VYSE Gelatin Co. v. Hicks
VYSE Gelatin Co. v. Hicks
2019 WL 13084200 (N.D. Ill. 2019)
June 3, 2019
Dow Jr., Robert M, United States District Judge
Summary
The Court granted Plaintiff's motion for sanctions against Defendants for failing to timely respond to the Discovery and for providing deficient responses. As a result, Defendants' affirmative defenses were stricken and they were ordered to respond fully to the Discovery and produce a privilege log within 14 days. The Court also awarded Plaintiff reasonable attorneys' fees related to the motion for sanctions.
VYSE GELATIN COMPANY, Plaintiff,
v.
JEFFREY HICKS and JT NATURALS USA, LLC, Defendants
v.
JEFFREY HICKS and JT NATURALS USA, LLC, Defendants
Case No. 17-cv-2937
United States District Court, N.D. Illinois, Eastern Division
Signed June 03, 2019
Counsel
Mark Elliott Furlane, Berger, Newmark & Fenchel P.C., Chicago, IL, for Plaintiff.Ankur V. Shah, Shah Legal Representation, Chicago, IL, for Defendants.
Dow Jr., Robert M, United States District Judge
ORDER
*1 Before the Court is Plaintiff's motion for sanctions [62]. For the reasons set forth below, Plaintiff's motion [62] is granted. Further status set for June 11, 2019 at 9:00 a.m.
STATEMENT
Plaintiff VYSE Gelatin Company (now known as VyGC Inc.) moves for sanctions against Defendants JT Naturals USA, LLC and Jeffrey Hicks under Federal Rule of Civil Procedure (“Rule”) 37 and Northern District of Illinois Local Rule 37.1. [See 62.] On August 28, 2018, Plaintiff served Defendants with interrogatories and requests for production of documents (the “Discovery”). Defendants’ responses and objections to the Discovery were due on September 27, 2018.
After Defendants failed to object or respond to the Discovery, Plaintiff filed a motion to compel [57] on October 12, 2018. In that motion, Plaintiff asked that the Court “rule that Defendants have waived their right to serve objections to the Discovery and order the Defendants to respond to the Discovery within 7 days.” [57, at 3.] On October 18, 2018, the Court granted Plaintiff's motion and gave Defendants until November 1, 2019 to respond to all outstanding discovery requests. [60.] The Court noted that this was “a FINAL deadline.” [Id.] At 4:19 p.m. on November 1, 2018—the final deadline set by the Court—Defendants asked Plaintiff for an extension of time to respond to the Discovery, noting that they still could provide objections on November 1, 2018. Plaintiff's attorney called to reject the request, noting that the November 1 deadline was a final deadline and that Defendants already had waived their objections by failing timely to respond to the Discovery. Later that evening, Defendants served their discovery responses on Plaintiff.
Plaintiff raises numerous challenges to the adequacy of Defendants’ responses. To begin, Defendants objected to every interrogatory and every request to produce. Under Rule 33(b)(4), “[a]ny untimely objection to an interrogatory is waived, unless the court excuses the failure for good cause.” Similarly, untimely objections to requests for production also are waived. Woods v. Cook Cty., Illinois, 2014 WL 7261277, at *2 (N.D. Ill. Dec. 19, 2014). Because Defendants have not identified any basis for finding that Defendants had good cause for failing to respond to the Discovery in a timely manner, the Court agrees that Defendants waived any objections to the Discovery.
Defendants’ discovery responses also were deficient in other ways. Although Defendants asserted the attorney-client privilege and/or the work-product protection with respect to numerous responses, Defendants did not produce a privilege log as required by Rule 26(b)(5). The only “substantive” responses to the interrogatories were general references to the documents produced, without any citation to specific pages or documents. Furthermore, Defendants’ actual production of documents was deficient, as outlined in Plaintiff's motion for sanctions. For example, Defendants did not produce any purchase orders, invoices, bill of ladings, checks, checking account records, or other similar documents requested. The few pages of emails produced by Defendants postdate the requested business dealings and communications between the parties.
*2 Although Plaintiff outlines the many deficiencies of Defendants’ discovery responses, Defendants fail substantively to explain how their responses were adequate. Instead, Defendants raise six arguments as to why Plaintiff's motion for sanctions should be denied.
First, Defendants argue that Plaintiff's motion for sanctions should be denied because Plaintiff did not include a certification that good faith attempts to confer had been made to obtain the Discovery without court action. However, as Plaintiff notes, Defendants’ failure properly to respond to Plaintiff's discovery requests violated the Court's order. Rule 37(b)(2), which does not have a certification requirement, governs Defendants’ failure to comply with the Court's October 18, 2018 order.
Second, Defendants argue that any failure to produce documents in Plaintiff's own possession, such as invoices, contracts, and other similar documentation would be duplicative and therefore improper. However, Defendants fail to cite any authority supporting the conclusion that documents can be withheld on that basis. Furthermore, the failure to respond to discovery requests “is not excused on the ground that the discovery sought was objectionable, unless the party failing to act has a pending motion for a protective order.” Fed. R. Civ. P. 37(d)(2). In any event, Defendants waived this objection by not timely filing responses to the Discovery.
Third, Defendants argue that sanctions are not warranted for their failure to respond to the Discovery because Plaintiff “took roughly one year to produce its own APA and [purportedly made] misrepresentations about the nature of an asset sale despite the Court's order to provide the full APA.” [69, at 5.] As noted by the Court at the October 18, 2018 hearing, the Court only knows what the parties are doing in discovery through the parties. If Defendants believed that sanctions were warranted against Plaintiff for failure to comply with a Court order, Defendants could have moved for sanctions or moved to compel compliance. In any event, even if Plaintiff failed to comply with its discovery obligations, that does not excuse Defendants from complying with the Court's orders.
Fourth, Defendants argue that Plaintiff failed to comply with Local Rule 37.1. Specifically, Defendants contend that Plaintiff (i) failed to provide the affidavit required by the Local Rule 37.1, and (ii) failed to raise an allegation of contempt. Because Plaintiff has not asked that Defendants be held in contempt (and because the Court does not conclude that a contempt finding is warranted at this time in any event), the Court agrees that Local Rule 37.1 does not apply. Still, the Court has authority to impose sanctions on Defendants for failing to comply with discovery orders under Rule 37(b). Fed. R. Civ. P. 37(b).
Fifth, Defendants argue that Plaintiff “has not and will not suffer any surprise, incurable prejudice, disruption at trial, or bad faith” because of Defendants inadequate discovery responses. [69, at 6.] In support of that argument, Defendants cite to Tribble v. Evangelides, which analyzed Rule 37(c)(1)’s mandate that “exclusion of non-disclosed evidence is automatic and mandatory * * * unless non-disclosure was justified or harmless.” Because Plaintiff's motion does not involve Rule 37(c)(1), that provision is not relevant. Still, to the extent that Plaintiff seeks default judgment as relief, the Court recognizes that entering default judgment under Rule 37(b) requires a showing of willfulness, bad faith, or fault. e360 Insight, Inc. v. Spamhaus Project, 658 F.3d 637, 642 (7th Cir. 2011). Given that Defendants waited until the last minute to request an extension of time to comply with the Court's order from the Plaintiff (notably, not from the Court), and that Defendants responses were inadequate, the Court concludes that Defendants acted willfully, in bad faith, with fault. However, the Court concludes that the extreme remedy of default judgment is not yet warranted. Sanctions must be “just” and “proportionate to the circumstances surrounding a party's failure to comply with discovery” obligations. Melendez v. Illinois Bell Tel. Co., 79 F.3d 661, 672 (7th Cir. 1996). In this case, the Court concludes that the less extreme sanction of striking Defendants’ affirmative defenses is proportional to Defendants’ failure to comply with their discovery obligations.
*3 In sum, the Court overrules Defendants’ objections to Plaintiff's motion and concludes that sanctions under Rule 37 are warranted by Defendants’ failure to comply with the Court's October 18, 2018 order. Because Defendants’ discovery responses were untimely, for the reasons discussed above, the Court rules that Defendants have waived any objections. As a sanction for Defendants’ failure to comply with their discovery obligations (specifically, the Court's October 18, 2018 order), Defendants’ affirmative defenses are stricken. Defendants are directed to respond fully to the Discovery within 14 days of this order. Defendants also are directed to produce a privilege log as required by Rule 26(b)(5) within 14 days of this order. The Court also awards Plaintiff reasonable attorneys’ fees related to its motion for sanctions. Plaintiff's counsel is directed to submit a fee request (supported by reasonable documentation) no later than 6/17/2019; any objections are due by 6/24/2017. The fee award must be paid within 28 days of the Court's order disposing of the fee request.
If Defendants again fail to comply with a Court order, including this order, the Court will entertain a renewed motion for entry of default judgment. The Court recognizes that the entry of default judgment is “strong medicine” that “[i]s appropriate only where there is a clear record of delay or contumacious conduct, where other less drastic sanctions have proven unavailing, or where a party displays willfulness, bad faith, or fault.” Domanus v. Lewicki, 742 F.3d 290, 301 (7th Cir. 2014) (internal quotation marks and citations omitted). Still, if Defendants continue to defy their discovery obligations and/or ignore the Court's orders, such strong medicine may very well be warranted.