Goodyear Tire v. Haeger

PETITIONER: Goodyear Tire & Rubber Company
RESPONDENT: Leroy Haeger, et al.
LOCATION: U. S. District Court for the District of Arizona

DOCKET NO.: 15-1406
DECIDED BY:
LOWER COURT: United States Court of Appeals for the Ninth Circuit

CITATION: US ()
GRANTED: Sep 29, 2016
ARGUED: Jan 10, 2017

ADVOCATES:
Pierre H. Bergeron - for the petitioner
John J. Egbert - for the respondents

Facts of the case

In 2003, Leroy, Donna, Barry, and Suzanne Haeger were injured when one of the tires on their motorhome failed while they were driving on the highway, which caused the motorhome to swerve off the road and overturn. The tire was manufactured by The Goodyear Tire & Rubber Company (Goodyear). In 2005, the Haegers sued Goodyear, which was represented by Basil J. Musnuff on all cases involving that particular model of tire and by Graeme Hancock as local counsel. The parties reached a settlement without going to trial in 2010.

Over a year later, the Haegers’ attorney saw an article that indicated that Goodyear had done testing on the tire in question that had not been provided to the Haegers during discovery. The attorney filed a motion for sanctions with the district court and argued that Goodyear had committed discovery fraud by knowingly concealing crucial tests. Goodyear opposed the motion and argued that it had never represented that it provided all the test records that had been conducted on the tire at issue. The district court determined that Goodyear and Musnuff had deliberately tried to frustrate attempts to resolve the case on its merits. The district court also determined that, while it could not impose sanctions because the matter was settled, it could award the plaintiffs attorney’s fees for all costs incurred after Goodyear’s responses to the first discovery request, which came to approximately $2.7 million. Musnuff and Goodyear were held jointly responsible for 80% of this figure, and Hancock for the other 20%. Musnuff and Goodyear appealed and argued that the district court could not impose such sanctions without the additional procedural protections required for the imposition of punitive sanctions. The U.S. Court of Appeals for the Ninth Circuit held in both appeals that the district court had not abused its discretion and affirmed the award of sanction fees.

Question

When a court does not afford the sanctioned party the additional procedural protections required to impose punitive sanctions, is the court required to tailor the amount of the sanction to the harm directly caused by the sanctionable conduct, as is required for the imposition of compensatory sanctions?

Media for Goodyear Tire v. Haeger

Audio Transcription for Oral Argument - January 10, 2017 in Goodyear Tire v. Haeger

John G. Roberts, Jr.:

We'll hear argument next in case 15-1406 Goodyear v. Haeger. Mr. Bergeron?

Pierre H. Bergeron:

Thank you, Mr. Chief Justice, and may it please the Court: A direct causation standard is necessary in light of the historic restrictions on a court's inherent authority, and it provides courts with a workable framework that they customarily apply in the sanctions context.

Respondents, in fact, acknowledge that a direct causation standard applies, sometimes, but not always. Their two-teared suggestion, however, does not provide concrete guidance to the district courts and it would inevitably lead to the expansion of the inherent authority. One of the reasons this Court has been reticent about any sort of broadening of the scope of the inherent authority is because the due-process issues and separation of powers issues combined with a court determining the violation acting essentially as prosecutor and fact finder and then imposing the penalty. And --

Sonia Sotomayor:

How do you -- am I to take that your -- I think what I read from your brief is that we should draw the line that we drew in Bagli between compensatory damages under the contempt inherent power and punishment damages that require criminal civil procedures. Is that the same thing you're asking us to --

Pierre H. Bergeron:

Yes. That's essentially the same thing.

Sonia Sotomayor:

So how do you deal with Chambers?

Pierre H. Bergeron:

So we deal with Chambers a couple of different ways.

First of all, Chambers factually distinguishably different from our case because Chambers was based purely on pervasive misconduct that was so bad that it tainted the entire case because there was no -- there was no good faith defense at the end of the day. We have the good faith defense here. But secondly --

Ruth Bader Ginsburg:

Wasn't, that wasn't that what was found here was that it was pervasive from the very first effort to get discovery continuing through the settlement?

Pierre H. Bergeron:

No, Justice Ginsburg.

In fact, what the Court found ultimately was it recognized it did not resolve the question whether the Heat Rise test was dispositive.

And it said plaintiffs believe it would be helpful, but it did not make a determination of that.

And in light of that, we had good-faith defenses as to even if the tests were produced, that there was still a design defect.

And beyond that, there were also causation defenses as to the ultimate cause of the accident, whether that was driver error or whether there was impact damage.

Ruth Bader Ginsburg:

But weren't you given the opportunity -- maybe you can clarify this -- the -- the Court said, well, if we're wrong about giving all of the counsel fees, then we will deduct -- what? -- some $700,000 based on Goodyear's filing of the amount that should not be recovered because it was unrelated to Goodyear's bad conduct.

Pierre H. Bergeron:

Correct.

So there's two points on that. First of all, that was -- how that evolved was the Court had already ruled against us on the causation point; so we had lost that battle.

And then when we -- when the plaintiffs finally submitted their fee application, we took a fallback position and said, at a bare minimum, this needs to be carved out.

So we haven't waived that, but I think the second --

Ruth Bader Ginsburg:

And you represented that that was the cost that was not attributable to Goodyear's misconduct.

Pierre H. Bergeron:

What we represented was that it was related to the medical costs, the medical damages -- proven up the medical damages, as well as pursuit of the other defendants.

So that would be one subset of the -- of the costs that were not caused by the misconduct, but it wasn't the total one. And what's significant about that as well is that the court said it's impossible to make this calculation.

But then the court did, at least to a certain extent, make a calculation based on the evidence that was submitted.

John G. Roberts, Jr.:

Well, your test is the direct directness of the causation.

And I -- I guess I'm curious as to how you would apply that in practice.

I mean, if you take a case, for example, they don't get the Heat Rise test, they get something else that isn't as, in their view --

Pierre H. Bergeron:

Right.

John G. Roberts, Jr.:

-- dramatic or compelling.

Pierre H. Bergeron:

Right.

John G. Roberts, Jr.:

And they have to go through all sorts of -- they're preparing somebody to testify about this other test, and they incur $100,000 in expenses to do that.

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