Law Lessons from MICHAEL GASKILL VS. ABEX CORPORATION, ET AL., App. Div., A-4871-09T1, December 11, 2012:
[T]he common definition of fraud on the court is not limited to court proceedings, orders, or any other defined procedure. Instead, “a fraud on the court occurs” – - “where it can be demonstrated, clearly and convincingly, that a party has sentiently set in motion some unconscionable scheme calculated to interfere with the judicial system’s ability impartially to adjudicate a matter by improperly influencing the trier or unfairly hampering the presentation of the opposing party’s claim or defense.” Triffin v. Automatic Data Processing, Inc., 394 N.J. Super. 237, 251 (App. Div. 2007) (quoting Aoude v. Mobil Oil Corp., 892 F.2d 1115, 1118 (1st Cir. 1989)).
In evaluating whether dismissal is an appropriate sanction, courts consider various factors. The Federal District Court for the District of New Jersey in Perna v. Electronic Data Systems Corp., 916 F.Supp. 388 (D.N.J. 1995), set forth factors which seem to encompass all of the factors generally followed by courts in assessing the appropriate penalty.
The concept of fraud upon the court is most often invoked as a ground for vacating a judgment alleged to have been procured by perjured testimony or the submission of falsified evidence. See, e.g., Shammas v. Shammas, 9 N.J. 321, 330 (1952) (“Perjured testimony that warrants disturbance of a final judgment must be shown by clear, convincing and satisfactory evidence to have been, not false merely, but to have been willfully and purposefully falsely given, and to have been material to the issue tried . . . .”); Gilgallon v. Bond, 279 N.J. Super. 265, 267 (App. Div. 1995). Rule 4:50-1(c) expressly authorizes a court to vacate a judgment procured through fraud, as well as “other misconduct of an adverse party.” See Von Pein v. Von Pein, 268 N.J. Super. 7, 16 (App. Div. 1993) (conspiring to “hide assets and deprive defendant and the court of knowledge to the true facts” is also a ground to vacate.)
However, the concept is not restricted to an attack upon a judgment, but applies as well to any “scheme to interfere with the judicial machinery performing the task of impartial adjudication, as by preventing the opposing party from fairly presenting his case or defense.” Hyland v. Kirkland, 204 N.J. Super. 345, 374 (Ch. Div. 1985) (quoting Pfizer, Inc. v. International Rectifier Corp., 538 F.2d 180, 195 (8th Cir. 1976), cert. den. 429 U.S. 1040, 97 S. Ct. 738, 50 L. Ed. 2d (1977)). In Triffin v. Automatic Data Processing, Inc., supra, 394 N.J. Super. at 251-52, we further stated:
A fraud on the court occurs “where it can be demonstrated, clearly and convincingly, that a party has sentiently set in motion some unconscionable scheme calculated to interfere with the judicial system’s ability impartially to adjudicate a matter by improperly influencing the trier or unfairly hampering the presentation of the opposing party’s claim or defense.” Aoude v. Mobil Oil Corp., 892 F.2d 1115, 1118 (1st Cir. 1989); Perna v. Elec. Data Sys. Corp., 916 F. Supp. 388, 397 (D.N.J. 1995). Unlike common law fraud on a party, fraud on a court does not require reliance. Separate and distinct from court rules and statutes, courts possess an inherent power to sanction an individual for committing a fraud on the court. See, e.g., Chambers v. Nasco, Inc., 501 U.S. 32, 111 S. Ct. 2123, 115 L. Ed. 2d 27 (1991); Perna, supra, 916 F. Supp. at 388.
While dismissal with prejudice is a drastic remedy, to be employed “only sparingly,” Zaccardi, supra, 88 N.J. at 253, it is appropriate where the discovery violation “goes to the very foundation of the cause of action, or where the refusal to [provide discovery] is deliberate and contumacious.” Lang v. Morgan’s Home Equip. Corp., 6 N.J. 333, 339 (1951).
In United States v. Shaffer Equip. Co., 11 F.3d 450, 462-63 (4th Cir. 1993), the Fourth Circuit stated that in determining whether a trial court has abused its discretion in dismissing an action with prejudice, an appellate court must be guided by the manner in which the trial court has balanced the following factors:
(1) the degree of the wrongdoer’s culpability;
(2) the extent of the client’s blameworthiness if the wrongful conduct is committed by its attorney, recognizing that we seldom dismiss claims against blameless clients;
(3) the prejudice to the judicial process and the administration of justice;
(4) the prejudice to the victim;
(5) the availability of other sanctions to rectify the wrong by punishing culpable persons, compensating harmed persons, and deterring similar conduct in the future; and
(6) the public interest.
See also Poulis v. State Farm Fire and Cas. Co., 747 F.2d 863, 870 (3d Cir. 1984) (Similar “factors should be weighed by the district courts in order to assure that the ‘extreme’ sanction of dismissal or default is reserved for the instances in which it is justly merited”). The factors identified in Shaffer Equip. Co., supra, were relied upon in Perna, supra, which had been cited with approval in Triffin v. Automatic Data Processing, Inc., supra, 394 N.J. Super. at 251-52, and thus serve as a useful guide.
A litigant that deliberately obstructs full discovery corrupts one of the fundamental precepts of our trial practice — the assumption by the litigants and the court that all parties have made full disclosure of all relevant evidence in compliance with the discovery rules. A litigant who willfully violates that bedrock principle should not assume that the right to an adjudication on the merits of its claims will survive so blatant an infraction. Wholly apart from the prejudice caused by Abtrax’s discovery violations, the conclusion is inescapable that Abtrax’s failure to comply with discovery demands and orders, if undetected, would have afforded Abtrax an unfair advantage at trial, because of Abtrax’s familiarity with facts and documents that had never been disclosed to Elkins. Prevention of such an unfair advantage is a basic premise of our discovery rules. On this record, we are fully satisfied that the sanction of dismissal imposed by the trial court was justified.
[Abtrax Pharmaceuticals, Inc. v. Elkins-Sinn, Inc., 139 N.J. 499, 521-22 (1995).]
The type of prejudice that will support dismissal of an action, or the striking of an answer, for abuse of discovery obligations need not be irreversible and can consist of the extra costs and repeated delays incurred in filing motions necessitated by the improper behavior on the part of a litigant. See Curtis T. Bedwell & Sons v. Int’l Fidelity Ins. Co., 843 F.2d 683, 693-94 (3d Cir. 1988).
Where fraud on the court is the underlying misconduct upon which the trial court predicates dismissal, the “prejudice” prong encompasses not only the prejudice to the litigants but also the impact on the judicial system and the threat to the integrity of the courts, which cannot command respect if they cannot maintain a level playing field amongst the participants. Derzack v. County of Allegheny, Pennsylvania, 173 F.R.D. 400, 414 (W. D. Pa. 1996). Thus, at least of equal, if not greater, importance is the public interest in preserving the integrity of the judicial system that fraud on the court serves to erode. Aoude v. Mobil Oil Corporation, 892 F.2d 1115, 1118 (1st Cir. 1989). As noted by the United States Supreme Court:
tampering with the administration of justice in the manner indisputably shown here involves far more than an injury to a single litigant. It is a wrong against the institutions set up to protect and safeguard the public, institutions in which fraud cannot complacently be tolerated consistently with the good order of society.
Hazel-Atlas Glass Co. v. Hartford-Empire Co., 322 U.S. 238, 246, 64 S. Ct. 997, 88 L. Ed. 1250, (1944), overruled on other grounds by Standard Oil Co. v. United States, 429 U.S. 17, 97 S. Ct. 31, 50 L. Ed. 2d 21 (1976).
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