WA Legal Roundup - Magaña v. Hyundai Edition
Over ten years ago, a small outfit by the name of Stritmatter Kessler Whelan Coluccio took on the case of Jesse Magaña, who was thrown out the rear of his Hyundai when the seat back failed, rendering the seat belt useless. The case went to trial, where Hyundai fought discovery tooth and nail. Even though Magaña had asked for information regarding other similar incidents, none were turned over. Magaña obtained a verdict against Hyundai, which Hyundai appealed based on failure to instruct as to testimony of an expert which was stricken. The case went back down for a new trial, and Magaña renewed his discovery requests, and had to file a motion to compel. On the eve of trial, Hyundai produced what it should have years ago. By that time, after investigation, it was learned that much of the evidence related to those OSIs were stale, lost, forgotten, or destroyed. The trial court held a hearing on the evidentiary issues and, after the hearing, entered default against Hyundai for $8 Million (the verdict in the original trial).
Hyundai appealed, and the Court of Appeals reversed. The COA held that time to investigate would have been enough.
The supreme court, in a manner not seen since Fisons, strongly admonished the conduct of Hyundai, lambasted the court of appeals on its substitution of judgment, and affirmed the trial court. The entire majority is worth the read, but here are the highlights:
Trial courts need not tolerate deliberate and willful discovery abuse. Given the unique facts and circumstances of this case, we hold that the trial court appropriately diagnosed Hyundai's willful efforts to frustrate and undermine truthful pretrial discovery efforts by striking its pleadings and rendering an $8,000,000 default judgment plus reasonable attorney fees. This result appropriately compensates the other party, punishes Hyundai, and hopefully educates and deters others so inclined. We determine the trial court acted well within its discretion and reverse the Court of Appeals, which improvidently reversed the trial court.
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"There is a natural tendency on the part of reviewing courts, properly employing the benefit of hindsight, to be heavily influenced by the severity of outright dismissal as a sanction for failure to comply with a discovery order." Nat'l Hockey League v. Metro. Hockey Club, Inc., 427 U.S. 639, 642, 96 S. Ct. 2778, 49 L. Ed. 2d 747 (1976). However since the trial court is in the best position to decide an issue, deference should normally be given to the trial court's decision. Fisons, 122 Wn.2d at 339. A trial court's reasons for imposing discovery sanctions should "be clearly stated on the record so that meaningful review can be had on appeal." Burnet v. Spokane Ambulance, 131 Wn.2d 484, 494, 933 P.2d 1036 (1997). If a trial court's findings of fact are clearly unsupported by the record, then an appellate court will find that the trial court abused its discretion. Mayer, 156 Wn.2d at 684. An appellate court can disturb a trial court's sanction only if it is clearly unsupported by the record. See Ermine v. City of Spokane, 143 Wn.2d 636, 650, 23 P.3d 492 (2001) (noting that a reasonable difference of opinion does not amount to abuse of discretion).
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A corporation must search all of its departments, not just its legal department, when a party requests information about other claims during discovery. Here Hyundai searched only its legal department. Hyundai's counsel told the trial court that in response to request for production 20, Hyundai's search "was limited to the records of the Hyundai legal department" and that "no effort was made to search beyond the legal department, as this would have taken an extensive computer search." CP at 5319. As the trial court correctly found, "[t]here is no legal basis for limiting a search for documents in response to a discovery request to those documents available in the corporate legal department. This would be the equivalent of limiting the responses in Smith[, 133 Wn. App. 306,] to a search for chemical tests which were on record in the corporate legal office, without disclosing that the search was so limited." CP at 5319-20. The trial court went on to say, "the legal department at Hyundai worked closely with the Consumer Affairs Department with respect to customer complaints and claims, including product liability claims. The vehicle owners' manual directed customers to call the Consumer Affairs number." CP at 5320. Hyundai had the obligation to diligently respond to Magaña's discovery requests about other similar incidents. It failed to do so by using its legal department as a shield. The trial court also found "Hyundai had the obligation not only to diligently and in good faith respond to discovery efforts, but to maintain a document retrieval system that would enable the corporation to respond to plaintiff's requests. Hyundai is a sophisticated multinational corporation, experienced in litigation." Id. Hyundai willfully and deliberately failed to comply with Magaña's discovery requests since Magaña's initial requests in 2000 and continued to do so.
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The Court of Appeals concluded, "[i]f [Magaña] tries to find experts and they are unable to analyze the evidence and would have been able to analyze it if it had been provided earlier, then and only then could irrevocable prejudice be shown that may warrant the trial court's usurping of the right to trial and directing a verdict in Magaña's favor." Id. at 520. But the problem is Magaña is unable to find the evidence because others who had accidents involving Hyundai vehicles are no longer living, have disappeared, or have discarded their evidence. The evidence that could be analyzed by experts has been lost because of the time that has elapsed between when Hyundai should have disclosed the information and the time it was compelled to do so -- more than five years late.
Magaña's ability to prepare for trial was substantially prejudiced because of Hyundai's egregious actions during discovery. The Court of Appeals substituted its own discretion for the trial court's, which is inconsistent with the abuse of discretion standard. The record supports the findings of the trial court that Magaña was prejudiced in preparing for trial.
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In addressing whether a monetary fine would suffice, the trial court found it would be difficult to know what amount would be suitable since "Hyundai is a multi-billion dollar corporation." CP at 5332-33. It also found a monetary sanction would not address the prejudice to Magaña or to the judicial system. Since there were no counterclaims in this case, the trial court could not strike those as a remedy. The trial court also denied a continuance, which Hyundai proposed. The trial court held that sanctions for discovery violations should not reward the party who has committed the violations and that granting a continuance would only exacerbate the situation. The Court of Appeals disagreed claiming, "[a]llowing Magaña to investigate the incidents of seat failure will shed light on whether Hyundai manufactured and sold a defective product." Magaña II, 141 Wn. App. at 519. But as aforementioned, time will not allow Magaña to investigate other incidents because much of that evidence is lost or stale.
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Appellate courts may not substitute their discretion for that vested in the trial court, absent abuse. Where there is no abuse of trial court discretion, we may not reverse simply because there are other possible ways the trial court could have possibly exercised it. The trial court properly imposed a default judgment against Hyundai for its willful and deliberate failure to comply with discovery. Accordingly we reverse the Court of Appeals and award Magaña reasonable attorney fees and expenses for responding to this appeal.