Usx Corp. v. Tieco, Inc.

189 F.R.D. 674, 45 Fed. R. Serv. 3d 1390, 1999 U.S. Dist. LEXIS 17477, 1999 WL 1034223
CourtDistrict Court, N.D. Alabama
DecidedNovember 9, 1999
DocketNo. Civ.A. 95-C-3237-S
StatusPublished

This text of 189 F.R.D. 674 (Usx Corp. v. Tieco, Inc.) is published on Counsel Stack Legal Research, covering District Court, N.D. Alabama primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Usx Corp. v. Tieco, Inc., 189 F.R.D. 674, 45 Fed. R. Serv. 3d 1390, 1999 U.S. Dist. LEXIS 17477, 1999 WL 1034223 (N.D. Ala. 1999).

Opinion

MEMORANDUM OPINION STRIKING THE CLAIMS OF THE PLAINTIFF

CLEMON, District Judge.

This is a case in which Plaintiff has failed to initially disclose to Defendant evidence relevant to disputed facts; purposefully failed to produce relevant evidence as requested by Defendant; misled the Court; and deprived the jury of probative evidence. For all of these reasons, and as a sanction, the Court withdrew and struck Plaintiffs claims, pursuant to F.R.Civ.P. 37 and the inherent power of the Court. This opinion memorializes the background and circumstances which led to the imposition of this extraordinary sanction.

I

Plaintiff USX Corporation (“USX”) claims that Defendant TIECO, Inc., (“TIECO”) violated the Racketeer Influenced Corrupt Organizations Act, 18 U.S.C. § 1962, (“RICO”), defrauded USX, and breached its contract with USX by submitting false invoices for Cushman vehicle parts never delivered to the Tractor Shop of its Fairfield (Alabama) Works. While admitting that the Cushman parts listed on various invoices were not delivered to USX, TIECO maintains that at the request of, and as an accommodation to USX agents and employees, it delivered to the Tractor Shop equivalent parts and entire Cushman vehicles having a value equal to that of the parts listed on the invoices, as ordered by USX purchasing managers and expediters possessing the requisite purchasing authority. TIECO contends that USX ratified the actions of its managers and employees by accepting, utilizing, and sometimes disposing of the vehicles after their useful life.

[676]*676Crucial to TIECO’s defense are USX’s files and inventories of Cushman mobile equipment physically present at the Tractor Shop. It is obviously a relevant consideration whether such files and inventories reflect the known presence and usage on USX premises of Cushman equipment never invoiced to USX.

II

In its initial disclosures to TIECO required under F.R.Civ.P. 26, USX did not include all documents relating to Cushman vehicles.

Through various requests for production, TIECO clearly sought the relevant documents.1 Indubitably, some of the requested materials were produced after continued and labored efforts of TIECO, but other probative Cushman-related documents were not produced.

A week before trial, TIECO filed another motion to compel and for sanctions. The motion was premised, inter alia, on the alleged failure of USX to produce the Bob Brown inventory of Cushman vehicles, and the Falls/Ingram or Facility Re-Deployment Task Force list of Cushman vehicles compiled between May and July 1996. The Court summoned counsel for an in-chambers conference on the motion on Thursday afternoon of October 14.

At the conference, TIECO’s cqunsel argued that in addition to the unproduced Brown and Falls inventories, USX had failed to produce any Cushman vehicle inventory maintained by Richard Autry, the head of the Tractor Shop. The Court then inquired of William Waudby, trial counsel for USX, whether he had produced to TIECO’s counsel all of the Cushman vehicle documents in USX’s possession. Waudby stated that he had produced all Cushman documents in his possession; but that other Cushman-related documents may be in various USX files at its headquarters in Pittsburgh. He stated that he did not know the location of these Pittsburgh files. He specifically denied knowledge of the location of materials taken from the files of Autry by USX personnel when Autry was discharged. The Court was convinced (1) that Waudby had in fact produced all of the Cushman materials in his possession; and (2) other Cushman materials remained at an undefined location in USX’s Pittsburgh headquarters.

Rather than striking all of USX’s claims, the Court imposed the less severe sanction of barring USX from using at trial any evidence relating to Cushman vehicles.2 In its October 15 Memorandum Opinion and Order of Preclusion, the Court wrote:

Counsel for the Plaintiffs has conceded that USX Corporation may not have produced all of the available materials sought by the Defendants relating to inventories/reeords of Cushman vehicles. These materials should have been produced a long time ago. Several months ago, USX erroneously represented to Defendants’ counsel that the materials had already been produced.
The court finds and concludes that USX has made evasive and incomplete respons[677]*677es to the Defendants’ discovery efforts related to Cushman vehicles. The court further finds no substantial justification for USX’s failure to reasonably comply with Defendants’ production requests.
... And based on the uncertainty of Plaintiffs’ counsel concerning the actual location of the requested materials, the Court finds that the said materials cannot reasonably be expected to be produced to Defendants’ counsel in sufficient time for use at trial.

Document 79, Court File.

Two business days after the conference, the ease proceeded to trial by jury.

The trial testimony of Robert Hilton, the in-house USX associate counsel in charge of the TIECO matter, revealed that certain Cushman-related records had been shipped from Pittsburgh headquarters to Attorney Waudby’s law firm in Birmingham several weeks before the trial.

The Court ordered Attorney Waudby to extract from those files any material claimed to be protected by the Lange-Simpson/USX attorney-client privilege, and to produce the files instcmter for an in camera review. The redacted files were then produced in three boxes.

The contents of the files were incredible. They clearly showed that the Court had been misled, and that relevant Cushman vehicle files had not been produced.3

Waudby admitted that all of these files were in his possession at the time of the October 14 conference.

By the time that these previously unproduced files were delivered to and examined by TIECO’s counsel, the case already had been submitted to the jury.

In these circumstances, the Court was convinced that if a lesser sanction and a re-trial on the merits were ordered, USX would not have been sufficiently punished and others would not be deterred from using similar abusive litigation tactics. Therefore, it struck and dismissed USX’s claims.

Ill

In imposing the fatal sanction of dismissal of USX’s claims, the Court did not write on a clean slate. Rule 37(d) of the Federal Rules of Civil Procedure authorizes, among other things, the dismissal of an action where a party fails to produce documents properly sought under Rule 34. Cf F.R.Civ.P. 37(b)(2)(C).

The constitutionality of dismissal of claims as a sanction for failure to provide discovery has been consistently upheld by the Supreme Court over the last ninety years. Hammond Packing Co. v. State of Arkansas, 212 U.S. 322, 29 S.Ct. 370, 53 L.Ed. 530 (1909). That case involved a refusal by the plaintiff to produce documents as ordered by the court. The court dismissed Hammond Packing’s claims as a sanction.

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189 F.R.D. 674, 45 Fed. R. Serv. 3d 1390, 1999 U.S. Dist. LEXIS 17477, 1999 WL 1034223, Counsel Stack Legal Research, https://law.counselstack.com/opinion/usx-corp-v-tieco-inc-alnd-1999.