Fjelstad v. American Honda Motor Co., Inc.

• Citation: 762 F.2d 1334,2 Fed.R.Serv.3d 196
• Decision Date: 25 June 1985
• Docket Number: Nos. 84-4058,84-7419 and 84-726,84-4059,s. 84-4058
• Parties: Heather FJELSTAD, a minor, et al., Plaintiffs/Appellees, v. AMERICAN HONDA MOTOR CO., INC., and Honda Motor Co., Ltd., Defendants/Appellants. HONDA MOTOR CO., LTD., Petitioner, v. UNITED STATES DISTRICT COURT FOR the DISTRICT OF MONTANA, Respondent, and Heather Fjelstad, a minor, et al., Real Parties In Interest. AMERICAN HONDA MOTOR CO., INC., Petitioner, v. UNITED STATES DISTRICT COURT FOR the DISTRICT OF MONTANA, Respondent, Heather Fjelstad, a minor, et al., Real Parties in Interest.
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

762 F.2d 1334

2 Fed.R.Serv.3d 196

Heather FJELSTAD, a minor, et al., Plaintiffs/Appellees, v. AMERICAN HONDA MOTOR CO., INC., and Honda Motor Co., Ltd.,

Defendants/Appellants.

HONDA MOTOR CO., LTD., Petitioner, v. UNITED STATES DISTRICT COURT FOR the DISTRICT OF MONTANA, Respondent, and Heather Fjelstad, a minor, et al., Real Parties In Interest.

AMERICAN HONDA MOTOR CO., INC., Petitioner, v. UNITED STATES DISTRICT COURT FOR the DISTRICT OF MONTANA, Respondent, Heather Fjelstad, a minor, et al., Real Parties in Interest.

Nos. 84-4058, 84-4059, 84-7419 and 84-726.

United States Court of Appeals,

Ninth Circuit.

Argued and Submitted March 7, 1985.

Decided June 11, 1985.

As Amended on Denial of Rehearings June 24 and June 25, 1985.

James A. Poore, III, Poore, Roth & Robinson, P.C., Butte, Mont., Randall H. Bellingham, Moulton, Bellingham, Longo & Mather, Billings, Mont., Irving H. Greines, Kent L. Richland, Greines, Martin, Stein & Richland, Beverly Hills, Cal., for defendants-appellants.

Donald W. Molloy, Billings, Mont., Theodore R. Dunn, Goetz, Madden & Dunn, Bozeman, Mont., for plaintiffs-appellees.

Appeal from the United States District Court for the District of Montana.

Before FARRIS, ALARCON and FERGUSON, Circuit Judges.

FARRIS, Circuit Judge.

BACKGROUND

This personal injury action arose from a collision between a Honda motorcycle driven by the minor plaintiff, then age twelve, and a farm implement called a tractor-ditcher. In their first amended complaint, the plaintiffs asserted theories of negligence and product liability against American Honda Motor Co., Inc., the distributor of the motorcycle, and Custom Products of Litchfield, Inc., the manufacturer of the tractor-ditcher cab. With respect to American Honda, the plaintiffs contended that the motorcycle's lack of conspicuity caused or contributed to the minor plaintiff's injuries. They alleged that the design of the motorcycle was defective because the headlight did not illuminate automatically when the engine was running and that American Honda negligently failed to provide adequate warnings about daytime headlight use in the owner's manual and on the motorcycle itself.

The plaintiffs served their first set of interrogatories upon American Honda on October 27, 1982. American Honda did not respond or object to the interrogatories or seek a protective order within thirty days as required by Rule 33(a) of the Federal Rules of Civil Procedure. After months of informal efforts on the part of plaintiffs' counsel to obtain answers to the interrogatories, the district court issued an order on March 8, 1983 directing all counsel to "meet all discovery deadlines imposed by the Federal Rules of Civil Procedure and all Court-imposed deadlines." Two days later, American Honda served an unsworn rough draft of its answers to some of the interrogatories upon the plaintiffs.

On May 13, 1983, the plaintiffs moved for imposition of sanctions upon American Honda for failure to respond to discovery. On August 8, the court amended its order of July 29 to provide that American Honda answer all of the plaintiffs' interrogatories "fully and completely" by August 29 unless it informed the court by affidavit that it could not provide the requested information. On August 23, American Honda informed the court that it could not provide design and manufacturing information because it was in the sole possession of American Honda's Japanese parent corporation, Honda Motor Co., Ltd., which would not divulge the information until it was made a party to the lawsuit. In its opinion dated September 7 supporting its July 29 order, the district court found that American Honda's counsel was responsible for his client's tardiness in responding to the interrogatories and ordered him to reimburse the plaintiffs for the attorney's fees, expenses, and costs they incurred in bringing their motion for discovery sanctions. The court explicitly warned counsel that if further discovery problems arose, the severity of sanctions might increase.

The plaintiffs amended their complaint to join Honda Limited as a defendant and served interrogatories upon Honda Limited on September 16, 1983. On January 9, 1984, Custom Products moved for imposition of sanctions against American Honda for failure to comply with the July 29 order. Four days later, the plaintiffs moved for imposition of sanctions against both Honda defendants for their willful filing of evasive, misleading, incomplete, and false answers to interrogatories and their failure to comply with the July 29 order. The plaintiffs also moved on January 24 to compel the production of owner's manuals or to impose sanctions against American Honda. Shortly after the hearing on the plaintiffs' motions, the defendants entered into a stipulation preventing the Honda defendants from contending that the design of the tractor-ditcher cab was the proximate cause of either the collision or the minor plaintiff's injuries. In exchange, Custom Products withdrew its motion for discovery sanctions.

On March 1, 1984, the court levied a $50,000 sanction against the Honda defendants, specifically citing Honda Limited's filing of incomplete and misleading answers to interrogatories and American Honda's one year delay in producing an accident reconstruction videotape and its production of requested owner's manuals just three days before depositions. On March 19, the plaintiffs moved for imposition of a judgment of liability against the Honda defendants for their failure to comply with the March 1 order and to answer outstanding interrogatories. After a hearing on March 30, the court granted the motion as to both Honda defendants on April 2. ¹ The court denied the defendants' motion for reconsideration of the April 2 order, refusing to allow them to present testimony or to file affidavits in support of their motion.

The Honda defendants appeal, asserting that the district court had no authority to impose discovery sanctions against them, that they did not receive adequate notice or an adequate opportunity to be heard on the issue of sanctions, and that their conduct did not warrant the severe sanction of default judgment on the issue of liability. We have jurisdiction over the appeals pursuant to 28 U.S.C. Sec. 1292(b). ²

STANDARDS OF REVIEW

We review the imposition of discovery sanctions under Rule 37 for abuse of discretion. National Hockey League v. Metropolitan Hockey Club, Inc., 427 U.S. 639, 642, 96 S.Ct. 2778, 2780, 49 L.Ed.2d 747 (1976) (per curiam); Sigliano v. Mendoza, 642 F.2d 309, 310 (9th Cir.1981). The district court's "discretion will not be disturbed unless we have 'a definite and firm conviction that the court ... committed a clear error of judgment in the conclusion it reached upon a weighing of the relevant factors.' " United States v. Sumitomo Marine & Fire Ins. Co., 617 F.2d 1365, 1369 (9th Cir.1980) (quoting Anderson v. Air West, Inc., 542 F.2d 522, 524 (9th Cir.1976) (quoting In re Josephson, 218 F.2d 174, 182 (1st Cir.1954))). "Where the drastic sanctions of dismissal or default are imposed, however, the range of discretion is narrowed and the losing party's non-compliance must be due to willfulness, fault, or bad faith." Sigliano, 642 F.2d at 310.

"We review findings of fact related to a motion for [discovery] sanctions under the clearly erroneous standard." Professional Seminar Consultants, Inc. v. Sino Am. Technology Exch. Council, Inc., 727 F.2d 1470, 1472 (9th Cir.1984.)

The district court's selection of the applicable legal standards is reviewable de novo. United States v. McConney, 728 F.2d 1195, 1200-01 (9th Cir.) (en banc), cert. denied, --- U.S. ----, 105 S.Ct. 101, 83 L.Ed.2d 46 (1984).

DISCUSSION

I. Authority

The district court explicitly "relie[d] on two independent and alternative sources of power in" imposing the sanction of partial default judgment against the Honda defendants: 1) its "inherent power to supervise and establish law concerning the conduct of litigation;" and 2) Rule 37 of the Federal Rules of Civil Procedure.

A. Inherent Power

"The inherent powers of federal courts are those which 'are necessary to the exercise of all others,' " and include "the 'well-acknowledged' inherent power ... to levy sanctions in response to abusive litigation practices." Roadway Express, Inc. v. Piper, 447 U.S. 752, 764-65, 100 S.Ct. 2455, 2463-64, 65 L.Ed.2d 488 (1980) (quoting United States v. Hudson, 11 U.S. (7 Cranch) 32, 34, 3 L.Ed. 259 (1812)). The Supreme Court has stated that "whether a court has power to dismiss a complaint because of noncompliance with a production order depends exclusively upon Rule 37" and that "[r]eliance upon 'inherent power' can only obscure analysis of the problem." Societe Internationale v. Rogers, 357 U.S. 197, 207, 78 S.Ct. 1087, 1093, 2 L.Ed.2d 1255 (1958). But the Court also has indicated that district courts may rely upon their inherent powers in penalizing some forms of discovery abuse. See Roadway Express, 447 U.S. at 765, 100 S.Ct. at 2463 (in limited circumstances, court has inherent power to assess attorney's fees against counsel who ignores discovery order). In this case, the district court invoked its inherent authority only to penalize conduct that it did not find to violate either its discovery orders or the discovery rules. Although Rogers therefore did not preclude the district court from relying upon its inherent authority, the court's action went beyond the scope of that authority.

In this circuit, "courts have inherent power to dismiss an action when a party has willfully deceived the court and engaged in conduct utterly inconsistent with the orderly administration of justice." Wyle v. R.J. Reynolds Industries, Inc., 709 F.2d 585, 589 (9th Cir.1983). See also Phoceene Sous-Marine, S.A. v. U.S. Phosmarine, Inc., 682 F.2d 802 (9th Cir.1982). Due process limits the imposition of the severe sanctions of dismissal or default to "extreme circumstances" in which "the...