Commercial Litigation and Arbitration

Rule 37 Sanctions — Default Judgment Drastic But Useful If Confronted with “Obstructionist Adversary” — Abuse of Discretion Standard “Not Appellant-Friendly” (Good Quotes) — 1st Circuit Rule 37 Factors

Angiodynamics, Inc. v. Biolitec AG, 2015 U.S. App. LEXIS 3802 (1st Cir. Mar. 11, 2015):

In this appeal, Defendants challenge the district court's exercise of personal jurisdiction over certain defendants, the denial of their motions to dismiss, and the entry of default judgment and a damages award against them as a sanction for discovery violations. Finding all arguments meritless, we affirm.


C. Entry of Default Judgment

After Defendants repeatedly refused to produce various individuals for depositions, including Neuberger, ADI moved for sanctions pursuant to Federal Rule of Civil Procedure 37. The district court granted the motions and entered default judgment against all Defendants. AngioDynamics, 991 F. Supp. 2d at 297.

Under Rule 37, the district court maintains a variety of tools at its disposal to sanction a party who violates discovery orders, from staying the proceedings to entering default judgment against the disobedient party. Fed. R. Civ. P. 37(b)(2)(A). District courts may impose such sanctions with an eye both to penalize the particular noncompliance and to deter others from engaging in the same tactics. Companion Health Servs., Inc. v. Kurtz, 675 F.3d 75, 84 (1st Cir. 2012) (quoting Nat'l Hockey League v. Metro. Hockey Club, Inc., 427 U.S. 639, 643 (1976) (per curiam)). The choice of sanction lies in the purview of the district court, and we review for abuse [*11]  of discretion. As we have observed in the past, "this standard of review is not appellant-friendly -- and a disgruntled litigant bears a heavy burden in attempting to show that an abuse occurred." Tower Ventures, Inc. v. City of Westfield, 296 F.3d 43, 46 (1st Cir. 2002).

We have set out a non-exhaustive list of factors for consideration when reviewing a Rule 37 motion for sanctions, some substantive and others procedural. Vallejo v. Santini-Padilla, 607 F.3d 1, 8 (1st Cir. 2010). Specifically, we have called on district courts to weigh the severity of the discovery violations, legitimacy of the party's excuse for failing to comply, repetition of violations, deliberateness of the misconduct, mitigating excuses, prejudice to the other party and to the operations of the court, and adequacy of lesser sanctions. Id. On the procedural side, we consider whether the district court gave the offending party notice of the possibility of sanctions and the opportunity to explain its misconduct and argue against the imposition of such a penalty. Id.

The district court dutifully reviewed and discussed each of these factors in a detailed forty-five page memorandum and order. AngioDynamics, 991 F. Supp. 2d at 290-97. As the district court ably and convincingly described, Defendants' conduct here was severe, repeated, and [*12]  deliberate, with no legitimate or mitigating explanation for noncompliance. Id. at 291-93, 296-97. Their discovery violations frustrated ADI's ability to prosecute this lawsuit and the district court's ability to manage its docket. Id.  at 293-95, 297. Defendants do not contend that they were   subjected to any procedural inadequacies in the imposition of  default judgment. Indeed, the district court afforded Defendants numerous opportunities to explain themselves, both on paper and in person, and had warned them that default judgment was a possibility if they continued to flout discovery orders. See id. at 290-91; AngioDynamics, Inc. v. Biolitec AG, 966 F. Supp. 2d 71, 74 (D. Mass. 2013) (denying ADI's first motion for default judgment, but stating, "Defendants should be aware, however, that their continued defiance of court orders will have increasingly severe consequences," including "reconsideration of entry of default judgment"). Despite the admonitions, Defendants continued to engage in a "deliberate pattern of stonewalling with the aim of frustrating effective discovery and the progress of the case." Companion Health Servs., 675 F.3d at 85. Facing repeated recalcitrance almost five years after ADI filed the instant action, the district court acted well within its discretion when it concluded that no lesser sanction could [*13]  address the twin goals of penalty and deterrence.

Although entry of default judgment is a "drastic sanction," it nonetheless "provides a useful remedy" where, as here, "a litigant is confronted by an obstructionist adversary." Crispin-Taveras v. Municipality of Carolina, 647 F.3d 1, 7 (1st Cir. 2011) (internal quotation marks omitted). Given the severity of Defendants' discovery violations, the district court acted well within its discretion in entering default judgment, a sanction that can play a "constructive role in maintaining the orderly and efficient administration of justice." Id.

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