$2.7 Million Sanctions Against Goodyear Reversed And Remanded, But Waiver Issue Might Sustain $2 Million Of Sanctions Award.
Stripping tube on mandrel before sending to cure, Goodyear Tire Factory, Akron, Ohio. c1928. Library of Congress.
The U.S. Supreme Court, in Goodyear Tire & Rubber Co. v. Haeger, No. 15-1406 (SCOTUS April 18, 2017), clarified the standard to be used by district judges in imposing “inherent power of the court to control judicial process” sanctions as far as setting an appropriate amount of sanctions, reversing a $2.7 million sanctions award in favor of plaintiff and against defendant Goodyear after a case was settled. Determining that both the district judge and Ninth Circuit used the wrong standard, SCOTUS—in a decision authored by Justice Kagan—articulated that a “but-for” test was appropriate, where the award must have a causal connection between the sanctioned litigant’s misbehavior and the legal fees by the opposing party seeking the sanction. The district judge did not use a “but-for” standard, and the Ninth Circuit erroneously used a temporal, rather than causal, limitation by sustaining a $2.7 million award for all legal fees incurred by plaintiff since the date of the misconduct. Interestingly enough, the district judge made a $2 million “contingent” award based on some causation analysis, but SCOTUS was still concerned that it was not quite right. However, Goodyear may have admitted that the $2 million award was causally related, setting up a waiver issue that SCOTUS observed “should be the initial order of business below” upon a remand.
Scotusblog analysis is available by clicking here.