For Discovery Violations, Court Indicates Likelihood of Finding Agency Relationship Existed as a Matter of Law

Maggette v. BL Dev. Corp., 2010 WL 2010816 (N.D. Miss. May 17, 2010)

For defendant’s and counsels’ discovery violations discovered with the assistance of a special master, including failing to adequately search for responsive material and misrepresenting search efforts to the court, the court indicated a likelihood that it would find as a matter of law that an agency relationship existed between defendant and another entity implicated in the underlying accident claims.  Accordingly, a hearing was set to address the possible sanctions as well as the implications of counsels’ actions for their involvement with the case.

Plaintiffs sued defendant for negligence following a tragic bus accident in which a bus operated by the Walters Bus Company (“Walters”) overturned while carrying passengers to the Grand Casino Tunica.  A “central question” in the case was whether defendant BL, owner of the Grand Casino Tunica, was vicariously liable for any negligence committed by Walters.

Discovery was contentious and a special master was appointed.  As a result of the special master’s reports and the discovery orders issued by the Magistrate Judge, the court, upon its own motion, took up the question of appropriate consequences for defendant’s discovery violations.  While the details are many and varied, the court concluded that defendant’s efforts to locate materials responsive to plaintiffs’ requests were vastly insufficient and that, as reported by the special master, defendant’s descriptions of search efforts were “clearly calculated to give the appearance of diligence and compliance” but proved “absurd upon closer scrutiny.”  This determination was further supported by the reports of the special master, including his account of “discovering” a “large trove” of responsive materials previously asserted to have been lost in Hurricane Katrina in a warehouse owned by the defendant.  Moreover, the special master described many instances where data previously reported as lost or destroyed was, in fact, located exactly where it might be expected to be and simply was not produced.

The special master also reported egregious behavior on the part of counsel, including one attorney’s adamant representations that particular documents were not in his possession, despite evidence of his receipt of such documents in email, and another who claimed to have searched for responsive material in “every conceivable database” – an assertion later proven false as evidenced by the discovery of responsive data “at the ordinary and customary locations where they would be expected to be found”.

The court thereafter expressed its lack of certainty that all responsive materials had been produced and, noting defendant’s and counsels’ misbehavior, questioned “what other evidence might have existed…which has been effectively concealed?” and why the court should presume that damaging documents had not been removed from the locations discovered by the special master.

Taking up the issue of appropriate sanctions, the court acknowledged that some Fifth Circuit authority suggests that dispositive sanctions are warranted only upon a showing of bad faith and that the missing evidence was relevant and probative.  However, the court went on to state that the “issue of primary concern in this case is not the ‘mere’ spoliation of evidence but rather the repeated flouting of discovery orders in such a manner as to call into question the integrity of this court’s order and to also raise questions regarding exactly what, if anything, BL might be attempting to hide in this case.”

Following further discussion of the nature of the issue before it, the court noted that defendant had been warned of the danger of severe sanctions by the Magistrate Judge during previous discovery conflict and that despite such warning, defendant had “doubled-down on its deception”.  Accordingly, the court acknowledged that it appeared to “have no real choice but to find that an agency relationship exists as a matter of law between BL and Walters.”  The irony of such a sanction, the court noted, was that it may to BL’s advantage where the alternative, an adverse inference instruction, may have put the jury in a “punitive mindset” when it considered underlying liability.  Recognizing that “the responsibility for punishing BL for its discovery violations lies with the court, rather than the jury”, though, the court indicated it saw “no reason why the jury should even be told of BL’s discovery violations, unless the violations are shown to impact the liability and damages issues before it.”

Wishing to provide the parties an opportunity to “argue the issues raised” in the present order, the court set a hearing for June 30th at which the primary topics for discussion would be:  “1) the proper handling of the vicarious liability issue and pretrial motions relating to the same; and 2) the conduct of BL counsel in this case.. and the implications of the same for them in this case.”  The court also noted that the question of whether to adjust previously imposed monetary sanctions in light of the most recent revelations would remain the determination of the Magistrate Judge.