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Apex Colors Inc. v. Chemworld International Ltd., Inc.

United States District Court, N.D. Indiana, Hammond Division

October 31, 2018

APEX COLORS, INC., Plaintiff,
v.
CHEMWORLD INTERNATIONAL LIMITED, INC., ATUL MODI, MANOJ MODI, and PAUL BYKOWSKI, Defendants.

          OPINION AND ORDER

          PAUL R. CHERRY MAGISTRATE JUDGE

         This matter is before the Court on (1) “Defendants' Motion to Strike the Verification of Will Koenig [DE-632-1] and Bar Koenig From Offering Expert Testimony Due to Apex's Failure to Make Disclosures” [DE 708]; (2) “Defendants' Rule 59(e) Motion to Alter or Amend the Default Judgment [DE-707] Due to Manifest Error of Fact and Law and to Prevent Manifest Injustice” [DE 711]; and (3) “[Defendants'] FRCP 55(c), or Alternatively, FRCP 60(b) Motion to Vacate Default” [DE 713], filed by Defendants on October 14, 2018, October 16, 2018, and October 17, 2018, respectively. Plaintiff Apex Colors, Inc. (“Apex”) filed a consolidated response brief on October 25, 2018, and Defendants filed reply briefs on October 26, 2018, October 28, 2018, and October 29, 2018.

         BACKGROUND

         On April 20, 2018, Apex filed a “Motion for Sanctions up to and Including a Default Judgment and for Related Evidentiary Hearing.” (ECF 601) (hereinafter the “April 20, 2018 Motion for Sanctions”). One of the several discovery issues raised by Apex as a basis for seeking the sanction of default judgment was that Defendant Paul Bykowski had failed to comply with the Court's April 13, 2015 Order to surrender any color computers that he used at Apex from May to September 2012. See (ECF 602, pp. 6-8). In support of the argument, Apex relied on the April 6, 2016 Verification of Will Koenig, attached as Exhibit C to the motion. See (ECF 602, p. 7; Ex. C). Apex argued that, although Bykowski turned over the Weadon color computer in response to the Court's April 13, 2015 Order, Will Koenig determined that the computer had not been used between May and September 2012; thus, Apex argued that Bykowski did not turn over the color computer he actually used during those months, depriving Apex of the computer records of the tests Bykowski ran during that relevant time period. See (ECF 602, pp. 2, 3, 4, 6-8, 17, 18, 19, Ex. C). Apex made the argument in Section D, titled “Bykowski's defiance of this Court's Order to surrender all color computers used between May and September 2012.” See (ECF 602, p. 6).

         On May 21, 2018, the Court struck Apex's April 20, 2018 Motion for Sanctions with leave to refile because an intervening Court ruling barring one of Apex's computer spoliation experts significantly impacted the motion. On May 22, 2018, Apex refiled the “Motion for Sanctions up to and Including a Default Judgment and for Related Evidentiary Hearing” (hereinafter the “May 22, 2018 Motion for Sanctions”), having removed the argument related to the barred expert but otherwise restating the arguments previously made. See (ECF 631, 632). Relevant to the instant motions, Apex made the identical argument regarding Bykowski's failure to produce the color computers he used from May to September 2012 at Apex, again relying on Will Koenig's April 6, 2016 Verification, which Apex again attached as Exhibit C. Compare (ECF 602, pp. 2, 3, 4, 6-8, 17, 18, 19, Ex. C), with (ECF 632, pp. 2, 3, 4, 6-8, 16, 17, 18, Ex. C).

         On June 1, 2018, the Court stayed the briefing on the May 22, 2018 Motion for Sanctions to allow for ruling on a pending motion to bar Apex's second computer spoliation expert. On June 2, 2018, the Court granted the motion to prohibit Apex's second computer spoliation expert and lifted the stay of briefing on Apex's May 22, 2018 Motion for Sanctions, setting a July 17, 2018 deadline for Defendants' response brief.

         On July 15, 2018, Defendants timely filed their response to the May 22, 2018 Motion for Sanctions. See (ECF 662). However, Defendants did not address, explain, or defend against Apex's argument regarding Bykowski's compliance with the Court's April 13, 2015 Order to turn over the color computers he used at Apex between May and September 2012. Moreover, Defendants neither acknowledged Apex's reliance on Will Koenig's April 6, 2016 Verification nor raised any objection to Koenig's Verification.

         On July 23, 2018, Apex filed a reply in support of the Motion for Sanctions, reasserting the arguments made in the opening brief, including those related to Bykowski's production of the color computers, and again referencing Will Koenig's Verification. See (ECF 667, pp. 3, 4, 5-6, 8, 9).

         On August 2, 2018, Defendants filed a Motion to Strike those portions of Apex's reply brie f that reference the color computers and Koenig's Verification, substantively responding to the issue for the first time. See (ECF 672). In support, Defendants attached a declaration from Bykowski attempting to explain the lack of color data on the Weadon computer. Defendants did not raise any Rule 26(a)(2) objection to Koenig's Verification. Apex filed an opposition to the motion, noting that Apex raised the issue of the color computers and Koenig's Verification in the Motion for Sanctions and objecting that Defendants had waived the issue by failing to address it in response to the Motion for Sanctions. See (ECF 675). Defendants then filed a reply, reiterating the arguments made in the Motion to Strike. See (ECF 676). On October 5, 2018, the Court denied Defendants' Motion to Strike, finding that Defendants had waived the opportunity to contest Apex's argument regarding the color computers and Koenig's Verification by failing to raise the arguments in response to the May 22, 2018 Motion for Sanctions. (ECF 707).

         In the same October 5, 2018 Opinion and Order, the Court granted Apex's Motion for Sanctions, awarding a sanction of default judgment under Federal Rule of Civil Procedure 37 against all Defendants for the egregious nature of Defendants' discovery conduct in this litigation. One of the numerous reasons for granting the sanction of default judgment, discussed in more detail below, was Bykowski's conduct in relation to the Court's April 13, 2015 Order to produce the color computers.

         ANALYSIS

         In the three pending motions, Defendants contest the Court's acceptance of Apex's argument regarding Bykowski's production of the color computers and the Court's reliance on Apex's citation to Will Koenig's April 6, 2016 Verification in ruling on the Motion for Sanctions and imposing the sanction of default judgment. Defendants ask the Court to reassess its analysis on the Motion for Sanctions and vacate the sanction of default judgment.

         As with the August 2, 2018 Motion to Strike Apex's Reply in Support of the Motion for Sanctions, Defendants waived the substantive arguments in these three motions regarding Bykowski's production of the color computers and Will Koenig's Verification by failing to raise them in response to Apex's May 22, 2018 Motion for Sanctions. See Ennin v. CNH Indus. Am., LLC, 878 F.3d 590, 596 (7th Cir. 2017) (finding that it is “the very essence of waiver” to choose not to present evidence when given the opportunity (citing Hardy v. City Optical Inc., 39 F.3d 765, 771 (7th Cir. 1994) (“In an adversary system, in which by its nature judges are heavily dependent on the lawyers to establish the facts upon which [a] decision will be based, the failure to reply to an adversary's point can have serious consequences.”)); Palmer v. Marion Cnty., 327 F.3d 588, 597-98 (7th Cir. 2003) (finding that the plaintiff abandoned a claim not delineated in opposition to summary judgment); Laborer's Int'l Union of N. Am. v. Caruso, 197 F.3d 1195, 1197 (7th Cir. 1999) (finding that arguments not presented to the district court in opposition to summary judgment are waived); Wolotka v. Sch. Town of Munster, 399 F.Supp.2d 885, 900 (N.D. Ind. 2005) (finding that the plaintiff waived any objection to an argument in the defendant's motion to strike by failing to respond to it); REP MCR Realty, LLC v. Lynch, 363 F.Supp.2d 984, 1015 (N.D. Ill. 2005) (holding that a plaintiff waived an argument he failed to raise in opposition to a motion for sanctions). The principle of waiver applies to Daubert motions challenging the admissibility of expert witness opinion testimony. See United States v. Dish Network LLC, 75 F.Supp.3d 916, 920 (C.D. Ill. 2014) (citing Questar Pipeline Co. v. Grynberg, 201 F.3d 1277, 1289-90 (7th Cir. 2000) (“A party may waive the right to object to evidence on Kumho/Daubert grounds by failing to make its objection in a timely manner.”)).

         Defendants first had notice of Apex's argument that Bykowski did not comply with the Court's April 13, 2015 Order to turn over the color computers, including Apex's reliance on Will Koenig's April 6, 2016 Verification, when Apex filed its April 20, 2018 Motion for Sanctions. (ECF 601, 602). Although the April 20, 2018 Motion for Sanctions was stricken, Apex refiled the motion on May 22, 2018, and made the identical argument regarding the color computers, again relying on Koenig's Verification. Thus, Defendants were on notice a second time with the filing of the May 22, 2018 Motion for Sanctions. Yet, Defendants did not respond to the argument in their July 15, 2018 response brief. Defendants did not offer ...


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