In Goodyear Tire & Rubber Co. v. Haeger, 137 S. Ct. 1178 (2017) (No. 15-1406), plaintiffs brought a products liability action, alleging that defendant’s defective tires caused plaintiffs’ motorhome to flip over on the highway. During lengthy discovery, plaintiffs repeatedly requested that defendant produce all testing data related to the relevant tires, which defendant claimed to produce. The parties settled on the eve of trial. Thereafter, plaintiffs learned that defendant had withheld certain test results from its discovery production, and moved for sanctions. The district court found that defendant had knowingly concealed crucial test records and engaged in a years-long course of bad-faith behavior; the court awarded plaintiffs $2.7 million in attorneys’ fees, which the court calculated was the amount incurred since defendant made its first dishonest discovery response. The district court held that, because of the egregious nature of the misconduct, it did not need to find a causal link between those fees and the sanctionable conduct. The Ninth Circuit affirmed, but the Supreme Court reversed, holding that when a federal court exercises its inherent authority to sanction bad-faith conduct by ordering an award of fees, the award must be limited to the fees the innocent party incurred solely because of the misconduct, i.e., the fees that the party would not have incurred but for the bad faith. The Court ruled that attorneys’ fees sanctions must be compensatory, rather than punitive, when imposed pursuant to civil procedures, and a sanction is compensatory only if it is calibrated to the damages caused by the bad-faith acts on which it is based. Thus, a court must establish a causal link between the litigant’s misbehavior and the legal fees paid by the opposing party.
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