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Musnuff v. Haeger

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Supreme Court of the United States
Musnuff v. Haeger
Docket number: 15-1491
Term: 2016
Court: United States Supreme Court
Important dates
Argument: Not held
Decided: October 25, 2016
Court membership
Chief Justice John G. Roberts • Anthony Kennedy • Clarence Thomas • Ruth Bader Ginsburg • Steven G. Breyer • Samuel Alito • Sonia Sotomayor • Elena Kagan


Musnuff v. Haeger is a case docketed for oral argument during the October 2016 term of the U.S. Supreme Court. Argument in the case was to be consolidated with the argument in Goodyear Tire and Rubber Co. v. Haeger however, pursuant to Supreme Court Rule 46, the petition for certiorari was dismissed on October 25, 2016. The case came on a writ of certiorari to the United States Court of Appeals for the 9th Circuit.

HIGHLIGHTS
  • The case: A federal district court imposed post-settlement compensatory sanctions for $2.7 million dollars against Goodyear and its counsel for acting in bad faith. The court did so under its inherent authority and without the protections of criminal due process for Goodyear and its counsel, which is required for imposing punitive sanctions.
  • The issue: What are the limits on a federal district court's power to impose compensatory sanctions under its own inherent authority?
  • The outcome: The petition for certiorari was dismissed pursuant to Supreme Court Rule 46.


    • In brief: Haeger and his family were injured in a 2003 crash of Haeger's motor home. Haeger claimed that a tire manufactured by Goodyear and mounted originally on the motor home was to blame because, Haeger alleged, the tire was not designed to be mounted on a motor home. Haeger died from unrelated causes years later. In 2010, prior to the start of a trial in federal district court, Goodyear, through its counsel Basil Musnuff and Graeme Hancock, announced a settlement with the Haegers. In 2011, however, the Haegers filed for additional sanctions, arguing that Goodyear failed to produce evidence of certain test scores for the tires during discovery. Goodyear argued that it never promised to produce all records, but Judge Roslyn Silver held that Goodyear and its attorneys "engaged in repeated and deliberate attempts to frustrate the resolution of this case on the merits." The district court, after noting sanctions under procedural and statutory authority were unavailable because the Haegers' case had been settled, used its inherent powers to impose compensatory sanctions against Goodyear and its counsel for not acting in good faith. The Ninth Circuit Court of Appeals affirmed the district court's judgment, holding that "sanctions can be compensatory even if the specific amount of sanctions is not directly caused by the alleged misconduct." Goodyear and its counsel argued that, in the absence of showing a direct harm caused by the tires, they should be allowed to challenge the award under rights of due process. The petition for certiorari in this case was dismissed on October 25, 2016, pursuant to Supreme Court Rule 46.[1]

    You can review the Ninth Circuit's opinion here.[2]
    Here's our page on the consolidated case, Goodyear Tire and Rubber Co. v. Haeger

    Click on the tabs below to learn more about this Supreme Court case.

    Case

    Background

    This is a case about the propriety of a district court imposing sanctions under its own inherent authority.

    In June 2003, the Haeger family was seriously injured when a tire manufactured by Goodyear, a Goodyear G159 tire, failed while the Haegers were driving their motor home on a highway. The failure of the tire caused the Haegers' motor home to swerve off the road and overturn. In 2005, the Haegers filed a lawsuit against Goodyear in Arizona state court, but Goodyear filed a motion to remove the lawsuit to a federal district court. Goodyear was represented by Basil Musnuff, who was Goodyear's "national coordinating counsel" for all cases involving G159 tires, and by Graeme Hancock, who was Goodyear's counsel in Arizona. Both Musnuff and Goodyear's in-house counsel, Deborah Okey, had responsibility for reviewing and approving any responses to discovery requests made during the case. In several pre-trial discovery motions, the Haeger family's counsel sought test results for the G159 from Goodyear. On April 14, 2010, the first day of the trial, the Haegers accepted a settlement from Goodyear and the district court closed the case.[2]

    Some time after the settlement, however, the Haegers' lawyer "saw an article stating that Goodyear had produced internal heat and speed testing in a separate case involving the G159 tire, and he realized that Goodyear had withheld evidence it was required to produce during discovery." Based on this, the Haegers filed a motion for sanctions against Goodyear in May 2011. In February 2012, the district court issued a proposed order sanctioning Goodyear based on Goodyear’s failure to produce certain test information as well as for the repeated representations made by attorney Hancock that all required documents had been produced. In March 2012, the court held an evidentiary hearing at which they found that testimony from both Musnuff and Hancock was unreliable and untruthful and that "Mr. Hancock, Mr. Musnuff, and Goodyear engaged in repeated and deliberate attempts to frustrate the resolution of this case on the merits." In consideration of the fact that the case was closed, the district court used its inherent authority to issue an award in excess of 2.7 million dollars to the Haegers based on the court's conclusion that Goodyear and its counsel engaged in a "years-long course of misconduct." The court determined that Hancock was responsible for 20% of the costs and that Musnuff and Goodyear were jointly responsible for the remaining 80%. Goodyear, Musnuff, and Hancock appealed to the United States Court of Appeals for the 9th Circuit.[2]

    Writing for a unanimous three-judge panel, Judge Milan Smith affirmed the decision of the district court. The court held that "the district court did not abuse its discretion in concluding that Hancock, Musnuff, and Goodyear each acted in bad faith" and that there was "no doubt that the Sanctionees’ bad faith conduct caused significant harm in forcing the Haegers to engage in sham litigation, and in their likely foregoing millions of dollars in the settlement they accepted under false pretenses of the Sanctionees, as found by the district court in light of Goodyear’s conduct in the Other G159 Cases." Based on the panel's interpretation of the U.S. Supreme Court's holding in Chambers v. NASCO, which governs the use of a federal court's inherent authority, the circuit panel held that "the district court's findings and ruling in this case regarding monetary sanctions fully comply with the law."[2]

    Petitioner's challenge

    Musnuff, the petitioner in this case, challenged the Ninth Circuit's affirmance of a district court order and award issued under the district court's inherent authority. Musnuff alleged that the district court exceeded its inherent authority in issuing the order rather than relying on other procedural rules available to federal courts. Musnuff's petition for certiorari was dismissed on October 25, 2016, pursuant to Supreme Court Rule 46

    Certiorari granted

    On June 7, 2016, Basil J. Musnuff, the petitioner, initiated proceedings in the Supreme Court of the United States in filing a petition for a writ of certiorari to the United States Court of Appeals for the 9th Circuit. The U.S. Supreme Court granted Musnuff's certiorari request on September 29, 2016, limiting argument to question 1 of the petition and consolidating argument with argument in Goodyear Tire and Rubber Co. v. Haeger. On October 25, 2016, the Supreme Court dismissed Musnuff's petition for certiorari pursuant to Rule 46.

    Arguments


    Question presented

    Question presented:

    "Whether a federal court may impose sanctions against an attorney for non-disclosure of documents without either affording heightened procedural protections, as required for punitive sanctions, or finding a causal relationship between the sanctioned conduct and the amount awarded, as required for compensatory sanctions."[3]


    Outcome

    Musnuff's petition for certiorari was dismissed by the Supreme Court on October 25, 2016, pursuant to Rule 46.

    Filings

    The court granted Musnuff's certiorari request on September 29, 2016.

    A stipulation to dismiss the writ of certiorari pursuant to Supreme Court Rule 46 was received by the court on October 17, 2016. The court dismissed the petition for certiorari on October 25, 2016.

    Certiorari filings

    Parties' filings

    • Basil J. Musnuff, the petitioner, filed a petition for certiorari on June 7, 2016.
    • LeRoy Haeger et al., the respondents, filed a brief in opposition to certiorari on July 11, 2016.

    See also

    Footnotes

    1. ↑ Supreme Court of the United States, "Granted & Noted list - cases for argument in October Term 2016," accessed October 28, 2016
    2. ↑ 2.0 2.1 2.2 2.3 U.S. Court of Appeals for the Ninth Circuit, LeRoy Haeger et al. v. The Goodyear Tire & Rubber Company et al., July 20, 2015
    3. ↑ Supreme Court of the United States, Musnuff v. Haeger, September 29, 2016
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