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Court Grants Plaintiff Crossfit’s Motion for Sanctions Due to Defendant’s Bad Faith

Posted on April 9th, 2018

Our blog discusses recent cases.

In Crossfit, Inc. v. National Strength and Conditioning Association, No. 14cv1191 JLS (KSC), (Dist. Court S.D. California, 2017), the Plaintiff demonstrated the willful nature of Defendant’s actions, warranting sanctions.

CrossFit certifies trainers in fitness and personal training. National Strength and Conditioning Association (“NSCA”) is a nonprofit corporation founded nearly 50 years ago. Both CrossFit and the NSCA generate revenue by credentialing and certifying trainers through their various programs. CrossFit argued in a specific study (the “Devor Study”) that the NSCA published false data regarding CrossFit participants’ injury rates.

After several years of litigation, the NSCA filed a separate suit in state court against CrossFit alleging trade libel, defamation, and unfair business practices. After a contentious discovery period, CrossFit received discovery from the state-court action that appeared to contradict assertions NSCA deponents had made in this action. CrossFit then deposed the NSCA’s Education Coordinator—in the state-court case at which time he admitted that several of the statements in his federal-action declaration, submitted under penalty of perjury, were false. Among the newly discovered documents were some that proved that the NSCA’s Education Coordinator perjured himself, and that there was ill intent behind false information dispersed by NSCA about CrossFit.

Federal Rule of Civil Procedure 37 authorizes the district court to impose a wide range of sanctions when a party fails to comply with the rules of discovery. However, because dismissal is such a severe remedy it should be imposed only in extreme circumstances, and only where the violation is due to willfulness, bad faith, or fault of the party.

Plaintiff argues that the factors weigh heavily in favor of terminating sanctions. Defendant argues that the NSCA would be irreparably prejudiced by dismissal, and that CrossFit is not truly prejudiced because the NSCA has agreed to CrossFit utilizing the documents produced in the state court in the federal action, the NSCA has agreed to allow CrossFit to take additional depositions, and the relevant pretrial dates are continued sufficiently to allow CrossFit time to adequately prepare for trial.

The Court agrees with Plaintiff that there is sufficient evidence to find willfulness, bad faith, or fault on the part of the NSCA in withholding the recently discovered documents and in lying under oath in the federal proceedings.  Nearly every factor weighs in favor of imposing terminating sanctions. First, the public’s interest in expeditious resolution of litigation would be served. Second, the court’s need to manage its dockets counsels in favor of termination. Third, although the risk of prejudice to the party seeking sanctions does not here weigh as heavily in favor of terminating sanctions, it nonetheless weighs slightly in favor of terminating sanctions given the sheer breadth of misconduct and Defendant’s refusal to accept responsibility for the same. Fourth, the public policy favoring disposition of cases on their merits slightly weighs in favor of terminating sanctions in the present case. Finally, there is availability of less drastic sanctions. After weighing all the factors, the Court concludes that it is well within its discretion to award terminating sanctions. However, the Court nonetheless declines to do so at this time.  Considering the issue and evidentiary sanctions the Court can ultimately award, this will significantly narrow the issues remaining for trial.

The Court grants Plaintiff the sanctions of adverse inference instructions to the jury. The Court also grants CrossFit leave to file an amended complaint addressing alleged lost revenue caused by NSCA’s actions. The Court also awards fees to Plaintiff.

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