The Courts and Late Discovery: The Honeymoon Is Over

By Peter S. Sanders, Michelangelo Macchiarella and Marissa Cohen

The Courts and Late Discovery: The Honeymoon Is Over

6.7.2022

By Peter S. Sanders, Michelangelo Macchiarella and Marissa Cohen

Courts and Late Discovery_675

The courts are cracking down on late discovery and no one is exempt, not even a former president of the United States. Donald Trump learned that lesson recently when a New York judge fined him $10,000 a day for failing to meet his discovery obligations on schedule. Though Trump’s fine was later capped at $110,000, the judge warned him that additional fines will be imposed – retroactively – if there is a further missed deadline.

At issue are CPLR 3126 and CPLR 5104. While CPLR 5104 applies to the Trump case, most of the late discovery cases have involved CPLR 3126.

Indeed, in the state courts of New York, getting an opposing party to comply with discovery demands has been a notoriously long and challenging process. However, recent trends suggest that appellate and lower court judges have become much more active in imposing sanctions against recalcitrant litigants under CPLR 3126. This trend toward preventing prolonged litigation and disobedience with court orders allows CPLR 3126’s provisions to serve as an effective tool for parties to obtain relief. A motion under this section often results in a conditional order allowing an additional time-limited opportunity to cure. Such an order can simultaneously serve equity, the preference for determinations on the merits, finality and provide protection against reversal on appeal. Properly drafted and enforced, it can promote just results and judicial economy, but only if the conditional order is given its intended effect. If unenforced, whether out of a sense of leniency or sympathy, it can unintentionally embolden noncompliant parties when continued obstruction is not met with the certitude of the prescribed consequences. It is the advocate’s job to convince the court to follow its own orders for these reasons and because the aggrieved party has a right to rely on the court following through on its word. Indeed, although not essential to a right to such reliance, an aggrieved party may even have forgone other remedies to its detriment in reliance on the enforcement of such an order.

CPLR 3126 Has a History of Judicial Non-Enforcement

CPLR 3126 states that a court may impose discovery sanctions, including the striking of a pleading or preclusion of evidence, where a party “refuses to obey an order for disclosure or willfully fails to disclose information which the court finds ought to have been disclosed.” But many courts have been reluctant to grant relief under the statute. This reluctance flies in the face of appellate authority that is heavily weighted to the contrary. Indeed, the reader may notice that the word “conditional” does not appear in the text of the statute; rather, the “conditional” portion of CPLR 3126 is a creature of judicial invention meant to temper the “drastic remedies” afforded under the statute in favor of hearing the matter on the merits. When a court refuses to follow its own conditional order and impose its sanctions, this is essentially a judicial act of clemency that implicates the non-offending party’s right to discovery. But litigation on the merits is a privilege that can be lost when procedure is abused, especially when that abuse prejudices a party playing by the rules.

In the leading case from the Court of Appeals,[1] the court urged greater use of discovery sanctions when it firmly stated, “[L]itigation cannot be conducted efficiently if deadlines are not taken seriously, and we make clear again, as we have several times before, that disregard of deadlines should not and will not be tolerated.”[2] This pronouncement, however, has been followed in the lower courts to varying degrees over the last decade.

As a general procedural roadmap, “A court may resort to the drastic remedies” such as “striking a pleading or precluding evidence upon a clear showing that a party’s failure to comply with a disclosure order was the result of willful and contumacious conduct.”[3] Such failure may be demonstrated by showing a lack of timely compliance with a self-executing conditional order.[4] Once a moving party establishes that the failure to comply with a disclosure order was willful, contumacious or in bad faith, the burden shifts to the opposing party to offer a reasonable excuse for its failure to timely or materially comply.[5]

In practice, however, it may take more than one discovery motion to lay the groundwork for sanctions that preclude claims or defenses, strike pleadings, or invoke negative inferences.[6] The courts have not been eager to issue or enforce sanctions because of the “willfulness inquiry” that must be conducted under CPLR 3126 before issuance of sanctions, including those that may spring from a conditional order. The clearest and simplest evidence of “willfulness” is found in repeated non-compliance with court orders. Thus, when the rule that is meant to promote expeditious and efficient litigation is misapplied by courts reluctant to enforce it, it forces litigants to file successive compliance motions.

CPLR 3126 in the Post-Pandemic Era

New York’s legal landscape has indisputably transformed because of the COVID-19 pandemic, moving more toward virtual and efficient litigation practices, which seems to be why the courts have begun to take discovery delays more seriously. One reason may be that the courts, which had operated with relatively more manageable caseloads, suddenly had to adjust to newly revived cases that had been languishing in the interim, including numerous outstanding discovery demands.

In a recent case (that our firm handled, but will remain unnamed as an appeal is still pending), we unsuccessfully sought enforcement of a conditional sanctions order by means of summary judgment after that order had become absolute. The Supreme Court had repeatedly referred continuing disputes over noncompliance to a discovery referee, resulting in a succession of orders, including one where the court ordered compensation to our client for legal fees of over $168,000. Those fees were found to have been incurred as a direct result of the defendants’ refusal to comply with their discovery obligations. Nevertheless, the defendants were still allowed a further extension of time to comply before the court’s conditional order was to trigger the remaining “drastic remedy” sanctions under CPLR 3126. The defendants, despite submitting further documents in response to the conditional sanctions order, were found to continue to be materially noncompliant after the self-executing deadline converted the order from conditional to absolute.

We then moved for summary judgment once (1) “willfulness” was established by demonstrating a pattern of non-compliance with several orders; (2) a self-executing conditional order was issued in final redress; and (3) the defendant had still not complied. We argued that the court was without discretion to deny a motion for summary judgment once the conditional order had “sprung” and become absolute. Initially, the court rejected our motion and, in an apparent attempt at further leniency and preference for a trial on the merits, reserved the 3126 sanctions for trial. However, upon re-argument, the court reversed itself as having admittedly overlooked the absolute nature of the conditional order at issue and struck the non-disclosing party’s answer and counterclaims and resolved all relevant claims in the pleadings in the plaintiff’s favor. Reversal on re-argument is a rarity but was warranted in light of the prevailing authority and the court’s recognition that no lesser remedy could properly rectify the prejudice caused to the aggrieved party.

In one case, an appellate court reversed a CPLR 3126 order that merely precluded a non-disclosing party from introducing evidence and substituting a wholesale striking of the non-disclosing party’s answer as proper after years of non-compliance.[7]

Another appellate court reversed the trial court’s denial of summary judgement where a conditional order had merely precluded the non-movant from presenting evidence in opposition, ostensibly as logically inconsistent.[8] This recognition of the logical inconsistency or insufficiency of certain lesser sanctions is noteworthy. Far too often courts fail to recognize that the non-disclosing party’s goals may still be achieved, and the aggrieved party still prejudiced, if a sanction fails to provide a complete remedy.

In another case, the appellate court reversed an order of the Supreme Court that had granted the non-disclosing party additional time to comply with a discovery order after a compliance deadline had already passed. In that case, a Compliance Conference Order had already been issued that stated, “Failure to comply [within 30 days] will result in preclusion.” Upon a motion for sanctions under CPLR 3126, however, the Supreme Court ignored its own order and allowed the non-disclosing party additional time to comply without any finding that the defaulting party had made a showing that its default was excusable. The appellate court reversed this order by directing that the motion under CPLR 3126 should have been granted as to preclusion in light of the conditional order’s mandatory language. The appellate court’s decision here is in line with the principle that when a court says that an order will result in a specified sanction, that court should follow its own orders and apply the sanction in the absence of extraordinary circumstances.

These post-pandemic cases show that lower court and appellate judges are no longer as inclined to forgive repeated discovery delays as had been the case. However, should a movant be able to demonstrate a reasonable excuse for the failure to timely or properly comply, an appellate court may reverse a denial of a motion to vacate a conditional order that had become absolute, thus providing a rare and proper escape valve when bona fide good cause for untimely or insufficient compliance can be shown.[9]

New York’s trend toward holding parties accountable for failing to comply with discovery goes beyond CPLR 3126. In New York v. The Trump Organization, Inc., et al.,[10] on April 26, 2022, former President Donald Trump was found to be in civil contempt in violation of CPLR 5104 for failing to comply with a subpoena within 14 days of the order compelling compliance, extended by stipulation for another 30 days (Hon. Arthur F. Engoron). The ruling stemmed from former President Trump’s failure to prove that he thoroughly looked for the demanded documents, acted in good faith to comply with the court’s order and asserted anything other than boilerplate language when submitting his response to the subpoena. In that case, as in ours, the party charged with producing documents cannot merely claim they don’t have them without explaining in a sworn affidavit the details of their record keeping practices and bona fide efforts to locate the documents.[11] Judge Engoron fined former President Trump $10,000 per day for non-compliance. The following day, Trump submitted a personal affidavit, which the court rejected as still insufficient to purge contempt. However, on May 11, 2022, the court “conditionally” purged the contempt pending submission of additional affidavits and payment of the fines that had accrued so far, in the amount of $110,000, but warned that contempt charges could be re-imposed with additional fines accruing retroactively to the date they were suspended if sufficient affidavits were not submitted. Although applied under a slightly different standard than found in CPLR 3126, the core of the ruling is the same: “disobedience to a lawful mandate of the court.”[12] Trump’s case illustrates that sanctions may and will be imposed for ignoring court orders and deadlines. The intolerance toward disobedient parties might be a leitmotif that is rising to a crescendo in post-pandemic New York.

Conclusion

Inevitably, there is still some play as to how many orders have to be issued and how long and egregious the non-compliance of your adversary must be to warrant sanctions. Litigants with bona fide claims or defenses rarely have any reason not to enthusiastically produce evidence supporting their position. But if and when a conditional order is issued, it is imperative for advocates to argue that there is little to no discretion involved in applying the prescribed sanctions of that order should non-compliance continue. Absolute means absolute. If a court still will not enter the sanctions, attorneys should make the argument that at some point the preference for leniency and a determination on the merits is outweighed by the individual and institutional harm rendered by abusive and inexcusable noncompliance. The appellate courts, including no less than the state’s highest court, have quite clearly signaled that attempts at leniency have been abused for too long and to the detriment of the litigants who play by the rules. This has disincentivized compliance, and the recent trend of enforcement recognizes that. It is welcome and long overdue.

Peter S. Sanders is the managing litigation partner at Capell Barnett Matalon & Schoenfeld and has taught CLE classes on the enforcement of discovery obligations under CPLR 3126.

Michelangelo Macchiarella is an associate attorney in the litigation department at Capell Barnett Matalon & Schoenfeld.

Marissa B. Cohen is a law clerk at Capell Barnett Matalon & Schoenfeld. She earned her LLM in Constitutional Law this spring from Emory University School of Law.


[1] Gibbs v. St. Barnabas Hosp., 16 N.Y.3d 74 (2010).

[2] Id. at 83.

[3] Peterson v. New York Cent. Mut. Fire Ins. Co., 174 A.D.3d 1386, 1387 (2019).

[4] Gibbs, 16 N.Y.3d at 82; Keller v. Merchant Capital Portfolios, LLC, 103 A.D.3d 532 (1st Dep’t 2013).

[5] Id.

[6] See 4 N.Y. Prac., Com. Litig. in NY State Courts, § 30:54 (5th ed. 2021); see also Patrick Connors, CPLR 3126 Conditional Orders Requiring Disclosure “Can’t Get No Respect,” 73 Alb. L. Rev. 853 (2010).

[7] See Henry v. Atlantis Rehab. and Res. Healthcare Facility, LLC, 194 A.D.3d 1021 (2d Dep’t 2021).

[8] Ubuzoh v. Mueller, 164 N.Y.S.3d 442 (Mem) (1st Dep’t 2022).

[9] Papadopoulos v. Metropolitan Transportation Authority, 192 A.D.3d 430 (1st Dep’t 2021); but cf. J.G. by Quaisha K. v. Fortress CD, LLC, 199 A.D.3d 571 (1st Dep’t 2021).

[10] Index No. 451685/2020 (Sup. Ct., N.Y. Co. 2020).

[11] See Jackson v. City of New York, 185 A.D.2d 768 (1992).

[12] Judiciary Law § 753(A)(1).

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