $10,000 and that World Union, Grover, and Stonehaven jointly and severally pay $1,500 to appellees for costs and fees incurred in bringing the prior motions to obtain discovery. The special master assessed his fee of $6,600 against Tungsten which was allowed to seek contribution from the other parties. Finally, he warned appellants that if they did not comply with his discovery order, he would recommend dismissal. The court affirmed the special master's recommendations in June 1991.

Appellees again noticed appellants, except for GW and Grover, for depositions in September 1991, this time including Tungsten's representative, K'ung. All depositions were rescheduled to October 1991 by mutual agreement. Then, three days before the first deposition, Hyde & Drath informed appellees that K'ung and the representative of World Union, Mr. Yih Kee Kon, were too sick to attend, and that Stonehaven had been dissolved. No depositions occurred in October 1991.

In January 1992, the special master recommended that appellants' complaint be dismissed. He found that GW, Grover, and World Union refused to pay the monetary sanctions imposed in his earlier recommendation and that Stonehaven no longer existed. Further, he concluded that K'ung had not submitted affidavits substantiating his claimed illness and so had no excuse for missing the deposition in October 1991. The special master also found that Grover, World Union, and GW had no excuses for missing past depositions. In April 1992, the court adopted this recommendation, dismissed the case, and imposed $17,974 in costs and fees jointly and severally on all appellants, including Hyde & Drath, who now appeal.

II

Appellants contend that the special master erred in ordering the depositions of Grover, Stonehaven, World Union, and GW to take place in San Francisco. Forcing the representatives of these companies to travel so far, appellants argue, was an unjustified imposition.

A district court has wide discretion to establish the time and place of depositions. In re Standard Metals Corp., 817 F.2d 625, 628 (10th Cir.1987), cert. dismissed, 488 U.S. 881, 109 S.Ct. 201, 102 L.Ed.2d 171 (1988). Here, the special master explained that it was necessary for the Hong Kong depositions to take place in San Francisco so that the court could oversee the proceedings since appellants had disregarded the previous deposition order. He also noted that appellants had done business and filed suit in the Northern District of California and should therefore expect to have to appear there. These facts are sufficient to establish that there was no abuse of discretion in ordering the depositions to occur in San Francisco.

III

Tungsten, Grover, World Union, and Stonehaven argue that the court abused its discretion in dismissing their complaint. Before a district court dismisses a complaint, it must weigh the five factors prescribed in Wanderer v. Johnston, 910 F.2d 652, 656 (9th Cir.1990). Then, the district court must find that a party's behavior in ignoring the depositions demonstrated willfulness, bad faith, or fault. Fjelstad v. American Honda Motor Co., 762 F.2d 1334, 1341 (9th Cir.1985).

A

Wanderer requires the district court to consider: (1) the public's interest in expeditious resolution of litigation, (2) the court's need to manage its dockets, (3) the risk of prejudice to the party seeking sanctions, (4) the public policy favoring disposition of cases on their merits, and (5) the availability of less drastic sanctions. 910 F.2d at 656.

The first two factors weigh in favor of affirming dismissal. The special master and district court found that litigation had been delayed two and one-half years by appellants' procrastination. Appellants claim that their actions have not delayed the litigation of this case, blaming the delay on an appellee who was in prison and on the district court, which stayed discovery proceedings twice. We find no merit in this argument. Even if the discovery process were extended to accommodate the imprisoned codefendant or the district court, appellants contributed significantly to the delay by ignoring the scheduled depositions. As the district court noted, appellants' failure to show up for depositions made the scheduled trial date impossible. Appellants' conduct thus "greatly impeded resolution of the case and prevented the district court from adhering to its trial schedule." Malone v. United States Postal Serv., 833 F.2d 128, 131 (9th Cir.1987), cert. denied, 488 U.S. 819, 109 S.Ct. 59, 102 L.Ed.2d 37 (1988).

Under the third Wanderer factor, appellants' behavior prejudices appellees if it "impaired [appellees'] ability to go to trial or threatened to interfere with the rightful decision of the case." United States ex rel. Wiltec Guam, Inc. v. Kahaluu Constr. Co., 857 F.2d 600, 604 (9th Cir.1988). Appellees have been completely unable to depose appellants' representatives except for K'ung. Thus, this case is not analogous to those cases involving delay but where depositions eventually occurred. See, e.g., Kahaluu, 857 F.2d at 604. Rather, the present case resembles Adriana International Corp. v. Thoeren, 913 F.2d 1406, 1412 (9th Cir.1990), cert. denied, 498 U.S. 1109, 111 S.Ct. 1019, 112 L.Ed.2d 1100 (1991), where "the repeated failure of [plaintiffs] to appear at scheduled depositions compounded by their continuing refusal to comply with court-ordered production of documents...