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January 3rd, 2011

Civil Death Penalty Upheld by Nevada Supreme Court

The Nevada Supreme Court denied a motion for rehearing of a case in which it had upheld imposition of the “civil death penalty” against Goodyear Tire & Rubber Co., eliminating all of its defenses and resulting in a $30 million judgment against the company.  The case was highlighted in the 2009-10  report as an example of a trend that is “fueling the fire” in Judicial Hellholes.  The American Tort Reform Association had urged the the full Nevada Supreme Court to reconsider its decision.

The civil justice system’s ultimate sanction is to strike a party’s pleadings, which nullifies any defense a party has to a lawsuit, regardless of the merits of the underlying claims. The defendant is liable by fiat. No trial. No evidence. We call this sanction the “civil death penalty” because it takes away the constitutional right to defend oneself. In the past few years, civil death penalty abuse has become an increasingly disturbing trend in Judicial Hellholes.

Until recently the civil death penalty has been the sanction of last resort, reserved as a response to only the most egregious conduct where no other sanction can work. An example is where a party maliciously destroys key evidence that deprives the other side of its right to a trial on the merits. But in recent years, personal-injury attorneys have sought to use this sanction as a litigation tactic against corporate defendants.

The underlying case arose from a fatal automobile accident allegedly caused by a defective tire. The trial judge imposed the extreme sanction for a failure to comply with a discovery request despite no finding of willful or malicious conduct on the part of the defendant, or that the discovery issue involved prejudiced the plaintiffs’ case.  During the Nevada Supreme Court’s hearing on the case in June 2009, Goodyear’s attorney Dan Polsenberg explained the troubling trend and “phenomena” of judges issuing extreme and unjust sanctions. “Judges are… changing the rules of the game,” Polsenberg stated. “Courts are enforcing rules differently from how they used to and differently from each other. And what they are doing is coming in and [issuing] extreme sanctions just for punishment and just for deterrence rather than to actually address willfulness or prejudice.”

The lone dissenter to the December 30 ruling, Justice Kristina Pickering, protested that “[t]he $30,000,000 default judgment in this case rests on the district court choosing to believe one side’s lawyers over another’s, with no evidentiary hearing, no cross-examination, and a genuine dispute over willfulness, fault, and prejudice.”  She concluded, “Liability should not be decided by sanction without a fair evidentiary hearing on all contested issues of fact material to the sanction imposed.  Here, that did not occur.”

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