On January 18, 1986, 2-year-old Jennifer Pollock suffered seizures which resulted in severe and permanent brain damage. It was determined that the seizures were caused by an excessive amount of theophylline in her system. The Pollocks sued Dr. James Klicpera, who had prescribed the drug, as well as Fisons Corporation (D) (the drug manufacturer) which produced Somophyllin Oral Liquid, the theophylline-based medication prescribed for Jennifer. After nearly 3 years of discovery, Dr. Klicpera, his partner and the Everett Clinic settled with the Pollocks. The doctors' insurer, Washington State Physicians Insurance Exchange & Association (P), would loan $500,000 to the Pollocks which would be contributed in the event of a settlement between the Pollocks and the drug company. More than 1 year after this settlement, an attorney for the Pollocks provided Dr. Klicpera's attorney a copy of a letter received from an anonymous source. The letter, dated June 30, 1981, indicated that the drug company was aware in 1981 of 'life-threatening theophylline toxicity' in children who received the drug while suffering from viral infections. The letter was sent from the drug company to only a small number of what the company considered influential physicians. The letter stated that physicians needed to understand that theophylline can be a 'capricious drug.' The Pollocks and Dr. Klicpera contended that their discovery requests should have produced the June 1981 letter and they moved for sanctions against D. The trial court subsequently denied Dr. Klicpera's request to reverse the discovery master's denial of sanctions and at the close of trial denied a renewed motion for sanctions. The day after the hearing on sanctions, the drug company delivered approximately 10,000 documents to Dr. Klicpera's and Pollocks' attorneys. Among the documents provided was a July 10, 1985 memorandum from Cedric Grigg, director of medical communications for the drug company, to Bruce Simpson, vice president of sales and marketing for the company. The 1985 memorandum referred to a dramatic increase in reports of serious toxicity to theophylline in early 1985 and also referred to the current recommended dosage as a significant 'mistake' or 'poor clinical judgment.' The memo alluded to the 'sinister aspect' that the physician who was the 'pope' of theophylline dosage recommendation was a consultant to the pharmaceutical company that was the leading manufacturer of the drug and that this consultant was 'heavily into [that company's] stocks.' The memo also noted that the toxicity reports were not reported in the journal read by those who most often prescribed the drug and concluded that those physicians may not be aware of the 'alarming increase in adverse reactions such as seizures, permanent brain damage, and death.' The memo concluded that the 'epidemic of theophylline toxicity provides strong justification for our corporate decision to cease promotional activities with our theophylline line of products.' The record at trial showed that the drug company continued to promote and sell theophylline after the date of this memo. Shortly after the 1985 memo was revealed, the drug company settled with the Pollocks for $6.9 million. The trial court determined that settlement to be reasonable, dismissed the Pollocks' claims, extinguished Dr. Klicpera's contribution/indemnity claims against D pursuant to RCW 4.22.060 and reserved determination of what claims remained for trial. The trial court then ordered the lawsuit recaptioned, essentially as Dr. James Klicpera, plaintiff v. Fisons Corporation, defendant. The jury concluded that Dr. Klicpera was entitled to recover against the drug company under his Consumer Protection Act claim and under his product liability claim, but not under the fraud claim. The jury awarded Dr. Klicpera $150,000 for loss of professional consultations, $1,085,000 for injury to professional reputation, and $2,137,500 for physical and mental pain and suffering. The jury further found Dr. Klicpera to be 3.3 percent contributorily negligent. The jury found that P was not entitled to recover under its fraud claim against the drug company the $500,000 settlement paid to the Pollocks. The trial court denied D's motion for judgment n.o.v. and for a new trial. D sought direct review by this court, and we accepted review. Dr. Klicpera and P cross-appeal from the trial court's refusal to award discovery sanctions for the alleged discovery violations. The casebook is only interested in issue 9 which was the denial of sanctions for discovery abuse.