Bradley Englebrick v. Worthington Industries , 620 F. App'x 564 ( 2015 )

FILED
NOT FOR PUBLICATION JUL 06 2015
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
BRADLEY ENGLEBRICK and No. 13-56067
ROXANNE HERNANDEZ,
D.C. No. 8:08-cv-01296-CJC-
Plaintiffs - Appellants, MLG
v.
MEMORANDUM*
WORTHINGTON INDUSTRIES, INC.,
Defendant - Appellee.
BRADLEY ENGLEBRICK and No. 13-56780
ROXANNE HERNANDEZ,
D.C. No. 8:08-cv-01296-CJC-
Plaintiffs - Appellees, MLG
v.
WORTHINGTON INDUSTRIES, INC.
and WORTHINGTON CYLINDERS
WISCONSIN, LLC,
Defendants - Appellants.
Appeal from the United States District Court
for the Central District of California
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
Cormac J. Carney, District Judge, Presiding
Argued and Submitted June 5, 2015
Pasadena, California
Before: KOZINSKI and CALLAHAN, Circuit Judges, and KORMAN,** Senior
District Judge.
Plaintiffs Bradley Englebrick and Roxanne Hernandez brought a products
liability action against the defendants Worthington Industries, Inc. and
Worthington Cylinders Wisconsin, LLC (together, “Worthington”), alleging
injuries arising out of an explosion involving a gas cylinder. Worthington’s
defense turned on whether Plaintiffs were under the influence of methamphetamine
(“meth”) and were using the cylinder to smoke meth at the time of the accident.
During discovery, Plaintiffs repeatedly lied under oath about their history of meth
usage and when they had last consumed meth before the accident. After four years
of litigation, they admitted this perjury while testifying during the second week of
trial. The district court granted Worthington’s motion to dismiss the complaint on
the basis of Plaintiffs’ perjury, but it denied Worthington’s motion for monetary
sanctions against Plaintiffs’ counsel. Plaintiffs appeal from the dismissal of the
action, and Worthington appeals from the district court’s denial of the motion for
**
The Honorable Edward R. Korman, Senior District Judge for the U.S.
District Court for the Eastern District of New York, sitting by designation.
2
monetary sanctions. We affirm the district court’s dismissal of the action but
remand for the district court to hold an evidentiary hearing on Worthington’s
motion for monetary sanctions.
I
The district court’s award of sanctions, including a dismissal pursuant to the
court’s inherent power and Federal Rule of Civil Procedure 37, is reviewed for
abuse of discretion. Anheuser-Busch, Inc. v. Natural Beverage Distribs., 69 F.3d
337, 348 (9th Cir. 1995); F.T.C. v. Alaska Land Leasing, Inc., 799 F.2d 507, 510
(9th Cir. 1986) (citing United States v. Associated Convalescent Enters., 766 F.2d
1342, 1345 (9th Cir. 1985)). A dismissal can only be disturbed where “the record
creates a definite and firm conviction that the court below committed a clear error
of judgment in the conclusion it reached upon a weighing of the relevant factors.”
Wyle v. R.J. Reynolds Indus., Inc., 709 F.2d 585, 589 (9th Cir. 1983) (internal
quotation marks omitted). “The district court’s factual findings may not be set
aside unless they are clearly erroneous. In particular, the district court’s credibility
determinations are entitled to special deference.” Anheuser-Busch, 69 F.3d at 348
(citations omitted).
3
A district court’s denial of a request to continue an evidentiary hearing is
also reviewed for abuse of discretion. See Lambright v. Ryan, 698 F.3d 808, 825-
26 (9th Cir. 2012); United States v. Ayers, 924 F.2d 1468, 1481 (9th Cir. 1991).
II
“Federal Rule of Civil Procedure 37 authorizes the district court, in its
discretion, to impose a wide range of sanctions,” and dismissal is authorized
“where the failure to comply is due to willfulness, bad faith, or fault of the party.”
Wyle, 709 F.2d at 589. Moreover, “courts have inherent power to dismiss an action
when a party has willfully deceived the court and engaged in conduct utterly
inconsistent with the orderly administration of justice.” Id. We have affirmed
dismissal of a civil action under the court’s inherent power as an appropriate
sanction for falsifying a deposition. Combs v. Rockwell Int’l Corp., 927 F.2d 486,
488 (9th Cir. 1991). Here, the district court followed our opinion in Halaco
Engineering Co. v. Costle, 843 F.2d 376 (9th Cir. 1988) (as amended). In that
case, we held that in determining whether to exercise its inherent power to dismiss:
A district court must determine (1) the existence of certain
extraordinary circumstances, (2) the presence of willfulness, bad faith,
or fault by the offending party, (3) the efficacy of lesser sanctions, (4)
the relationship or nexus between the misconduct drawing the
dismissal sanction and the matters in controversy in the case, and
finally, as optional considerations where appropriate, (5) the prejudice
4
to the party victim of the misconduct, and (6) the government interests
at stake.
Id. at 380.
We agree with the district court that consideration of these factors fully
supports the dismissal of Plaintiffs’ claims. The record endorses the trial court’s
determination that Plaintiffs had repeatedly lied under oath during the pretrial
proceedings about a topic essential to Worthington’s defense, and that Plaintiffs’
deception made it “impossible for the Court to believe a word that Plaintiffs have
to say at trial about the fire or anything having to do with it.” These are indeed
extraordinary circumstances, and the Plaintiffs have demonstrated willfulness and
bad faith. No lesser sanctions would be adequate. Striking Plaintiffs’ testimony
entirely would only unburden them of their difficult cross-examination, and
holding that the cylinder was misused would not compensate Worthington for the
extensive resources it expended in order to disprove Plaintiffs’ false testimony.
Moreover, the nexus between the misconduct and the sanction is clear, as is the
harm to Worthington from Plaintiffs’ prevarication. Finally, although the district
court was not required to consider governmental interests, the court reasonably
concluded that “there is no public interest in allowing cases to proceed in which a
party’s misconduct has ‘infected all of the pretrial procedures and interfered
5
egregiously with the court’s administration of justice’” (quoting TeleVideo Sys.,
Inc. v. Heidenthal, 826 F.2d, 915, 917 (9th Cir. 1987)).
Plaintiffs have failed to show that the district court abused its discretion in
dismissing their complaint as a sanction for their repeated lies under oath during
the pretrial proceedings about a topic essential to Worthington’s defense.
III
A district court retains jurisdiction to consider motions for sanctions,
including attorneys’ fees, even after the entry of a judgment on the merits. See
Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 395 (1990). Here, Worthington
pressed its request for monetary sanctions both before and after the district court
entered its order dismissing the action.
Attorneys practicing before the district court must comply with the rules of
professional conduct and ethical violations may serve as a basis for imposing
sanctions. Molski v. Evergreen Dynasty Corp., 500 F.3d 1047, 1063 (9th Cir.
2007). A court has a “duty to examine the charge of unethical behavior and
impose the necessary sanctions.” Erickson v. Newmar Corp., 87 F.3d 298, 303
(9th Cir. 1996). In Gas-A-Tron of Arizona v. Union Oil Co. of California, we
endorsed the Third Circuit’s statement in Richardson v. Hamilton International
Corp., 469 F.2d 1382, 1385 (3d Cir. 1972), that:
6
Whenever an allegation is made that an attorney has violated his
moral and ethical responsibility, an important question of professional
ethics is raised. It is the duty of the district court to examine the
charge, since it is that court which is authorized to supervise the
conduct of the members of its bar. The courts, as well as the bar, have
a responsibility to maintain public confidence in the legal profession.
534 F.2d 1322, 1324 (9th Cir. 1976) (per curiam) (as modified). Courts have an
“arsenal of sanctions” for dealing with unethical conduct by attorneys, including
monetary sanctions. Erickson, 87 F.3d at 303. However, any “sanction imposed
must be tailored to curtail the attorney’s particular misconduct.” Molski, 500 F.3d
at 1063.
In this case, the district judge stated during the original evidentiary hearing
that “what counsel for Mr. Englebrick and Ms. Hernandez knew [was] relevant” to
Worthington’s sanctions request. The judge also acknowledged that, in order to
rule on the sanctions motion, he would “need to hear what [Plaintiffs’] counsel
knew and when.” However, the district judge never reopened the evidentiary to
allow Worthington to question Plaintiffs’ counsel on these topics. Without further
inquiry, the district judge could not have known when Plaintiffs’ counsel learned
that Plaintiffs were lying under oath, what actions, if any, counsel then took, and
what further sanctions, if any, are appropriate. On this case’s unique record, it was
an abuse of discretion for the district court not to provide Worthington with the
7
opportunity to make its case through an evidentiary hearing. Accordingly, we
vacate the district court’s denial of Worthington’s motion for monetary sanctions
and remand the case to the district court with instructions to reopen the evidentiary
hearing.
The district court’s dismissal of Plaintiffs’ complaint as a sanction for their
repeated lies under oath during the pretrial proceedings is AFFIRMED, the district
court’s denial of Worthington’s motion for monetary sanctions is VACATED, and
the matter is REMANDED to the district court to allow Worthington an
evidentiary hearing on its motion. Costs are awarded to Worthington.
8