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Chrysler Corp. v. Carey

United States Court of Appeals for the Eighth Circuit
186 F.3d 1016 (1999)


Facts

John Carey and Joseph Danis (defendants) were attorneys who worked for a firm that represented Chrysler Corp. (plaintiff) against several class-action suits. Carey and Danis then started their own firm. When Carey and Danis left their old firm, they took several confidential documents relating to the firm’s representation of Chrysler. Carey and Danis then began representing a client who sued Chrysler for an allegedly defective antilock-braking system (ABS). Carey and Danis loosely worked with a group of other class-action attorneys, communicating with them about the ABS case. Chrysler objected to Carey and Danis working on the ABS case, arguing that it was a conflict of interest. Carey and Danis eventually transferred the client to an attorney in the group who was filing a class action against Chrysler regarding the ABS. Chrysler sued Carey and Danis for breach of fiduciary duty. Chrysler served Carey and Danis with several discovery requests, including a request for communications regarding the ABS case. Carey and Danis flatly denied that any existed. The discovery process was drawn out, lasting over two years. During the process, third parties produced 42 documents responsive to Chrysler’s request for communications involving the ABS litigation, some of which Carey or Danis wrote, but Carey and Danis did not amend their responses or produce these communications. During trial, an attorney for Carey and Danis shared with Chrysler a letter he planned to use. The letter was from Danis to a member of the group of class-action lawyers and involved the ABS class action. It had not been produced in discovery. Chrysler brought the letter to the court’s attention and moved to strike Carey and Danis’s answer to the complaint—which would result in default judgment in Chrysler’s favor—because of Carey and Danis’s repeated discovery violations. Carey and Davis argued that they had merely forgotten about the letter, that the letter did not contain new evidence Chrysler was not already aware of, and that striking their answer was too drastic of a sanction. In granting Chrysler’s motion, the court characterized the most recent letter as the tip of the iceberg on top of the 42 other communications Carey and Danis failed to produce. Danis and Carey appealed, arguing among other things that they should have received a hearing.

Rule of Law

Issue

Holding and Reasoning (Beam, J.)

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