In Re Newkirk Logistics, Inc.

Supreme Court of Texas
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No. 24-0255
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In re Newkirk Logistics, Inc.,
Relator

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On Petition for Writ of Mandamus
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PER CURIAM

Trial courts may impose “just” sanctions on litigants who do not
meet their discovery obligations. TEX. R. CIV. P. 215.2(b);
TransAmerican Nat. Gas Corp. v. Powell, 811 S.W.2d 913, 917 (Tex.
1991). But the discretion to do so is not limitless. “Two factors mark
the bounds of the trial court’s discretion in order for sanctions to be
just: first, a direct relationship between the offensive conduct and the
sanction imposed must exist; and second, the sanction imposed must not
be excessive.” Chrysler Corp. v. Blackmon, 841 S.W.2d 844, 849 (Tex.
1992). Distilled down to its basic principle: “The punishment should fit
the crime.” TransAmerican, 811 S.W.2d at 917. We have therefore held
that death-penalty sanctions, which cause the offending party to
essentially lose the case, are reserved for the most exceptional cases and
should be the trial court’s “last resort.” Cire v. Cummings, 134 S.W.3d
835, 840-42 (Tex. 2004).
Death-penalty sanctions were not a last resort in this case. The
trial court struck Newkirk’s pleadings without first considering or
testing lesser sanctions, and the court of appeals denied Newkirk
mandamus relief without issuing a substantive opinion. Because
Newkirk’s pleadings were struck, Plaintiffs received the equivalent of a
default judgment not only on their negligence claims but also on their
gross-negligence claim. Even if Newkirk violated a discovery order—
which is far from clear—we conclude its conduct did not justify the
extreme punishment imposed. As a result, we conditionally grant
Newkirk’s petition for writ of mandamus.
I. Background
This mandamus proceeding arises from a car wreck. Rayah
Lemons and Nicholas Begaye suffered serious injuries after their vehicle
was struck by a tractor-trailer operated by Mario Cottman, an employee
of Newkirk Logistics, Inc. Cottman was backhauling cargo from
Oklahoma to a warehouse in Texas under an agreement between
Newkirk and Global Mail Inc., d/b/a DHL eCommerce. Lemons and
Begaye sued Cottman and Newkirk, asserting causes of action for
ordinary and gross negligence against Cottman and for negligent
entrustment; negligent hiring, retention and training; and gross
negligence against Newkirk. Plaintiffs later added DHL eCommerce
and Hogan Truck Leasing, Inc., the owner of the tractor, as defendants.
A discovery dispute arose regarding the existence and possession
of contracts between Newkirk and DHL eCommerce. Newkirk and DHL
eCommerce have done business together for over a decade and,
according to Newkirk, have done so through an online bidding process.

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Under that process, Newkirk first submits a bid, and then DHL
eCommerce either awards or denies Newkirk the job. Newkirk
maintained throughout discovery that its day-to-day business
relationship with DHL eCommerce was not governed by written
contracts.
Plaintiffs requested the production of all contracts between
Newkirk and DHL eCommerce. Newkirk responded that it located no
responsive documents after a diligent search. The trial court then
issued a discovery order compelling Newkirk to produce any contracts
between it and DHL eCommerce, bills of lading, other shipping
documents, tractor-trailer maintenance records, leases, emails, and
dispatch reports. The discovery order contemplated limited sanctions
due to the insufficient deposition of Newkirk’s corporate representative
(a matter not at issue here) and directed Plaintiffs to submit a proposed
monetary sanctions order. Plaintiffs never submitted a proposed
monetary sanctions order, and the trial court never signed one.
After another fruitless search in compliance with the discovery
order, Newkirk did not produce contracts between it and DHL
eCommerce. Plaintiffs filed a motion for sanctions in response. In the
hearing on that motion, Newkirk’s counsel reiterated that, despite
Newkirk’s best efforts, no written contracts with DHL eCommerce were
found. The trial court concluded that no sanctions were warranted.
Things changed in June 2023. In response to requests for
production, DHL eCommerce produced two documents: the 2015 “DHL
eCommerce Transportation Requirements” and the 2014 “Cartage
Agreement.” The documents were signed by both DHL eCommerce and

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Newkirk and appeared to govern aspects of the companies’ business
relationship. Under the impression that DHL eCommerce’s production
of the contracts necessarily meant that Newkirk possessed but failed to
produce the same, Plaintiffs filed a second motion for sanctions against
Newkirk. Newkirk responded that Plaintiffs lacked any evidence it
intentionally engaged in deceptive discovery conduct and attached
affidavits from its president and an employee stating that, at the time
of their depositions, they believed no written agreements existed
between DHL eCommerce and Newkirk.
The trial court heard the second sanctions motion in July 2023.
It was a brief hearing. After a few minutes of argument, the court orally
struck Newkirk’s pleadings because it failed to produce the DHL
documents. Five months later, the trial court signed a seventeen-page
sanctions order adopting findings of fact and conclusions of law
submitted by Plaintiffs’ counsel. The findings of fact and conclusions of
law added justifications for the death-penalty sanctions—none of which
were discussed in the July 2023 sanctions hearing. Without issuing a
substantive opinion, the court of appeals denied Newkirk’s mandamus
petitions challenging the oral and written sanctions orders. Newkirk
now seeks mandamus relief from this Court.
II. Discussion
We review a trial court’s imposition of sanctions for abuse of
discretion. Cire, 134 S.W.3d at 838. A trial court abuses its discretion
when it acts without reference to any guiding rules and principles such
that its ruling was “arbitrary or unreasonable.” Id. at 839.

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The trial court’s justifications for striking Newkirk’s pleadings fit
into three main categories:
1. failing to produce the DHL documents: Newkirk failed
to produce the contractual documents that were later
produced by DHL eCommerce;
2. failing to produce other documents: Newkirk failed to
produce or properly retain bills of lading and other
shipping documents, tractor-trailer maintenance
records and leases, Cottman’s pay stubs and
employment history, and GPS data; and
3. misidentifying DHL eCommerce: Newkirk
misidentified DHL eCommerce in earlier discovery
responses.
The DHL documents were the original and only basis on which
the trial court orally struck Newkirk’s pleadings. The other
justifications did not come until later, when the trial court signed
findings of fact and conclusions of law that, as is standard practice, were
drafted by Plaintiffs’ counsel.
Plaintiffs now argue that we are bound by the trial court’s
findings and conclusions. It’s easy to see why. The findings and
conclusions greatly expand the grounds for sanctions and attached over
1,000 pages of documents consisting mostly of hearing transcripts and
argumentative filings. But Plaintiffs’ complete reliance on these
findings and conclusions ignores our precedent. We independently
review the entire record to determine whether the trial court abused its
discretion when imposing sanctions on a party. E.g., Am. Flood Rsch.,
Inc. v. Jones, 192 S.W.3d 581, 583 (Tex. 2006).
As the party seeking sanctions, Plaintiffs had the burden of
establishing their right to relief. See GTE Commc’ns Sys. Corp. v.

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Tanner, 856 S.W.2d 725, 729 (Tex. 1993). Where, as here, “a motion for
sanctions asserts that a respondent to a discovery request has failed to
produce a document within its possession, custody or control, the
movant has the burden to prove the assertion.” Id. We therefore look
for evidence of actual or constructive possession, custody, or control of
the sought-after documents. If a party failed to produce documents over
which it had actual or constructive possession, custody, or control, the
court must determine whether the “party’s hindrance of the discovery
process justifies a presumption that its claims or defenses lack merit”
before depriving the party of its right to present the merits of its case.
TransAmerican, 811 S.W.2d at 918. Such a severe outcome requires
evidence not just of “bad faith,” but of “flagrant” or “extreme” bad faith.
Altesse Healthcare Sols., Inc. v. Wilson, 540 S.W.3d 570, 575-76 (Tex.
2018).
We start with the DHL documents. Plaintiffs argue, and the trial
court found, that Newkirk had actual or constructive possession of the
DHL documents and that it intentionally concealed and failed to
produce them. While the DHL documents were signed by Newkirk—
thus serving as some evidence of actual possession, at least at some
point—there is insufficient evidence that Newkirk intentionally
concealed or intentionally failed to produce the documents when they
were requested. Rather, the record suggests that Newkirk used its best
efforts to search for the DHL documents in accordance with the trial
court’s discovery orders. Newkirk’s president and an employee testified
that they were unaware of the eight-year-old documents and believed no
written agreements existed between Newkirk and DHL eCommerce.

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Plaintiffs’ “mere skepticism or bare allegations that [Newkirk] has failed
to comply with its discovery duties” in flagrant or extreme bad faith will
not do. See In re Weekley Homes, L.P., 295 S.W.3d 309, 318 (Tex. 2009).
So too for the other documents that the trial court sanctioned
Newkirk for failing to produce. The trial court found that Newkirk failed
to produce or properly retain bills of lading and other shipping
documents, tractor-trailer maintenance records and leases, Cottman’s
pay history, Cottman’s post-accident drug test, and Cottman’s GPS data.
According to Plaintiffs, Newkirk made a “calculated and egregious”
decision to withhold those documents. Newkirk responds that Plaintiffs
produced no evidence of Newkirk’s actual or constructive possession of
the documents and produced no evidence that Newkirk intentionally
concealed and failed to produce them. We take each category of
documents in turn.
The record provides no evidence that Newkirk intentionally
withheld bills of lading or other shipping documents that were in its
actual possession. Rather, Newkirk produced the responsive documents
it possessed, including a copy of the electronic record of Cottman’s
pick-ups and drop-offs on the accident date. As for constructive
possession, no evidence suggests that Newkirk had the legal right to
compel production of additional documents from any third party. We
cannot infer intentional concealment or deliberate destruction of any
additional bills of lading and shipping documents based on Plaintiffs’
mere speculation. Speculation cannot substitute for evidence of bad
faith.

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For the tractor-trailer maintenance records and leases, the record
establishes that a different defendant, Hogan, owned the tractor and
leased the trailer involved in the accident. No evidence demonstrates
that Newkirk had actual possession of maintenance records beyond
those it already produced. Plaintiffs point to Hogan’s eventual
production of maintenance records as proof of Newkirk’s discovery
violation, but this evidence suggests the opposite—that the records were
maintained by and within the possession of Hogan, not Newkirk. As for
constructive possession, Plaintiffs failed to establish any legal right by
which Newkirk could compel Hogan to produce these records. No
evidence demonstrates a parent–subsidiary relationship, joint business
enterprise, or other legal relationship giving Newkirk control over
Hogan’s internal maintenance records. Mere business dealings between
separate corporate entities do not establish constructive possession over
each other’s documents. See GTE, 856 S.W.2d at 729.
The record is also devoid of any evidence that Newkirk
intentionally concealed or withheld relevant maintenance records or
lease documents. Newkirk produced responsive documents within its
possession and properly identified Hogan as the entity possessing more
records. That these records were ultimately obtained directly from
Hogan undermines the assertion that Newkirk engaged in obstructive
conduct.
Concerning Cottman’s pay history, post-accident drug test
records, and GPS data, the record again fails to establish that, at the
time this information was requested, Newkirk had actual or
constructive possession of additional information not already produced.

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Plaintiffs’ contentions that Newkirk intentionally concealed and failed
to produce additional information rest on speculation rather than
evidence. Further, the trial court’s June 16, 2023 discovery order did
not compel Newkirk to produce Cottman’s pay history, post-accident
drug test, or GPS data. Thus, Newkirk’s alleged failure to produce
additional information within these categories did not violate a court
order.
Across the categories of documents that the trial court sanctioned
Newkirk for failing to produce, the record lacks evidence of the type of
flagrant bad faith or callous disregard for discovery obligations that
would justify imposing death-penalty sanctions. Even if we were to
assume Newkirk was negligent in failing to retain certain documents,
death-penalty sanctions would not be warranted. See Petroleum Sols.,
Inc. v. Head, 454 S.W.3d 482, 489-90 (Tex. 2014) (holding trial court’s
sanctions were an abuse of discretion because no proof existed that the
defendant intentionally concealed evidence).
The trial court also struck Newkirk’s pleadings because it
misidentified DHL eCommerce in its initial discovery responses. While
Newkirk initially misidentified DHL eCommerce, the mistake was
timely fixed. As a result, Plaintiffs were able to join the proper DHL
entity—DHL eCommerce—well before any statute-of-limitations issue
arose. It’s hard to see how Plaintiffs suffered any prejudice from the
mistake. The trial court ironically agreed, remarking at a prior hearing
that Plaintiffs “haven’t really shown me that somebody intentionally
misled you or, you know, told you a wrong entity or something like
that . . . . [C]orporate entities are always problematic. So long as the

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correct entity is in there now, I don’t think sanctions are appropriate for
that.” The trial court’s about-face in the sanctions order can only be
described as arbitrary.
Having concluded that no evidence shows Newkirk intentionally
concealed and withheld documents, we turn to whether the trial court
abused its discretion by imposing death-penalty sanctions against
Newkirk. We conclude that it did.
For sanctions to be “just,” there must be “a direct
relationship . . . between the offensive conduct and the sanction
imposed,” and the “sanctions must not be excessive.” TransAmerican,
811 S.W.2d at 917. Neither of these things is true here. First, there is
no direct relationship between the offensive conduct and the sanction
imposed. As we have maintained since TransAmerican, the “sanction
must be directed against the abuse and toward remedying the prejudice
caused the innocent party.” Id. While a failure to produce documents
can certainly prejudice a party’s efforts to prove its claim, Plaintiffs have
not shown that they have been unable to prepare for trial because of
Newkirk’s purported failures. Nor is there evidence that Newkirk failed
to comply with its discovery duties in flagrant or extreme bad faith. A
party’s pleadings should not be struck under such circumstances. See
GTE, 856 S.W.2d at 729-30.
Second, the sanctions were excessive. Sanctions cannot be used
to effectively adjudicate the merits of a case unless the offending party’s
conduct justifies a presumption that its claims or defenses lack merit.
Paradigm Oil, Inc. v. Retamco Operating, Inc., 372 S.W.3d 177, 184 (Tex.
2012). Here, Newkirk’s conduct does not support such a presumption.

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This is not a case like Cire, where we affirmed death-penalty sanctions
because the offending party deliberately destroyed evidence after being
ordered to produce it. 134 S.W.3d at 841-42. The extraordinary
justification required for death-penalty sanctions is simply absent here.
The trial court also had an obligation “to consider the availability
of lesser sanctions.” Id. at 840 (emphasis omitted). Death-penalty
sanctions may be imposed in the first instance only under exceptional
circumstances when such a sanction is “clearly justified.” Spohn Hosp.
v. Mayer, 104 S.W.3d 878, 882 (Tex. 2003). The trial court’s order recites
that less stringent sanctions would be ineffective, but its statements fail
to adequately explain “the appropriateness of the sanctions imposed.”
Id. at 883. On this record, the conclusory statement that lesser
sanctions would be inadequate cannot support the “most devastating”
sanctions available, TransAmerican, 811 S.W.2d at 917-18, when it is
not “fully apparent that no lesser sanctions would promote compliance
with the rules,” GTE, 856 S.W.2d at 729. “We fail to see why any
number of lesser sanctions, from fines to contempt, would not have
promoted compliance with discovery, if there had been abuse here.” Id.
at 729-30.
In sum, the record lacks evidence of the flagrant bad faith
required for such severe sanctions; the punishment far exceeds any
demonstrated prejudice to Plaintiffs; and the trial court failed to
consider or test lesser sanctions first. For these reasons, the trial court
abused its discretion in imposing death-penalty sanctions against
Newkirk. Mandamus relief is appropriate where “a trial court imposes
sanctions which have the effect of adjudicating a dispute,” such as

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“striking pleadings.” TransAmerican, 811 S.W.2d at 919; see also
Walker v. Packer, 827 S.W.2d 833, 843 (Tex. 1992) (“[A]n appeal will not
be an adequate remedy where the party’s ability to present a viable
claim or defense at trial is vitiated or severely compromised by the trial
court’s . . . error.”).
III. Conclusion
Accordingly, without hearing oral argument, see TEX. R. APP.
P. 52.8(c), we conditionally grant Newkirk’s petition for writ of
mandamus. We direct the trial court to vacate its order striking
Newkirk’s pleadings and conduct further proceedings consistent with
this opinion. We are confident the court will comply. The writ will issue
only if it does not.

OPINION DELIVERED: May 16, 2025

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