Court Does Not Abuse Its Discretion in Striking an Answer and Entering Default

Following a Sanctioned Party’s Willful Disobedience and the Pointlessness of Awarding Lesser Discovery Sanctions
Keith A. Liker, Esq.
Schwartz Semerdjian Ballard & Cauley LLP
Published:  10.01.2012

In a very recent decision by the 9th Circuit Court of Appeals, the court ruled that a party’s willful disobedience to a previous discovery order may result in the striking of a defendant’s answer and the entry of default.  In Gerald Hester v. Vision Airlines, Inc. (decided July 18, 2012) (2012 D.J.D.A.R. 9891), the court held that after nearly two years of discovery disputes and repeated willful disobedience to the court’s orders, the District Court’s sanction of the defendant by striking its answer and entering default was not an abuse of discretion.

Hester involved a class action complaint against Vision Airlines, who had contracted with the United States Government as a private airline to deliver supplies through war zones to U.S. military posts in Iraq and Afghanistan.  The Government contract with Vision provided “hazard pay” for the pilots and crew members of those flights, and also contained a “pass-through” provision to ensure that the hazard pay actually reached the pilots and crew members who were risking their lives by transporting supplies through war zones.  Vision made some of the hazard pay payments to its pilots, but shortly afterwards, stopped paying hazard pay to any of its employees, and it kept the money for its own benefit.  Vision also fired all pilots and crew members who knew about or had previously received hazard pay, and replaced them with employees who were unaware that they were entitled to receive it.  The class action complaint filed in District Court was brought on the grounds of unjust enrichment, money had and received, and conversion, alleging that Vision had received more than $21,000,000.00 in hazard pay, but had retained it and refused to make all of the payments to its employees.

Plaintiffs sent Vision interrogatories and requests for production requesting all communications and documents that related to hazard pay.  Vision responded by affirming that it “had no documents or communications relating to hazard pay.”  In response to plaintiff’s first motion to compel, Vision told the court that it had not produced the requested documents because “there is no hazard pay.”  Plaintiffs, however, showed the court some of Vision’s invoices which they had obtained by subpoena from third-parties, which indicated hazardous bonus payments.  Vision also told the court that “there is no pay that is separate or allocated for hazard pay.”  The court denied plaintiffs’ first motion to compel because it determined that the parties had failed to meet and confer sufficiently before the hearing of the motion.  The court then granted a discovery extension to Vision to respond further.

Vision eventually produced some hazard pay documents, but before doing so, significantly redacted large portions.  Significantly, Vision did not provide a privilege log or even claim that the redacted information was privileged!  Plaintiffs filed a second motion to compel.  The court granted that motion and ordered Vision to produce the requested and unredacted documents approximately two weeks before the final pretrial conference.  At the pretrial conference, Vision still had not produced the documents as ordered, and the court again ordered their production.  On the date that trial was originally scheduled to begin, Vision still had not complied with the discovery order to produce the documents, and plaintiffs filed a motion for sanctions.  In response to the motion for sanctions, Vision provided a few of the requested documents.  Several days before the hearing on the motion, Vision produced a few more responsive documents.  At this hearing, the court also discussed Vision’s failure to produce a privilege log for the redacted materials and discussed the possibility of sanctioning Vision regarding documents that Vision should have produced involving the third parties.  The court warned Vision on the record that based upon its intentional discovery violations, the court had the authority to strike Vision’s answer and enter a default judgment.

Vision was then ordered again to produce unredacted versions of the documents, but instead, Vision produced entirely different documents, which had never before been produced.  At yet another discovery hearing, the court ordered Vision’s answer stricken, default judgment entered, and ordered that a trial be held to determine damages, because liability was no longer an issue with the entry of Vision’s default.

On appeal, Vision’s sole argument was that the District Court abused its discretion because it had “failed to consider less drastic sanctions” before striking the answer and entering default.  The 9th Circuit held that because the district court had thoroughly discussed less drastic sanctions in its previous discovery orders, Vision’s argument was meritless.  The 9th Circuit identified that the court must consider the following five factors before striking a pleading or declaring entry of default: (1) the public’s interest in expeditious resolution of litigation; (2) the court’s need to manage its docket; (3) the risk of prejudice to the other party; (4) the public policy favoring the disposition of cases on their merits; and (5) the availability of less drastic sanctions.  The reviewing court found the district court had considered each of these factors and had made determinations regarding each in its order striking Vision’s answer and entering default.  In light of Vision’s willful disobedience, the 9th Circuit held that the district court reasonably concluded that additional lesser sanctions would be “pointless” given Vision’s previous discovery abuses.  

In its consideration of Vision’s willful disobedience and the pointlessness of lesser sanctions, the District Court specifically identified that Vision “would act to delay the litigation and prevent discovery by any means necessary.”  The trial court also found that to impose lesser sanctions or extend discovery further would merely give Vision what it desired – further delay – and would simply validate Vision’s clear misconduct.  The court was particularly perturbed that Vision was willing to mislead the court “time after time in order to keep from producing relevant, possibly critical discovery material.”

This decision is significant because it reiterates and reminds us that if a party fails to obey an initial order to provide discovery, then the U.S. District Court may impose sanctions, including the striking of pleadings in whole or in part.  Furthermore, where the court’s sanction results in the default of a party, the sanctioned party’s willful or bad faith violations may justify striking an answer and the entry of default, but only after the court has explained why lesser sanctions would be inappropriate, and only after the court has warned the offending party of the possibility of dismissal.