Maynard, Harry L. v. Nygren, Keith , 332 F.3d 462 ( 2003 )

In the
United States Court of Appeals
For the Seventh Circuit
____________
Nos. 02-1733, 02-1810 and 02-3477
HARRY L. MAYNARD, DENNIS R. FAVARO, PATRICIA L. JOCHUM
and FAVARO, BUZEK & GORMAN, LTD.
Plaintiffs-Appellants/Cross-Appellees,
v.
KEITH NYGREN, in his official capacity as
Sheriff of McHenry County, Illinois,
Defendant-Appellee/Cross-Appellant.
____________
Appeal from the United States District Court
for the Northern District of Illinois, Western Division.
No. 98 CV 50193—Philip G. Reinhard, Judge.
____________
ARGUED JANUARY 23, 2003—DECIDED JUNE 10, 2003
____________
Before BAUER, CUDAHY and COFFEY, Circuit Judges.
CUDAHY, Circuit Judge. Corrections officer Harry
Maynard sued his former employer, the McHenry County
Sheriff, alleging a violation of the Americans with Disabili-
ties Act (ADA), 42 U.S.C. §§ 12101-213. On February 14,
2002, the district court, finding discovery violations, Fed. R.
Civ. P. 37(c), granted the defendant Sheriff’s motion to dis-
miss and assessed monetary sanctions against Maynard
and his counsel, attorneys Dennis Favaro and Patricia
2 Nos. 02-1733, 02-1810 and 02-3477
Jochum and the firm of Favaro, Buzek & Groman, Ltd.
Maynard and his counsel appeal on the ground that the
trial court failed make a finding of a discovery violation suf-
ficient to sustain the sanction of dismissal. The appellants
also claim that part of the monetary sanctions were im-
proper and that there was insufficient cause to sanction
counsel. The appellants ask us to vacate the district court
order and remand to a different district judge under 28
U.S.C. § 455(a). The Sheriff cross-appeals, requesting addi-
tional attorney’s fees from the appellants. We affirm in part
and reverse in part and remand for reconsideration.
I.
Harry Maynard began working as a corrections officer at
the McHenry County Sheriff’s Department in 1992. In
February 1996, Maynard was hospitalized and diagnosed
with multiple sclerosis. Following his hospital stay, he pre-
sented his supervisor, Chief Maire, with a report (dated
March 4) from his doctor, David Martinez, allowing him to
return to work. However, Maynard was told by Maire that
he would not be allowed to return to work because the re-
port stated that he could have recurrent episodes of weak-
ness and unsteadiness. Maynard met with Dr. Martinez to
discuss Maynard’s displeasure with the content of the
March 4th report, and they arranged for Maynard to meet
with a neurologist. On March 25, Benjamin Nager, a neu-
rologist, wrote to Dr. Martinez confirming that Maynard
should not be released back to work without restrictions.
Based on this letter, Dr. Martinez wrote a second report on
April 4, stating that Maynard was not then able to perform
the functions of his job, but that he might become able
within ninety days. Where this April 4th report ended up,
and did not end up, lies at the root of Maynard’s troubles;
what is known is that the Sheriff was not given a copy of
this report until this lawsuit was well underway.
Nos. 02-1733, 02-1810 and 02-3477 3
The Sheriff’s lawyer wrote Maynard in November 1996 to
advise him that, as an alternative to releasing his medical
records (something he was not legally obligated to do),
Maynard could submit himself to an examination by an
Independent Medical Examiner in order to determine his
ability to return to work. In January 1997, Maynard met
with Dr. Pradip Sethi, who confirmed that there was no
guarantee that Maynard would be symptom-free or that he
could perform all his job functions at all times. Based on Dr.
Sethi’s reports, the Sheriff terminated Maynard. This law-
suit alleging refusal to provide a reasonable accommodation
under the ADA followed.
The Complaint and the Amended Complaint in this action
failed to mention the existence of the second, April 4th, re-
port of Dr. Martinez. Nor did the April 4th report appear
during discovery, although Maynard’s counsel forwarded to
the Sheriff what was supposed to be all of Maynard’s
medical records from Dr. Martinez’s file. The Sheriff finally
learned of the April 4th report and received a copy of it from
Dr. Martinez in January 2002, shortly before the trial date.
The Sheriff then filed an emergency motion seeking invol-
untary dismissal and sanctions under Fed. R. Civ. P.
37(c)(1) for Maynard’s failure to disclose the document. The
trial judge held an evidentiary hearing to explore exactly
what had happened to the April 4th report.
At the hearing, Dr. Martinez testified that he had pre-
pared the April 4th report at Maynard’s urgent request.
Jeanne Gannon, Dr. Martinez’s assistant, testified that she
had typed the report and left it hanging in a public area of
the office to be picked up. While she did not witness
Maynard picking up the report, she concluded that the re-
port had been picked up since the original was not returned
to Maynard’s medical file. On the other hand, there was no
note in Maynard’s chart showing that he had requested
such a report (as there ordinarily would be), and Maynard
denied that he had requested or received the report.
4 Nos. 02-1733, 02-1810 and 02-3477
Cynthia Kroncke, Dr. Martinez’s former medical assistant,
also testified. She said that she had copied the entire
Maynard file and had sent copies to Maynard’s counsel in
February 1999. In view of Dr. Martinez’s testimony that a
copy of the April 4th report was in the file in 2002, it ap-
peared that Maynard’s counsel had received the April 4th
report during discovery, but somehow had failed to forward
it to the Sheriff’s counsel.
Judge Reinhard found that Maynard’s denials were not
credible, and that he had intentionally withheld the April
4th report. Judge Reinhard also noted that Maynard had
lied in his Amended Complaint and in an affidavit by
stating that Dr. Martinez would not change the original,
March 4th report. Am. Compl. at 4, para. 18 (“Maynard
tried unsuccessfully to obtain a different release, but the
physician would not change the wording from the original
release.”); Maynard Aff., Pl.’s Resp. to Def.’s Emergency
Mot. for Involuntary Dismissal Ex. G, at 1 (“I had never
seen Dr. Martinez’s April 4, 1996 letter until January 25,
2002 when it was provided to me by my counsel.”). The
judge dismissed Maynard’s suit, awarded the Sheriff at-
torney’s fees and costs incurred in bringing the emergency
motion and assessed a fine of $3500 payable to the court for
the time spent on the motion. Judge Reinhard also found
that the April 4th report had been provided to Maynard’s
counsel, but he did not believe that counsel had deliberately
withheld the letter, positing instead that the letter was
either lost in the office or removed from the office, possibly
by Maynard. Nonetheless, the monetary sanctions were
divided evenly between Maynard and his counsel because
the judge felt that the situation could have been avoided
had counsel been more careful with the discovery docu-
ments or more diligent in investigating their client’s testi-
mony.1
1
The order, in relevant part, stated:
(continued...)
Nos. 02-1733, 02-1810 and 02-3477 5
II.
Discovery sanctions are reviewed for abuse of discretion.
Nat’l Hockey League v. Metro. Hockey Club, 427 U.S. 639,
642 (1976); Johnson v. J.B. Hunt Transp., Inc., 280 F.3d
1125, 1130-31 (7th Cir. 2002). Under this standard, we
uphold any exercise of the district court’s discretion that
could be considered reasonable, even if we might have re-
solved the question differently. Johnson, 280 F.3d at 1130-
31. However, a district court by definition abuses its dis-
cretion when it makes an error of law, Koon v. United
States, 518 U.S. 81, 100 (1996), and, while factual findings
are generally reviewed only for clear error, findings which
are tainted by the application of an inapposite standard are
subject to fuller review, see Platinum Tech., Inc. v. Fed. Ins.
Co., 282 F.3d 927, 931 (7th Cir. 2002) (“In cases of mixed
questions of law and fact the standard is oftentimes clear
error (or abuse of discretion), though plenary review may be
used when certain factors indicate it is warranted or
needed.”); cf. Thomas v. Gen. Motors Acceptance Corp., 288
F.3d 305, 307 (7th Cir. 2002) (noting that clear error
generally governs when the question is whether a given
rule had been applied properly to accepted facts).
We must first clarify the law of this circuit on the weight
of evidence necessary to support dismissal as a discovery
sanction. Then, we will consider the appropriateness of the
other sanctions ordered by the district judge.
(...continued)
The court enters the following sanctions against plaintiff/his
counsel: (1) This case is dismissed with prejudice for discov-
ery violation; (2) Defendant is awarded reasonable attorney
fees, expenses, and costs incurred in bringing this emergency
motion (½ to be paid by the plaintiff and ½ to be paid by
plaintiff ’s counsel); and (3) an additional sanction of $3,500 to
be paid to the Clerk of Court for the court’s time incurred on
this emergency motion (½ to be paid by plaintiff and ½ to be
paid by plaintiff ’s counsel).
6 Nos. 02-1733, 02-1810 and 02-3477
A.
Of all possible sanctions, dismissal is considered “draco-
nian,” and we must be “vigilant” in our review. Marracco v.
Gen. Motors Corp., 966 F.2d 220, 223-24 (7th Cir. 1992).
Because of its severity, we have circumscribed the range of
cases in which dismissal may be used as a sanction. Look-
ing at the case law, we find two different standards for
determining whether a case can properly be dismissed.
Some of our cases have held that actions can be dismissed
“when there is a clear record of delay or contumacious con-
duct, or when other less drastic sanctions have proven una-
vailing.” Williams v. Chicago Bd. of Educ., 155 F.3d 853,
857 (7th Cir. 1998); Schilling v. Walworth Sheriff Park and
Planning Comm’n, 805 F.2d 272, 278 (7th Cir. 1986). This
appears to be the standard used when cases are dismissed
for want of prosecution or failure to comply with orders of
the court, Fed. R. Civ. P. 41(b). A slightly different require-
ment—a finding of willfulness, bad faith or fault—comes
into play when dismissals are used specifically as a discov-
ery sanction under Fed. R. Civ. P. 37.2 In re Golant, 239
F.3d 931, 936 (7th Cir. 2001); Langley v. Union Elec. Co.,
107 F.3d 510, 514 (7th Cir. 1997); cf. In re Rimsat, Ltd., 212
F.3d 1039, 1046-47 (7th Cir. 2000) (requiring a finding of
bad faith when a district court dismisses a case under the
inherent powers of the court). That is, even without “a clear
record of delay, contumacious conduct or prior failed sanc-
2
In Ladien v. Astrachan, 128 F.3d 1051, 1056 n.5 (7th Cir. 1997),
we noted that the overlap between Rules 41(b) and 37(b)—both
cover failures to comply with orders of the court—and the slightly
different requirements for justifying dismissal under each rule
pose a conflict. While this question is not before us today—we
have a Rule 37(c) violation only—we assume that Rule 37(b), as
the more specific provision, would apply when discovery orders
are at issue. But see Lucien v. Breweur, 9 F.3d 26, 29 (7th Cir.
1993) (“The criteria for sanctions under Rules 16(f), 37(b), and
41(b) are the same.”).
Nos. 02-1733, 02-1810 and 02-3477 7
tions,” a court can apply the sanction of dismissal for Rule
37 violations with a finding of willfulness, bad faith or fault,
as long as it first considers and explains why lesser sanc-
tions would be inappropriate. See Long v. Steepro, 213 F.3d
983, 986 (7th Cir. 2000); Schilling, 805 F.2d at 278 (“When
a clear record of delay, contumacious conduct, or prior failed
sanctions does not exist, the exercise of judicial discretion
requires that the district court consider and explain the
inappropriateness of lesser sanctions.”); Shepherd v. Am.
Broad. Cos., 62 F.3d 1469, 1478-79 (D.C. Cir. 1995) (requir-
ing that courts provide a “specific, reasoned explanation for
rejecting lesser sanctions” and collecting cases requiring
same).
We have not yet answered the question of what burden of
proof is necessary to sustain a Rule 37 dismissal based on
willfulness, bad faith or fault. For Rule 41(b) dismissals, the
record of delay, contumacious conduct or prior failed sanc-
tions must be “clear.” Williams, 155 F.3d at 857. Is there a
similar requirement for the evidence supporting a finding
of willfulness, bad faith or fault? The Sheriff argues that a
preponderance of the evidence suffices, while Maynard ar-
gues that there must be clear and convincing evidence be-
fore a case is dismissed for a discovery violation. See Danis
v. USN Communications, Inc., No. 98 C 7482, 2000 U.S.
Dist. LEXIS 16900, at *103 (N.D. Ill. Oct. 23, 2000) (follow-
ing Shepherd, 62 F.3d at 1472, 1477, and applying a clear
and convincing evidence standard). We agree with the ap-
pellants that, considering the severe and punitive nature of
dismissal as a discovery sanction, a court must have clear
and convincing evidence of willfulness, bad faith or fault be-
fore dismissing a case.3 See Shepherd, 62 F.3d at 1476-77
3
This holding brings the evidentiary standard applicable here
into line with the standard applicable to justify dismissal for de-
lay, contumacious conduct or failed sanctions. In all circum-
(continued...)
8 Nos. 02-1733, 02-1810 and 02-3477
(comparing dismissal as a discovery sanction to civil fraud
and civil contempt); cf. Aoud v. Mobil Oil Corp., 892 F.2d
1115, 1118 (1st Cir. 1989) (holding that fraud on the court
must be demonstrated “clearly and convincingly”); Pfizer,
Inc. v. Int’l Rectifier Corp., 538 F.2d 180, 195 (8th Cir. 1976)
(a finding of fraud on the court “must be supported by clear,
unequivocal and convincing evidence”); Scholastic, Inc. v.
Stouffer, 221 F. Supp. 2d 425, 439 (S.D.N.Y. 2000) (applying
the clear and convincing evidence standard to dismissal for
a fraud on the court).
Working without the benefit of a clear pronouncement
from this court on the appropriate burden of proof, the
district judge did not specify which standard he was ap-
plying. Cf. Danis, 2000 U.S. Dist. LEXIS 16900, at *103
(applying the clear and convincing evidence standard in the
absence of contrary guidance). We are left to deduce from
the record which standard was applied. We agree with the
appellants that the district court may have applied a pre-
ponderance standard. This belief is grounded principally on
the portions of the ruling which deal with Maynard’s coun-
sel’s culpability. On two occasions, the district judge noted
that it was “more likely” than not that the April 4th report
was sent to counsel. Tr. of Proceedings (Tr.) at 148-49 (Feb.
14, 2002). We also note the circumstantial nature of much
of the evidence, which makes this perhaps a closer case
than some. While we cannot conclude with certainty that a
preponderance, rather than a clear and convincing, stan-
dard was applied, the absence of any assurance that the
higher burden of proof was considered advises us to assume
for the purpose of this appeal that the lower threshold was
used.
The Sheriff argues now that, regardless of the standard
used below, the evidence is in fact clear and convincing, and
(...continued)
stances, to justify dismissal as a sanction, there must be clear and
convincing evidence.
Nos. 02-1733, 02-1810 and 02-3477 9
that we should affirm the dismissal. And the evidence does
appear to support the Sheriff’s positions and the district
court’s conclusions quite strongly. The court reasonably re-
lied on the persuasive testimony of Dr. Martinez and his
staff in finding that Maynard had acted in bad faith in
concealing evidence during pleadings and discovery. How-
ever, especially because factual determinations such as
these are the special province of the trial judge, we must
defer to the trial judge and allow him to reconsider the evi-
dence in light of the standard announced here.4 In remand-
ing the case, we do not find appropriate the recusal of Judge
Reinhard, and are confident that he will approach this
determination without preconception. Nothing in the record
persuades us otherwise. See Grove Fresh Distribs., Inc. v.
John Labott, Ltd., 299 F.3d 635, 640 (7th Cir. 2002) (hold-
ing that bias must be proven by compelling evidence of
“deep-seated favoritism or antagonism as would make fair
4
As appellants’ counsel acknowledged at oral argument, a fur-
ther hearing is probably unnecessary. However, two points may
be worth noting. As noted above, in cases not involving a clear
record of delay, contumacious conduct or failed prior sanctions,
district courts must explain why sanctions lesser than dismissal
would not suffice. The appellants complain that the district court
did not satisfy this requirement adequately. While we recognize
that the district court did consider some lesser sanctions, see Tr.
at 146, it would be helpful if the judge discussed in greater detail
specific potential sanctions and their inadequacy. In particular,
Rule 37(b)(2)(A) and (B) provide sanctions that the district court
may consider. The appellants also express concern that the dis-
trict judge’s order was based on an erroneous finding of the
importance of the April 4th report. If indeed the legal significance
of the April 4th report is a principal basis for dismissing this case,
rather than imposing a lesser sanction, it may be worthwhile for
the district judge to elaborate on any effect earlier disclosure of
the document might have had on pretrial rulings. See Tr. at 142
(“[The report] could have impacted on my decision to. . . grant
summary judgment.”).
10 Nos. 02-1733, 02-1810 and 02-3477
judgment impossible” (citing Liteky v. United States, 510
U.S. 540 (1994))).
B.
Even if the district court upon reconsideration declines to
dismiss this lawsuit—and we make no recommendation on
the matter—there remain the other, non-dismissal sanc-
tions, which are generally permissible even without clear
and convincing evidence. The monetary sanctions imposed
by the district judge included both attorney’s fees to the
Sheriff and a $3500 fine for the court’s time. Half of these
amounts was to be paid by Maynard and half by Maynard’s
counsel. The appellants argue that the $3500 fine was an
abuse of discretion, as was any sanction against counsel.
As to the $3500 fine, the appellants provide no case law
that supports their argument. On the contrary, there is am-
ple case law validating the use of fines, especially where
they are “remedial” and correspond to some real cost (here,
the court’s time at $500 per hour). Classic Amenities, Inc. v.
Verbeke, No. 00 C 3326, 2001 U.S. Dist. LEXIS 7465, at *5-6
(N.D. Ill. June 4, 2001) (assessing a $5000 fine for a Rule 37
violation and collecting cases assessing court fines); cf.
United States v. Dowell, 257 F.3d 694, 699-700 (7th Cir.
2001) (approving a fine of approximately $2500, imposed in
a civil contempt order, based on the cost to the government
of a lawyer’s failure to appear at trial). While fines are not
specifically included in the non-exclusive list of sanctions in
Rule 37(b)(2), they are among the tools available to trial
courts to remedy the harms of discovery violations. Such a
fine was within the discretion of the district judge.
The second question demands more analysis. We see two
potential bases for upholding the district court’s sanction
against Maynard’s counsel: the Federal Rules of Civil
Procedure and the inherent powers of the court. Reading
Nos. 02-1733, 02-1810 and 02-3477 11
the transcript of the proceedings below, it is not clear on
which the district court was basing the sanctions; thus, we
consider whether the sanctions against Maynard’s counsel
would have been permissible under either authority.
We agree with the appellants that Insurance Benefit
Administrators v. Martin, 871 F.2d 1354, 1360 (7th Cir.
1989) (IBA), does not permit the imposition of Rule 37(c)
sanctions on attorneys. See also Apex Oil Co. v. Belcher Co.
of N.Y., 855 F.2d 1009, 1014 (2d Cir. 1988) (refusing to
extend Rule 37(c) sanctions to counsel); Fed. R. Civ. P. 37(c)
advisory committee’s note to 1970 amendment (Rule 37(c)
requires “that the party improperly refusing the admission
pay the expenses of the other side in making the necessary
proof at trial.”) (emphasis added); cf. Roadway Express, Inc.
v. Piper, 447 U.S. 752, 763-65 (1980) (noting that Rule 37(b)
explicitly allows sanctions against attorneys); Fed. R. Civ.
P. 37(b)(2) (“[T]he court shall require the party failing to
obey the order or the attorney advising that party or both to
pay the reasonable expenses.”) (emphasis added). In IBA,
we held that attorneys can be sanctioned for failure-to-dis-
close violations only under Rule 26(g)(3), which authorizes
sanctions against attorneys who certify discovery disclo-
sures in violation of the rules. In the case at hand, because
the court found that counsel had no knowledge that the dis-
covery response was inadequate, there is no ground for a
sanction under Rule 26(g), which applies only to knowing
violations of the rules. Any sanction against Maynard’s
counsel based on Rule 37(c) or 26(g) was improper.
The district judge’s finding of no willfulness also pre-
cludes any sanction against counsel under the inherent
powers of the court. While generally the inherent powers of
the court can extend beyond those powers granted in the
Federal Rules of Civil Procedure, Chambers v. NASCO, Inc.,
501 U.S. 32, 43 (1991) (specifying that the inherent powers
are not limited by the Federal Rules of Civil Procedure), the
assessment of fees against counsel under the inherent pow-
12 Nos. 02-1733, 02-1810 and 02-3477
ers of the court is permitted only when there is a finding of
willful disobedience or bad faith, Roadway Express, 447
U.S. at 755-56. See also United States v. Johnson, 327 F.3d
554 (7th Cir. 2003) (disallowing a punitive sanction under
the inherent powers of the court where there was no bad
faith). Here, however, the district judge found explicitly
that counsel did not willfully withhold the document—the
judge blamed the document’s disappearance on negligent
mishandling. There is no authority under the Rules or
under the inherent powers of the court to sanction attorneys
for mere negligence, and so sanctions must be reversed as
applied to Maynard’s counsel.
III.
The Sheriff cross-appeals, arguing that he should have
been awarded all his attorney’s fees, and not merely those
incurred in bringing the successful motion for dismissal.
The Sheriff argues that such full reimbursement is required
by the text of Rule 37. However, Rule 37 supports only the
reimbursement of fees resulting from the discovery viola-
tion. Fed. R. Civ. P. 37(c)(1) (allowing courts to require
“payment of reasonable expenses, including attorney’s fees,
caused by the failure”) (emphasis added). As long as the suit
as a whole was not frivolous, and we have no reason to be-
lieve that it was, the remaining attorney’s fees would have
been incurred even without the discovery violation; thus,
the causality requirement was not met. The Sheriff also ar-
gues that attorney’s fees are required under Rule 41, under
which a dismissal not otherwise grounded “operates as an
adjudication on the merits.” However, the American Rule is
generally that prevailing parties are not entitled to fees,
even where a full adjudication on the merits has taken
place. The Sheriff’s claim under the ADA, 42 U.S.C.
§ 12205, also fails since there was no finding that
Maynard’s claim was frivolous, unreasonable or without
Nos. 02-1733, 02-1810 and 02-3477 13
foundation. See Christiansburg Garment Co. v. EEOC, 434
U.S. 412, 421-22 (1978). None of the bases for cross-appeal
are therefore valid.
IV.
For the foregoing reasons, the judgment of the district
court is REVERSED in part and AFFIRMED in part.
A true Copy:
Teste:
________________________________
Clerk of the United States Court of
Appeals for the Seventh Circuit
USCA-02-C-0072—6-10-03