Monetary sanctions for violating rules despite ‘very minimal’ impact

Singer Oil Co. v. Newfield Exploration Mid-Continent, Inc.

In this nuisance and negligence action, the court imposed mandatory sanctions against the plaintiff for violating the rules governing discovery. However, it found that the plaintiff’s nondisclosure of third-party communications and failure to supplement discovery had little impact on the case.

The plaintiff, Singer Oil Company, initiated this nuisance and negligence lawsuit against Newfield Exploration Mid-Continent and Halliburton Energy Services (collectively “Newfield”). In discovery, Newfield explicitly requested “all communications of any kind” that related to “the subject of this lawsuit.”

Singer responded promptly, representing that it “had produced or would produce all responsive documents” related to this request. Singer’s counsel “confirmed that all responsive documents had been produced” during the parties’ follow-up conference. Singer never supplemented its responses or claimed that any unproduced documents were privileged.

After a jury trial, Singer moved to recover its attorney’s fees. While reviewing Singer’s time records, Newfield discovered that Singer’s attorney emailed several third parties during the course of litigation. Those communications concerned “several of the issues that were disputed” in the case. Further, Newfield asserted that Singer sent at least two of those undisclosed emails before its initial discovery response.

Newfield moved for sanctions for Singer’s nondisclosure of discoverable communications and failure to supplement discovery. It argued that sanctions were mandatory under Federal Rule of Civil Procedure 26(g)(3) and permitted under Rule 26(e)(1)(A). Newfield asked the court to impose severe sanctions by denying Singer’s entire recovery of attorney’s fees and costs.

Singer argued that it “did not violate the letter or spirit of the discovery code” or the court’s orders. It pointed out that it never created any discoverable documents as a result of the third-party communications. Singer also stated that those communications would largely be protected by the work-product doctrine.

Rule 26(g)(3) demands that counsel certify that all disclosures are “complete and correct” when made. Should a party violate the rule “without substantial justification,” the court “must impose an appropriate sanction.” That sanction may include expenses and attorney’s fees necessitated by the violation.

Additionally, under Rule 26(e)(1)(A), parties must supplement their discovery responses upon obtaining new information. The court has the discretion to impose sanctions that it deems appropriate.

Here, the court agreed that the communications noted in the time records “would fall within” Newfield’s discovery request. While the work-product doctrine likely would have protected those conversations, Singer failed to assert it or provide a privilege log.

The court concluded that Singer “may not have intentionally violated” the rules of discovery. However, it nonetheless did so by failing to disclose its third-party communications. Fortunately for Singer, the court found that the nondisclosure “only had a very minimal, if any, impact” on the case.

The court acknowledged that it must impose sanctions under Rule 26(g)(3). However, it rejected Newfield’s “extremely harsh sanction,” noting that it was “not warranted by the circumstances.” Instead, the court simply ordered Singer to pay Newfield’s attorney’s fees associated with its motion for sanctions.

Takeaways on Minimizing Discovery Costs

This case highlights one of the easiest ways to reduce your spending on discovery: don’t pay for anyone else’s attorney. Here, the court generously allowed that Singer’s counsel may not have been aware of the duty to disclose third-party conversations or designate them as privileged. But, as in much of the law, ignorance is no excuse. Singer’s recovery is less than it might have been without this avoidable error. Ensure that you know the rules governing discovery in your jurisdiction so you can design a discovery plan that will ensure your full compliance.

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