Thomas E. Hoar, Inc. v. Sara Lee Corp.
| Decision Date | 10 August 1989 |
| Docket Number | 808,Nos. 1070,D,s. 1070 |
| Citation | 882 F.2d 682 |
| Parties | 1989-2 Trade Cases 68,716, 14 Fed.R.Serv.3d 1066 THOMAS E. HOAR, INCORPORATED, Plaintiff-Appellant, Cross-Appellee, v. SARA LEE CORPORATION, et al., Defendants-Appellees, Cross-Appellants. ockets 88-7962, 88-9010. |
| Court | U.S. Court of Appeals — Second Circuit |
Leon J. Greenspan, White Plains, N.Y. (Greenspan, Jaffe & Rosenblatt, White Plains, N.Y., of counsel), for plaintiff-appellant and cross-appellee.
Russell H. Carpenter, Washington, D.C. (Covington & Burling, Washington, D.C., and Frederick Newman, Blodnick, Pomeranz, Schultz & Abramowitz, Lake Success, N.Y., of counsel), for defendants-appellees and cross-appellants.
Before LUMBARD, ALTIMARI and MAHONEY, Circuit Judges.
Plaintiff Thomas E. Hoar, Inc. ("Hoar") and its attorney (collectively "appellants") appeal from an order of the United States District Court for the Eastern District of New York (Thomas C. Platt, Ch.J.) that imposed a sanction on them with joint and several liability for expenses including attorneys' fees pursuant to Fed.R.Civ.P. 37. Appellants argue that the district court improperly found that they abused the discovery process warranting the imposition of the Rule 37 sanction. Defendants-appellees, Sara Lee Corp., ("Sara Lee") and its subsidiary Hanes Knitwear/Printables ("Hanes"), cross-appeal contending that the district court's order, which reduced the amount of the sanction originally imposed For the reasons stated below, we affirm the order of the district court.
by the magistrate to $14,815.40, does not reflect full recovery of their reasonable expenses including attorneys' fees under Rule 37.
We shall summarize only those facts and prior proceedings believed necessary to an understanding of the threshold issue of appealability and of the merits of this appeal. The underlying litigation to the present appeal was initiated in May, 1986. Alleging, inter alia, violation of the antitrust laws, plaintiff Hoar, a distributor of men's and boy's underwear, filed suit against defendants Sara Lee and its subsidiary Hanes, a manufacturer and supplier. The defendants counter-claimed alleging fraud and breach of contract.
Since its initiation over three years ago, the discovery process in this suit has tread a rocky road as a result of numerous disputes between the parties. A search of the record discloses that at several junctures Hoar failed to fulfill defendants' legitimate discovery requests and to comply with court orders compelling complete discovery.
The protracted trek commenced when Hoar neglected to answer the defendants' first set of interrogatories by the due date of June 3, 1987. Only after the defendants moved to compel discovery pursuant to Rule 37(a) did Hoar respond on July 16, 1987. When Hoar was remiss in responding to the defendants' second and third sets of interrogatories, due on July 7, 1987 and July 27, 1987 respectively, the discovery process continued to flounder. Hoar eventually tendered answers to both sets of interrogatories on September 10, 1987. After reviewing these responses, the defendants alleged that Hoar had proffered incomplete and inadequate answers. The defendants again moved the court to compel adequate responses.
At a conference held on December 18, 1987, the magistrate attempted to clear a straight path by allowing Hoar four additional months in which to comply and ordering full satisfaction of all previous outstanding discovery by April 29, 1988. Hoar, however, continued to obstruct the thoroughfare of discovery with its deficient responses. As a result, on May 3, 1988, it was necessary to hold an additional conference before the magistrate. At this conference, defendants noted that despite their repeated efforts to secure answers to certain interrogatories, Hoar still had not furnished an itemized damage claim, but merely asserted that the defendants' violation of the antitrust laws had caused over one and one-half million dollars in lost profits. In addition, the defendants pointed out sundry gaps in document production.
Confronted with these and other deficiencies, Hoar sought an additional 30 days in which to comply. The magistrate granted a 45-day extension setting June 17, 1988 as "the absolute final date for compliance." Disregarding the court's second mandate, Hoar once more encumbered the path to full discovery by allowing June 17, 1988 to pass without any significant attempt to comply.
More than two years after the initiation of the suit, on September 2, 1988, the magistrate granted the defendants' Rule 37 motion. He imposed a sanction in the amount of $22,990.09 to compensate defendants for their reasonable expenses including attorneys' fees incurred due to appellants' hindrances of discovery. Specifically, pursuant to Rule 37(b)(2), the magistrate allocated the sums of $9,523.50 and $11,990.60 for appellants' failure to comply with the court orders of January 5, 1988 and May 10, 1988 respectively. In addition, the magistrate allocated the sum of $1,475.99 for the costs of defendants' December, 1987 motion to compel pursuant to Rule 37(a)(4). The magistrate concluded that the appellants had engaged in a "pattern of ignoring discovery requests" so as to "willfully and unnecessarily" prolong the litigation. Hoar and its attorney were held to joint and several liability for the Rule 37 sanction.
Hoar and its attorney next appealed to the district court seeking a reversal of the On this appeal of the sanction imposed by the district court, appellants now argue, as an initial matter, that the district court's order is appealable. They also contend that the district court imposed the sanction in a manner that disregarded the "true facts of the case" and was "contrary to law." Further, they claim that the district court's order should be reversed because of a lack of due process.
sanction. After reviewing the matter, Chief Judge Platt held that the Rule 37 sanction was warranted. However, in an order dated October 11, 1988, he reduced the amount of the compensatory sanction to $14,815.40 "given the routine nature of [defendants'] reviewing and cataloging discovery materials to determine the extent of compliance." Subsequently, in response to appellants' request for clarification of the October 11, 1988 order, the district judge affirmed that Hoar and its attorney were jointly and severally liable for the sanction
The defendants assert that this court lacks jurisdiction over the interlocutory appeal. They further argue that the district court was well within its discretion to impose the Rule 37 sanction. In addition, they cross-appeal maintaining that the district court's order, in so far as it reduced the amount of the sanction imposed by the magistrate, does not provide for their full recovery of reasonable expenses including attorneys' fees pursuant to Rule 37. Finally, defendants request attorneys' fees and costs incurred by reason of this appeal.
Appellants contend that this court has jurisdiction over the appeal under 28 U.S.C. Sec. 1291. It is well established that "as a general rule a district court's decision is appealable under ... [Section 1291] only when the decision 'ends the litigation on the merits and leaves nothing for the court to do but execute the judgment.' " Gulfstream Aerospace Corp. v. Mayacamas Corp., 485 U.S. 271, ----, 108 S.Ct. 1133, 1136, 99 L.Ed.2d 296 (1988) (quoting Catlin v. United States, 324 U.S. 229, 233, 65 S.Ct. 631, 633, 89 L.Ed. 911 (1945)). A "small class" of district court orders, however, has long been understood to constitute an exception to the "final judgment rule." The Supreme Court held in Cohen v. Beneficial Industrial Loan Corp., 337 U.S. 541, 546, 69 S.Ct. 1221, 1225, 93 L.Ed. 1528 (1948), that some rights are simply "too important to be denied review and too independent of the cause itself to require that appellate consideration be deferred until the whole case is adjudicated." In elaborating Cohen's "collateral order" exception, the Court has forged a three-part test to ascertain whether an order that does not finally resolve litigation is nonetheless appealable pursuant to Section 1291. The order must: (1) conclusively determine the disputed question; (2) resolve an important issue completely separate from the merits of the action, and (3) be effectively unreviewable on appeal from a final judgment. Gulfstream Aerospace, 485 U.S. at ----, 108 S.Ct. at 1136-37; Coopers & Lybrand v. Livesay, 437 U.S. 463, 468, 98 S.Ct. 2454, 2457, 57 L.Ed.2d 351 (1978).
In Cheng v. GAF Corp., 713 F.2d 886 (2d Cir.1983), we held that a non-party attorney may bring an interlocutory appeal of a Rule 37 sanction pursuant to the Cohen exception. As to the first requirement, the assessment of the Rule 37 sanction in the amount of $14,815.40 by the district court, after an appeal of the magistrate's order, amounts to a "conclusive determination." Cheng, 713 F.2d at 889. See also Sanko S.S. Co., Ltd. v. Galin, 835 F.2d 51, 53 (2d Cir.1987); David v. Hooker, Ltd., 560 F.2d 412, 417 (9th Cir.1977). But see Eastern Maico Distributors, Inc. v. Maico-Fahrzeugfabrik, 658 F.2d 944, 951 (3d Cir.1981). The second requirement is satisfied, since the imposition of the sanction involves an issue "completely separate from the merits of the underlying litigation." Cheng, 713 F.2d at 889. See also Sanko, 835 F.2d at 53.
The third Cohen requirement presents a thornier issue. In Cheng, however, we enumerated several reasons why a sanction imposed on a non-party attorney is effectively "unreviewable after final judgment."
1 First, in the face of settlement negotiations, an attorney might be placed in an "ethical dilemma" since "his view of any settlement proposal would almost certainly be colored by its handling of the attorneys' fee issue." Cheng, 713 F.2d at 889-90. In addition, the plaintiff's...To continue reading
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...evaluate the merits of the underlying action). Contrast the holdings in the preceding cases with the holding in Thomas E. Hoar, Inc. v. Sara Lee Corp., 882 F.2d 682 (2d Cir.1989). In that case, the magistrate judge imposed monetary sanctions on an attorney under Rule 37 for failure to provi......
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