## Facts

- Carey and Danis worked as associates at a firm that served as lead counsel in much of Chrysler’s product-liability class action litigation.
- While at the firm, Carey and Danis worked on multiple Chrysler matters and participated in litigation tasks that exposed them to Chrysler’s confidential information, including strategy and settlement discussions.
- They had broad access to Chrysler-related files and electronic materials, including pleadings, research, internal memoranda, and communications with Chrysler’s in-house counsel.
- After leaving the firm and forming their own practice, Chrysler sued Carey, Danis, and their firm for breach of fiduciary duty, alleging they shared or used Chrysler’s confidential information to assist plaintiffs’ attorneys pursuing claims against Chrysler.
- During discovery in Chrysler’s fiduciary-duty action, the district court found a pattern of discovery noncompliance by defendants, described as repeated discovery abuses, including untimely production and inaccurate or misleading discovery responses.
- After four days of trial, based on the discovery misconduct, the district court struck defendants’ pleadings, entered judgment against them on liability, and submitted only damages to the jury.

## Issues

1. Whether the district court abused its discretion under Federal Rule of Civil Procedure 37 by striking defendants’ pleadings and entering judgment against them on liability as a discovery sanction.
2. Whether the discovery abuses sufficiently prejudiced Chrysler’s ability to prepare for trial to justify such a severe sanction.
3. Whether the sanction was disproportionate or violated due process requirements applicable to dispositive discovery sanctions.

## Decision

- The Eighth Circuit affirmed the district court’s judgment.
- The court held the district court did not abuse its discretion in striking pleadings and entering liability judgment as a sanction for repeated discovery abuses.
- The court accepted the district court’s findings that the misconduct was serious, willful, and prejudicial in its cumulative effect.
- The court rejected arguments that the district court’s prejudice findings were undermined by disputes about the importance of particular withheld items, focusing instead on the overall pattern of misconduct.

## Legal Principles

- Under Federal Rule of Civil Procedure 37, a district court may impose severe sanctions, including striking pleadings and entering judgment, when discovery violations are willful or in bad faith and cause substantial prejudice.
- Prejudice is assessed pragmatically, including whether discovery misconduct impaired the opponent’s ability to prepare, evaluate evidence, and make informed trial-strategy decisions.
- Discovery-sanction decisions are reviewed on appeal for abuse of discretion, and substantial deference is given to the trial court’s assessment of litigant conduct and case-management needs.
- A pattern of noncompliance can justify dispositive sanctions even if no single withheld item, considered alone, would necessarily change the outcome.

## Conclusion

The Eighth Circuit upheld dispositive Rule 37 sanctions after concluding that defendants engaged in repeated, willful discovery misconduct that prejudiced Chrysler, and that the district court acted within its broad discretion by striking pleadings, entering judgment on liability, and trying only damages to the jury.


Chrysler Corp. v. Carey, 186 F.3d 1016 (8th Cir. 1999)