August 06, 2019 Top Story

Next Stop, Sanctionville!

Court punishes defendant for discovery dispute that goes off the rails

By Stephen Carr

Finding a pattern of “pervasive” discovery misconduct, a state appeals court has upheld a sanctions order that resulted in imposed liability and an award of over a million dollars in attorney fees, before a jury entered a verdict of more than $15 million. In affirming the award, the court noted that the defendant railway’s misrepresentations deprived the plaintiff not just of a fair chance to prove his case, but potentially also a chance for necessary medical treatment following an industrial accident.

An employee at a railyard was exposed to a foul-smelling gas and was subsequently diagnosed with reactive airway disease

An employee at a railyard was exposed to a foul-smelling gas and was subsequently diagnosed with reactive airway disease

iStockphoto by Getty Images

Tank Car Spill and Possible Coverup

In Kowalewski v. BNSF Railway Co., a plaintiff working at a railyard was exposed to a foul-smelling gas and taken to the hospital where he was diagnosed with reactive airway disease and other conditions. The plaintiff alleged that these conditions resulted from being exposed to a chemical released by one of the railway’s tank cars. When the plaintiff sought medical treatment, the trial court found that the railway “misled Kowalewski by representing that he was exposed to sulfur dioxide,” depriving him of a proper diagnosis of his condition.

The tank cars involved in the accident were not flagged and held aside by the railway as the likely source of the gas. Instead, they were added to other trains and allowed to leave the yard.

The plaintiff filed suit in Minnesota state court and sought to inspect several tank cars to determine which of the cars was the source of the toxic leak. After first claiming it could produce the cars, the railway delayed the inspection, then claimed that it did not have control over the tank cars and could not produce them for inspection.

The trial court found that the railway spoliated evidence by failing to inspect and preserve evidence from the scene. It failed to preserve video evidence of the accident and records from the tank cars. The court found that the railway altered evidence after the accident by presenting a version of the company’s claims manual to the court that had been changed after the incident, and failing to produce the name of the tower operator until that witness had reached a settlement with the company.

The plaintiff moved for sanctions. The trial court found that the railway’s conduct constituted “a deliberate effort to frustrate” the plaintiff’s ability to bring his claim and that it “significantly inhibited” the plaintiff’s ability to establish liability and causation. Accordingly, the court entered judgment for the plaintiff on those issues, limiting the trial to damages issues only.

The court also awarded attorney fees in the amount of $1,153,507 based on the amount of hours the attorneys worked on the case on the issues of causation and liability. The case went to trial on damages. The jury then returned a verdict in favor of plaintiff for over $15 million.

Appellate Court Agrees that Discovery Got Seriously Off Track

The railway appealed the trial court’s order to the Minnesota Court of Appeals. It argued that the sanctions were too punitive and that the trial court’s decision to strike the company’s defenses deprived it of a fair trial.

In an unpublished opinion, the appellate court rejected the railway’s attempt to characterize the trial court’s ruling as being mostly about producing the tank cars. Instead, it pointed out that the railway’s misconduct was pervasive. “The court’s opinion is really scathing in showing that the misconduct here was part of a pattern or practice of failing to preserve and produce evidence and not an isolated event,” explains Donald F. Winningham III, Birmingham, AL, cochair of the ABA Section of Litigation’s Discovery Strategies Subcommittee of the Mass Torts Committee.

 “Striking a party’s defenses is a drastic sanction, and the size of the jury verdict here reflects the potentially devastating results of such a sanction. And the fact that the trial court was willing to enter such a sanction reflects on the seriousness of the defendant’s misconduct,” states Winningham.

Another leader agrees that the repeated violations were key to the court’s decision. “The court’s order shows that it seriously evaluated the totality of the circumstances—not just individual discovery incidents—and found a pattern of discovery misconduct that was willful and prejudicial to the plaintiff,” explains Tracy A. DiFillippo, Las Vegas, NV, cochair of the Section of Litigation’s Pretrial Practice & Discovery Committee. “The trial court was clearly irritated by the defendant’s failure to produce evidence on multiple occasions, their continual finger-pointing, and their attempts to mislead plaintiff about his injuries,” she concludes.

Attorneys Need to Keep Communication Lines Clear

Although the case was unique in many ways, observers caution that the opinion highlights the need for lawyers to work with their clients to make sure evidence is being preserved. “Practitioners need to address these issues early on with their clients and make sure that the relevant evidence has been preserved,” recommends DiFillippo.

Preservation can be particularly tricky when representing a corporate client where ownership or control over evidence may be subject to some dispute and where communication may be unclear. “Lawyers are often in a tough spot when they don’t have all the information. This could result from one of two scenarios: (1) the lawyer fails to ask the correct questions of the client and then makes a mistaken representation to the court or another party; or (2) the client either doesn’t fully inform counsel or provides incorrect information. Therefore, it is important that lawyers clearly communicate with their clients and address discovery issues early in the litigation,” counsels Winningham.

“Most importantly, attorneys need to always be careful that the representations they make to the court are accurate and, to the extent required, to clarify any potentially inaccurate statements as quickly as possible,” he concludes.

 

Stephen Carr is an associate editor for Litigation News.


Hashtags: #sanctions, #discovery, #appellatetwitter

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