## Facts

- Cine Forty-Second Street Theatre Corp. owned a Times Square movie theater and sued multiple film distributors and related theater entities for antitrust violations, alleging a conspiracy to deny it first-run films.
- Defendants served consolidated interrogatories seeking, among other things, Cine’s damages theory and calculations.
- Cine repeatedly served late and deficient interrogatory answers, failed to provide a workable method to calculate most claimed damages, and delayed retaining a damages expert.
- A magistrate judge issued multiple orders compelling compliance, imposed a $500 fine, and warned that continued disobedience could result in dismissal-type sanctions.
- Cine continued its pattern of noncompliance despite being able to comply, prompting the magistrate to recommend preclusion of damages evidence, which would effectively terminate Cine’s damages claim.
- The district court found Cine “grossly negligent” but declined to impose the recommended preclusion sanction because it did not find “willfulness,” instead imposing a lesser monetary sanction and certifying an interlocutory appeal.

## Issues

1. Whether Rule 37 permits a sanction tantamount to dismissal (such as preclusion of essential evidence) based on gross negligence in violating discovery orders, absent a finding of willfulness or bad faith.
2. What level of culpability is required before a district court may impose the severest Rule 37 sanctions for discovery noncompliance.

## Decision

- The Second Circuit held that gross negligence can justify the severest sanctions available under Rule 37, including preclusion or dismissal-type sanctions.
- The court rejected the view that a specific finding of subjective willfulness is a prerequisite to severe Rule 37 sanctions.
- The court concluded Cine’s sustained, court-ordered discovery failures warranted the magistrate’s recommended sanction of precluding damages evidence.

## Legal Principles

- Rule 37 sanctions are not limited to cases of subjective willfulness or bad faith; gross negligence may suffice when noncompliance is serious and persistent.
- Severe sanctions may be appropriate where a party, able to comply, repeatedly violates discovery orders after warnings and lesser measures prove ineffective.
- Litigants are generally accountable for their counsel’s discovery misconduct for sanction purposes, particularly where noncompliance threatens fair and orderly pretrial process.
- Although preclusion and dismissal-type sanctions are extreme and reserved for exceptional situations, they may be proportionate where the withheld discovery is central to a claim and delay has been prolonged.

## Conclusion

The Second Circuit held that a district court may impose severe Rule 37 sanctions, including preclusion tantamount to dismissal, for grossly negligent discovery noncompliance, and that Cine’s repeated failures to obey discovery orders justified precluding damages evidence.


Cine Forty-Second St. Theatre Corp. v. Allied Artists Pictures Corp., 602 F.2d 1062 (2d Cir. 1979)