## Facts

- A 2003 motorhome crash allegedly resulted from failure of a Goodyear G159 tire, causing serious injuries to Leroy, Donna, Barry, and Suzanne Haeger.
- The Haegers sued Goodyear in Arizona state court; the case was removed to the U.S. District Court for the District of Arizona.
- During discovery, the Haegers repeatedly sought Goodyear’s internal G159 testing data; Goodyear’s responses were found to be slow, incomplete, and misleading.
- The parties settled confidentially in 2010 before trial.
- More than a year later, the Haegers learned from another G159 case that Goodyear had withheld testing results and Goodyear conceded the nondisclosure despite requests for all testing data.
- The Haegers moved for sanctions based on alleged bad-faith discovery misconduct by Goodyear and its counsel.

## Issues

1. When a federal court uses its inherent authority to sanction bad-faith conduct by awarding attorney’s fees, must the award be limited to fees the opposing party would not have incurred but for the misconduct?
2. May a court, without procedures required for punitive sanctions, shift all attorney’s fees based on a finding that misconduct “permeated” the case?

## Decision

- The Supreme Court unanimously reversed the Ninth Circuit and remanded (Justice Gorsuch not participating).
- The Court held that inherent-power attorney’s-fee sanctions must be compensatory and limited to fees incurred solely because of the misconduct (a but-for standard).
- The district court’s award of approximately $2.7 million in fees and costs, covering all expenses after the first dishonest response, was not properly calibrated to but-for causation.
- The case was remanded for recalculation of fees limited to those the Haegers would not have incurred absent Goodyear’s bad-faith conduct.

## Legal Principles

- A federal court may sanction bad-faith litigation conduct under its inherent authority, but an attorney’s-fee award under that power is limited to compensating the harmed party for losses caused by the misconduct.
- Fee-shifting sanctions imposed under inherent power require but-for causation: the court must determine whether specific fees would have been incurred absent the sanctioned conduct.
- A sanction is compensatory only if calibrated to the damages caused by the bad-faith acts; amounts that go beyond compensation function as punishment.
- Punitive or quasi-criminal sanctions require additional procedural protections; absent those protections, an inherent-power fee award must remain strictly compensatory.
- Trial courts may use reasonable estimation to “do rough justice” in applying but-for causation, but may not award all fees based solely on generalized findings of pervasive misconduct without a causal accounting.

## Conclusion

The Court limited inherent-power attorney’s-fee sanctions to amounts that compensate for expenses directly caused by bad-faith misconduct, requiring a but-for causal connection between the misconduct and the fees awarded and barring punitive fee awards without heightened procedures.


Goodyear Tire & Rubber Co. v. Haeger, 581 U.S. 101 (2017)