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Moore v. CITGO Refining and Chemicals Co., L.P.

United States Court of Appeals, Fifth Circuit

November 12, 2013

STEVE MOORE; RUBEN PENA; RONALD E. GANER; RUSSELL EDLIN; CIRIACO VILLARREAL, JR., et al., Plaintiffs-Appellants,
v.
CITGO REFINING AND CHEMICALS COMPANY, L.P., Defendant-Appellee. STEVE MOORE; RUBEN PENA; RONALD E. GANER; RUSSELL EDLIN; CIRIACO VILLARREAL, JR.; RUDY RAMIREZ; MICHAEL JOHN WEDGEL; ROBERT G. GARCIA; JERRY DAVILA; CRAIG SIGMOND CORLEY; ROLAND V. GUZMAN; RUDOLFO R. MARTINEZ; RONALD D. STUBBS; LUIS R. GALVAN, II; CHARLES JOHN BREIDENBACH; DAVID BELLOWS; DAVID D. RUIZ; DONALD HEDRICK; ROBERT SCOTT; WILLIAM F. WAGGONER, JR.; JAIME REQUENEZ; EDUARDO MARTINEZ, SR.; GREGORY G. SMITH; RICK G. SALINAS; DIANA G. REDDELL; CHESTER HARRISON, Plaintiffs-Appellees,
v.
CITGO REFINING AND CHEMICALS COMPANY, L.P., Defendant-Appellant.

Appeals from the United States District Court for the Southern District of Texas

Before SMITH, DENNIS, and HIGGINSON, Circuit Judges.

JERRY E. SMITH, Circuit Judge

Console supervisors at a refinery alleged that their employer, CITGO Refining and Chemicals Company, L.P. ("CITGO"), misclassified them as exempt from the overtime pay requirements of the Fair Labor Standards Act ("FLSA"), 29 U.S.C. §§ 201–219. In two separate discovery sanctions, the district court dismissed twenty-one of twenty-four plaintiffs.[1] After granting CITGO's motion to exclude testimony regarding damages by the three remaining plaintiffs, the court granted summary judgment for CITGO based on plaintiffs' inability to prove damages; the court, however, reduced CITGO's award of taxable costs. We affirm the summary judgment but reverse and render the award of costs.

I.

CITGO served plaintiffs with requests for discovery and interrogatories. After CITGO alleged that plaintiffs' responses were deficient, the district court entered its first discovery order, requiring plaintiffs to produce documents and respond to interrogatories. CITGO again complained of plaintiffs' continued non compliance, whereupon the court entered a second discovery order requiring plaintiffs to preserve documents, respond to specific interrogatories, and produce documents. The court scheduled an evidentiary hearing and warned that "[p]laintiffs who are found to have violated this Court's Order to preserve their notes and/or documents, will have their claims dismissed."

After two evidentiary hearings that included live testimony from eighteen plaintiffs, the court concluded that seventeen of them "had failed to participate in discovery, failed to properly supplement responses, and failed to preserve documents." Pursuant to Federal Rule of Civil Procedure 37(b)(2)(A)(v), the court dismissed the claims of all seventeen as a discovery sanction.[2]

CITGO moved for summary judgment on the merits, contending that the seven remaining plaintiffs were exempt from the overtime-pay requirements of the FLSA pursuant to the exemptions for administrative, executive, combination, and highly compensated employees; and that liability, if any, must be calculated pursuant to the fluctuating-workweek method and was subject to a two-year statute of limitations. The court did not rule on CITGO's summary-judgment motion before four additional plaintiffs were dismissed for further discovery violations.

As part of its second discovery order, the court instructed plaintiffs to "produce either: (1) the emails that are responsive to Interrogatory No. 16 and/or Request for Production No. 41; or (2) a list of all of their respective personal email addresses, along with the relevant account names and passwords ..... " Further, "[i]f any Plaintiff deletes any of his personal emails after the date of the entry of this Order, the Court will impose on that Plaintiff a monetary sanction of one hundred dollars ($100) for each deleted email."

Among the plaintiffs who elected to disclose their email accounts and passwords, three deleted emails notwithstanding the order, and a fourth made no effort to preserve the contents of his inbox. Following a further evidentiary hearing, the court gave the offending plaintiffs the option of "either: (1) dismissal of their claims against CITGO with prejudice; or (2) . . . monetary sanctions . . . . Plaintiffs elected to dismiss their claims against CITGO with prejudice."

Giving no reasons, the court denied CITGO's motion for summary judgment as to the three remaining plaintiffs. It then granted CITGO's motion to prevent those plaintiffs from testifying at trial about damages, because "after over a year of discovery, not one Plaintiff has yet to provide CITGO with any calculation or estimation of the damages he is seeking." See Fed. R. Civ. P. 37(b)-(2)(A)(ii). Plaintiffs, moreover, had failed timely to designate an expert on damages, and the court had denied their motion to designate out of time.

Because plaintiffs had no way of proving an essential element, CITGO's ensuing motion for summary judgment on damages was unopposed. The district court granted that motion, dismissed plaintiffs' claims with prejudice, and entered final judgment in favor of CITGO. Although CITGO submitted a bill of costs for more than $50, 000, [3] the court awarded only $5000, based in part on a finding of CITGO's "enormous wealth" and plaintiffs' "limited resources."

Both parties appeal. Plaintiffs contend that the district court erred by (1) entering discovery sanctions dismissing seventeen plaintiffs (the "January Sanction"); (2) entering discovery sanctions dismissing four additional plaintiffs (the "March Sanction"); and (3) dismissing the three remaining plaintiffs after preventing them from testifying about damages. CITGO (4) re-urges its motion on the merits as an alternative ground for summary judgment against the final three plaintiffs and (5) avers that the court erred by reducing its cost award.

II.

"A district court has broad discretion in all discovery matters, and such discretion will not be disturbed ordinarily unless there are unusual circumstances showing a clear abuse." Kelly v. Syria Shell Petroleum Dev. B.V., 213 F.3d 841, 855 (5th Cir. 2000) (internal quotation omitted). "The district court's underlying findings of fact are reviewed for clear error and its underlying conclusions of law reviewed de novo." Smith & Fuller, P.A. v. Cooper Tire & Rubber Co., 685 F.3d 486, 488 (5th Cir. 2012) (internal quotation marks omitted).

Because plaintiffs do not allege a legal error, i.e., it is undisputed that the district court applied the correct test; the only question is whether it clearly erred in its findings of fact. "Clear error review is especially rigorous when we review a lower court's assessment of trial testimony, because the trier of fact has seen and judged the witnesses." In re Eldercare Props., Ltd., 568 F.3d 506, 515 (5th Cir. 2009) (internal quotation marks omitted).

Rule 37(b)(A)(v) expressly contemplates dismissal, and the district court's discretion thereunder is broad. Bluitt v. Arco Chem., 777 F.2d 188, 191 (5th Cir. 1985). "The courts have consistently demonstrated their willingness to impose the ultimate sanction of dismissal or default." Gregory P. Joseph, Sanctions: The Federal Law of Litigation Abuse § 49(B)(4), at 729 (5th ed. 2013) (citation omitted). "[D]ismissal is a severe sanction that implicates due process." FDIC v. Conner, 20 F.3d 1376, 1380 (5th Cir. 1994). Rule 37 dismissal, however "must be available to the district court in appropriate cases, not merely to penalize those whose conduct may be deemed to warrant such a sanction, but to deter those who might be tempted to such conduct in the absence of such a deterrent." Nat'l Hockey League v. Metro. Hockey Club, Inc., 427 U.S. 639, 643 (1976) (per curiam).

"The question . . . is not . . . whether the Court of Appeals [ ] would as an original matter have dismissed the action; it is whether the District Court abused its discretion in so doing." Id. at 642. The Court's Rule 37 dismissal guidance is but a specific application of its general instructions regarding clear error review: "If the district court's account of the evidence is plausible in light of the record viewed in its entirety, the court of appeals may not reverse it even though convinced that had it been sitting as the trier of fact, it would have weighed the evidence differently." Anderson v. City of Bessemer City, N.C. , 470 U.S. 564, 573–74 (1985).

[S]everal factors ["Conner factors"] must be present before a district court may dismiss a case with prejudice as a sanction for violating a discovery order: (1) "the refusal to comply results from willfulness or bad faith and is accompanied by a clear record of delay or contumacious conduct;" (2) the violation of the discovery order must be attributable to the client instead of the attorney, (3) the violating party's misconduct "must substantially prejudice the opposing party;" and (4) a less drastic sanction would not substantially achieve the desired deterrent effect.

Doe v. Am. Airlines, 283 F.App'x 289, 291 (5th Cir. 2008) (per curiam) (quoting Conner, 20 F.3d at 1380–81); accord Gregory P. Joseph, supra, ยง 49(B)(4), at 740 ...


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