When Sanctions Rule Provides “Substantially Justified” Defense, District Court Must Rule Whether Conduct was Substantially Justified — Deposition Misconduct and Untimely, Revised, Post-Deposition Expert Report
From DeVille v. Givaudan Frangrances Corp., 2011 U.S. App. LEXIS 6245 (3d Cir. Mar. 25, 2011):
Two discovery events are relevant to this appeal. The first occurred during the deposition of an expert witness named Michael Soudry. Elliott produced Soudry to testify about alleged statistical evidence [*5] of age discrimination at Givaudan. While deposing this witness, Givaudan's attorney, Wendy Lario, discovered that Soudry had relied upon lists and data that Elliott had not produced or shared with the defense. When Lario asked Soudry why he had not included this information in his report, Elliott made repeated interjections that not only prevented Soudry from answering, but provided answers on his behalf:
[Defense Counsel] Lario: . . . I do know that the list that we've just marked as Soudry 12 was produced to you in response to a request, actually in response to an interrogatory that asked for identification of those who were retirees and who were not terminated. It is a list that Mr. Soudry has acknowledged that he reviewed, so for purposes of my deposition, I’d like to continue without your interruption.
[Plaintiff’s Counsel] Elliott: Well, he excluded this list from his report because it had nothing to do with . . . involuntary termination.
Lario: In connection with your terminated list, you also indicated that you excluded New York employees, correct?
Elliott: It's possible that this list--
Lario: Ms. Elliott, please[.]
Elliott: Let me clarify. I think this list is an incorrect list of what he relied upon.
Lario: Please, can we please just focus on--
Elliott: We are assuming that this list is correct, and when we are looking at the second page of the attachments to Soudry 8--
Elliott: --I think that that would explain it, because the point is there were over ten employees that he included as 55 and over, and he did several analyses, so he produced this, this document from his computer, but it's some other analysis.
. . . .
Elliott: I really think that that's what explains it that this list is wrong. It's the same number of people. If you take out the New York people and leave in the so-called retirees, it's the same number of people.
. . . .
Lario: Why didn't you produce your spreadsheet?
[Plaintiff’s Expert] Soudry: To produce the spreadsheet?
Soudry: I could produce it if you would like.
Lario: Why didn't you?
Soudry: I didn't think I should produce it.
Soudry: Did you ask for a spreadsheet?
Lario: I asked for all of the information upon which you've relied and reviewed, yes, I did[.]
Elliott: I think it's here. He did produce it. That's his spreadsheet.
. . . .
Lario: Mr. Soudry, are you sitting here and telling me today that there are other spreadsheets that you prepared that support your list of terminated employees that you did not produce?
Elliott: Yes, by mistake. That's the whole point of this information that he mistakenly produced to you.
Lario: I've asked your witness a question.
Elliott: I can finish. I can finish . . .
*** The Magistrate Judge explained that she was "very troubled by the completely objectionable conduct of counsel in defending [Soudry's] deposition" (App. 32), because in her estimation Elliott's interjections went "beyond just suggesting an answer" and amounted to "testifying for the expert witness . . . throughout the deposition testimony," (App. 30).
The second discovery event relevant to this appeal followed the Magistrate Judge order that Elliott serve her expert reports "no later than October 1, 2009." Elliott first served Soudry's expert witness report on September 14, 2009. After Givaudan's November 5, 2009, deposition of Soudry--the substance of which proved very damaging to key aspects of Deville's case--Elliott produced a new report that changed data in Soudry's original "final" report. Elliott filed the new report without notice on November 10, 2009--more than one month after the October 1 deadline. The Magistrate Judge concluded that (1) the late report violated the discovery schedule and (2) changes in the amended report were material because they rendered large portions of the expert's deposition worthless. Noting that she was particularly troubled by attorney Elliott's conduct during Soudry's deposition, the Magistrate Judge offered Elliott a choice: withdraw the offending report, or face monetary sanctions. Elliott chose the monetary sanctions. ***
This Court held in Grider v. Keystone Health Plan Cent., Inc., 580 F.3d 119 (3d Cir. 2009), that when the text of a sanction rule provides that parties may be sanctioned if their behavior lacks "substantial justification," district courts must make express rulings upon whether the offending party's conduct was "substantially justified." Id. at 139 (vacating Rule 26(g) sanctions because the trial court "failed to analyze the 'substantial justification' standard expressly articulated in the Rule"); id at 140 (vacating Rule 37(c)(1) sanctions for the same reason). We vacated the sanction award in that case because there was "nothing in [the district court's opinion] that discusse[d] the contours of this standard or explain[d] the ways in which the Appellants' legal positions were not substantially justified." Id. at 139. Grider therefore provides that District Courts may not apply sanctions under Rules 26 and 37 without considering whether the sanctioned conduct was "substantially justified."
We conclude that the Magistrate Judge's oral opinion applying Rule 37(b)(2) satisfied Grider's requirements. Rule 37(b)(2) states that sanctions are appropriate unless the sanctionable conduct was "substantially justified." Elliott asserts she had "substantial justification" to file the late report for two reasons: (1) the alterations made to the expert report were non-sanctionable because they were "corrections" and "de minimus [sic]," and (2) her Federal Rule of Civil Procedure 26(e) duty to supplement or correct her prior filings obliged her to file the report. Under Grider, she must persuade us that the Magistrate Judge did not adequately consider these asserted justifications.
The Magistrate Judge did consider these justifications. ***
At bottom, sanctions awards are discretionary rulings committed to the judges who are most familiar with the parties and their conduct. *** We do not reverse them lightly--particularly in cases like this one, where the issue has been twice reviewed and carefully considered by the two trial judges most intimate with the discovery process in the case at bar. We conclude that Elliott has not demonstrated that both of those judges abused their discretion. We will therefore affirm the District Court.
Thanks to my friend Sheldon Finkelstein for calling this case to my attention.
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