In Parsi v. Daioleslam, the US Court of Appeals for the DC Circuit held that the appellants' failure to produce information in violation of court orders constituted bad faith to justify an award of attorneys' fees under Federal Rule of Civil Procedure (FRCP) 37 and the district court's inherent power to sanction those who disobey its instructions and interfere with proceedings.
On February 10, 2015, the US Court of Appeals for the DC Circuit in Parsi v. Daioleslam held that the appellants' failure to produce information in violation of court orders constituted bad faith to justify an award of attorneys' fees under FRCP 37 and the district court's inherent power to sanction those who disobey its instructions and interfere with proceedings (No. 12-7111, (DC Cir. Feb. 10, 2015)).
Appellants, the National Iranian American Council (NIAC), a Washington-based non-profit, and its founder Trita Parsi filed a complaint alleging that Seid Hassan Daioleslam defamed them in articles and blog posts by stating that they had secretly lobbied on behalf of the Iranian regime in the United States. During discovery, the parties argued over NIAC's failure to produce documents responsive to several of Daioleslam's requests for production. Between July 2010 and August 2011, the district court issued three orders compelling NIAC to produce certain documents and parts of its computer network.
In September 2011, Daioleslam moved for summary judgment and sanctions. The district court granted summary judgment to Daioleslam and imposed sanctions against the appellants for their discovery abuses. The district court concluded that NIAC violated its orders by failing to produce all the computers on which it stored relevant data after the court compelled them to do so and ordered sanctions including:
Daioleslam's expenses for the second and third forensic imaging of NIAC's hard drive.
Daioleslam's expenses in bringing the third motion to compel NIAC to produce its server.
Part of Daioleslam's expenses in re-deposing witnesses.
The district court then entered a final judgment in the amount of $183,480.09. NIAC and Parsi appealed the district court's sanctions.
The DC Circuit affirmed the bulk of the district court's sanctions. The DC Circuit found that the appellants engaged in "dilatory, dishonest, and intransgient conduct" by deferring production of, withholding or denying the existence of relevant documents. The court further found that because many of these documents went to the heart of Daioleslam's defense, Daioleslam wasted resources and time deposing witnesses and subpoenaing third parties for e-mails that the appellants should have turned over.
The DC Circuit could not conclude that the district court was clearly erroneous to find that the appellants acted in bad faith and found that the district court was therefore well within its discretion to sanction the appellants under FRCP 37.