Hester v. Vision Airlines: Ninth Circuit Affirms Certification, Sanctions

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The Ninth Circuit Court of Appeals has affirmed an order granting class certification in an unusual class action in which pilots and airline crew members sought recovery of “hazard pay” earned in delivering supplies to military posts in Iraq and Afghanistan.  See Hester v. Vision Airlines, Inc., __ F.3d __ (9th Cir. 2012) (available here).

The plaintiffs allege that Vision Airlines, a U.S. military subcontractor, retained funds that were specifically designated for hazard pay, and simply fired any employee who was aware that they were entitled to these funds, keeping the money for its own benefit.  See slip op. at 2-4.  The district court certified the class based on theories of liability that included unjust enrichment, money had and received, and conversion.  Id. at 4.  Specifically, the operative complaint alleged that Vision received and retained more than $21 million in hazard pay on behalf of its employees during the class period.  Id.

Particularly notable in Hester is the relatively rare imposition of a draconian discovery sanction, as the defendant’s answer was stricken after it repeatedly refused to produce documents related to hazard pay in response to an interrogatory served by the plaintiffs, and misled the court as to the existence of responsive documents.  See id. at 5-7.  Indeed, the district court’s imposition of such severe sanctions, affirmed by the Ninth Circuit, substantially shaped the case’s disposition.  The Ninth Circuit rejected the defendant’s contention that striking its answer was unjustified given that the district court had failed to consider less onerous sanctions, noting that Vision was warned several times on the record that this was a possibility.  The court also noted that, given defendant’s “willful disobedience,” it was reasonable to conclude that lesser sanctions would have been pointless.  Id. at 11.

Because the answer was stricken and a default judgment issued, the defendant in Hester was left to contest the adequacy of the plaintiffs’ allegations in the operative complaint, an argument that both the district court and Ninth Circuit rejected.  Id. at 7.  Likewise, the defendant was unsuccessful in seeking reversal of class certification, with the half-hearted argument that because the named plaintiff, Hester, had an employment contract with Vision and the other class members did not, the class representative was not typical and common issues did not predominate.  The Ninth Circuit dismissed this summarily, noting that “Vision did not produce any evidence that Hester had an employment contract with Vision.”  Id. at 13-14.

Hester stands as an ominous warning to defendants that engaging in discovery gamesmanship could have serious consequences.