Commercial Litigation and Arbitration

Rule 16(f) Sanctions—Suspension of Deadlines for Settlement Talks Doesn’t Excuse Disregard of Them after Talks Fail, Even If Order Not Expressly Reinstated—Rule 26(e) Irrelevant to 16(f) Violation—Unclean Hands Inapt If Sanctions Sua Sponte

Rorrer v. Cleveland Steel Container, 2014 U.S. App. LEXIS 8079 (3d Cir. April 29, 2014):

During a Title VII action, the District Court imposed a monetary sanction against Plaintiffs' counsel ... under Rule 16(f) of the Federal Rules of Civil Procedure for failure to obey the Court's scheduling order. [Plaintiff’s counsel] appeals, arguing that the District Court abused its discretion in imposing that sanction. For the reasons that follow, we affirm.

*** The pertinent facts, however, concern an eleventh-hour psychiatric evaluation of [Plaintiff’s counsel]'s client, Lucy Rorrer, performed by Dr. Robert Toborowsky, her expert forensic psychiatrist. The District Court's final scheduling order directed the parties to complete expert discovery by September 25, 2009. In advance of this deadline, [Plaintiff’s counsel] produced three of Dr. Toborowsky's reports concerning her client's mental condition.

On June 11, 2010, nearly ten months after the closing of expert discovery, [Plaintiff’s counsel] informed defense counsel that Dr. Toborowsky wished to meet with and re-examine her client sometime prior to his scheduled testimony. With discovery long-closed and trial testimony due to begin only days later, defense counsel objected to the proposed reexamination. Suspicious that [Plaintiff’s counsel] might permit the reexamination notwithstanding the objection, defense counsel reiterated to [Plaintiff’s counsel] clear and unequivocal opposition to any further examination or consultation by the doctor.

Despite these objections, [Plaintiff’s counsel]'s client was indeed reexamined by Dr. Toborowsky on June 11, 2010--the very same day she had initially broached the subject of reexamination with defense counsel. This information was first brought to light during Dr. Toborowsky's cross-examination, as [Plaintiff’s counsel] elected neither to supplement the doctor's previous report nor to provide notice of any kind. When asked whether the reexamination influenced his testimony in any way, Dr. Toborowsy explained that it merely "tended to reinforce opinions that [he] had independently arrived at before." J.A. at 25, 170.2

2   When asked whether he was able to produce a record of the reexamination as mandated by a subpoena requiring  [*4] him to preserve and bring his entire file to court, Dr. Toborowsky testified that the notes had been destroyed, adding that they were merely "scribbles." Id. at 25.

At sidebar during cross-examination and later in the Judge's chambers, the District Judge discussed the reexamination with counsel. During this two-part colloquy, [Plaintiff’s counsel] acknowledged her decision to ignore the objections of defense counsel and permit Dr. Toborowsky to meet with her client.... Shortly thereafter, defense counsel moved to strike the doctor's testimony.

Though denying the motion to strike, the District Court elected to sanction [Plaintiff’s counsel] pursuant to Rule 16(f) of the Federal Rules of Civil Procedure on the ground that she had committed a "flagrant and bad will violation of the discovery rules" and had acted unfairly. J.A. at 27. Specifically, the Court explained that "[Plaintiff’s counsel] deliberately withheld information about the pending re-examination without any regard for discovery deadlines, . . . concern for Defense counsel's right to know this information, or . . . Defendant's right to bring this dispute to the Court's attention." Id. The sanction, totaling $2,700, was meant to reflect the total  [*5] amount of attorney's fees incurred by the defendant because of [Plaintiff’s counsel]'s expert discovery violation. In the alternative, the District Court held that, even if no discovery violation occurred, it "would have nonetheless sanctioned [Plaintiff’s counsel] under [its] inherent authority to manage cases before [it]." Id. at 31. It thereafter denied [Plaintiff’s counsel]'s motion to vacate the monetary sanction. D.E. No. 267. [Plaintiff’s counsel] has timely appealed.


On appeal, [Plaintiff’s counsel] alleges that the District Court abused its discretion in assessing a Rule 16(f) sanction against her. Rules 16(a) through (e) of the Federal Rules of Civil Procedure set out standards governing pretrial conferences, scheduling orders, and general case management, while Rule 16(f) authorizes sanctions for violations of those standards. In relevant part Rule 16(f) provides that "[o]n motion or on its own, the court may issue any just orders . . . if a party or its attorney . . . fails to obey a scheduling or other pretrial order." Fed. R. Civ. P. 16(f)(1)(C). Moreover, "[i]nstead of or in addition to any other sanction, the court must order the party, or its attorney, or both to pay the reasonable expenses--including attorney's fees--incurred because of any noncompliance with this rule." Id. 16(f)(2) (emphasis added). Absent a showing that the noncompliance was either "substantially justified" or circumstantially "unjust," Rule 16(f) requires the imposition of monetary sanctions. Id. Substantial justification  [*7] exists where there is a "genuine dispute concerning compliance." Tracienda Corp. v. DaimlerChrysler AG, 502 F.3d 212, 241 (3d Cir. 2007) (quoting Fitz, Inc. v. Ralph Wilson Plastics Co., 174 F.R.D. 587, 591 (D.N.J. 1997)). Whether a sanction is "unjust" requires a "consideration of the degree of the sanction in light of the severity of the transgression which brought about the failure to produce." Id. (noting "'unjust' can be variously defined as 'unfair,' 'unreasonable,' 'inequitable,' or 'harsh'").

Beyond their express ability to impose sanctions against parties and attorneys under Rule 16(f), federal courts "retain the inherent power 'to sanction errant attorneys financially both for contempt and for conduct not rising to the level of contempt.'" In re Cendent Corp., 260 F.3d 183, 199 (3d Cir. 2001) (quoting Eash v. Riggins Trucking, Inc., 757 F.2d 557, 567 (3d. Cir. 1985)). This power, the Supreme Court has noted, is "governed not by rule or statute but by the control necessarily vested in courts to manage their own affairs so as to achieve the orderly and expeditious disposition of cases." Link v. Wabash R.R. Co., 370 U.S. 626, 630-31 (1962).

The District Court concluded that the  [*8] imposition of a monetary sanction against [Plaintiff’s counsel] was warranted under Rule 16(f) in light of her "blatant violation" of the expert discovery deadline. J.A. at 29. It pointed out that not only was [Plaintiff’s counsel] obligated to disclose the reexamination to defense counsel, but that her failure to do so precluded her opponents from performing any form of discovery to which they were rightly entitled. Id. It also noted that [Plaintiff’s counsel] was neither "substantially justified" in her noncompliance with the Court's scheduling order nor unjustly sanctioned. Id. at 30. As to the former, the Court explained that, given the significant amount of time elapsed between the Court's scheduling order and the reexamination in question, there was no "genuine dispute" concerning compliance. Id. Moreover, [Plaintiff’s counsel] permitted her client to attend the reexamination notwithstanding defense counsel's objection. Concerning the latter, the Court determined that, considering the extent to which [Plaintiff’s counsel]'s behavior "illustrated a blatant disrespect for the judicial process and common courtesy to her opposing counsel," a fine equivalent to defense counsel's resulting attorney's fees was far from unjust[*9] Id. On these facts, we cannot say that the District Court abused its discretion in sanctioning [Plaintiff’s counsel].

She argues nonetheless that her actions were not a discovery violation because, at the time of the reexamination, the relevant scheduling order was no longer in effect.... In support of this assertion, [Plaintiff’s counsel] makes reference to an order, filed on October 13, 2009, that suspended all deadlines contained in the Court's April 27, 2009, scheduling order pending the outcome of settlement discussions scheduled for November 6, 2009.... Insofar as the docket does not explicitly reflect the Court's reinstatement of the April 27, 2009 scheduling order (including the September 25, 2009 discovery deadline), [Plaintiff’s counsel] argues that no scheduling order was in place....

This argument is not persuasive. Although the docket does not explicitly reflect reinstatement of the deadlines in the scheduling order, that minor omission does not invite [Plaintiff’s counsel] to conclude that the discovery deadline was never restored. The Court's October 13, 2009 order suspending discovery deadlines pending the outcome of settlement discussions  [*10] was filed over three weeks after the expert discovery deadline had passed. If nothing else, that order implicitly suggests that, once the settlement discussions were concluded, the existing discovery deadlines were reinstated. Any assumption to the contrary would permit ongoing discovery up to and including the beginning of trial.

The District Court buttressed its decision to impose a monetary sanction against [Plaintiff’s counsel] by citing its inherent authority to govern its own affairs. J.A. at 31 ("[E]ven if there was no rule discovery violation, we would have nonetheless sanctioned [Plaintiff’s counsel] under our inherent authority to manage cases before us.") Thus, even in the absence of a discovery violation, the Court was well within its discretion under its inherent power to "impose reasonable sanctions for conduct by lawyers that falls short of contempt of court." In re Cendant Corp, 260 F.3d at 199. By ignoring the objections of defense counsel and failing to provide any notice that the reexamination had taken place, [Plaintiff’s counsel] conducted herself in a manner deserving censure. Insofar as the Court found [Plaintiff’s counsel]'s actions to be abusive of the judicial process (and this it no doubt did),  [*11] its inherent powers permitted the imposition of a monetary sanction.

[Plaintiff’s counsel] raises additional points of contention in her appeal, none of which materially affect our assessment of the District Court's decision. First, she argues that, in light of the express language of Rule 26(e), she was under no duty to supplement the record following the reexamination by Dr. Toborowsky. Under Rule 26(e)(1)(A), a party who has either made a disclosure or responded to an interrogatory, request for production, or request for admission is required to provide supplementation "if the party learns that in some material respect the disclosure or response is incomplete or incorrect, and if the additional or corrective information has not otherwise been made known to the other parties during the discovery process or in writing." Fed. R. Civ. P. 26(e)(1)(A) (emphasis added).

Here, [Plaintiff’s counsel]'s argument is predicated on the belief that, insofar as Dr. Toborowsky's reexamination "tended to reinforce opinions that [he] had independently arrived at before," J.A. at 25, it did not produce any "material" change in his diagnosis that would call for supplementation or notice of any kind, Appellant's Opening  [*12] Br. 34-35. Whether [Plaintiff’s counsel] was under a duty to supplement the record, however, is not the key to this appeal, as the District Court's decision to impose a sanction was premised not on her failure to provide Rule 26 supplementation but on her "blatant violation of the Court's April 27, 2009 Scheduling Order." J.A. at 29. Whereas Rule 37(c) permits a court to levy sanctions against a party for failure to supplement, sanctions imposed pursuant to Rule 16(f) address a party's failure to obey scheduling or other pretrial orders. See Fed. R. Civ. P. 16(f), 37(c). Accordingly, the sanction imposed here by the District Court, whether pursuant to Rule 16(f) or its inherent authority to manage its affairs, is unaffected by [Plaintiff’s counsel]'s decision to forgo Rule 26 supplementation.


Finally, [Plaintiff’s counsel] contends that the Court erred in imposing a sanction because defense counsel had unclean hands. Appellant's Opening Br. 28. In support of this assertion, she cites several instances of allegedly improper conduct by the defense attorney.3 [Plaintiff’s counsel]'s reliance on this doctrine, however, is misplaced, as "[t]he equitable doctrine of unclean hands applies when a party seeking relief has committed an unconscionable act immediately related to the equity the party seeks in respect to the litigation." Highmark, Inc. v. UPMC Health Plan, Inc., 276 F.3d 160, 174 (3d Cir. 2001) (citing Keystone Driller Co. v. General Excavator Co., 290 U.S. 240, 245 (1933)) (emphasis added). In our case, defense counsel did not seek the fine levied against [Plaintiff’s counsel]. Instead, the Court, acting  [*14] pursuant to its statutory and inherent authority, independently elected to impose its sanction. J.A. at 27. As the doctrine of unclean hands covers only the "party seeking relief," it has no application here.

3   Most notably, [Plaintiff’s counsel] alleges that defense counsel's own expert psychiatrist, Dr. Annie Steinberg, improperly reviewed certain medical records after issuing her initial report and failed to file supplementation. Appellant's Opening Br. 46.

In this context, we hold that the District Court did not abuse its discretion in assessing $2,700 monetary sanction against [Plaintiff’s counsel]. We thus affirm.

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