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September 9, 2003


The opinion of the court was delivered by: James Munley, District Judge


Before the court for disposition are motions for sanctions requesting dismissal of the present action in addition to attorneys' fees and costs for plaintiffs' failure to comply with numerous discovery requests. The moving defendants are Ginader, Jones & Co., LLP and Jack Jones ("Movants"). The plaintiff is Admiral Insurance Co. All co-defendants concur with movants. For the following reasons, we will grant the defendants' motions for sanctions in part.

I. Background

Plaintiff is an insurance company that provided movants with a million dollar professional liability policy, covering June 6, 1999 to June 6, 2000. Movants are certified public accountants who acted as outside auditors for Novick Chemical Co. In November 1999, movants were sued in an underlying state action for professional malpractice by Defendants Page 2 Novick Chemical Co., Inc., Edward Novick, and Roberta Novick ("Novick Defendants").*fn1 Novick Defendants alleged, inter alia, that movants inaccurately recorded their financial statements.*fn2

Plaintiff began to provide for the defense of the movants in the state court action. Subsequently, however, plaintiff filed the present action seeking a declaration that it need not indemnify movants. In answering the instant complaint, movants denied all claims, asserted affirmative defenses, and counterclaimed for breach of fiduciary duty. During discovery, movants identified and sought to depose two of plaintiff's employees, Wayne Pinkstone and Joseph Vizzini. Plaintiff, however, failed to produce the deponents on the first scheduled appearance and subsequently failed to produce them eleven more times over a period of seven months. In total, plaintiff requested continuances of the depositions twelve times, including three times after the court ordered that no further extensions would be granted.

On January 22, 2003, Ginader, Jones and Jack Jones moved to sanction Admiral Insurance Co. for failure to produce the two deponents on twelve scheduled occasions. Subsequently, Defendant Jack Jones died unexpectedly. On February 20, 2003 defendants again moved for sanctions in a supplemental motion claiming that sanctions are more Page 3 appropriate now due to the death of the defendant.

Movants request that the court dismiss the declaratory judgment complaint with prejudice. They further request that plaintiff be fined for failing to participate in discovery according to its obligations. Finally, they request that plaintiff be ordered to pay all appropriate fees of movants associated with preparation of the numerous rescheduled depositions and the present motions. For the reasons that follow, we will grant the motion in part.

II. Jurisdiction

This court exercises jurisdiction over this case pursuant to 28 U.S.C. § 1332, diversity jurisdiction, as the plaintiff is a citizen of New Jersey and the defendants are citizens of Pennsylvania. The amount in controversy is greater than $75,000.00. See Compl. at ¶ 5

III. Discussion

The law provides that a court may enter sanctions against a party who fails to cooperate with discovery obligations. See generally FED. R. ClV. P. 37; Winters v. Textron. Inc., 187 F.R.D. 518 (M.D. Pa. 1 999). Where appropriate the district court has great discretion in determining the proper sanction under Rule 37. See, e.g., National Hockey League v. Metropolitan Hockey Club. Inc., 427 U.S. 639 (1976). Regarding the type of sanction however, "[d]ismissal must be a sanction of last, not first, resort . . . and must be reserved for extreme cases." Poulis v. State Farm Fire & Casualty Co., 747 F.2d 863, 868-69 (3d. Cir. 1984). Nevertheless, "[t]he authority of a federal trial court to dismiss a plaintiff's action with Page 4 prejudice . . . cannot seriously be doubted." Link v. Wabash R.R. Co., 370 U.S. 626, 629 (1962). "The power to invoke this sanction is necessary in order to prevent undue delays in the disposition of pending cases and to avoid congestion in the calendars of the district courts." Id. at 629-30. Furthermore, "[t]he most severe in the spectrum of sanctions provided by statute or rule must be available to the district court . . . not merely to penalize . . . but to deter those who might be tempted to such conduct in the absence of such a deterrent." National Hockey League, 427 U.S. at 643.

A court must balance the following factors in assessing whether dismissal of a complaint is warranted: (1) the extent of the personal responsibility of the party; (2) prejudice to the adversary caused by failure to meet discovery orders; (3) history of dilatoriness; (4) willfulness or bad faith of the conduct in question; (5) effectiveness of alternative sanctions other than dismissal; and (6) the meritoriousness of the claim. Poulis, 747 F.2d at 868. Not all six factors need to be met to warrant sanctions, but a consideration and balance of all six factors must be undertaken. Hoxworth v. Blinder. Robinson & Co., 980 F.2d 912, 919 (3d Cir. 1992). Each of these six factors will be analyzed below.

(1) Personal Responsibility of the Party

The first factor for us to examine is whether the party, as opposed to the party's counsel, bears personal responsibility for the action or inaction. Adams v. Trustees of the New Jersey Brewery Employees' Pension Trust Fund, 29 F.3d 863, 873 (3d Cir. 1994). A party may suffer dismissal justly because of its counsel's conduct. Id. However, courts are increasingly Page 5 emphasizing the appropriateness of "visiting sanctions directly on the delinquent lawyer, rather than on a client who is not actually at fault." Id. (citations omitted). Nevertheless, "a client cannot always avoid the consequences of the acts or omissions of its counsel." Poulis, 747 F.2d at 868.

In the present action, there is no evidence to suggest that Admiral Insurance bears any responsibility for the acts of its counsel. However, plaintiff "voluntarily chose this attorney as [its] representative . . . and [it] cannot now avoid the consequences of the acts or omissions of this freely selected agent. Any other notion would be wholly inconsistent with our system of representative litigation." Link, 370 U.S. at 633-34.

As mentioned above, it is not necessary to meet all six prongs of the Poulis test for sanctions to be awarded. Accordingly, we shall proceed to analyze the ...

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