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Death penalty sanctions: a rare last resort for egregious civil misconduct

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United States Publication July 2020

The role of discovery in civil litigation has become increasingly more prevalent, particularly with the advent of electronic discovery. These changes have not only created an increased amount of discovery disputes, but have also opened the door for significant discovery sanctions—including what is known as the civil death penalty.1 A death penalty sanction arises when a court strikes a party's pleadings for discovery abuses, in effect eliminating any type of defense that a particular party would have as they relate to the merits of the underlying claims of the case.2 These sanctions have the effect of adjudicating a dispute and, put simply, it means case closed.3

These are instances when a party's claims or actions are so egregious, and so without merit, that judges must impose sanctions in order to stop the case from proceeding because it would be unjust to allow the dispute to continue. For example, a trial court in Texas imposed death penalty sanctions in 2014 after a party involved with a contract dispute falsified contracts and introduced them during discovery while ushering in corporate representatives to provide false testimony in depositions.4 In another instance, the Texas Supreme Court found that no lesser sanction would be appropriate when a party deliberately destroyed 70 to 100 audiotapes in a legal malpractice case.5 The use of death penalty sanctions is incredibly rare, as they should be, only arising in the most egregious of circumstances. This article discusses the elements considered by Courts when imposing death penalty sanctions, and provides examples from cases dealing with the issue.

Elements to consider

Sanctions can include "dismissal, default judgment, exclusion of evidence and jury instructions resolving fact issues in favor of one party."6 Monetary awards – to cover attorneys' fees - are also common in egregious circumstances. They vary dramatically by jurisdiction and rely prominently on judicial discretion. In addition, death penalty sanctions are incredibly powerful and have been likened to a court dismissing a case with prejudice.

Some litigants have criticized their use based on judges "applying the sanctions in unpredictable and inconsistent ways."7 However, certain states have, through case law, been able to establish a solid framework for determining their appropriateness.8

Courts typically follow a four-part test for determining whether death penalty sanctions are appropriate:

  1. There must be a direct relationship between the conduct and the sanction;
  2. The sanction may only be as severe as necessary to promote compliance;
  3. To uphold death penalty sanctions, there must be a showing that a lesser sanction was previously imposed and did not resolve the issue; and
  4. In egregious cases of misconduct, a court is not required to attempt lesser sanctions before imposing death penalty sanctions "as long as the record reflects that the court considered lesser sanctions and found the party's conduct would not be deterred by lesser sanctions."9

In Texas, for example, courts must actually both consider and test the effectiveness of less severe sanctions before levying death penalty sanctions (unless, however, there are exceptional circumstances). According to relevant case law, the sanctions are only appropriate when a "party's conduct justifies a presumption that its claims or defenses lack merit," and trial courts actually have an obligation "to consider the availability of lesser sanctions before imposing death penalty sanctions."

In Georgia, courts must consider if the offending party's actions "have actually prejudiced the opposing party" before imposing the sanctions.10 Additionally, the Nevada Supreme Court created a list of eight factors to consider after a full evidentiary hearing in a seminal 1990 case, Young v. Johnny Ribeiro Building, Inc. that involved a real estate business venture and a breach of contract, breach of fiduciary duty dispute.

Important in these lists of factors was the notion of recognizing "the feasibility and fairness of alternative, less severe sanctions, such as an order deeming facts relating to improperly withheld or destroyed evidence to be admitted by the offending party."11

Pertinent examples

Courts have repeatedly found that death penalty sanctions should only be used in exceptional circumstances, when it's apparent that no lesser sanction would promote compliance with court rules. This requirement is present in most case law surrounding death penalty sanctions, and is critical when measuring the legitimacy of imposed sanctions.

Below are several examples of courts imposing death penalty sanctions and the egregious actions that spurred the penalty.

Example 1. Colorado Supreme Court- Refusal to Comply with Court Order

In 2009, the Colorado Supreme Court reversed a death penalty sanction for a defendant in a dispute involving the recovery of unpaid wages. In this dispute, a former employee of the defendant sought payment of approximately $23,000 in alleged lost wages. After a battle over appropriate depositions, the plaintiff filed a motion to compel discovery, alleging that the defendant had violated discovery protocol on several occasions when it failed to put forward an available witness list.

The trial court agreed, asking the defendant's counsel to comply with the request in "the spirit of [his] professional responsibilities." There was failure to appear at a September 2008 court ordered hearing to resolve the witness dilemma, and discovery disputes continued through October, November and December of the same year. The trial court eventually imposed a sanction of striking the defendant's answer and affirmative defenses to an amended complaint, saying that a monetary sanction against the multi-million dollar company would not have the needed effect. According to the lower court, "Defendants were strongly cautioned by the Court in status hearings and the Court struggled with counsel's dysfunction endemic to this case". Although the defendant had not complied with both discovery requirements and trial court orders, the higher court determined that the lower court's imposed penalty was "not proportional to the actions of the offending party." According to the court, "Although [the defendant] committed some discovery violations and attempted to stonewall many of Pinkstaff's requests, striking the answer was an unwarranted sanction." This case exemplifies just how egregious the conduct during discovery must be in order for death penalty sanctions to be imposed.

Example 2. U.S. District Court for the Southern District of Texas- Destroying Relevant Evidence

In September 2018, U.S. Magistrate Judge Nancy Johnson ruled in favor of alliantgroup, a Houston-based management-consulting firm, on its motion for death penalty sanctions.12 In its original complaint, alliantgroup claimed that a former employee, Brad Mols ("Mols"), had used the firm's trade secrets and violated the Federal Computer Fraud and Abuse Act. Brad Mols and Angela Torres resigned from alliantgroup on the same day and immediately started a competing business. alliantgroup filed suit against defendants alliantgroup brought claims for breach of contract, misappropriation and wrongful use of trade secrets, and sought a temporary injunction.

alliantgroup's motion for death penalty sanctions alleged a pattern of misconduct that included destroying relevant evidence – 57,000 files were permanently erased from a laptop computer, lying to the Texas court. Judge Johnson reasoned in the court's final order as follows:

Based on his evasive discovery responses, evidence that Mols obstructed and delayed the discovery process from the outset by concealing his ownership interest in Prime, deleting relevant email and text messages, and providing evasive or incorrect answers at his deposition, the court concludes that Mols' refusal to comply with his obligations in discovery was a conscious decision made in bad faith.

The Court continued by finding that "The spoliation was massive and prejudicial" and that their testimony was "not credible." These actions led the Court to issue the extremely rare death penalty sanction. So egregious was the behavior, that Judge Johnson described Mols' litigation behavior as including "obfuscation and outright lies."

In the end, alliantgroup was awarded the entire cost of a forensic examination, its expert costs, as well as attorneys' fees. Mols agreed to pay alliantgroup $1,200,000 in damages to settle the case. This case establishes a base line for the type of egregious behavior that will draw a death penalty sanction, including: 1) the intentional destruction of evidence; 2) obfuscation and lies during the discovery process; 3) false and misleading claims; and 4) perjury. The Court found that the imposition of lesser sanctions simply could not overcome the prejudice based on the severity of Mols' actions.

Example 3. Texas Court of Appeals for the Fourteenth District

In a 2015 case, the Texas Court of Appeals for the Fourteenth District affirmed a trial court's imposition of death penalty sanctions in a legal malpractice suit, recognizing that the sanctions were reserved for "all but the most egregious and exceptional cases."13 The case was centered around the plaintiff suing his former attorney for breach of fiduciary duty, claiming that attention the former attorney was receiving for the plaintiff's underlying health care liability claim was resulting in the plaintiff losing lucrative employment opportunities.

In this case, the plaintiff went as far as to falsify job application documents, including two letters and a Form I-9, in order establish his "losses" from jobs for which he was allegedly rejected. Once the scheme was revealed, the Plaintiff continued to lie to the court, giving responses that were described by the court as defying credibility.

The lower court imposed death penalty sanctions, striking the plaintiff's pleadings—finding that merely striking the evidence wouldn't be sufficient as it wouldn't allow the defendant the opportunity to use the fabricated evidence to speak to the plaintiff's lack of credibility. "No lesser sanction is entered because any lesser sanction simply leaves Plaintiff where he was had he not attempted this fraud," the lower court said.

On appeal, the plaintiff attempted to argue that the lower court neglected to consider possible lesser sanctions, however the court of appeals found that to be untrue—ruling that the fabrication of evidence and the death penalty sanctions were directly linked and that no lesser sanction was available. "The trial court sanctioned Pressil for 'manufacturing evidence related to damages,' and the evidence supports that finding," the appellate court said.

Death penalty sanctions in practice

When imposing death penalty sanctions, courts have shown that there are certain factors on which they will rely. In particular, these disputes must typically involve situations wherein the gravity of the action is extreme, the acts are intentional and the harm is so egregious that no other lesser sanction will adequately remedy the situation.

As shown in the cases of alliantgroup vs. Mols and Pressel vs. Gibson, the court followed a four-factor test set out by the U.S. Court of Appeals for the Fifth Circuit.14 That test, established in Moore v. Citgo Ref. & Chems. Co., L.P., requires that a court ensure these factors are present before entering death penalty sanctions:

  1. The refusal to comply results from willfulness or bad faith and is accompanied by a clear record of delay or contumacious conduct;
  2. The violation of the discovery order must be attributable to the client instead of the attorney;
  3. The violating party's misconduct must substantially prejudice the opposing party; and
  4. A less drastic sanction would not substantially achieve the desired deterrent effect.

In both of these cases, the courts found the actions to be so egregious that a less drastic sanction wouldn't achieve the desired deterrent effect.

Though the actions taken in in the Pinkstaff v. Black & Decker Inc. arguably were serious, that court was not prepared to sustain the ultimate sanction. In these cases when death penalty sanctions were not awarded, the court seemed to believe that a less drastic sanction might suffice or remedy the situation with greater equity.

Practitioners who are moving a court to impose these drastic sanctions should note this element. This drastic sanction should be used only in the most rare situations. It is critical to establish for the court that your party cannot successfully move forward with its case, or that evidence has been spoiled to such a degree that there would be no way to either recreate the destroyed evidence or repair the tarnished lens that the evidentiary misconduct has created. Counsel should then be able to establish that a default judgment in the form of sanctions is the only reasonable remedy.

Courts do have the inherent authority to punish the most egregious bad faith conduct with means such as the death penalty sanction described above. However, it's up to practitioners to acknowledge the severity of these sanctions and to properly inform the courts of their necessity.

In both of these cases, the courts found the actions to be so egregious that a less drastic sanction wouldn't achieve the desired deterrent effect.

Though the actions taken in in the Pinkstaff v. Black & Decker Inc. arguably were serious, that court was not prepared to sustain the ultimate sanction. In these cases when death penalty sanctions were not awarded, the court seemed to believe that a less drastic sanction might suffice or remedy the situation with greater equity.

Practitioners who are moving a court to impose these drastic sanctions should note this element. This drastic sanction should be used only in the most rare situations. It is critical to establish for the court that your party cannot successfully move forward with its case, or that evidence has been spoiled to such a degree that there would be no way to either recreate the destroyed evidence or repair the tarnished lens that the evidentiary misconduct has created. Counsel should then be able to establish that a default judgment in the form of sanctions is the only reasonable remedy.

Courts do have the inherent authority to punish the most egregious bad faith conduct with means such as the death penalty sanction described above. However, it's up to practitioners to acknowledge the severity of these sanctions and to properly inform the courts of their necessity.


Footnotes

3   TransAmerican Nat. Gas Corp., 811 s.W.2d 913, 918 (Tex. 1991).

4   JNS Enterprise, Inc. V. Dixie Demolition L.L.C., 2013 WL 3791502, --S.W.3d -- (Tex. App. – Austin 2014).

5   Cire v. Cummings, 47 Tex Sup. Ct. J. 465 (April 26, 2004).

6   Winning Your Case Before it Goes to Trial, State Bar of Texas, Advanced Family Law Course 2009, Chapter 16.

7   See Cire v. Cummings.

8   Id.

9   See Winning Your Case Before it Goes to Trial, State Bar of Texas, Advanced Family Law Course 2009, Chapter 16.

10   Stephens v. Trust for Pub. Land, 479 F. Supp. 2d 1341, 1346 (N.D. Ga. 2007).

11   Young, 787 P.2d at 780.

12   alliantgroup, L.P., v. Brad Mols, No. H-16-3114, (S.D. Tex 2018)

13   Pressil v. Gibson et al., 477 S.W. 3d 402 (14th Dist. 2015).

14   Moore v. CITGO Ref. & Chems. Co., L.P., 735 F.3d 309 (5th Cir. 2013).



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