Civil Procedure

Fact pattern

A collector purchases a sword from a dealer in historical artifacts. The dealer represents that an illustrious general wore the sword in a famous Civil War battle. After buying the sword, the collector has it appraised for insurance purposes, but discovers that the sword is a counterfeit. The collector thus sues the dealer for fraud in a federal district court, seeking $150,000 in compensatory damages and $500,000 in punitive damages. Subject-matter jurisdiction, personal jurisdiction, and venue are proper.

The collector, to bolster his case, seeks to establish that the dealer has a history of selling counterfeit items. Accordingly, the collector serves an interrogatory on the dealer that reads: “Please list all sales of historical artifacts made by you in the last 10 years, including a description of the artifacts, the identity of the purchaser, the purchase price, and whether the purchaser subsequently sought a refund or otherwise complained about the item purchased.”

The dealer does not object to this interrogatory, and he answers in writing as follows: “The requested information is contained in five filing cabinets of paper sales records at the defendant’s warehouse. To obtain the requested information, the plaintiff may review and copy these records at his convenience during normal business hours.” The dealer’s records are well-organized, and they can readily be reviewed for this information. Both the collector and the collector’s attorney reside within a 30-minute drive of the dealer’s warehouse.

The collector is dissatisfied with this response, so he files a motion to compel the dealer to compile and produce the information. The judge denies the motion.

Sixty days before trial, the collector serves on the dealer a written offer of judgment for $100,000 in compensatory damages and $250,000 in punitive damages. The dealer does not respond to the offer. At trial, the jury finds in favor of the collector, and awards the collector $150,000 in compensatory damages and $400,000 in punitive damages.

Before entering judgment, the judge holds a hearing on costs. The collector provides evidence of the offer of judgment, and moves for an award of all costs incurred after the offer of judgment was made. The judge refuses, noting that under Fed. R. Civ. P. (Rule) 54, the award of costs to the prevailing party is not mandatory. The dealer does not appeal within the time allowed.

Shortly afterward, the Federal Trade Commission (FTC), an executive-branch agency of the U.S. government, sues the dealer in the appropriate U.S. district court. The FTC seeks damages and injunctive relief under a federal statute that prohibits fraud in the sale of historic artifacts. At trial, the FTC seeks to use the judgment in the collector’s case, along with other similar judgments, to prove that the dealer has committed fraud in the sale of such artifacts. The dealer wishes to dispute these previous findings of fraud in the FTC’s case.

Questions

1. Was the judge correct to deny the collector’s motion to compel? Explain.
2. Was the judge correct to deny costs to the collector? Explain.
3. Can the FTC use the judgment in the collector’s lawsuit to keep the dealer from disputing that the dealer defrauded the collector? Explain, disregarding any distinction between offensive and defensive collateral estoppel.