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Davis v. Lakeside Motor Co. Inc.

United States District Court, N.D. Indiana, South Bend Division

March 31, 2014

JAMES DAVIS, Plaintiff,


JON E. DEGUILIO, District Judge.

This is an employment discrimination case brought by James Davis against his former employer, Lakeside Motor Company, Inc. This case was set for a jury trial on March 17, 2014, but that that date was vacated on February 4, 2014 due to numerous failures by both parties to comply with this Court's Scheduling, Pretrial Conference, and Trial Order. [DE 131]. In this Order, the Court will address two motions for sanctions filed by the Plaintiff [DE 132, 133], as well as several other issues presented by the parties' pre-trial filings, in order to clarify the issues to be tried and the parties' obligations in proceeding to trial.

A. Plaintiff's Motion for Sanctions Regarding Documents Produced through Quashed Subpoenas

On January 30, 2014, Davis filed a Motion for Sanctions for the Defendant's Violation of Court Orders Dated May 22, 2012 and October 24, 2012.[1] [DE 112]. In the first of those orders, the Court granted Davis' motion to quash seven subpoenas that Lakeside had served on his current and former employers. [DE 40]. The second of those orders addressed a subsequent attempt by the Lakeside to subpoena Davis' employers, and denied Davis' motion to quash as moot based on Lakeside's representation that it had withdrawn the subpoenas. [DE 62]. However, even though all of Lakeside's subpoenas had been quashed or withdrawn, the trial exhibits that Lakeside disclosed on January 16, 2014 included two exhibits containing documents from Davis' employers, apparently produced to Lakeside in response to its subpoenas. Davis accordingly filed this motion for sanctions, asserting that Defendant violated this Court's orders and also failed to supplement its disclosures by producing those documents to Davis as required by Rule 26(e). Davis seeks to prohibit the Defendant from using those documents at trial, asks this Court to hold Defendant in contempt for violation of its orders, and requests an award of attorneys' fees incurred in addressing this issue, pursuant to Rules 37(b) and 37(c).[2] [DE 112 p. 6; DE 132].

By way of background, Defendant first notified Davis of its intent to subpoena records from his current and former employers on April 1, 2011. [DE 33-3]. Defendant attached copies of seven subpoenas, which sought Davis' entire personnel file from Frost Creative Sounds, Alpha Baking Company, Lowe's Home Improvement, Rally's Hamburgers, Complete Cleaning Service, Damon's Grill, and Dixie Staffing Services. [DE 33-3]. Davis objected to Lakeside serving these subpoenas, and the parties discussed the matter through a series of correspondence over the following months. On August 16, 2011, the Defendant reiterated its intent to serve the subpoenas, and attached seven subpoenas directed to the same set of employers. [DE 33-13]. Davis again objected, and the parties largely rehashed their prior discussions in further correspondence dated August 19, 26, and 29, 2011. [DE 33-15, -16, -17]. The parties further discussed the issue during a telephone conference on September 14, 2011. [DE 34]. Defendant had not yet served the subpoenas at this time.

On April 4, 2012, over six months later, Defendant served subpoenas on a number of Davis' employers. [DE 112-1]. Lakeside notified Davis that same day that it was serving the subpoenas. [DE 112-1]. Attached to that letter were subpoenas to seven employers: Dixie Staffing Services, Complete Cleaning Service, Checkers Drive-In Restaurants, Inc., Lowe's Companies, Inc., Manpower Group, Frost Creative Sounds, and Alpha Baking Company. [DE 112-1]. Notably, Lakeside did not attach any subpoena to Damon's Grill or otherwise notify Davis that it had subpoenaed them, though it did in fact serve the subpoena.[3] [ See id. ]. Though the subpoenas did not require a response for 30 days, Damon's Grill responded to the subpoena on April 9, 2012, and Alpha Baking Company responded on April 18, 2012. [DE 112-3; DE 136-2].

On April 24, 2012, unaware that two of the subpoenas had already been responded to, Plaintiff moved to quash all of the subpoenas, arguing that they were overly broad and unduly burdensome. [DE 31]. The Defendant responded in opposition to the motion to quash, but did not disclose to either the Plaintiff or the Court that it had already received responses as to two of the subpoenas, even though this rendered the motion to quash moot as to those subpoenas. In re Special April 1977 Grand Jury, 581 F.2d 589, 591 (7th Cir. 1978) ("Of course it is an empty gesture to quash' a subpoena already honored...."). Nor did Lakeside disclose that it had in fact served at least eight subpoenas, not just the seven of which it had notified Davis. On May 22, 2012, the Court granted Plaintiff's motion to quash, finding that the subpoenas were overly broad and unduly burdensome. [DE 40].

On September 13, 2012, the day before the close of discovery, Lakeside again notified Davis that it was issuing subpoenas to his employers, this time seeking wage information from eight of his past and present employers. [DE 112-2]. These employers included Alpha Baking Company and Damon's Grill, even though Lakeside had already received responses from those employers through its first round of subpoenas. [DE 112-2]. Davis immediately moved to quash the subpoenas. [DE 51]. Lakeside did not respond to the motion to quash, but represented in a separate filing that it had withdrawn the subpoenas. [DE 51]. The Court accordingly denied Davis' motion to quash as moot, but awarded Davis his attorneys' fees incurred in litigating the motion based on its finding that Lakeside's "eleventh hour subpoenas... substantially duplicated those already quashed by this Court in its May 22nd order [and] once again caused Plaintiff undue cost by forcing him to file [the motion to quash]." [DE 62 p. 7]. At no point did Lakeside disclose that it was in possession of documents from both Damon's Grill and Alpha Baking Company.

On January 16, 2014, Lakeside provided Davis with copies of the exhibits it intended to use at trial. Those exhibits included documents received from Damon's Grill (Exhibit D) and Alpha Baking Company (Exhibit E), as well as a summary exhibit containing information learned through those documents (Exhibit F). Davis therefore brought the present motion, asserting that Lakeside violated the Court's prior orders quashing the subpoenas and also violated its discovery obligations by failing to previously disclose the documents. Davis seeks to prevent Lakeside from using the documents or the information learned through those documents at trial, and has also sought a finding of contempt against Lakeside and recovery of his attorneys' fees. [DE 112, 132]. In response, Lakeside has agreed to withdraw Exhibits D and E, but denies that any other sanctions are warranted. [DE 135].

Davis first argues that the Court should sanction Lakeside pursuant to Rule 37(b), which authorizes sanctions for violations of a court's discovery orders, and hold it in contempt. Fed.R.Civ.P. 37(b)(2)(A). However, the Court cannot conclude that Lakeside violated its orders relative to the subpoenas. Lakeside received responses to both of the subpoenas at issue before Davis had even moved to quash them, much less before the Court had granted the motion, so its issuance of the subpoenas and its receipt of responsive documents cannot have violated the Court's later orders quashing those subpoenas. [DE 136-1]. Davis argues that Lakeside violated the Court's orders by failing to destroy the documents once the subpoenas were quashed, but it provided no authority for that assertion.[4] Rule 45(e)(2)(B) states that a party may be obligated to return or destroy documents if the party responding to a subpoena inadvertently produced privileged material, but nothing in Rule 45 addresses a party's obligations with respect to documents produced pursuant to a subpoena that is later quashed. None of the Court's orders have addressed that question, either. Therefore, neither sanctions nor a finding of contempt are justified on this basis. See Tranzact Techs. v. 1Source Worldsite, 406 F.3d 851, 855 (7th Cir. 2005) (stating that for a party to be held in contempt, it "must have violated an order that sets forth in specific detail an unequivocal command from the court").

Lakeside's compliance with its discovery obligations is another story, and justifies sanctions pursuant to Rule 37(c) for failure to supplement discovery responses as required by Rule 26(e). Fed.R.Civ.P. 37(c)(1). Rule 26(e) requires a party to supplement or correct a disclosure or response to a document request "in a timely manner if the party learns that in some material respect the disclosure or response is incomplete or incorrect." Fed.R.Civ.P. 26(e)(1)(A). Here, however, Lakeside was in possession of these documents for nearly two years before finally disclosing them to Davis. Davis' first set of requests for the production of documents specifically requested copies of all documents obtained through the use of a subpoena. [DE 112-6]. In responding to that request on June 13, 2011, Lakeside simply raised various boilerplate objections. [ Id. ]. In correspondence with Davis shortly thereafter, however, Lakeside affirmatively represented that it had neither "subpoenaed nor actually procured" documents from Davis' employers. [DE 33-11]. While this may have been true at the time, it was no longer true as of April 2012, when Lakeside did in fact procure such documents from two of Davis' employers. [DE 136-1]. Lakeside did not disclose these documents to Davis until January 16, 2014, however.

Lakeside therefore violated Rule 26(e) both by failing to supplement its response to Davis' document request upon receiving the subpoenaed documents, and by failing to correct its affirmative statement that it was not in possession of any documents from Davis' employers. First, Rule 34 states that in responding to a document request, a party must specify the parts of the request that it objects to and must "permit inspection of the rest." Fed.R.Civ.P. 34(b)(2)(C). Though Lakeside's objection to Davis' document request may have been justified with respect to some aspects of the request, the subpoenaed documents fall squarely within its scope, so Lakeside was required to produce the documents "in a timely manner" after receiving them, notwithstanding its boilerplate objections. It failed to do so, and thus violated Rule 26(e). Second, Lakeside failed to correct its affirmative statement that it had not procured any documents from Davis' employers after it did, in fact, receive such documents. Had Lakeside disclosed this fact, Davis could have moved to compel production of the documents while discovery was still open, allowing him to follow up or conduct further discovery if necessary. However, since all of Lakeside's subpoenas were either quashed and withdrawn and it never acknowledged its receipt of responsive documents, Davis had no reason to do so.

These violations of Rule 26(e) authorize the Court to impose sanctions pursuant to Rule 37(c), which states that where a party fails to comply with Rule 26(e), "the party is not allowed to use that information... to supply evidence on a motion, at a hearing, or at a trial, unless the failure was substantially justified or is harmless." Fed.R.Civ.P. 37(c)(1). This sanction is "automatic and mandatory unless the offending party can establish that its violation of Rule 26[(e)] was either justified or harmless." Ciomber v. Cooperative Plus, Inc., 527 F.3d 635, 641 (7th Cir. 2008) (internal quotations omitted). Rule 37(c) further authorizes a court to "order payment of the reasonable expenses, including attorney's fees, caused by the failure." Fed.R.Civ.P. 37(c)(1)(A).

Given that Lakeside has voluntarily withdrawn Exhibits D and E, the sanctions that remain at issue are whether Exhibit F should be excluded and whether Davis should be awarded his attorneys' fees for bringing this motion. The Court concludes that the information in Exhibit F that Lakeside learned through the subpoenas (though not Exhibit F in its entirety) must be stricken, and that attorneys' fees are warranted. There is no basis whatsoever on which to conclude that Lakeside's violations were justified; its excuse that it put the documents in its file and forgot about them is simply unacceptable. As Defendant's counsel have been expressly warned in another case, "Poor judgment and a degree of indolence, as well as a lack of candor in failing to report information all fall within the realm of conduct that is not substantially justified or harmless during discovery." ...

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