California Trial Courts Have Inherent Power to Dismiss an Action

When a Plaintiff's Deliberate, Egregious Misconduct Has Made a Fair Trial Impossible, The Trial Court Has the Power to Impose a Terminating Sanction

Stephen Slesinger, Inc. v. The Walt Disney Company (Sept. 25, 2007, B178340, Second Dist.)
54 p. opinion

In this case the Court of Appeal holds that "when a plaintiff's deliberate and egregious misconduct makes any sanction other than dismissal inadequate to ensure a fair trial, the trial court has inherent power to impose a terminating sanction." (p. 1) The essential requirement is to calibrate the sanction to the wrong. The decision requires consideration of all relevant circumstances, including the nature of the misconduct, (which must be deliberate and egregious), the strong preference for adjudicating claims on the merits, the integrity of the court as an institution of justice, the effect of the misconduct on a fair resolution of the case, and the availability of other sanctions to cure the harm. (pp. 35-36)

This is the general rule. Much of the 54 page opinion is a detailed recounting of the misconduct that made a terminating sanction appropriate in this action. That description will be invaluable to any attorney who wants to determine whether such a sanction would be appropriate in a case where he represents the defendant. However, for the purpose of gaining a general understanding of this inherent authority, a shorter summary is adequate.

Plaintiff Steven Slesinger, Inc., after filing this action in 1991, engaged an investigator who over a period of years took thousands of pages belonging to Disney and turned them over to the principals of SSI. The investigator obtained the pages by repeatedly breaking into Disney office buildings and secure trash receptacles, and by trespassing onto the secure facility of the company with which Disney had contracted to destroy its confidential documents. The investigator stole documents from 1992 until 1995, and perhaps longer. On two occasions, in 1997 and 1998, SSI's attorneys turned over a highly confidential document to Disney, but SSI claimed that it did not know how it had obtained the document and/or that Disney had produced the document during discovery. SSI altered Disney documents to remove markings identified they as confidential.

It wasn't until 2002 that SSI revealed its employment of the investigator, and turned over more than 6,000 pages of Disney documents. SSI could not say how many total pages it had received because it had kept no record of either the documents that it had received or the documents that it had destroyed. This behavior provides the example of the deliberate and egregious misconduct that can justify a terminating sanction.

Most crucially, because SSI's principals had personally reviewed the stolen documents there was no way to prevent the use of the improperly obtained confidential information during the course of a trial. No change of counsel could prevent the principals from using this information, either consciously or unconsciously during trial. The forbidden knowledge could not be erased from the brains of the SSI principals.

As appalling as this behavior was, it is rather heartening to note that there is no indication that SSI had any attorneys who countenanced its behavior. SSI was represented by at least ten different law firms during the course of this lawsuit. Given the information in this opinion, it is not difficult to guess the reason for those many changes.

Acting Presiding Justice Willhite wrote the opinion. Justices Manella and Suzukawa concurred.