Commercial Litigation and Arbitration

Ultimate Sanctions, Appellate Review and Evidence; Relationship of Inherent Power and Rule-Specific Sanctions

From Sentis Group, Inc. v. Shell Oil Co., 559 F.3d 888 (8th Cir. 2009):

[Appellate Review of Ultimate Sanction]

"[A]lthough we review the district court's discovery decisions for an abuse of discretion, we more closely scrutinize dismissal imposed as a discovery sanction because 'the opportunity to be heard is a litigant's most precious right and should sparingly be denied.'" Schoffstall v. Henderson, 223 F.3d 818, 823 (8th Cir. 2000) (quoting Chrysler Corp. v. Carey, 186 F.3d 1016, 1020 (8th Cir. 1999)). To the extent a discovery sanction depends upon an interpretation of law, our review of the underlying legal determination is de novo. United States v. Gonzalez-Lopez, 403 F.3d 558, 564 (8th Cir 2005) ("[A] district court by definition abuses its discretion when it makes an error of law" (internal quotation and citation omitted)).

[Relationship of Inherent Power and Rule-Specific Sanctions]

When a dismissal sanction rests upon purported violations of discovery orders, courts should ensure that the specific requirements of Federal Rule of Civil Procedure 37 are met. Societe Internationale Pour Participations Industrielles Et Commerciales, S.A. v. Rogers, 357 U.S. 197, 207, 78 S. Ct. 1087, 2 L. Ed. 2d 1255 (1958) (reversing a sanction of dismissal for failure to satisfy the requirements of Rule 37). ***

Our court has not treated … Societe Internationale as creating an absolute rule demanding strict segregation of inherent authority and Rule 37 analyses. Rather, we have affirmed the imposition of a sanction of dismissal in a case where a district court blended a Rule 37 analysis with an inherent-authority analysis…. Nevertheless, the guidance from the Court is clear, and we emphasize that the better practice is to apply Rule 37 where appropriate and not allow an exercise of inherent power to "obscure" the Rule 37 analysis. Societe Internationale, 357 U.S. at 207.

That is not to say that inherent powers are insufficient to justify the sanction of dismissal in an appropriate case if a court makes an express finding of bad faith…. Rather, inherent authority is a broad and powerful tool. As such, it should be used sparingly…. In general, then, courts first should turn to specific rules tailored for the situation at hand, such as Rule 37, to justify sanctions. Then, as an alternative basis for support or in circumstances where specific rules are insufficient, i.e., when "there [is] a need," it may be appropriate to invoke their inherent authority….

It follows from this general rule that the best practice is to keep the structured analysis for a particular rule separate from the relatively unstructured analysis associated with inherent authority. ***

[Evidence Rules on Motions Seeking Ultimate Sanctions]

While the Federal Rules of Evidence do not necessarily apply in the context of a motion for sanctions, evidence relied upon must, at a minimum, bear indicia of reliability. See, e.g., Jensen v. Phillips Screw Co., 546 F.3d 59, 66 n.5 (1st Cir. 2008). This is especially true when the sanction imposed is the draconian sanction of dismissal with prejudice. Just as an affidavit containing hearsay and not otherwise bearing indicia of reliability cannot support the final disposition of a case on summary judgment, the present affidavit cannot support the present dismissal. See Brooks, 425 F.3d at 1112.

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