Anheuser-Busch, Inc. v. Natural Beverage Distributors

151 F.R.D. 346, 28 Fed. R. Serv. 3d 884, 1993 U.S. Dist. LEXIS 19153, 1993 WL 413969
CourtDistrict Court, N.D. California
DecidedSeptember 9, 1993
DocketNo. C-89-891-JPV
StatusPublished
Cited by1 cases

This text of 151 F.R.D. 346 (Anheuser-Busch, Inc. v. Natural Beverage Distributors) is published on Counsel Stack Legal Research, covering District Court, N.D. California primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Anheuser-Busch, Inc. v. Natural Beverage Distributors, 151 F.R.D. 346, 28 Fed. R. Serv. 3d 884, 1993 U.S. Dist. LEXIS 19153, 1993 WL 413969 (N.D. Cal. 1993).

Opinion

ORDER GRANTING PLAINTIFF’S MOTION TO DISMISS COUNTERCLAIM

VUKASIN, District Judge.

INTRODUCTION

Plaintiff and Counterdefendant Anheuser-Busch, Inc. (“Anheuser”) brought a motion to dismiss the counterclaim of defendants and counterplaintiffs Natural Beverage Distributors (“Natural Beverage”), Mendocino Coast Distributing Company, Inc., and Florence M. Beardslee. An evidentiary hearing regarding the motion was held on February 17 and 19, and on March 1 and 2. Peter E. Moll of Howrey and Simon appeared for plaintiff and Richard D. Rosenberg of the law offices of Joseph L. Alioto appeared for defendants. After hearing the evidence and the arguments of counsel, and reviewing the entire record, the court now GRANTS the motion to dismiss.

[347]*347BACKGROUND

Plaintiff Anheuser filed this action seeking a declaratory judgment that it was acting within its contractual rights in terminating the distributorship of defendants. Defendants filed a counterclaim alleging that Anheuser had unreasonably disapproved of the proposed sale of defendants’ distributorship. By order dated December 21, 1989, the court granted plaintiffs motion for summary judgment on plaintiffs claim and denied plaintiffs motion for summary judgment on the counterclaim. Trial on the counterclaim was held in January and February of 1992. After a jury returned a verdict for counterplaintiff, the court granted Anheuser’s motion for a new trial. The counterclaim was scheduled for re-trial in January of 1993.

In December of 1992, Anheuser filed a motion to dismiss the counterclaim, appealing to the court’s authority under Fed.R.Civ.P. 37 to dismiss an action where a party has violated court-ordered discovery. Anheuser alleges that defendant Beardslee concealed from Anheuser the existence of crucial documents relating to the finances of Natural Beverage (which Beardslee owned at the time). These documents were said by Beardslee to have been destroyed by fire in 1989; Anheuser alleges that the documents survived the fire and that Beardslee has long had knowledge of their existence and lied to Anheuser and the court about their alleged destruction. Anheuser asserts as an additional basis for dismissing the counterclaim allegations that Beardslee has repeatedly violated the court’s pre-trial publicity order. Anheuser’s motion to dismiss is the subject of this Order.

DISCUSSION

I. Standard for Dismissal of Action

Anheuser asserts as a basis on which the court can dismiss the counterclaim the sanctions for discovery abuses as provided by Fed.R.Civ.P. 37. Rule 37 provides in pertinent part:

“If a party ... fails to obey an order to provide or permit discovery, ... the court in which the action is pending may make such orders in regard to the failure as are just, and among others the following:
(C) An order ... dismissing the action or proceeding or any part thereof, or rendering a judgment or default against the disobedient party.”

Fed.R.Civ.P. 37(b)(2)(C).

“[T]he district court must weigh five factors before imposing dismissal: (1) the public’s interest in expeditious resolution of the litigation; (2) the court’s need to manage its dockets; (3) the risk of prejudice to the party seeking sanctions; (4) the public policy favoring disposition of cases on their merits; and (5) the availability of less drastic sanctions. The first of these two factors favor imposition of sanctions in most cases, while the fourth cuts against a dismissal sanction. Thus the key factors are prejudice and the availability of lesser sanctions.”

Henry v. Gill Industries, Inc., 983 F.2d 943, 948 (9th Cir.1993) (citations and quotations omitted).

The Gill Industries court also adds a sixth factor: “Where the drastic sanctions of dismissal or default are imposed, however, the range of discretion is narrowed and the losing party’s non-compliance must be due to willfulness, fault, or bad faith.” Id. at 946 (quoting Fjelstad v. American Honda Motor Co., 762 F.2d 1334, 1337 (9th Cir.1985)).

II. Concealment of Documents

Anheuser alleges that dismissal of the counterclaim is appropriate because Beard-slee has willfully committed an egregious discovery violation that has severely prejudiced Anheuser, and that lesser sanctions would not be effective.

The claims of the parties regarding the discovery of certain business documents are conflicting. Anheuser alleges that Beardslee has concealed the existence of relevant business documents that survived a 1989 fire at her warehouse. Beardslee alleges that she believed the fire had destroyed all of her business records. There is no dispute that the documents in question did survive the fire in legible form and that the documents [348]*348were subject to discovery requests. The central dispute for purposes of the motion to dismiss is, to borrow a phrase from a more well-known dispute, what Beardslee knew and when she knew it. That is, unless Beardslee knew of the documents’ existence, her failure to produce them was not willful or in bad faith, and thus under Gill Industries would not subject her to the dismissal sanction.

In order to resolve the conflict in the parties’ allegations as to Beardslee’s knowledge of the documents’ existence, the court held the evidentiary hearing. At the hearing, the court was able to evaluate the credibility of the witnesses. Having done so, the court finds that Beardslee’s story is utterly devoid of credibility. Not only are there internal inconsistencies within her own statements, but there are too many credible witnesses with no interest in the litigation whose testimony flatly contradict her statements. The court also finds that Anheuser has been prejudiced by defendants’ discovery abuses and that sanctions less than dismissal would not be effective. Accordingly, the court finds dismissal of the counterclaim the only appropriate sanction.

A Willful Failure to Make Discovery

This court will first set forth its findings of fact with regard to the history of the documents. Then the court will analyze in greater detail the testimony of various witnesses, including Beardslee.

1. History of the Documents

The following are the court’s findings of fact, in narrative form, regarding the history of the documents with respect to this litigation.

Florence Beardslee kept her records for Natural Beverage in the Natural Beverage warehouse, located in Fort Bragg, California. A fire burned the warehouse on December 10, 1989. The fire badly damaged the warehouse, particularly the office and loft areas, where Natural Beverage’s business records were principally stored. In the days following the fire, Beardslee inspected the warehouse.

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151 F.R.D. 346, 28 Fed. R. Serv. 3d 884, 1993 U.S. Dist. LEXIS 19153, 1993 WL 413969, Counsel Stack Legal Research, https://law.counselstack.com/opinion/anheuser-busch-inc-v-natural-beverage-distributors-cand-1993.