Hester v. Vision Airlines: Ninth Circuit Affirms Terminating Sanctions in Class Action for Discovery Abuse

Hester v. Vision Airlines, Inc., --- F.3d --- (7/18/12) is an unusual case that deals with a couple of interesting points.

Plaintiff Gerald Hester worked as a pilot for Vision Airlines. Vision was subcontracted to deliver supplies through war zones to U.S. military posts in Iraq and Afghanistan. The United States provided substantial “hazard pay” for the pilots and crew members who made those flights.

Hester sued Vision, alleging that it failed to pay more than $21 million in "hazard pay" to its employees. The trial court certified the class.

After extensive discovery disputes, the district court sanctioned Vision by striking its answer, entered default judgment, and held a jury trial to determine damages. Vision appealed.

First, the Court rejected Vision's argument that the district court abused its discretion by not considering less drastic sanctions, as required. The district court specifically "determined that no alternative sanction would be sufficient and Vision’s conduct warrants striking its Answer." Slip op. at 12. The district court "warned Vision on the record several times about the possibility of a case-dispositive sanction, and the court’s written order contained an explicit, three-and-a-half-page discussion of why less drastic sanctions were insufficient." Slip op. at 13.

Second, the Court rejected Vision’s argument that the complaint's allegations were insufficient to support a the judgment. As to the claim for conversion, "In Nevada, a defendant’s wrongful dominion over a plaintiff’s commission of money is sufficient for a conversion claim, even when no personal property is involved." Slip op. at 15.  Vision could not merely dispute the allegations made as a way to relitigate the facts alleged in the complaint.  Ibid.

Third, the Court rejected Vision's argument that the district court erred in certifying the class because Hester had an employment contract and other class members did not, defeating the typicality, predominance, and adequacy requirements for class certification. The Court found that Vision "did not produce any evidence that Hester had an employment contract with Vision," and the "single page, unilateral memorandum from Vision to Hester, which informed Hester of changes in rates at which Vision would pay captains and first officers" did not show "that Hester was a party to an employment contract with Vision or that he was situated differently from other members of the Class." Slip op.a t 16.

On the class's cross-appeal, the Court held that the district court improperly struck the class's claim for punitive damages. The Court held that punitive damages were allowed under Nevada law because the claims did not arise under contract.

[I]n this case, the Complaint alleges facts that could allow a jury to conclude that Vision engaged in oppression, fraud, or malice when it refused to pay its employees the hazard pay they were due, when it fired those employees to whom it had already paid hazard pay, or when it continued to accept hazard pay monies from upstream contractors for years with no intention of distributing that money.

Slip op. at 17-18.

The opinion is available here.