U.S. Supreme Court
The Supreme Court of the United States ruled in Goodyear Tire & Rubber Co. v. Haeger that discovery sanctions must be causally tied to the alleged misconduct. The unanimous ruling endorsed the position submitted to the court by Shook’s National Amicus Practice Co-Chair Phil Goldberg in an amicus brief filed on behalf of the National Association of Manufacturers.
In the case, Goodyear was fined $2.7 million for an alleged discovery violation, which comprised all of the plaintiff’s attorney's fees and costs after the alleged violation occurred. Shook’s amicus brief explained the legal deficiency with this ruling, namely that the trial court abrogated its responsibility to tie the fee-shifting sanction to only those fees caused by the alleged violation. Instead, it simply awarded all of the fees and costs “incurred after the alleged discovery violation.” The Ninth Circuit Court of Appeals then “accepted this post hoc ergo propter hoc fallacy of whatever happens after an event can be attributed to the event.” Determining which fees and costs are causally connected to the alleged misconduct is necessary because “any amount paid to another party for attorney fees and costs not caused by one’s alleged misconduct is punitive and, therefore criminal in nature.”
In vacating the sanction, the Supreme Court highlighted these points. It stated that, here, the trial court’s sanctions established a “temporal limitation, not a causal one,” which it called “wide of the mark.” Rather, a district court must determine which fees and costs the innocent party “would not have incurred but for the bad faith.” “In other words, the fee award may go no further than to redress the wronged party ‘for losses sustained’; it may not impose an additional amount as punishment for the sanctioned party’s misbehavior. To level that kind of separate penalty, a court would need to provide procedural guarantees applicable in criminal cases, such as a ‘beyond a reasonable doubt’ standard of proof.” (Internal citation omitted).
Shook’s amicus brief also put the importance of mooring a court’s inherent sanction authority to “but for” causation for discovery disputes into context of today’s complex litigation. In these cases, the brief stated, “allegations of discovery violations have proven particularly vulnerable to manipulation and excessive sanctions, which can interfere with the ability of the parties to achieve justice through the courts.” In some lawsuits, “discovery has now become the main event—the end game—in pretrial litigation proceedings. . . . Giving parties access to windfall recoveries in excess of their corresponding attorney’s fees and costs will incentivize more discovery disputes and lead to greater injustices.”