Kowal Law Group Logo
Transparency

9th Cir. Reverses $1.8B Summary Judgment Against Discovery Abuser, Suggests District Court Impose Terminating Sanctions Instead

Tim Kowal     March 31, 2021

The Good News for Defendant: The Ninth Circuit reversed plaintiff's summary judgment on its breathtaking $1.8 billion Lanham Act claim.

The Bad News: In light of all defendant's discovery abuses, the Ninth Circuit wonders aloud whether the district court, when reconsidering the matter, might simply enter a default judgment against it on remand.

In AECOM Energy and Construction v. Morrison Knudsen Corp., 2021 WL 1117780 (9th Cir. Mar. 24, 2021), plaintiff moved for summary judgment on its Lanham Act claim, which carries a right to disgorgement damages.

In support of disgorgement damages, plaintiff offered just three press releases, announcing the EPA, the Bureau of Land Management [I recall a time when that was abbreviated BLM without risk of confusion], and other mining concerns had awarded defendant construction contracts totaling $1.8 billion.

Plaintiff offered no other evidence supporting the $1.8 billion in damages. On the other hand, defendant offered nothing in rebuttal, either. To the contrary, the Ninth Circuit acknowledged that defendants "failed to provide in discovery any reliable evidence of their sales, profits, or costs, despite court orders compelling them to do so."

A split panel held that plaintiff's evidence of the award of contracts was not enough to demonstrate sales or revenues. The court remanded on the issue of damages.

In a concurring opinion that I find more persuasive than the majority's, Judge Friedland agreed the matter must be remanded, but only because the district court apparently did not understand it was empowered to reduce the award. "To the contrary, the district court stated that it was “restless ... over the amount of damages,” but Defendants-Appellants’ “procedural failures left the [c]ourt with no clear avenue other than to rest upon the standards of civil procedure,” which suggests that it may have felt bound to grant $1.8 billion or nothing. This error amounted to an abuse of discretion requiring a remand for reconsideration. See Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 405 (1990)."

In other words, as we often note in these pages, the failure to exercise discretion is an abuse of discretion. Thus, back down this ruling goes.

But for this oversight, however, the concurrence goes on to explain why the $1.8 billion should have been affirmed. Noting defendants had failed to participate in the fact-finding process, " “[r]equiring more precision than can be attained, especially where the impossibility of more precise ascertainment was the fault of the wrongdoer, would be inequitable and is not required.” DSPT Int'l, Inc. v. Nahum, 624 F.3d 1213, 1223 (9th Cir. 2010)."

"Consequently, the district court was permitted to assume that this fact “as claimed and adequately supported by the moving party [was] admitted to exist without controversy.” C.D. Cal. R. 56-3."

This is the law under California procedure, too: "When a party does not produce ordered documents, the court is entitled to infer the documents would contain evidence damaging to that party's case and instruct the jury accordingly. (See Kuhns v. State of California (1992) 8 Cal.App.4th 982, 987–990.)" (Lopez v. Watchtower Bible and Tract Society of New York, Inc. (2016) 246 Cal.App.4th 566, 605, review denied (July 27, 2016).)

There is no duck blind in civil discovery: you don't get to take shots at the other side's evidence if they don't get to take shots at yours.

The concurrence concludes with this chilling suggestion: "I share the majority's opinion that the district court could consider entering discovery sanctions. See supra note 5. In my view, appropriate sanctions could even include a default judgment against Defendants-Appellants, if the district court deems it justified."

Tim Kowal helps trial attorneys and clients win their cases and avoid error on appeal. He co-hosts the Cal. Appellate Law Podcast at www.CALPodcast.com, and publishes a newsletter of appellate tips for trial attorneys at www.tvalaw.com/articles. Contact Tim at [email protected] or (714) 641-1232.

Tim Kowal is an appellate specialist certified by the California State Bar Board of Legal Specialization. Tim helps trial attorneys and clients win their cases and avoid error on appeal. He co-hosts the Cal. Appellate Law Podcast at CALpodcast.com, and publishes summaries of cases and appellate tips for trial attorneys. Contact Tim at [email protected] or (949) 676-9989.
Get “Not To Be Published,” a weekly digest of these articles, delivered directly to your inbox!
Subscribe

"A judge is a law student who grades his own papers."

— H.L. Mencken

“It will be of little avail to the people, that the laws are made by men of their own choice, if the laws be so voluminous that they cannot be read, or so incoherent that they cannot be understood; if they be repealed or revised before they are promulgated, or undergo such incessant changes that no man, who knows what the law is today, can guess what it will be tomorrow. Law is defined to be a rule of action; but how can that be a rule, which is little known, and less fixed?”

— James Madison, Federalist 62

Show neither partiality to the weak nor deference to the mighty, but judge your fellow men justly.

Leviticus

"It may be that the court is thought to be excessively legalistic. I should be sorry to think that it is anything else."

— Hon. Sir Owen Dixon, Chief Justice of Australia

"God made the angels to show Him splendor, … Man He made to serve Him wittily, in the tangle of his mind."

— Sir Thomas More in Robert Bolt's A Man for All Seasons

"Counsel on the firing line in an actual trial must be prepared for surprises, including requests for amendments of pleading. They cannot ask that a judgment afterwards obtained be set aside merely because their equilibrium was slightly disturbed by an unexpected motion."

Posz v. Burchell (1962) 209 Cal.App.2d 324, 334

"Good people do not need laws to tell them to act responsibly, while bad people will find a way around the laws."

— Plato (427-347 B.C.)

"So far as the beginnings of law had theories, the first theory of liability was in terms of a duty to buy off the vengeance of him to whom an injury had been done whether by oneself or by something in one's power. The idea is put strikingly in the Anglo-Saxon legal proverb, 'Buy spear from side or bear it,' that is, buy off the feud or fight it out."

— Roscoe Pound, An Introduction to the Philosophy of Law

"Upon putting laws into writing, they became even harder to change than before, and a hundred legal fictions rose to reconcile them with reality."

— Will Durant

"Moot points have to be settled somehow, once they get thrust upon us. If an assertion cannot be proved, then it must be settled some other way, and nearly all of these ways are unfair to somebody."

—T.H. White, The Once and Future King

"At common law, barratry was 'the offense of frequently exciting and stirring up suits and quarrels' (4 Blackstone, Commentaries 134) and was punished as a misdemeanor."

Rubin v. Green (1993) 4 Cal.4th 1187

Copyright © 2024 Kowal Law Group
menuchevron-down
linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram