Commercial Litigation and Arbitration

Default Judgment for Discovery Violations — Factors for Review of Rule 37 Sanctions — Severe & Otherwise — Second Circuit

Guggenheim Capital, LLC v. Birnbaum, 2013 U.S. App. LEXIS 14195 (2d Cir. July 15, 2013):

"If a party . . . fails to obey an order to provide or permit discovery," the district court may impose sanctions, including "rendering a default judgment against the disobedient party." Fed. R. Civ. P. 37(b)(2)(A)(vi). Certain Rule 37 remedies -- dismissing a complaint or entering judgment against a defendant -- are severe sanctions, but they may be appropriate in "extreme situations," as "when a court finds willfulness, bad faith, or any fault on the part of the" noncompliant party. Bobal v. Rensselaer Polytechnic Inst., 916 F.2d 759, 764 (2d Cir. 1990) (internal citation and quotation marks omitted).

We generally review an entry of a default judgment for abuse of discretion. See Nat'l Hockey League v. Metro. Hockey Club, Inc., 427 U.S. 639, 642 (1976) (per curiam) ("The question, of course, is not whether . . . the Court of Appeals[] would as an original matter have dismissed the action; it is whether the District Court abused its discretion in so doing."); see also S. New Eng. Tel. Co. v. Global NAPs Inc., 624 F.3d 123, 143 (2d Cir. 2010). When assessing a district court's exercise of its discretion pursuant to Rule 37, we generally look to "(1) the willfulness of the non-compliant party; (2) the efficacy of lesser sanctions; (3) the duration of the . . . noncompliance; and (4) whether the non-compliant party had been warned" that noncompliance would be sanctioned. Agiwal v. Mid Island Mortg. Corp., 555 F.3d 298, 302 (2d Cir. 2009) (per curiam) (quotation omitted); see also Bambu Sales, Inc. v. Ozak Trading Inc., 58 F.3d 849, 852-53 (2d Cir. 1995).

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