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In SCOTUS sanctions case, defiant plaintiffs argue Goodyear got what it deserved
December 21, 2016 / 7:55 PM / a year ago

In SCOTUS sanctions case, defiant plaintiffs argue Goodyear got what it deserved

(Reuters) - Here’s an interesting way to brief your case at the U.S. Supreme Court: Instead of engaging in arcane tit-for-tat on the legal question the justices took the case to decide, tell the justices that the question your opponent posed is a red herring and that the facts of the case are all that really matter.

Arizona lawyer John Egbert of Jennings Strouss & Salmon represents Leroy Haeger and other members of the Haeger family whose personal injury case against Goodyear is now before the Supreme Court. The Haegers, who were injured in a motor home accident, blamed Goodyear tires for the crash. After they settled with the company in 2010, they learned that Goodyear failed to turn over crucial testing data during discovery. The trial judge in the case conducted an extensive inquiry into Goodyear’s conduct and concluded that the entire course of the litigation was tainted by the company’s disclosure violation. Exercising her equitable powers, she awarded the Haegers about $2.7 million - nearly all of their legal fees and costs.

The 9th Circuit upheld the award, citing the broad inherent sanctioning power the Supreme Court gave federal judges in its 1991 ruling in Chambers v. NASCO. Goodyear asked the Supreme Court to review the 9th Circuit ruling, which, according to the company, failed to take into account the justices’ 1994 decision in United Mine Workers v. Bagwell, which restricted judges’ powers to issue punitive sanctions without providing due process to the alleged wrongdoer.

The Supreme Court took the case to figure out what protection courts must provide to parties accused of litigation chicanery, whether the sanction is punitive (as Goodyear contended the Haegers’ award was) or compensatory. Specifically, the justices granted certiorari to address “whether a federal court may impose sanctions against an attorney for non-disclosure of documents without either affording heightened procedural protections, as required for punitive sanctions, or finding a causal relationship between the sanctioned conduct and the amount awarded, as required for compensatory sanctions.”

As I told you last month, Goodyear’s merits brief is mostly dedicated to the argument that the Supreme Court must constrain federal judges from overreaching their inherent powers, either by imposing a requirement that compensatory sanctions be tied directly to the harm attributable to misconduct or by affording alleged wrongdoers due process protection when courts impose punitive sanctions. Goodyear’s Supreme Court counsel at Squire Patton Boggs spend a lot of time discussing why the 9th Circuit’s decision is inconsistent with the spirit of the Supreme Court’s Bagwell precedent, even though Bagwell involved contempt sanctions. It cannot be, Goodyear said, that its exposure under the trial judge’s exercise of her inherent power is greater than its potential liability had it defied a court order.

Egbert filed the Haegers’ merits brief at the Supreme Court last week. It seems to show quite a different strategy than Goodyear’s brief (and, for that matter, from the usual run of legalistic Supreme Court filings). A big chunk of the brief recites the facts of the underlying personal injury litigation and the trial court’s inquiry into Goodyear’s misconduct, which, according to the Haegers, provide precisely the causal link Goodyear claims is missing. The trial judge found Goodyear’s failure to turn over critical testing data forced the Haegers to engage in years of sham litigation for which the Haegers should not have to pay. The 9th Circuit agreed (albeit in a split decision). And according to the Haegers, that’s about all the Supreme Court needs to know.

“Goodyear’s extensive arguments about the lower courts’ supposed rejection of a causation requirement, the underlying justification for that requirement and the negative effects that could happen if a court were to impose sanctions without any causation limitation are red herrings,” the brief said. “Neither the Haegers nor the 9th Circuit dispute that fees and costs awarded as sanctions under a court’s inherent power must be causally connected to the bad-faith misconduct. The real question to be decided - and the only issue on which the Ninth Circuit panel members parted ways - is how close a link is required and whether the facts in this case (as found by the district court) meet that standard.”

The brief does discuss why the 9th Circuit decision aligns with the Supreme Court’s Chambers precedent as well as previous Supreme Court opinions on the broad inherent power of district courts to award sanctions beyond those tied directly to costs on the other side. (The Haegers contend Goodyear’s proposed “direct” cause requirement would turn trial judges into bean counters.) The brief dispenses with the supposed tension between Chambers and Bagwell in a paragraph, pointing out that the sanctions in Bagwell were punitive, not compensatory.

In an interview Wednesday, I asked Egbert whether I correctly read his strategy as sticking closely to the facts rather than debating law and policy with Goodyear. He declined to discuss strategy, but did say the Haegers’ legal team decided to stick with counsel who knew the case – Egbert got involved in the litigation during the sanctions proceeding in the trial court – rather than bringing in Supreme Court specialists. “We had some proposals, but we didn’t accept,” Egbert said. The Jan. 10 oral argument will be his first at the U.S. Supreme Court.

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