Snow Machines, Inc. v. Hedco, Inc.
| Decision Date | 09 February 1988 |
| Docket Number | No. 87-5516,87-5516 |
| Parties | SNOW MACHINES, INCORPORATED v. HEDCO, INC. and the Dewey Electronics Corporation. Appeal of FRIEDMAN AND KAPLAN. |
| Court | U.S. Court of Appeals — Third Circuit |
Friedman and Kaplan, New York City, pro se.
Before GIBBONS, Chief Judge, SLOVITER and COWEN, Circuit Judges.
In this case we must determine whether the district court acted properly, under Fed.R.Civ.P. 11, when it ordered an attorney to pay a sanction of $1500 to the court for submitting a proposed form of order to a magistrate. The district court concluded that the submission misrepresented the magistrate's decision, even though the magistrate signed the proposed order. We hold that, at least in the absence of extraordinary circumstances not present here, the submission of a proposed order which is actually signed by one judge cannot be considered objectively unreasonable by another. Therefore, we will reverse.
Snow Machines, Inc. and Hedco, Inc., a division of the Dewey Electronics Corporation, are competitors in the manufacture of snowmaking equipment. In May of 1985, Hedco distributed a circular at a trade show discussing patent litigation between it and Snow Machines. In July of 1985, Snow Machines instituted this action, alleging that the circular was defamatory. It also claimed various business torts.
This case was litigated vigorously, if not bitterly. The aspect of the battle that concerns us here is Hedco's discovery request for evidence of causation and special damages, necessary elements of plaintiff's non-libel claims. In particular, Hedco asked for information concerning those customers which Snow Machines claimed failed to do business with it because of the circular (Interrogatory 5) and asked for the basis of Snow Machines' contention that Hedco's conduct "reduced the volume of [Snow Machines'] business" (Interrogatory 6). (A. 61-63). Snow Machines failed to supply any detailed information, responding to Hedco's interrogatories as follows:
5. The specific details requested by defendant are unknown by plaintiff at this time, however plaintiff's sales are down compared to one year ago, before the Circular was distributed.
6. While the exact figures are confidential, plaintiff's sales for year to date, January 1985, were down approximately $600,000. Plaintiff expects the publication of the Circular to influence future sales as well.
(A. 82). On April 23, 1986, in response to a motion to compel more specific answers, Magistrate Serena Perretti, finding these answers "totally unresponsive," ordered that questions 5 and 6 be answered "in full and complete detail within 10 days," (A. 130). The supplementary response to question 6 reads in its entirety:
Preliminary figures just computed by [Snow Machines'] accountants place [its] gross sales for 1985 down approximately $400,000 from the previous year.
(A. 399).
On May 20, 1986, Magistrate Perretti conducted a conference to deal with various discovery disputes and scheduling matters. See Fed.R.Civ.P. 16. She took the unusual step of conducting the conference in open court and recording it. She opened the conference as follows:
All right, madam and gentlemen, I asked you to come into the Courtroom rather than the library so that there would be no mistake about who says what today, and I can start off, knowing that this is on record--please be seated--and let you know that I am extremely troubled, No. 1, about the extraordinary exchange of correspondence that I have been getting here. I cannot keep up with it. There are responses, some responses I've received to adversary's letters even before I've received adversary's letters. That's how quick this has been being exchanged. That's No. 1, I simply can't keep up with it and I have got the impression from it that there is a problem.
No. 2, I'm quite aware of the fact that there was other litigation, that there is other litigation as well. I can draw an inference that the parties who have been involved in this litigation over the course of so many years--it certainly must be close to ten--may have developed somewhat of an antipathy toward each other. I would certainly hope that counsel, being professional persons, are not letting what might be a reasonable antipathy on the part of clients rub off on them, but I fear that maybe that's happening in this case and that's why I'm having this on the record and why I am starting it off by freely saying, noting that I am being recorded, what I have in my mind. And maybe if you folks say what you have in your minds we can get this show on the road.
I've entered orders in this case, my orders have been ignored, my time limits have been expanded, my expanded time limits have been ignored. You know, I'm just here to try to get you people to the point where you can best serve your clients by bringing this case to resolution, and if you're not going to abide by my orders, well I guess we'll have to take steps.
(A. 138-39).
Magistrate Perretti persistently questioned counsel for Snow Machines:
* * *
responded to their questions to the best of our ability.
(A. 147-48). Attention turned specifically to the supplemented answer to interrogatory 6, indicating that sales were down approximately $400,000. Magistrate Perretti stated with regard to that answer:
All right, you still haven't got anything about cause and ... you've been told everything that they intend to tell the trial court and, therefore, without being able to establish the cause ... they can't get the amount in, can they? Therefore it seems to me that you've won....
(A. 149). A short time later, the magistrate commented:
But at this point in time you're never going to get to amount, ... because there has been no causal relationship revealed in the discovery.
* * *
You got what you wanted for your motion for summary judgment.
(A. 153). Counsel for Hedco requested "an order that precludes them from putting evidence on as to the cause with respect to either a summary judgment or a trial." Magistrate Perretti responded, "I will issue a preclusionary order limiting them to their discovery produced." (A. 154-55).
This, however, was neither the end of the conference nor the end of the discussion concerning interrogatory 6. As the conference continued, counsel for Snow Machines explained that (A. 156). He further explained, (A. 156). Tempers apparently flared as counsel interrupted each other. The magistrate interjected, "Hey, both of you, please." (A. 157). Counsel for Hedco apologized. The following colloquy ensued:
(A. 158-59). As the conference was drawing to a close, the magistrate summed up:
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