Shumaker Manufacturing

A Legal & Industry Review

United States Supreme Court Limits Sanctions Against Tire Manufacturer in Goodyear Tire & Rubber Co. v. Haeger (April 18, 2017)

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In Goodyear Tire & Rubber Co. v. Haeger, plaintiffs asserted a products liability claim against Goodyear for a tire failure. The parties entered into a settlement agreement, after which plaintiffs discovered that Goodyear did not disclose internal testing reports that were responsive to discovery requests prior to the settlement. Plaintiffs moved for sanctions against Goodyear, and the Federal District Court in Arizona entered a sanctions award of $2.7 million representing all legal fees and costs incurred by plaintiffs since Goodyear’s failure to disclose. The award was affirmed by the Ninth Circuit Court of Appeals. However, the United States Supreme Court reversed the judgment and remanded the case, finding that the lower courts failed to apply the correct legal standard, which requires that sanctions be compensatory, not punitive. The ruling clarifies and limits sanctions that can be imposed by failure of adequate discovery responses, but is also a reminder of litigants’ continuing duty to provide full and accurate discovery responses. Perhaps the plaintiffs sanctions motion could have been avoided by a well drafted settlement agreement releasing any post-settlement claims.

 

 

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