Discovery sanctions appeals can be tricky business

When it comes to appeals, 1 plus 1 does not necessarily equal 2 - or, more precisely, an order that imposes one sanction of $2,001 and another sanction of $3,000 is not the same as an order that imposes a sanction of $5,001.

Why does this math matter? $5,001 is a key threshold for anyone hoping to appeal a sanctions order.

The California Courts of Appeal have jurisdiction to decide appeals from only three types of rulings: (1) final judgments that resolve all of the issues between the parties; (2) orders listed in Code of Civil Procedure Section 904.1(a); and (3) orders that are not listed in Section 904.1, but that finally address an issue "collateral" to the subject of the litigation and direct the payment of money or performance of an act.

California courts have held that discovery sanctions are not appealable under categories (1) or (3). An award of discovery sanctions is not a final judgment - at best, it resolves one subsidiary issue between the parties, and often it does not even completely do that. And most orders imposing discovery sanctions on a party or its attorney do not meet the collateral order criteria, because they are not sufficiently final even as to the discovery issue and/or because discovery is part and parcel of, not collateral to, the underlying case. Barton v. Ahmanson Developments, Inc., 17 Cal. App. 4th 1358, 1361 (1993).

With the final judgment and collateral order categories off the table, there is only one avenue left for appealing a sanctions order: Section 904.1(a)'s list of appealable orders. And here's where the math comes in. Section 904.1 authorizes appeals from an interlocutory judgment or order "directing payment of monetary sanctions by a party or an attorney for a party if the amount exceeds five thousand dollars ($5,000)." Section 904.1(a)(11)-(12), italics added. By contrast, sanctions orders or interlocutory judgments for less than $5,001 are not independently appealable - they are reviewable only following a final judgment in the underlying case, "or, at the discretion of the court of appeal," on a writ petition. Section 904.1(b).

This rule makes appealability easy to determine when the trial court issues a sanctions order less than $5,001: Review will have to wait until the end of the case, unless there are unusual circumstances warranting writ review. But what about an order that imposes sanctions for several different discovery infractions, where each individual sanction is less than $5,001 but the sanctions collectively total more than $5,000? Although dicta in one opinion suggests that such an order might be appealable, the overwhelming majority of courts have held that it is not - i.e., they prohibit aggregating sanctions to create appealability.

The 4th District Court of Appeal, Division Three recently adhered to the majority, no-aggregating position in Stueve v. Berger Kahn, 2016 WL 6872960 (Nov. 22, 2016, G052689) (unpublished). Stueve is the latest chapter in a long-running lawsuit by the successors to the Alta Dena Dairy fortune against lawyers and law firms who allegedly deprived them of their fortunes.

This particular Stueve appeal stemmed from a discovery dispute. A defendant filed three motions to compel the Stueves to provide further responses to discovery requests - one motion per type of discovery request. Each motion sought sanctions. The trial court issued a single order that granted all three motions to compel and imposed sanctions as requested: $2,835 relating to a document production request; $1,800 relating to a request for admissions and form interrogatories; and $2,700 relating to special interrogatories. The Stueves appealed from the sanctions order.

The Court of Appeal dismissed the appeal for lack of jurisdiction. None of the three discovery sanctions met the $5,001 appeal threshold on its own, and the court rejected the Stueves' attempt to aggregate the three awards to get over the hump. Given that the trial court's order separately analyzed each motion to compel and sanction, treating the three awards as a unit "simply because they were each included in a single written order would place form over substance."

The Stueves' pro-aggregating position was not entirely without legal support. The same division of the Court of Appeal had suggested in dicta 23 years earlier that "'aggregating' separate sanctions awards" to reach the appealability threshold "may be appropriate" where "it is the same conduct which is being sanctioned" in each award. Champion/L.B.S. Associates Development Co. v. E-Z Serve Petroleum Marketing, Inc., 15 Cal. App. 4th 56, 59 (1993). But as Stueve recognized, subsequent decisions have rejected the Champion/L.B.S. dicta as contrary to the legislative intent behind Section 904.1.

Until 1990, all monetary sanctions orders were appealable under the collateral order doctrine, regardless of amount. The Legislature added sanctions orders exceeding a certain threshold (originally $750, now $5,000) to Section 904.1's list of appealable orders in 1990 in order to restrict appeals of sanctions below the threshold amount. Courts that have rejected aggregation reason that aggregating multiple small sanctions awards to reach the appeal threshold "would derogate this restriction on the right of appeal." Calhoun v. Vallejo City Unified School Dist., 20 Cal. App. 4th 39, 45 (1993).

Stueve and other courts have also rejected aggregating for a second reason: Aggregating sanctions for "the same conduct" but not sanctions for different conduct would inject uncertainty into the appellate process. It might be difficult to predict whether an appellate court would classify sanctions as stemming from the same or from different misconduct, leaving parties "unsure whether to proceed by appeal or by writ petition." As Calhoun put it, "Bright lines are often too arbitrary to be of much use in the substantive law, but they are usually quite serviceable and even preferred as procedural rules, which should serve as clearly marked guideposts rather than traps for the unwary."

Given Section 904.1's goal of restricting sanctions appeals and the preference for bright-line procedural rules, Stueve held that the three sanctions of under $5,000 could not be aggregated to reach the appeal threshold. Stueve also declined to treat the appeal as a writ petition (even though the merits appear to have been fully briefed) because there were no "extraordinary circumstances" warranting writ relief. The sanctions order at issue thus will be reviewed, if at all, only as part of an appeal from the final judgment in the case.

The unpublished Stueve decision is not precedential. It is, however, an important reminder that appellate jurisdiction is serious business and involves many nuances. Any party desiring appellate review of a pre-judgment order should carefully consider whether that order is appealable - and, any respondent who receives a notice of appeal from a pre-judgment orders should do the same.