Commercial Litigation and Arbitration

Sanctions — Striking of All Pleadings “Is a Serious Sanction That Requires an Explicit Factual Basis from the District Court” — Willfulness May Be Inferred from Party’s “Pattern of Behavior” (Good Quotes)

Southern U.S. Trade Ass’n v. Guddh, 2014 U.S. App. LEXIS 7570 (5th Cir. April 22, 2014):

The defendant, Sumit Guddh, appeals the district court's imposition of sanctions against him and the district court's grant of summary judgment to the plaintiffs -- the Southern United States Trade Association ("SUSTA"), Jerry Hingle, and Bernadette Wiltz 1 -- on their defamation claims against Guddh. As a result of Guddh's discovery abuses and violation of court orders, the district court imposed a severe sanction -- striking all of Guddh's pleadings in the case. After doing so, the district court granted SUSTA's motion for summary judgment  [*2] on the issue of liability for the defamatory comments. Subsequently, the district court also granted SUSTA's motion for summary judgment on the amount of damages, holding Guddh and his co-defendant Juyasis Mata, liable in solido for $158,942 to SUSTA, and $50,000 to each individual plaintiff.2 Guddh and Mata were also enjoined from republishing the statements. Because we hold that the district court did not abuse its discretion in imposing these severe sanctions and that summary judgment was proper, we AFFIRM the judgment of the district court.


Guddh's main contention on appeal is that the district court erred in imposing a sanction as severe as striking all of his pleadings. A district court's imposition of sanctions is reviewed for abuse of discretion. F.D.I.C. v. Conner, 20 F.3d 1376, 1380 (5th Cir. 1994). Where an imposed sanction is severe, we must conduct a "particularly scrupulous" review. Brinkmann v. Dallas Cnty. Deputy Sheriff Abner, 813 F.2d 744, 749 (5th Cir. 1987).

Rule 37 "authorizes a district court to strike pleadings of . . . a party that fails to comply with a discovery order." U.S. for the Use of M-CO Constr., Inc. v. Shipco Gen., Inc., 814 F.2d 1011, 1013 (5th Cir. 1987). A district court order must provide a sufficient basis for the review of its decision, but the court "need not provide specific factual findings in every sanction order." Topalian v. Ehrman, 3 F.3d 931, 936 (5th Cir. 1993). "[T]he degree and extent to which a specific explanation must be contained in the record will vary accordingly with the particular circumstances of the case, including the severity of the violation, the significance of the sanctions, and the effect of the award." Thomas v. Capital Sec. Servs., Inc., 836 F.2d 866, 883 (5th Cir. 1988)  [*6] (en banc). In the Rule 11 sanction context, we have emphasized "the importance of an adequate record for appellate review in those cases in which the violation is not apparent on the record and the basis and justification for the trial judge's Rule 11 decision is not readily discernible." Id. In deciding on which sanction to impose, "the district court should carefully choose sanctions that foster the appropriate purpose of the rule, depending on the parties, the violation, and the nature of the case." Topalian, 3 F.3d at 936 (citing Thomas, 836 F.2d at 877).

Here, the district court did not abuse its discretion in striking Guddh's pleadings. Although the striking of all pleadings is a serious sanction that requires an explicit factual basis from the district court, the district court order supplied a sufficient factual basis for the sanctions. The court had previously sanctioned Guddh for discovery abuses -- a sanction Guddh has yet to pay -- and Guddh still failed to abide by the court order and appear in person for his deposition and the pre-trial conference. After Guddh's first failure to appear (for his deposition), the court explicitly warned Guddh prior to the pre-trial conference  [*7] that he must appear in person and that failing to do so would lead to the imposition of severe sanctions "including, but not limited to, sua sponte dismissal of the suit, assessment of costs and attorney fees, default, or other appropriate sanctions." Guddh once again failed to appear.

We have upheld the striking of a party's pleadings based on discovery abuses in the past. See, e.g., KeyBank Nat. Ass'n v. Perkins Rowe Assocs., L.L.C., 539 F. App'x 414, 417-20 (5th Cir. 2013) (unpublished) (affirming the district court's striking of defenses and counterclaims based on discovery abuses); Plasticsource Workers Comm. v. Coburn, 283 F. App'x 181, 184-85 (5th Cir. 2008) (unpublished) (same). Guddh abused the discovery process through his failure to respond to discovery requests or appear for depositions. In addition, he violated an explicit court order to appear for the pre-trial conference. These transgressions, combined with the district court's knowledge that earlier monetary sanctions had no curative effect, provide a substantial factual basis for striking Guddh's pleadings.

Guddh argues that the district court should not have imposed such a sanction in his case because his violation  [*8] of the court's order was not willful. See Smith v. Smith, 145 F.3d 335, 344 (5th Cir. 1998) (requiring a showing of bad faith for dismissal of a suit to be authorized as a sanction). Guddh's argument is unavailing. In determining whether a violation is willful, the court may "rely on its complete understanding of the parties' motivations." Id. Here, the district court observed Guddh's discovery abuses, his evasive and obstructive behavior during his deposition, his failure to appear for an in-person deposition, and his failure to appear for a pre-trial conference in violation of the court's direct instructions and despite the court's warning that failure to appear would lead to sanctions including "sua sponte dismissal of the suit, assessment of costs and attorney fees, default, or other appropriate sanctions." From this pattern of behavior, there is no error in finding that Guddh's actions were willful.

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