SOC-SMG, Inc. v. Christian & Timbers, LLC
SOC-SMG, Inc. v. Christian & Timbers, LLC
2009 WL 10696664 (D. Nev. 2009)
November 23, 2009
Cooke, Valerie P., United States Magistrate Judge
Summary
The court found that CT had failed to comply with its discovery obligations and had not offered substantial justification for why documents were not disclosed within the time limits of the court's October 2008 scheduling order. The court imposed monetary sanctions in the form of reasonable attorneys' fees and costs to deter future conduct toward court discovery processes, and noted that CT's concealment of the documents may have resulted in a much harsher sanction.
SOC-SMG, Inc., Plaintiff,
v.
CHRISTIAN & TIMBERS, LLC, Defendant
v.
CHRISTIAN & TIMBERS, LLC, Defendant
3:08-CV-00392-ECR-VPC
United States District Court, D. Nevada
Signed
November 20, 2009
Filed November 23, 2009
Counsel
Steven Wayne Bonilla, San Quentin, CA, pro se.Cooke, Valerie P., United States Magistrate Judge
ORDER
*1 Before the court is defendant Christian & Timbers's (“CT”) motion to strike and/or in limine regarding portions of the July 30, 2009, deposition of John Poncy (#40), and plaintiff SOC-SMG's (“SMG”) motion for terminating sanctions against CT (#44). The parties have filed the following papers in regard to these motions: docket #s 40, 44-56.
I. FINDINGS OF FACT
1. SMG is a private Nevada corporation that specializes in security management. It offers security services, training, and recruitment in foreign countries.
2. CT is a limited liability company specializing in executive search recruitment and placement.
3. In March 2005, SMG retained CT to conduct an executive search and provide SMG with a chief executive officer (“CEO”). Paul Groce (“Mr. Groce”), a CT partner, participated in the process of searching for and placing a candidate at SMG. Mr. Groce presented Mr. John Poncy (“Mr. Poncy”) to SMG. In August 2005, SMG hired Mr. Poncy as CEO.
4. Mr. Poncy remained CEO of SMG until his termination in June 2006.
A. Pleadings
5. On July 17, 2006, SMG filed its original complaint, alleging five counts against defendant, including breach of contract, negligence, breach of fiduciary duty, intentional misrepresentation and concealment, and negligent misrepresentation (#1).
6. SMG alleged that CT was aware that Mr. Poncy had been fired from previous jobs and had omitted these employers from his resume (#1, p. 4).
7. CT answered the complaint on August 20, 2008 (#7).
B. Discovery
8. On October 6, 2008, the court issued its scheduling order, which noted that discovery would be completed no later than May 29, 2009 and that dispositive motions would be filed no later than June 29, 2009 (#11).
9. On October 28, 2008, CT made initial disclosures pursuant to Fed. R. Civ. P. 26(a) to SMG (#45, p. 3; #50-2, p.3).
10. CT's initial disclosures included the following documents with respect to Mr. Poncy: (1) a “Confidential Candidate Report” regarding his employment history, and (2) a “Confidential Reference Report” regarding his references.
11. On January 21, 2009, SMG made its first request for production (#45, p. 3; #50-2, p. 5). SMG's requests included but were not limited to the following:
a) documents relating to Mr. Poncy;
b) documents relating to the the recruiting of Mr. Poncy;
c) documents relating to Mr. Poncy's placement at SMG and/or Mr. Poncy's employment history;
d) any communications relating to Mr. Poncy;
e) any communications between Mr. Groce and Mr. Poncy; and
f) any communications between CT and SMG (#45, Ex. 1).
13. On March 3, 2009, CT also responded to SMG interrogatories, noting that “Poncy was a potential candidate based on a resume he had submitted to SMG prior to the time Paul Groce ever worked at CT.” CT reserved the right to supplement the response (#45, Ex. 2).
*2 14. On March 20, 2009, SMG made its second requests for production (#45, p. 4; #50-2, p. 7).
15. On March 23, 2009, counsel for SMG and CT met and conferred regarding outstanding discovery requests. CT counsel agreed “to contact [CT] to determine whether it [had] any notes, e-mails, drafts of final documents, or other preliminary materials that did not make it into CT's document production to SMG” (#45, Ex. 3). CT counsel also agreed “to inquire of CT whether it [knew] of the existence of any documents that [were] responsive to SMG's inspection demands but which cannot be produced because the responsive documents are no longer in the possession, custody, or control of SMG (e.g. such responsive documents have been lost or destroyed” (#45, Ex. 3; # 50-2, p. 7).
16. On April 3, 2009, CT supplemented its disclosures to SMG with 165 pages of documents, forty-five pages of which concerned Mr. Poncy (#45, p. 5; #50, p. 9).
17. On April 7, 2009, SMG deposed Mr. Groce in New York City. Mr. Groce produced 304 pages of documents.
18. SMG counsel had the following exchange with Mr. Groce:
[SMG Counsel]: At this point with the documents here from Mr. Garin [CT counsel] and the documents that as far as you know have been produced in this case, have you produced all the documents related to your communications with Mr. Poncy?
Groce: Right now our intent is to provide you every single document that we have, and that is to include every E-mail that I retained, everything that is potentially related to the case. So the answer – specifically the answer is yes, and the answer specific to Poncy, that information was provided many, many weeks back.” (#45, Ex. 5)
19. Mr. Groce also noted:
Information is retained digitally. Our company policy is to retain key documents which would be copies of the offer letter, copies of the reference report, a candidate CV, the resume and some verification of the education check, which we do have a box in our system that allows us to put in that information. That is part of our standard search closeout process, and that information is retained. Id.
20. On April 8, 2009, SMG deposed Mr. David Nocifora (“Nocifora”), a CT partner, in Cleveland, Ohio. Mr. Nocifora produced thirty-two pages of documents (#45, p. 6; #50-2, p. 11).
21. On April 15, 2009, CT produced supplemental disclosures. CT provided internet hyperlinks to SMG for document retrieval because CT claimed that the documents were too “voluminous” to email.
22. On April 21, 2009, CT responded to SMG's second request for production (#45, p. 7; #50-2, p. 12).
23. On May 21, 2009, SMG continued its deposition of Mr. Groce.
24. On May 22, 2009, SMG wrote a letter reminding CT of its discovery obligations concerning responsive documents. In that letter, SMG reminded CT of its previous meet and confer efforts and requested documents responsive to SMG's inspection demands (#45, Ex. 9).
C. Close of Discovery
25. On May 29, 2009, fact discovery closed pursuant to the court's scheduling order (#11).
26. On the same day, SMG sent a letter to CT specifically requesting “imaged versions of prior candidate submitted resumes” (#45, Ex. 10).
*3 27. On the same day, CT also filed a motion to compel the deposition testimony of John Poncy (#25). SMG opposed (#26), but the court subsequently granted the order (#37).
D. Post-Discovery Events
28. On June 8, 2009, CT sent a letter and documents to SMG. Those documents included a resume of Mr. Poncy (“June 8 resume”) (#45, Ex. 11).
29. CT counsel, Joseph P. Garin (“Mr. Garin”), offered additional opportunities to depose Messrs. Groce and Nocifora. CT also noted that it would allow SMG's liability expert to augment his report in light of the newly produced documents (#50, Ex. D).
30. SMG's trial counsel was out of the country on June 8, 2009, and did not respond to this request.
31. On June 17, 2009, SMG requested a declaration concerning the June 8 production of the Poncy resume (#45, p. ; #50-2, p. 19). On June 19, 2009, CT advised SMG that Mr. Nocifora would likely prepare a declaration (#45, p. ; #50-2, p. 19).
32. On June 29, 2009, CT filed a motion for summary judgment (#30).
33. On June 30, 2009, SMG counsel requested CT counsel to withdraw its motion for summary judgment in light of discovery issues (#45, p. ; #50-2, p. 20).
34. On July 2, 2009, Mr. Garin sent a letter to SMG and declined to withdraw the motion for summary judgment. Enclosed with that letter, CT produced (1) email communications between Mr. Poncy and Mr. Groce, and (2) a second version of a Poncy resume (“July 2 resume”).
35. Mr. Garin noted that “CT's information department located a back up tape that included the attached documents” (#50, Ex. E).
36. CT counsel Mr. Garin added:
[W]ith this enclosure, the resumes of Mr. Jennings and Mr. Poncy, and all of the documents previously produced, I believe this constitutes the entire universe of C&T's documents related (directly or indirectly) to this case... If you want to examine Mr. Groce or Mr. Nocifora on an information department representative limited to the topic of these documents only, we should discuss arrangements” (#50-7, Ex. E).
37. On July 2, 2009, SMG filed an ex parte motion seeking to deny or continue CT's motion for summary judgment due to outstanding discovery issues (#31).
38. On July 6, 2009, the court held a hearing and stayed SMG's opposition to CT's motion for summary judgment. The court also granted CT's motion to compel the deposition testimony of Mr. Poncy (#25).
39. On July 13, 2009, Mr. Nocifora provided a declaration indicating that he had “conducted a reasonably diligent search” of CT records. He provided 215 pages of documents to SMG (“July 13 documents”). The documents included a third and fourth version of Poncy resumes (“July 13 resumes”) (#45-4, Exs. 18, 19); and two versions of a Poncy “Confidential Candidate Report” (#45-4, Ex. 20).
E. July 16, 2009, Court Order
40. On July 16, 2009, the court signed the parties' stipulation for the completion of fact discovery.
41. The court order provided that CT would provide Messrs. Groce, Nocifora, and the CT information technology employee/agent who located CT records produced to SMG after the close of fact discovery. In general, these persons were to testify concerning the following topics:
a) the creation, maintenance, production and/or communications regarding any document produced by CT after the close of fact discovery...
*4 b) CT's maintenance of its files related to SMG since the filing date of this civil action (July 17, 2008);
c) CT's efforts to search its records for documents in response to SMG's discovery and/or F.R.C.P Rule 26 obligations.
42. The court also ordered the completion of the deposition of Mr. Poncy.
F. July 20, 2009 Depositions of Messrs. Groce, Nocifora, and CT's IT Employee
43. On July 20, 2009, CT produced Mr. Groce in New York City for deposition pursuant to the July 16 court order.
44. Mr. Groce testified that the July 13 documents were in existence and could have been produced on or about April 7, 2009 (#45, Ex. 21).
45. On July 20, 2009, SMG deposed Mr. Nocifora and an information technology employee, Mr. William M. Weinrauch, in Cleveland, Ohio (#45, Ex. 22).
46. Mr. Nocifora's testimony reflected that he could not explain why the documents were not produced earlier. Id.
47. Mr. Weinrauch testified that an exhaustive search, using all available technology, would likely have taken a period of several weeks (#45, Ex. 23).
G. Deposition of Mr. Poncy
48. Three days prior to Mr. Poncy's deposition, on July 27, 2009, SMG counsel, Thomas E. Alborg (“Mr. Alborg”), received a package at his law office from an anonymous sender. Mr. Alborg opened the package, saw that it contained emails, but did not review the contents of the package in its entirety until he traveled to the July 30 deposition of Mr. Poncy in Miami, Florida (#47, p. 2).
49. On July 30, 2009, the parties resumed the deposition of Mr. Poncy in Miami, Florida.
50. Mr. Alborg presented the contents of the package to Mr. Poncy who confirmed that the emails were likely obtained from the email server of his present employer, Venali Inc.
51. CT counsel objected to the introduction of the contents of the package and noted that Mr. Poncy may wish to retain counsel.
52. Mr. Alborg consulted with Venali Inc.'s counsel and returned certain portions of the package to Venali Inc. (#47, p. 2).
53. Mr. Alborg retained other portions that he claims are relevant to the instant litigation as well as portions of emails which impeach the credibility of Mr. Poncy. Id.
54. Mr. Alborg has submitted all documents received from the anonymous sender under seal. Id.
II. LEGAL DISCUSSION
A. Discussion
1. Fed. R. Civ. P. 37
Federal Rule Civil Procedure 37(c) governs failures to disclose or to supplement an earlier response. It provides:
If a party fails to provide information or identify a witness as required by Rule 26(a) or (e), the party is not allowed to use that information or witness to supply evidence on a motion, at a hearing, or at a trial, unless the failure was substantially justified or is harmless. In addition to or instead of this sanction, the court, on motion and after giving an opportunity to be heard: (A) may order payment of the reasonable expenses, including attorney's fees, caused by the failure....
Fed. R. Civ.P. 37(c)(1).
Federal Rule of Civil Procedure 37(b)(2) governs failures to comply with discovery orders and provides:
If a party or a party's officer, director, or managing agent – or a witness designated under Rule 30(b)(6) or 31 (a)(4) – fails to obey an order to provide or permit discovery, includes an order under Rules 26(f), 35, or 37(a), the court where the action is pending may issue further just orders.
*5 Fed. R. Civ. P. 37(b)(2).
The court has broad discretion to impose any listed sanction or any other sanction it deems appropriate. Yeti by Molly, Ltd. v. Deckers Outdoor Corp., 259 F.3d 1101, 1105-06 (9thCir. 2001) (noting that imposition of particular sanctions under Rule 37 “gives teeth” to disclosure requirements of Rule 26); Ins. Corp. of Ireland, Ltd. v. Compagnie des Bauxites de Guinee, 456 U.S. 694 (1982) (deeming facts as established); Navallier v. Sletten, 262 F.3d 923, 947-48 (9th Cir. 2001), cert. denied, 536 U.S. 941 (2002); Hoffman v. Construction Protective Serv, Inc., 541 F.3d 1175, 1179 (9th Cir. 2008) (prohibiting evidence); United States v. Sumitomo Marine & Fire Ins. Co., Ltd., 617 F.2d 1365, 1369 (9th Cir. 1980) (striking pleadings); G-K Properties v. Redevelopment Agency of the City of San Jose, 577 F.2d 645, 647 (9th Cir. 1978) (entering a dispositive ruling); Richmark Corp. v. Timber Falling Consultants, 959 F.2d 1468 (9th Cir. 1992) (treating the failure to obey its order as a contempt of the court).
The court is not limited to the sanctions listed in Rules 37(b)(2), and may make an order that it deems “just.” Valley Engineers, Inc. v. Electric Engineering Co., cert. denied, 526 U.S. 1064 (1999) (justice is the central factor in a sanctions order under Rule 37(b) ).
2. Local Rule
Local Rule (“LR”) IA 10-7(a) of the Local Rules of Practice for this court provides that an attorney admitted to practice before this court is subject to the standards of conduct prescribed by the Model Rules of Professional Conduct as adopted by the Nevada Supreme Court. LR IA 10-7 further states, “Any attorney who violates these standards may be disbarred, suspended from practice before this court for a definite time, reprimanded or subjected to such other discipline as the court deems proper. This subsection does not restrict the court's contempt power.”
3. Nevada Rules of Professional Conduct (“NRPC”)
a. NRPC 3.4(a)
Nevada Rules of Professional Conduct 3.4(a) reads: “A lawyer shall not unlawfully obstruct another party's access to evidence or unlawfully alter, destroy or conceal a document or other material having potential evidentiary value. A lawyer shall not counsel or assist another person to do such an act.”
b. NRPC 4.4(a)
Nevada Rules of Professional Conduct 4.4(a) reads: “In representing a client, a lawyer shall not use means that have no substantial purpose other than to embarrass, delay, or burden a third person, or use methods to obtaining evidence that violate the legal rights of such a person.”
III. SANCTIONS ANALYSIS
A. SMG Motion for Sanctions
SMG seeks sanctions against CT due to CT's perceived discovery abuses (#44). SMG maintains that CT should be sanctioned due to its late production of Poncy resumes and its failure to produce competent witnesses in violation of the July 16 court order. SMG seeks an order for the following: (1) granting terminating sanctions, or in the alternative, issue sanctions, (2) striking CT's pending motion for summary judgment; (3) permitting SMG's expert to serve an amended expert report based on documents and testimony produced after the close of discovery; and (4) awarding SMG fees and costs associated with the resolution of outstanding discovery issues.
*6 CT responds that the company is a “highly decentralized organization” without “a formalized document retention policy” and maintains that it made a good faith effort to comply with the appropriate rules of procedure and the requirements of the court order (#50, p. 5).[1]
1. CT's production of Poncy resumes after the close of discovery
Evasion of pretrial discovery is sanctionable conduct. See Wanderer v. Johnston, 910 F.2d 652, 655 (9th Cir. 1990). SMG submits to the court its requests for production, which sought documents related to the recruitment and hiring of Mr. Poncy as CEO for SMG. Specifically, SMG requested any documents and communications that CT had concerning Mr. Poncy's employment history. A Poncy resume, or any communication concerning a Poncy resume, would clearly fall within the ambit of that request. In the period of discovery designated by the court's scheduling order, CT did not produce one version of a Poncy resume. In the month following the close of discovery, CT produced four versions of Poncy resumes, two “Confidential Candidate Reports,” and numerous other documents. Although CT may not have a “document retention policy,” Mr. Groce noted in his April 2009 deposition that CT retained documents digitally (#45, Ex. 21). Unless CT can offer a substantial justification for the delay, the court concludes that CT did not act reasonably in its search of its files.
Under Rule 37(c)(1), the burden of proving that a delay in disclosing documents was substantially justified or harmless rests with the party making the late disclosure. Yeti by Molly, 259 F.3d at 1106. The court finds that CT has not met this burden. CT has not adequately explained the origins of the June 8 resume. CT has explained that the July 2 resume came from a “backup” tape. As for the third and fourth resumes, CT explains that the documents came from a search of CT's recruiting software. Even when deposed to explain the reasons for the late production of the documents, Mr. Nocifora could not explain why they were not produced earlier (#45, Ex. 22). In addition, Mr. Groce testified that the documents were in existence and thus capable of production as early as April 7, 2009 (#45, Ex. 21). Notwithstanding CT's objections in its original responses for production, the court finds that CT has not offered substantial justification for why these documents were not disclosed within the time limits of the court's October 2008 scheduling order. That a company is a “highly decentralized organization” may suffice for the production of an errantly filed document, but the production of hundreds of pages of documents after the close of discovery demonstrates CT's negligent behavior in failing to engage in timely inquiry. Although SMG argues vociferously that CT's production of documents is indicative of bad faith, this court does not reach that conclusion. CT's behavior is more aptly characterized as negligent.[2] The court acknowledges CT's efforts to offer proper curative measures; however, CT's failure at the outset to meet its discovery obligations has needlessly protracted this litigation.[3]
*7 The court is cognizant of the fact that retrieval of information from electronic sources usually incurs delays, but the court's scheduling order clearly set forth the date for the close of discovery. Documents unquestionably responsive to SMG's requests produced without substantial justification demonstrate CT's failure to comply with discovery obligations.
Therefore, the court reaches the threshold determination that CT's conduct is sanctionable.
2. Compliance with July 16, 2009, court order
The court issued its order on July 16, 2009, directing CT to provide competent witnesses to testify to these late produced documents. The order called upon Messrs. Groce and Nocifora to testify to the relevant topics by August 6, 2009. Messrs. Groce and Nocifora were produced to respond to that inquiry, and CT counsel also produced an information technology employee as well.
In light of all the evidence before it, the court finds that CT made a good faith effort to comply with the order. SMG argues that a competent witness has not been produced because no individual employee has yet been produced who can answer each and every question. However, Messrs. Groce and Nocifora were produced because they were mentioned in the court order. They are not only responsible for recovering the documents but the most knowledgeable of the case and the underlying facts of the litigation. Therefore, it makes sense that they would be the individuals to explain how and why the documents were produced.[4] CT also produced Mr. Weinrauch, an information technology employee in a good faith attempt to find a witness to explain the discovery of the July 2 resume and the corresponding email, which were recovered from a “backup” tape. It appears to the court that CT counsel made a good faith effort to bring forth witnesses who could adequately account for the documents produced after discovery.
Therefore, in regard CT's compliance with July 16 court order, the court finds that CT's conduct is not sanctionable.
B. CT's Motion to Strike
With respect to its motion to strike, CT argues that SMG's receipt and use of anonymously sent documents, without notification of CT, is an abuse of discovery process. CT essentially argues that Mr. Alborg was obligated to notify opposing counsel so as to take corrective measures. CT seeks (1) to strike the documents and any related testimony, (2) a protective order for Mr. Poncy and Venali, Inc., and (3) sanctions against SMG counsel. CT points to NRPC 3.4(a) and 4.4(a) in an attempt to demonstrate that Mr. Alborg has violated ethical rules.[5]
1. NRPC 3.4(a)
*8 NRPC 3.4(a) deals with an attorney's fairness to the opposing party and counsel. CT argues that Mr. Alborg's failure to notify CT and the deponent of the documents constitutes willful and intentional obstruction of evidence (#40). The court finds that Mr. Alborg's receipt of the documents days before the deposition, his brief review of them en route to the deposition, and his subsequent efforts to authenticate the documents at the deposition of Mr. Poncy do not constitute an “obstruction” to the documents. Therefore, Mr. Alborg did not violate Rule 3.4(a).
2. NRPC 4.4(a)
NRPC 4.4(a) deals with one party's inadvertent disclosure to an opposing party (e.g. the errant fax or mislabeled letter). The facts here did not deal with inadvertent disclosure from an opposing party. An anonymous source sent the package of documents directly to Mr. Alborg. Moreover, the documents did not come from an opposing party. The contents of the documents derive from Mr. Poncy's employment at Venali Inc. Neither Mr. Poncy nor Venali is a party in this litigation.
The American Bar Association Committee on Ethics and Professional Responsibility addressed a similar issue in its Formal Opinions. In Formal Opinion 94-382, the Committee considered “the ethical obligations of a lawyer under the Model Rules when the lawyer is offered or sent, by a person not authorized to offer them, materials of an adverse party that the lawyer knows to be, or that appear on their face to be, subject to the attorney-client privilege of an adverse party or otherwise confidential within the meaning of Model Rule 1.6.” Formal Opinion 06-440 noted, “[a] lawyer receiving materials under such circumstances is therefore not required to notify another party or that party's lawyer of receipt as a matter of compliance with the Model Rules.” Here, the documents are not from an adverse party, and they do not appear to be privileged or confidential within the meaning of NRPC 1.6. The opinion further notes, however, that a lawyer's obligation to disclose such matters is “a matter of law beyond the scope of Rule 4.4(b).” To that end, the court examines SMG's obligation to timely disclose documents under Fed. R. Civ. P. 26(e) below.
3. SMG's Obligations under Fed. R. Civ. P. 26(e)
CT argues that the documents and Mr. Poncy's accompanying testimony should not be admitted because the documents were produced after the close of discovery and not timely produced as a supplemental disclosure pursuant to Rule 26(e). On the other hand, SMG maintains that the documents were disclosed in an appropriate manner but also that the documents are appropriate for impeachment and thus do not necessarily need to be disclosed.
Rule 26(e) requires the supplemental disclosure of documents within the scope of Rule 26(a). Assuming the documents are relevant to SMG's claims, the court must determine whether they were disclosed in compliance with SMG's obligations under Fed. R. Civ. P. 26(a). The court finds that Mr. Alborg sought to authenticate the documents and then disclose them in a timely manner. Moreover, Rule 26(a) does not mandate the disclosure of documents that are used solely for impeachment. Therefore, the court will not strike the contents of the documents nor the accompanying testimony of Mr. Poncy because Mr. Alborg has offered sufficient justification for their late disclosure. Furthermore, should the documents be used only for impeachment, Mr. Alborg was not obligated to disclose the documents to counsel.[6]
*9 Therefore, the court finds that Mr. Alborg's conduct with respect to the receipt of the documents is not sanctionable.
IV. SANCTIONS
As noted above, the court reaches the threshold determination that CT's conduct relating to the production of documents after the close of discovery responsive to SMG's continuing requests for production constitutes sanctionable conduct. Therefore, the court must now decide what sanction is appropriate.
At the outset, the court notes that it need not hold an evidentiary hearing in every case to impose sanctions. “Rule 37(c)(1) permits a court to impose sanctions only ‘after affording an opportunity to be heard.’ However conforming to rule does not require an evidentiary hearing in every case.” Paladin Assoc., Inc. v. Mont. Power Co., 328 F.3d 1145, 1164 (9th Cir. 2003) (citing Mathews v. Eldridge, 424 U.S. 319, 334-35 (1976) ). In this case, the submission of briefs, responses and replies, as well as oral argument, have given the parties adequate opportunity to be heard. An evidentiary hearing would not have aided the decisionmaking process. See id.
The court concludes that the appropriate sanction is to charge CT with the reasonable attorney's fees and costs associated with the filing of the ex parte motion (#31),[7] the instant motion (#44), and the fees and costs incurred in the additional depositions of July 20, 2009. See Freeman v. San Diego Ass'n of Realtors, 322 F.3d 1133 (9th Cir. 2003).
SMG's request for terminating sanctions and issue and evidence preclusion and are not warranted here. A District Court has the discretion to impose the extreme sanction of dismissal if there has been “flagrant, bad faith disregard of discovery duties.” Wanderer v. Johnston, 910 F.2d 652, 655-56 (9th Cir. 1990) (citing National Hockey League v. Metro. Hockey Club, Inc., 427 U.S. 639 (1976) ). As noted above, the court finds that CT's conduct, although deficient, does not rise to the level of flagrant bad faith. The documents have been produced, and SMG will have the opportunity to respond to any dispositive motions and (as noted below) make necessary amendments to expert reports. The court here does not find that the alleged abuses of discovery merit sanctions which strike the pleadings or preclude issues or evidence at trial. Moreover, the court finds that CT can be deterred by this conduct with the imposition of monetary sanctions in the form of reasonable attorneys' fees and costs.
These sanctions will serve the purpose of deterring such future conduct toward court discovery processes. The court finds that the award the sanctions for reasonable attorneys' fees and costs associated with the late production of evidence demonstrates that counsel and their clients have a responsibility to engage in the process of discovery and produce documents that are relevant to an opposing party's requests within the time prescribed by the court's scheduling order.
V. CONCLUSION
The court has reviewed the papers filed and considered the facts and law before it. It is this court's sincere hope that those subject to the sanctions herein will renew their commitment to meet discovery obligations with the utmost diligence and timeliness.
*10 IT IS ORDERED that plaintiff SMG's motion for sanctions (#44) is GRANTED in part and DENIED in part as follows:
1. Mr. Garin and/or CT shall pay the plaintiff SMG's reasonable attorneys' fees for the filing of the instant motion for sanctions and accompanying affidavit (#s 44, 45), the July 2 ex parte motion and accompanying declaration (#s 31, 32), and the depositions of Messrs. Groce, Nocifora, and Weinrauch conducted on July 20, 2009.
2. Plaintiff SMG shall have until December 31, 2009, to amend its expert reports relating to those issues of outstanding discovery.
3. Plaintiff SMG shall have leave to file a response to CT's motion for summary judgment (#30) no later than January 13, 2010.
4. SMG shall file a memorandum of the reasonable attorney's fees and costs incurred in bringing the above mentioned motions no later than December 3, 2009, and shall provide an itemized statement of the legal services performed, by whom, the hourly rate of each attorney, and the attorney's fees attributable to each task, as well as the affidavit of counsel attesting to the accuracy of the memorandum. CT and counsel shall have leave to file a response to the statement of attorney's fees and costs no later than December 16, 2009. Should CT file a response, defendant has leave to file a reply no later than December 23, 2009.
IT IS ORDERED that defendant CT's motion to strike the deposition of John Poncy (#40) is DENIED.
IT IS SO ORDERED.
Footnotes
CT's response largely seeks to shift any blame to SMG in their failure to produce documents responsive to their requests. The court declines to entertain CT's requests because they are not properly before the court. Nevertheless, “a party is not excused from making its disclosures because it has not fully investigated the case or because it challenges the sufficiency of another party's disclosures or because another party has not made its disclosures.” Fed. R. Civ. P. 26(a)(1)(E).
For this reason, the court does not issue sanctions pursuant to local rule. Under local rules, sanctions cannot be imposed for mere negligence. In particular, attorneys fees payable to the opposing party are only valid when there is a showing of bad faith or willful disobedience of court orders or rules. Zambrano v. City of Tustin, 885 F.2d 1473, 1481 (9th Cir. 1989).
CT should note that its concealment of the documents may have resulted in a much harsher sanction.
The alleged failure to offer an explanation as to why the documents were not produced does not concern their capability as a 30(b)(6) witness, but rather their lack of substantial justification. Such a lack of substantial justification is more properly viewed as sanctionable conduct in that it failed to comply with discovery obligations, not failure to comply with a court order.
The court also notes that NRPC 8.4 prohibits an attorney from engaging in criminal conduct. NRPC 8.4(b), (c) reads: “It is professional misconduct for a lawyer to... (b) commit a criminal act that reflects adversely on the lawyer's honesty, trustworthiness or fitness as a lawyer in other respects; (c) engage in conduct involving dishonesty, fraud, deceit, or misrepresentation.” There is no evidence before the court that Mr. Alborg committed a criminal act in obtaining the emails. Mr. Alborg declares that he had no knowledge of the documents before they arrived in the mail from an anonymous source. Furthermore, he had no knowledge that the emails were the property of another until he had the opportunity to verify such facts with Mr. Poncy and with Venali counsel. Therefore, Mr. Alborg's behavior does not implicate Rule 8.4's prohibition on misconduct.
The court reminds the parties that its decision to allow the documents only relates in so much as to their production. The parties will be free to renew objections to the material in any in limine motions before the District Court should a trial date be set.