ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF PENNSYLVANIA C.A. No. 77-0226
Before Adams, Hunter and Sloviter, Circuit Judges.
This case places before us the question of the appealability, under 28 U.S.C. § 1291, of a Rule 37(a)(4) order by the district court which imposed monetary sanctions against appellant's attorney for filing a motion the court deemed dilatory. Also involved is the appealability of three other discovery orders that were entered against the parties to this action. We hold that appellate jurisdiction is lacking at this time with respect to all of these orders, and accordingly dismiss the appeals without prejudice.
Maico-Fahrzeugfabrik, G.m.b.H. (hereinafter "German Maico"), a defendant and an appellant in this action, and Eastern Maico Distributors, Inc., a plaintiff and an appellee, have been litigating since 1977 an action involving an alleged breach by German Maico of a distributorship agreement.*fn1 In the course of the lawsuit each of the two companies sought discovery of numerous documents in the possession of the other.
Following a series of requests by plaintiffs for documents held by the defendants and responses which the plaintiffs considered inadequate, the plaintiffs in October 1979 filed a motion for sanctions against the defendants pursuant to Rule 37(b) of the Federal Rules of Civil Procedure. Shortly thereafter, the defendants filed a motion to compel production of certain documents in the possession of the plaintiffs. In June 1980 the plaintiffs filed a motion for attorneys' fees with respect to a partial summary judgment motion. Then the defendants in July 1980 filed another motion to compel production of documents as well as for sanctions. The district court, in ruling on these four motions, handed down four separate orders in December 1980. Those orders are now appealed by German Maico and its attorney, Clyde W. McIntyre, Esquire.
The court's order number 1 addresses plaintiffs' 1979 motion for Rule 37(b) sanctions. Plaintiffs alleged that the defendants had failed to comply with discovery orders entered by the district court. Following a hearing, the district court concluded that the defendants had "seriously breached their discovery obligations" in that they had, despite repeated requests, failed to produce documents that the district court found were "highly relevant ... probably the most important materials of all other discovered information." Construing these failures as "obvious attempts to delay and frustrate the discovery process," the court decided that sanctions requiring the payment of expenses and attorneys' fees were warranted, and directed a United States Magistrate to hold a hearing to determine the proper amount of such expenses and fees. Defendants appealed the district court's order before the amount was set; this Court dismissed the appeal because it was not a final decision under 28 U.S.C. § 1291 or an appealable "collateral order" as the courts have defined that term. Following a hearing by the magistrate, the district court ordered German Maico to reimburse the plaintiffs $10,219.90 to cover expenses and attorneys' fees in the matter. The district court also required German Maico to deposit $25,000 with the clerk of the court to cover plaintiffs' expenses in retaking the depositions that were required in light of the newly produced documents.
Order number 2 concerns defendants' 1979 motion to compel the production of certain documents. The district court found that the request was repetitious, having previously been denied at least four times, and awarded plaintiffs their attorneys' fees and costs pursuant to Rule 37(a). The judge directed the magistrate to conduct a hearing to ascertain the amount of costs and to resolve whether they should be assessed against defendants or their counsel. The magistrate held a hearing to determine costs and in a report to the court recommended an award of $681; a separate hearing to determine the appropriate party to bear the expenses was scheduled. In filing exceptions to that report, the defendants' counsel requested that any attorneys' fees should be awarded against himself rather than against his clients. The magistrate thereupon cancelled the scheduled hearing as moot, and filed his report with the district court. The court, over the defendants' objections, awarded plaintiffs $681 in attorneys' fees against the defendant's counsel, Mr. McIntyre.
Orders 3 and 4 of the court were rendered in favor of the defendants, denying plaintiffs' motion for attorneys' fees with respect to a partial summary judgment motion and granting defendants' motion for the production of certain documents, but denying defendants' request for sanctions against the plaintiffs. German Maico appeals from orders 3 and 4 only with respect to language in those orders that German Maico considers unduly critical of its counsel.
For this Court to have appellate jurisdiction over these four orders at this time would require appellants to overcome a major jurisdictional barrier. Under 28 U.S.C. § 1291, courts of appeal may review only final decisions of the district courts, and exceptions to this rule are carefully limited. Congress in 28 U.S.C. § 1292 has enumerated a group of interlocutory orders which may be appealed immediately, but the challenged orders in this case do not fall within any of the specified categories. Consequently, if these orders are appealable at present, they must qualify as final decisions under § 1291, even though they arise in the context of an action that will continue after the present appeals finally are resolved.
In interpreting Section 1291, the Supreme Court has applied a "practical rather than a technical construction" to ascertain whether an appeal is final for appealability purposes. Cohen v. Beneficial Industrial Loan Corp., 337 U.S. 541, 546, 69 S. Ct. 1221, 1226, 93 L. Ed. 1528 (1949). In Cohen, the defendants in a derivative shareholder suit had asked the district court to order the plaintiffs to post a bond for the expenses of the defense. The district court denied the request; the appeals court considered the order denying the request for a bond to be immediately appealable and reversed the court's order. The Supreme Court affirmed the court of appeals, holding that the district court's order was appealable because it fell within the small class of orders which, although not dispositive of the actions from which they arise, nevertheless determine "claims of right separable from, and collateral to, rights asserted in the action, too important to be denied review and too independent of the cause itself to require that appellate consideration be deferred until the whole case is adjudicated." 337 U.S. at 546, 69 S. Ct. at 1225. Later cases have discerned three distinct requirements for the applicability of the Cohen "collateral order" exception: first, "the order must conclusively determine the disputed question, " second, it must "resolve an important issue completely separate from the merits of the action," and third, it must be "effectively unreviewable on appeal from a final judgment." Coopers & Lybrand v. Livesay, 437 U.S. 463, 468, 98 S. Ct. 2454, 2458, 57 L. Ed. 2d 351 (1978); United States v. Levine, 658 F.2d 113 at 116-118 (3d Cir.1981).
Discovery orders generally do not fit within either the plain language of Section 1291 or the collateral order exception articulated in Cohen, and so without more are not immediately reviewable on appeal. See, e. g., United States v. Ryan, 402 U.S. 530, 91 S. Ct. 1580, 29 L. Ed. 2d 85 (1971); Cobbledick v. United States, 309 U.S. 323, 60 S. Ct. 540, 84 L. Ed. 783 (1940); Borden Co. v. Sylk, 410 F.2d 843 (3d Cir. 1969). As the Supreme Court has ...