Haeger v. Goodyear Tire & Rubber Co.

Facts

In June 2003, Leroy and Donna Haeger, and Barry and Suzanne Haeger (Ps) were all seriously injured when one of the Goodyear tires on the front of their motor home failed while they were driving on a highway. The vehicle swerved off the road and overturned. Ps retained attorney David Kurtz, who filed suit against D in 2005. D was represented by Musnuff, who served as Goodyear's 'national coordinating counsel' on all G159 cases, and Hancock, who served as Goodyear's local counsel in Arizona. Musnuff and D's in-house counsel, Deborah Okey (Okey), were responsible for reviewing and approving all discovery responses in the case. Before releasing its G159 tire, D performed extensive Department of Transportation (DOT) tests, electronic post-production W84 high-speed test data (High-Speed tests), L04 heat rise test results (Heat Rise tests), DOT endurance tests, crown durability tests, and bead durability tests on the tire. Throughout discovery, Ps repeatedly sought the results of D's tests on the G159 tire. D, Musnuff, and Hancock failed to search for, and/or withheld these relevant and responsive G159 testing documents in violation of their discovery obligations to produce requested relevant documents, and to supplement prior disclosures. The obfuscation started from the very first discovery request. It even included lying to the judge. On April 6, 2007, when Judge Silver asked Hancock 'is there any internal documentation that is available that has been requested that your . . . clients have not provided,' Hancock responded that Goodyear had 'responded to all outstanding discovery . . . if a document shows up, we'll, of course, produce it and supplement our answers.' This response to Judge Silver was false. At the time of this statement, Hancock had been sent the High-Speed tests and had stated to Musnuff that they should be produced promptly 'given the accusation of no high-speed testing in the January report that put that at issue in the case'; it was thus a false representation to state that Goodyear had responded to all outstanding discovery. D finally produced the High-Speed tests on June 21, 2007. On September 13, 2007, Richard Olsen, D's Rule 30(b)(6) witness, testified during a deposition that while additional tests had been undertaken to determine if D could justify a speed rating of the G159 tire at 75 mph, none of these additional tests was available. Such tests were clearly in addition to the High-Speed tests that had been turned over to Ps. Shortly after Olsen's deposition, Hancock assured the court that there were no other tests in existence beyond those already produced to Ps. Despite Ps' demands for production, during pre-trial discovery, Goodyear disclosed only the FMVSS119 DOT tests and the High-Speed tests. On the first day of trial, the parties announced a settlement. The court closed the case. Ps apparently settled for a small fraction of what they might otherwise have done.  Kurtz then saw an article stating that D had produced internal heat and speed testing in a separate case involving the G159 tire, and he realized that Goodyear had withheld evidence it was required to produce during discovery. Kurtz filed a motion for sanctions on May 31, 2011. Kurtz alleged discovery fraud from knowingly concealing crucial 'internal heat test' records related to the defective design of the G159. In defense, D stated that it agreed unambiguously, indicating that it would not produce all test data. The district court admitted that it 'was under the impression that D had produced all test data relevant to Ps' claims.' The district court ordered D to produce 'the test results at issue.' d produced the Heat Rise tests, but did not mention any additional tests. The court issued a proposed order sanctioning D for failure to produce the Heat Rise tests and the repeated representations made by Hancock to the district court that all responsive documents had been produced. In responding to this proposed order, D, apparently by accident, disclosed the existence of additional G159 tests - the crown durability, bead durability, and DOT endurance tests - none of which had been mentioned or produced in the litigation. The court also discovered that Olsen, D's Rule 30(b)(6) witness, knew about, but failed to mention, these additional tests at his deposition. The district court held that these tests should also have been produced as responsive to Ps' First Request. The court found that 'Hancock, Musnuff, and D engaged in repeated and deliberate attempts to frustrate the resolution of this case on the merits.' The court also discovered as in this case, that in each of the Other G159 Cases, D engaged in lengthy discovery battles with the plaintiffs before it produced the requested documents. The district court concluded that sanctions under 28 U.S.C. § 1927 could not reach D's conduct, and that sanctions pursuant to Rule 11 were unavailable as they should be imposed before a case is closed. Relying upon its inherent power, the district court determined that the most appropriate sanction for 'remedying a years-long course of misconduct' would be 'to award Ps all of the attorneys' fees and costs they incurred after D served its supplemental responses to Ps' First Request.' The district court held that the supplemental responses, in which D only produced the FMVSS119 DOT tests, 'was the first definitive proof that Goodyear was not going to cooperate in the litigation process.' The court the case should have settled for considerably more money. The district court found that Ps should be reimbursed $2,741,201.16 in attorneys' fees and costs. Ds appealed. 

Issues

Rule of Law

Holding and Decision

Legal Analysis

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