# Petition for Writ of Certiorari — Carey Canada, Inc. v. Hinely > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385019_0804%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition for Writ of Certiorari - **Published:** January 1, 1987 - **Citation:** 484 U.S. 898 ## Text Y FILED 8? “3 00 AUG 21 19897 JOSEPH F. SPANIOL, JR, NO. CLERK SUPREME COURT OF THE UNITED STATES OCTOBER TERM 1987 CAREY CANADA, INC. Petitioner VS: JAMES E. HINELY, ET AL Respondents ON PETITION FOR WRIT OF CERTIORARI TO THE SUPREME COURT OF GEORGIA PETITION FOR CERTIORARI E. FREEMAN LEVERETT HEARD, LEVERETT, ADAMS & PHELPS, P.C. COUNSEL OF RECORD FOR PETITIONER P. O. DRAWER 399 ELBERTON, GEORGIA 30635 404/283-2651 JOHN D. JONES GREENE, BUCKLEY, DERIEUX & JONES SUITE 1300, THE HURT BUILDING ATLANTA, GEORGIA 30303 404/522-3541 DARLENE Y. ROSS BRANNEN, WESSELS & SEARCY P. O. BOX 8002 SAVANNAH, GEORGIA 31412 912/234-8875 OF COUNSEL NO. SUPREME COURT OF THE UNITED STATES OCTOBER TERM 1987 CAREY CANADA, INC. Petitioner VS: JAMES E. HINELY, ET AL Respondents ON PETITION FOR WRIT OF CERTIORARI TO THE SUPREME COURT OF GEORGIA PETITION FOR CERTIORARI QUESTIONS PRESENTED (1) Whether, in an asbestos products liability case, sanctions for failure to make discovery of documents under a request for production relating to jurisdictional and sales issues are violative of due process of law when the ~ sanctions exceed the scope of discovery sought and adjudicate issues such as a finding that (a) Defendant failed to warn plaintiffs of the dangers of asbestos-containing products (b) Defendant is guilty ef negligence per se (c) Defendant knowingly suppressed knowledge of the dangers of asbestos in order to maximize corporate profit in disregard of adverse health effects upon persons exposed to such products? (2) Whether the trial court denied defendant Canadian corporation due process of law by imposing sanctions of default and contempt for non-production of documents which defendant was unable to produce because prohibited from doing so by the law of Canada? PARTIES The Petitioner, defendant in the trial court below, is Carey Canada, Inc., oil in = a Canadian corporation, (hereinafter Carey Canada). The named Respondent, plaintiff below, is James E. Hinely. This case, in all courts below, actually involved twenty-six (26) similar cases involving twenty-six (26) different groups of plaintiffs.? 1. In the trial court, the cases were treated as having been consolidated for purposes of all pretrial rulings. ~iii- TABLE OF CONTENTS PAGE NO. QUESTIONS PRESENTED... cccccccccccee il PARTIES .ccccccccccccccccccccccccccces Ll TABLE OF AUTHORITIES... -cceeccccceess vi OPINIONS BELOW... ccccccccccccscceses 1 JURISDICTION... cccccccccccccccccccee L STATUTORY AND CONSTITUTIONAL PROVISIONS RELIED UPON....-eeeeceees 2 (a) Statute Involved........22-2- 2 (b) Constitutional Provision Relied UpOn..ccccccccccccccs 3 STATEMENT OF THE CASE... cccccccccssee 4 FEDERAL QUESTIONS RAISED...-.-eeee4e- 9 REASONS FOR GRANTING THE WRIT OF CERTIORARI .cccccccccccccccccccseccces Ld (1) Imposition of Discovery Sanctions Unrelated To The Discovery Sought Violates Due Process And Is Contrary To Prior Decisions of This Court ccccccccccccccccccccce 12 (2) Petitioner Carey Canada, As A Canadian Corporation, Was Denied Due Process Of Law By The Adjudication Of Default And Contempt For -iv- Failing To Produce Records Which It Was Unable To Produce Because Of Prohibition Of Canadian PPPvrrrererrerererrrrrrerrrrr 26 CONCLUSION. «cc ccccccccccece a 40 INDEX TO APPENDIX APPENDIX CERTIFICATE OF SERVICE TABLE OF AUTHORITIES CASES Application of Chase Manhattan Bank, 297 F2d 611 C2 GES. ZOE) 66 whee seb dKsKeaee Bailey v. Alabama, 219 U.S. 219, 239, 55 L.Ed 191, 200 CiDRs) ob ocesuees e*eeee#8s: eeees#e a. a a ae Carey Canada, Inc. v. Hinely et al, 181 Ga. App. 364, 352 S.E.2d 398 (1986)...... Carey Canada, Inc. v. Hinely, et al, 257 Ga. 150, 356 S.E.2d 202 (1987) .c.ccecceeee Cine Forty-Second Street Theatre v. United Artists, 602 F2d 1062 (2nd Cir. 1979).... Dorsey v. Academy Moving & Storage, 423 F2d 858 (5th ad BOO l eek se eens 6% eoeeesee?#e#e?#s? Emerick v. Fenick Industries, 539 F2d 1379 (Sth Cir. 1976) .ccccccvcccccccee English v. 2lst Phoenix Corp., 590 F2d 723 (8th Cir. 1979), cert. den. 444 U.S. 832 (1979) cc cccccccccccccce Federal Maritime Commission vy. Desmedt, 366 F2d 464, 467 (ZOE Cif. APSCl 6 osc ct ccveces PAGE NO. eee 34 coe 19 eee 19 eee 18 eee 34 ee to. we ae ae ay ee PI eo gp ee ay a TP ee eae ier eo ao ee ae Ty. a same” Do ot ag D ae s 1 o- 4 Feingold v. Walworth Bros., 144 N.E. 675, 238 N.W. 446 Ol >’ > err TT irre rere Re ee ee 18 First National Bank v. IRS, 271 F2d 616, 619 (2nd Cir. 1959), cert. den. 361 U.S. 948 (1960) ccc cere eee eereeeecerccees 34 Fjelstad v. American Honda Motor Co., 762 F2d 1334 ‘ (9th se fee . . ) e*evnseeses e*eeee#ee#e«# 19 Ford Motor Co. v. Carter, 239 Ga. 657, 662, 238 eB SR pg Pe eee ee 22 FTC v. Compagnie de Saint-Gobain-Pont-A-Mousson, 636 F2d 1300, 1325 (D.C. oy El: RR 36,38 Garner v. Louisiana, 368 O.8. 237s F mas 2G 267 (1961)... 40 Garrett v. Royal Bros. Co., (1969) -cccccces ROS OC OO Cee ereseeeres 22 Gipson Lumber Co. v. Schickling, 56 Wis. 2d 164, 201 H.W. 24 SOO (1972) ccccccscccces 18 Gordon v. FTC, 427 F2d 578 9 ng TO 1970). e*eeeeseese#*#e#eee#ee#*e#¢t€## 37 Hammond Packing Co. v. Arkansas, 212 U.S. 322 Se Depa GEPOOEl cccccccccess vcaw Bp bdekde -vVii- Re ee eee ee soe eA. ae ee Z i q : 4 7 ’ i - , . ‘ ; - ia a Harrah Independent School District v. Martin, 440 U.S. 194, 59 L-EBd.2d 248 (1979) .cccccces Harrigan v. Mason & Winograd, Inc., 397 A2d 514, 121 make 209 eo >. > ae eoeenevensveneeete 18» Hovey v. Elliott, 167 U.S. 409, 42 L.Ed. 215 (1897)......... 12,17, In re Grand Jury Subpoena to Continental Illinois National Bank, 96 A2d 480, 464 N.Y.S. 2G 192 CASED casasccseseseseseccane In re Oil Spill by Amoco Cadez, 93 F.R.D. 840 (D.C. Tide SOB ccccescccesssesceiccesses In re Rubin, 769 F2d 611 (9th Cie. SOG s ewanee ee cseaces ‘. ora £e eae In Re Westinghouse Elecric Corp. Uranium Contracts Litigation, 563 F2d 922 CEUGR GEE s BEIT! 6 RS coo eee Reece ee es In the Matter of Equitable Plan Co., 185 F. Supp. 57 (DeCw Wak s BPGGP crccccvccaveccceses Ings v. Ferguson, 282 F2d 14D CE2AG CLE « TOG oc cccccrcessccse 34 Insurance Corporation of Ireland v. Compagnie Des Bauxites de Guinea, 456 U.S. 694, 72 L.Ed.2d 492 C1 9GS) cc ceeede Sees hedecesocsacees 8,12 Levy v. Louisiana, 391 U.S. 68, 72, 20 L.Ed.2d 436 (1968) Logan v. Zimmerman Brush Co., 455 0.8. 422, 71 L.Ed.2d 265 (1982). e@eeoe#2s eeseeentee2ees3se#2e8e#e#€e# Massey v. Hilton Heights Park, Inc., 121 Ga. App. 214, 173 S.E.2d 396 (1970)........ Motorship Lines Ltd. v. Federal Maritime Board, 295 Munoz-Santana v. U.S. Immigration and Nationalization Service, 742 P2G 561 (Sth Cir. 1984)...... National Hockey League v. Metropolitan Hockey Club, Inc., 427 U.S. 639, 49 Demee ee £47 CIDTE) ccccccceccce O'Toole v. William J. Meyer Co., 243 F2d 765 (Sth Cir. LOST iswes rr rrry Ketheaweses Pacquete Habana, The, 175 U.S. 677, 44 L.Ed. 320, BOG APOE) cc scecss SESS CROC dees Professional Seminar Consultants v. Sino American Technology, 727 F2d 1470 (9th oy ee GS 2 rs Regents of University of Michigan v. Ewing, 474 U.S. , 88 L.Ed.2d 523 (1985).. -ix- eeccee 40 bennee 22 ccccee 19 coves 42 coccee 18 ce ccce 37 ceccece i$ Tre te 40 Roadway Express Inc. v. Piper, 447 U.S. 752, n. 14, 65 L.Ed.2d 488 (1980).........2.20. Schulze v. Coy Kendall, 545 P2d 392, 218 Kan. 653 (1976)....... Sears Roebuck & Co. v. Walker, 127 Ariz. 432, 621 P2d 938 (1980) .cccccccccccccccccece Serwitz v. General Electric Credit Corp., 174 Ga. App. 747, 331 S.E.2d 95 (1985).......... Shelton v. Tucker, 364 U.S. 479, 5 L.Ed.2d 231 (1960).......... Societe International v. Rogers, 357 U.S. 197, 2 L.Ed.2d 1255 (1958).....--. 12,15,17,30,41 Societe Nationale v. U.S. District Court, 482 U.S. P 96 L.Ed.2d 41 (1987) ..cccccccccccce Speiser v. Randall, 357 U.S. 513, 2 L.Ed.2d 1460 (1958)... The Pacquete Habana, 175 U.S. 677, 44 L.Ed. 320, 328 (1900) Thompson v. Louisville, 362 U.S. 199, 206, 4 L.Ed.2d 654 CaP debate ae oe e@eeeeeee#ee#eegege#es#es Tot v. United States, 319 U.S. 463, 87 L.Ed. 1519 (1943) .cccccccece Terrrrrrrrree es See 40 24 Trade Development Bank v. Continental Ins. Co., 469 F2d 35 (2nd Git. yy | a Trustees of Dartmouth College v. Woodward, 4 Wheat. 518, 4 L-Ed. 629 (1819) .ccccccccee United States v. First National Bank of Chicago, 699 F2d 341 (7th Cir. 1983)...... United States v. First National City Bank, 396 F2d $94 (2nd Cic. 1968) ccccccccecs United States v. Meyer, 398 F2d 66, (9th Cir. 1968)...... United States v. Standard Oil Co. of New Jersey, 23 FRD 1 (D.C. N.Y. Toe céeseee e*eee#ee#se#feee? United States v. Vetco, Inc., 691 F2d 1281 (9th Cir. (1981)..... Vachon v. New Hampshire, 414 U.S. 478, 38 L.Ed.2d 666 (1974) wcccceccsccce eccccccccce Vincent v. Ateliers de la Motobecane, S.A., 193 N.J. Super 716, 475 A2d 686 (1984) Volkswagenwerk A. v. Superior Court, 123 Cal. App. 3rd 840, 176 Cal. 874 (1981) .cccccecce Vonderheyt v. Rogers, 251 F2d 17 (D.C. Cir. 1958) .ccccccccccccces ayia 18 40 34 Weber v. Aetna Casualty & Surety Co., 406 U.S. 164, 31 L.Ed.2d 768 (1972)........ Wyle v. R. J. Reynolds Industries, Inc., 709 F2d 585 (Sth Circ. 1983) cccccccccceccece STATUTES AND CONSTITUTIONAL PROVISIONS 2B UGCA 1257 (Sd ccccccccccecs 0O.C.G.A. §9-11-37 (b) eeersreeeer Rule 37-6 PRuPecaesccesoeseseees Constitution of Georgia, Art. VI, Sec. VI, Par. Westeooecees Province of Quebec Business Concerns Records Act, 1964, Que. Rev. Stat. C. 278 (1964) MISCELLANEOUS Agnor, Use of Discovery Under The Georgia CPA, §12-7, p. 265 (3rd Tit tceenbeebesétseosé Note, Emerging Deterrence Orientation In The Imposition of Discovery Sanctions, 9l Harv. L.R. 1033 (1978)....... Note, Foreign Nondisclosure Laws and Domestic Discovery Orders In Antitrust Litigation, 88 Yale L.J. 612, GiG (i979) cccses see eececsces -xii- ~> af QV r ! i * 7 Var at = a” a-S . > = 4 pal aa 5 . . a 4 - aa he (a Se eore Mg) lg Fi ee ay e Se ‘a — 7 ee ok a 7 = te : 4 fm Fe meh is Woke a bh lie SIN i, eo : - 2 - : 7 , [_ BN eat “ a DLR Liste, 70 _w € - : : a on : - a ] i - “ee " ; i Pe I q us : 7 if Note, Limitations On The Federal Judicial Power To Compel Acts Violating Foreign Law, 63 Col. L.R. 1443 (1963) Note, Ordering Production of Documents From Abroad In Violation of Foreign Law, 31 U. Chi. LR. 791 (1964) ...... Note, Standards for Imposition of Discovery Sanctions, 27 Maine L.R. 247, CROFT OS 666d ChEeOKEROKE ORE OR ERES Onkelinx, Conflict of International Jurisdiction: Ordering The Production of Documents In Violation of the Law of the Situs, 64 N.W.U.L.R. 487 (1969)........ Restatement (Second) of the Foreign Relations Law of the United States, SEGcccccccecces 8 Wright & Miller, Federal Practice and Procedure, §2284 (SQOD. dD ecccesosnes cabeeeeeers 4A Moore's Fed. Prac., §37.03 (BOS) < esac oeeeeeereee eeeeeveeee 27 CJS 268-269, §86 ..... cee. 35A CJS 1048, §750...-eeeeeee -xlii- OPINIONS BELOW The order of the State Court of Chatham County adjudging defendant in contempt and imposing sanctions is unreported (R. 580).* The decision of the Court of Appeals of Georgia, the intermediate appellate court, is reported as Carey Canada, Inc. v. Hinely et al, 181 Ga. App. 364, 352 S.E.2d 398 (1986). (Appendix, p. 1). The decision of the Supreme Court of Georgia is reported as Carey Canada, Inc. v. Hinely, et al, 257 Ga. 150, 356 S.E.2d 202 (1987). (Appendix, p. 42). JURISDICTION Jurisdiction is based on 28 USCA 1257(3), defendant having set up in the courts below, a right, privilege and immunity with respect to the sanctions * References to the record refer to the record transmitted to the Court of Appeals of Georgia. -l|- imposed, under the Due Process Clause of the Fourteenth Amendment to the Constitution of the United States. The order of the trial court was entered December 31, 1984 (R. 584). Notice of Appeal was timely filed on January 29, 1985 (R. 1). The decision of the Court of Appeals of Georgia was rendered November 20, 1986, rehearing denied December 19, 1986. The decision of the Supreme Court of Georgia was rendered May 27, 1987, rehearing denied June 17, 1987. STATUTORY AND CONSTITUTIONAL PROVISIONS RELIED UPON (a) STATUTE INVOLVED 0.C.G.A. §9-11-37(b), in pertinent part provides: "Tf a party .. . faidis to obey an order to provide or permit discovery. . . the Court in which the action is pending may make such orders in regard to the failure as are just and, among others, the following: -2- (A) An order that the matters regarding which the order was made or any other designated facts shall be taken to be established for the purposes of the action in accordance with the claim of the party obtaining the order; (B) An order refusing to allow the disobedient party to Support or oppose designated claims or defenses, or prohibiting him from introducing designated matters in evidence; (C) An order striking out pleadings or parts thereof, or staying further proceedings until the order is obeyed, or dismissing the action or proceeding or any part thereof, or rendering a judgment by default against the disobedient party; (D) In lieu of any of the foregoing orders, or in addition thereto, an order treating as a contempt of court the failure to obey any orders except an order to submit to a physical Or mental examination;. .. (b) CONSTITUTIONAL PROVISION RELIED UPON Fourteenth Amendment to the Constitution of the United States: -3- ", . » Nor shall any State deprive any person of life, liberty Or property, without due process of law. . .” STATEMENT OF THE CASE On May 30, 1980, James E. Hinely filed Civil Action No. 80-3141 in the State Court of Chatham County, Georgia, against 22 defendants, including Petitioner Carey Canada, claiming that plaintiff was a carpenter who became exposed to asbestos products either mined Or manufactured by defendants, resulting in injuries. The complaint asserted 4 causes of action based on negligence, implied warranty, knowledge and conspiracy to deprive, and strict liability in tort (R. 17-21). Defendant Carey Canada filed defensive pleadings denying the essential allegations of the complaint (R. 24). Susequently thereto, the 25 other asbestos products liability cases referred to in the contempt order a were filed in which Carey Canada was named as a defendant. Interrogatories, Requests for Admission and Requests For Production of Documents were filed by plaintiffs, the latter, which are the only thing in issue here, having been filed on December 21, 1982 (R. 262; Appendix, p. 46). Defen- dant Carey Canada filed objections, including the objection that production would be contrary to the Canadian Business Concerns Records Act of 1964, which governed defendant as a Canadian Corporation whose corporate offices were located in Canada (R. 272). The objections were overruled on November 16, 1983, and defendant was ordered to respond by December 9, 1983. After defendant had exhausted a number of proceedings challenging the order in the state superior court and appellate -5- courts, and the filing of a further response by defendant stating that certain documents would be produced (R. 573), the State Court entered its order of sanctions on December 31, 1984 which: (1) Imposed a fine of $500 per day from the date of the order requiring discovery (Dec. 9, 1983) until the date of the sanctions order, or $193,500; (2) Relying on O.C.G.A. §9-11-37(b), ordered as follows: "1. The following facts, matters and condition (sic) established as true for purposes of the above-referenced lawsuit: (a) That Defendant Carey Canada, Inc. did sell asbestos containing products; (b) That Plaintiffs were exposed to the asbestos containing products sold by Defendant Carey Canada, Inc.; (c) That Plaintiffs have suffered personal injury and/or death as a result of being exposed to the asbestos containing products sold by Defendant Carey Canada, Inc.; -§- \ (d) That the Defendant Carey Canada, Inc., failed to warn the Plaintiffs and each of them of the dangerous characteristics of their asbestos-containing products and is, therefore, guilty of negligence as a matter of law; (e) That the Defendant Carey Canada, Inc. knowingly suppressed and -overed up knowledge of the dangers of asbestos in order to maximize corporate profits in complete and utter disregard of the adverse health effects upon persons exposed to asbestos products manufactured and sold by Defendant Carey Canada, Inc.; 2. That Defendant Carey Canada, Inc. is prohibited from submitting or offering any evidence or testimony to contradict any facts alleged by Plaintiffs or to support any defenses alleged by Defendant Carey Canada on any issues of liability." (R. 584) On appeal, the Court of Appeals of Georgia rejected defendant's contention that the contempt fine was criminal contempt and hence in excess of the statutory maximum of $500 per violation. -7- Second, the Court further recognized the general principle, both as a matter of statutory construction and due process, that a sanction "must be specifically related to the particular claim which was at issue in order to provide discovery", citing Insurance Corporation of Ireland v. Compagnie Des Bauxites de Guinea, 456 U.S. 694, 707, 72 L.Ed.2d 492 (1982), and that the sanction must "Support the presumption that the refusal to produce evidence. . . was but an admission of the want of merit in the asserted defense", citing Hammond Packing Co. v. Arkansas, 212 U.S. 322, 351, 53 L.Ed. 530 (1909) (181 Ga. App. at 368-369). Based on this, the Court of Appeals held that sanction l(c) was error as it did not "correlate with any documents requested", and that Sanction 2, insofar as it precluded defendant from contesting any -8- issue of liability, was also "beyond the scope of the discovery requested" (181 Ga. App. at 369). The Court of Appeals also rejected defendant's Fourteenth Amendment due process claim that it was improperly sanctioned for refusing to do what the law of its sovereign forbade it to de. (181 Ga. App. at 373). The Supreme Court of Georgia granted certiorari, and set aside the contempt fine, but did not consider or disturb the other holdings of the Court of Appeals. 257 Ga. 150; Appendix, p. 42. FEDERAL QUESTIONS RAISED In the trial court below, defendant resisted all sanctions on the ground that it was not in default (R. 554, 567). In Plaintiffs' Brief in Support of their Motion For Sanctions, plaintiffs conceded that any sanction imposed could not exceed the scope of the discovery sought, declaring that the sanctions authorized by Georgia law (0.C.G.A. §9-11-37[b] [2]) "[Mlay only relate to the matters and issues on which discovery is being frustrated", citing Agnor on Discovery, §12-7. (R. 482). However, the trial judge's order disregarded this admission by plaintiffs and imposed the sanctions complained of, going far beyond what was authorized by law, or what plaintiffs conceded was proper. Defendant thereupon raised its due process question at the earliest practical time, by enumeration of errors on appeal to the Court of Appeals (Enumeration Nos. 9, 13). In defendant's objections to plaintiffs' Requests for Production, defendant also urged that the Request was "in contravention of the Province of Quebec's Business Concerns Records Act, -10- a 1964, Que. Rev. Stat. C. 278 (1964) and expose the Defendant to liability for contempt for violation of the Act" (R. 277, 278). When the trial court rejected these objections and imposed sanctions going beyond anything reasonably anticipated,defendant at the first opportunity asserted its due process constitutional objection in its Enumeration of Errors in the Court of Appeals of Georgia.° The Court of Appeals decided the due process federal questions by rejecting same (181 Ga. App. at 373, Divisions 7 and 9). The Supreme Court of Georgia, whose review of decisions of the Court of Appeals is discretionary, Constitution of Georgia; Art. VI, Sec. VI, Par. V, granted certiorari stating that it was 2. Enumeration Nos. 9, 13. -ll- particularly concerned only with the criminal contempt fine (Order of February 25, 1987), and the Court in fact addressed only this issue. 257 Ga. 150. REASONS FOR GRANTING THE WRIT OF CERTIORARI (1) Imposition of Discovery Sanctions Unrelated-To The Discovery Sought Violates Due Process And Is Contrary To Prior Decisions Of This Court The due process challenge rejected by the Court of Appeals of Georgia below is one previously addressed by this Court in Hovey v. Elliott, 167 U.S. 409, 42 L.Ed. 215 (1897); Hammond Packing Co. v. Arkansas, 212 U.S. 322, 53 L.Ed.2d 530 (1909); Societe Internationale v. Rogers, 357 U.S. 197, 209, 2 L.~Ed2d 1255 (1958), and Insurance Corp. of Ireland, Ltd. v. Compagnie Des Bauxites De Guinea, 456 U.S. 694, 705, 72 L.Ed.2d 492 (1982). ~12- Hovey v. Elliott held that it was a denial of due process for a Court to strike a party's answer and declare him in default as punishment for contempt in failing to obey a prior order of court, for "The fundamental conception of a court of justice is condemnation only after hearing. To say that courts have inherent power to deny all right to defend an action and to render decrees without any hearing whatever is, in the very nature of things, to convert the court exercising such an authority into an instrument of wrong and oppression, and hence to strip it of that attribute of justice upon which the exercise of judicial power necessarily depends." (167 U.S. at 414). Hammond Packing Company v. Arkansas, supra, modified Hovey by upholding an adjudication of default and the imposition of penalties sought by the -~l|3- | ieeeneecmmeanaiii me ; complaint when the defendant had refused to submit to depositions and produce records relating to all issues, including liability. Hovey was distinguished on the reasoning that: "In a sense, of course, the striking out of the answer and default was a punishment, but it was only remotely so, as the generating source of the power was the right to create a presumption flowing from the failure to produce. The difference between mere punishment, as illustrated in Hovey v. Elliott, and the power exerted in this, is as follows: In the former, due process of law was denied by the refusal to hear. In this, the preservation of due process was secured by the presumption that the refusal to produce evidence material to the administration of due process was but an admission of the want of merit in the asserted defense. The want of power in the one case and its existence in the other are essential to due process, to preserve in the one and to apply and enforce in the other. In its ultimate conception, therefore, the power exerted below was like the authority to default or to take a bill for confessed because of a failure to answer, based upon a presumption that the material facts alleged or pleaded were admitted by -14- ee Si a BTR tet SHB IR CEI wel: not answering, and might well also be illustrated by reference to many other presumptions attached by the law to the failure of a party to a cause to specially set up or assert his supposed rights in the mode prescribed by law." (212 U.S. at 351). In Societe Internationale, supra, dealing with Rule 37, FRCP, on which the Georgia statute is based, the Court, in holding that the district court had erred in dismissing a complaint by a foreign corporation seeking to recover property seized under the Trading With The Enemy Act, based upon its refusal to produce documents, declared that "The provisions of Rule 37 which are here involved must be read in light of the provisions of the Fifth Amendment that no person shall be deprived of property without due process of law, and more particularly against the opinions of this Court in Hovey v Elliott, 167 US 409, . . . and Hammond Packing Co. v. Arkansas, 212 US 322,... =} $= = wir oe 7 : y 7. = = : tt + ues “ These decisions establish that there are constitutional limitations upon the power of courts, even in aid of their own valid processes, to dismiss an action without affording a party the opportunity for a hearing on the merits of his cause. The authors of Rule 37 were well aware of these constitutional considerations. See Notes of Advisory Committee on Rules, Rule 37, 28 USC (1952 ed.), p. 4325." (357 U.S. at 209). Insurance Company of Ireland, supra, upheld application of Rule 37(b) (2) to the establishment of jurisdictional facts where the defendants had refused to produce business records bearing on the jurisdictional question, declaring that the "application of a legal presumption to the issue of personal jurisdiction does not itself violate the Due Process Clause. . ." (456 U.S. at 709). The Court recognized -16- the due process implications of adjudging facts as established when there was no connection between the discovery sought and the facts found, referring to Hovey, Hammond and Societe Internationle and the proposition that "Due Process is violated only if the behavior of the defendant will not support the Hammond Packing presumption" (456 U.S. at 705-706). The Court further concluded that "a proper application of Rule 37(b)(2) will, as a matter of law, support such a presump- tion" (Id., p. 706), and that "Rule 37(b) (2) contains two standards--one general and one specific-- that limit a district court's discretion. First, any sanction must be "just"; second, the sanction must be specifically related to the particular "claim" which was at issue in the order to provide discovery. While the latter requirement reflects the rule -l7- of Hammond Packing, supra, the former represents the general due process restrictions on the court's discretion." (456 U.S. at 707). These rules have uniformly been followed by the authorities. United States v. Meyer, 398 F2d 66, 77 (9th Cir. 1968); O'Toole v. William J. Meyer Co., 243 F2d 765 (5th Cir. 1957); Gipson Lumber Co. v. Schickling, 56 Wis. 2d 164, 201 N.W. 2d 500 (1972); Sears Roebuck & Co. v. Walker, 127 Ariz. 432, 621 P2 938, 942 (1980); Feingold v. Walworth Bros., 144 N.E. 675, 238 N.Y. 446 (1924); Harrigan v. Mason & Winograd, Inc., 397 A2d 514, 517, 121 R.I. 209 (1979); Schulze v. Coy Kendall, 545 P2d 392, 397, 218 Kan. 653 (1976); English v. 21st Phoenix Corp., 590 F2d 723 (8th Cir. 1979), cert. den. 444 U.S. 832 (1979); Agnor, Use of Discovery Under The Georgia -18- PES CPA, §12-7, p. 265 (3rd Ed.); 27 CJS 268-269, §86; 35A CJS 1048, §750; 4A Moore's Fed. Prac., §37.03 (2-3); Logan Vv. Zimmerman Brush Co., 455 U.S. 422, 429, 71 L.Ed.2d 265 (1982); Emerick v. Fenick Industries, 539 F2d 1379 (5th Cir. 1976); Roadway Express Inc. v. Piper, 447 U.S. 752, n. 14, 65 L.Ed.2d 488 (1980); Dorsey v. Academy Moving & Storage, 423 F2d 858, 860 (5th Cir. 1980); In re Rubin, 769 F2d 611 (9th Cir. 1985); Wyle v. R. J. Reynolds Industries, Inc., 709 F2d 585 (9th Cir. 1983); Munoz-Santana v. U.S. Immigration and Nationalization Service, 742 F2d 561 (9th Cir. 1984); Professional Seminar Consultants v. Sino American Technology, 727 F2d 1470 (9th Cir. 1984); Fjelstad v. American Honda Motor Co., 762 F2d 1334 (9th Cir. 1985). In this case, the refusal of defendant does not support the sanctions -19- imposed. In their Motion To Compel, plaintiffs characterized the scope of the Requests For Production as being related to sales, solicitation, and "relevant 3 jurisdictional evidence” (R. 327). 3. The requests for production relate to these matters: Records retrievable system for sales (No. 1); names and addresses of Georgia purchasers (Nos. 2, 3), and companies to whom defendant sent mailings (No. 4); ledgers, journals, etc., relating to Georgia companies making payments to Carey Canada for asbestos products (No. 5); information as to orders or requests to purchase from Georgia customers (No. 6); information as to shipments into Georgia of products (No. 7); information as to shipments of asbestos products to any persons anywhere after July, 1970 (No. 8); information as to invoices for sales both in Georgia and elsewhere (Nos. 9, 10); travel expense records for travel by officials to Georgia (Nos. ll, 12, and 13); records relative to participation by Carey Canada in any meetings or conventions in Georgia (No. 14); directories maintained by defendant (No. 15); employee lists and adddresses of company employees (No. 16); records of telephone calls to Georgia (No. 17); and records relating to advertisements placed by defendant in any -20- Oca tials Baer ies Yet, the sanctions in question are not related at all to the Requests. Sanction l1(d) first establishes that defendant failed to warn plaintiffs of the dangerous characteristics of asbestos products. While advertising matter may have failed to disclose any warnings, the more pertinent aspect is the unsupported assumption that defendant knew of the dangers of asbestos, and none of the Requests sought this type of evidence at all. The second part of sanction l(d) is even more remote, for it adjudicated that defendant "is therefore guilty of negligence as a matter of law" (R. 584). None of the Requests dealt with liability, as the Court of Appeals itself (Footnote 3 continued... publication (No. 18). (R. 262). Appendix, p. 46. In plaintiffs' motion to compel, referred to above, plaintiffs grouped and characterized the Requests substantially the same as set forth in this note. -2li- recognized with respect to Sanctions l(c) and (2) (181 Ga. App. at 369), and this sanction is even more far-fetched because under Georgia law, ". . .[T]he conduct of a party cannot be declared to be negligence per se unless it has been so declared by a lawmaking body." Ford Motor Co. v. Carter, 239 Ga. 657, 662, 238 S.E.2d 361 (1977); Garrett v. Royal Bros. Co., 225 Ga. $33, 170 S.E. 2d 294 (1969). No statute or other law declares that failure to warn is negligence or otherwise illegal. This is a jury question under the facts of each case for the jury to resolve. Massey v. Hilton Heights Park, Inc., 121 Ga. App. 214, 217-219, 173 S.E.2d 396 (1970). Sanction l(e), that defendant "knowingly suppressed and covered up the dangers of asbestos in order to maximize corporate profits in complete and utter -22- disregard of the adverse health effects upon persons exposed. . ." (R. 584), assumes (1) That defendant knowingly Selb tee le Lio a ial ir a Wh AS e ee erento Sexe Sehr oe Tio A il suppressed, etc., (2) In disregard of health effects, (3) For the purpose of sb TglRGR Ae ahaa oe maximizing corporate profits (R. 584). None of the documents sought related to company or other documents Showing tht defendant had knowledge during the period in question that asbestos was dangerous. The Requests did not seek discovery of chemical test results, inter-company memos ordering that such information not be divulged, nor any company records stating that information had to be Suppressed in order to avoid a reduction in sales and corresponding reduction in profits. The sanction here presumes not only a deliberate act, and technical Knowledge, but also a specific state of 3 es y aes ea . sy B, ona % > Rs, x Pd - ee ag sah ae Fe. > te 7a 3 “« # $ ..9 a ‘3 PA Me ag Pee mentee EARS ee mind, and none of this is supported by any documents sought by the Requests. The proposition here is similar to the due process rule governing a statutory presumption, under which "a statutory presumption cannot be sustained if there be no rational connection between the fact proved and the ultimate fact presumed, if the inference of the one from proof of the other is arbitrary because of lack of connection between the two in common experience." Tot v. United States, 319 U.S. 463, 467, 87 L.Ed. 1519 (1943). "It is apparent that a constitutional prohibition cannot be transgressed indirectly by the creation of a statutory presumption any more than it can be violated by direct enactment. The power to create presumptions is not a means of escape from constitutional restrictions." Bailey v. Alabama, 219 -24- U.S. 219, 239, 55 L.Ed 191, 200 (1911); Speiser v. Randall, 357 U.S. 513, 526, 2 L.Ed.2d 1460 (1958). The adjudication of facts against a party to a case without any evidence or lawful presumption arising from a default from which an evidentiary inference logically can be derived, strikes at the very heart of due process. "By the law of the land is most clearly intended the general law; a law which hears before it condemns; which proceeds upon inquiry, and renders judgment only after trial. The meaning is, that every citizen shall hold his life, liberty, property, and immunities, under the protection of the general rules which govern society." (Argument of Daniel Webster in Trustees of Dartmouth College v. Woodward, 4 Wheat. 518, 581, 4 L.Ed. 629 [1819]). -25- “ad o as * sx Fs ie” bee ; a5 ; Be i 7 ate vn . i AES DAE See eos See tte Sees The Section 37(b)(2) finding here is inexplicable in the face of the Court of Appeals' holding that a declaration of liability could not be supported. See 181 Ga. App. at 369. One Count of the complaint asserted as a separate cause of action, "knowledge and conspiracy to deprive” (R. 17-21). Consequently, plaintiffs may attempt to use this adjudication not only as an adjudication of liability, but also as a basis for punitive damages in 26 asbestos products liability cases. Plaintiffs also may attempt to use it as an admission or estoppel in other similar cases for the proposition that Carey ‘Canada has been found guilty of know:sgiy suppressing the harmful effects of asbestos, for the express purpose of increasing corporate profits "in complete and utter disregard of the adverse health effects upon ‘ -26- persons exposed to asbestos products. . ." (R. 584). Yet there has been no trial ? ng - and no evidence to this effect, only a judicial edict unsupported by anything except a presumption having no valid basis whatever. (2) Petitioner Carey Canada, As A Canadian Corporation, Was Denied Due Process Of Law By The Adjudication Of Default And Contempt For Failing To Produce Records Which It Was Unable To Produce Because Of Prohibition of Canadian Law. Petitioner, as a Canadian Corporation, objected to the Request For Production of Documents on grounds that production was prohibited by the law of Canada, specifically, the Province of Quebec Business Concerns Records Act (R. 273), which declares: "2. Subject to section 3, no person shall, pursuant to or under any requirement issued by any legislative, judicial or adminis- trative authority outside the -27- Province, remove or cause to be : removed, or send or cause to be \ sent, from any place in the Province ; to a place outside the Province, any document or resume or digest of any document yelating to any concern." (R. 282). Section 3 makes exceptions for Situations where documents are sent to a 4. Respondents urged below that since documents were found to be in the United States, petitioner could not be heard to urge the Canadian law as a defense. However, the order of production and the sanctions order were not limited to documents in the United States (R. 370, 581). Indeed, Petitioner had agreed with Respondents to make those documents available, but Respondents, apparently anticipating a favorable order on the sanctions motion, notified Petitioner that they would not proceed with the agreed on inspection, but would rest on their motion so as not to "waive any rights" (R. 608). Subsequently, the documents were furnished to plaintiffs' co-counsel. The trial judge also was incorrect in stating in the contempt order that defendant had not disclosed the existence of the records in the United States. This was not correct, as the Court was advised in a letter, and a disclosure also had been made at a hearing. -28- : 4 a 4 § ‘ 3 . branch or affiliate outside the Province in the ordinary course of business (R. 282); Section 4 authorizes the Attorney General to apply for injunction to prevent removal of records (R. 283); and Section 5 provides criminal penalties (R. 283-4). Provision is made by a separate act for examination of witnesses and production of documents in Canada pursuant to Court order (R. 285).