The United States Supreme Court recently analyzed a federal court’s “inherent authority to sanction bad-faith conduct by ordering a litigant to pay the other side’s legal fees,” holding that such an award was “limited to the fees the innocent party incurred solely because of the misconduct.”
In Goodyear Tire & Rubber Co. v. Haegger, No. 15-1406, 581 U.S. ____ (April 18, 2017), the Haeger family had sued Goodyear after a Goodyear tire allegedly failed and caused their motorhome to flip over. During the original suit, Goodyear was slow and unresponsive to many of the Haegers’ discovery requests, especially when the Haegers requested internal company tests for the tire at issue. The case eventually settled just before trial. Months later, the Haegers’ attorney noticed a news story indicating that, in a similar suit, Goodyear had disclosed “test results indicating that the tire got unusually hot at highway speeds.” Goodyear subsequently admitted to the attorney that it had withheld information in the Haeger suit.
Because the case had already settled, the district court was limited in its options when addressing Goodyear’s misconduct, and “[a]ll it could do for the Haegers was to order Goodyear to reimburse them for attorney’s fees and costs paid during the suit.” The district court determined that this award could be “comprehensive, covering both expenses that could be causally tied to Goodyear’s misconduct and those that could not.” The district court calculated all the Haegers’ litigation expenses after the very early moment when Goodyear first dishonestly responded to discovery and awarded the Haegers $2.7 million. When explaining its award, the district court stated that while the usual case requires the fees awarded to be causally related to the misconduct, the misconduct in this case “rose to a truly egregious level.” The district court found that the level of misconduct here meant that all attorneys’ fees could be awarded with no need to find a causal link between the fees and the sanctioned party’s conduct.