On December 30, 2016, in Ramirez v. T&H Lemont, Inc., the US Court of Appeals for the Seventh Circuit held that in civil cases, facts underlying a district court's decision to dismiss the case or enter a default judgment as a sanction for discovery violations need only be established by a preponderance of evidence, overruling the prior applicable evidentiary standard requiring clear and convincing evidence and creating a split with several other circuits ( (7th Cir. Dec. 30, 2016)).

Armando Ramirez sued his former employer, T&H Lemont, Inc., alleging that it subjected him to discriminatory working conditions and a hostile work environment based on his national origin. He also alleged that T&H Lemont fired him in retaliation for reporting the harassment. Three years into the litigation, at the eleventh hour, Ramirez located three witnesses, former T&H Lemont employees, who testified at depositions about the hostile work environment. Three months later, as the defense prepared to re-depose one of the witnesses, the witness sent a text message to Ramirez's counsel referring to his payment when the case settled. Ramirez's counsel reported the text to the defense. On the same day, the witness also contacted a T&H Lemont employee informing him that he was willing to testify in T&H Lemont's favor against Ramirez if he could get his job at T&H Lemont back.

The district court convened an evidentiary hearing to determine if any witness provided false deposition testimony. At the hearing's conclusion, it found that there was clear and convincing evidence that Ramirez engaged in witness tampering. The court then granted the defense's motion to dismiss the case with prejudice under FRCP 37 and the court's inherent authority to sanction Ramirez, but did not specify the basis for the dismissal. Ramirez appealed, arguing that the record does not support a finding of witness tampering by clear and convincing evidence and that the district court abused its discretion when it dismissed the case with prejudice as a sanction.

The Seventh Circuit affirmed, finding that the district court could have properly dismissed the case under either FRCP 37 or the court's inherent authority to sanction discovery-related misconduct. Noting that it had had construed the sanctioning power of FRCP 37 to extend to instances of a party hiding evidence and lying in his deposition (see Negrete v. Nat'l R.R. Passenger Corp., 547 F.3d 721, 723-24 (7th Cir. 2008)), the panel saw no reason why FRCP 37 would not extend to a party soliciting a witness to lie at a court-ordered deposition. The panel also remarked on the district court's inherent authority to regulate the conduct of parties before it, including imposing appropriate sanctions to penalize and discourage misconduct. Finally, the court stated that under either basis for dismissal as a sanction for discovery violations, a district court must find that the responsible party acted or failed to act with a degree a culpability that exceeds simple inadvertence or mistake.

Next, the Seventh Circuit examined its own precedent on this issue. In Maynard v. Nygren, it held that clear and convincing evidence is required for a dismissal as a sanction for discovery-related misconduct under FRCP 37 (332 F.3d 462, 468 (7th Cir. 2003)). Surveying its own frequent criticism of Maynard's clear and convincing standard, the Seventh Circuit concluded that Maynard had failed to consider that the presumption in federal civil cases of the burden of proof is preponderance of the evidence, unless the governing statute or the Constitution demand a higher burden. Finding that the interests implicated in civil litigation are not so important as to demand that the facts underlying a dismissal as a sanction for misconduct be established by clear and convincing evidence, the court overruled Maynard and held that facts underlying a district court's decision to dismiss a case as a sanction may be established by a preponderance of the evidence. Finding no clear error in the district court's finding that Ramirez engaged in witness tampering and no abuse of discretion in the court's decision to dismiss the case with prejudice as a sanction, the Seventh Circuit affirmed.

The Seventh Circuit's ruling creates a split with other circuits who adopted a clear and convincing standard, including the US Courts of Appeals for the First (Aoude v. Mobil Oil Corp., 892 F.2d 1115, 1118 (1st Cir. 1989)), Eighth (Pfizer, Inc. v. Int'l Rectifier Corp., 538 F.2d 180, 195 (8th Cir. 1976)), and DC Circuits (Shepherd v. Am. Broad. Cos., 62 F.3d 1469, 1478-79 (D.C. Cir. 1995)).

For more on sanctions, see Practice Note, Sanctions in Civil Litigation (Federal): Sanctions for Failure to Make Required Disclosures or Cooperate in Discovery Under FRCP 38 and Sanctions Under a Court's Inherent Authority.