The Supreme Court Addresses Legal Fee Calculations for Discovery Abuse

 
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Charges of discovery abuse get thrown around frequently in product liability litigation. We have not done a scientific survey, but we guess that such charges are levied against the manufacturer defendants more often than against individual plaintiffs. For one thing, seeking burdensome discovery, and then discovery on discovery, has been in the product liability plaintiff game plan for a long time. There also tends to be more discovery that a defendant could produce—and, therefore, be accused on wrongfully withholding—than a plaintiff could produce. There is also the practical consideration that large manufacturers tend to have the financial wherewithal to pay fees when ordered and contingency plaintiffs do not—although the lawyers who front the money for those plaintiffs and make the decisions about how to proceed in discovery typically do. While there are occasions where courts require plaintiffs and their lawyers to pay substantial defense costs because of bad conduct in discovery or in the litigation more broadly, an argument about how to calculate fees to be awarded for discovery abuse is something that we generally hope to avoid. It is not quite up there with arguing about the maximum acceptable ratio of punitive to compensatory damages that can be awarded, but it still makes us a little uncomfortable.

The Supreme Court's decision in Goodyear Tire & Rubber Co. v. Haeger, 581 U.S. __ (2017), slip op., involves a very large award of fees based on the district court's conclusion that the manufacturer defendant in a product liability case had intentionally withheld important internal testing documents. The plaintiffs did not learn about the documents until after they had settled, when a reference appeared in a newspaper article about another similar case. Because the case had resolved, the late application to shift costs and fees appealed to the court's inherent authority. Using that authority, the court not only determined that the defendant had engaged in bad faith discovery for years, but that it should pay the plaintiff $2.7 million for all costs and fees since the initial "dishonest discovery response." Slip op. at 3. It specifically determined that egregious conduct by a party negates the typical requirement that fees be limited to those caused by the sanctionable conduct. Id. As a back-up in case the Court of Appeals reduced the award, the court determined that the costs and fees excluding what plaintiffs estimated they incurred in...

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