Delaware Business Litigation Report

Federal Court Awards Attorney Fees And Expenses Despite Lack Of Bad Faith In Eleven Month Discovery Delay

Tracinda Corp. v. Daimlerchrysler AG, No. Civ.A. 00-993-JJF, 2005 WL 927187 (D.Del. Apr. 20, 2005). This opinion relates to plaintiff's motion for sanctions for defendants' late production of documents in discovery. The matter was referred to a Special Master for a hearing in 2003. The Special Master found for the plaintiff who then filed the present motion for relief including: (1) witness Valade be barred from testifying about matters included in the delayed production unless his responses were required by the plaintiff's or the Court's questions; (2) that two witnesses be recalled to testify at trial; and (3) that the defendants be ordered to pay plaintiff's fees and costs incurred towards resolving the matters connected with the late production of the Valade documents. The Court denied plaintiff's request to bar Valade's testimony and permitted him to testify on all matters. It dismissed the second relief as moot because the parties had agreed to permit recall of the two witnesses. The Court however granted plaintiff's motion and awarded all costs and fees associated with the delayed production of the Valade notes. The plaintiff had contended that it was entitled to attorney fees and costs pursuant to Fed.R.Civ.P. 16(f), 37(b)(2) and 37(c )(1) because defendant had failed to comply and turn over the requested records in discovery in accordance with the September 25, 2002 Special Master-issued Order and the Court's Rule 16 Scheduling Order. The plaintiff alleged that: (1) the misconduct was consistent with a pattern of similar dilatory behavior exhibited by defendants throughout the litigation; (2) that it had suffered a "high degree of prejudice;" (3) such conduct obviated the need to demonstrate willful or bad faith conduct on part of defendants to request sanctions against them; (4) the delay in production deprived the plaintiff of its use of the Valade notes to develop the plaintiff's case theory; (5) denied the plaintiff of its use of the notes to decide on whom to depose and the order of depositions; and (6) that the delay in production substantively affected plaintiff's deposition and trial testimony. The plaintiff further alleged that the delay had negatively impacted their motion practice and their summary judgment responses. The defendants countered that the Special Master had ruled that the defendants had not engineered the delay "intentionally or in bad faith." Therefore, they claimed, they were not liable for sanctions. The Court examined the law of sanctions pertaining to Rule 16 Scheduling Order violations, including precedent from other circuits and held that the sanctions served to compensate and punish the errant party, even if there was no intent or bad faith driving the violations. Further, the Court held that they were warranted because the delay of eleven months in producing the documents and violation of the Scheduling Order negatively impacted upon judicial resources because it caused the rescheduling of the trial "on the eve of the last day of trial." Additionally, the Court observed that plaintiff was prejudiced by the delay and the efforts to ameliorate the prejudice caused were not completely satisfactory. Accordingly, the Court awarded plaintiff the entire attorney fees and costs requested. It is to be noted that plaintiff claimed only about half the fees and all actual expenses incurred to avoid further litigation that could have ensued concerning the reasonableness of its fee and expenses claims. Authored by: Raj Srivatsan 302.888.6831 rsrivatsan@morrisjames.com Share