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Hankook Tire Co., Ltd. v. Philpot

Court of Appeals of Arkansas, Division I

September 7, 2016



          Hardin, Jesson & Terry, PLC, by: Kirkman T. Dougherty and Kynda Almefty, for appellants.

          Kelly Law Firm, P.A., by: Jerry Kelly; and Gordon, Caruth & Virden, P.L.C., by: Ben Caruth, for appellee.

          CLIFF HOOFMAN, Judge

         Appellants Hankook Tire Company, Limited, and Hankook Tire America Corporation (collectively referred to as Hankook) appeal the entry of the July 23, 2015 order of the Conway County Circuit Court that assessed attorney fees against Hankook for its discovery obstruction, awarding the fees to appellee Elmer Philpot. Because we lack appellate jurisdiction over this appeal, we dismiss.

         Hankook manufactures and distributes tires. Appellee Elmer Philpot was driving a dump truck that had a Hankook tire on it when the tire failed, Philpot lost control of the dump truck, and Philpot crashed and was injured. This case was initially filed in June 2012 in Conway County Circuit Court.

         In more precise detail, Philpot alleged that Hankook manufactured the inherently defective steel-belted tire "Hankook 385/65R 22.5 Super Single radial medium truck tire" and distributed it for sale in Arkansas. This tire was installed on the right front of a 1985 Ford 9000 dump truck, which was loaded with gravel and which Philpot was driving when the tire tread belt allegedly failed. Philpot alleged that Hankook was negligent in its design, testing, construction, and manufacture of the tire and in its failure to inspect the tire or warn of the defects that it knew or should have known to exist. Philpot contended that this tire was unfit and unsafe for its intended use and purpose and that Hankook breached an implied warranty. Philpot also sued his employer and the owner of the truck for failing to properly inspect and maintain the truck and thus providing defective equipment for Philpot's use.

         Interrogatories and requests for production of documents were sent to Hankook in December 2012. A few non-confidential documents were produced in a timely fashion. In August 2013, Philpot filed a motion to compel answers to his fifty-three requests for production, seeking documents related to Hankook's tire design process, manufacturing process, prior knowledge and testing concerning tread separations in steel-belted radial medium truck tires, warranty return data and quality testing in those tires, and other similar incidents in those tires. Philpot contended that this information was directly relevant to the issues before the court but that Hankook had unilaterally and inappropriately limited the scope of discovery and was manifesting a "stonewall approach." Philpot argued that Hankook was objecting to any request about their general manufacturing process and only responding to queries as to the specific model of tire on this dump truck, only as to the plant in which this particular tire was manufactured, and only those documents created at or within a few years of this particular tire's manufacture. Prior attempts to resolve this difference in opinion on the scope of discovery were not successful, Hankook's attorney noting that if the trial court's intervention was necessary, then so be it.

         Philpot sought an order from the trial court compelling discovery pursuant to Ark. R. Civ. P. 37, noting that discovery is broader than solely evidence that will be admissible at trial. Philpot asked for Rule 37 sanctions for Hankook's unreasonable and unjustifiable refusal to comply with his reasonable, appropriate, and relevant discovery requests.

         Hankook resisted in a response filed in September 2013, contending that it was providing reasonably related responses, translating Korean documents into English for Philpot, and otherwise legitimately objecting to revealing confidential trade secrets. Protective orders were put in place to protect the secrecy of company documents.

         On October 17, 2013, a hearing was conducted on the motion to compel, and extensive discussion was had about what would constitute reasonable parameters for discovery. In an order filed on November 26, 2013, the trial court granted Philpot's motion to compel and ordered Hankook to produce documents related to all tires that it manufactured that used the same inner liner compound and/or the same belt skim and set specific time frames for particular discovery requests. Hankook was ordered to provide its document retention policies and other responsive documentation within forty-five days; it was ordered to translate any Korean documentation into English within ninety days.

         On March 19, 2014, Philpot filed a "Motion For Sanctions For Spoliation And Concealment Of Evidence." A hearing was conducted on September 18, 2014, following which the trial judge gave permission for the parties to submit post-hearing briefs and took the matter under advisement.

         The trial judge issued a detailed letter order on January 21, 2015, in which he ordered that due to "the multiple hearings that have been necessitated because of the Defendants obtuse and unnecessary abuse of the discovery process, " and "to deter any future similar conduct, " Rule 37 sanctions would be imposed in the form of reasonable attorney fees. The trial judge found that the case had been pending for over two years, that Hankook initially responded to the multiple requests for information by providing a small stack of documents primarily in Korean, and then produced them in English only after a lengthy and exhaustive process. The letter order recited that:

This Court previously made clear to the parties that it interpreted the Arkansas Rules of Civil Procedure and the discovery process to be quite liberal and the Court reiterated numerous times that it was the Court's belief that anything should be produced that could be relevant and possibly lead to discoverable information. This Court, at the request of Hankook, has even entered various confidentiality protective orders. This Court has previously rejected the narrow scope of discovery requested by Hankook and ordered a far more extensive scope of discovery than was sought by Hankook. .... Despite the wide scope of discovery under this Court's Order, Hankook produced virtually no pertinent documents in its January 10, 2014 supplemental response.

         The trial court noted that it was empowered to assess sanctions for discovery abuse pursuant to Rule 37 when a party's conduct necessitates the motion, and furthermore that the trial court has the inherent authority to ...

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