MILES, Senior District Judge.
This case arises out of a house fire in Kentucky. The house was insured by State Automobile Mutual Insurance Company ("State Auto"). State Auto obtained subrogation rights and filed this lawsuit against the manufacturer of a heater believed to have caused the fire. The manufacturer moved for summary judgment based on Rule 37 of the Federal Rules of Civil Procedure because the heater had been discarded by a fire examiner who was hired by State Auto's adjusting agency. The district court granted the manufacturer's motion and dismissed State Auto's claim pursuant to Rule 37 because it held that State Auto was responsible for the loss of an important piece of evidence. State Auto has appealed the dismissal. For the reasons stated below, this court reverses the decision of the district court.
On November 22, 1989, the house of David and Carrie Beil caught fire, resulting in the destruction of the house and the death of the Beils. The house was insured by State Auto. State Auto paid the insurance claim filed by the Beils' estate and, therefore, acquired subrogation rights.
Shortly after the fire, State Auto contacted Kirby and Associates, an independent adjusting firm, to adjust the loss. On November 27, 1989, Kirby and Associates hired Donald Yuellig, a fire investigator, to investigate the scene of the fire and determine its origin. Yuellig is the sole proprietor and only employee of D.P. Yuellig Fire Protection Consultants. He has done work for Kirby and Associates for five or six years.
Yuellig has vast experience in the "fire" business. He served for 32 years in the Cincinnati Fire Department. While serving in the Cincinnati Fire Department, he served as Firefighting Company Officer, Commander of the Fire Department Emergency Rescue Service, and as Assistant Superintendent for Fire Prevention. Since retiring from the
Yuellig examined the fire scene. He also spoke with the Beils' son and daughter-in-law and local police and fire authorities. On December 1, 1989, the police allowed him to take possession of several items that had been in the house at the time of the fire. These items were a Lakewood Electric Oil Filled Radiator Heater, its supply cord, and an extension cord. Yuellig photographed the heater and electrical cords.
Before the end of December 1989, Yuellig submitted his report to Kirby and Associates. Yuellig concluded that the heater caused the fire. Yuellig reasoned that the only heat sources in the area of origin were the heater and the electrical cords. Yet, Yuellig found no indication that the electrical cords were damaged prior to the fire. Yuellig's conclusion was not based on an examination of the mechanical components of the heater. Yuellig's report stated that he would keep the heater and electrical cords for a reasonable amount of time pending a decision for disposition.
The Kentucky State Fire Marshal conducted its own investigation of the fire scene. The fire marshal's report concluded that the fire was caused by a defective extension cord. The fire marshal's conclusion was based on an examination of the fire scene and the extension cord.
Approximately three months after Yuellig submitted his report to Kirby and Associates, he discarded the heater and electrical cords. Yuellig testified that he kept such items for a reasonable amount of time and then discarded them if nobody came to get them. He testified that three months is longer than he normally keeps things. Nevertheless, Yuellig testified that he placed several phone calls to Kirby and Associates for the purpose of determining what it wanted done with the items. He never reached the person to whom he needed to talk, but he left messages to return his calls. Beyond this, the extent of the messages is not known. Nobody ever returned his calls.
According to the affidavits of Maurice Kirby, president of Kirby and Associates, and Robert Wimberg, a State Auto claims examiner, the industry custom and practice is that items from a fire scene will not be destroyed by an investigator without express permission. Yuellig testified that he did not receive express permission to discard the items.
In November 1990, State Auto filed a lawsuit against Lakewood Engineering and Manufacturing Co. ("Lakewood"), the manufacturer of the heater, in Kenton Circuit Court, State of Kentucky. The lawsuit was removed to the United States District Court for the Eastern District of Kentucky.
In early 1991, Lakewood first inquired about the location of the heater. At that time, State Auto advised Lakewood that the heater had been discarded.
In April 1991, this case was consolidated with a wrongful death and personal injury case filed by the Beils' estates.
On or about September 14, 1992, Lakewood filed a motion for summary judgment in both cases requesting that the cases be dismissed pursuant to Rule 37 of the Federal Rules of Civil Procedure due to "the intentional, pre-litigation destruction by an agent of the Plaintiffs of the heater manufactured by the Defendant which the Plaintiffs allege to have been defective." In the alternative, Lakewood requested that plaintiffs be prohibited, under Rule 37, from introducing any evidence that the heater was defective or caused the fire.
On November 19, 1992, the district court held a hearing on the motion. At the hearing, the court stated:
It's their agent.
In response to the court, State Auto stated that it was not informed that Yuellig was going to discard the items. To this, the court responded:
On November 24, 1992, the district court issued an order consistent with the court's announced intentions from the November 19, 1992, hearing. The order stated:
The court stated in a footnote that "the record does not suggest that Yuellig acted "maliciously," or that any of the parties intended to impede discovery or gain an unfair advantage." Finally, the order concluded in bold and capital letters: "THIS IS NOT A FINAL AND APPEALABLE ORDER."
State Auto filed an appeal. State Auto claims that the district court abused its discretion by finding that State Auto was grossly negligent and by finding that Yuellig was its agent. Further, State Auto claims that the district court failed to consider the proper factors in determining whether to dismiss the case. Lakewood claims that this court does not have appellate jurisdiction because the district court did not certify its decision for appeal under Rule 54(b) of the Federal Rules of Civil Procedure. In addition, Lakewood claims that the district court properly considered the factors and, therefore, did not abuse its discretion.
The United States Courts of Appeals have jurisdiction over appeals from all final decisions of the federal district courts. 28 U.S.C. § 1291. In an action involving multiple parties or multiple claims, the district court, pursuant to Rule 54 of the Federal Rules of Civil Procedure, "may direct the entry of a final judgment as to one or more but fewer than all of the claims or parties only upon an express determination that there is no just
This court has held that consolidated cases remain separate actions. Thus, a case which is disposed on summary judgment is appealable pursuant to 28 U.S.C. § 1291 despite the fact that the case with which it is consolidated has not been disposed. Lundblad v. Celeste, 874 F.2d 1097, 1103, vacated, 882 F.2d 207 (1989), reinstated as modified, 924 F.2d 627 (6th Cir.1991), cert. denied, ___ U.S. ___, 111 S.Ct. 2889, 115 L.Ed.2d 1054 (1991). A case which is disposed on summary judgment does not have to be certified for appeal pursuant to Rule 54. Id. The court stated:
Id. (quoting Kraft v. Local Union 327, 683 F.2d 131, 133 (6th Cir.1982)); see Knafel v. Pepsi Cola Bottlers, Inc., 850 F.2d 1155 (1988) (Two cases were consolidated. One case was appealable pursuant to 28 U.S.C. § 1291 because summary judgment disposed of the case; the other case the was only appealable if certified under Rule 54(b) because summary judgment did not dispose of the entire case.), appeal after remand, 899 F.2d 1473 (6th Cir.1990).
In the instant case, this court has appellate jurisdiction pursuant to 28 U.S.C. § 1291. Although this case was consolidated with another, this case has been disposed. Therefore, certification under Rule 54(b) is not necessary. The district court cannot divest this court of its appellate jurisdiction simply by stating that its order is not a final appealable order.
Rule 37 of the Federal Rules of Civil Procedure is entitled "Failure to Make or Cooperate in Discovery: Sanctions." Subsection (d) allows the court to sanction a party who fails to attend its own deposition, serve answers to interrogatories, or respond to a request for inspection. Subsection (d) states:
The actions authorized under subsection (b)(2) include dismissing the action.
Rule 37 incorporated Rule 34 of the Federal Rules of Civil Procedure. Rule 34 is entitled "Production of Documents and Things and Entry Upon Land for Inspection and Other Purposes." The rule states in part:
Fed.R.Civ.P. 34(a). The rule also prescribes procedures to follow in making a request for inspection. Fed.R.Civ.P. 34(b).
A district court's decision to invoke Rule 37 sanctions is reviewed by this court for an abuse of discretion. Taylor v. Medtronics, Inc., 861 F.2d 980, 985 (6th Cir. 1988); Regional Refuse Systems, Inc. v. Inland Reclamation Company, 842 F.2d 150, 154 (6th Cir.1988). An abuse of discretion occurs when (1) the district court's decision is based on an erroneous conclusion of law, (2) the district court's findings are clearly erroneous, or (3) the district court's decision is clearly unreasonable, arbitrary or fanciful. Badalamenti v. Dunham's, Inc., 896 F.2d 1359, 1362 (Fed.Cir.1990) (applying 6th Circuit
In deciding whether the district court acted unreasonably, arbitrarily or fancifully, this court has announced several factors that it should consider when deciding whether the district court abused its discretion by imposing sanctions. Among the factors are: "(1) whether the adversary was prejudiced by the dismissed party's failure to cooperate in discovery, (2) whether the dismissed party was warned that failure to cooperate could lead to dismissal, and (3) whether less drastic sanctions were imposed or considered before dismissal was ordered." Taylor at 986 (citing Regional Refuse Systems at 155).
Dismissal is the sanction of last resort. It should be imposed only if the court concludes that the party's failure to cooperate in discovery was willful, in bad faith, or due to its own fault. Taylor at 985. Dismissal is an abuse of discretion if the party does not have the ability to comply with the request. Id. The dismissed party has the burden of proving that it could not comply with the discovery request. Id. at 987. A district court does not abuse its discretion in dismissing a case, "even though other sanctions might be workable, if dismissal is supported on the facts." Regional Refuse Systems at 155.
In the instant case, the district court abused its discretion by dismissing the case pursuant to Rule 37(d) because it erroneously applied the rule. Rule 37(d) allows for sanctions in three defined situations: (1) if a party fails to appear at its own deposition after being served, (2) if a party fails to answer or object to interrogatories submitted under Rule 33, and (3) if a party fails to serve a written response to a request for inspection submitted under Rule 34. The only situation that may be applicable to this case is a party's failure to serve a written response to a request for inspection submitted under Rule 34. A request for inspection pursuant to the procedures set out in Rule 34(b) was not made. Moreover, a request for the heater and electrical cords would be outside of the scope of Rule 34 because the rule is limited to tangible things in the possession, custody, or control of the party upon whom the request is made. The heater and electrical cords were never in State Auto's possession or control during the lawsuit. The heater and electrical cords were discarded in or about March 1991. The lawsuit was not filed until November 1991. Thus, had a request been made, State Auto could have properly complied with Rule 37 by filing a response stating that it could not produce the heater and electrical cords because they had been destroyed and, therefore, were not in its possession, custody, or control.
This court's decision is in no way meant to condone pre-litigation destruction of evidence. The court simply recognizes that Rule 37 is a procedural rule, and like all procedural rules, it governs conduct during the pendency of a lawsuit. Rule 37 does not, nor does any procedural rule, apply to actions that occurred prior to the lawsuit. Such a remedy must be found in the substantive law of the case. For example, several states have laws which shift the burden of proof when a party is responsible for discarding evidence or which allow juries to draw inferences about discarded evidence. This has been done in Kentucky.
In Welsh v. United States, one member of this court noted that "the District Court's drawing of inferences adverse to the defendant based on defendant's failure to produce evidence that was within its control finds general support in Kentucky case law." 844 F.2d 1239, 1245 (6th Cir.1988). The rationales for allowing adverse inferences are both evidentiary and deterrent. "The evidentiary rationale springs from the common sense notion that a party with notice of an item's possible relevance to litigation who proceeds nonetheless to destroy it is more likely to have been threatened by the evidence than a party in the same position who does not destroy it[.]" Id. at 1246. The deterrent rationale "`serves as a penalty, placing the risk of an erroneous judgment on the party that wrongfully created the risk.'" Id. "Destruction of potentially relevant evidence obviously occurs along a continuum of fault — ranging from innocence through the
The unavailability of evidence due to the plaintiff's pre-litigation destruction and the corresponding negative inferences, however, do not necessarily mandate dismissing the case or granting summary judgment.
For the reasons stated above, the decision of the district court is REVERSED.
At oral arguments, counsel for Lakewood suggested that this court could dismiss the case under Rule 56 if the court determined that Rule 37 was inapplicable. We are unable to address this alternate ground for dismissal because it is not properly before the court, as it has not been presented to the district court.