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United States Freight Co. v. Penn Central Transportation Co.

decided*fn*: June 14, 1983.

UNITED STATES FREIGHT COMPANY, AS SUCCESSOR IN INTEREST OF INTERNATIONAL FORWARDING CO., APPELLEE,
v.
PENN CENTRAL TRANSPORTATION CO., ET AL., APPELLANTS



Appeal from a judgment of the United States District Court for the Southern District of New York, Charles S. Haight, Judge, striking the defendants' answer and entering a default judgment, as a sanction under Fed. R. Civ. P. 37(b)(2)(C) for failure to comply with a discovery order. Affirmed.

Oakes and Meskill, Circuit Judges, and Hill, District Judge.*fn**

Author: Per Curiam

Penn Central appeals from a judgment of the United States District Court for the Southern District of New York, Charles S. Haight, Judge, accepting Magistrate Raby's report and recommendation, striking defendants' answer and entering a default judgment of $10,000 for lost or damaged shipments. The judgment represents a sanction under Fed. R. Civ. P. 37(b)(2)(C) for failure to comply with an order for discovery.

United States Freight Co. filed an action in New York state court claiming $62,940.62 damages; defendants removed to federal court in February of 1975, and sought three extensions of time before answering the complaint. After four pretrial conferences, and on the belief that the parties would complete settlement negotiations, the court ordered the action discontinued on December 9, 1977. No settlement followed. Magistrate Raby conducted five more conferences. Plaintiffs agreed to a settlement of $10,000 at the second of these conferences, and defendants' counsel agreed to recommend that figure, but defendants would not give authority to their attorney to settle. Thereafter, on November 3, 1982, Judge Haight granted United States Freight Co.'s motion to vacate the prior dismissal and restore this case to the active calendar. Magistrate Raby fixed the discovery timetable by order on November 17, 1982. It is the sanction imposed on Penn Central for failure to comply with this order that is the subject of the present appeal.

Standing alone, a single pretrial violation, such as this party's failure to respond to a document request by the date ordered, would not ordinarily result in an imposition of a sanction of such finality as striking defendants' answer and entering judgment by default. Link v. Wabash Railroad, 370 U.S. 626, 634, 8 L. Ed. 2d 734, 82 S. Ct. 1386 (1962) (involuntary dismissal under Fed. R. Civ. P. 41(b)). In opposing the motion for sanctions, Penn Central argues that its "technical failure" to comply with the discovery order was inadvertent and due to staff absences during year's end holidays. Penn Central's sole argument on appeal is abuse of discretion on the theory that a lesser sanction should have been imposed first. However, Penn Central ignores the magistrate's stated rationale for the sanction -- the "continuing saga of dilatory conduct on the part of defendants with respect to this litigation" -- and the established principle that courts act within their discretionary powers when they impose sanctions for impeding or extending court proceedings. See, e.g., Roadway Express, Inc. v. Piper, 447 U.S. 752, 763-64, 65 L. Ed. 2d 488, 100 S. Ct. 2455 (1980); Penthouse International, Ltd. v. Playboy Enterprises, Inc., 663 F.2d 371, 386 (2d Cir. 1981). This court will not reverse a trial court's Rule 37 final order in a case of this "vintage," to use the trial court's word, unless on review we find an abuse of discretion. National Hockey League v. Metropolitan Hockey Club, Inc., 427 U.S. 639, 642, 49 L. Ed. 2d 747, 96 S. Ct. 2778 (1976) (per curiam).

General deterrence, rather than mere remediation of the particular parties' conduct, is a goal under Rule 37; unconditional impositions of sanctions are necessary to deter "other parties to other lawsuits" from flouting "other discovery orders of other district courts." National Hockey League v. Metropolitan Hockey Club, Inc., 427 U.S. at 643; Paine, Webber, Jackson & Curtis, Inc. v. Inmobiliaria Melia de Puerto Rico, Inc., 543 F.2d 3, 6 (2d Cir. 1976), cert. denied, 430 U.S. 907, 51 L. Ed. 2d 583, 97 S. Ct. 1178 (1977). Further, the 1980 amendments to Fed. R. Civ. P. 37, and the presently proposed amendments to the Rules, emphasize the court's power to sanction for abuse of pretrial process. Where, as here, that expressly permitted sanction was imposed for failure to comply with a discovery order of which the party had proper notice, and only after an opportunity to argue its case against the proposed sanction, the court has both protected Penn Central's procedural rights and acted within the proper scope of its discretion.

Judgment ...


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