Third District Finds Substantial Justification for Sanctioned Parties’ Position, Many of Which Involved Attorney-Client Privilege Concerns.
Although involving a convoluted set of facts for which we will only give you the “Reader’s Digest” version,
Truckee Carson Irrig. Dist. v. Sierra Pacific Power Co., Case No. C061004 (3d Dist. Nov. 9, 2010) (unpublished) does reinforce that appellate courts–even under the abuse of discretion standard–will reverse discovery sanctions when they feel they were unfair or there was “substantial justification” for the sanctioned parties’ positions.
There, around $52,600 in total discovery sanctions were imposed on utility and water companies for not producing certain documents, although many were claimed as attorney-client privileged even after an asset sale resulted in a transfer of documents from one company to another. Beyond that, the rulings and recommendations of the trial court and discovery referee were incongruous in certain material respects. The upshot was that the appellate court could not sustain the discovery sanctions, even under the deferential abuse of discretion standard, given the convoluted state of the discovery proceeding and given the overall reasonableness of appellants’ positions throughout. Sanctions reversed.