WV Supreme Court affirms sanctions on utility companies - WBOY.com: Clarksburg, Morgantown: News, Sports, Weather

WV Supreme Court affirms sanctions on utility companies

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West Virginia Supreme Court justices recently affirmed a lower court's sanctions on a party for producing hundreds of thousands of pages of documents shortly before trial.

Ohio Power Co. and American Electric Service Power Corp. said the lower court should not have imposed sanctions upon them because they were not in violation of a court order and they did not have a "pattern of wrongdoing" throughout the litigation.

However, Pullman Power LLC and Structural Group Inc. said sanctions were appropriate because they could not review the deluge of documents in a meaningful way before trial.

The case stems back to a March 4, 2006, fire in a smokestack at the Mitchell power plant, which killed Pullman employee Gerald W. Talbert and injured employees David Early and Timothy Wells. The three men were working on the chimney stack when the fire occurred.  

Early, Wells and Tiffani D. Talbert, acting as administratrix of Gerald Talbert's estate, filed a civil action in Marshall County Circuit Court.

The circuit judge entered a scheduling order setting the deadline for discovery submission for Jan. 14, 2011.

However, in March 2011, attorneys for Ohio Power Company and American Electric Service Corporation realized other electronically-stored information existed.

Court documents state that five weeks before trial, AEP's counsel advised Pullman's counsel that it discovered the additional 750,000 to 1.5 million pages of electronic information.

AEP's newly appointed counsel informed Pullman that a former attorney had the documents stored on a hard drive but had not reviewed it for discovery.

Counsel also said AEP and the former attorney had these documents for several years, court documents state.

A week before trial, AEP's counsel turned over 100,000 pages of documents, and five days before trial produced another 180,000 pages promising it would produce two additional products of "similar size and scope."

Earley, Wells and Talbert later settled before trial, but petitioners intended to go to trial on the crossclaims, documents state.

Pullman's attorneys filed a motion for sanctions against their co-defendants, and AEP and Ohio Power filed their opposing motions.

The lower court later found AEP's production of the documents shortly before trial "constituted noncompliance with the West Virginia Rules of Civil Procedure" and violated the prior deadlines.

The court also ruled Pullman was unable to review the documents "in any meaningful way before trial" and their rights to defend their cross-claims were "severely and unduly prejudiced."

Thus, the court dismissed with prejudice the crossclaims against Pullman.

Parties appeared in the state Supreme Court for the Jan. 23 oral argument hearing.

Representing Ohio Power Company and American Electric Service Power Corporation was Michael P. Leahey, who argued sanctions should not have been imposed.

Leahey said parties did not violate a court order because they did not "engage in a pattern of wrongdoing throughout the litigation" and there was no evidence that the documents were relevant to the claims.

He also argued that cases require an evidentiary hearing to determine whether there was bad faith, willfulness or prejudice. He added other steps should have been taken first such as holding an evidentiary hearing, granting a continuance, before dismissing.

"While the petitioners attempt to downplay the gravity of their violation of the scheduling order, this court has repeatedly stated that it does not condone such conduct when done so willfully. … The magnitude of the violation of the scheduling order in this case stems from the massive volume of documents that went completely unchecked by petitioners and their former counsel during the discovery process," the April 1 per curiam opinion states.

The opinion noted the documents were known to the companies and their formal counsel.

"Finally, we reject the petitioners' argument that the circuit court's dismissal of the cross claims was premature because the court did not first conduct an evidentiary hearing," the opinion continued. "When the circuit court stated on the record its decision to dismiss the cross-claims and to convert the prior oral arguments and proffers made at the pretrial hearing into the evidentiary hearing, there was no objection raised at that time or thereafter by the petitioners."