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Quality Prefabrication Inc. v. Daniel J. Keating Co.


decided: March 30, 1982.



Before Aldisert, Van Dusen, and Garth, Circuit Judges.

Author: Aldisert


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 leave to amend the complaint.*fn3 Appellant presented each of these arguments to the district court in its motion for reconsideration and accompanying memorandum of law.

Appellant's contentions and appellees' response present a number of factual disputes whose resolution by the district court must have influenced its exercise of discretion. Appellant argues that its failure to produce requested documents was neither wilful misconduct nor in bad faith, and that it endeavored in good faith to comply with the court's order compelling production. It avers also that counsel for both sides agreed on October 28, 1980, to defer further discovery until leave was granted to file an amended complaint. Appellees have strenuously denied the existence of any such agreement, both before the district court and on appeal, and they deny generally the other allegations. Both sides have presented elaborate and persuasive factual arguments, and on the record and the briefs we cannot say that inferences supporting either party would be unreasonable.

It is not the function of a court of appeals to draw factual inferences, however, but only to review the evidence of record to determine whether the inferences drawn by the trial court are clearly erroneous. See Universal Minerals, Inc. v. C. A. Hughes & Co., 669 F.2d 98 (3rd Cir. 1981). In this case, for example, the district court failed to articulate on the record its reasons for dismissing the complaint or for denying reconsideration, and this requires us to speculate as to what facts formed the predicate of its decision.

We have recognized that it is possible for a district court to undertake an analytical examination of a discretionary question even when "that analysis itself is not on the record." Sparks v. Hershey, 661 F.2d 30, 33 (3rd Cir. 1981) (per curiam). We also have noted, however, that our review is facilitated when a trial judge "clearly and succinctly expresses the bases for his decision" of a discretionary issue.*fn4 United States v. Criden, 648 F.2d 814, 818 (3rd Cir. 1981). Moreover,

until or unless guiding rules have become fixed, it is important that the exercise of discretion be accompanied by the trial court's articulation of the factors considered and the weight accorded to them .... Superficially, it might appear that such an articulation would encourage appellate revision while an unarticulated decision might evade review. In fact, however, articulation of the reasons for the decision tends to provide a firm base for an appellate judgment that discretion was soundly exercised. It confines review of the exercise of discretion to its appropriate scope-i.e., whether the relevant factors were considered and given appropriate weight-and discourages reversal on the ground that the appellate judges might have decided differently had they been the original decisionmakers.

Id. at 819. When, as here, an exercise of discretion is necessarily grounded on the court's resolution of a congeries of convoluted factual issues, articulation of the basis for the action would surely facilitate an appellate judgment that discretion was soundly exercised. The lower court's statement would focus and provide a framework for appellate review of its findings in the context of the clearly erroneous standard, and it would enable the reviewing court to determine whether the relevant factors were considered and assigned appropriate weight in making the decision.*fn5

Rule 37 does not permit dismissal when a "failure to comply has been due to inability, and not to willfulness, bad faith, or any fault" of the non-complying party. National Hockey League, 427 U.S. at 640, 96 S. Ct. at 2779 (quoting Societe Internationale, 357 U.S. at 212, 78 S. Ct. at 1095). Appellees argue that appellant's conduct was at least "culpable" and thus encompassed within the "any fault" language of National Hockey League. We see no such finding or legal conclusion in the district court's record. Cf. Cine Forty-Second Street Theatre Corp. v. Allied Artists Pictures Corp., 602 F.2d 1062, 1067 (2nd Cir. 1979) (any fault "must at least cover gross negligence of the type presented in this case").

National Hockey League and Societe Internationale provide valuable guidance to the factors relevant to decision of a Rule 37 motion to dismiss, and opinions of the lower federal courts have helped to map more precisely the proper pathways. We cannot say, however, that the "guiding rules have been fixed" by a comprehensive body of caselaw, United States v. Criden, 648 F.2d at 819; and this court has not yet had occasion to interpret the "any fault" language of the Supreme Court decisions. The common law tradition is one of gradual accretion, building principles on series of rules tied to definite and detailed sets of facts. See Romeo v. Youngberg, 644 F.2d 147, 182 (3rd Cir. 1980) (in banc) (Aldisert, J., concurring), cert. granted, 451 U.S. 982, 101 S. Ct. 2313, 68 L. Ed. 2d 838 (1981). Rules similarly may develop out of the accumulated experience of the courts in series of similar cases initially committed to discretion. An opinion of the district court in this type of case would contribute to the ever-accumulating body of judicial wisdom that represents the common-law overlay of Rule 37. It also would set forth the definite and detailed statement of facts that is needed to decide whether, as appellees contend, Quality was at "fault" within the meaning of the Supreme Court decisions.

We cannot find, however, that the district court abused its discretion in this case. The court was familiar with the parties and the litigation and apparently gave due consideration to the opposing contentions. We have previously noted that the court could reasonably have resolved all disputed factual questions in favor of Keating and KSA.

We have given this matter particular attention nonetheless, because the district court imposed the ultimate sanction, dismissal with prejudice. The reasons for desiring some articulation of the bases for decision have special importance in this context. When such a severe sanction is imposed, values of consistency and predictability, reviewability, and deterrence, see United States v. Criden, 648 F.2d at 818; National Hockey League, 427 U.S. at 643, 96 S. Ct. at 2781, outweigh the values of economy and efficiency that may be promoted by allowing inarticulate decisions.*fn6

Therefore, exercising our supervisory authority over the district courts in this judicial circuit, we hold that in the future a dismissal of a complaint with prejudice as a Rule 37 sanction must be accompanied by some articulation on the record of the court's resolution of the factual, legal, and discretionary issues presented. We will not set aside the judgment of the district court in this case, however, because we recognize that our approach to this problem represents a new view in this judicial circuit. We cannot fault the district court for not following a special procedure that heretofore was not required. Thus, as in Domeracki v. Humble Oil & Refining Co., 443 F.2d 1245, 1252 (3rd Cir. 1971), we will require only prospective application of the rule we announce today.


The judgment of the district court will be affirmed.

Each side to pay its own costs.

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