The United States Supreme Court held that a discovery sanction awarding fees cannot exceed the amount actually incurred because of the misconduct. In Goodyear Tire & Rubber Company v. Leroy Haeger 137 S. Ct. 1178 (2017) the defendant Goodyear Tire & Rubber Company was sued by the plaintiffs alleging that the failure of a Goodyear Tire caused the family’s motor home to swerve off the road and flip over. There was contentious discovery over a period of years and the matter was settled. Some months later the plaintiff’s attorney learned that in another lawsuit involving the same tire Goodyear disclosed test results that indicated the tire got unusually hot at highway speeds. Goodyear subsequently conceded that they withheld the information even though the plaintiffs had requested all testing data. The plaintiffs then sought sanctions for discovery fraud urging that the defendants misconduct entitled them to attorney’s fees and costs expended in the litigation.
The district court found that the defendant, Goodyear, had engaged in an extended course of misconduct and awarded the plaintiff 2.7 million, the entire sum they had spent in legal fees and costs since the moment early in the litigation, when Goodyear made its first dishonest discovery response. The Ninth Circuit Court of Appeals agreed concluding that the district court had properly awarded the defendants all of the fees they had incurred during the time when Goodyear was acting in good faith. The Supreme Court reversed saying:
“In this case we consider a federal courts’ inherent authority to sanction a litigant for bad faith conduct by ordering it to pay for the other sides legal fees. We hold that such an order is limited to the fees the innocent party incurred solely because of the misconduct – or to put it another way, to the fees that that party would not have incurred but for the bad faith. The district court has broad discretion to calculate fee awards under that standard. But because the court here granted legal fees beyond those resulting from the litigation misconduct, its award cannot stand.”