FINDINGS OF FACT

This suit arises from a business dispute and alleged violations of a non-disclosure and non-competition agreement. On March 5, 2018, Plaintiff filed a Second Amended Complaint containing twenty one counts against ten defendants. Attorney Eric Freeland represents Defendants CREMServices, LLC, Robert Corcoran, Brenda Corcoran, Real Estate Learning Institute, Inc., Ronald Gerber and Sherry Helgoe (collectively “Defendants”).

On April 13, 2018, Plaintiffs filed a Motion to Compel (Doc. 118) the above Defendants to respond to certain discovery requests. The Court held a Discovery Dispute Conference on May 4, 2018, and issued an Order granting the motion (Doc. 141) on May 7, 2018. Specifically, this Court ordered Defendants CREMServices, LLC, Robert Corcoran, Brenda Corcoran, Real Estate Learning Institute, Inc., Ronald Garber and Sherry Helgoe to file responses to Plaintiff’s discovery by May 11, 2018. The Court directed counsel for Defendants to prioritize the production of the financial documents since Plaintiffs' counsel needed those to meet the expert disclosure deadline. The Court further ordered Defendant Robert Corcoran to surrender possession of the laptop computer purchased for him by Plaintiffs and to provide Plaintiff’s counsel with a copy of the backed up files that he deleted in July 2017 by May 11, 2018. Plaintiff’s counsel was then directed to identify by May 24, 2018, a neutral expert to perform a forensic analysis of the laptop hard drive. Counsel was warned the scheduled trial date was firm and that strict compliance with discovery deadlines was necessary.

On May 16, 2018, Plaintiffs filed the Motion for Sanctions (Doc. 143) alleging that counsel for Defendants had not only failed to produce the requested discovery by May 11, 2018, but he had also failed to surrender the laptop, and had in fact, further tampered with the laptop by sending it to a vendor of his own choosing without permission from the Court. On May 18, 2018, Plaintiffs filed a Supplemental Motion for Sanctions (Doc. 145) alleging further delays in production.

Plaintiffs served interrogatories and requests for production of documents on Defendants on October 27, 2017. The parties, by agreement, extended the time to respond to initial discovery requests to December 29, 2017. On January 3, 2018 this Court granted Defendants until January 8, 2018 to respond to discovery. On or about January 8, 2018, Defendants responded to Plaintiffs' interrogatories and requests for production. Defendants produced 63 pages of material and raised objections to other requests based on confidentiality. On February 14, 2018, this Court entered an order granting Plaintiffs' motion for Confidentiality Agreement/Protective Order. Defendants did not supplement their initial responses to Plaintiff’s initial discovery requests following the entry of the Protective Order. On or about February 20, 2018, and February 23, 2018, Plaintiffs served Supplemental Interrogatories and Supplemental Requests for Production with responsive dates of March 4, and March 26, 2018, respectively. Defendants failed to timely file responses. Following an unsuccessful “meet and confer” between the parties, Plaintiffs then filed the motion to compel which was granted by the Court on May 7, 2018.

*2 The Court held a hearing on the Motion for Sanctions and Supplemental Motion for Sanctions on May 30, 2018. Counsel for Plaintiffs set forth a timeline of events following the May 7, 2018 Order compelling discovery responses.

Eric Freeland, counsel for Defendants, represented that the failure to comply with the May 7, 2018 Court Order was not intentional, rather it was a result of the voluminous discovery in this case. Mr. Freeland hired an electronic discovery firm to assist with the matter, but this was the first case in which he has used such software and he has had difficulty properly uploading and making documents available to counsel for Plaintiffs. With regard to the financial documents, Mr. Freeland admitted he had those in his possession on May 4, 2018, but he wanted to provide them to Plaintiffs' counsel as Bates-stamped documents along with all of the other documents. Mr. Freeland thought he had provided the financial documents on May 11, 2018, but subsequently learned that he had erred when uploading the documents and they were not produced to Plaintiff’s counsel until May 18, 2018. Mr. Freeland further explained that he could not list the Bates numbers for responsive documents until he received a thumb drive containing the Bates-stamped documents from his e-discovery firm on May 21, 2018.

*3 On June 5, 2018, Defendant Laura Kombrink filed an Affidavit with the Court stating that she was initially represented by Eric Freeland. She has subsequently hired new counsel. At the time she was represented by Mr. Freeland, they discussed producing documents regarding her finances, as they had been requested by the Plaintiffs. Ms. Kombrink states and affirms that as recently as March 2018, Mr. Freeland told her that Co-defendant Robert Corcoran did not intend to turn over any documents regarding his finances. Mr. Freeland had previously explained that, instead of simply turning the documents over, Robert Corcoran’s plan was to force the Plaintiffs to seek court intervention. This was part of an overarching strategy of forcing the Plaintiffs to spend as much money as possible, in the interest of forcing them to settle or drop the case due to an inability to pay their attorneys.

On June 8, 2018, Attorney Eric Freeland filed an Affidavit with the Court stating that at no time did he tell Laura Kombrink that Robert Corcoran’s plan was to force Plaintiff to spend money by having the Court compel production of financial documents. Mr. Freeland states and affirms the Defendants' delay in providing Plaintiffs with the documents was due to the massive volume of data/documents collected and the time required to review and process those documents. He further affirmed that it is not now, nor has it ever been, a strategy on the part of Defendants to force Plaintiffs to spend as much money as possible in the interest of forcing them to settle or drop the case due to an inability to pay their attorneys.

Plaintiffs' counsel had requested that Defendant Robert Corcoran return the laptop that was purchased for him by Plaintiffs at the beginning of the litigation around July, 2017. Defendant Robert Corcoran refused at the time. During the hearing on the Motion to Compel, Mr. Freeland informed the Court that Defendant Robert Corcoran had “wiped” the contents of the laptop in July 2017 in anticipation of having to return it. Mr. Freeland represented to the Court that Mr. Corcoran had made a backup copy of the laptop prior to deleting its contents. The Court subsequently ordered that both the laptop and a copy of the backup be turned over to Plaintiffs. Plaintiffs were ordered to provide the Court with the name of a neutral third-party to conduct a forensic analysis on the laptop.

On May 4, 2018, following the hearing, Mr. Freeland spoke to Robert Corcoran and learned from his client that he did not in fact backup the entire contents of the laptop. Rather, Robert Corcoran had made copies of the corporate documents, as well as personal photos and documents, and transferred them to a new laptop. When Mr. Freeland received the May 7, 2018 Order directing the production of the backup, he made the decision to send the laptop to a vendor to see what could be retrieved in order to “save face” with the Court as he had represented that a backup existed. Mr. Freeland contacted his e-discovery firm and was told they could make an effort to recover the deleted data without any further loss of data from the hard drive. Mr. Freeland sent the laptop to D4 to attempt to recover deleted data/information. Following the analysis by D4, they then shipped the laptop to Plaintiffs' counsel on May 11, 2018. Plaintiffs' counsel received the laptop on May 15, 2018.

Plaintiffs argue Defendants and Defendants' counsel intentionally flouted the Court’s May 11, 2018 discovery order. Plaintiffs ask the Court to impose sanctions, including prohibiting Defendants from opposing Plaintiffs' claims as set forth in the Second Amended Complaint; striking Defendants' pleadings; dismissing Defendants, Robert Corcoran and Ronald Garber’s counter-claims/third party claims with prejudice; ordering Defendants to pay all expenses, as incurred and invoiced, of Deloitte’s forensic analysis of the laptop hard drive; and ordering Defendants and/or Defendants' counsel to pay reasonable expenses, including attorney’s fees, for the bringing of the motion for sanctions, Plaintiffs' motion for protective order, and Plaintiffs' motion to compel caused by Defendants' contempt.

CONCLUSIONS OF LAW

*4 Rule 37(b)(2)(A) of the Federal Rules of Civil Procedure provides that dismissal of an action may be an appropriate sanction if a party “fails to obey an order to provide or permit discovery.” A court may dismiss a case as a sanction for discovery abuse if it finds that the party’s actions displayed willfulness, bad faith, or fault, and if dismissal would be a proportionate response to the circumstances. Collins v. Illinois, 554 F.3d 693, 696 (7th Cir. 2009) (citations omitted). Rule 37(b)(2)(C) provides that in addition to dismissal, “the court must order the disobedient party, the attorney advising that party, or both to pay the reasonable expenses, including attorney’s fees, caused by the failure, unless the failure was substantially justified or other circumstances make an award of expenses unjust.”

The Court finds the conduct of Defendants' counsel with regard to discovery in this case inexcusable. While Mr. Freeland explained to the Court how diligently he had been working on this case in the last four weeks, there is no excuse for his delay in responding to discovery requests for the previous five months. Further, Mr. Freeland’s decision to interfere with the laptop was a willful defiance of the Court Order. Mr. Freeland’s assertion that he sent the computer to someone else in contravention of the Court Order to “save face” with the Court is beyond comprehension. Moreover, while Mr. Freeland denies the strategy to which Ms. Kombrink attests, his actions are entirely consistent with such a plan. The question becomes what sanctions would be a proportional response to the dilatory conduct. The Court finds that striking Defendants' pleadings is not a proportionate response at this time.[1] However, ordering Defendants' counsel to pay Plaintiff’s expenses incurred due to his persistent delays in responding to discovery is a proportionate response. Further, ordering Defendant Robert Corcoran to pay the expenses incurred for forensic analysis of the laptop is, at a minimum, an appropriate response to his deleting the contents of the computer after the lawsuit was filed.

Plaintiff’s counsel submitted an Affidavit (Doc. 153) as well as contemporaneous accounting records of costs incurred pursuing Defendants' compliance with discovery requests.

Counsel also submitted the retention fee to conduct the forensic analysis (Doc. 153).

In Hensley v. Eckerhart, the United States Supreme Court set forth the standard for courts to employ when reviewing fee petitions. 461 U.S. 424, 433–35, 103 S.Ct. 1933, 76 L.Ed.2d 40 (1983). The Court explained that the “most useful starting point for determining the amount of a reasonable fee is the number of hours reasonably expended on the litigation multiplied by a reasonable hourly wage.” Id. at 433. Plaintiffs' counsel has properly documented with contemporaneous accounting records reasonable time and costs expended; therefore, the Court will award the amount of fees requested for pursuing compliance with discovery requests as well as the retention fee for forensic analysis of the computer.

RECOMMENDATIONS

*5 Based on the foregoing, it is RECOMMENDED that the Motion for Sanctions and Supplemental Motion for Sanctions (Docs. 143 and 149) be GRANTED IN PART; Defendants' counsel Eric Freeland be ordered to pay $38,750.57 to Plaintiffs for attorneys' fees and costs incurred as a result of his conduct; Defendant Robert Corcoran be ordered to pay $5,000.00 to Plaintiffs for costs incurred as a result of his conduct; and that the Court adopt the foregoing findings of fact and conclusions of law.

It has yet to be determined whether the information on the laptop computer can be recovered. Plaintiff’s case against these Defendants may have been irreversibly damaged by the destruction of evidence. Upon completion of the forensic analysis of the laptop computer, the Court will consider any motion regarding the spoliation of evidence.