*1 Plaintiffs moved this court, pursuant to Rule 37(d)(1), to impose sanctions on Defendant for his failure to provide spreadsheets containing financial information that are responsive to one or more requests for production of documents. For the reasons set forth below, this motion is granted in part and denied in part.

I. Background

The relevant background can be found in this court's previous order regarding Plaintiffs' motion for sanctions. (Doc. 131). In December 2018, Defendant, then proceeding pro se, initially failed to produce spreadsheets containing lists of Toke Oil and Gas's expenditures for years 2008 through 2010. After obtaining counsel, Defendant was granted an extension to supplement his discovery responses. The deadline to comply with the extended scheduling order was May 15, 2019. Despite defense counsel's acknowledgment that they knew of the spreadsheets in April 2019, Defendant failed to produce the spreadsheets.

On August 2, 2019, Plaintiffs filed a motion to compel production of “Copies of all Toke Oil and Gas, S.A.'s financial, bookkeeping or transaction records from the date that you [Defendant] became involved with Toke Oil and Gas, S.A. to the present date.” (Doc. 104). On August 6, 2019, Defendant provided Plaintiffs with a spreadsheet listing funds received during 2008-2010 and three spreadsheets that purported to be expenses for Toke during the 2008-2010 period. Defendant was late, by about three months, in supplementing his discovery responses.[1]

In light of Defendant's initial failure to produce these spreadsheets, Plaintiffs ask this court to sanction Defendant by entering a default judgment against Defendant and striking Defendant's counterclaim. (Doc. 105 at 7). Alternatively, Plaintiffs seek reasonable costs and attorney's fees for bringing the motion to compel and for conducting the second deposition of Defendant. Defendant argues that Plaintiffs were not prejudiced by the late production of these documents and, therefore, are not entitled to sanctions. Because Plaintiffs failed to address the relevant standard for imposing sanctions—specifically the relevant standard for default judgment—pursuant to Rule 37, this court denied the motion without prejudice and ordered the parties to submit additional briefing on the issue of whether sanctions were appropriate in this case. Both parties have filed supplemental authority for their respective positions.

II. Discussion

A district court's broad power to control discovery “includes the ability to impose sanctions on uncooperative litigants.” Phipps v. Blakeney, 8 F.3d 788, 790 (11th Cir. 1993); Malautea v. Suzuki Motor Co., Ltd., 987 F.2d 1536, 1542 (11th Cir. 1993) (Rule 37 “gives district judges broad discretion to fashion appropriate sanctions for violation of discovery orders ....”). Rule 37 of the Federal Rules of Civil Procedure provides that a court may impose sanctions when a party “fails to obey an order to provide or permit discovery, including an order under Rule 26(f), 35 or 37(a)” or when “a party after being properly served with interrogatories under Rule 33 or a request for inspection under Rule 34, fails to serve its answers, objections, or written responses.” Fed. R. Civ. P. 37(b)(2), (d)(1). “A failure to disclose under Rule 37 encompasses both the destruction of evidence, or spoliation, and untimely production of documents and information required to be produced.” In re September 11th Liability Ins. Coverage Cases, 243 F.R.D. 114, 125 (S.D.N.Y. 2007).

*2 Rule 37(d)(3) authorizes courts to impose the following sanctions:

See Fed. R. Civ. P. 37(b)(2)(A), (d)(3). In addition, under Rule 37(d)(3), a “court must require the party failing to act, the attorney advising the party, or both to pay the reasonable expenses, including attorney fees, caused by the failure, unless the failure was substantially justified or other circumstances make an award of expenses unjust.” Fed. R. Civ. P. 37(d)(3) (emphasis added).

The party seeking sanctions under Rule 37 bears the burden of establishing that an opposing party failed to comply with Rule 26 or a discovery order. Silvagni v. Wal-Mart Stores, Inc., 320 F.R.D. 237, 241 (D. Nev. 2017); New World Sols., Inc. v. NameMedia, Inc., 150 F. Supp. 3d 287, 304 (S.D.N.Y. 2015); Lodge v. United Homes, LLC, 787 F. Supp. 2d 247, 258 (E.D.N.Y. 2011). If the party can establish that a discovery violation occurred, that party then has the burden of establishing the appropriateness of a requested sanction at least by a preponderance of the evidence. Ramirez v. T&H Lemont, Inc., 845 F.3d 772, 778 (7th Cir. 2016); see United States v. Regan, 232 U.S. 37, 49, 34 S. Ct. 213, 217 (1914) (noting that “the general rule applicable to civil suits” entails “proof by a reasonable preponderance of the evidence”).

In considering whether a sanction should be imposed—and what sanction should be imposed—courts should consider a variety of factors, including:

See Societe Internationale Pour Participations Industrielles et Commerciales, S.A. v. Rogers, 357 U.S. 197, 212, 78 S. Ct. 1087, 1096 (1958); ML Healthcare Servs., LLC v. Publix Super Markets, Inc., 881 F.3d 1293, 1309 (11th Cir. 2018); Tobinick v. Novella, 848 F.3d 935, 949 (11th Cir. 2017); AngioDynamics, Inc. v. Biolitec AG, 780 F.3d 429, 435 (1st Cir. 2015); Harriman v. Hancock Cty., 627 F.3d 22, 30 (1st Cir. 2010); OFS Fitel, LLC v. Epstein, Becker & Greene, P.C., 549 F.3d 1344, 1362-65 (11th Cir. 2008); United States v. Reyes, 307 F.3d 451, 457-58 (6th Cir. 2002); Webb v. District of Columbia, 146 F.3d 964, 971 (D.C. Cir. 1998); Malautea, 987 F.2d at 1542; Jones v. Thompson, 996 F.2d 261, 264 (10th Cir. 1993); Navarro v. Cohan, 856 F.2d 141, 142 (11th Cir. 1988); Ford v. Fogarty Van Lines, Inc., 780 F.2d 1582, 1583 (11th Cir. 1986).

Furthermore, requests that a court impose the sanctions of dismissal or entry of a default judgment require substantial justification. Courts must be “cognizant of the drastic nature of a default judgment, which deprives a party completely of its day in court.” Webb, 146 F.3d at 971. A district court's power to impose dismissal or default judgment against the non-compliant party, therefore, should be used only as a last resort. Malautea, 987 F.2d at 1542 (“[T]he severe sanction of a dismissal or default judgment is appropriate only as a last resort, when less drastic sanctions would not ensure compliance ....”); Phipps, 8 F.3d at 790 (noting that “dismissal without prejudice is the most severe Rule 37 sanction and is not favored ... ”). This is due to the strong policy in favor of courts adjudicating cases on their merits. Foman v. Davis, 371 U.S. 178, 181-82, 83 S. Ct. 227, 230 (1962) (noting the preference in American law for cases to be decided on their merits); Perez v. Wells Fargo N.A., 774 F.3d 1329, 1342 (11th Cir. 2014) (noting the “strong preference that cases be heard on the merits”); Webb, 146 F.3d at 971 (noting that because “disposition of cases on the merits is generally favored,” a “default judgment must be a ‘sanction of last resort,’ to be used only when less onerous methods” will be ineffective).

Because a default judgment prevents a party from having its claim or defense adjudicated on the merits, a party seeking a default judgment as a sanction has a substantial burden. Hammond Packing Co. v. State of Arkansas, 212 U.S. 322, 349-52, 29 S. Ct. 370, 379-81 (1909); Chudasama v. Mazda Motor Corp., 123 F.3d 1353, 1371 (11th Cir. 1997). A district court should impose this sanction only when it finds that: (1) there is a clear record of delay, bad faith, or willful contempt; and (2) no lesser sanctions would sufficiently vindicate the relevant interests. Watts v. Ford Motor Co., 648 F. App'x 970, 973 (11th Cir. 2016) (quoting Betty K. Agencies, Ltd. v. M/V Monada, 432 F.3d 1333, 1338 (11th Cir. 2005)). Thus, a “violation of a discovery order caused by simple negligence, misunderstanding, or inability to comply will not satisfy a Rule 37 default judgment or dismissal.” Malautea, 987 F.2d 1542; see Rogers, 357 U.S. at 212, 78 S. Ct. at 1096 (“Rule 37 should not be construed to authorize dismissal of this complaint because of petitioner's noncompliance with a pretrial production order when it has been established that failure to comply has been due to inability, and not to willfulness, bad faith, or any fault of petitioner.”).

*4 In determining whether to impose sanctions and the severity of the sanctions to be imposed, the undersigned has considered the following factors:

(1) Purposes to be Served by the Imposition of Sanctions. Sanctions under Rule 37 are intended to (1) compensate the court and parties for the added expenses caused by discovery abuses, (2) compel discovery, (3) deter others from engaging in similar conduct, and (4) penalize the offending party or attorney. Wouters v. Martin Cty., 9 F.3d 924, 933 (11th Cir. 1993); Carlucci v. Piper Aircraft Corp., Inc., 775 F.2d 1440, 1453 (11th Cir. 1985). Because the discovery period has already closed, the imposition of sanctions on Defendant would not deter him from committing future discovery violations in this case.

(2) Importance of Materials—From Plaintiffs' Perspective—to Litigating the Case. Plaintiffs assert that the financial information contained in the spreadsheets was essential to their claims because the information contained in the spreadsheets showed that Defendant received payments from Toke which allegedly should have been provided to DeepGulf. (Doc. 134 at 5). Plaintiffs also argue that the information in the spreadsheets is relevant to Defendant's assertion of the defense of statute of limitations insofar as the spreadsheets show that Defendant's conversion was fraudulently concealed, which—Plaintiffs argue—essentially tolled the statute of limitations. (Doc. 134 at 6).

The District Court, however, granted summary judgment in favor of Defendant on Plaintiffs' claims of breach of contract (i.e., the noncompetition agreement), civil theft, and conversion by misappropriating a business opportunity. (Doc. 150 at 7-10). The District Court also held that, under Florida law, any fraudulent concealment did not extend or toll the statute of limitations. (Doc. 150 at 8-9). Thus, the spreadsheets were not essential to any meritorious claim or defense, and Plaintiffs' counsel should have grasped this before seeking these materials.

(3) Costs Incurred. Plaintiffs assert that they incurred attorney's fees and costs—including the cost of a second deposition of Defendant—as a result of Defendant's failure to produce the spreadsheets timely. In support thereof, Plaintiffs attached an exhibit of their fees, which total $11,676.05.[2] (Doc. 147-1). Plaintiffs assert this represents the hours worked on the motion to compel and the cost of the additional deposition. Id.

Plaintiffs have the burden of demonstrating that the amounts sought as a sanction are appropriate and directly pertain to Defendant's failure to provide the requested discovery materials. Ramirez, 845 F.3d at 778; Ungar v. City of New York, 329 F.R.D. 8, 16 (E.D.N.Y. 2018); Taylor v. City of New York, 293 F.R.D. 601, 613 (S.D.N.Y. 2013); Patterson v. Aiken, 111 F.R.D. 354, 358 (N.D. Ga. 1986), aff'd, 841 F.2d 386 (11th Cir. 1988). Most of the notations for the work performed by their attorneys are cryptic and fail to demonstrate that the work was directly and solely related to Defendant's failure to provide the spreadsheets timely. The amounts sought appear to pertain in part to issues other than the information contained in the spreadsheets. For example, the notation for October 15, 2019, states that 2.4 hours was expended to “review email from Rus Howard; Review Issues from Counterclaim; Prepare for Deposition.” (Doc. 147-1 at 3). Many other entries suffer from similar defects.

*5 Furthermore, there are various entries related to objections to the undersigned's order that did not impose sanctions on Defendant. (Doc. 147-1). Based on the paucity of information contained in Plaintiffs' motion and memorandum of law, the undersigned could not have imposed sanctions on Defendant. Specifically, Plaintiffs' motion for sanctions and memorandum of law in support violated the Federal Rules of Civil Procedure and the Local Rules insofar as they failed to: (1) state the standard for imposing sanctions; and (2) discuss and provide evidence relevant to the multiple factors—identified above—that a court must consider before imposing sanctions under Rule 37.[3] See Fed. R. Civ. P. 7(b); N.D. Fla. Loc. R. 7.1(E). If Plaintiffs had filed a detailed motion and supporting memorandum as required by the Rules of Civil Procedure and the Local Rules, Plaintiffs would not have incurred some of the expenses that they now seek to foist on Defendant.

Plaintiffs have demonstrated that Defendant's failure to provide the spreadsheets timely caused them to expend additional sums. They have not shown, however, that Defendant's failure directly and necessarily caused them to expend $11,676.05. Without additional briefing from Plaintiffs and the expenditure of additional judicial resources, this court cannot determine precisely which expenses and fees are fairly attributable to Defendant's conduct.

Furthermore, as noted above, Plaintiffs failed to show that the spreadsheets were relevant to any meritorious claims. When materials sought through the discovery process are relevant only to non-meritorious claims, there is less reason to sanction a party who failed to produce such materials. See Dunbar v. United States, 502 F.2d 506, 509 n.2 (5th Cir. 1974) (“It is perhaps worthy of note that even though a given piece of information may be ‘relevant’ for the purposes of Rule 26(b), the less relevant that information becomes, the less appropriate a Rule 37 sanction is, where there is a failure or refusal to produce the information.”); see generally Fonseca v. Regan, 734 F.2d 944, 950 (2d Cir. 1984) (holding it was an error for the district judge to impose a sanction when the motion to compel sought unnecessary information). Thus, any harm Plaintiffs suffered largely was due to their ill-advised decision to pursue non-meritorious claims.

(4) Whether Important Case-Related Events Were Delayed. In August 2019, both Defendant and Plaintiffs produced discovery late. (Doc. 147 at 2, 6). This precipitated an extension of the discovery deadline by three-months. (Doc. 134 at 7; Doc. 141 at 10; Doc. 108). The district court had not yet scheduled a trial, however. Defendant's delay in providing the spreadsheets, therefore, did not result in the rescheduling of a trial.

(5) Lack of a Specific Court Order. Both parties concede that there was no specific court order directing Defendant to produce the spreadsheets. (Doc. 134 at 7 (noting that “[t]here was no order that specifically mentioned the spreadsheets”)); Doc. 141 at 10).

(6) Burden on the Court. Defendant's failure to produce the spreadsheets timely placed a small burden on the court insofar as it caused Plaintiffs to file a motion to compel that this court was required to address. Defendant, however, promptly remedied his failure prior to the court ruling on the motion to compel, thereby minimizing the burden his conduct placed on this court. Furthermore, it is worth noting that Plaintiffs filed their motion to compel after Defendant already agreed to produce the documents at issue subject to a confidentiality agreement. (Doc. 104 at 9). Thus, if Plaintiffs had provided Defendant another day or two, their motion to compel might not have been necessary and this court would not have been burdened at all.

*6 (7) Prior Discovery Violations. Plaintiffs assert that Defendant has engaged in a pattern of abuse of the discovery process, including failing to provide initial disclosures, misrepresenting the severity of his medical condition to avoid attending his deposition in Pensacola, Florida, and failing to produce documents that were responsive to Plaintiffs' other requests for production of documents. (Doc. 105 at 7; Doc. 134 at 8-9). Plaintiffs, however, are speculating regarding the severity of Defendant's medical condition. Furthermore, Defendant usually remedied any violations quickly. That does not excuse the violations, but it is relevant to the question of whether sanctions should be imposed and, if so, the extent of the sanctions.

(8) Offending Party's Justification. Defendant has not shown that he was justified in withholding the spreadsheets at the time Plaintiffs sought them. Because the claims to which the spreadsheets were relevant lacked merit, however, Defendant has shown that his actions essentially were harmless.

(9) Intent. Plaintiffs have not demonstrated that Defendant acted willfully, in bad faith, or with contempt for the court.

(10) Whether the Discovery Violation is Attributable to a Client, Counsel, or Both. According to Defendant's counsel, “Defendant produced said spreadsheets to defense counsel in April 2019, but they were not produced due to defense counsel's information and belief the financial data contained in the spreadsheets had already been summarized in the financial documents already in the hands of Plaintiffs since 2011 and 2012, and because of confidentiality concerns, which were acknowledged by Plaintiffs only on 31 July 2019.” (Doc. 117 at 3 n.1).

(11) Previous Warning. In this case, Defendant was not warned that an imposition of any sanction would be imposed for discovery violations.

(12) Lesser Sanctions. The facts of this case suggest that a severe sanction is not warranted and that a lesser sanction would be effective.

(13) Justice and Proportionality. Defendant argues that the circumstances of this case do not warrant the imposition of sanctions because the Plaintiffs also withheld necessary documents during the course of discovery. Thus, Defendant asks this court to consider Plaintiffs' “unclean hands.” See Insituform Tech., Inc. v. Amerik Supplies, Inc., No., 2010 WL 11493292, at *8 n.8 (N.D. Ga. Feb. 19, 2010) (finding that imposition of sanctions would be unjust when both parties engaged in similar discovery misconduct) (citing Rice v. City of Chicago, 333 F.3d 780, 784-86 (7th Cir. 2003)).

In support, Defendant indicates that there have been several ongoing discovery issues with Plaintiffs. First, Defendant asserts that Plaintiffs have been intentionally withholding financial records that are relevant to Defendant's claims. According to Defendant, this required the expenditure of attorney's fees and judicial resources because Defendant was required to file a motion to compel with this court and issue a subpoena duces tecum to Wells Fargo, which the Plaintiffs attempted to quash. On July 17, 2019, one day after the motion to compel was filed, Plaintiffs agreed to produce documents that they had been withholding based on objections. These documents were produced on July 18, 2019. In response, Plaintiffs indicated that they had initially withheld the documents based on objections, but subsequently agreed to produce the documents because they believed it was possible that this court's reasoning in its order to deny the motion to quash the subpoena would apply equally to Plaintiffs' objections.

Defendant also argues that Plaintiffs have failed to produce: (1) communications between shareholders; and (2) corporate banking records for the years 2005-2012. Plaintiffs state that—after objecting on the record at the deposition—they stipulated to producing certain documents to Defendant, which were produced on August 7, 2019 (a day after Defendant produced the spreadsheets). (Doc. 147 at 5-6). Additionally, Plaintiffs indicate that neither they nor Wells Fargo maintain bank records for more than seven years, thus they cannot produce bank records from 2007 through 2012. Id. at 5.

*7 Defendant finally argues that Plaintiffs have withheld documents that were attached to emails that had been turned over during discovery. Defendant states that on September 20, 2019, he propounded a Third Request for Production of documents in an effort to obtain these responsive documents. (Doc. 141 at 5). Defendant asserts that Plaintiffs failed to produce any such responsive documents. Id. Plaintiffs claim that on July 16, 2019, two months prior to Defendant propounding these requests, they informed Defendant that they did not have the attachment. (Doc. 147-5).

III. Conclusion

Based on the relevant factors, some of which are discussed above, this court finds that a sanction is appropriate, but that entry of a default judgment, striking of counterclaims, or the imposition of $11,676.05 in costs and attorney's fees would be excessive. Instead, this court will impose a monetary sanction of $1,000.00 on Defendant. This will serve the relevant interests identified above. Therefore, it is ORDERED:

1. Plaintiffs' Motion for Sanctions is GRANTED IN PART and DENIED IN PART.

2. On or before April 16, 2020, Defendant shall pay Plaintiffs $1,000.00.

3. Plaintiffs' Motion is DENIED in all other respects.

SO ORDERED this 16th day of March, 2020.