Independent Investor Protective League v. Touche Ross & Co., s. 187-189

Citation607 F.2d 530
Decision Date04 April 1978
Docket NumberD,Nos. 187-189,s. 187-189
PartiesINDEPENDENT INVESTOR PROTECTIVE LEAGUE, Martin F. Randolph, Jr., Gary Michael and Michael Fagan, Plaintiffs-Appellants, and I. Walton Bader, Appellant, v. TOUCHE ROSS & COMPANY, Defendant-Appellee. ockets 77-7187, 77-7271, 77-7273.
CourtUnited States Courts of Appeals. United States Court of Appeals (2nd Circuit)

I. Walton Bader, White Plains, N.Y. (Bader & Bader, White Plains, N.Y., on the brief), for plaintiffs-appellants and appellant Bader pro se.

Gerald Walpin, New York City (James K. Nevling, Jr., and Rosenman, Colin, Freund, Lewis & Cohen, New York City, on the brief), for defendant-appellee Touche Ross & Co.

Before MOORE, FRIENDLY and TIMBERS, Circuit Judges.

TIMBERS, Circuit Judge:

The narrow issue on this appeal is whether the district court, in imposing sanctions under Fed.R.Civ.P. 37 against plaintiffs and their counsel for failure to comply with an order requiring service of answers to interrogatories by a specified date, abused its discretion. We hold that the district court acted well within its discretion under the particular circumstances of this case. We affirm.

I.

Appellants are Independent Investor Protective League (IIPL); three individuals, Martin F. Randolph, Jr., Gary Michael and Michael Fagan; and I. Walton Bader, attorney for IIPL and the three individuals. Appellee is Touche Ross & Company (Touche Ross).

Appellants (except Bader) were the four named plaintiffs below in a class action brought on behalf of the stockholders of Teleprompter Corporation (Teleprompter) against Teleprompter, Touche Ross and others (the action). 1

As the result of a series of discovery proceeding events detailed below, an order was entered on January 9, 1976, after hearings, in the Southern District of New York, Richard Owen, District Judge, upon motion of Touche Ross pursuant to Fed.R.Civ.P. 37, which dismissed the action as against Touche Ross with prejudice and ordered IIPL and Bader to pay to Touche Ross the latter's expenses, including attorneys' fees, in connection with the Rule 37 motion and ensuing hearings. 2

On an earlier appeal to our Court from the January 9, 1976 order by plaintiffs IIPL and Randolph and their attorney Bader, we dismissed the appeal on September 17, 1976 for lack of appellate jurisdiction, pointing out that there was no direction for the entry of final judgment pursuant to Fed.R.Civ.P. 54(b) and that the amount of expenses, including attorneys' fees, to be paid by IIPL and Bader to Touche Ross remained to be determined. 542 F.2d 157-58.

Thereafter a final judgment was entered on May 11, 1977, --- F.Supp. ----, pursuant to Rule 54(b) which dismissed the action as against Touche Ross with prejudice and ordered that Touche Ross recover of IIPL and Bader the sum of $8,074.38 ($7500 attorneys' fees, $549.38 transcript cost and $25 witness' fees) representing the reasonable expenses of Touche Ross in connection with the Rule 37 motion and hearings.

From the judgment of May 11, 1977, the instant appeal has been taken. 3

II.

The events which led to the imposition of the Rule 37 sanctions here under review began on November 1, 1973 about a month after commencement of the action when Touche Ross served on plaintiffs eleven relatively simple interrogatories. They called for information regarding the organization and membership of IIPL; the identity of the three individual plaintiffs; and the details of plaintiffs' acquisitions of shares of Teleprompter.

Plaintiffs at no time interposed objections to these interrogatories. They simply ignored them and failed to respond for more than eight months.

After several directions by the court to plaintiffs and their attorney, Bader, to answer Touche Ross' interrogatories, 4 on August 16, 1974 Judge Owen granted a written motion by Touche Ross pursuant to Rule 37(a)(2) to compel each of the plaintiffs to respond to the interrogatories. The judge ordered compliance within twenty days, i. e., by Thursday, September 5, 1974. This order was announced in open court on August 16, at which time Bader was present.

On September 6, counsel for Touche Ross received in the mail two envelopes, each postmarked September 5. One contained a copy of the purported answers of IIPL bearing the typed date, September 5, 1974. The other contained copies of the purported answers of each of the individual plaintiffs, each bearing the typed date, August 29, 1974, although the individual plaintiffs, Randolph, Fagan and Michael, lived in California, Connecticut and Vermont, respectively.

All of the copies of the answers, with one exception, were unconformed, there being no indication whether they had been signed and sworn to by plaintiffs. The one exception was that, as part of the verification of IIPL's answers, there appeared the following: "/s/ Merrill Sands". Sands was an officer of IIPL and a brother-in-law of Bader (as disclosed at the subsequent hearing before Judge Owen).

Being understandably suspicious of the form of the purported answers, counsel for Touche Ross, on September 6, the same day the answers were received, wrote to Bader requesting that the originals of the answers be filed pursuant to Rule 6(c) of the General Rules of the Southern District of New York. This letter also noted the failure to conform the copies of the answers and inquired whether they actually had been signed and sworn to by the several plaintiffs.

In response to this and another request from counsel for Touche Ross, Bader insisted that he would send photocopies of the original interrogatories "in a few days". Not satisfied, counsel for Touche Ross on September 10 demanded to see the originals. Bader, while averring that he had the answers to the interrogatories, stated that he could not show them on that day because he was not in his office and did not know where in his office the interrogatories were and that he might have left them at home. An appointment was set up for the following morning at Bader's office, which counsel for Touche Ross confirmed by letter. On the morning of September 11, Bader showed to counsel for Touche Ross the original answers of IIPL (purportedly sworn to by Sands, as Secretary of IIPL, on September 5 before Bader as notary public) and the original answers of plaintiff Randolph (purportedly sworn to on September 3 before a notary public in California). The answers of IIPL and Randolph were dated September 5 and August 29, respectively; they were signed by Bader as attorney.

Also in Bader's office on September 11, counsel for Touche Ross requested to see the original answers of the other two plaintiffs, Fagan and Michael. Bader admitted that he had not received them. He was unable satisfactorily to explain why copies of the purported answers of these two plaintiffs, each dated August 29, had been mailed by Bader to counsel for Touche Ross on September 5.

In light of these disclosures, counsel for Touche Ross informed Judge Owen by a hand-delivered letter on the same day, September 11, of these disclosures and of Bader's noncompliance with the court's order of August 16.

On September 20, Judge Owen heard arguments on a motion by Touche Ross, brought on by an order to show cause dated September 13, to dismiss the action as against Touche Ross pursuant to Rule 37(b) and (d); and on a motion by plaintiffs for an extension of time with respect to the interrogatory answers of plaintiffs Fagan and Michael. At the conclusion of the arguments on September 20, the court denied plaintiffs' motion and ordered an evidentiary hearing into the circumstances under which copies of plaintiffs' purported answers to Touche Ross' interrogatories were served on September 5.

The hearing ordered by Judge Owen was held before him on November 4, 13, and 14. The evidence adduced included the testimony of Bader, Sands and Bader's secretary, Mrs. Blacker. In a comprehensive opinion dated January 9, 1976, Judge Owen found that the answers of Fagan and Michael concededly had not been received on September 5; that the answers of Randolph had not been received on September 5; and that there was "no credible evidence" that the answers of IIPL were timely executed and served. The judge therefore ordered that the action as against Touche Ross be dismissed with prejudice and that IIPL and Bader pay to Touche Ross the latter's expenses, including attorneys' fees, in connection with the Rule 37 proceedings.

In support of the Rule 37 sanctions imposed, Judge Owen reached the following critical conclusion:

"On the entire record before me, it is clear and I cannot but conclude that Mr. Bader intended the Rosenman firm (counsel for Touche Ross) to believe that the various answers to interrogatories were due and timely served on the very last day for such service, September 5, 1974, when in fact they had not been. I also cannot but conclude that thereafter Messrs. Bader and Sands made False statements and gave False testimony pursuant to an evolving plan to first deceive counsel and later the Court as to the circumstances surrounding the mailing of the purported 'answers' to interrogatories on behalf of plaintiffs Independent Investor Protective League and Fagan, Michael and Randolph on September 5, 1974." --- F.Supp. Supra, at ----. (emphasis added) (footnote omitted).

III.

We turn directly to what we find to be the only issue on this appeal that warrants discussion: whether the district court abused its discretion in imposing the Rule 37 sanctions that it did against plaintiffs and their counsel under the circumstances of this case. We hold that it did not.

Rule 37(b)(2) and (d), pursuant to which sanctions were imposed here by the district court, in relevant part provides:

"(b) Failure to Comply with Order.

. . . .

(2) Sanctions by Court in Which Action is Pending. If a party or an officer, director, or managing agent of a party . . . fails to obey an order to provide or permit discovery . . . the court in which the action...

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  • Mobius v. Quest Diagnostics Clinical Labs., Inc.
    • United States
    • United States District Courts. 2nd Circuit. United States District Court of Western District of New York
    • June 23, 2020
    ...respond to the revised Interrogatories. These facts support the sanction of dismissal. See, e.g., Indep. Inv'r Protective League v. Touche Ross & Co., 607 F.2d 530, 531-32, 534 (2d Cir. 1978), cert. denied, 439 U.S. 895 (1978) (affirming dismissal when the lower court granted a motion to co......

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