*1 I. Introduction 

II. Defendants' Continued and Systematic Discovery Violations 

III. Additional Discovery Managed by the Discovery Master

IV. Legal Standards 

V. Report of Discovery Completed, Discovery to be Completed Through Entry of an Order to Compel, and Recommendation for Rule 37 Sanctions 

A. Saja's answers to interrogatories are deficient; supplementation is required, and sanctions are appropriate. 

 1. Saja's answers to Interrogatories Nos. 3 and 4 remain deficient. 

 2. Saja's answer to Interrogatory No. 5 remains deficient. 

B. Natimark's answers to interrogatories are deficient, a supplement is required, and sanctions appropriate. 

 1. Natimark's answer to Interrogatory No. 1 remains deficient. 

 2. Natimark's answer to Interrogatory No. 4 remains deficient. 

 3. Natimark's answer to Interrogatory No. 8 is sufficient. 

 4. Natimark's answer to Interrogatory No. 9 remains deficient. 

 5. Natimark's answer to Interrogatory No. 14 is sufficient. 

C. Saja's Responses to Requests for Production are deficient and a supplement is required 

 1. Saja's response to Request for Production No. 1 is deficient. 

 2. Saja's response to Request for Production No. 2 is sufficient. 

D. Natimark's Responses to Requests for Production are deficient, a supplement is required, and sanctions appropriate. 

 1. Natimark's responses to Requests for Production No. 3 and No. 4 remain deficient. 

 2. Natimark's response to Request for Production No. 6 is sufficient 

 3. Natimark's response to Request for Production No. 7 remains deficient. 

 4. Natimark's responses to Requests for Production No. 8, No. 9, and No. 10 remain deficient. 

 5. Natimark's responses to Requests for Production No. 11, 19-23, 27, and 29-32 are sufficient, but require certification 

 6. Natimark's response to Request for Production No. 42 is sufficient 

 7. Natimark's response to Request for Production No. 45 remains deficient. 

VI. Scheduling Order Recommendation 

VII. Conclusion and Summary of Recommendations 

VIII. Notice Regarding Objection to Recommendation 1 2 5 6 7 8 8 10 11 11 12 14 15 16 16 17 17 18 18 19 20 21 21 22 23 24 255 277

The gist of this lawsuit is that Plaintiffs Jody Firneno and Christopher Franke (“Plaintiffs”) allege that Defendants Nationwide Marketing Services, Inc. (“Natimark”), Leon Saja (“Saja”), and other corporate officers of Natimark (collectively, “Defendants”) violated the Fair Credit Reporting Act (“FCRA”), 15 U.S.C. § 1681b, by selling or providing consumer lists to third parties containing Plaintiffs' private financial information. (Dkt. 1, Complaint).

Plaintiffs filed a motion for class certification (Dkt. 4), which has been held in abeyance pending discovery. (Dkt. 20.) The Court recently re-appointed the undersigned to act as Discovery Master. (Dkt. 73.) After the re-appointment, the Discovery Master met with the parties and Defendants supplemented their responses to Plaintiffs' written discovery. Because discovery issues remain after Defendants' supplementation, the Discovery Master issues this Report and Recommendation for Entry of an Order Compelling Discovery and Imposing Sanctions against Defendants under Rule 37.

*2 On March 13, 2015, Plaintiffs filed a motion to compel Defendants to answer, without objection, Plaintiffs' First Interrogatories to Leon Saja; Plaintiffs' Requests for Production to Leon Saja; Plaintiffs' Second Interrogatories to Natimark; and Plaintiffs' Requests for Production to Natimark. (Dkt. 25, 26, 30, 40, and 44.) The matter was referred to the Discovery Master, who issued a recommendation that Defendants be ordered to supplement discovery. (Dkt. 39.) On March 24, 2016, the Court adopted the Discovery Master's recommendations, directing Defendants to supplement their discovery responses within 14 days. (Dkt. 50.)

On July 14, 2016, the Court found that Defendants had “failed to comply” with the Court's Order (Dkt. 52), granted Plaintiffs' motion to enforce discovery, and again compelled Defendants to supplement answers to Plaintiffs' interrogatories and to produce documents. (Dkt. 56.) The Court advised Defendants that “any further failure to cooperate with the progression of the case or to comply with an order of the Court will be treated as conduct tantamount to bad faith, and will result in harsher sanctions under Civil Rule 37, up to and including the Court's issuance of a default judgment against the Defendants.” (Id.)

On September 14, 2016, Plaintiffs filed a renewed motion to enforce discovery, and for Rule 37(b) sanctions due to Defendants' continued noncompliance with the Court's orders.” (Dkt. 63.) On January 10, 2017, the Court granted Plaintiffs' renewed motion. (Dkt. 73.) The Court found that “[t]here is no explanation for the discovery issues here other than the Defendants' refusal to comply with the Court's discovery orders.” (Id.) It again advised that if “Defendants continue to defy the Court's orders, the Court will impose harsher sanctions, including directing that certain designated facts be taken as established for purposes of the action as to Plaintiffs' claims, prohibiting Defendants from supporting or opposing designated claims or defenses, or from introducing designated matters in evidence, and treating the noncompliance as contempt of the Court. SeeFed. R. Civ. P. 37(b)(2).” (Id.)

The Court issued additional Rule 37 sanctions against Defendants, ordering that:

The Court also re-appointed the Discovery Master, pursuant to Rule 53, “to supervise, manage, and make recommendations to the Court regarding the disposition of discovery disputes, the completion of discovery, and any other discovery-related issues that arise.” (Dkt. 73.) The Discovery Master was directed to specifically:

(Dkt. 73.) The Court required the parties to meet with the Discovery Master no later than January 27, 2017. (Id.)

The Court further advised that “[i]f the parties cannot reach an agreement that leads to the completion of discovery, the filing of a renewed motion to certify class, and a firm scheduling order for the remainder of the case, the Discovery Master will make recommendations to the Court regarding the contested issues.” (Dkt. 73.)

The Discovery Master held a joint call with the parties on January 16, 2017, and issued the following directive in attempt to complete the remaining discovery and to ascertain the open discovery-related issues:

The Discovery Master advised that upon receipt of the Plaintiffs' list of open issues, the Discovery Master may reconvene the parties for further conference or issue a recommendation for an order to be entered by the Court.

A party may obtain discovery regarding any non-privileged matter that is relevant to any party's claim or defense. Fed. R. Civ. P. 26(b) provides:

If a party fails to respond to discovery, or if a party's discovery response is evasive or incomplete, the requesting party may move for an order compelling discovery. Fed. R. Civ. P. 37(a)(1)-(4). Under Rule 37(b)(2)(A), “a district court may sanction parties who fail to comply with its orders in a variety of ways, including dismissal of the lawsuit.” Bass v. Jostens, Inc., 71 F.3d 237, 241 (6th Cir. 1995).

Courts consider four factors when determining the appropriate sanction for failure to provide discovery under Rule 37(b): (1) whether the party's failure is due to willfulness, bad faith, or fault; (2) whether the adversary was prejudiced by the dismissed party's conduct; (3) whether the dismissed party was warned that failure to cooperate could lead to dismissal; and (4) whether less drastic sanctions were imposed or considered before dismissal was ordered. United States v. Reyes, 307 F.3d 451, 458 (6th Cir. 2002).

*4 The Order appointing the Discovery Master provided that, “[i]f he so chooses, he may outline the details and procedures governing the supervision and management of discovery in a further order, and submit the order to the Court after consultation with counsel. (Dkt. 73.) Therefore, the Discovery Master issues this Report and Recommendation for Entry of an Order Compelling Discovery and Imposing Sanctions against Defendants.

Saja was ordered to supplement his answers to “Plaintiffs' First Interrogatories to Leon Saja.” (Dkt. 73.) In response to the Discovery Master's directive, Saja supplemented on January 30, 2017. Plaintiffs complain that the supplement remains deficient as to Interrogatories No. 3, 4, and 5. The Discovery Master agrees: Saja should be compelled to supplement his answers, and Rule 37 sanctions should be applied as follows:

Plaintiffs' Interrogatory No. 3 requests Saja to “[i]dentify by name, address, and phone number, each employer or agency for whom you worked in the past 10 years.” Plaintiff's Interrogatory No. 4 similarly requests Saja to “identify each business in which you had an ownership interest or a position as an officer or board member” for the past 10 years.”

Saja's supplemental answers to Plaintiffs' Interrogatories Nos. 3 and 4 dated January 30, 2017, failed to identify his employers or the companies he has owned for the past 10 years. Instead, the supplement directs Plaintiffs to “[s]ee the deposition of Mr. Saja pages 11-30 for an extensive question and answer regarding Mr. Saja's employment.” Saja's response to Interrogatories Nos. 3 and 4, refusing to answer and instead directing Defendants to review Saja's deposition transcript, are deficient.

Rule 33(b)(3) provides that “[e]ach interrogatory must, to the extent it is not objected to, be answered separately and fully in writing under oath.” Fed. R. Civ. P. 33(b)(3). “Because Rule 33(b)[3] requires a party to answer each interrogatory ‘fully,’ it is technically improper and unresponsive for an answer to an interrogatory to refer to outside material, such as pleadings, depositions, or other interrogatories.” Kuriakose v. Veterans Affairs Ann Arbor Healthcare Sys., No. 14-CV-12972, 2016 WL 4662431, at *7 (E.D. Mich. Sept. 7, 2016) (citing Equal Rights Ctr. v. Post Properties, Inc., 246 F.R.D. 29, 35 (D.D.C. 2007) and Moore's Federal Practice–Civil § 33.103.) Therefore it's inappropriate to refer to a deposition transcript in lieu of providing a written answer to an interrogatory.

Saja may not, as he has done here, answer interrogatories by generally referring to his deposition transcript. Saja has personal knowledge of his own employers and the companies he has owned. There is no reasonable excuse as to why this information has not been provided in writing in response to Plaintiffs' Interrogatories. Saja should be compelled to fully and completely provide the information requested in Interrogatories Nos. 3 and 4 as soon as possible, not later than ten days, and should be sanctioned to pay Plaintiffs' reasonable fees incurred for having to again request these answers.

Plaintiffs' Interrogatory No. 5 requests Saja to identify the relationships between specific entities[1] or their owners and “any entity in any way connected to [Saja] that buys or sells consumer data or lists.” Saja's supplemental answers failed to state the relationship between “Leads Warehouse” and Natimark or Nationwide Marketing Services.

*5 Saja again improperly referred to his deposition transcript in response. Saja's deposition admits his personal knowledge of a relationship between “Leads Warehouse” and Natimark. He therefore has no reasonable excuse as to why he cannot identify the relationship in writing in response to Plaintiffs' Interrogatory. Saja should be compelled to fully and completely answer Interrogatory No. 5 within ten days, and should be sanctioned to pay Plaintiffs' reasonable fees incurred for having to again request this answer.

Natimark was ordered to supplement its answers to “Plaintiffs' Second Interrogatories to Nationwide Marketing Services, Inc.” (Dkt. 73.) Natimark supplemented on January 30, 2017. Plaintiffs complain that the supplement remains deficient as to Interrogatories No. 1, 4, 8, 9, and 14.[2] The Discovery Master agrees in part and disagrees in part. Defendant Natimark should be compelled to provide supplemental answers and Rule 37sanctions should be applied as follows:

Plaintiffs' Interrogatory No. 1 requests details regarding Natimark's document storage, review, and production. Natimark's supplement provided details that it had previously withheld, but for an unknown reason it ignored the request to identify “the system administrator responsible for maintaining the system, and the individual who retrieved the document.”

The Court's prior orders held that this information is relevant and is to be produced without objection. See Dkt. 39. Identity of the system administrator or the individual who retrieved the documents is even more relevant here due to the missing and incomplete document productions. Natimark affirmatively stated in its court filings that it “has, through its IT administrator, undertaken a thorough search of its servers.” (Dkt. 64 at p. 2.) Plaintiffs are entitled to know the identity of the system administrator or individual who conducted the alleged “thorough search.”

Natimark should be compelled to answer Interrogatory No. 1, providing the identity of the administrator or the individual who conducted the search for responsive documents, within ten days and should be sanctioned to pay Plaintiffs' reasonable fees incurred for having to again request this answer.

Plaintiffs' Interrogatory No. 4 requests details related to “customer lists” that Natimark “accessed, used or sold that included data concerning either Plaintiff in the five years precedent the filing of the complaint[.]” In response, Natimark refers Plaintiffs to invoices, e-mail, and a spread sheet listing e-mail. Natimark further states it is “in the process of compiling e-mails” and refers Plaintiffs to Saja's deposition.

Plaintiffs allege that Natimark's response fails to provide information related to (a) the date lists were accessed, (b) dates on which Natimark provided or sold the lists, (d) the permissible purpose certified by the subscriber, and (e) the entity from which Natimark obtained the data. The Discovery Master agrees.

Natimark has had ample time to search for and to produce documents on its own. Plaintiffs sent their discovery requests in 2014. To answer, in 2017, that Natimark is still continuing to search and compile, and will supplement is unacceptable, especially after having been ordered by the Court, which easily qualifies as a “warning” under the Reyes factors.

*6 Therefore, the Discovery Master recommends that the Court order that a third-party ESI vendor[3] search Natimark's computers and servers for information and documents responsive to Plaintiffs' discovery requests. Plaintiff may identify up to three custodians. Within ten days of the custodian identification, Natimark will make its computers and servers available to the third-party ESI vendor to search for and collect data from each custodian. The vendor will then search the collected data for e-mail or documents related to “customer lists,” by running search terms “customer list”,[4] “customer lists”, and the 21 additional search terms identified in Plaintiffs' Requests for Production No. 7. Natimark will pay the vendor's reasonable costs as a sanction under Rule 37.

In addition, due to Natimark's continued failure to provide a “permissible purpose certified by the subscriber” for the customer lists, it will be deemed admitted that Natimark did not obtain a “permissible purpose certified by the subscriber” for the “customer lists” in relation to all further proceedings in this matter, including motion practice and at trial.

Plaintiffs' Interrogatory No. 8 requests Natimark to “detail the investigation and/or inquiry which you undertook concerning Radner or Zero Debt to insure your compliance with the FCRA provisions at issue in this case.” Natimark's Supplemental Response admits that “Defendant did not speak to Radner or its employees,” thereby admitting that no investigation or inquiry was made regarding compliance with FCRA related to Radner. This fact should be deemed admitted.

Natimark's response as to Zero Debt, regarding statements from Mr. Dubina, is sufficient, but Natimark should not be permitted to produce any fact, by document or testimony, that it did in any way undertake any additional attempts to investigate or to ensure FCRA compliance. Natimark is foreclosed from production of any evidence demonstrating that any follow-up investigation was ever conducted or attempted after the date that Natimark received the “customer list.”

Plaintiffs' Interrogatory No. 9 requests Natimark to “state when Radner and/or Zero Debt initially became a customer or subscriber” and to further describe the nature and extent of the services provided. In response, Natimark states it “is in the process of retrieving in excess of 300 communications between Nationwide and 800 Zero Debt or its affiliates.” In addition, Natimark refers Plaintiffs to Saja's deposition.

Natimark's response, referring to documents not yet produced and a deposition transcript, is not sufficient at this late date. And here again, as discussed above, Natimark has had years to retrieve this information. Because Natimark has had ample time to search for and to produce documents on its own, but has continually failed to do so in violation of the Court's orders, the Discovery Master recommends that a third-party vendor search Natimark's computers and servers for information and documents responsive to Plaintiffs' discovery. The parties and vendor will follow the same procedure outlined in Section V(B)(2) above, but the vendor will add the search terms “Radner” and “Zero Debt”, for documents related to Interrogatory No. 9. The costs for the vendor will be borne entirely by Natimark as a sanction under Rule 37.

*7 Plaintiffs' Interrogatory No. 14 requests Natimark to provide information related to “steps you took to preserve the evidence,” the information found, and “the identity of all individuals charged with preserving the information.”Natimark responded that it has not destroyed any evidence and that the “system at Nationwide Marketing automatically back up material including e-mail.” This response is sufficient, including the admission that nothing was affirmatively done that was not automatically programmed, including the admission that no specific individual was charged with preservation.

The Discovery Master also recommends that the Court preclude Natimark, for the duration of this litigation (in any motion, or at any hearing, including trial), from producing documents or offering testimony in support of a claim that it actively preserved documents or charged any individual with document preservation.

Plaintiffs served their “First Requests for Production to Leon Saja” on December 30, 2014. In response to the Discovery Master's directive, Saja supplemented his responses on January 30, 2017. Plaintiffs' complain that Saja failed to produce documents in response to Plaintiff's First Requests for Production No. 1 and 2. The Discovery Master agrees in part and disagrees in part. Saja should be compelled to supplement his production as follows:

Plaintiffs' Request for Production No. 1 requests all prior sworn statements, testimony, or deposition transcripts of Saja. Saja's supplemental response failed to include a copy of the deposition transcript involving a matter with Experian, alleging that it is subject to a protective order. Because the transcript may be relevant to the Plaintiffs' claims, and otherwise may be used by Plaintiffs for impeachment, Saja is required to produce it.

The protective order entered in another matter does not provide a legitimate basis for the transcript to be withheld here, but Saja may redact the transcript prior to production to remove only personal or sensitive information, for example, the contact information and social security numbers of individuals. Saja should be compelled to produce the deposition transcript within ten days of the Court's order.

Plaintiffs' Request for Production No. 2 requests documents related to all claims or litigation involving Saja. Saja was ordered to produce documents related to prior litigation if it involved claims of an FCRA violation. (Dkt. 39, Discovery Master's Recommendation, as adopted by Dkt. 50.) Saja's supplemental response advised that he has not been involved in any prior litigation involving an FCRA violation. Accordingly, there are no additional documents to be produced in response.

Plaintiffs served their “First Requests for Production to Nationwide Marketing Services, Inc.” on Natimark on December 30, 2014. In compliance with the Discovery Master's directive, Natimark supplemented its response on January 30, 2017. Plaintiffs complain that Natimark has failed to produce documents in response to Plaintiffs' First Requests for Production No. 3, 4, 6, 7, 8, 9, 10, 11, 19, 20, 21, 22, 23, 27-32, 42, and 45.[5] The Discovery Master agrees in part and disagrees in part. Natimark should be compelled to provide supplemental answers, and Rule 37sanctions should be applied as follows:

*8 Plaintiffs' Request for Production No. 3 requests communications between Natimark and “Radner Law Group, PLLC, (“Radner” 800 Zero Debt, LLC (“ZeroDebt”) or LaserCom, LLC.” Plaintiffs' Request for Production No. 4 similarly requests communications with “Radner, Zero Debt of LaserCom.” Natimark's supplemental responses included production of 492 pages of electronic communications, but further advised that “Defendant continues to make diligent search of records and will supplement this response as additional responsive materials are located.”

Natimark's response, that it continues to search for documents that have been requested since December 30, 2014, is not sufficient. Because Natimark has had sufficient time to search for and to produce documents on its own, but has continually failed to do so in violation of the Court's orders, the Discovery Master recommends to the Court that the same third-party vendor collect and search the data, pursuant to the instructions in Section V(B)(2) above, for e-mail or documents with the additional search terms of “Radner Law Group, PLLC, (“Radner”) 800 Zero Debt, LLC (“ZeroDebt”) or LaserCom, LLC”, for documents responsive to Requests Nos. 3 and 4. Again, the costs for this search will be borne by Defendants as a Rule 37sanction.

Plaintiffs' Request for Production No. 6 requests all communications between Natimark and Radner, Zero Debt, or Lasercom that includes consumer lists. The Court previously adopted the Discovery Master's Recommendations compelling production of these documents, which limited the production to “[a]ll documents which reference, refer to, or are in any way related to the Plaintiffs or the alleged consumer lists which contained Plaintiffs' names.” (Dkt. 39.) Natimark's response states that “despite a diligent search, Defendant had not located a list containing the names of Plaintiffs' prior to January 11, 2012.”

Plaintiffs complain that Natimark has not produced any unredacted consumer lists, but Natimark should not be further compelled to search for and produce something that it has conducted a diligent search for and was unable to locate. A party cannot be compelled to produce something it does not possess.[6]

Plaintiffs' Request for Production No. 7 requests Natimark to produce documents and communications that contain any of the 21 search terms listed. Natimark's Supplemental Response provides objections, stating that the request is overbroad and not reasonably calculated to lead to the discovery of admissible evidence. But Natimark had previously been ordered to respond to this request “without objection,” as its objections were waived due to its failure to timely respond. (Dkt. 39, Dkt. 50, and Dkt 56.)

Because Natimark refuses to search for and to produce its documents, in continued violation of the Court's orders, the Discovery Master recommends that the same third-party vendor collect and search the harvested data, pursuant to the instructions in Section V(B)(2) above, for the 21 search terms identified in Request No. 7. Again, the costs for this search will be borne by Defendants as a Rule 37 sanction.

*9 Plaintiffs' Requests for Production Nos. 8, 9, and 10 request “consumer lists” provided by Natimark to others (Nos. 8 and 10) and those that were provided to Radner, ZeroDebt, or LaserCom (No. 9.) The requests ask for the lists to be provided in native excel format. Plaintiffs complain that Natimark improperly redacted the consumer lists and failed to produce them in native format. The Discovery Master agrees. Natimark should be compelled to supplement its production within ten days by providing unredacted native excel files of each consumer list.

In each of Natimark's responses to Requests for Production No. 11, 19-23, 27, and 29-32, it states that it made a diligent search and was not able to locate responsive documents in its custody or control. Natimark's responses are signed by counsel, properly attesting to the validity of the assertion that a diligent search was conducted and there are no responsive documents. Plaintiffs complain that the response does not provide the details of Natimark's diligent search. Because the attestation of counsel is to be relied on, there is no reasonable basis to compel production of any documents in response to Requests No. 11, 19-23, 27, or 29-32.

But, as numerous courts in this district have allowed, it's appropriate for a court to require a party to state what was done to ensure that a diligent search for responsive documents was performed. See e.g. Weber Mfg. Techs., Inc. v. Plasan Carbon Composites, Inc., No. 14-12488, 2016 WL 8114507, at *6 (E.D. Mich. July 26, 2016). Therefore, Natimark should be ordered, within ten days, to provide a declaration of a corporate representative detailing its attempts to search for responsive documents, indicating whether it believes that a sufficiently diligent search was made based on the tools and resources available, and whether its document productions have been made to the best of its ability. If, based on the declaration, it turns out that additional documents should have searched for or produced, the Discovery Master may revisit the request for additional Rule 37 sanctions.

Plaintiffs' Request for Production No. 42 requests documents related to investigations or prior actions against Natimark involving “consumer reports and/or consumer credit information at any time.” Natimark was ordered to produce its documents related to prior investigations and litigation if they involved claims of an FCRA violation. (Dkt. 50, adopting Dkt. 39.) Natimark's supplemental response states it has not been involved in any claims related to an FCRA violation other than the one in Florida, which it has produced. It does not appear that there are any additional documents to be produced. Accordingly, Natimark's response is deemed sufficient.

Plaintiffs' Request for Production No. 45 requests Natimark to produce transcripts of depositions or sworn statements from all witnesses identified in its Rule 26 disclosures. Natimark's supplemental responses state that the only responsive document is the deposition of Saja in another matter. But Natimark refuses to produce Saja's deposition transcript, alleging it is subject to a protective order.

As stated above regarding Plaintiffs' Request for Production No. 1 to Saja, Saja should be compelled to produce the deposition transcript. Although likely duplicative, Natimark should also be compelled to produce the deposition transcript if it is in its possession, within ten days.

*10 If the Court adopts the recommendations above, that Defendants be compelled to supplement discovery and that additional electronic discovery be conducted by a third-party vendor, the parties will require additional time to complete discovery. Accordingly, the Discovery Master would then recommend that the following discovery and briefing schedule be entered:

As to Class Claims:

For the reasons stated, the Discovery Master recommends that the Court enter an order providing the following relief:

IT IS ORDERED that Plaintiffs' Renewed Motion to Compel Discovery (Dkt. 63) be FURTHER GRANTED IN PART AND DENIED IN PART as to Saja as follows:

IT IS FURTHER ORDERED that Plaintiffs' Renewed Motion to Compel Discovery (Dkt. 63) be FURTHER GRANTED IN PART AND DENIED IN PART as to Defendant Natimark as follows:

*11 Per Fed. R. Civ. P. 53(f)(2), the parties may object and seek review of this Recommendation within 21 days of service.

Respectfully submitted,

By:

Brooks Wilkins Sharkey & Turco PLLC

401 S. Old Woodward Ave., Suite 400

Birmingham, Michigan 48009

248-971-1712; sharkey@bwst-law.com

Discovery Master