Bonilla v. Volvo

Court of Appeals for the First Circuit·Decided July 31, 1998·No. 97-1599·Published

Opinion

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<pre>                 United States Court of Appeals <br>                     For the First Circuit <br> <br> <br> <br>No. 97-1599 <br> <br>                      LUIS BONILLA, ET AL., <br> <br>                      Plaintiffs, Appellees, <br> <br>                                v. <br> <br>                      VOLVO CAR CORPORATION, <br> <br>                      Defendant, Appellant. <br>                       ____________________ <br> <br>No. 97-1600 <br> <br>                      LUIS BONILLA, ET AL., <br> <br>                      Plaintiffs, Appellees, <br> <br>                                v. <br> <br>                TREBOL MOTORS CORPORATION, ET AL., <br> <br>                      Defendants, Appellees. <br>                            __________ <br>  <br>NEREIDA MELENDEZ, RAFAEL PEREZ-BACHS, RUBEN T. NIGAGLIONI, MANUEL <br>FERNANDEZ-BARED, JEANNE HABIB-FIGUEROA, ABELARDO RUIZ-SURIA, <br>FRANCISCO OJEDA, ANTONIO A. ARIAS-LARCADA and McCONNELL VALDES, <br> <br>                           Appellants. <br>                      _____________________ <br> <br>No. 97-1790 <br> <br>                      LUIS BONILLA, ET AL.,  <br> <br>                      Plaintiffs, Appellees, <br> <br>                                v. <br> <br>                TREBOL MOTORS CORPORATION, ET AL., <br> <br>                      Defendants, Appellees. <br> <br>                            __________ <br> <br>    RICARDO GONZALEZ-NAVARRO and CONCHITA NAVARRO DE GONZALEZ, <br> <br>                     Defendants, Appellants. <br> <br>                       ____________________ <br> <br>          APPEALS FROM THE UNITED STATES DISTRICT COURT <br> <br>                 FOR THE DISTRICT OF PUERTO RICO <br> <br>       [Hon. Jaime Pieras, Jr., Senior U.S. District Judge] <br> <br> <br> <br>                              Before <br> <br>                      Selya, Circuit Judge, <br>                                 <br>Campbell, Senior Circuit Judge, <br> <br>and Boudin, Circuit Judge. <br>___________________ <br>     Michael J. Rovell with whom Jewel N. Klein and Law Offices of <br>Michael J. Rovell were on brief for defendants Ricardo Gonzalez- <br>Navarro and Conchita Navarro de Gonzalez. <br>     Allan Kanner with whom Conlee Schell Whiteley, Allan Kanner & <br>Associates, P.C., Paul H. Hulsey, Frederick J. Jekel, Theodore H. <br>Huge, Ness, Motley, Loadholt, Richardson & Poole, P.A., Jose F. <br>Quetglas Jordan, Eric Quetglas Jordan, Zygmunt Slominski, Quetglas <br>Law Offices, Daniel Harris and Law Offices of Daniel Harris were on <br>brief for plaintiffs Luis Bonilla, et al. <br> <br> <br> <br> <br> <br>July 28, 1998 <br> <br> <br> <br> <br> <br> <br>

 BOUDIN, Circuit Judge.  This opinion is a companion to <br>two others issued today, growing out of the same district court <br>case.  In No. 97-1135, we are reversing the principal judgment <br>against Volvo.  In Nos. 97-1140 and 97-1143, the principal judgment <br>against Trebol and the Gonzalez defendants is being vacated and the <br>matter remanded for further proceedings as to damages, subject to <br>the possibility that proceedings against Trebol may be stayed under <br>the bankruptcy laws; that opinion also dismisses the plaintiffs' <br>cross-appeal in No. 97-1145. <br>  This final volume in the trilogy concerns appeals by <br>Volvo (No. 97-1599), Volvo's attorneys (No. 97-1600), and the <br>Gonzalez defendants (No. 97-1790) directed to a sanctions order and <br>an attorney's fee order, entered together in the district court on <br>March 27, 1997.  The effect of the two orders taken together was to <br>award attorney's fees and costs in favor of the plaintiffs in the <br>amount of $3,518,844.41.  In setting forth the history pertinent <br>to the orders under review, we assume familiarity with our two <br>opinions issued this day in Nos. 97-1135, 97-1140, 97-1143 and 97- <br>1145. <br>     Between the filing of the original complaint on June 16, <br>1992, and the start of trial on June 24, 1996, the plaintiffs <br>conducted extensive discovery.  Rancorous disputes ensued.  <br>According to the district court, there are 500 docket entries that <br>relate to discovery matters.  On several occasions the district <br>court made preliminary references to alleged misconduct by one or <br>more of the defendants with a promise of future attention to the <br>matter and possible sanctions. <br>     After discovery was completed and the case proceeded to <br>trial, the issue of sanctions reemerged.  On July 2, 1996, the <br>seventh day of trial, the district judge announced, sua sponte but <br>outside the presence of the jury, that he had examined documents <br>filed under seal by Trebol in August 1995 comprising invoices sent <br>by AUM to Trebol and purporting to be genuine Volvo invoices for <br>cars shipped by Volvo to Trebol.  A number of these invoices, as we <br>now know, included inflated figures significantly exceeding the <br>original invoice prices.  The true prices were shown on invoices <br>for the same sales sent directly by Volvo to Trebol. <br>     Volvo had earlier resisted producing to plaintiffs its <br>own copies of the invoices it had sent directly to Trebol on the <br>ground that they would simply duplicate invoices that Trebol itself <br>had been asked to produce.  On the morning of July 2, the district <br>judge said that when Volvo objected to this earlier production <br>request, Volvo "knew" that its own production of the invoices was <br>not a moot issue and also "knew" that the invoices produced by <br>Trebol did not include specified cost information.  The court said <br>that it would keep this in mind when deciding on the nature of <br>sanctions to be imposed thereafter.  The next day, July 3, 1996, <br>the plaintiffs filed a motion for sanctions, and the court reported <br>that it would sanction Volvo by an instruction to the jury that it <br>could draw a negative inference that the unproduced documents were <br>harmful to Volvo's case.  The court issued an order to this effect <br>on July 12, 1996. <br>     Thereafter, during the trial, the district court limited <br>Volvo's attempt to cross-examine certain of plaintiffs' witnesses <br>on topics involving the relationship between Volvo and AUM.  The <br>judge was seemingly prompted by what he thought was Volvo's alleged <br>misconduct relating to the Volvo-Trebol invoices.  But it is clear <br>from the transcript that the question intermittently became <br>confused with a different objection made several

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