Fraud and Misconduct

Fraud and Misconduct

Rule 60(b)(3) lets a court relieve a party from a final judgment for “fraud (whether previously called intrinsic or extrinsic), misrepresentation, or misconduct by an opposing party.”¹ The two clauses before it place the defect on the movant’s side of the case. Clause (1) covers “mistake, inadvertence, surprise, or excusable neglect,” and clause (2) covers newly discovered evidence that reasonable diligence could not have produced in time for a Rule 59(b) new-trial motion.² Clause (3) places it on the winner’s side. The loser stops explaining what went wrong with its own presentation and asks what the winner did to produce the judgment.

That complaint differs in kind from a clerical slip. A court that corrects a clerical oversight performs a ministerial task, one that does not require the judgment to be formally reopened or the case retried.³ A clause (3) judgment may read exactly as the court meant it to read; the movant claims that the winner corrupted the process that produced it. A winner who obtained a result by deception has little claim to the repose that normally defeats a motion to reopen, and the rule gives the complaint its own ground for that reason. A loser who could reopen a case just by accusing the winner of cheating, however, would try every case twice, so the rule hedges the ground with limits.

Four limits do the work, and a part below takes up each: the parenthetical that retires the old line between intrinsic and extrinsic fraud, the clear and convincing standard of proof, the requirement that an opposing party commit the wrong, and the forms of misconduct that courts accept and reject. Time is a fifth limit. A motion under clauses (1) through (3) must come within one year of judgment, while the catch-all clause need be brought only within a reasonable time, as Hawaii’s counterpart to the rule shows.⁴ The later part on time limits treats that limit in full.

Intrinsic and Extrinsic Fraud

The parenthetical in clause (3), “whether previously called intrinsic or extrinsic,” retires a distinction that courts once used to ration relief for fraud.⁵ Many states still apply that distinction, so the labels, the old rule, and the reason for it all remain worth knowing.

Intrinsic fraud occurs in court during the trial itself, and perjured testimony is the standard example. Extrinsic fraud is an act of the opposing party that prevented the movant from discovering evidence or otherwise from making a claim or defense.⁶ The labels sort fraud by where it does its damage. Intrinsic fraud works inside the contest: the case is tried, and the fact finder hears a lie. Extrinsic fraud removes the loser from the contest or strips away the materials the loser needed to compete. The two can blur, as when a witness lies on the stand after the winner has hidden the records that would have exposed the lie.

Historically, courts granted relief only for extrinsic fraud. They believed that trial itself gives the loser a chance to uncover intrinsic fraud through the examination and cross-examination of witnesses, and that a motion for relief should not correct trial errors.⁷ A witness who lies under oath does so in front of the opposing lawyer, who can test the story on cross-examination, confront it with documents, and call other witnesses to contradict it. If the fact finder believes the lie anyway, the loser’s complaint concerns how the trial went, and a new-trial motion or an appeal exists for that complaint. Letting it resurface under Rule 60(b) would give the loser a second chance at the first trial.

Extrinsic fraud stands differently under the old rule, because the reasoning behind the limit does not reach it. Cross-examination can test only what is presented at trial, and the wrong in an extrinsic case is something the trial never saw.

Federal Rule 60(b) abandons the old restriction and authorizes relief for both kinds of fraud.⁸ A federal court would not stop at the label that defeated the landowner: the same lie, if the movant proves it and moves in time, can support relief under clause (3) even though the witness told it at trial and the movant tested it on cross-examination.⁹ The label is unnecessary because the rule screens motions in other ways. A rule that turned on classification would force courts to argue over which kind of fraud a mixed scheme involved, and the movant must in any event establish the fraud by clear and convincing evidence, since a mere suspicion or allegation of fraud is not sufficient.¹⁰ The proof requirement and the time limit now do the screening that the label once did.

Clause (3) fraud also differs from “fraud upon the court,” a separate ground that has no time limit and is not even barred by laches.¹¹ Fraud upon the court generally involves something designed to corrupt or taint the judicial process, not merely to keep the opposing party from prevailing, and few circumstances qualify. Simple perjury generally does not, although an attempt to bribe the judge does.¹² A party who proves a lie told at trial therefore proceeds under clause (3) and within its time limit. The final part of this chapter returns to fraud upon the court.

Many states today retain the historic distinction and open a judgment only for extrinsic fraud.¹³ The forum therefore decides how much the label matters. A federal stem that places the fraud “at trial” does not close the door under clause (3), while a stem set in a state that keeps the historic limit requires the student to classify the fraud before anything else. Even in federal court, classification is only a starting point. The movant must still prove the fraud clearly and convincingly, move in time, and show that an opposing party was responsible.

Proving Fraud

Clause (3) lists the wrongs that qualify, but its text does not say how much proof establishes one.¹⁶ Courts have supplied a demanding answer: the movant must establish the fraud by clear and convincing evidence, and a mere suspicion or allegation of fraud is not sufficient.¹⁷ That standard sits above the ordinary civil burden of a preponderance, which asks only whether a fact is more likely true than not, and it calls for proof that makes the fraud highly probable. Together with the time limit, it now does much of the screening that the intrinsic and extrinsic labels once did.

The bar is high because the charge is cheap. A party who has just lost has an explanation close at hand, that the other side cheated, and stating it costs nothing. If an accusation could carry the motion, the winner would have to defend a hard-won result a second time against a charge that is easy to make and hard to disprove, since showing that something did not happen is rarely simple. A clear and convincing requirement replaces the accusation with evidence and leaves the burden with the party who makes the charge. The standard does not make fraud unprovable. Documents, sworn testimony, and admissions can carry it, and the movant need only bring them.

A second formulation connects the wrongdoing to the result. In In re Adoption of A.A.T., the Kansas Supreme Court construed a state rule with language identical to Rule 60(b)(3) and observed that its reading matched federal circuit decisions.¹⁸ Atkinson v. Prudential Property Co. (8th Cir.) requires the movant to show by clear and convincing evidence that the opposing party engaged in fraud or misrepresentation that prevented the movant from fully and fairly presenting its case, and Frederick v. Kirby Tankships (11th Cir.) requires the losing party to prove that the prevailing party obtained the verdict through fraud, misrepresentation, or other misconduct.¹⁹ Because the Kansas court was applying its own rule, its account persuades a federal court without binding it. The two federal phrasings agree on what the movant must connect: the wrong kept the movant from fully and fairly presenting the case, or it produced the verdict. The test is functional, and it echoes the old extrinsic category without the label, since it asks what the wrongdoing did to the contest. Misbehavior that left the movant’s presentation intact leaves no unfairness for the rule to repair.

The practical question is what a movant who believes the other side cheated must actually put in front of the court, and a motion built on inference answers it badly.

Late production of an exhibit is consistent with fraud, and it is equally consistent with a party who kept disorganized files, so the fact the homeowner relies on points toward neither explanation. Proof that makes fraud highly probable has to exclude the innocent account, and an inference from timing cannot do that.

Both movants believe they were cheated, and the difference lies in what each can prove. The retailer’s evidence establishes that a statement was made, that the supplier knew it was false when made, and that the retailer changed its preparation because of it. That last fact supplies the link between the wrongdoing and the lost defense that the federal formulations require. The homeowner has a suspicion and none of those three facts.

Courts also divide on whether a movant who proves the fraud must show that a fair trial would come out differently. Two positions appear in the decisions:

• Some courts allow relief without any showing that the result is likely to change in a second trial untainted by fraud.²⁰
• Other courts require some showing of a meritorious claim or defense.²¹

The first position treats the fraud itself as the injury. A winner who corrupted the proceeding has a weak claim to the finality the proceeding would otherwise earn, and a loser kept from presenting a case cannot say with confidence how a clean trial would have ended, since the wrong is what prevented anyone from finding out. The second position rests on the economy that runs through the rest of Rule 60(b): reopening costs the winner and the court a second trial, and a second trial is pointless if the movant would lose again on the merits. The split sets clause (3) apart from clause (2), where the movant must show that the new evidence would likely produce a different result.²² A movant who can show a meritorious claim or defense satisfies both positions, so the split matters only for a movant who cannot.

The Adverse-Party Requirement

Clause (3) reaches fraud, misrepresentation, or misconduct “by an opposing party,” and those words say who must have committed the wrong.²⁵ A movant can prove a deception clearly and convincingly, and file inside the time limit, and still lose because the wrong person did the deceiving. The opposing party is the party on the other side of the case, the one who sought the judgment and holds it. Hawaii’s and Kansas’s versions of the rule say “adverse party,” and the Kansas decision applies that phrase to the same requirement.²⁶

The limit follows from what the clause takes away. Clause (3) strips a winner of finality’s protection because the winner’s own wrongdoing helped produce the result. Reopening a judgment burdens whoever holds it. When a stranger did the wrong, the burden falls on a holder who did nothing to earn it, and the wrongdoer escapes the order. The requirement keeps the clause aimed at the person who benefits from the judgment and should answer for how it was obtained.

In re Adoption of A.A.T. shows the limit at work. A natural father sought to undo an adoption decree after learning that the child’s mother had lied to him about obtaining an abortion and had concealed both the birth and the adoption.²⁷ The trial court ruled that the mother was not an adverse party and that fraud justifying relief must come from one.²⁸ The father argued on appeal that the trial court had misread “adverse party,” and the Kansas Supreme Court disagreed.²⁹ Adoptions, the court observed, are not perfectly analogous to the usual adversary proceedings, so it asked which participant filled the adverse role. It found that the adoptive parents filled it, because they had filed the petition to terminate the father’s parental rights, and the trial court had found that they and the adoption agency acted in good faith, which the father did not dispute. The mother had already voluntarily relinquished her parental rights and surrendered custody, so she was not the party seeking the decree. The court therefore affirmed that she did not qualify as an adverse party and that the father could not obtain relief on the fraud ground.³⁰

A.A.T. is a state decision, and a federal court is not bound by it. Its rule’s language is identical to the federal rule’s, however, so its reasoning carries real persuasive weight.³¹ The father proved a lie that cost him his chance to be heard, and the clause stayed closed anyway, because the lie came from someone who neither sought nor held the decree, and the parties who did hold it had acted in good faith.

The answer in the second scene would change if the landlord knew the testimony was false and offered it anyway, because the wrongdoing would then be his own. The same logic explains why the A.A.T. court looked past the mother’s lie to the good faith of the people who held the decree.

The requirement also excludes the movant’s own side. In Varden v. Danek Medical, Inc., an unpublished Sixth Circuit decision cited in the Kansas opinion, a plaintiff who complained of his own attorneys’ actions was denied relief under the federal rule because the attorneys were not adverse parties to the action and because his motions came more than a year after the dismissal.³² A lawyer works for the movant, and the earlier part on attorney neglect explained that a client answers for the acts and omissions of the lawyer it chose. Treating a client’s own lawyer as the winner’s wrongdoer would let any loser reopen a judgment by blaming counsel.

A movant who clears step 3 still has to make the clear and convincing showing and meet the time limit.

Misconduct in Litigation

Clause (3) names three wrongs, “fraud (whether previously called intrinsic or extrinsic), misrepresentation, or misconduct by an opposing party,” and the last carries the clause into cases where no one told an outright lie.³⁵ Because misconduct stands apart from fraud and misrepresentation in the text, a movant who cannot point to a false statement may still rely on conduct by the winner that undermined the fairness of the proceeding. The conduct most often charged is a failure to disclose in discovery, the pretrial stage in which each side must produce the documents and materials the other properly requests. A party that holds something back can shape the case without saying anything false at trial. The earlier parts covered who must commit the wrong and how clearly the movant must prove it. This part asks what counts as misconduct in practice, and the answer turns on whether the movant could have reached the material without the other side’s help.

A failed motion shows the limit first. In Alderson v. Bonner, an Idaho court reviewed a Rule 60(b) motion by a loser who argued that the plaintiffs’ attorney had wrongfully failed to produce a videotape during discovery.³⁶ The trial court found that the tape admitted at trial had never been in the plaintiffs’ possession. It sat in the court files of another lawsuit in which Bonner had been engaged, and he had access to it in that case and others, so he could not claim surprise at its existence or content. The reviewing court held that the record supported those findings and that the trial court did not abuse its discretion, because Bonner had not demonstrated discovery misconduct.³⁷ Because Alderson is a state decision, a federal court may find it persuasive but is not bound by it.

Two facts did the work in that decision: the plaintiffs did not hold the tape, and Bonner could reach it himself. A claim of nondisclosure needs something that was concealed, and counsel cannot withhold what counsel never had or what the other side can pull from a courthouse file. The wrong the clause targets is an opponent’s control over information that the movant needs and cannot get elsewhere, so when the movant knew of the material or could easily obtain it, that control is missing. The complaint then amounts to regret about how the movant used the opportunity it had, and honoring it would let every loser seek a second try built on discovery responses it never questioned. The Idaho court also repeated its standard for these motions, which allows relief “only upon a showing of unique and compelling circumstances.”³⁸ That is Idaho’s formulation, and a federal movant instead faces the clear and convincing standard taught earlier, but both express the same wariness about reopening a judgment over a discovery complaint the movant could have raised before trial.

Bonner and the boat buyer both complained about an item that went unproduced, and the difference lies in who controlled the item. The manufacturer held the reports privately and affirmatively denied that they existed, while the tape in Alderson sat in court files that Bonner could consult at any time. That contrast also marks the boundary of the clause: it repairs a loss caused by the opponent’s hold on information, and it gives nothing to a movant whose own access stayed open throughout.

The clause is not confined to judgments entered after trial. In White v. National Football League, a players’ association and a league ended a suit by signing a stipulation of dismissal. The association later argued that the dismissal should be set aside under Rule 60(b) because the league had secured it by fraud, misrepresentation, or misconduct. The Eighth Circuit allowed the association to seek Rule 60(b) relief but emphasized that it expressed no view on the merits of the motion.³⁹

Permission to pursue the motion decides only that the movant may try to make its showing. The movant still carries the burden of proving the other side’s fraud, misrepresentation, or misconduct by clear and convincing evidence, and still must move within the time the rule allows. An exam stem that reports a court “allowing” or “permitting” a Rule 60(b) motion has described a step in the process and has not described a finding of misconduct. The question to ask of the facts that follow is the one the Alderson and boat-buyer scenes answered: what did the opponent hold, and could the movant have reached it alone?