Class Action Defense Issues-Slesinger v. Walt Disney: California Appellate Court Affirms Terminating Sanction For "Deliberate And Egregious" Discovery Misconduct
As a Matter of First Impression, Trial Court has Inherent Power to Impose Terminating Sanction in the Face of Deliberate and Egregious Misconduct and Properly Imposed such a Sanction in this Case California Appellate Court Holds
Though not a class action, this case presents a vivid reminder that attorneys are officers of the court and may be held accountable for the misconduct of their clients and experts. Plaintiff filed suit against Walt Disney alleging that it had failed to pay certain royalties due under a licensing agreement for the Winnie the Pooh children’s stories, and “to assist in prosecuting its lawsuit, [plaintiff] hired an investigator to surreptitiously obtain Disney documents.” Slesinger v. The Walt Disney Co., ___ Cal.App.4th ___ [Slip Opn., at 2] (Cal.App. September 25, 2007). An anonymous caller tipped Disney to the fact that confidential documents had been obtained by an investigator, id., at 6-7. Once Disney learned of the investigator’s misconduct, defense attorneys moved for terminating sanctions, id. Plaintiff argued that it had instructed the investigator to “obey the law,” id. The trial court concluded that only terminating sanctions could protect Disney from plaintiff’s use of the information illegally obtained by its investigator, and granted the defense motion. Id. The California Court of Appeal held as a matter of first impression that the trial court had the inherent power to impose terminating sanctions and affirmed.
At issue were thousands of pages of documents that plaintiff’s investigator obtained “by breaking into an uncertain number of Disney office buildings and secure trash receptacles, and by trespassing onto the secure facility of the company with which Disney had contracted to destroy its confidential documents,” including documents marked “privileged and confidential.” Slesinger, at 2. During the course of the “lengthy, bitter litigation,” the court imposed evidentiary and monetary sanctions against Disney for destroying certain documents, id., at 3. But it then “fell victim to its own litigation abuses,” id., at 4. According to the court, plaintiff hired an investigator for the purpose of “surreptitiously obtaining Disney documents,” id., at 5. And while plaintiff instructed the investigator to “make sure what you’re doing is legal and that you do it by the book,” no other steps were taken to ensure that he complied with that instruction. Id., at 6. To the contrary, plaintiff argued that supervising the investigator “wasn’t my job” and that all plaintiff “did was pay his bills…[and] receive documents.” Id.
We do not here summarize the numerous reasons that the court concluded plaintiff and their counsel knew of the investigator’s misconduct, or at the very least should have known of it. By way of example, the investigator had obtained the documents illegally because the investigator produced documents marked “CONFIDENTIAL - For Internal Use Only” in the footer, but when plaintiff finally produced these pages to the defense, this “confidential” tag had been eliminated. Slesinger, at 8. The fact “Slesinger or someone else on [plaintiff’s] behalf altered copies of [Disney documents] after receiving them from [the investigator] to delete any reference to their confidentiality” was evidence of plaintiff’s misconduct. Id., at 22-23.\