APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA (D.C. Civil No. 80-2652)
Before Aldisert, Van Dusen, and Garth, Circuit Judges.
Quality Prefabrication, Inc., plaintiff in the district court, appeals from the court's refusal to reconsider an order entered pursuant to Fed.R.Civ.P. 37, which dismissed its complaint with prejudice as a sanction for Quality's failure to provide discovery. Finding no abuse of discretion, we affirm the judgment of the district court. In order to facilitate appellate review of similar decisions in the future, however, we will exercise our supervisory power to require a district court dismissing a complaint with prejudice as a Rule 37 sanction to articulate on the record the reasons for its decision.
We need only briefly summarize the facts. Quality filed suit against appellees Daniel J. Keating Company (Keating) and Keating Saudi Arabia, Ltd. (KSA) on July 9, 1980, seeking approximately $80,000 in damages for breach of contract. The defendants answered and counterclaimed, and the parties undertook discovery.
A dispute apparently arose over whether KSA was properly designated in the complaint as a domestic corporation. Quality filed a motion for leave to amend accompanied by a proposed amended complaint on December 18, 1980, and on the same day requested that Keating produce certain documents. Keating responded that it had previously provided all documents in its possession and that an investigation of KSA's files would be made "upon its joinder." Keating also asserted that Quality had failed to respond to an earlier request for production and threatened to move for sanctions unless Quality complied within two weeks.
On January 13, 1981, the court granted leave to amend and the clerk filed the amended complaint. Quality avers, and appellees do not disagree, that the clerk inadvertently failed to notify the parties of this action for approximately 60 days.
On February 27, Keating moved for an order requiring Quality to produce. Quality did not answer Keating's motion. On March 24, 1981, the district court ordered Quality to provide discovery within ten days. Keating filed a motion for sanctions on April 9, alleging that Quality had failed to comply with the order and asking that Quality be precluded from introducing evidence of its claim and that judgment be entered dismissing the complaint. Quality responded to this motion on April 21.
The district court granted Keating's motion on April 27, 1981, and entered a judgment of dismissal.*fn1 Quality filed a timely motion for "reconsideration" pursuant to Fed.R.Civ.P. 59, 60, and E.D.Pa.R. 20(g).*fn2 Keating answered on May 20, and the court denied the motion by order on August 10, 1981. The district court stated no reasons for its decisions of April 27 and August 10, granting Keating's motion for dismissal and denying Quality's motion for reconsideration.
A timely appeal from an order denying a Rule 59 motion to alter or amend brings up the underlying judgment for review. See Fed. R. App. P. 4(a)(4). Appellees' motion for sanctions and appellant's motion for reconsideration both invoke the discretion of the district court, see National Hockey League v. Metropolitan Hockey Club, 427 U.S. 639, 96 S. Ct. 2778, 49 L. Ed. 2d 747 (1976) (per curiam); Ross v. Meagan, 638 F.2d 646, 648 (3rd Cir. 1981) (per curiam), and we will not reverse unless that court has abused its discretion.
Quality asserts essentially two grounds for reversal. It argues that the district court abused its discretion in dismissing the complaint because the record does not show sufficient evidence of bad faith or wilful misconduct to justify dismissal under the teachings of National Hockey League and Societe Internationale v. Rogers, 357 U.S. 197, 78 S. Ct. 1087, 2 L. Ed. 2d 1255 (1958). It contends also that the parties had agreed to defer discovery pending KSA's joinder, and therefore that it should not be penalized for failure to provide discovery during the two months in which the clerk of court failed to notify the parties that the court had granted ...