Vestas-Am. Wind Tech., Inc. v. Salazar
Vestas-Am. Wind Tech., Inc. v. Salazar
2021 WL 4896142 (N.D. Tex. 2021)
March 27, 2021
Parker, John R., United States Magistrate Judge
Summary
The court found that Salazar and his attorneys failed to provide documents responsive to the request related to ESI, and declined to hold Salazar in civil contempt. As a result, the court ordered Salazar and his attorney to pay the reasonable expenses, including attorneys' fees, caused by their failures.
Additional Decisions
VESTAS-AMERICAN WIND TECHNOLOGY, INC., Plaintiff,
v.
ARTURO SALAZAR, III, et al., Defendants
v.
ARTURO SALAZAR, III, et al., Defendants
Civil Action No. 6:19-CV-00076-H
United States District Court, N.D. Texas, San Angelo Division
Filed March 27, 2021
Parker, John R., United States Magistrate Judge
AMENDED ORDER ON VESTAS'S MOTION FOR SANCTIONS UNDER RULE 37
*1 Before the Court is Vestas's Motion for Sanctions under Rule 37 (the “Motion”) filed December 29, 2020. Dkt. No. 80. United States District Judge James Wesley Hendrix referred the Motion to the undersigned United States magistrate judge on December 31, 2020 for resolution. Dkt. No. 83. Salazar filed a Response on February 1, 2021. Dkt. No. 90. And Vestas filed a Reply on February 16, 2021. Dkt. No. 92. Thus, the Motion has been fully briefed.
Through the Motion, Vestas asks this Court to impose sanctions on Salazar under Federal Rule of Civil Procedure 37(b)(2)(A) for failing to obey a previous order of this Court and to treat that failure as contempt under Rule 37(b)(2)(A)(vii). See Dkt. No. 80 at 1. Vestas also asks this Court to order both Salazar and his attorneys to pay expenses incurred by Vestas because of their disobedience of an order of this Court. Id. Salazar opposes the imposition of sanctions, contending that Salazar and his counsel have complied with the Court's previous orders. Dkt. No. 90.
The Court entered a Final Judgment in this case on March 12, 2021. Dkt. No. 96. However, the Court retains collateral jurisdiction to consider pending motions for sanctions and to impose sanctions even after a final judgment on the underlying merits has been entered. See Ratliff v. Stewart, 508 F.3d 225, 229–30 (5th Cir. 2007); see also Qureshi v. United States, 600 F.3d 523, 525 (5th Cir. 2010) (a court retains jurisdiction to impose sanctions and award attorney's fees after an action is dismissed and it no longer has power to consider the merits). In fact, “a district court always has jurisdiction to impose sanctions designed to enforce its own rules, even after that court no longer has jurisdiction over the substance of a case.” Fleming & Assocs. v. Newby & Tittle, 529 F.3d 631, 637–38 (5th Cir. 2008).
Therefore, the undersigned has the authority and the Court retains collateral jurisdiction to consider the imposition of discovery sanctions in this dismissed action.
As explained below, the Court finds that Salazar and his counsel, attorney Steve Hershberger, must pay Vestas's reasonable expenses and attorneys' fees under Rule 37(b)(2)(C) as a sanction for their failure to comply with the Court's previous discovery order. The Court, in its discretion, declines to hold Salazar in contempt of court.
I. THE DISPUTED CONFERENCE
As a preliminary matter, the parties dispute the substantiveness of the pre-motion conference. See Dkt. No. 81 at 4; Dkt. No. 90 at 2; Dkt. No. 92 at 2–3. The Motion includes a certificate of conference that appears to comply with Local Civil Rule 7.1. See Dkt. No. 81 at 4. Moreover, and more importantly, Vestas's Motion seeks sanctions under Rule 37(b)(2)(A) which, by definition, can only be sought based on a failure to comply with a prior court order. The parties' conference on whether the Court's order has been violated is irrelevant to the Court's authority to enforce its orders and impose sanctions for their violation. Hence, in the context of Rule 37(b)(2)(A) sanctions, as here, the moving party need not certify that a good faith effort has been made to try to resolve a dispute that is within the exclusive province of the Court to resolve.
II. LEGAL STANDARDS
*2 Rule 37(b) provides for the imposition of sanctions for failures to obey discovery orders, and the district court “has broad discretion under Rule 37(b) to fashion remedies suited to the misconduct.” Smith & Fuller, P.A. v. Cooper Tire & Rubber Co., 685 F.3d 486, 488 (5th Cir. 2012) (citing Pressey v. Patterson, 898 F.d 1018, 1021 (5th Cir. 1990)). A district court's imposition of sanctions under Rule 37(b) or the district court's inherent power is reviewed for abuse of discretion. Tollett v. City of Kemah, 285 F.3d 357, 363 (5th Cir. 2002).
Rule 37(b)(2)(A) provides that “[i]f a party ... fails to obey an order to provide or permit discovery,” the court may issue whatever orders are just, including, among the non-exclusive list of examples provided by the Rule, an order “treating as contempt of court the failure to obey any order except an order to submit to a physical or mental examination.” Fed. R. Civ. P. 37(b)(2)(A)(i)–(vii). Here, there is no order for a physical or mental examination.
Rule 37(b)(2)(C) further requires that, “[i]nstead of or in addition to the orders [described under Rule 37(b)(2)(A)], 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.” Fed. R. Civ. P. 37(b)(2)(C). A party's failure is “substantially justified” under this Rule if it is a response to a “ ‘genuine dispute, or if reasonable people could differ as to the appropriateness of the contested action.’ ” Samsung Electronics America, Inc. v. Yang Kun Chung, 321 F.R.D. 250, 278 (N.D. Tex. 2017) (quoting S.E.C. v. Kiselak Capital Grp., L.L.C., No. 4:09-CV-256-A, 2012 WL 369450, at *5 (N.D. Tex. Feb. 3, 2012)). The burden of demonstrating substantial justification or other circumstances making sanctions unjust rests with the party whose failure is at issue. Kiselak Capital Grp., L.L.C., 2012 WL 369450, at *3 (footnote omitted).
Additionally, Rule 26(g) requires that every discovery request, response, or objection must be signed by at least one attorney of record in the attorney's own name or by the party personally, if unrepresented. Fed. R. Civ. P. 26(g)(1). By signing, a party or attorney certifies that to the best of the person's knowledge, information, and belief formed after a reasonable inquiry, a discovery request, response, or objection is, among other things, consistent with the Federal Rules of Civil Procedure, not interposed for any improper purposes, such as to harass, cause unnecessary delay, or needlessly increase the cost of litigation, and is neither unreasonable nor unduly burdensome or expensive, considering the needs of the case, prior discovery in the case, the amount in controversy, and the importance of the issues at stake in the action. See Rule 26(g)(1)(B)(i)–(iii).
III. THE DISPUTED DISCOVERY REQUESTS
Vestas's Motion focuses on alleged deficiencies in Salazar's responses to four discovery requests, which the Court examines separately.
A. Interrogatory No. 9
Vestas propounded Interrogatory No. 9 on March 31, 2020. Dkt. No. 51-1. Salazar filed an initial response on May 18, 2020, Dkt. No. 51-2, and a supplemental response on May 31, 2020, Dkt, No. 51-3. The disputed discovery request and responses are as follows:
*3 Vestas Interrogatory No. 9: Describe every individual to whom You have transferred any money, assets, or funds (in the amount of over $1,000) from 2016-2019. Dkt. No. 51-1 at 6.
Salazar's Initial Response: This Defendant objects to this Interrogatory on the grounds that it is ambiguous, overly broad, and burdensome. Dkt. No. 51-2 at 2.
Salazar's Supplemental Response: Every individual to whom I transfer any money, assets or funds was Security Service Credit Union, 15000IH 10 West, San Antonio, Texas 78249. 210-319-2601, San Antonio, Texas for (1) $1,400 per month for my home mortgage and (2) $516,00 per month for an airplane. Dkt. No. 51-3 at 3.
As Vestas points out in its Motion, the Court found in its October 21 Order that Interrogatory No. 9 was a proper discovery request and that no valid objections to that interrogatory had been interposed by Salazar's attorney. Dkt. No. 69 at 2–4. Thus, the Court ordered Salazar to further supplement his response by stating not only that he paid “$1,400 per month for my home mortgage,” but to also clearly state whether he made any additional payments toward his mortgage beyond the minimum required monthly payment. Id. at 4. To that extent, the Court granted Vestas's Motion to Compel. Id.
In response to the Court's October 21 Order compelling a complete and correct response to Interrogatory No. 9, Salazar appears to have further supplemented his response to that interrogatory on November 12, 2020. Dkt. No. 82-2. That supplemental response listed thirty-seven (37) transfers of money, assets, or funds between 2016 and 2019 that exceeded $1,000 — thus responsive to the interrogatory — and provided the date of the transfer, the amount of the transfer, and the individual or entity receiving the transfer. Id. at 3–4. Vestas complains that Salazar's response is deficient because while half of the transfers were clearly in payment of Salazar's mortgage, Salazar “did not specify which, if any, were ‘beyond the minimum required monthly payment,’ ” as required by the Court's order. Dkt. No. 81 at 6–7. Thus, Vestas claims, it “cannot deduce which, if any payments, were ‘beyond the minimum required monthly payment.’ ” Id. at 7.
The Court is not convinced that the deduction powers of Vestas's attorneys are so limited. Half of the mortgage payments listed are in the exact amount of $1,200. 95. That amount is also the lowest amount transferred in payment of the mortgage in any single transfer. Most of the remaining mortgage payments listed are within a couple of hundred dollars of $1,200.95. The largest mortgage transfer listed appears to approximately $2,300.74.[1] It is not too far of a stretch to deduce from this information that the minimum required monthly payment was approximately $1,200.95. And while Vestas argues that “Salazar has violated the Court's order to ‘clearly state [ ] whether he made any additional payments toward his mortgage beyond the minimum required monthly payment,’ ” Vestas has not clearly demonstrated how this particular violation prejudiced Vestas in any material way. In light of the November 2020 supplemental response, Vestas does not, and presumably cannot, claim to not know how much money was applied to Salazar's mortgage, when it was applied, or in which amounts. Accordingly, it is difficult for the Court to find prejudice to Vestas on this basis.
*4 Next, Vestas argues that the non-mortgage transfers listed by Salazar (e.g., “J.P. Hunter,” “David Stevens,” “Willie Suel,” “Keri's Rental,” “Quint's Upholstery,” and “Poor Boy Avionics”) fail to “adequately ‘describe[ ]’ ” the transaction “so as to enable Vestas to ascertain the actual identity of the recipient or beneficiary of the transfer, let alone contact the person or entity that received the funds.” Dkt. No. 81 at 7. As Vestas notes, Interrogatory No. 9 requested that Salazar “[d]escribe every individual to whom You have transferred any money, assets, or funds (in the amount of over $1,000) from 2016-2019.” Id. at 6. Vestas argues in its Motion that
[a]n adequate response to Interrogatory No. 9 would include a description of each recipient that is at least sufficient to (1) identify the individuals who received the transfers, including their addresses or other available contact information, (2) if information for a business that received a transfer is not publicly available, contact information for the person who owns/operates the business, (3) identify the account holder and account number for any payments on personal loans or credit cards. The information provided for the transfers numbered 1-5, 11-12, and 23-37 is not sufficient to answer these basic questions.
Id. at 7.
The fundamental flaw in Vestas's argument is that it did not ask most of these basic questions. And while the Court ordered that Salazar and his attorneys must serve complete and correct responses to the discovery requests addressed in its October 21 Order, the scope of that order was limited to the scope of the requests actually made, except where otherwise noted. Vestas did not specifically define the word “describe” in the definitions and instructions preceding its interrogatories. See Dkt. No. 51-1 at 2–4. The first time Vestas defines the word “describe” to include information necessary to answer most of these “basic questions” was in its brief in support of this Motion. Dkt. No. 81 at 7. Thus, Salazar and his attorneys, and now the Court, were left to construe this term by using common sense and the term's ordinary definition. See Heller, 303 F.R.D. at 491.
Merriam-Webster's on-line dictionary defines “describe” as “to represent or give an account of in words.”[2] The Oxford English Dictionary defines “describe” as “to portray in words or by visual representation.”[3] But regardless of the definition applied, with the exception of Vestas's recent definition, the Court is unable to conclude that Salazar's listing of transfers by date of the transfer, amount of the transfer, and the individual or entity receiving the transfer were so far outside the common sense, ordinary construction of the term “describe” to justify the imposition of sanctions or a finding of contempt. Or, in the words of Rule 37, whatever failure occurred appears to be either “substantially justified or other circumstances make an award of expenses unjust.” Fed. R. Civ. P. 37(b)(2)(C).
That said, there are two transfers which appear too vague to satisfy any reasonable definition of the word “describe.” First, is the transfer on December 12, 2018, that simply states, “Mobile Payment, $2,522.58.” Dkt. No. 82-2 at 3. Second, is the transfer on December 31, 2018, that states, “Online IMDB to CC, $3,000.00.” Id. For this reason, the Court finds that Salazar and his attorney, Steve Hershberger, failed to comply with the October 21 Order to serve complete and correct responses regarding these transfers. And Salazar and his attorney have failed to demonstrate that their failure to comply with the October 21 Order with respect to these transfers was substantially justified or that there exists other circumstances that would make sanctions unjust. As a result, the Court finds that sanctions are not only appropriate, but required under both Rule 37(b)(2)(C) and Rule 26(g)(3). Here, since an award under both rules would be duplicative, the Court chooses to impose sanctions under Rule 37(b)(2)(C) only. See Heller, 303 F.R.D. at 478 (declining to award sanctions under Rule 37(a)(5)(A) where they would be “duplicative and redundant” of those sought under Rule 26).
*5 Finally, Vestas complains that the Salazar failed to list among the transfers provided in his November 2020 supplemental response to Interrogatory No. 9 “what appear to be dozens of electronic transfers, totaling hundreds of thousands of dollars.” Dkt. No. 81 at 7–11. Vestas acknowledges that it knows of this violation because the omitted transfers are reflected in “the PayPal records produced along with the 2020 Supplement.” Id. at 7. Vestas argues that Salazar's “failure to describe, in response to Interrogatory No. 9, what appear to be dozens of transfers totaling well over a hundred thousand dollars” resulted in “substantial” prejudice to Vestas because Vestas “has no way of knowing where/to whom all that money went or what it was used for ... which is critical information for Vestas to discover in order to be able to trace at least some of the funds that Defendants stole from it.” Id. at 10–11.
Salazar does not directly respond to this allegation, except to say that he provided Vestas with the PayPal records and Vestas also independently subpoenaed the PayPal records. Dkt. No. 90 at 4.
It appears, from what has been provided to the Court, that the PayPal records for the transactions in question only identify the date and time of the transaction, the amount of the transaction, and the email from which the transfer was made (in this case, Salazar's email). See Dkt. No. 82-3. It also appears that the summary of the PayPal records included in Vestas's brief contains several duplicate entries. This can be deduced not solely from the dates and amounts of these transfers, but because also the timestamp is identical down to the second. As a result, it is less clear to the Court that there are indeed dozens of transfers totaling well over a hundred thousand dollars that were not sufficiently described. However, even one such transfer is too many.
For this reason, the Court finds that Salazar and his attorney, Steve Hershberger, failed to comply with the October 21 Order to serve complete and correct responses regarding these transfers. And Salazar and his attorneys have failed to demonstrate that their failure to comply with the October 21 Order with respect to these transfers was substantially justified or that there exists other circumstances that would make sanctions unjust. The Court finds that sanctions are not only appropriate, but required under Rule 37(b)(2)(C) and Rule 26(g)(3). For the reasons explained above, the Court chooses to impose sanctions under Rule 37(b)(2)(C) only.
For the above reasons, Salazar and his attorney, Steve Hershberger, are both, jointly and severally, ORDERED to pay the reasonable expenses, including attorneys' fees, caused by their failure to serve complete and correct responses to Interrogatory No. 9 as required by the October 21 Order.
B. Interrogatory No. 10
Vestas propounded Interrogatory No. 10 on March 31, 2020. Dkt. No. 51-1. Salazar filed a response on May 18, 2020. Dkt. No. 51-2. Although Salazar supplemented his discovery responses on May 31, 2020, he did not supplement his response to Interrogatory No. 10. See Dkt. No. 51-3. The disputed discovery request and responses are as follows:
Vestas's Integratory No. 10: Describe any asset You own, control, or have controlled, whether individually or jointly, in the past three years, that is worth over $1,000. Dkt. No. 51-1 at 6.
Salazar's Response: 2019 Nissan; 2011 Toyota Tacoma; a dirt bike, a Raptor Nighty; a utility trailer, a closed trailer, a 1977 Piper Warrior airplane; five acres pf [sic] surface in Terlingua, Texas, and we are homesteading 9155 RM 853, San Angelo, TX 76901. Dkt. No. 51-2 at 2.
The Court previously ruled that to the extent Salazar and his attorneys interposed any objections to this interrogatory, those objections were untimely, and hence waived, and consisted solely of invalid boilerplate objections. See Dkt. No. 69 at 4–6. On these bases, the Court granted Vestas's motion to compel. Id. at 6.
*6 In response to the Court's October 21 Order, Salazar appears to have supplemented his response to Interrogatory No. 10 further by identifying twelve assets. See Dkt. No. 82-2 at 4–5.
Vestas argues that this response “does not comply with [the Court's] directive.” Dkt. No. 81 at 11. Specifically, Vestas takes issue with the Salazar's supplemental response that identifies a “Bass boat, which was junked ($1,500.00 at one time).” Dkt. No. 82-2 at 5. Vestas contrasts this statement with Salazar's supplemental response to Interrogatory No. 9 in which he claims to have paid $8,000 for the bass boat (Dkt. No. 82-2 at 3) and, Vestas argues, “at least $4,830 for upholstery for the bass boat.” Dkt. No. 81 at 11.
That Salazar's responses may give rise to factual disputes or a need for further discovery does not render those responses deserving of an application of the Court's sanction authority. These apparently conflicting responses indeed identify an area for further exploration and exploitation by Vestas, but a motion for sanctions under Rule 37(b) is not the appropriate means of resolving those factual disputes.
The Court is unable to say, based on the motions and briefing before it, that either of the above Salazar responses fail to constitute complete and correct responses solely because they appear to conflict. The Court can envision circumstances in which these responses are complete and correct, but there exists more to the story that needs to be developed through further questioning. Vestas sought through Interrogatory No. 10 a description of “any asset [Defendants] own, control, or have controlled, whether individually or jointly, in the past three years, that is worth over $1,000.” Dkt. No. 51-1. And among the responses was the junked bass boat. Separately, Vestas sought through Interrogatory No. 9 the identity of “any individual to whom [Defendants] have transferred any money, assets, or funds (in the amount of over $1,000) from 2016-2019.” Dkt. No. 51-1 at 6. And among the response was the $8,000 payment for a bass boat and several thousand dollars more for upholstering presumably the same bass boat. If Vestas seeks an explanation for this discrepancy between Salazar's discovery responses, it could have sought it. But Vestas has not asked that question.
Next, Vestas complains that the Salazar “lists a number of assets for which he provides no detail or value at all,” including a 401(k)-retirement plan, a homestead, an airplane, and an ATV. Dkt. No. 81 at 11. Here again, however, the answer to Vestas's complaint can be found in its question. Interrogatory No. 10 simply seeks a description of any assets owned or controlled over the past three years with a value of over $1,000. To the extent Vestas now complains that it was not provided with sufficient detail, it did not seek any more detail than an undefined description requires. Here, the 401(k) was described by Salazar as his retirement plan with Vestas. The homestead was described by its address. The airplane was described by make, model, year, and location. And the ATV was identified by make and model. If Vestas had wanted more information about these assets, it could have sought that detail in its interrogatory, but it did not.
*7 To the extent Vestas complains that Salazar's response failed to provide any “value at all,” again Vestas's interrogatory did not seek the value of the assets beyond a description of those valued at over $1,000. The contours of the Court's October 21 Order, the violation of which Vestas bases its Rule 37(b) Motion, were generally defined by the contours of Vestas's discovery requests addressed therein. With limited exceptions, that Order did not enlarge the disputed requests or supply definitions that Vestas did not. See Dkt. No. 69. For this reason, the Court will not impose sanctions for Salazar's failure to provide information that was not sought in the underlying discovery request at issue unless there is otherwise a basis for sanctions in the October 21 Order, and the Court can find none here on this point.
Finally, Vestas complains that some of the “dozens of undescribed transfers of over $1,000 reflected in Mr. Salazar's PayPal records ... may have been for the purchase of things of value ....” Dkt. No. 81 at 11. While Salazar's conduct within the context of this case lend legitimacy to Vestas's concern in this regard, ultimately the Court finds that this is too speculative of a basis upon which the Court can impose sanctions, particularly since the Court is already imposing sanctions on firmer bases.
C. Request for Production No. 10
Vestas propounded Request for Production No. 10 on March 31, 2020. Dkt. No. 51-4. Salazar filed an initial response on April 29, 2020, Dkt. No. 51-4, and a supplemental response on June 1, 2020, Dkt. No. 51-5. The disputed discovery request and responses are as follows:
Vestas Request for Production No. 10: A copy of statements from any bank or other Financial Institution where You currently hold or previously held accounts, individually or jointly, that show deposits during the past five years. Dkt. No. 51-4 at 9.
Salazar's Initial Response: Defendant objects to this request as overly intrusive, overly broad and overly burdensome. Id.
Salazar's Supplemental Response (June 1, 2020): The two previous years of account activity at Security Service Credit Union are being forwarded. Dkt. No. 51-5 at 5.
The Court found in its October 21 Order that some of Salazar's objections to this request were boilerplate, and thus invalid, while other objections were interposed only in response to Vestas's motion to compel, and thus untimely and waived. Dkt. No. 69 at 7–8. Regardless, none had merit. Accordingly, the Court granted Vestas's motion to compel. Id.
In response to the Court's October 21 Order, Salazar stated to Vestas:
The two previous years of account activity at Security Service Credit Union have been forwarded. Due to the cost charged by he [sic] Credit Union for the three remaining years, Arturo Salazar can not [sic] obtain the statements.
Mr. Salazar agrees to sign an authorization so that the Plaintiff can order These records.
Dkt. No. 82-2 at 5.
Vestas insists through its Motion on receiving actual copies of the statements responsive to this request, and characterizes Salazar's offer to sign an authorization as “yet another baseless objection” which “attempts to saddle Vestas with [the cost]” of requesting the statements from the financial institutions. Dkt. No. 81 at 12.
In response to the Motion, Salazar argues that he provided two years of his credit union records, but that he did not have the funds to pay his credit union for copies of the statements for the earlier three years. Dkt. No. 90 at 3. In lieu of providing those statements, Salazar says that he is willing to sign an authorization to allow Vestas to obtain those records, presumably at Vestas's expense. Id. Salazar also points out that Vestas was able to secure the full five years of records from the credit union through a subpoena, which Vestas appears to concede. See Dkt. No. 90 at 3–4 and Dkt. No. 92 at 5, n.2, respectively. However, as Vestas notes, Salazar has failed to provide any documents responsive to Request for Production No. 10 relating to financial institutions other than the credit union. Dkt. No. 92 at 5, n.2. This would include any records related to Salazar's 401(k) account. Id.
*8 In his response to the Motion, Salazar does not address the records of financial institutions other than the credit union, except to say that his 401(k) records are “contained within the Vestas laptop” which he argues makes them available to Vestas. Dkt. No. 90 at 4. Even assuming the laptop contained records related to the 401(k) account, it is far from clear that the laptop would grant Vestas access to the account itself or to the entirety of records responsive to this request.
Otherwise, Salazar repeats his offer to sign an authorization to enable Vestas to obtain the 401(k) records. Id. Vestas argues that Salazar and his attorneys continue their attempts to object to the discovery request through their characterization of the Motion as “vexatious and harassing” and by referencing the “disparity between the litigants.” Dkt, No. 92 at 4–5. Vestas's characterization of these arguments as objections may be an appropriate one in the context of a motion for sanctions under Rule 37(a) or Rule 37(d), but in the context of sanctions under Rule 37(b), as here, the Court considers these statements as relevant not only to whether Salazar and his attorneys violated this Court's Order, but certainly whether any such violation, if it occurred, was substantially justified and whether there exists other circumstances that make sanctions unjust on these facts.
But here, the Court's order of October 21, 2020 was clear:
Salazar is ORDERED to serve, through his counsel, a response to each of the seven (7) discovery requests set forth above within ten (10) days of this Order, regardless of whether Salazar has additional information to produce. If Salazar has no additional information to produce in response to a particular request, he is to so state and provide as much specificity as possible regarding why he has no additional information to produce. These responses must be signed by both Salazar and his counsel. Counsel's signature will constitute his certification under Rule 26(g) that the responses are each complete and correct. See Fed. R. Civ. P. 26(g)(1). No further objections are to be made in connection with any of the above discovery requests.
Dkt. No. 69 at 13.
Equally clear is that Salazar and his counsel failed to comply with the Court's October 21 Order with respect to Request for Production No. 10. Nor did they seek relief from that Order. They appear to have simply disregarded it. And in doing so, Salazar's counsel violated both the October 21 Order and the required certification under Rule 26(g).
As Vestas points out, if Salazar's attorneys had previously failed to familiarize themselves with their discovery obligations in federal court, and the consequences of failing to satisfy those obligations, one would reasonably assume that the Court's previous Order imposing sanctions on attorney Hershberger would have caused them to do so. See Dkt. Nos. 77, 79.
Salazar and his attorneys have failed to demonstrate that their failure to comply with the October 21 Order with respect to Request for Production No. 10 was substantially justified or that there exists other circumstances that would make sanctions unjust.
Therefore, the Court finds that sanctions are not only appropriate, but required under Rule 37(b)(2)(C) and Rule 26(g)(3). For the reasons explained above, the Court chooses to impose sanctions under Rule 37(b)(2)(C) only. Thus, Salazar and his attorney, Steve Hershberger, are both, jointly and severally, ORDERED to pay the reasonable expenses, including attorneys' fees, caused by their failures discussed above.
D. Request for Production No. 11
*9 Vestas propounded Request for Production No. 11 on March 31, 2020. Dkt. No. 51-4. Salazar filed an initial response on April 29, 2020, Dkt. No. 51-4, and a supplemental response on June 1, 2020, Dkt. No. 51-5. The disputed discovery request and responses are as follows:
Vestas Request for Production No. 11: A copy of Your PayPal account history from January 1, 2016 until December 31, 2019 that shows all payments You received from Keith Krier or BT Machine. Dkt. No. 51-4 at 9.
Salazar's Initial Response: To be address [sic] in supplementation. Id.
Salazar's Supplemental Response: Mr. Salazar does not currently possess the PayPal account history from January 01, 2016 until December 31, 2019 that shows payments from Keith Krier to Mr. Salazar. Dkt. No. 51-5 at 5.
The Court's October 21 Order specifically ordered that Salazar was obligated to produce information responsive to this request even if he “does not currently possess” it, so long as he has control over it. See Dkt. No. 69 at 9. To that extent, the Court granted Vestas's motion to compel and ordered Salazar to produce any information responsive to this request that Salazar has possession, custody, or control over. Id. The Court specifically ordered Salazar to include any historical information that, while Salazar may not actually possess it, he has the legal right or practical ability to obtain it. Id.
In response to the Court's Order, Salazar said that he produced “[a] copy of [his] PayPal account from March 28, 2016, until December 31, 2019.” Dkt. No. 82-2 at 5.
Vestas complains through its Motion that Salazar failed to provide his PayPal account history from between January 1, 2016, and March 28, 2016. Dkt. No. 81 at 13. And that Salazar failed to specifically state why he failed to produce the missing records, as required by the Court's Order. Id.; See also Dkt. No. 69 at 13.
Salazar responds that Vestas has already subpoenaed the PayPal records, including the missing records, and is attempting to cause Salazar to needlessly incur the expense of producing that which Vestas already has. Dkt. No. 90 at 4.
Vestas appears to agree that it has all the records it requested, either from Salazar or through its subpoena of the PayPal records, but claims that any objection on that basis now has been specifically disallowed by the Court's Order that Salazar and his attorneys are to make “no further objections.” See Dkt. No. 92 at 5. In other words, Vestas appears to be imploring this Court to seize on a technicality to wield its sanctions authority, which the Court declines to do.
As discussed above, while Vestas chooses to view as an inappropriate objection Salazar's pointing out that Vestas already has the missing documents, the Court views the revelation of that apparently undisputed fact as relevant not only to whether Salazar and his attorneys violated this Court's Order, but certainly whether any such violation, if it occurred, was substantially justified — it appears that it was — and whether there exists other circumstances that make sanctions unjust on these facts — it appears that there are.
For these reasons, the Court finds no basis to sanction Salazar or his attorneys for not providing Vestas with that which it apparently already has.[4]
IV. CIVIL CONTEMPT
*10 “[C]ivil contempt sanctions, or those penalties designed to compel future compliance with a court order, are considered to be coercive and avoidable through obedience, and thus may be imposed in an ordinary civil proceeding upon notice and an opportunity to be heard.” Int'l Union, United Mine Workers of Am. v. Bagwell, 512 U.S. 821, 827 (1994). “Judicial sanctions in civil contempt proceedings, may in a proper case, be employed for either or both of two purposes: to coerce the defendant into compliance with the court's order, and to compensate the complainant for losses sustained.” American Airlines, Inc. v. Allied Pilots Ass'n, 228 F.3d 574, 585 (5th Cir. 2000) (citation omitted). The district court retains broad discretion in the assessment of damages in a civil contempt proceeding. Id.
Vestas contends that “more severe sanctions are appropriate” in this case and urges the Court to hold Salazar in contempt of court under Rule 37(b)(2)(A)(vii), arguing that “Defendants' behavior in failing to comply should be viewed in light of the Salazar Defendants', and their attorneys', persistent noncompliance with their discovery obligations and this Court's rules.” Dkt. No. 81 at 14. While sanctions against Salazar and his counsel, attorney Steve Hershberger, are warranted under Rule 37(b)(2)(C) insofar as they are ordered to jointly pay Vestas's reasonable expenses and attorneys' fees, the Court declines to hold Salazar in civil contempt.
In determining the imposition of a civil contempt sanction, the Court considers “(1) the harm from noncompliance; (2) the probable effectiveness of the sanction; (3) the financial resources of the contemnor and the burden the sanctions may impose; and (4) the willfulness of the contemnor in disregarding the court's order.” Lamar Fin. Corp. v. Adams, 918 F.2d 564, 567 (5th Cir. 1990) (citations omitted). As the Court noted above, the prejudice to Vestas caused by Salazar's noncompliance is less than clear, even though such conduct directly defied an order of this Court. The Court recognizes that it previously awarded Vestas payment of its reasonable expenses and attorneys' fees under Rule 37(a)(5)(B) in this case. Dkt. Nos. 77 and 79.
To the extent that a civil contempt proceeding may be employed for purposes of coercing Salazar's compliance with a court order, the Final Judgment entered in this case renders a finding of civil contempt on that basis less appropriate. Insofar as compensating Vestas, the complainant, for the losses sustained, the Court finds that the imposition of sanctions under Rule 37 against Salazar, and, for the second time, attorney Steve Hershberger, is sufficient to compensate Vestas here.
V. SANCTIONS AND ORDER TO RESPOND
Having found that sanctions are appropriate and required, the Court turns to the sanction itself. Through its brief in support of the Motion, Vestas
moves pursuant to Fed. R. Civ. P. 37(b)(2)(C) for an order requiring the Salazar Defendants' counsel of record, Mr. Hershberger and Mr. Foster, to pay Vestas' expenses incurred as a result of their noncompliance, including attorneys' fees incurred in (1) bringing this motion, (2) drafting a previous motion for sanctions for complete noncompliance with the Court's order (which was drafted during the time period after the November 2020 Supplement was due that Vestas was unable to contact Mr. Hershberger), and (3) corresponding with or attempting to contact Mr. Hershberger concerning the Court's October 21, 2020 Order.
Dkt. No. 81 at 15. While Vestas attached contemporaneous time records to its reply, it appears to have done so for purposes of refuting attorney Steve Hershberger's claim that Ms. Cain told him she had not drafted the Motion at the time of the conference, and not for purposes of supporting the reasonableness of either its attorneys' hourly rate or the number of hours expended as a result of the noncompliance by Salazar and his attorneys. See id. at 5, n.1.
*11 Accordingly, Vestas shall file no later than April 9, 2021, a Notice itemizing its reasonable expenses, including attorneys' fees, caused by the failures found by the Court in this Order. The reasonableness of both its attorneys' hourly rate and the number of hours expended must be supported by affidavit. Salazar and attorney Steve Hershberger must file a response to Vestas's Notice no later than April 16, 2021.
VI. CONCLUSION
For these reasons and to the extent stated above, the Court GRANTS Vestas's Motion for Sanctions Pursuant to Rule 37 (Dkt. No. 80) and ORDERS as follows:
1. Salazar and his attorney, Steve Hershberger, are both, jointly and severally, ORDERED to pay the reasonable expenses, including attorneys' fees, to be determined by the Court, caused by their failures to comply with this Court's October 21 Order as it pertains to Interrogatory Nos. 9 and 10 and Request for Production No. 10.
2. Vestas shall file, NO LATER THAN APRIL 9, 2021, a Notice itemizing its reasonable expenses, including attorneys' fees, caused by the failures found by the Court in this Order.
3. Salazar and Hershberger must file a response to Vestas's Notice NO LATER THAN APRIL 16, 2021.
4. The parties previously extended a deadline in this Court's October 21 Order without seeking leave of Court to do so. And this action by the parties resulted in further disputes about the timeliness of Salazar's and his attorneys' compliance with this Court's Order. Therefore, it is further ORDERED that the deadlines in this order shall not be extended except upon a motion showing extraordinary circumstances.
ORDERED this 26th day of March, 2021.
Footnotes
There appears to be a typographical error in the listing, as it states “$2,3074.” Dkt. No. 82-2 at 3.
Merriam-Webster, https://www.merriam-webster.com/dictionary/describe (last visited Mar. 25, 2021).
Oxford English Dictionary, https://www.oed.com/view/Entry/50732?redirectedFrom=describe#eid (last visited Mar. 25, 2021).
In anticipation of possible post-judgment discovery under Rule 69(a)(2), all counsel are reminded that the Court expects the parties to work in good faith to resolve discovery disputes. Such cooperation and meaningful pre-motion conferencing are “part and parcel of the ethical rules governing attorneys and the court rules governing all parties ....” Brown v. Bridges, No. 3:12-CV-4947-P, 2014 WL 2777373, at *2 (N.D. Tex. June 19, 2014) (citing Dondi Props. Corp., 121 F.R.D. 284, 289–90 (N.D. Tex. 1988) (per curiam); accord Carter v. H2R Rest. Holdings, LLC, No. 3:16-CV-1554-N-BN, 2017 WL 3724122, at *3 (N.D. Tex. Aug. 29, 2017)). Counsel are also admonished to re-read this Court's per curiam opinion in Dondi Properties, cited above.