$8 million default judgment for car manufacturer's discovery violations

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Magana argued that Hyundai had produced many of these documents too late and that evidence of consumer complaints the documents identified had been lost. Despite its many objections to the discovery requests, Hyundai had never moved for a protective order that would permit it to avoid answering. The trial court conducted a lengthy evidentiary hearing on the discovery dispute. The trial trial court found that Hyundai’s discovery responses had been false and incomplete. The court concluded that Hyundai’s conduct had harmed Magana’s case because potentially crucial evidence had been permanently lost or destroyed.

The trial court imposed default judgment as a sanction against Hyundai. Because the jury in the first trial had found $8 million in damages, that was the amount of the default judgment.

Hyundai again appealed. The Court of Appeals reversed, holding that Magana had not suffered prejudice. The appellate court also held that the trial court had failed to establish adequately that a lesser sanction than default judgment would not suffice. Magana sought and won review by the Washington Supreme Court.

The Supreme Court reversed the Court of Appeals, because “Hyundai is a sophisticated multinational corporation, experienced in litigation.” The default judgment “appropriately compensates [Magana], punishes Hyundai, and … educates and deters others,” the Court held.

Two justices dissented, arguing that because Magana’s counsel had failed to move to compel the discovery responses for several years, Magana had not shown prejudice, and that a lesser sanction such as a trial continuance or monetary sanctions would have sufficed.