U.S. District Court Did Not Abuse Its Discretion in Awarding Sanctions in the Form of Attorney Fees and Costs for Discovery Violations

The 7^th Circuit Court of Appeals in Chicago has affirmed a district court decision where sanctions were allowed in the form of attorney fees. The court of appeals stated that under Federal Rule 37, sanctions may include an order to pay the amount of reasonable expenses incurred in preparing the motion for sanctions, including attorney fees.

In March 2012, Angel Houston sued Hyatt Corp. and the Hyatt Regency Inn for breach of contract, intentional misconduct and negligence. The lawsuit arose out of injuries Houston suffered after falling at the downtown Indianapolis Hyatt Hotel during a hotel-sponsored New Year’s Eve party on Dec. 31, 2010.

Houston claimed that Hyatt chose not to provide a safe and secure environment for the party and that this failure was the proximate cause of her injuries. Damages were sought in excess of $1 million.

Several months later, Houston added another party, C.G. Security Services Inc., as a defendant. C.G. Security provided security personnel for the New Year’s Eve party. Discovery revealed that Hyatt had used C.G. Security Services for many years. Houston alleged that C.G. Security had a duty to provide adequate security services and that its failure caused her injuries and damages.

In May 2013, Hyatt and C.G. moved for summary judgment, which was granted by the district court judge in February 2014. The district court delayed ruling on C.G.’s motion due to Houston’s filing of three motions for sanctions against C.G. for various discovery matters.

The sanction matter was referred to a magistrate judge. It was found that C.G. had engaged in a pattern of obstreperous discovery behavior. The magistrate judge recommended that the district court impose monetary sanctions against C.G.

The district court judge then granted C.G.’s motion for summary judgment in March 2014. In September 2014, the district judge, over C.G.’s objection, accepted the report of the magistrate judge and ordered Houston’s counsel to file a petition for attorney fees.

Houston’s lawyers moved for $146,050 in attorney fees and $18,512.10 in costs. In February 2015, the district court granted in part Houston’s motion for attorney fees. The district court judge ordered C.G. to pay Houston $118,925 in attorney fees and $16,498.91 in costs. C.G. took this appeal.

C.G. argued that the district court abused its discretion in awarding sanctions because Houston failed to comply with procedural prerequisites. C.G. relied upon a local rule that requires a movant’s counsel to file a motion showing that she made reasonable efforts to confer with opposing counsel and resolve the issues raised in the motion. This rule would be similar to Illinois Supreme Court Rule 201(k).

The appellate panel rejected C.G.’s argument. The panel found that Houston’s counsel met the meet-and-confer requirements through participation in a May 2013 discovery conference and through e-mail exchanges and calls to opposing counsel. The court of appeals noted that the record showed that Houston’s counsel made various efforts to confer with C.G.’s counsel but that C.G. rebuffed those efforts.

C.G. maintained that it did not conduct discovery in bad faith. It cited Corley v. Rosewood Care Center, Inc. of Peoria, where there was no imposition of sanctions because there was no showing of bad faith or improper purposes. This panel, however, found that there was sufficient evidence of bad faith in the record.

The court of appeals pointed to C.G.’s failure to provide information in a timely manner as well as evidence of false, or at best, reckless and evasive, testimony offered by at least one of C.G.’s witnesses. The panel found that the district court did not abuse its discretion in awarding sanctions. The panel found that the district court properly applied the loadstar fees analysis and offered a thorough explanation for why the costs, expenses and time claimed by Houston’s attorneys were reasonable. The panel accordingly affirmed the district court’s decision.

Angel Houston v. C.G. Security Services, Inc., No. 15-1518 (U.S. Court of Appeals for the 7^th Circuit, April 25, 2016).

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