Leroy Haeger v. the Goodyear Tire & Rubber Co

FOR PUBLICATION

UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT

LEROY HAEGER; DONNA HAEGER, No. 12-17718
husband and wife; BARRY HAEGER;
SUZANNE HAEGER, husband and D.C. No.
wife, 2:05-cv-02046-
Plaintiffs-Appellees, ROS

v.

THE GOODYEAR TIRE & RUBBER
COMPANY, an Ohio corporation,
Defendant-Appellant,

and

SPARTAN MOTORS, INC., a Michigan
corporation; GULFSTREAM COACH,
INC., an Indiana corporation,
Defendants,

v.

ROETZEL & ANDRESS, LPA; BASIL J.
MUSNUFF,
Movants.
2 HAEGER V. GOODYEAR TIRE & RUBBER CO.

LEROY HAEGER; DONNA HAEGER, No. 13-16801
husband and wife; BARRY HAEGER;
SUZANNE HAEGER, husband and D.C. No.
wife, 2:05-cv-02046-
Plaintiffs-Appellees, ROS

v.

THE GOODYEAR TIRE & RUBBER
COMPANY, an Ohio corporation,
Defendant-Appellant.

LEROY HAEGER; DONNA HAEGER, No. 13-16861
husband and wife; BARRY HAEGER;
SUZANNE HAEGER, husband and D.C. No.
wife, 2:05-cv-02046-
Plaintiffs-Appellees, ROS

v.

THE GOODYEAR TIRE & RUBBER
COMPANY, an Ohio corporation;
SPARTAN MOTORS, INC., a Michigan
corporation; GULFSTREAM COACH,
INC., an Indiana corporation,
Defendants,

v.

BASIL J. MUSNUFF,
Movant-Appellant.
 HAEGER V. GOODYEAR TIRE & RUBBER CO. 3

LEROY HAEGER; DONNA HAEGER, No. 13-16862
husband and wife; BARRY HAEGER;
SUZANNE HAEGER, husband and D.C. No.
wife, 2:05-cv-02046-
Plaintiffs-Appellees, ROS

v.
ORDER AND
THE GOODYEAR TIRE & RUBBER AMENDED
COMPANY, an Ohio corporation; OPINION
SPARTAN MOTORS, INC., a Michigan
corporation; GULFSTREAM COACH,
INC., an Indiana corporation,
Defendants,

v.

FENNEMORE CRAIG, P.C.; GRAEME
HANCOCK,
Movants-Appellants.

Appeal from the United States District Court
for the District of Arizona
Roslyn O. Silver, Senior District Judge, Presiding

Argued and Submitted
March 10, 2015—San Francisco, California

Filed July 20, 2015
Amended February 16, 2016

Before: J. Clifford Wallace, Milan D. Smith, Jr.,
and Paul J. Watford, Circuit Judges.
4 HAEGER V. GOODYEAR TIRE & RUBBER CO.

Order;
Opinion by Judge Milan D. Smith, Jr.;
Dissent by Judge Watford

SUMMARY*

Sanctions

The panel affirmed the district court’s order imposing
monetary sanctions against attorneys Basil Musnuff and
Graeme Hancock and The Goodyear Tire & Rubber
Company, and non-monetary sanctions against Goodyear.

The panel held that it was not an abuse of discretion for
the district court to rely on its inherent power to sanction the
conduct at issue in this case, and to determine that Fed. R.
Civ. P. 37 did not provide the appropriate remedy, especially
since the discovery fraud was not discovered until after the
cases had settled.

The panel held that it was not abuse of discretion to find
that the Sanctionees each acted in bad faith. The panel also
held that the district court acted well within its discretion in
awarding all the attorneys’ fees and costs incurred by the
Plaintiffs after Goodyear served its supplemental responses
to Plaintiffs’ First Request.

The panel held that the district court did not abuse its
discretion in imposing non-monetary sanctions on Goodyear.

*
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
 HAEGER V. GOODYEAR TIRE & RUBBER CO. 5

The panel held that the district court’s imposition of
non-monetary sanctions against Goodyear was balanced,
narrowly tailored, and imposed no sanctions beyond what
was necessary to remedy what the district court perceived as
an ongoing problem in Goodyear’s litigation.

Judge Watford dissented. He agreed with the majority
that the district court’s misconduct findings were supported
by the record, but he would nonetheless conclude that the
$2.7 million sanctions award must be vacated because
Goodyear and its lawyers were not afforded heightened
procedural protections before punitive sanctions were
imposed.

COUNSEL

Pierre H. Bergeron (argued), Squire Sanders LLP, Cincinnati,
Ohio; George Brandon, Squire Sanders LLP, Phoenix,
Arizona; Jill G. Okun, Squire Sanders LLP, Cleveland, Ohio,
for Defendant-Appellant/Defendant The Goodyear Tire &
Rubber Company.

Mark I. Harrison (argued), Jeffrey B. Molinar, Osborn
Maledon, PA, Phoenix, Arizona, for Movant/Movant-
Appellant Basil J. Musnuff.

Andrew M. Jacobs, (argued), Katherine V. Foss, Snell &
Wilmer LLP, Tucson, Arizona; James R. Condo, Lisa M.
Coulter, Snell & Wilmer LLP, Phoenix, Arizona, for Movant-
Appellant Graeme Hancock.
6 HAEGER V. GOODYEAR TIRE & RUBBER CO.

John J. Egbert (argued), Jennings Strouss & Salmon, PLC,
Phoenix, Arizona; David L. Kurtz, The Kurtz Law Firm,
Scottsdale, Arizona, for Plaintiffs-Appellees.

ORDER

The opinion and dissent filed on July 20, 2015 and
published at 793 F.3d 1122 are hereby amended. The
amended opinion and dissent are filed concurrently with this
order.

With these amendments, Judge M. Smith voted to deny
the petitions for rehearing en banc, and Judge Wallace so
recommends. Judge Watford voted to grant the petitions.

The full court was advised of the petitions for rehearing
en banc. A judge requested a vote on whether to rehear the
matter en banc, and the matter failed to receive a majority of
the votes of the nonrecused active judges in favor of en banc
consideration. Fed. R. App. P. 35.

The petitions for rehearing en banc are DENIED.

Future petitions for panel rehearing and petitions for
rehearing en banc will not be entertained.
 HAEGER V. GOODYEAR TIRE & RUBBER CO. 7

OPINION

M. SMITH, Circuit Judge:

On November 8, 2012, after a six-hour evidentiary
hearing, and after considering the record in the case and
fifteen briefs filed by the potentially-sanctionable parties,
then-Chief United States District Judge Roslyn O. Silver, of
the United States District Court for the District of Arizona,
handed down a sixty-six-page order (Order) imposing
sanctions ultimately calculated in the sum of $548,240
against attorney Graeme Hancock (Hancock), and $2,192,961
jointly against attorney Basil J. Musnuff (Musnuff) and The
Goodyear Tire & Rubber Company (Goodyear) (collectively
the Sanctionees). In the Order, which included forty-nine
pages of findings of fact and seventeen pages of legal
analysis, Judge Silver found that “there is clear and
convincing evidence that sanctions are required to be imposed
against [] Hancock, [] Musnuff, and Goodyear. The Court is
aware of the unfortunate professional consequences that may
flow from this Order. Those consequences, however, are a
direct result of repeated, deliberate decisions by [] Hancock,
[] Musnuff, and Goodyear to delay the production of relevant
information, make misleading and false in-court statements,
and conceal relevant documents. [] Hancock, [] Musnuff, and
Goodyear will surely be disappointed, but they cannot be
surprised.”1

1
The district court began its order with the following powerful
declaration, which warrants the attention of all members of the bar:
“Litigation is not a game. It is the time-honored method of seeking the
truth, finding the truth, and doing justice. When a corporation and its
counsel refuse to produce directly relevant information an opposing party
is entitled to receive, they have abandoned these basic principles in favor
8 HAEGER V. GOODYEAR TIRE & RUBBER CO.

Because the fraud and deceit practiced on the district
court and the Plaintiffs by the Sanctionees was not
discovered until after the underlying litigation had been
closed and Plaintiffs had settled with Goodyear based upon
the incomplete information provided by the Sanctionees, the
district court imposed the sanctions in reliance upon its
inherent power, and not under Federal Rule of Civil
Procedure 11, or 28 U.S.C. § 1927.

The Sanctionees appeal from the judgment awarding the
sanctions, arguing that the district court abused its discretion
in relying upon its inherent power to impose sanctions, and in
determining the amount and the nature of the sanctions
imposed.

We affirm both the district court’s monetary and non-
monetary sanctions imposed against the Sanctionees.

FACTUAL AND PROCEDURAL BACKGROUND

In June 2003, Leroy and Donna Haeger, and Barry and
Suzanne Haeger (collectively the Haegers, or Plaintiffs) were
all seriously injured when one of the Goodyear G159 tires on
the front of their motor home failed while they were driving
on a highway, which caused their vehicle to swerve off the
road and overturn. The Haegers retained attorney David
Kurtz (Kurtz), who filed suit against Goodyear in 2005 in
Arizona state court. The case was quickly removed to federal
court by Goodyear. Goodyear was represented by Musnuff,
who served as Goodyear’s “national coordinating counsel” on
all G159 cases, and Hancock, who served as Goodyear’s local

of their own interests.[] The little voice in every attorney’s conscience that
murmurs turn over all material information was ignored.”
 HAEGER V. GOODYEAR TIRE & RUBBER CO. 9

counsel in Arizona. Musnuff and Goodyear’s in-house
counsel, Deborah Okey (Okey), were responsible for
reviewing and approving all discovery responses in the case.

Before releasing its G159 tire, Goodyear performed
FMVSS119 Department of Transportation (DOT) tests,
electronic post-production W84 high speed test data (High
Speed tests), L04 heat rise test results (Heat Rise tests), DOT
endurance tests, crown durability tests, and bead durability
tests on the tire. Throughout discovery, the Haegers
repeatedly sought the results of Goodyear’s tests on the G159
tire. However, as detailed below, Goodyear, Musnuff, and
Hancock failed to search for, and/or withheld these relevant
and responsive G159 testing documents in violation of their
discovery obligations to produce requested relevant
documents, and to supplement prior disclosures. See Fed. R.
Civ. Pro. 26, 34.

Goodyear served its Initial Disclosure Statement on the
Plaintiffs on December 15, 2005, pursuant to Rule 26. The
initial disclosures did not include testing information, and
Kurtz promptly requested that Goodyear produce “[t]esting
documentation regarding the G159 tires.” Nevertheless,
Goodyear did not supplement the disclosures in its Initial
Disclosure Statement. Goodyear propounded interrogatories
asking for, among other things, “each legal theory under
which you believe Goodyear is liable.” In response, on
August 18, 2006, the Haegers articulated their theory of the
case: “Prolonged heat causes degradation of the tire which,
under appropriate circumstances, can lead to tire failure and
tread separation even when the tire is properly inflated.”
Additionally, the Haegers stated that when the G159 tire was
used on motor homes, the tire produced a level of heat and
10 HAEGER V. GOODYEAR TIRE & RUBBER CO.

degradation “which the tire was not designed to endure,
leading to its premature failure.”

The Haegers served their First Request for Production of
Documents (First Request), pursuant to Rule 34, in
September 2006. “Request for Production Number 14”
requested “[a]ll test records for the G159 tires, including, but
no[t] limited to, road tests, wheel tests, high speed testing,
and durability testing.” Goodyear objected to this request
with a series of boilerplate objections, and failed to produce
any documents. However, on November 1, 2006, in its
supplemental response to “Request for Production Number
14,” Goodyear agreed to produce the FMVSS119 DOT tests
for the G159 tire. On December 20, 2006, Kurtz sent
Hancock a letter clarifying what had been requested:

Request for Production No. 14. We asked for
test records for the G159 275/70R 22.5,
including road tests, wheel tests, high speed
testing, and durability testing. You objected,
suggesting the test records were overly broad
and unduly burdensome. You have only
produced the DOT test data showing the tires
were tested at 30 mph. My interest is in
finding the rest of the test data. If there is any,
it is your obligation to disclose it.

On January 2, 2007, Hancock wrote an email to Musnuff
regarding “Request for Production Number 14,” stating:

We should either respond to any portions of
Kurtz’ 12.20 letter or figure out that we have
a fight on our hands on these points and
prepare a counter argument . . . RTP 14. [ . . .]
 HAEGER V. GOODYEAR TIRE & RUBBER CO. 11

[t]est records for all testing on this size G159
tire. Again, was the only testing at 30 mph or
less? What speed testing/fleet testing did
Goodyear rely on? Can/should we supplement
since his theory is that this tire can’t operate at
75 mph in the southwest for long periods?

On January 5, 2007, the Haegers’s expert witness, David
Osborne (Osborne), identified speed as a contributing factor
in the G159 tire’s failure in his expert report. In response to
Osborne’s report, Musnuff wrote to Hancock:

Osborne appears to draw the conclusion that
the subject tire was only tested at speeds up to
30 mph from the fact that the only test data we
produced is the DOT test data. Of course, our
discovery response was limited to DOT test
data because plaintiff had not yet identified
their defect theory at that time. Now that
plaintiffs are pinpointing speed as an issue,
perhaps we need to supplement our discovery
responses to show the testing of this tire at
various speeds. Thoughts?

Musnuff also forwarded this email to Goodyear’s in-house
counsel, Okey, concluding “we should consider
supplementing our discovery responses to show the testing of
this tire at various higher speeds.” Despite Goodyear’s
understanding of its obligation to supplement its previous
discovery responses, they were not supplemented.

Also in January 2007, one of Goodyear’s tire engineers
located the G159 tire’s High Speed tests and Heat Rise tests.
It is clear that the engineer delivered at least the High Speed
12 HAEGER V. GOODYEAR TIRE & RUBBER CO.

tests to Musnuff because on February 12, 2007, Musnuff
emailed the High Speed tests to Hancock. Neither Musnuff
nor Hancock produced these tests to the Haegers. Instead, on
April 6, 2007, when Judge Silver asked Hancock “is there any
internal documentation that is available that has been
requested that your . . . clients have not provided,” Hancock
responded that Goodyear had “responded to all outstanding
discovery . . . if a document shows up, we’ll of course
produce it and supplement our answers.” This response to
Judge Silver was false. At the time of this statement, Hancock
had been sent the High Speed tests and had stated to Musnuff
that they should be produced promptly “given the accusation
of no high speed testing in the January report that put that at
issue in the case”; it was thus a false representation to state
that Goodyear had responded to all outstanding discovery.

Additionally, as a follow up to his receipt of the High
Speed tests, Musnuff emailed Goodyear’s tire engineer
requesting additional data, explaining “if we disclose any of
the [High Speed] testing – which is in our best interest – then
we need to produce all of it.” Despite the fact that these High
Speed testing documents were responsive to the Haegers’
discovery request, Musnuff was still undecided about whether
they were going to be produced.

On May 8, 2007, the Haegers served a Third Request for
Production of Documents (Third Request) requesting tests
related to whether the G159 tire was suitable for use at a
speed of 75 mph. At a discovery dispute hearing on May 17,
2007, Hancock admitted that there were tests available
showing that the tire was tested for speeds above 30 mph, but
did not mention that Goodyear had been withholding these
tests from the Haegers for approximately four months.
Instead, Hancock represented that Goodyear would now
 HAEGER V. GOODYEAR TIRE & RUBBER CO. 13

produce these tests because of the new obligation arising
from the Haegers’ Third Request. This was a
misrepresentation to the court as Hancock had known that
these High Speed tests were responsive to the First Request
since February 2007.

On May 21, 2007, Goodyear deposed Osborne, the
Haegers’ expert witness. Osborne was deposed while under
the impression that no high speed testing of the tire had been
done. Neither Hancock nor Musnuff disclosed that Goodyear
was withholding the High Speed tests. The district court
found that taking Osborne’s deposition “knowing that Mr.
Osborne was operating under incorrect assumptions and an
incomplete record,” could only have been done “to delay
production of the tests in hopes of gaining a tactical
advantage.”

Goodyear finally produced the High Speed tests on June
21, 2007, again representing that the production was in
response to the Third Request, when these tests were actually
responsive to the First Request.

On September 13, 2007, Richard Olsen (Olsen),
Goodyear’s Rule 30(b)(6) witness, testified during a
deposition that while additional tests had been undertaken to
determine if Goodyear could justify a speed rating of the
G159 tire at 75 mph, none of these additional tests was
available. Such tests were clearly in addition to the High
Speed tests that had been turned over to the Haegers. Shortly
after Olsen’s deposition, on October 19, 2007, Hancock
assured the court that there were no other tests in existence
beyond those already produced to the Haegers. Despite the
Haegers’ demands for production, during pre-trial discovery,
14 HAEGER V. GOODYEAR TIRE & RUBBER CO.

Goodyear disclosed only the FMVSS119 DOT tests and the
High Speed tests.

On April 14, 2010, the first day of trial, the Haegers and
Goodyear informed the court that they had reached a
settlement, and the court closed the case. Based on the
information derived from the results of at least one of the
Other G159 Cases (discussed below), without having the
relevant information in their possession due to the
Sanctionees’ deceit, the Haegers apparently settled for a small
fraction of what they might otherwise have done.

Some time after the case had settled, Kurtz saw an article
stating that Goodyear had produced internal heat and speed
testing in a separate case involving the G159 tire, and he
realized that Goodyear had withheld evidence it was required
to produce during discovery. Kurtz filed a motion for
sanctions on May 31, 2011. The motion for sanctions argued
that Goodyear had engaged in discovery fraud by “knowingly
conceal[ing] crucial ‘internal heat test’ records related to the
defective design of the G159.” Goodyear’s opposition to the
motion argued that it “never represented that the DOT test
data comprised the totality of testing with regard to the G159
tire.” Goodyear further argued:

Nor did Goodyear ever state or imply that it
would produce “all test records for the G159
tires” or identify all tests performed on the
G159 tires as sought in plaintiffs’ initial
discovery requests. Rather, Goodyear objected
to these requests and stated precisely which
test records it agreed to produce,
unambiguously indicating that it would not
produce all test data.
 HAEGER V. GOODYEAR TIRE & RUBBER CO. 15

This argument came as a surprise to the district court and it
admitted that it “was under the impression that Goodyear had
produced all test data relevant to Plaintiffs’ claims.”

On October 5, 2011, finding that there were “serious
questions regarding [Goodyear’s] conduct in this case,” the
district court ordered Goodyear to produce “the test results at
issue.” Goodyear produced the Heat Rise tests, but did not
mention any additional tests.

On February 24, 2012, the district court issued a proposed
order sanctioning Goodyear based on Goodyear’s failure to
produce the Heat Rise tests and the repeated representations
made by Hancock to the district court that all responsive
documents had been produced. The district court’s proposed
order concluded that the Heat Rise tests should have been
produced in response to the First Request. In responding to
this proposed order, Goodyear, apparently by accident,
disclosed the existence of additional G159 tests – the crown
durability, bead durability, and DOT endurance tests – none
of which had been mentioned or produced in the litigation.
The court also discovered that Olsen, Goodyear’s Rule
30(b)(6) witness, knew about, but failed to mention, these
additional tests at his deposition. The district court held that
these tests should also have been produced as responsive to
the Haegers’ First Request.

The district court held an evidentiary hearing on March
22, 2012, at which both Musnuff and Hancock testified that
they had not knowingly engaged in discovery fraud. The
district court found their testimonies to be untruthful and
unreliable, and held that “Mr. Hancock, Mr. Musnuff, and
Goodyear engaged in repeated and deliberate attempts to
frustrate the resolution of this case on the merits.”
16 HAEGER V. GOODYEAR TIRE & RUBBER CO.

In its Order, the district court reviewed Goodyear’s
discovery responses in certain other G159 tire failure actions
(collectively the Other G159 Cases) against Goodyear in
order to compare what the Sanctionees knew, and when they
knew it, with regards to the G159 tests.2 In Woods v.
Goodyear, No. CV 04-45 (Circuit Court of Hale County,
Alabama), in August 2007, a Goodyear employee informed
Musnuff that in addition to the High Speed tests, the tests
used to determine the suitability of the G159 to be driven at
65 mph included FMVSS119 DOT tests, Heat Rise tests, bead
durability tests, crown durability tests, W16 tests, W64 tests,
G09 tests, and L04 tests. In Schalmo v. Goodyear, No. 51-
2006-CA-2064-WS (Fla. Cir. Ct., 6th Cir., Pasco County), in
April 2008, Musnuff and Goodyear produced the Heat Rise
tests in response to a request to produce tests associated with
speed rating. Musnuff wrote an email in May 2009 stating
that the Schalmo plaintiffs “highlighted the Heat Rise testing
taken during the durability testing of the G159.” This case
ended in a plaintiff’s verdict of $5.6 million. Finally, in
Bogaert v. Goodyear, No. CV 2005-051486 (Sup. Ct. of
Maricopa County, Arizona), in response to an order from the
court to produce testing of the G159 tire’s suitability at
65 mph, Musnuff emailed Hancock in June 2008 stating that
the whole suitability testing package included: (1) the
extended DOT tests, (2) the Heat Rise tests, (3) the bead
durability tests, and (4) the crown durability tests. As in this
case, in each of the Other G159 Cases, Goodyear engaged in
lengthy discovery battles with the plaintiffs before it
produced the requested documents. Woods and Bogaert were

2
The district court considered Hancock, Musnuff, and Goodyear’s
conduct in the Other G159 Cases for the purpose of assessing credibility,
and determining the actors’ state of mind. It expressly did not base its
sanctions on the Sanctionees’ conduct in the Other G159 Cases.
 HAEGER V. GOODYEAR TIRE & RUBBER CO. 17

ultimately settled, but the amount of the settlements is either
held under seal, or not reflected in the record of those cases.
As stated above, presumably with the benefit of the Heat Rise
tests, Schalmo yielded a $5.6 million verdict to the plaintiffs.

The district court considered each of the Sanctionees’
conduct in the Other G159 Cases in light of their conduct in
the present case, and concluded that “Goodyear and its
counsel took positions in other G159 cases directly contrary
to the positions they now ask this Court to accept. The
positions taken in these other cases, when Goodyear and its
counsel were not attempting to avoid sanctions, are reliable.”

The district court concluded that sanctions under
28 U.S.C. § 1927 could not reach Goodyear’s conduct, and
that sanctions pursuant to Rule 11 were unavailable as they
should be imposed before a case is closed. Accordingly,
relying upon its inherent power, the district court determined
that the most appropriate sanction for “remedying a years-
long course of misconduct” would be “to award Plaintiffs all
of the attorneys’ fees and costs they incurred after Goodyear
served its supplemental responses to Plaintiffs’ First
Request.” The district court held that the supplemental
responses, in which Goodyear only produced the FMVSS119
DOT tests, “was the first definitive proof that Goodyear was
not going to cooperate in the litigation process.” The court
also noted that while it would be impossible to determine how
the litigation would have proceeded if Goodyear had made
the proper disclosures, the case more likely than not would
have settled much earlier, and the Haegers believe, for
considerably more money.

The district court then conducted an exhaustive analysis
of the documentation submitted by Plaintiffs concerning the
18 HAEGER V. GOODYEAR TIRE & RUBBER CO.

time entries of its attorneys after Goodyear served its
supplemental responses to Plaintiffs’ First Request, and the
extensive objections made by Goodyear and its counsel to
these time entries. The district court “spent considerable time
reviewing each time entry and its associated objections in an
attempt to ensure the appropriate size of the award,” and with
painstaking attention to detail, made adjustments based on
Goodyear’s objections. Ultimately, using the lodestar method,
the district court found that the Haegers should be reimbursed
$2,741,201.16 in attorneys’ fees and costs. The district court
determined that Hancock would be responsible for twenty
percent of these fees and costs “[b]ased on his relatively
limited involvement, but in light of his repeated
misstatements and his failure to correct the record once he
learned his representations were false.” Musnuff and
Goodyear were held jointly responsible for the remaining
eighty percent of the fees and costs.

The district court also ordered Goodyear “to file a copy of
this Order in any G159 case initiated after the date of this
Order,” with a footnote indicating that “Goodyear may apply
to the court hearing the case to be excused from this
requirement.” The district court concluded that such filings
were necessary based on Goodyear’s history of engaging in
discovery misconduct during every G159 case that had been
brought to the court’s attention. The court reasoned that by
filing the Order in future G159 cases, Goodyear would “alert
plaintiffs and the courts” that it has not acted “in good faith
in the past when litigating such cases,” and give notice of the
tests Goodyear had “attempted to conceal in previous cases.”
 HAEGER V. GOODYEAR TIRE & RUBBER CO. 19

STANDARD OF REVIEW AND JURISDICTION

“The district court’s award of sanctions and the amount
of the award are reviewed for abuse of discretion.” B.K.B. v.
Maui Police Dep’t, 276 F.3d 1091, 1108 (9th Cir. 2002)
(citing Chambers v. NASCO, Inc., 501 U.S. 32, 55 (1991)).
Since imposing a sanction under its inherent authority “is
within the sound discretion of the district court, we will not
overturn its decision unless the court committed an error of
law or the court’s factual determinations were clearly
erroneous.” Lasar v. Ford Motor Co., 399 F.3d 1101, 1109
(9th Cir. 2005).

We need not resolve whether a bad faith finding must be
supported by clear and convincing evidence, or whether a
lesser quantum of evidence suffices, because the district court
did not abuse its discretion in finding clear and convincing
evidence of bad faith by the Sanctionees in this case. See
Lahiri v. Universal Music and Video Distrib. Corp., 606 F.3d
1216, 1219 (9th Cir. 2010).

We have jurisdiction over the Sanctionees’ appeals
pursuant to 28 U.S.C. § 1291.

DISCUSSION

I. The District Court’s Inherent Power

“It has long been understood that [c]ertain implied powers
must necessarily result to our Courts of justice from the
nature of their institution, power which cannot be dispensed
with in a Court, because they are necessary to the exercise of
all others.” Chambers v. NASCO, Inc., 501 U.S. 32, 43 (1991)
(internal citations and quotation marks omitted). The
20 HAEGER V. GOODYEAR TIRE & RUBBER CO.

Supreme Court has specifically recognized that the “inherent
power of a federal court to investigate whether a judgment
was obtained by fraud, is beyond question.” Universal Oil
Prods. Co. v. Root Refining Co., 328 U.S. 575, 580 (1946)
(citing Hazel-Atlas Glass Co. v. Hartford Empire Co.,
332 U.S. 238 (1944)).

This inherent power is not limited by overlapping statutes
or rules. The Supreme Court explained “that the inherent
power of a court can be invoked even if procedural rules exist
which sanction the same conduct.” Chambers, 501 U.S. at 49.
Thus, the Sanctionees’ argument that the district court should
have relied on Federal Rule of Civil Produce 37 fails.3 While

3
Rule 37 provides that “[o]n notice to other parties and all affected
persons, a party may move for an order compelling disclosure or
discovery. The motion must include a certification that the movant has in
good faith conferred or attempted to confer with the person or party failing
to make disclosure or discovery in an effort to obtain it without court
action.” If the party fails to comply with a court order, Rule 37 provides
the following remedies: Rule 37(b)(2)(A) “If a party . . .fails to obey an
order to provide or permit discovery . . . the court where the action is
pending may issue further just orders. They may include the following:
(i) directing that the matters embraced in the order or other designated
facts be taken as established for purposes of the action, as the prevailing
party claims; (ii) prohibiting the disobedient party from supporting or
opposing designated claims or defenses, or from introducing designated
matters in evidence; (iii) striking pleadings in whole or in part; (iv) staying
further proceedings until the order is obeyed; (v) dismissing the action or
proceeding in whole or in part; (vi) rendering a default judgment against
the disobedient party; or (vii) treating as contempt of court the failure to
obey any order except an order to submit to a physical or mental
examination”; Rule 37(b)(2)(C) “Instead of or in addition to the orders
above, the court must order the disobedient party, the attorney advising
that party, or both to pay the reasonable expenses, including attorney’s
fees, caused by the failure, unless the failure was substantially justified or
other circumstances make an award of expenses unjust.”
 HAEGER V. GOODYEAR TIRE & RUBBER CO. 21

Rule 37 also provides a method to sanction a party for failing
to comply with discovery rules, it is not the exclusive means
for addressing the adequacy of a discovery response. See id.

The Sanctionees also argue that the court cannot impose
sanctions in this case because the Haegers failed to move to
compel disclosure or discovery under Rule 37, and thus the
Sanctionees never violated a district court order compelling
disclosure or discovery. More specifically, the Sanctionees
contend that absent such a motion to compel or order
requiring production, Goodyear and its counsel complied with
discovery rules, and thus the district court does not have
power to sanction the Sanctionees’ conduct. The Supreme
Court has expressly rejected this argument. “[N]either is a
federal court forbidden to sanction bad-faith conduct by
means of the inherent power simply because that conduct
could also be sanctioned under the statute or the Rules . . . if
in the informed discretion of the court, neither the statute nor
the Rules are up to the task, the court may safely rely on its
inherent power.” Id. at 50. We hold that it was not an abuse
of discretion for the district court to rely on its inherent power
to sanction the conduct at issue in this case, and to determine
that Rule 37 did not provide the appropriate remedy,
especially since the discovery fraud was not discovered until
after the case had settled.

Additionally, if a party fails to disclose or supplement an earlier
response, Rule 37(c)(1) states: “If a party fails to provide information . . .
the party is not allowed to use that information . . . to supply evidence on
a motion, at a hearing, or at a trial, unless the failure was substantially
justified or is harmless. In addition to or instead of this sanction, the court,
on motion and after giving an opportunity to be heard: (A) may order
payment of the reasonable expenses, including attorney’s fees, caused by
the failure; (B) may inform the jury of the party’s failure; and (C) may
impose other appropriate sanctions . . . .”
22 HAEGER V. GOODYEAR TIRE & RUBBER CO.

A. Bad Faith

Before awarding sanctions pursuant to its inherent power,
“the court must make an express finding that the sanctioned
party’s behavior ‘constituted or was tantamount to bad
faith.’” Leon v. IDX Sys. Corp., 464 F.3d 951, 961 (9th Cir.
2006). We have found bad faith in a variety of conduct
stemming from “a full range of litigation abuses.” Chambers,
501 U.S. at 47. For example “[a] party ‘demonstrates bad
faith by delaying or disrupting the litigation . . . .’ Primus
Auto. Fin. Servs., Inc. v. Batarse, 115 F.3d 644, 648 (9th Cir.
1997).” Leon, 464 F.3d at 961 (plaintiff demonstrated bad
faith by going to extraordinary measures to destroy evidence).

Actions constituting a fraud upon the court or actions that
cause “the very temple of justice [to be] defiled” are also
sufficient to support a bad faith finding. Chambers, 501 U.S.
at 46. For example, in Pumphrey v. K.W. Thompson Tool
Company, the decedent’s family brought a wrongful death
action against a gun manufacturer after the decedent dropped
the manufacturer’s gun with the safety devices engaged and
it fired, killing the decedent. 62 F.3d 1128, 1130 (9th Cir.
1995). During trial, the manufacturer introduced tests
showing that when the gun was dropped, the safeties
performed as designed and the gun never fired. Id. After the
trial concluded, Plaintiffs’ attorney learned that in a
subsequent, unrelated lawsuit, the manufacturer had produced
tests during which the gun had fired when dropped. Id. These
tests had not been produced during Plaintiffs’ litigation even
though they were available two months before trial, and
despite the manufacturer’s assurance that gun tests would be
made available upon their discovery. Id. at 1131. The
manufacturer also affirmatively mischaracterized the nature
of these tests during later discovery, and introduced testimony
 HAEGER V. GOODYEAR TIRE & RUBBER CO. 23

during trial that it had never seen the gun fire when dropped.
Id. at 1132. Plaintiffs moved to set aside the trial verdict,
pursuant to Federal Rule of Civil Procedure 60(b). Id. at
1130. We upheld the district court’s grant of a new trial
finding that the manufacturer had “engaged in a scheme to
defraud the jury, the court, and [the Plaintiffs], through the
use of misleading, inaccurate, and incomplete responses to
discovery requests, the presentation of fraudulent evidence,
and the failure to correct the false impressions created . . . .”
Id. at 1132. We further held that the “end result of the scheme
was to undermine the judicial process, which amounts to
fraud upon the court.” Id. (citing Hazel-Atlas Glass Co. v.
Hartford Empire Co., 332 U.S. 238, 245–46, 250 (1944)
(deliberately planned scheme to present fraudulent evidence
constitutes fraud upon the court); Abatti v. C.I.R., 859 F.2d
115, 118 (9th Cir. 1988) (fraud upon the court involves
unconscionable plan or scheme to influence the court
improperly)). While the procedural posture of Pumphrey
differs from the one in this case, the similarities with this case
support the conclusion that the district court did not abuse its
discretion in concluding that Sanctionees engaged in fraud
upon the court in their scheme to avoid their discovery
obligations.

In B.K.B. v. Maui Police Department, we found
“counsel’s reckless and knowing conduct” to be “tantamount
to bad faith and therefore sanctionable under the court’s
inherent power.” 276 F.3d 1091, 1108 (9th Cir. 2002)
(emphasis in original). B.K.B. was a sexual harassment suit,
in which defense counsel introduced testimony in violation of
24 HAEGER V. GOODYEAR TIRE & RUBBER CO.

Federal Rule of Evidence 412.4 Defense counsel introduced
this testimony after two Rule 412 pre-trial motions had been
denied, and after he assured the district judge in a sidebar that
the anticipated testimony would not violate Rule 412. Id. at
1107. We concluded that “defense counsel’s introduction of
[the] testimony was a knowing and intentional violation of
Rule 412” and further held that “[i]f left unsanctioned,
defense counsel’s behavior in this case would undermine the
very purpose and force of Rule 412’s strictures.” Id. at 1108.
In this case, the district court did not abuse its discretion in
concluding that the Sanctionees’ failure to produce relevant
documents despite their affirmative obligations to do so
pursuant to Rules 26 and 34, and their misrepresentations in
numerous discovery disputes (which the district court
estimated took “approximately sixteen hours in court”), was
tantamount to bad faith. The Sanctionees’ conduct in this
matter undermines the very purpose of the federal rules
requiring disclosure of relevant and responsive documents.

It is clear the district court did not abuse its discretion in
concluding that Hancock, Musnuff, and Goodyear acted in
bad faith in this litigation. The Sanctionees, throughout
numerous discovery dispute filings and hearings, convinced
the district court that Goodyear had produced all test data
relevant to the Haegers’ claims. The district court noted that
“[i]n fact, at various points the Court became exasperated
with Plaintiffs’ apparently unsubstantiated claims that
additional information must exist.” It was not until the

4
Rule 412: “(a) Prohibited Uses. The following evidence is not
admissible in a civil or criminal proceeding involving alleged sexual
misconduct: (1) evidence offered to prove that a victim engaged in other
sexual behavior; or (2) evidence offered to prove a victim’s sexual
predisposition.”
 HAEGER V. GOODYEAR TIRE & RUBBER CO. 25

sanctions proceedings that the district court realized that the
Sanctionees had

adopted a plan of making discovery as
difficult as possible, providing only those
documents they wished to provide, timing the
production of the small subset of documents
they were willing to turn over such that it was
inordinately difficult for Plaintiffs to manage
their case, and making false statements to the
Court in an attempt to hide their behavior.

The Haegers served their First Request in September
2006. The Sanctionees merely objected to this request, and
did not produce any documents. The Sanctionees then filed
supplemental responses in November 2006, which included
the production of only one group of tests – the FMVSS119
DOT tests. It was not an abuse of discretion for the district
court to find that production of just one group of tests meant
that the Sanctionees had failed to search properly for relevant
G159 tests in response to the Haegers’ First Request, and had
done so in bad faith.

The Sanctionees then failed to disclose promptly relevant
G159 tests after a proper search had been conducted. Musnuff
and Hancock had the High Speed tests in their possession at
the latest in February 2007, yet failed to disclose promptly the
High Speed tests to the Haegers. Instead, the Sanctionees
chose to depose the Haegers’ expert in May 2007, and then
produce the High Speed tests in June 2007. Musnuff was next
aware of more tests – including the Heat Rise tests, DOT
endurance tests, crown durability tests, and bead durability
tests — at least by August 2007, and Hancock was aware of
these same tests at least by June 2008. However, the
26 HAEGER V. GOODYEAR TIRE & RUBBER CO.

Sanctionees again failed to disclose properly these tests upon
their discovery. Without producing any of these additional
tests, Goodyear settled with the Haegers in April 2010.

The district court concluded that the Sanctionees should
have turned over the High Speed tests, Heat Rise tests, DOT
endurance tests, crown durability tests, and bead durability
tests as soon as they were discovered, as they were all
responsive to the First Request. The district court did not
abuse its discretion in concluding that this decision to
withhold documents “was a bad faith attempt to hide
responsive documents,” which would not have been
uncovered but for the sanctions proceedings. This finding of
bad faith is bolstered by Hancock’s repeated representations
to the district court that Goodyear was complying with all
discovery requests when in fact, Goodyear was withholding
relevant and responsive documents.

Any attempt by Goodyear to argue that the district court
abused its discretion in preventing Goodyear from passing the
blame on to its attorneys is unavailing. Goodyear “is deemed
bound by the acts of [its lawyers] and is considered to have
‘notice of all facts, notice of which can be charged upon the
attorney.’” Link v. Wabash R. Co., 370 U.S. 626, 634 (1962);
see also Lockary v. Kayfetz, 974 F.2d 1166, 1169–70 (9th Cir.
1992). Additionally, the district court did not abuse its
discretion in concluding that Goodyear participated directly
in the discovery fraud: Goodyear’s Rule 30(b)(6) witness,
authorized to testify on Goodyear’s behalf, falsely testified
during deposition that no additional tests were available
beyond the High Speed tests that had been turned over to the
Haegers; and Goodyear’s in-house counsel, Okey, maintained
responsibility for reviewing and approving all the incomplete
and misleading discovery responses.
 HAEGER V. GOODYEAR TIRE & RUBBER CO. 27

We hold that it was not an abuse of discretion for the
district court to find that Hancock, Musnuff and Goodyear
each acted in bad faith.

B. Monetary Sanctions

Once a district court makes a finding of bad faith, it has
the discretion to “award sanctions in the form of attorneys’
fees against a party or counsel.’” Leon v. IDX Sys. Corp.,
464 F.3d 951, 961 (9th Cir. 2006) (quoting Primus Auto. Fin.
Servs., Inc. v. Batarse, 115 F.3d 644, 648 (9th Cir. 1997)). “A
primary aspect of that discretion is the ability to fashion an
appropriate sanction for conduct which abuses the judicial
process.” Chambers v. NASCO, 501 U.S. 32, 44–45 (1991).

In its analysis of sanctions, the district court noted that
due to the extent of the bad faith of the Sanctionees in this
case, had the misconduct “come to light while the case was
ongoing, entry of default judgment with a trial on damages
would have been the obvious solution.” However, since the
case was settled and closed before the misconduct was
discovered, the court instead was faced with the task of
determining the appropriate amount of sanctions to make the
Plaintiffs whole in the form of attorneys’ fees and costs. The
court found that the Sanctionees had engaged in a “years-long
course of misconduct,” which had made it difficult for the
court to “separate the fees incurred due to legitimate activity
from the fees and costs incurred due to Goodyear’s refusal to
abide by clear and simple discovery obligations.” The court
explained that “if Goodyear had responded to Plaintiffs’ First
Request with all responsive documents, Goodyear might have
decided to settle the case immediately,” and thus it was
possible to “conclude practically all of Plaintiffs’ fees and
costs were due to misconduct.” The district court concluded
28 HAEGER V. GOODYEAR TIRE & RUBBER CO.

that “[w]hile there is some uncertainty how the litigation
would have proceeded if Goodyear and its attorneys were
acting in good faith, based on Goodyear’s pattern and practice
in G159 cases, the case more likely than not would have
settled much earlier.” Thus the district court was informed in
part by past settlement practices of Goodyear in the Other
G159 Cases in reaching its determination concerning
appropriate compensatory damages in this case. The district
court then determined, relying upon the reasoning in
Chambers, that while “[i]t is difficult to reconcile Chambers
with . . . Miller,” “the most appropriate sanction is to award
Plaintiffs all of the attorneys’ fees and costs they incurred
after Goodyear served its supplemental responses to
Plaintiffs’ First Request” as this “was the first definitive proof
that Goodyear was not going to cooperate in the litigation
process.” The district court held that “in these unique
circumstances, it is inappropriate to limit the award to the
fees and costs that could be directly linked to the misconduct;
proving that linkage is an almost impossible task given how
the misconduct permeated the entirety of this case.”

The Sanctionees claim that this determination was made
in error because sanctions must be directly linked to damage
caused by its bad faith conduct, citing Miller v. City of Los
Angeles, 661 F.3d 1024, 1029 (9th Cir. 2011). The
Sanctionees’ confidence in Miller is misplaced, for at least
two reasons: (1) to the degree Miller can be read to require
that the specific amount of attorneys’ fees and costs awarded
when a court invokes its inherent powers must be directly
linked to the bad faith conduct, it flouts controlling United
States Supreme Court case law; and (2) under Chambers, the
district court did all it was required to do in this case in
determining the appropriate amount of fees to award as
 HAEGER V. GOODYEAR TIRE & RUBBER CO. 29

sanctions to compensate the Plaintiffs for the damages they
suffered as a result of Sanctionees’ bad faith.

The panel majority’s opening paragraph in Miller
characterized the case as follows: “This is a strange case. Its
resolution hinges on the absence, as a factual matter, of
something we must accept as a legal matter. There are
unlikely to be many more like it, so this opinion’s
precedential value is probably limited.” Id. at 1026. What was
missing? The answer: bad faith, an essential requirement for
invoking the district court’s inherent powers. Miller was a
wrongful death suit brought against the City of Los Angeles,
its police department, police chief, and a sergeant who shot
and killed the decedent. The district court “issued an in limine
order precluding defendants from arguing that the decedent
was armed when he was shot.” Id. at 1026. The district court
found that during the trial’s summation, defense counsel
violated its in limine order by stating that before decedent
was shot, decedent had shot another man, and awarded
sanctions under its inherent power for the entire cost of the
trial after the jury hung. Counsel conceded that he had
violated the court’s order, and even apologized for his error,
but the district court nevertheless construed counsel’s conduct
as “tantamount to bad faith,” granted plaintiffs’ motion for
sanctions, and sanctioned defendants $63,687.50. Id. There
was just one problem. A careful review of the record showed
that counsel hadn’t actually violated the court’s in limine
order, despite his confession that he had done so. That put the
majority of our panel into a quandary. What should one do
about a lawyer who confesses a non-existent error? In this
case, the panel majority concluded that it was bound by what
the lawyer had confessed, but that since the lawyer had not
conceded bad faith, and clearly had not actually violated the
court’s order, there could be no finding of bad faith. Put
30 HAEGER V. GOODYEAR TIRE & RUBBER CO.

another way, “you can’t have a bad faith violation without a
violation.” Id. at 1029. The case was over, since a district
court cannot use its inherent power to sanction a party
without a finding of bad faith.

But even the subsequent analysis in Miller is of little help
to the Sanctionees here. Miller addressed whether the district
court linked the alleged bad faith conduct to the harm
suffered, i.e, whether the district court found that the
attorney’s alleged statement caused the jury to hang. The
panel concluded that “without a finding that [defense
counsel’s violation] caused the first jury to hang, the district
court had no power to order defendants to compensate
plaintiffs for the attorneys’ fees and costs they spent on the
first trial.” Id. Thus, while Miller suggests that harm is
necessary to compensate a party, Miller makes no holding on
the measure of attorneys’ fees allowed once it is clear that the
bad faith of a party has actually caused harm. 5 In this case,
however, there is no doubt that the Sanctionees’ bad faith
conduct caused significant harm in forcing the Haegers to
engage in sham litigation, and in their likely foregoing
millions of dollars in the settlement they accepted under false
pretenses of the Sanctionees, as found by the district court in
light of Goodyear’s conduct in the Other G159 Cases.

5
In re Dyer, 322 F. 3d 1178 (9th Cir. 2003), also cited by the panel,
involved the violation of an automatic stay in bankruptcy, and a purported
sanctions award based on the bankruptcy court’s statutory contempt
power, granted by 11 U.S.C. §105(a). Our panel found that a bankruptcy
court has no authority to impose a non-compensatory “serious punitive”
sanction. Id. at 1195. This holding, of course, has no bearing on this case.
B.K.B. v. Maui Police Dep’t, 276 F. 3d 1091, 1109 (9th Cir. 2002) also
referenced by the Miller panel, is discussed infra.
 HAEGER V. GOODYEAR TIRE & RUBBER CO. 31

Even though Miller does not provide an answer, we next
consider how close a link is required between the harm
caused and the compensatory sanctions awarded when a court
invokes its inherent power. The question is squarely answered
by Chambers v. NASCO, Inc., the Supreme Court’s strongest
statement about the use of a court’s inherent power. 501 U.S.
32 (1991). In Chambers, the Supreme Court upheld a district
court’s determination that “full attorney’s fees were
warranted due to the frequency and severity of [the party]’s
abuses of the judicial system.” 501 U.S. at 56. The underlying
action in Chambers was a suit by NASCO seeking
Chambers’s specific performance of an agreement to sell a
television station’s facilities and broadcast license to
NASCO. Chambers responded to the suit by attempting to put
the properties at issue beyond the reach of the district court
through various transfers, ignoring the district court’s
preliminary injunction, filing meritless motions and
pleadings, attempting to conduct depositions in violation of
the Federal Rules of Civil Procedure, and engaging in other
behavior aimed at frustrating the possibility of specific
performance. The district court found these actions to be “part
of a sordid scheme of deliberate misuse of the judicial
process designed to defeat NASCO’s claim by harassment,
repeated and endless delay, mountainous expense and waste
of financial resources.” Id. at 57 (internal quotation marks
omitted).

The district court then awarded NASCO an amount
“which represented the entire amount of NASCO’s litigation
costs paid to its attorneys.” Id. at 40. The Supreme Court
dismissed Chambers’s argument, which was virtually
identical to the causation requirement claim the Sanctionees
are making in this case, that “the fact that the entire amount
of fees was awarded means that the District Court failed to
32 HAEGER V. GOODYEAR TIRE & RUBBER CO.

tailor the sanction to the particular wrong,” and instead
upheld the district court’s conclusion “that full attorney’s fees
were warranted due to the frequency and severity of
Chambers’s abuses of the judicial system and the resulting
need to ensure that such abuses were not repeated.” Id. at 57.
The Supreme Court further explained that it was within the
district court’s discretion to “compensate NASCO by
requiring Chambers to pay for all attorney’s fees.” Id. The
Supreme Court reasoned that the district court “imposed
sanctions for the fraud [Chambers] perpetrated on the court
and the bad faith he displayed toward both his adversary and
the court throughout the course of litigation.” Id. at 55
(internal citations and quotation marks omitted). And, such
sanctions both “vindicat[e] judicial authority without resort
to the more drastic sanctions available for contempt of court
and mak[e] the prevailing party whole for expenses caused by
his opponent’s obstinacy.” Id. at 46 (internal citation and
quotation marks omitted); see also Hutto v. Finney, 437 U.S.
678, 691 (1978). As a United States Supreme Court case,
Chambers clearly trumps Miller, to the degree Miller’s dicta
conflicts with Chambers, as well as any other Ninth Circuit
case to the contrary. Thus, even though the district court
in this case struggled with how to reconcile Miller
with Chambers, it appropriately awarded the Haegers all
their attorneys’ fees and costs in prosecuting the action
once the Sanctionees began flouting their clear discovery
obligations and engaging in frequent and severe abuses of the
judicial system.

Given the teaching of Chambers, the district court’s
findings and ruling in this case regarding monetary sanctions
fully comply with law. First, the Supreme Court expressly
rejected the linkage argument made by the Sanctionees here
when it upheld the award for full attorney’s fees “due to the
 HAEGER V. GOODYEAR TIRE & RUBBER CO. 33

frequency and severity of Chambers’s abuses of the judicial
system and the resulting need to ensure that such abuses were
not repeated.” Chambers, 501 U.S. at 57. Secondly, it made
clear that we review the district court’s determinations in
arriving at the proper measure of compensatory damages for
abuse of discretion. Id.

The district court here used the lodestar method to
calculate the appropriate amount of fees incurred as a result
of the Sanctionees’ bad faith, and noted that this “method
contemplates multiplying the ‘reasonable hourly rate’ by the
number of hours ‘reasonably expended.’ Morales v. City of
San Rafael, 96 F.3d 359, 363 (9th Cir. 1996).” The district
court then went to great lengths in reviewing the “240 pages
of time entries” submitted by the Haegers, and the
combination of objections by Goodyear and its attorneys to
“[a]lmost every time entry” to ensure “the appropriate size of
the award.” In a nineteen-page order, the district court
addressed each objection made by the Sanctionees to the
court’ s proposed award, and made five adjustments based on
these objections: 1) “out of an abundance of caution,” the
district court imposed a twenty percent reduction of $29,310
for recreation of time entries; 2) the district court held that
because some of the time entry descriptions were vague
and/or incomplete, it could not conclude that this time was
reasonably expended absent the appropriate information, and
reduced the award by $32,117; 3) the district court reduced
the award by $4,880.73, equaling the costs for which the
Haegers did not submit supporting documents; 4) the district
court subtracted $50,721 for time entries involving work of
a clerical nature; and 5) the district court found that
$25,827.50 should be reduced for excessive billing.
Applying these adjustments, the district court awarded the
amount the court reasonably believed it cost the Haegers to
34 HAEGER V. GOODYEAR TIRE & RUBBER CO.

litigate against a party and attorneys during the time when
that party and those attorneys were acting in bad faith.
Nothing more is required under Chambers or our case law,
and, especially given the great care with which the court
reviewed the relevant data during its consideration of legal
fees, the court clearly did not abuse its discretion.

Our dissenting colleague suggests that Chambers’s
control over this case was undermined by International
Union, United Mine Workers v. Bagwell, 512 U.S. 821(1994),
and our own F.J. Hanshaw Enterprises, Inc. v. Emerald
River Development, Inc., 244 F. 3d 1128 (9th Cir. 2001). He
also suggests that the district court’s sanctions in this case
were punitive, not compensatory. With due respect, our
colleague is mistaken on both counts. Bagwell involved a
criminal contempt proceeding stemming out of a protracted
labor strike, in which a union was found to have violated the
trial court’s orders hundreds of times, as determined in eight
separate contempt hearings. Although the trial court labeled
the over $64 million it levied in fines against the union “civil
and coercive,” Bagwell, 512 U.S. at 824, once the union and
the companies settled their labor dispute, and moved to vacate
the contempt fines, the trial judge refused to do so, declaring
that they were “payable in effect to the public.” Id. at 825.
The Supreme Court appropriately treated the fines as
punishment for “criminal contempt,” and required courts to
provide additional protections to the defendants in such cases.
Id. at 826. However, even though Chambers had been
decided only 3 years before by the Supreme Court, Bagwell
did not even mention Chambers, let alone overrule or
distinguish it. Contrary to the facts in this case, the Court
noted:
 HAEGER V. GOODYEAR TIRE & RUBBER CO. 35

[N]either any party nor any court of the
Commonwealth has suggested that the
challenged fines are compensatory. At no
point did the trial court attempt to calibrate
the fines to damages caused by the union’s
contumacious activities or indicate that the
fines were to compensate the complainant for
losses sustained. The nonparty governments,
in turn, never requested any compensation or
presented any evidence regarding their
injuries, never moved to intervene in the suit,
and never actively defended the fines
imposed.

Id. at 834 (internal citation and quotation marks omitted).

F.J. Hanshaw, also cited by our dissenting colleague, is
extremely helpful in confirming the validity of the
compensatory damages awarded in this case. F.J. Hanshaw
involved a dispute between two wealthy brothers about a
partnership dissolution. 244 F.3d at 1132. Just as a court-
appointed receiver was about to render an accounting to the
court, one of the brothers, Frederick J. Hanshaw (FJH),
allegedly offered the receiver a bribe of $100,000, as well as
future business. Id. at 1132–33. When the attempted bribe
came to the attention of the district court, the court referred
the matter to the FBI, which, after conducting several
interviews, decided not to proceed with formal criminal
charges against FJH. Id. at 1133. Thereafter, the district court
conducted two evidentiary hearings to determine whether
FJH had attempted to defraud the court and his brother. Id. at
1133–34. After weighing the evidence, the court concluded
that there had been an attempt by FJH to bribe the receiver,
and sanctioned FJH and his corporation $500,000, payable to
36 HAEGER V. GOODYEAR TIRE & RUBBER CO.

the United States, and imposed a $200,000 sanction against
them in favor of his brother, Gordon Hanshaw (GH). Id. at
1135. Relying on Bagwell, our court found that the $500,000
sanction was “clearly punitive and intended to vindicate the
court’s authority and the integrity of the judicial process. The
sanction was a substantial ‘flat, unconditional fine’; was not
intended to compensate [GH] but rather was made payable to
the United States . . . .” Id. at 1138. Since the $500,000
sanction was found to be punitive in nature, we reversed the
district court because FJH and his corporation did not receive
all the procedural protections to which they were entitled. Id.
at 1139–40, 1145.

However, we upheld the district court’s $200,000
sanction in favor of GH, despite FJH’s contention that it too
was criminal in nature and should be vacated. Id. at 1142,
1145. We noted that: (a) “[u]nlike a punitive sanction,
particularly one that is payable to the government or the
court, a compensatory award payable to a party does not
place the court in a prosecutorial role”; (b) “[w]hen
determining whether and how much to compensate a party,
the court sits in the same adjudicatory position it does when
it resolves most disputes. Although the court has an
institutional interest in the matter, the court in essence is
resolving a dispute between litigants: one party claims it was
wronged by the other and wants to be reimbursed by the
losses it sustained. For these reasons, when the court is
adjudicating a compensatory civil sanction, the traditional
procedural protections applicable to civil proceedings are
sufficient to satisfy the Constitution’s requirement of due
process”; (c) in concluding that the $200,000 award to GH
was compensatory, we reasoned that “[t]he award was
payable to [GH] . . . and was meant to offset the expenses he
incurred because of [FJH’s] misconduct. As a result of the
 HAEGER V. GOODYEAR TIRE & RUBBER CO. 37

bribe attempt, the entire receivership process was delayed by
nearly six months and [GH] was forced to incur additional
attorney fees. The court had before it the billing reports from
[GH’s] attorneys and [GH] had asked the court for $824,000
in compensation . . . . Exercising its discretion, the court
awarded $200,000 to [GH]”; and (d) “[b]ased upon this
record, we conclude that the $200,000 award was intended to
compensate [GH] for losses sustained as a result of [FJH’s]
misconduct and is civil in nature.” Id. at 1142 (citing
Chambers, 501 U.S. at 56–58).

Just like the district court did in F.J. Hanshaw in its
$200,000 award to GH, the court here responded to a
complaint filed by the Plaintiffs seeking damages for the
Sanctionees’ bad faith, and awarded as compensatory
damages the amount of the attorneys’ fees and costs it
carefully determined the Haegers had actually incurred
litigating against the Sanctionees, during the time they were
acting in bad faith.

“[W]hether a contempt is civil or criminal turns on the
‘character and purpose’ of the sanction involved,” meaning
a civil sanction is “for the benefit of the complainant,” while
a criminal sanction is “punitive, to vindicate the authority of
the court.” Bagwell, 512 U.S. at 827–28 (internal quotations
omitted). A fine is almost always civil it if “compensate[s]
the complainant for losses sustained,” Id. at 829 (internal
quotations omitted), whereas it is generally punitive in nature
when it “was not intended to compensate [the party] but
rather [is] made payable to the United States.” F.J. Hanshaw,
244 F.3d at 1138. Other Ninth Circuit cases affirm these
points. In B.K.B. v. Maui Police Department, the district
court found that the sanctionees had acted in bad faith in
violating the Federal Rules of Evidence while questioning a
38 HAEGER V. GOODYEAR TIRE & RUBBER CO.

witness about the Plaintiff during trial, and awarded “$5,000
to compensate Plaintiff for the pain and suffering caused by
the public embarrassment resulting from [the] testimony.”
276 F.3d 1091, 1099 (9th Cir. 2002). We upheld the sanction,
holding that “the amount the court imposed reflected its
assessment of the actual harm incurred by Plaintiff . . . [in]
emotional and reputational damage.” Id. at 1109. Because the
district court imposed the sanctions for the purpose of
compensation, they were within its discretion.

The district court in Lasar v. Ford Motor Company
imposed monetary sanctions to compensate “for unnecessary
costs and attorney’s fees.” 399 F.3d 1101, 1111 (9th Cir.
2005). In Lasar, the sanctionees’ attorney violated pretrial
orders during his opening statement, and the court granted
Lasar’s motion for mistrial and discharged the jury. Id. at
1106. The district court then instructed “Lasar’s attorneys to
prepare an affidavit detailing Lasar’s costs and attorney’s fees
incurred over the previous two weeks.” Id. While it is unclear
why the district court determined that Lasar should be
compensated for two weeks of attorney’s fees, the sanctions
were upheld as we determined that “[t]he monetary sanctions
imposed . . . were compensatory in nature because they were
designed to compensate Lasar for unnecessary costs and
attorney’s fees.” Id. at 1111. Thus, it was within the district
court’s discretion to determine the time frame in which Lasar
sustained “losses.”

Collectively, these cases make clear that the sanctions
awarded here were entirely lawful and appropriate. Not one
dime was awarded to the government or the court. Just like
the district court in F.J. Hanshaw, the district court here
awarded compensatory damages after the aggrieved party
filed suit, or filed a motion, seeking compensation for
 HAEGER V. GOODYEAR TIRE & RUBBER CO. 39

damages suffered as a result of the bad faith of the opposing
party. In awarding compensatory damages, the district court
did not act as a prosecutor, but instead allowed the accused
and accusing parties to file extensive briefs, and held
extensive hearings to determine the truth of what had
happened. It took great care in parsing and reducing the
attorney fee claims of the Plaintiffs. The accused were
granted full due process and afforded all the protections
required in civil sanctions hearings. While the district court
had an institutional interest in the proceedings (just like the
district court did in F.J. Hanshaw), its stated purpose was to
properly compensate the Plaintiffs for damages they suffered
as the result of the Sanctionees’ fraudulent conduct. In sum,
the district court acted well within its discretion in awarding
all the attorneys’ fees and costs incurred by the Plaintiffs after
Goodyear served its supplemental responses to Plaintiffs’
First Request.

C. Non-Monetary Sanctions

The district court also used its inherent power to order
Goodyear to file a copy of the Order in any G159 case
initiated after the date of that Order. The district court
reasoned that “[b]ased on Goodyear’s history of engaging in
serious discovery misconduct in every G159 case brought to
this Court’s attention, filing this Order in future G159 cases
will alert plaintiffs and the courts that Goodyear has, in the
past, not operated in good faith when litigating such cases.”
The district court found that this would “serve as a notice of
the existence of certain tests Goodyear attempted to conceal
in previous cases.” The district court did not limit this
requirement in either time or scope. Goodyear argues that this
sanction is too severe as it impacts the fairness of unrelated
40 HAEGER V. GOODYEAR TIRE & RUBBER CO.

proceedings, and thus should be reversed as an abuse of the
district court’s discretion.

Courts have the inherent power to impose various non-
monetary sanctions. See Thompson v. Hous. Auth. of Los
Angeles, 782 F.2d 829, 831 (9th Cir. 1986) (inherent power
includes power to “impose sanctions including, where
appropriate, default or dismissal”); Anheuser-Busch, Inc. v.
Natural Beverage Distribs., 69 F.3d 337, 348 (9th Cir. 1995)
(dismissal pursuant to inherent powers); Hester v. Vision
Airlines, Inc., 687 F.3d 1162 (9th Cir. 2012) (affirming order
striking answer and entering default judgment). However,
even if a given sanction is available, the scope of the sanction
must also be appropriate. Lewis v. Tel. Emps. Credit Union,
87 F.3d 1537, 1558 (9th Cir. 1996). A sanction should be
“carefully fashioned to deny [the party] the fruits of its
misconduct yet not to interfere with [the party’s future
rights].” Id.

In Hale v. U.S. Trustee, a bankruptcy court imposed a
sanction that regulated future conduct “in response to specific
and repeated acts of incompetent and irresponsible
representation.” 509 F.3d 1139, 1149 (9th Cir. 2007). The
court found a bankruptcy attorney to be “[u]nable or
unwilling to conform his conduct to the requirements
established by the Court’s prior decisions and ruling, and to
the standards by which all other debtors’ counsel in the
District abide.” Id. at 1145. We upheld the bankruptcy
court’s sanction which required that the attorney “not file, nor
shall he prepare or cause to be prepared for filing by a debtor,
any bankruptcy petitioner unless [the attorney] signs said
petition.” Id. Additionally, the attorney was directed not to
file, nor assist a debtor as counsel in filing, “any bankruptcy
petition unless [the attorney] commits to such debtor to meet
 HAEGER V. GOODYEAR TIRE & RUBBER CO. 41

the ethical and professional obligations of a debtor’s attorney
and provide the reasonable and necessary services required to
properly represent a debtor in a bankruptcy case.” Id. Thus,
this chosen sanction regulated the attorney’s practice and
specific actions that the attorney was required to take with all
future clients. We held that “[u]nder the specific acts of this
case, we cannot say that the bankruptcy court abused its
inherent power to impose sanctions.” Id. at 1149.

We are persuaded by the reasoning of Hale. We are also
persuaded by the reasoning of Gallop v. Cheney, a Second
Circuit case addressing the same issue. 667 F.3d 226 (2d Cir.
2012). The Plaintiff’s claims in Gallop were dismissed by the
district court as frivolous, and the Second Circuit affirmed the
dismissal on appeal. Id. at 228. The Second Circuit then
ordered Plaintiff and her counsel, including Dennis
Cunningham, to show cause why the Court should not impose
sanctions for what it held to be a frivolous appeal. In
response, Plaintiff moved to “disqualify the three members of
the panel from considering her petition for rehearing and
rehearing in banc.” Id. The Court sanctioned Plaintiff’s
counsel for filing a frivolous appeal, and then imposed
additional sanctions for filing the frivolous motion to
disqualify. Id. at 230. The Court held that “Cunningham acted
in bad faith in demanding the recusal of the three panel
members and any like-minded colleagues,” and ordered
Cunningham to “provide notice of the sanctions imposed
upon him in this case . . . to any federal court in this Circuit
before which he appears or seeks to appear” for a period of
one year. Id.

The district court here imposed the non-monetary
sanction so that future plaintiffs and courts would be alerted
that Goodyear had previously not operated in good faith, and
42 HAEGER V. GOODYEAR TIRE & RUBBER CO.

so that future plaintiffs would be aware of the types of G159
tests available. We agree with the district court’s reasoning,
particularly in light of the fact that it is highly likely that most
future G159 litigation will be filed in state courts (see, e.g.,
the Other G159 Cases), and state court counsel will not
necessarily investigate what might be contained in the Federal
Reporter about the conduct of Goodyear and its counsel. We
note also that the district court provided a form of safety
valve in its non-monetary sanctions because “Goodyear may
apply to the court hearing the case to be excused from [the
requirements of the Order].”

We find that the district court’s imposition of non-
monetary sanctions against Goodyear is balanced, is narrowly
tailored, and imposes no sanctions beyond what is necessary
to remedy what the district court properly perceived as an
ongoing problem in Goodyear’s G159 litigation. The district
court did not abuse its discretion in imposing non-monetary
sanctions on Goodyear.

CONCLUSION

For the reasons noted in this opinion, we hold that the
district court did not abuse its discretion in imposing
sanctions in the sum of $548,240 against Hancock, and
$2,192,961 jointly against Musnuff and Goodyear. The
district also did not abuse it discretion in imposing non-
monetary sanctions against Goodyear.
 HAEGER V. GOODYEAR TIRE & RUBBER CO. 43

We affirm the monetary and non-monetary sanctions set
forth in the district court’s Order.

The Sanctionees shall bear all costs in this appeal.

AFFIRMED.

WATFORD, Circuit Judge, dissenting:

Goodyear and its lawyers were accused in this case of
perpetrating a fraud on the Haegers and the court. If
sustained, those charges could of course severely damage the
professional reputations of the lawyers involved. The district
court accordingly approached the task of determining whether
the charges were true with great thoroughness and care. After
conducting a lengthy evidentiary hearing and reviewing
multiple rounds of briefing, the court concluded that
Goodyear and its lawyers acted in bad faith when they failed
to produce test results that were responsive to the Haegers’
document requests. I agree with the majority that the district
court’s misconduct findings are supported by the record, but
I nevertheless conclude that the $2.7 million sanctions award
must be vacated.

The district court’s finding of bad faith authorized it to
levy sanctions under its inherent power. Chambers v.
NASCO, Inc., 501 U.S. 32, 50 (1991). Those sanctions could
have taken one of two forms: punitive sanctions, which are
criminal in nature and intended to vindicate the authority of
the court; or compensatory sanctions, which are civil in
nature and designed to compensate the injured party for
losses sustained as a result of the misconduct. Miller v. City
44 HAEGER V. GOODYEAR TIRE & RUBBER CO.

of Los Angeles, 661 F.3d 1024, 1029–30 (9th Cir. 2011); F.J.
Hanshaw Enterprises, Inc. v. Emerald River Development,
Inc., 244 F.3d 1128, 1136–42 (9th Cir. 2001).1

The district court chose not to impose punitive sanctions.
Doing so would have required the court to follow procedures
applicable in criminal cases, such as appointing an
independent prosecutor, affording the accused the right to a
jury trial, and demanding proof of misconduct beyond a
reasonable doubt. Miller, 661 F.3d at 1030. Compensatory
sanctions, by contrast, may be imposed by the court acting
alone after providing adequate notice and an opportunity to
be heard. Lasar v. Ford Motor Co., 399 F.3d 1101, 1110 (9th
Cir. 2005). That is the route the district court chose to follow
here. The question for us is whether the court correctly
labeled the sanctions compensatory. If it did not—if the
sanctions are instead punitive—they cannot stand. See
Miller, 661 F.3d at 1029–30; F.J. Hanshaw, 244 F.3d at
1141–42.

In my view, the $2.7 million sanctions award cannot be
deemed compensatory. The award could be compensatory
only if the record reveals a causal connection between the
misconduct the court found and the amount it awarded. See
Miller, 661 F.3d at 1029–30. The $2.7 million award
represents all of the attorney’s fees incurred by the Haegers
after Goodyear breached its discovery obligations, including
fees for the years of litigation that ensued before the parties
settled on the first day of trial. The court purported to find

1
Sanctions may also be civil in nature if they are “designed to compel
future compliance with a court order.” International Union, United Mine
Workers v. Bagwell, 512 U.S. 821, 827 (1994). The sanctions imposed
here could not serve that function because the litigation between the
Haegers and Goodyear had long since ended.
 HAEGER V. GOODYEAR TIRE & RUBBER CO. 45

the necessary causal link between the misconduct and the fees
awarded on the theory that, if Goodyear had produced the test
results when it was supposed to, “the case more likely than
not would have settled much earlier.” I do not think that
finding is supported by the record.

Our decision in Miller v. City of Los Angeles, 661 F.3d
1024 (9th Cir. 2011), illustrates the deficiency. In that case,
the district court found that defense counsel violated an in
limine order by suggesting during closing arguments that the
decedent was armed when the defendant police officer shot
him. Id. at 1026. The trial ended in a hung jury. The district
court awarded the plaintiffs all fees incurred during the trial
as a compensatory sanction, presumably on the theory that
defense counsel’s improper closing argument caused the jury
to hang, thus necessitating a retrial and rendering all of the
fees incurred during the first trial a waste. We concluded that
the award could not be deemed compensatory. Id. at 1030.
The record did not establish a causal connection between the
lawyer’s misconduct and the jury’s inability to reach a
verdict. It was simply impossible to know, on the record
compiled in that case, why the jury could not reach a verdict,
and the limited evidence available suggested that it was not
because of defense counsel’s improper remarks. Id.

The record in this case is similarly devoid of evidence
establishing a causal link between Goodyear’s misconduct
and the fees awarded. It’s anyone’s guess how the litigation
would have proceeded if Goodyear had disclosed all
responsive test results from the start. The case might have
settled right away, as the district court assumed, but that
seems unlikely. The test results did not provide conclusive
proof that the Haegers’ tire failed due to its defective design.
To be sure, the test results were favorable to the Haegers:
46 HAEGER V. GOODYEAR TIRE & RUBBER CO.

The results supported the Haegers’ theory that Goodyear sold
tires that were prone to failure when used on motor homes at
highway speeds, especially in hot driving conditions like
those prevailing at the time of the Haegers’ accident in
Arizona. But even if those test results had been put before
the jury, Goodyear still planned to argue that the Haegers’
own tire, which had endured more than 40,000 miles of wear
and tear, failed because it struck road debris, not because the
tire was defective. And Goodyear has consistently
maintained (whether rightly or wrongly) that the test results
it concealed do not accurately predict tire behavior in real-
world driving conditions.

If anything, it seems more plausible to assume that the
case would have proceeded to trial had the test results been
timely disclosed. The Haegers’ grievance is that they
accepted a low-ball settlement from Goodyear on the eve of
trial under false pretenses. The concealed test results, they
contend, would have significantly strengthened their hand.
That suggests the Haegers would have been willing to take
their case to the jury if Goodyear had refused to increase its
offer, but it does not suggest that Goodyear would have
thrown in the towel and met the Haegers’ demands. In fact,
the only relevant data point in the record supports the
opposite conclusion. In the Schalmo case, one of the other
motor home accident suits involving the same allegedly
defective tire, Goodyear produced the test results at issue, but
the plaintiffs and Goodyear elected to take the case to trial
(with the jury returning a sizeable verdict for the plaintiffs).
Goodyear did not settle that case immediately upon disclosure
of the test results, as the district court assumed would have
happened here.
 HAEGER V. GOODYEAR TIRE & RUBBER CO. 47

In short, we simply don’t know—and have no way of
reliably figuring out—what would have happened if timely
disclosure of the test results had occurred. Thus, I think the
district court clearly erred in finding that “the case more
likely than not would have settled much earlier” had
Goodyear disclosed the test results when it should have.

The majority does not contend that a causal connection
between Goodyear’s misconduct and the fees awarded has
been shown here, as required for the sanctions to be deemed
compensatory. The majority instead contends that Miller’s
causation requirement “flouts controlling United States
Supreme Court case law.” Maj. op. at 30. I don’t think that’s
true. Miller’s discussion of causation did not break new
ground; it simply reflects the well-established principle, fully
consistent with Supreme Court precedent, that a sanction can
be deemed compensatory only if it compensates the injured
party for losses sustained as a result of the sanctionable
misconduct. See, e.g., Lasar, 399 F.3d at 1111; F.J.
Hanshaw, 244 F.3d at 1142. What we said about causation
in Miller merely illustrates why the fees awarded in this case
were not sustained as a result of Goodyear’s misconduct.

The majority reads Chambers v. NASCO, Inc., 501 U.S.
32 (1991), as establishing a competing principle: that a fee
award may be deemed compensatory even if the fees were not
incurred as a result of the sanctionable misconduct, so long as
the misconduct involves “frequent and severe abuses of the
judicial system.” Maj. op. at 32. The majority assumes that
principle must be valid because, in its view, not all of the fees
awarded to NASCO were incurred as a direct result of
Chambers’ misconduct.
48 HAEGER V. GOODYEAR TIRE & RUBBER CO.

I see two problems with the majority’s reading of
Chambers. First, it is by no means clear as a factual matter
that the majority’s reading is correct. The district court in
Chambers expressly held that Chambers’ misconduct began
even before NASCO formally filed suit. After Chambers
informed NASCO that he would not honor the agreement to
sell his local television station, NASCO gave Chambers
notice on a Friday that it intended to file suit the following
Monday seeking specific performance. That advance notice
was required by court rules because NASCO also intended to
seek a temporary restraining order preventing Chambers from
disposing of the station pending resolution of the suit.
501 U.S. at 36. Rather than acknowledge that he had no valid
defense to the suit, and that he therefore had no business
putting NASCO to the expense of filing it, Chambers
embarked on what turned out to be a years-long campaign of
bad-faith litigation misconduct, beginning with his efforts
over the weekend to fraudulently transfer ownership of the
station in order to deprive the district court of jurisdiction. Id.
at 36–37. Because the district court found that Chambers
never had a good-faith basis for resisting the relief NASCO
sought, and that all of the actions he took in “defending” the
suit were aimed solely at obstructing and delaying the
inevitable sale of the television station, it seems fair to say
that all of NASCO’s attorney’s fees were incurred as a direct
result of Chambers’ misconduct. See id. at 50–51.

Second, even if some portion of NASCO’s attorney’s fees
were not incurred as a direct result of Chambers’ misconduct,
the majority incorrectly assumes that the Supreme Court
upheld the award as purely compensatory. The sanction
imposed there was not purely compensatory; it served the
“dual purpose” of (1) vindicating the court’s own authority
and (2) “mak[ing] the prevailing party whole for expenses
 HAEGER V. GOODYEAR TIRE & RUBBER CO. 49

caused by his opponent’s obstinacy.” Id. at 46 (internal
quotation marks omitted). The first of these purposes, we
have subsequently held, is the domain of punitive sanctions,
and the Court in Chambers left no doubt that punishment was
indeed a key purpose of the sanctions imposed in that case.
See id. at 55 n.17 (“the sanctions imposed on Chambers were
aimed at punishing not only the harm done to NASCO, but
also the harm done to the court itself”). Because it was partly
punitive, the sanctions award did not need to be limited to
fees directly caused by Chambers’ misconduct.

I concede that the district court imposed the sanctions in
Chambers without applying the heightened procedural
protections we have subsequently held are necessary before
punitive sanctions may be imposed, and that the Supreme
Court nonetheless affirmed. I don’t think we can read
anything into that fact. The defendants in Chambers did not
raise any due process arguments, and the Supreme Court
therefore did not address whether the process afforded the
defendants was adequate. Moreover, the law has changed
since Chambers was decided. A few years later the Court
issued International Union, United Mine Workers v. Bagwell,
512 U.S. 821 (1994), the case from which we first derived the
rule that imposition of punitive sanctions must be
accompanied by the procedural protections applicable in
criminal cases. See F.J. Hanshaw, 244 F.3d at 1137–38. If
any doubts lingered about whether Chambers authorizes
imposition of so-called “dual purpose” sanctions without
following the procedures applicable in criminal cases, we put
those to rest in Miller. The dissent in Miller made that very
argument, 661 F.3d at 1039 (Ikuta, J., dissenting), but the
panel majority implicitly rejected it. See id. at 1030.
50 HAEGER V. GOODYEAR TIRE & RUBBER CO.

None of this is to suggest that compensatory sanctions
can’t be fashioned at all. There may well be other ways to
calculate the losses sustained by the Haegers as a result of the
misconduct. For example, the most direct loss the Haegers
sustained is that they probably settled their case for less than
it was really worth. It might be possible to use the Schalmo
case, and others like it if they exist, to calculate the difference
between what the Haegers actually received in settlement and
what they likely would have received—whether through an
enhanced settlement or a jury verdict—if the test results had
been disclosed in a timely manner. But going down that path
would obviously be fraught with proof problems of its own.

Alternatively, instead of attempting to calculate lost
settlement value, the district court could again focus on
attorney’s fees incurred by the Haegers, limiting the award to
fees that can be linked in a non-speculative way to the
misconduct. The fees that most readily spring to mind are
those wasted on expert discovery that took place under the
mistaken assumption that key test results supporting the
Haegers’ liability theory did not exist. Those and other fees
similarly traceable to the misconduct are no doubt
comparatively small, but I don’t think the district court was
right in suggesting that calculating them would be an
impossible task. Those fees can be calculated; it’s just that
they may produce a sanction smaller than seems warranted
given the severity of the misconduct the district court found.

If the sanctions that can properly be deemed
compensatory seem too paltry under the circumstances, the
district court could still fashion an award of punitive
sanctions, so long as it applies the corresponding heightened
procedural protections. See Miller, 661 F.3d at 1030–31; F.J.
Hanshaw, 244 F.3d at 1141–42. Because Goodyear and its
 HAEGER V. GOODYEAR TIRE & RUBBER CO. 51

lawyers were not afforded those protections before punitive
sanctions were imposed, I dissent from the majority’s
affirmance of the $2.7 million award.