Universal Physician Serv., LLC v. Zotto
Universal Physician Serv., LLC v. Zotto
2019 WL 13063495 (M.D. Fla. 2019)
September 16, 2019
Honeywell, Charlene E., United States District Judge
Summary
UPS presented ESI, such as e-mails sent from amanda@clinicalservicesinc.com and eric@clinicalservicesinc.com, as well as the AT&T account information, to prove that DeLong and CSI had committed perjury and other litigation misconduct. The court found that DeLong had testified falsely and imposed sanctions on him and CSI, allowing UPS to introduce evidence of DeLong's false testimony concerning Del Zotto's relationship with CSI during the trial.
UNIVERSAL PHYSICIAN SERVICES, LLC, Plaintiff,
v.
AMANDA DEL ZOTTO, ERIC DELONG, CLINICAL SERVICES, LLC, CLINICAL SERVICES INTERNATIONAL, CLINICAL SERVICES INTERNATIONAL, INC., CLINICAL SERVICES INTERNATIONAL, LLC, CSI, INC. and CSI, LLC, Defendants
v.
AMANDA DEL ZOTTO, ERIC DELONG, CLINICAL SERVICES, LLC, CLINICAL SERVICES INTERNATIONAL, CLINICAL SERVICES INTERNATIONAL, INC., CLINICAL SERVICES INTERNATIONAL, LLC, CSI, INC. and CSI, LLC, Defendants
Case No. 8:16-cv-1274-T-36JSS
United States District Court, M.D. Florida
Signed September 16, 2019
Counsel
Beatriz McConnell, Courtney Fernald, Joseph Wesley Etter, IV, Leonard S. Englander, Andrew J. Davis, Englander & Fischer, PA, St Petersburg, FL, for Plaintiff.James John Zonas, Law Offices of Schwartz & Zonas, Naples, FL, for Defendant/Amanda Del Zotto.
Alan F. Hamisch, Hamisch & Hurvitz, PLLC, James John Zonas, Law Offices of Schwartz & Zonas, Naples, FL, for Defendant/Eric Delong, Clinical Services, LLC, Clinical Services International, Clinical Services International, Inc., Clinical Services International, LLC, CSI, Inc. and CSI, LLC.
Honeywell, Charlene E., United States District Judge
ORDER
*1 This cause comes before the Court upon Plaintiff's Motion for Sanctions (Doc. 160) and Supplemental Motion for Sanctions (Doc. 178) and Defendant Eric DeLong's and Defendant Clinical Services Inc.'s responses thereto (Doc. 163; Doc. 185). In the motions, Plaintiff requests that the Court sanction Defendant Eric DeLong and Defendant Clinical Services, Inc. for perjury and other litigation misconduct by striking their answer, affirmative defenses, and counterclaim, entering default judgment as to liability against them, and awarding Plaintiff attorneys' fees and costs. The Court, having reviewed the parties' submissions and being fully advised in the premises, and with the benefit of evidentiary hearings and oral argument, will now grant in part and deny in part the Motion for Sanctions and deny the Supplemental Motion for Sanctions.
I. BACKGROUND[1]
A. UPS and Del Zotto
This action concerns the alleged destruction and/or theft of trade secrets. Plaintiff, Universal Physician Services, LLC (“UPS”) is a family business specializing in temporary transitional and local placement of emergency physicians (locum tenens). Doc. 89-1[2] at p. 7. UPS's customers include physicians, hospitals, and third parties. Doc. 89-1 at p. 7. UPS established its customer base through networking and building relationships over a period of more than 10 years at great time and expense. Doc. 89-1 at p. 7. Of the total pool of potential clients in the locum tenens industry, UPS has at most one-tenth of one percent of the market share (approximately 40 clients). Doc. 89-1 at p. 7.
UPS maintains substantial and confidential information on its customers and physicians, including contact information, personal information, and pricing information, as well as critical information pertaining to hospital emergency department contracts (such as when those contracts are coming up for renewal), which helps UPS effectively and competitively place physicians at particular hospitals. Doc. 89-1 at p. 8. UPS maintains detailed hospital lists across multiple states containing hospital CEOs, emergency department contract holders and renewal dates, volumes, bids and counties served, credentialing information, provider lists, personal and health information on physicians, and proposals and contracts. Doc. 89-1 at p. 8. UPS's customer information is not available to the public generally, is never shared by UPS with anyone outside the company, and is considered confidential company information. Doc. 89-1 at p. 8.
Mary Ludvik (“Ludvik”) is the sole managing member of UPS. Doc. 89-1 at p. 8. Amanda Del Zotto (“Del Zotto”), the only daughter of Ludvik, worked for UPS from its inception until she was terminated on February 13, 2015. Doc. 89-1 at p. 8. While at UPS, Del Zotto was a chief recruiter in charge of sending out flyers to physicians, gathering customer personal data, and compiling physician profiles. Doc. 89-1 at p. 8. Del Zotto was responsible for maintaining the hospital lists, provider lists, physician information, and proposals. Doc. 89-1 at p. 9. Del Zotto maintained a company PC and laptop on which she kept this confidential business information. Doc. 89-1 at p. 9.
*2 Prior to working for UPS, Del Zotto had no relationships with doctors or hospitals and had no experience in or knowledge of the locum tenens industry other than “what she heard at the dinner table.” Doc. 89-1 at p. 9. UPS did not have a written noncompete agreement with Del Zotto because UPS's principals trusted Del Zotto as family and never imagined she would jeopardize or betray the family business. Doc. 89-1 at p. 9.
Sometime in the days leading up to her termination in February 2015, Del Zotto took a confidential UPS proposal and presented it as her own along with a doctor who had been a UPS customer. Doc. 89-1 at p. 9. Del Zotto was terminated for that reason. Doc. 89-1 at p. 9. Following Del Zotto's termination from UPS, she began contacting and soliciting UPS's clients. Doc. 89-1 at p. 9.
B. State Court Proceedings Against Del Zotto
UPS filed this action on or about April 9, 2015 in the Circuit Court of the Sixth Judicial Circuit in and for Pinellas County, Florida (the “state court”), naming Del Zotto as the sole defendant. Doc. 89-1 at pp. 34-45. UPS's complaint against Del Zotto alleged the following causes of action: breach of fiduciary duty, tortious interference, conversion, replevin, civil theft, and breach of confidential relationship (the “Original Complaint”). Doc. 89-1 at pp. 34-45; Doc. 2 at ¶ 98. UPS sought injunctive relief against Del Zotto.
On April 10, 2015, the state court entered a temporary injunction against Del Zotto, enjoining her from using, altering, or destroying any of UPS's confidential information, personal property, emails, or passwords and from communicating with UPS's customers, customer base, and physicians pending further order of the state court. Doc. 120 at p. 24. Del Zotto was ordered to return all confidential information, personal property, company emails, and passwords to UPS within 10 days following service of the injunction. Doc. 120 at p. 24.
Del Zotto did not return UPS's computer equipment until June 2015. Doc. 89-1 at p. 9. Upon inspection, UPS discovered that both the PC and laptop Del Zotto returned had been wiped of all data, including UPS's confidential business information. Doc. 89-1 at p. 9. Unrefuted expert testimony by UPS showed that in May 2015, all of the data—about 170 gigabytes—under a profile named “Amanda_Del Zotto” was intentionally deleted and destroyed and could not be recovered. Doc. 89-1 at p. 9.
On January 29, 2016, the state court entered an order granting UPS's motion for sanctions for spoliation of evidence. Doc. 74 at p. 54. The state court held that there “shall be an adverse inference available to the finder of fact that the computers at issue ... did, in fact, contain confidential information that was the property of [UPS], and that [Del Zotto], did act to prevent its return to [UPS].” Doc. 74 at p. 54.
On March 22, 2016, the state court entered an order granting UPS's motion for sanctions against Del Zotto for litigation misconduct. Doc. 74 at p. 59. The state court found that Del Zotto willfully violated the state court's temporary injunction by failing to timely return UPS's computer equipment and by deleting and destroying UPS's confidential information. Doc. 74 at p. 57. The state court also found that Del Zotto violated its amended temporary injunction, provided perjured testimony, failed to supplement document production as required pursuant to an order granting UPS's motion to compel discovery responses and document production, and continued to destroy and withhold evidence by deleting emails and text messages UPS had requested through discovery. Doc. 74 at pp. 56-58. Finding that Del Zotto “set in motion an unconscionable scheme calculated to interfere with the judicial system's ability impartially to adjudicate this matter by unfairly hampering the presentation of UPS's claim,” the state court struck Del Zotto's answer and entered default judgment as to liability against her on Counts II, III, and VII of the Original Complaint. Doc. 74 at p. 59.
*3 On April 1, 2016, UPS and Del Zotto went to trial on Counts I, II, III, and VII of UPS's Original Complaint and Count VIII of a supplemental pleading filed by UPS.[3] Doc. 20 at p. 13. Del Zotto testified at the non-jury trial. Doc. 139-2. The state court found in favor of UPS and against Del Zotto on each count and entered a Partial Final Judgment for Damages against Del Zotto in the amount of $512,871[4] to bear interest at the prevailing statutory rate. Doc. 20 at p. 14.
The state court entered a permanent injunction against Del Zotto on April 26, 2016. The permanent injunction permanently restrained and enjoined Del Zotto from
utilizing, sharing, disclosing, or otherwise using UPS's confidential and trade secret information, specifically its customer information including: contact information, personal information, pricing information, information pertaining to hospital emergency department contracts (such as when those contracts are coming up for renewal), hospital lists containing hospital CEOs, emergency department contract holders and renewal dates, volumes, bids and counties served, credentialing information, provider lists, personal and health information on physicians, as well as proposals and contracts.
Doc. 74 at pp. 20-21.
C. UPS's Supplemental Complaint and the Addition of DeLong and CSI as Parties
As UPS prosecuted its claims against Del Zotto, it also sought to obtain information from or about an individual, Eric DeLong (“DeLong”), and two entities, Clinical Services, Inc. and Clinical Services, LLC, with which UPS suspected Del Zotto had relationships. Doc. 74 at pp. 56-57, 60. UPS's efforts to discover information about the three were, at times, thwarted by Del Zotto's litigation misconduct. Doc. 74 at pp. 56-57 (holding, in combination with its order granting UPS's motion for sanctions for litigation misconduct, that Del Zotto lied under oath that Clinical Services, Inc. has no affiliation with Clinical Services, LLC and lied under oath that she did not have a relationship with Clinical Services, LLC).
At a deposition on January 12, 2016, UPS's counsel questioned Del Zotto about an e-mail it had obtained. The e-mail, dated February 13, 2015 and sent from amanda@clinicalservicesinc.com to various undisclosed recipients, stated that Del Zotto was no longer with UPS and had “since created a new organization completely autonomous from the staff at UPS.” Exh. 2. Del Zotto testified that she sent the e-mail to physicians that she had known that were also friends, some of which she had worked with at UPS and some not. Exh. 1 at p. 6, ln. 17-22, p. 32, ln. 2-21. In her January 12, 2016 deposition, Del Zotto also testified that the e-mail amanda@clinicalservicesinc.com was her business e-mail. Exh. 1[5] at p. 32, ln. 2-21, p. 6, ln. 19-22.
UPS served subpoenas duces tecum upon the corporate representative of Clinical Services, Inc., upon the corporate representative of Clinical Services, Inc. a/k/a Clinical Services, LLC, Clinical Services International, Clinical Services International, Inc., Clinical Services International, LLC, CSI, Inc., and/or CSI, LLC, and upon DeLong to appear for a deposition on January 27, 2016 at 10:00 a.m. in South Carolina. Exh. 3. DeLong appeared at the scheduled deposition as a non-party on behalf of himself and the corporate entities identified in the two other subpoenas. Exh. 4 at p. 80, ln. 1-2. DeLong's counsel sat in on the deposition. Exh. 4 at p. 3, ln. 3-8.
*4 At the deposition, DeLong testified that Clinical Services, LLC was formed by him and his father, David DeLong, in March 2015 in a merger with another entity named Del Ray Group. Exh. 4 at p. 29, ln. 17-25, p. 30, ln. 1-17. DeLong testified that he owns 10 percent of Clinical Services, LLC and that his father owns the other 90 percent. Exh. 4 at p. 34, ln. 1-6. DeLong also testified that Clinical Services, Inc., CSI, Inc., and Clinical Services International were the same as Clinical Services, LLC (collectively, “CSI”). Exh. 4 at p. 41, ln. 3-18, p. 63, ln. 12-23. DeLong confirmed that CSI's business was locums coverage, including physician placement and staffing. Exh. 4 at p. 38, ln. 5-10.
DeLong testified that he has the following e-mail address with CSI: eric@clinicalservicesinc.com. Exh. 4 at p. 7, ln. 11-17, p. 60, ln. 10-12. However, when UPS presented DeLong with a copy of an e-mail sent from eric@clinicalservicesinc.com to a recipient, DeLong testified that he did not recognize the e-mail and did not remember typing it. Exh. 4 at p. 59, ln. 1-25, p. 60, ln. 1-25, p. 61, ln. 1-25, p. 62, ln. 1-19. The e-mail in question, identified as an exhibit to DeLong's deposition, was addressed to a Janet Shook. Exh. 4 at p. 59, ln. 1-25. The e-mail in question stated that DeLong had received Shook's CV from an associate, Amanda Del Zotto. Exh. 4 at p. 60, ln. 15-25.
When questioned about the e-mail, DeLong testified he has “never spoken to a Ms. Janet Shook” and that he may have received her contact information from the internet. Exh. 4 at p. 60, ln. 15-24. DeLong commented:
No. There's been times I think where my e-mail may have been used by somebody else because I don't know who this person is. I've never spoke to a Janet Shook. No. I'm sorry, Beatriz.[6] I use a couple different things to gather information for physicians. So I may have done a blast e-mail about getting some opportunities out there and there may have been an instance where one or two of them were people working with the Del Zottos, but I'm not infringing on their business.
Exh. 4 at p. 59, ln. 12-23 (footnote added).
Asked whether the e-mail statement that DeLong received Shook's e-mail from Del Zotto was a lie, DeLong reiterated that he didn't know a Janet Shook and stated that he did not receive any of UPS's information from Del Zotto. Exh. 4 at p. 62, ln. 3-19, p. 61, ln. 14-18.
DeLong also testified about his relationship with Del Zotto, including that he and Del Zotto were previously dating, that Del Zotto had previously stayed with or lived with him at one point, and that Del Zotto was not presently living with him. Exh. 4 at p. 69, ln. 17-18, p. 12, ln. 3-6, p. 13, ln. 1-25, p. 14, ln. 1-25, p. 15, ln. 1-20. DeLong testified that he did not provide Del Zotto cell phone service through his wireless telephone plan. Exh. 4 at p. 49, ln. 1-4. DeLong testified that Del Zotto has never shared any of UPS's client information, contracts, or proposals with him. Exh. 4 at p. 51, ln. 8-16, p. 62, ln. 3-19.[7]
*5 While DeLong answered some of UPS's counsel's questions, DeLong also stated at times that he did not recall answers to questions or flatly refused to answer questions. Exh. 4 at p. 11, ln. 14, p. 12, ln. 1, p. 15, ln. 14-20, p. 38, ln. 14-18, p. 39, ln. 4-25, p. 40, ln. 4-25, p. 46, ln. 1-25, p. 50, ln. 1-23, p. 54, ln. 5-25, p. 55, ln. 1-11, p. 58, ln. 13-19, p. 66, ln. 25, p. 67, ln. 1-16, p. 73 ln. 4-7, p. 74, ln. 4-6, 12-25, p. 75, ln. 1-25, p. 76, ln. 3-5, p. 77, ln. 20-25, p. 78, ln. 1-25, p. 79, ln. 1-25, p. 80, ln. 1-25. When UPS's counsel asked DeLong about Del Zotto's role at CSI, the following exchange occurred:
Q. What is Amanda's role at CSI?
A. I refuse to answer that question.
Q. And, again, you refuse to answer what the legal basis is for you not answering that?
A. Amanda does not have a role at CSI. She doesn't work for CSI. She's not –– she doesn't work for me. So, no, I don't have an answer for your question. I'm not going to answer your question.
Q. Well, you just did answer my question.
A. Right. And my testimony is she does not work for my company, no. Amanda doesn't work for CSI.
Q. Has Amanda ever worked for CSI?
A. She's never been an employee for CSI.
Q. Well, what do you mean by that? Why are you saying she's never been an employee? Has she worked in some other capacity?
A. I refuse to answer your question.
Q. Okay. So my question of whether Amanda has provided any services for CSI, your answer is you refuse to answer?
A. That's correct.
Exh. 4 at p. 75, ln. 5-25, p. 76, ln. 1-2.
DeLong's refusal to answer questions, or his responses that he did not recall, was often instigated by Del Zotto's attempts to object to counsel's questions of DeLong. The following excerpts of DeLong's testimony provide an example.
Q. When was the last time you spoke with Ms. Del Zotto?
A. What's today? What's today, Wednesday?
MS. DEL ZOTTO: Today is Wednesday.
THE WITNESS: Sunday afternoon.
BY MS. SANCHEZ:
Q. Did you talk in person or on the phone?
A. On the telephone.
Q. And what was the content of that communication?
A. I don't know.
MS. DEL ZOTTO: I object. I object to that.
MS. SANCHEZ: First of all, you're not a licensed attorney. Let me just give you the ––
THE WITNESS: Okay. I don't –– I don't remember what we talked about. I don't recall what we talked about.
BY MS. SANCHEZ:
Q. You don't recall what you talked about on Sunday on the telephone. How long was the conversation?
A. I don't recall.
Q. You don't recall. Okay. Is Ms. Del Zotto living with you right now?
A. No.
Q. No? When did she stop living with you?
MS. DEL ZOTTO: I object to that. And because I am pro se I can object to your questions.
MS. SANCHEZ: No. But what I'm trying to tell you, Ms. Del Zotto, is that in a deposition you're allowed a form objection, okay? So you can –– you can't have these speaking objections. You can object to form and then he can answer.
MS. DEL ZOTTO: Okay. I don't ––
MS. SANCHEZ: You can't instruct him not to answer. There is no privilege.
MS. DEL ZOTTO: I object to form. Then I object to form.
...
Q. Okay. What about in April of 2015? Did Clinical Services, LLC have contracts with any customers?
MS. DEL ZOTTO: Object to form.
BY MS. SANCHEZ:
Q. You can answer.
A. I refuse to answer that question.
Q. Okay. May of 2015 ––
A. I refuse to answer that question.
Q. Well, let me finish the question so we have a clean record.
A. Okay.
Q. In May of 2015 did Clinical Services, LLC have contracts with any customers?
A. I refuse to answer that question.
Q. Okay. And in June of 2015 did Clinical Services, LLC have any contracts with any customers?
MS. DEL ZOTTO: Object to form.
THE WITNESS: I refuse to answer that question.
Exh. 4 at p. 11, ln. 4-25, p. 12, ln. 1-18, p. 39, ln. 17-25, p. 40, ln. 1-12. DeLong's behavior at the deposition resulted in UPS's counsel's early termination of the deposition.[8] Exh. 4 at p. 80, ln. 5-25.
*6 On February 12, 2016, the state court granted UPS leave to file a supplemental pleading, its Verified Supplemental Complaint (the “Supplemental Complaint”). Doc. 1-1 at p. 1. The Supplemental Complaint adds more claims against Del Zotto and names DeLong and CSI as parties. Doc. 1-1 at p. 1; Doc. 2 at pp. 1-2.
The Supplemental Complaint alleges that Del Zotto copied and retained UPS's confidential information for her own benefit and use before deleting it from UPS's PC and laptop. Doc. 2 at ¶ 92. According to the Supplemental Complaint, DeLong, the President of CSI as well as a shareholder, member, employee, and/or agent of CSI, and Del Zotto, a shareholder, member, employee and/or agent of CSI, utilized UPS's confidential information to contact and solicit UPS's clients and obtain contracts on behalf of CSI. Doc. 2 at ¶¶ 80-81, 93.
In addition to the remaining claims in the Original Complaint, the Supplemental Complaint asserts claims for misappropriation against Del Zotto (Count VIII),[9] misappropriation against CSI (Count X),10 civil conspiracy to misappropriate trade secrets against Del Zotto and DeLong (Count XI), civil conspiracy to misappropriate trade secrets against Del Zotto and CSI (Count XII), injunctive relief against DeLong (Count XIII), injunctive relief against CSI (Count XIV), tortious interference against DeLong (Count XV), tortious interference against CSI (Count XVI), civil conspiracy to tortiously interfere with UPS's business relationships and contracts against Del Zotto and DeLong (Count XVII), and civil conspiracy to tortiously interfere with UPS's business relationships and contracts against Del Zotto and CSI (Count XVIII). Doc. 2 at ¶¶ 99-190.
On March 30, 2016, prior to holding trial on most of UPS's claims against Del Zotto, the state court entered an order granting UPS's motion to bifurcate trial on Counts IX through XVIII of UPS's Supplemental Complaint and the special damages portion of Count VIII. Doc. 89-1 at p. 13.
DeLong and CSI were served with the Supplemental Complaint on or about May 6, 2016. Doc. 5 at p. 1. DeLong and CSI[11] removed the case to this Court on May 20, 2016, invoking the Court's diversity jurisdiction pursuant to 32 U.S.C. § 1332, and filed a Motion to Dismiss. Doc. 1; Doc. 5. Del Zotto consented to removal.[12] Doc. 3; Doc. 5.
On March 16, 2017, after the Court denied their Motion to Dismiss, DeLong and CSI filed their Answer to the Supplemental Complaint. Doc. 85. DeLong and CSI raised the following affirmative defenses: failure to state a claim, lack of personal jurisdiction, causation, laches, unclean hands, estoppel, and statute of frauds. Doc. 85. In addition, DeLong and CSI asserted counterclaims against UPS, Ludvik, Joe Del Zotto, and Anthony Del Zotto[13] in their individual and official capacities as members or agents of UPS. Doc. 85 at p. 13. DeLong and CSI asserted the following counterclaims: unfair and deceptive trade practices, tortious interference with contractual and business relations, tortious interference with prospective contractual and business relations, conspiracy to interfere with contractual and business relations, conspiracy to interfere with prospective contractual and business relations, defamation, and outrage. Doc. 85.
*7 On March 23, 2017, UPS filed an amended[14] motion to compel discovery and for sanctions. Doc. 89. In the motion, UPS requested that the Court compel DeLong and CSI to file “proper and complete discovery responses to UPS's First Requests for Production” and to award UPS attorney's fees as sanctions. Doc. 89 at p. 1.
On May 16, 2017, the Magistrate Judge overruled DeLong's and CSI's objections to UPS's requests for production. Doc. 100. The Magistrate Judge directed DeLong and CSI to serve second supplemental responses to UPS's requests for production by June 2, 2017. Doc. 100 at p. 1. Specifically, the Magistrate Judge granted the motion as to requests for production to DeLong “1 through 16 (to the extent that they relate to the matters alleged in Plaintiff's Amended Complaint), 17 (documents indicating when Clinical Services LLC was formed, who formed it, and the identity of owners and operators), 18, 19–27 (as to solicitation or business relationships between entities, individuals, and Defendants).” Doc. 100 at p. 2. The Magistrate Judge noted that the same restrictions would apply to requests for production from CSI. Doc. 100 at p. 2.
However, the Magistrate Judge denied UPS's requests for sanctions, determining that although the dispute delayed the progression of the case, DeLong's and CSI's objections and responses were a result of their differing view as to the requests rather than a failure to participate in discovery. Doc. 100 at p. 2.
On October 17, 2017, UPS moved for partial summary judgment[15] on the claims in its Supplemental Complaint. Doc. 126. The Court denied that motion, holding that disputes of material fact existed as to whether Del Zotto was an agent of CSI and that there was insufficient evidence that Del Zotto or CSI had an agreement or common purpose sufficient to show civil conspiracy. Doc. 212. Specifically, the Court noted that DeLong's deposition testimony raised issues of material fact.
UPS deposed DeLong for a second time in January 2018 on behalf of himself and CSI, this time as a party to the litigation. DeLong and CSI were represented at the deposition by counsel. During this deposition, UPS came with additional documents with which to question DeLong. The deposition mainly focused on whether Del Zotto had any relationship with CSI. UPS's counsel attempted to obtain that information by asking similar questions in a variety of ways, resulting in the following relevant exchanges.
Q. Okay. Does Amanda Del Zotto have an ownership interest in CSI?
...
A. It's okay. Beatriz, she has no ownership and never had any ownership in Clinical Services.
Q. Okay. Was it your idea to form CSI?
A. Yes.
Q. Was anyone besides yourself involved in forming CSI?
A. No.
...
Q. Okay. And are there any employees that CSI has had since it was formed?
A. No.
Q. Has Amanda Del Zotto ever been an employee of CSI?
A. No.
Q. Has she ever been manager of CSI?
A. No.
Q. Has she ever been director of CSI?
A. No.
Q. Has Amanda Del Zotto ever been a partner of CSI?
A. No.
Q. Has she been an independent contractor for CSI?
A. No.
...
Q. Did CSI pay Amanda Del Zotto any compensation in 2015?
*8 A. No.
Q. Did you give any of your distribution to Amanda Del Zotto?
A. No.
Q. Did CSI pay Amanda Del Zotto any compensation in 2016?
A. No.
Q. What about 2017?
A. No.
Q. Has Amanda Del Zotto ever had a role at CSI?
A. No.
Q. Has CSI ever compensated Amanda Del Zotto for services she provided to CSI?
A. No.
Q. Has Amanda Del Zotto ever received payment from CSI as a draw for commissions earned?
A. No.
Q. And has she ever been an employee of CSI?
A. No.
Exh. 15 at p. 18, ln. 10-11, p. 19, ln. 3-11, p. 23, ln. 24-25, p. 24, ln. 1-11, p. 49, ln. 19-21, p. 56, ln. 4-23.
Following these exchanges, UPS's counsel presented DeLong with (1) a copy of a health insurance benefit application submitted to Blue Cross Blue Shield (“BCBS”) for CSI with DeLong's signature, listing DeLong and Del Zotto as “eligible employees” (defined on the form as employees actively at work an average of 30 hours per week) and (2) a copy of a letter from Michael Hayes, DeLong's accountant, stating that “Amanda Del Zotto receives pay from Clinical Services, LLC as a draw for commissions earned. She draws $800 per month on average.” Exh. 15 at p. 57, ln. 15-22, p. 59, ln. 18-25, p. 60, ln. 1, p. 61, ln. 11-17.
In response to questioning about the documents, DeLong testified that the statement provided to BCBS that Del Zotto worked for CSI and received commissions was false and was provided for the purpose of getting Del Zotto health insurance. Exh. 15 at p. 60, ln. 12-25, p. 61, ln. 1-25, p. 62, ln. 1-12. De Long acknowledged that he had signed the forms, but that he did so to do “whatever I needed to do to get her health insurance.” Exh. 15 at p. 61, ln. 1-2.
UPS's counsel next presented DeLong with a copy of CSI's AT&T account information, which DeLong agreed was a true and accurate copy. Exh. 15 at p. 63, ln. 25. Counsel pointed to one of the telephone numbers listed on the AT&T account: 803-626-3522. Exh. 15 at p. 65, ln. 1-10. In response to counsel's questions, DeLong testified that he used that phone number, that no one else at CSI used that phone number, and that Del Zotto, as far as he was aware, has not used that phone number. Exh. 15 at p. 65, ln. 1-10. Asked whether DeLong had paid for any of Del Zotto's expenses since January 2016, DeLong responded that he has only paid for her health insurance. Exh. 15 at p. 85, ln. 6-16.
UPS's counsel also questioned DeLong about whether Del Zotto had ever tried to recruit physicians on behalf of UPS. Exh. 15 at p. 65, ln. 25, p. 66, ln. 1. DeLong replied that, as far as he was aware, she had not. Exh. 15 at p. 66, ln. 1. Asked whether, prior to Del Zotto's termination at UPS, DeLong and Del Zotto had planned to start CSI together, DeLong responded “no.” Exh. 15 at p. 86, ln. 11-13.
UPS's counsel then presented DeLong with an e-mail sent from amanda@clinicalservicesinc.com dated August 24, 2015. Exh. 15 at p. 108, ln. 18-25. The e-mail, addressed to a Megan Godfrey, Scott Sasser, and eric@clinicalservicesinc.com, stated, “Megan and Scott, Good Morning! I understand the [sic] CSI is in review with the legal department but I will be in the Greenville area with my associate Eric Wednesday-Friday this week with other business.” Exh. 15 at p. 112, ln. 10-17.
*9 Questioned about the e-mail address amanda@clincialservicesinc.com and about the e-mail itself, DeLong testified:
A. I don't recognize this e-mail.
Q. Okay. Who is amanda@clinicalservicesinc.com?
A. I don't –– I don't know about this e-mail address.
Q. So –– so is it your testimony that this amanda@clinicalservicesinc.com is not Amanda Del Zotto?
A. It's not her. I don't ––
Q. It's not her?
A. I just –– in regards to this e-mail, I don't recognize this at all.
Q. Well, are you in charge of the e-mail domain for Clinical Services, Inc.?
A. Yes.
Q. Okay. So you have to register one; right?
A. Yes.
Q. Okay. So you would of been the person to register amanda@clinicalservicesinc.com?
A. I did not register amanda@clinicalservicesinc.com.
Q. Okay. So does anybody else have access to register an e-mail address at that domain?
A. I would have to ––
Q. At CSI?
A. I would have to look into that.
Exh. 15 at p. 109, ln. 1-25, p. 110, ln. 1-2.
UPS's counsel also questioned DeLong about e-mails sent from eric@clinicalservicesinc.com, which DeLong agreed was his e-mail address with CSI. Exh. 4 at p. 7, ln. 11-17; Exh. 15 at p. 78, ln. 6. UPS's counsel presented DeLong with multiple e-mails sent from that e-mail address to various recipients between March and October of 2015. DeLong denied that he recognized almost all of the e-mails, stating that he didn't know who the recipients were, that the e-mails didn't represent his “verbiage,” or that he did not write the e-mails. Exh. 15 at p. 66, ln. 15-25, p. 67, ln. 1-12, p. 68, ln. 14-22, p. 69, ln. 4-11, p. 70, ln. 17-25, p. 71, ln. 1-24, p. 72, ln. 4-25, p. 73, ln. 1-9, p. 74, ln. 14-25, p. 75, ln. 1-8, p. 116, ln. 16-25, p. 117, ln. 1-5. Asked whether anyone else had access to his e-mails in 2015, DeLong responded, “I don't believe anybody had access to my e-mail at that time, no.” Exh. 15 at p. 72, ln. 12-15.
UPS's counsel also asked whether CSI has a bank account. DeLong testified that it did, with Wells Fargo. Exh. 15 at p. 77, ln. 5-11. Asked if DeLong was “the only signor on that account as the corporate rep,” DeLong responded, “No. My dad is as well.” Exh. 15 at p. 77, ln. 5-11.
D. The Sanctions Motions
UPS filed the first Motion for Sanctions on April 9, 2018, and filed the Supplemental Motion for Sanction on May 25, 2018. Doc. 160; Doc. 178 (together, the “sanctions motions”). In the sanctions motions, UPS alleges that DeLong and CSI committed various litigation misconduct, including perjury, failure to disclose evidence, and other bad faith tactics. DeLong and CSI filed two short responses in opposition to the sanctions motions, mainly disputing UPS's factual assertions and arguing that UPS's motions were merely “an attempt to take the job away from the trier of fact.” Doc. 163. DeLong and CSI also challenged the admissibility of the documents attached to the sanctions motions. Because UPS sought severe sanctions and because DeLong and CSI disputed the facts in the sanctions motions and raised concerns about admissibility of evidence, the Court determined an evidentiary hearing would be necessary.
II. LEGAL STANDARD[16]
*10 District courts have inherent authority to impose sanctions upon parties who abuse the judicial process or who perpetrate a fraud upon the court. See Chambers v. NASCO, Inc., 501 U.S. 32, 44-45 (1991). A fraud upon the court occurs when a party knowingly sets “in motion some unconscionable scheme calculated to interfere with the judicial system's ability impartially to adjudicate a matter by improperly influencing the trier or unfairly hampering the presentation of the opposing party's claim or defense.” Jackson v. Comberg, No. 8:05-cv-1713-T-24TMAP, 2006 WL 8440091, at *2 (M.D. Fla. Aug. 25, 2006) (quoting Aoude v. Mobil Oil Corp., 892 F.2d 1115, 1118 (1st Cir. 1989)). A district court may impose sanctions pursuant to its inherent authority where a party destroys or conceals evidence or commits perjury. Flury, 427 F.3d at 944-45 (discussing the imposition of sanctions for spoliation of evidence); Qantum Commc'ns Corp. v. Star Broad., Inc., 473 F. Supp. 2d 1249, 1269 (S.D. Fla. 2007) (“[T]he inherent powers doctrine is most often invoked where a party commits perjury or destroys or doctors evidence.”). Moreover, several federal courts have held that “the need for sanctions is heightened when the misconduct relates to the pivotal or ‘linchpin’ issue in the case.” Qantum Commc'ns Corp., 473 F. Supp. 2d at 1269.
A court's inherent power to sanction is “governed not by rule or statute but by the control necessarily vested in courts to manage their own affairs so as to achieve the orderly and expeditious disposition of cases.” Purchasing Power, LLC v. Bluestem Brands, Inc., 851 F.3d 1218, 1223 (11th Cir. 2017) (quoting Chambers, 501 U.S. at 43). A district court may exercise its inherent power “to sanction the willful disobedience of a court order, and to sanction a party who has acted in bad faith, vexatiously, wantonly, or for oppressive reasons.” Id. (quotation marks and citations omitted). The purpose of the court's inherent power to sanction is twofold: (1) “to vindicate judicial authority without resorting to a contempt of court sanction” and (2) “to make the prevailing party whole.” Id. (citing Chambers, 501 U.S. at 46).
“The key to unlocking a court's inherent power” is a finding of subjective bad faith or conduct “so egregious that it could only be committed in bad faith.” Purchasing Power, LLC, 851 F.3d at 1223-25. Bad faith is demonstrated by a party's “delaying or disrupting the litigation or hampering enforcement of a court order,” among other things. Eagle Hosp. Physicians, LLC v. SRG Consulting, Inc., 561 F.3d 1298, 1306 (11th Cir. 2009). The Eleventh Circuit has further explained that while false statements, alone, do not show bad faith, “[a] false statement can be evidence of bad faith, if, for instance, there is other evidence in the record indicating that the statement was made for a harassing or frivolous purpose.” Diaz v. First Marblehead Corp., 643 Fed. Appx. 916, 925, n.5 (11th Cir. 2016) (quoting Byrne v. Nezhat, 261 F.3d 1075, 1125 (11th Cir. 2001), abrogated on other grounds by Bridge v. Phoenix Bond & Indem. Co., 553 U.S. 639 (2008)). Without a “smoking gun” statement from a party, “a district court makes a determination of bad faith by drawing inferences from the conduct before it.” Terry v. Carnival Corp., No. 13-20571-CIV-GRAHAM/GOODMAN, 2014 WL 11798518, at *4 (S.D. Fla. Jan. 15, 2014) (quoting Byrne, 261 F.3d at 1125).
To make findings supporting sanctions, a court must comply with the “mandates of due process, requiring fair notice and an opportunity to be heard.” Hernandez v. Acosta Tractors Inc., 898 F.3d 1301, 1306 (11th Cir. 2018) (quotation marks and citations omitted). Further, inherent power “must be exercised with restraint and discretion” and should not be used as a penalty for mere protracted litigation. Purchasing Power, LLC, 851 F.3d at 1225. Rather, sanctions fashioned pursuant to a court's inherent authority are remedies for “rectifying disobedience.” Id. Such sanctions may include attorney's fees and costs. Roadway Exp., Inc. v. Piper, 447 U.S. 752, 765-66 (1980). Dismissal of a party's pleading or striking of its defenses is a “heavy punishment, appropriate only as a last resort.” Eagle Hosp. Physicians, LLC, 561 F.3d at 1306 (quotation marks and citations omitted). Nonetheless, dismissal and striking may be appropriate where lesser sanctions would not suffice to deter conduct or ensure the disobedient party's compliance. Id.
*11 In addition to its inherent authority, a federal court also maintains the power to impose a variety of sanctions under Federal Rule of Civil Procedure 37(b). Under that Rule, a court may sanction a party who “fails to obey an order to provide or permit discovery” by:
(i) directing that the matters embraced in the order or other designated facts be taken as established for purposes of the action, as the prevailing party claims;
(ii) prohibiting the disobedient party from supporting or opposing designated claims or defenses, or from introducing designated matters in evidence;
(iii) striking pleadings in whole or in part;
(iv) staying further proceedings until the order is obeyed;
(v) dismissing the action or proceeding in whole or in part;
(vi) rendering a default judgment against the disobedient party; or
(vii) 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). Instead of or in addition to the sanctions listed in subsections (i) through (vii), the court must order the disobedient party or the party failing to act, 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), 37(d)(3).
Although dismissal of a recalcitrant party's claim is permitted, dismissal with prejudice is “the most severe Rule 37 sanction” and not favored. Mene v. Marriott Inter., Inc., 238 Fed. Appx. 579, 582 (11th Cir. 2007). However, dismissal with prejudice is appropriate when less drastic remedies have been ineffective or when a party “demonstrates a flagrant disregard for the court and the discovery process.” Id. (affirming dismissal as sanction under Rule 37 where party had twice disobeyed court orders to appear for depositions and consistently disregarded court-imposed deadlines). Default judgment is also considered a “severe sanction,” appropriate only when a district court had made “a finding of willful bad faith failure to comply” and determined that “lesser sanctions are not sufficient.” Rasmussen v. Central Fla. Council Boy Scouts of Am., Inc., 412 Fed. Appx. 230, 232 (11th Cir. 2011).
Rule 37(d) also permits the Court to impose sanctions against a party if (1) the party fails to appear for his own deposition after being served with proper notice, or (2) fails to serve answers, objections, or written responses after being properly served with interrogatories or a request for inspection. Under Rule 37(d), “[s]anctions may include any of the orders listed in Rule 37(b)(2)(A)(i)-(vi).” Fed. R. Civ. P. 37(d)(3).
III. FINDINGS AND ANALYSIS
The Court received evidence from UPS in support of its sanctions motions during evidentiary hearings held April 17, 2019 and June 4, 2019.[17] UPS supplemented its documentary exhibits with testimony of its attorney, Beatriz McConnell, who discussed UPS's counsels’ efforts to obtain discovery in this case. Ludvik also testified on behalf of UPS as to the harm caused by DeLong's and CSI's conduct. UPS also called upon Del Zotto to testify and upon DeLong to testify on behalf of himself and CSI. DeLong and CSI did not provide any evidence or call any witnesses. Both sides presented oral argument.
A. The First Sanctions Motion
*12 In the Motion for Sanctions, UPS argues, in relevant part,[18] that DeLong committed perjury when he, on behalf of himself and CSI: (1) refused to answer questions or claimed he did not recall during the January 2016 non-party deposition; (2) falsely testified about Del Zotto's relationship with CSI to conceal facts material to UPS's claims; (3) falsely testified that Del Zotto did not provide CSI with UPS's business information; and (4) falsely testified that he did not recognize inculpatory evidence. UPS also argues that DeLong and CSI committed further litigation misconduct when they, among other things, wrongfully denied UPS's requests for admissions that are central to UPS's claims and withheld evidence.
During the evidentiary hearings, UPS presented evidence that DeLong testified falsely at his depositions when he repeatedly denied that Del Zotto had any role at CSI, denied that he knew anything about Del Zotto's recruitment efforts on behalf of CSI, and denied that Del Zotto provided CSI with UPS's business information. At the evidentiary hearings, Del Zotto and DeLong provided various explanations for inconsistencies in the record. The Court recounts the evidence provided by UPS and DeLong's and Del Zotto's explanations of that evidence below.
i. The Cell Phone Number
UPS contends that DeLong testified falsely when he attempted to distance himself from Del Zotto by denying that he provided Del Zotto with cellular telephone service through CSI's AT&T account. Doc. 160 at p. 6; Exh. 4 at p. 7, ln. 3-6, p. 49, ln. 1-4; Exh. 15 at p. 65, ln. 1-10.
UPS presented evidence to the Court that Del Zotto had used a phone number associated with CSI's AT&T account. Specifically, UPS provided the Court with evidence that (1) the phone number 803-626-3522 is listed on CSI's AT&T account and (2) Del Zotto provided that same phone number to the state court's judicial assistant on February 10, 2016 as a way to contact her. Exh. 15 at p. 63, ln. 22, p. 65, ln. 1-10; Exh. 7.[19]
Confronted with this evidence, Del Zotto explained during the June 4, 2019 evidentiary hearing that the phone number was not hers, but was DeLong's and that she was allowed to use it for emergencies.
ii. The Insurance Application with BCBS
UPS argues that DeLong provided perjured testimony when he testified that Del Zotto has never had a role at CSI.
UPS presented evidence of the health insurance benefit application submitted to BCBS for CSI, listing DeLong and Del Zotto as “eligible employees” and the accompanying letter from DeLong's accountant stating that “Amanda Del Zotto receives pay from Clinical Services, LLC as a draw for commissions earned. She draws $800 per month on average.” Exh. 15 at p. 57, ln. 15-22, p. 59, ln. 18-25, p. 60, ln. 1, p. 61, ln. 11-17.[20]
At the June 4, 2019 evidentiary hearing, consistent with his testimony at his January 2018 deposition, DeLong explained that the letter submitted with the insurance application was done for the purpose of getting Del Zotto health insurance. DeLong testified that Del Zotto was “somewhat suicidal” and “drinking heavily,” and that he “manipulated the system” to get her health insurance to have her attend counseling. DeLong further testified that this was necessary because there was no open enrollment for health insurance at the time the coverage was needed. DeLong testified that he asked his accountant to do him a “huge favor” and write the letter to BCBS. The Court questioned DeLong about his testimony, resulting in the following exchange.
*13 Q. [By the Court] And then the insurance issue, so as I understand it, this exhibit with regard to insurance based upon your testimony, this is all just a big lie? A. In regards to me giving her a job, what my CPA wrote, yes, Your Honor, that was a lie. It was. I had to get her insurance. I guess that lie was more important to me than her killing herself and she had mentioned that more than a few times.
iii. The Wells Fargo Business Account Application
As further evidence that DeLong perjured himself when he stated that Del Zotto has no role with CSI, UPS presented evidence to the Court that CSI opened a business account with Wells Fargo on April 27, 2015, listing Del Zotto as an “owner with control of the entity.” Exh. 16.
At the evidentiary hearing on June 4, 2019, DeLong admitted that the bank application contained his and Del Zotto's signatures. However, he denied that Del Zotto had any ownership at CSI. DeLong testified that Del Zotto's designation as an owner on the business account was a mistake, and that she was merely supposed to be a signor on the account to “help out” when the account was first set up to “deposit checks and things like that.” DeLong testified that he and Del Zotto were signing quickly with an electronic pad, that he did not review the application before it was submitted, and that he did not receive a printed copy of the application at the bank. Moreover, DeLong's counsel argued that DeLong's tax returns, attached to his January 2018 deposition transcript, did not show Del Zotto as an owner or partner of CSI.
iv. The amanda@clinicalservicesinc.com E-mail Address
UPS contends that DeLong provided perjured testimony when he testified at his depositions that he did not recognize the e-mail address amanda@clinicalservicesinc.com and that Del Zotto did not provide UPS's confidential information to CSI. Doc. 160 at pp. 17-18. In support of its allegations, UPS presented evidence of e-mails including the address amanda@clinicalservicesinc.com, as well as Del Zotto's deposition testimony in January 2016 that the e-mail amanda@clinicalservicesinc.com was her business e-mail and that she had sent the February 13, 2015 e-mail to undisclosed recipients. Exh. 1 at p. 32, ln. 2-21.
At the evidentiary hearing, the Court questioned DeLong about the e-mails with the address amanda@clinicalservicesinc.com.
Q. [By the Court] So is it your testimony that Ms. Del Zotto never worked for Clinical Services?
A. Absolutely, Your Honor.
Q. So why is her name on all –– on these emails that I've seen, and I haven't seen a significant number but I have reviewed a few that have been admitted into evidence and her name is on them. Why is that?
A. Your Honor, when with –– when I first set up the business I set up an email for her.
Q. Why, if she wasn't going to work there?
A. Well, before the lawsuit she was helping me out. Before, before my attorneys at Motley Rice said she needs to stop. Let's say there was a couple months where she was helping me out. She never received ––
Q. What time period was that?
A. The spring of 2014 –– wait. No. False. So the spring of 2015.
Q. So she was helping you out. By that do you mean she was working at Clinical Services in spring of 2015?
A. I wouldn't say she was working. She was just consulting, helping me out. She wasn't on payroll or anything like that, Your Honor.
Q. And so these emails occurred because she was helping you out during spring of 2015?
*14 A. That would be my answer, yes.
Q. And when did she stop helping you out?
A. My attorney told me after all these letters were sent to my clients about injunctions and things of that nature that she should not be doing anything after December of 2015, and I believe we have copies of that letter as well.
Q. So December of 2015 Amanda Del Zotto stopped helping you out at Clinical Services?
A. Yes, Your Honor, I believe that's a correct date.
UPS's attorney asked additional questions of DeLong following the Court's questioning. The following exchange occurred.
Q. Mr. DeLong, you just represented to the Court that the reason that you set up an email address for Ms. Del Zotto at Clinical Services’ email address is because she was helping you out for a short period of time in the spring of 2015; correct?
A. I believe that's correct, the date. The date, yeah. I just don't want to mess the dates up because I don't remember that well that many years ago.
Q. Okay. So then at your deposition, you remember being deposed in this case?
A. Prior to your injunction letters. How about that?
Q Okay. So when you were deposed in this case in 2018, you repeatedly denied that you were even aware of the email address Amanda@ClinicalServicesInc.com, so that would have been a lie; correct?
A. No. I did not set her –– I actually did not set that email address up. The person who set it up –– I had somebody set up our Vista Print account and our website. He set up those email addresses and he also set up –– yeah. So I didn't set it up, no. I didn't set up her email address or password.
Q. Okay. But you testified you were not aware that she had an email address?
A. I did not know she had an email address at the time, no, I did not.
Q. You didn't know she was helping you out when she was helping you out?
A. I knew she was helping me out. I was aware that she had an email address for a couple months, but the email address was supposed to be terminated.
v. The eric@clinicalservicesinc.com E-mail Address
UPS contends that DeLong also provided perjured testimony when he claimed at his depositions to not recognize e-mails with the address eric@clinicalservicesinc.com and when he testified that he and CSI never received UPS's confidential information. UPS contends that DeLong's claim is belied by evidence of e-mails from eric@clinicalservicesinc.com to various recipients between March and October of 2015 which include statements that he received contact information from a “member over at U[PS].” Doc. 160 at p. 7; Exh. 11.
At the evidentiary hearing on June 4, 2019, consistent with his deposition testimony, DeLong admitted that the e-mail address was his but denied recognizing many of the e-mails sent, stating that he didn't know who the recipients were, that the e-mail didn't represent his “verbiage,” or that he did not write the e-mails.
At the evidentiary hearing, DeLong attempted to explain his response that he did not recognize the e-mails from eric@clinicalservicesinc.com by stating that his accounts had been hacked and that other people, including Del Zotto, had access to his e-mail account and had sent e-mails he was unaware of. DeLong further explained that he was not in the office often due to medical issues, that he didn't have a password on his computer until about a year ago, and that his office space was very open. On cross-examination by his counsel, DeLong testified as follows.
*15 Q. Mr. DeLong, you testified as to access to on your account?
A. Yes.
Q. Can you elaborate in detail as to the types of hacks that occurred on or about 2015?
A. I had a Pay Pal hack. My bank account, the business operating account. All the business accounts were hacked. We had to re-change all of our business accounts. I found out that my emails I guess I had too simple of a password or my family member that worked for me Jenny, she had gotten in and did some emails that I wasn't aware of. I believe Amanda had gotten in and done some emails that I was not aware of. There's certain emails in this booklet that I did not type that have Eric@ClinicalServices with a capital “E” would never be things like that, but, yes, I had people accessing my information without my knowledge.
Q. Can you describe for the Court the office structure that you had at CSI?
A. Very family oriented, a little bit too open. I shared an office with my uncles. That was my dad's former business, so we all kind of worked together in that type of office atmosphere. When I was having health issues, my cousin who worked with me managed my admin. account and she also managed my emails and things like that. I had –– 2015 I was having extreme back problems at that point, extreme anxiety.
During its direct examination, UPS also questioned DeLong about how he could not know about the e-mails sent from his e-mail address given that some of them were provided to UPS in discovery by DeLong's own attorneys. In response, DeLong suggested that he had not seen what was provided in discovery because he gave his attorneys access to CSI's server and his attorneys printed the e-mails.
vi. The Checks
In furtherance of its assertion that DeLong lied about Del Zotto's relationship with CSI, UPS presented evidence of (1) checks dated April 3, 2017 made out to Del Zotto that were signed over to DeLong and then deposited in a Wells Fargo account and (2) checks dated October 27, 2015 and September 15, 2016 written by DeLong to pay Del Zotto's attorney's fees when she had been represented. Exh. 16; Exh. 19.
At the June 4, 2019 evidentiary hearing, DeLong testified about the checks written to Del Zotto that were signed over to him and then deposited in a Wells Fargo account. DeLong explained that the checks were to Del Zotto for work she had done for another company completely unrelated to CSI. DeLong further explained that Del Zotto must have signed them over to DeLong to deposit because Del Zotto did not have a bank account of her own at the time.
DeLong admitted to signing the checks on behalf of Del Zotto for her attorney's fees. However, he explained that the attorney's fees would have been a loan from DeLong's father. DeLong testified that he did not make much money at the time the checks were written and that he was trying to help Del Zotto “get though all of this mom suing her stuff” while they were dating. In response to cross-examination by his counsel, DeLong also testified that he often provided for Del Zotto by giving her housing and groceries.[21]
*16 UPS also provided evidence in support of other alleged litigation misconduct by DeLong and CSI, including the alleged withholding of evidence. First, UPS alleges that DeLong wrongfully denied several requests for admission. UPS provided the Court with DeLong's responses to UPS's first request for admission. DeLong provided the following relevant denials on or about January 17, 2017.
Admit that you, along with Amanda Del Zotto, formed a company called Clinical Services, LLC.
RESPONSE: Deny.
Admit that Amanda Del Zotto shared UPS's Confidential Information with you.
RESPONSE: Denied as stated.
Admit that you used information obtained from Amanda Del Zotto to contact UPS's contract physicians and attempt to solicit them to do business with Clinical Services, LLC.
RESPONSE: Denied as stated.
Admit that you used information obtained from Amanda Del Zotto to contact Dr. James Hill and attempt to solicit him to do business with Clinical Services, LLC.
RESPONSE: Denied as stated.
Admit that Amanda Del Zotto is still employed by and/or doing business with or on behalf of Clinical Services, LLC.
RESPONSE: Denied as stated.
Exh. 25.
Second, UPS alleges that DeLong and CSI withheld evidence after the Magistrate Judge ordered them to supplement their responses to UPS's first requests for production. UPS alleges that after being ordered to supplement their discovery responses, DeLong and CSI produced only eight pages of documents.[22] Doc. 60 at p. 21. UPS alleges that DeLong and CSI continued to withhold and deny the existence of material documents that in fact exist and were obtained by UPS through third-party discovery. In its motion and at oral argument, UPS specifically pointed to (1) the payments made by DeLong to Del Zotto's attorneys and (2) the Wells Fargo business account application listing Del Zotto as an owner, both of which UPS alleges it had to obtain through third-party discovery.
Moreover, UPS alleges that neither it nor the Court can know the extent to which DeLong and CSI have withheld additional documents in this litigation. UPS alleges that it has reasonable belief that there are additional documents withheld, specifically, communications between DeLong and Del Zotto concerning a number of clients, which was requested in UPS's requests for production. UPS argues that, given all of the other evidence of communications involving DeLong and Del Zotto, it defies credulity that they would not have a single communication between themselves.[23]
i. Sanctions Under the Court's Inherent Authority
*17 “A witness testifying under oath or affirmation [commits perjury] if she gives false testimony concerning a material matter with the willful intent to provide false testimony, rather than as a result of confusion, mistake, or faulty memory.” U.S. v. Dunnigan, 507 U.S. 87, 94 (1993).
After careful consideration, the Court concludes that DeLong committed perjury. The Court begins with the most glaring example of DeLong's perjury: his testimony that Del Zotto never had a role at CSI and his testimony that he was unaware that she maintained the email address amanda@clincialservicesinc.com.
At the January 2016 deposition, DeLong at first refused to answer UPS's counsel's question, “what is Amanda's role at CSI?” After UPS's counsel asked DeLong for a legal basis for refusing to answer, DeLong testified: “Amanda does not have a role at CSI. She doesn't work for CSI. She's not –– she doesn't work for me.” UPS's counsel followed up with another question, asking whether Del Zotto has worked for CSI in any capacity or whether she has provided any services for CSI. DeLong refused to answer. Exh. 4 at p. 75, ln. 5-25, p. 76, ln. 1-2.
At the January 2018 deposition, DeLong denied under oath that Del Zotto had any role at CSI. De Long testified in response to UPS's counsel's questions that Del Zotto was not an owner, employee, manager, director, partner, nor independent contractor of CSI. Following those responses, UPS's counsel also asked DeLong: “Has Amanda Del Zotto ever had a role at CSI?” DeLong testified “no.” Exh. 15 at p. 18, ln. 10-11, p. 19, ln. 3-11, p. 23, ln. 24-25, p. 24, ln. 1-11, p. 49, ln. 19-21, p. 56, ln. 4-23.
Throughout the January 2018 deposition, DeLong asserted distance between himself and CSI and Del Zotto, responding “no” to questions about whether he recognized the e-mail address amanda@clinicalservicesinc.com, whether Del Zotto used a CSI phone number, whether he and Del Zotto had planned to start CSI together, and whether he paid any of Del Zotto's expenses after January 2016. Exh. 15 at p. 109, ln. 1-22, p. 65, ln. 1-10, p. 86, ln. 11-13, p. 85, ln. 6-16.
DeLong's deposition testimony about Del Zotto's relationship with CSI was clearly false, as demonstrated by documentation in evidence and by DeLong's testimony in response to the Court's and UPS's counsel's questioning at the June 4, 2019 evidentiary hearing. First, when confronted with a copy of the Wells Fargo business account application for CSI, DeLong explained that Del Zotto's designation as an owner on the account was a mistake. DeLong testified that Del Zotto was only supposed to be a signor on the account so that she could help him deposit checks. Second, DeLong testified that Del Zotto was “helping out” at CSI from the spring of 2015 through December of 2015. Third, DeLong testified that he and Del Zotto had planned to go into business together when they first met.
DeLong emphasized during his hearing testimony that Del Zotto had never been employed by CSI and had never been an owner. But whether or not Del Zotto was a volunteer at CSI rather than an employee, and whether she was a signor on the CSI business account rather than an owner, is of no moment. DeLong clearly denied in his depositions that Del Zotto ever had any role at CSI.
*18 Also at the June 4, 2019 evidentiary hearing, while discussing the fact that Del Zotto had “helped out” at CSI for a few months in 2015, DeLong testified, contrary to his deposition testimony, that when he “first set up the business,” he “set up an e-mail for her [Del Zotto].” When UPS's counsel pointed out the inconsistency, including DeLong's prior deposition testimony where he denied knowing anything about Del Zotto's CSI e-mail address, DeLong attempted to walk back his statements, testifying that someone else set up the e-mail address for Del Zotto. DeLong further attempted to clarify that, while he knew an e-mail address had been set up for Del Zotto at one time, he thought the e-mail address was supposed to be terminated and therefore did not know that she had an e-mail address at the time he was asked about it.
DeLong's attempts to clarify his inconsistent version of events are, again, unavailing. Whether DeLong personally set up Del Zotto's CSI e-mail address and whether he thought the e-mail address was supposed to be terminated at some date after it was created is not relevant—DeLong testified in his deposition that he knew nothing, ever, about the e-mail address amanda@clinicalservicesinc.com. DeLong's testimony at the June 4, 2019 evidentiary hearing that he paid Del Zotto's expenses (attorney's fees, groceries, and housing) and that he and Del Zotto had once planned to go into business together is also inconsistent with his deposition testimony. Exh. 15 at p. 86, ln. 11-13; p. 85, ln. 6-16.
DeLong's deposition testimony about these issues was not only one word, or even a few, that could be categorized as a misspeak or misunderstanding of counsel's question. Rather, DeLong made efforts to conceal the extent of his relationship with Del Zotto, even denying that Del Zotto had any role whatsoever with CSI. And this was no accident—DeLong knew full well that UPS was attempting to learn the scope—however small or large—of the relationship between Del Zotto and CSI to advance material aspects of its claims. DeLong falsely denied facts under oath for the purpose of hampering UPS's ability to prove its claims and, in so doing, acted in bad faith.[24]
Additional evidence in the record also supports the Court's conclusion that DeLong provided perjured testimony. The Wells Fargo business account application, the letter to BCBS stating that Del Zotto draws monthly commissions from CSI, evidence that Del Zotto used a CSI phone number, and e-mails from amanda@clinicalservicesinc.com all suggest that Del Zotto had some relationship with CSI of which DeLong was at least aware.
DeLong's attempts to provide excuses for most of the documentation is unconvincing. DeLong's admitted conduct of providing false statements to an insurance company for the purpose of obtaining benefits is behavior that seriously calls into question his credibility. See Vargas v. Peltz, 901 F. Supp. 1572, 1578 (S.D. Fla. 1995). Moreover, DeLong has failed to provide any evidence corroborating his version of events or otherwise disputing UPS's evidence. See id. Above all, the Court finds it strains credulity that each piece of UPS's evidence is simply happenstance. See Bonet v. New Courier, Inc., 203 F. Supp. 3d 1195, 1207 (S.D. Fla. 2016) (rejecting plaintiff's blame on a number of third parties, holding that plaintiff's conduct could only be explained as an effort to muddy the issues, disobey court orders, and avoid a fair trial on the merits).[25]
*19 The evidence admitted also supports the Court's next conclusion: DeLong committed perjury when he testified that he had no knowledge of Del Zotto's recruitment efforts or her providing CSI with UPS's business information. Exh. 4 at p. 51, ln. 8-16, p. 62, ln. 3-19, p. 75, ln. 1-6; Exh. 15 at p. 65, ln. 24-25, p. 66, ln. 1-13. The record is replete with solicitation e-mails from Del Zotto's CSI e-mail and DeLong's CSI e-mail to various hospitals or physicians, many, if not all of which, UPS maintains it has or had relationships with. Even if the Court partially accepted DeLong's version of events with respect to his e-mail—that he does not recognize the e-mails from eric@clinicalservicesinc.com, that he did not write them, and that Del Zotto or someone else may have written them—it is incredible to believe that DeLong had no knowledge of Del Zotto's efforts to solicit clients on behalf of CSI, his business, using either of their company e-mail addresses. It is especially incredible to believe in light of DeLong's and Del Zotto's close relationship.[26]
Finally, DeLong's evasiveness did not stop with his deposition testimony. DeLong was purposefully deceptive at the June 4, 2019 evidentiary hearing, making more effort to cover up inconsistencies in his prior testimony than to speak with veracity. DeLong's continued pattern of falsification is egregious, and warrants sanctions.
The Court “is entitled to the simple truth on all occasions.” U.S. v. Sterba, 22 F. Supp. 2d 1333, 1343, n.6 (M.D. Fla. Aug. 13, 1998). “Perjury, regardless of the setting, is a serious offense that results in incalculable harm to the functioning and integrity of the legal system as well as to private individuals.” U.S. v. Holland, 22 F.3d 1040, 1047 (11th Cir. 1994).
The record in this case demonstrates that UPS is entitled to sanctions. DeLong committed perjury about material issues in the case: the scope of the relationship between Del Zotto and CSI, i.e., whether Del Zotto was employed by or helped out at CSI and whether she provided CSI with UPS's business information. DeLong's perjury has resulted in postponement of this case and wasted the time of UPS's counsel and the Court, forcing UPS and the Court to spend time assessing falsehoods rather than adjudicating the merits of the case.
As a sanction, the Court will require DeLong and CSI to pay the reasonable fees and costs expended by UPS in prosecuting its first Motion for Sanctions. Moreover, during the trial of this cause, UPS will be entitled to introduce evidence of DeLong's false testimony concerning Del Zotto's relationship with CSI.
Although DeLong's conduct in this case is egregious, the Court finds that the most severe sanctions of striking DeLong's and CSI's answer, affirmative defenses, and counterclaim and entering default judgment against them is not warranted. Because UPS will be permitted to submit evidence of DeLong's perjury to the fact finder, the jury will have ample evidence with which to assess DeLong's credibility. Such sanctions are sufficient to remedy the harm caused to UPS in this case.
ii. Sanctions Under Rule 37
A previous discovery order is required to impose Rule 37(b) sanctions upon a party. Fed. R. Civ. P. 37(b); see also Doe v. City of Miami Gardens, No. 18-21381-CV-UNGARO/MCALILEY, 2019 WL 3312533, at *4 (S.D. Fla. Mar. 21, 2019). UPS obtained such an order in this case when the Magistrate Judge granted its motion to compel supplemental responses to UPS's first requests for production. Exh. 26. In the May 16, 2017 order (the “discovery order”), the Magistrate Judge directed DeLong and CSI to serve second supplemental responses to UPS's requests for production “1 through 16 (to the extent that they relate to the matters alleged in Plaintiff's Amended Complaint), 17 (documents indicating when Clinical Services LLC was formed, who formed it, and the identity of owners and operators), 18, 19–27 (as to solicitation or business relationships between entities, individuals, and Defendants).” Doc. 100 at p. 2.
*20 UPS alleges that DeLong and CSI failed to comply with the discovery order by continuing to withhold and deny the existence of material documents that in fact exist and were obtained by UPS through third-party discovery. In its Motion for Sanctions and at oral argument, UPS specifically pointed to (1) the payments made by DeLong to Del Zotto's attorneys and (2) the Wells Fargo business account application listing Del Zotto as an owner, both of which UPS alleges it had to obtain through third-party discovery. UPS further alleges that neither it nor the Court can know the extent to which DeLong and CSI have withheld additional documents in this litigation, particularly with respect to communications between DeLong and Del Zotto concerning UPS's clients.
A review of UPS's request for production and DeLong's and CSI's responses reveal the following two requests and amended supplemental responses relevant to the alleged withholding of evidence as described by UPS:
10. All documents evidencing communications between You and Amanda Del Zotto from May 1, 2014 through the present regarding [UPS and various hospitals, physicians and other clients of UPS.]
...
Supplemental Response: Based upon information and belief, Defendants are not aware at this time of any documents which are responsive to these requests. However, as discovery and investigation is still ongoing, Defendants reserve the right to supplement as necessary.
...
17. All documents evidencing payments made by You or on Your behalf to or for the benefit of Amanda Del Zotto from May 1, 2014 though the present.
...
Supplemental Response: See Appendix F.
Exh. 28. UPS did not attach Appendix F, produced by DeLong and CSI, to its exhibit.
Based on the requests and responses provided, including the relevant ones identified by the Court, it is unclear which request the Wells Fargo business account application would have been responsive to. Stated differently, UPS has not shown that the Wells Fargo business account application, allegedly obtained by UPS through third-party discovery, was something that DeLong and CSI had an obligation to produce following the entry of the discovery order.
Nor are the checks from DeLong to Del Zotto's attorneys something that DeLong and CSI clearly should have produced following the discovery order. In its amended motion to compel discovery, UPS stated with respect to request 17 that it “is entitled to discover payments made from CSI to Del Zotto.” Doc. 89 at p. 15 (emphasis added). Moreover, in the discovery order, the Magistrate Judge made clear that she was limiting the scope of requests to the allegations in the Supplemental Complaint. But UPS has not clearly shown that the checks were written from CSI's Wells Fargo business account rather than DeLong's personal account, or that the payment of Del Zotto's legal fees was a personal loan or gift rather than reimbursement for business services. Therefore, it is not entirely clear that DeLong and CSI should have produced the checks.
The only remaining request for production that apparently relates to UPS's argument is number 10, the request for documents between DeLong and CSI and Del Zotto regarding UPS or certain clients. Given the other communications discovered in this case, the Court agrees with UPS that DeLong's and CSI's supplemental response that no such communication existed is unlikely. However, it is apparent that UPS received some e-mail communications between DeLong, Del Zotto, and CSI given the evidence it provided in support of its perjury allegations, discussed supra. Whatever other communications UPS may not have received, such as text messages, is speculative. See Morris-Huse v. GEICO, No. 8:16-cv-1353-T-36AEP, 2018 WL 6040288, at *2-3 (M.D. Fla. Jan. 30, 2018) (declining to impose sanctions where a party's argument was based on inference and suggestion, and explanations other than misconduct were equally likely).
*21 UPS had available to it the opportunity to move to compel DeLong and CSI for discovery on more than one occasion. The only motion to compel UPS filed, and the only Rule 37 order it obtained, was the discovery order related to its first requests for production. For the reasons discussed above, the Court is unable to conclude that DeLong and CSI failed to obey the discovery order. Therefore, sanctions pursuant to Rule 37 are improper.
B. The Supplemental Sanctions Motion
In the Supplemental Motion for Sanctions, UPS argues that DeLong and CSI engaged in further litigation misconduct after the filing of the first Motion for Sanctions by: (1) untimely disclosing witnesses, including two purported expert witnesses, nearly six months after the deadline; (2) failing to disclose expert reports; (3) failing to timely disclose exhibits; (4) failing to provide documents required to timely prepare the Joint Final Pretrial Statement; (5) filing an untimely dispositive motion nearly four months after the deadline; and (6) unilaterally filing an untimely and unauthorized Joint Pretrial Statement.
No sanctions will be imposed against DeLong and CSI at this time for the misconduct alleged in the Supplemental Motion for Sanctions. First, although the Supplemental Motion for Sanctions is levied against DeLong and CSI, it appears to center around allegations concerning their counsels’ conduct. Each of the exhibits UPS offers in support of its allegations appear to predominately involve the actions of counsel rather than DeLong and CSI. See Exhs. 33-34, 36-38.
While UPS characterizes its Supplemental Motion for Sanctions as a continuation of its first motion, the Supplemental Motion for Sanctions is of a different nature. Rather than provide additional evidence of DeLong's perjurious or obstructive conduct, the Supplemental Motion for Sanctions provides evidence concerning counsels’ efforts to make timely motions, timely gather and disclose expert reports and witnesses, and participate in meaningful conferral as required by the Court's Case Management and Scheduling Order. Courts are hesitant to impose harsh sanctions on parties for the misconduct of their attorneys. See Goforth v. Owens, 766 F.2d 1533, 1535 (11th Cir. 1985).
Second, much of the conduct discussed in the Supplemental Motion for Sanctions has already been remedied by the Court or is the subject of other pending motions, including motions in limine. One of the key issues with a party failing to comply with the Court's Case Management and Scheduling Order and providing late disclosure is prejudice to the opposing party. However, that prejudice may be easily cured by excluding the evidence from the purview of the factfinder. See Cinquini v. Synchrony Bank, No. 8:16-cv-03409-CEH-TGW, 2018 WL 728459, at *2-3 (M.D. Fla. June 11, 2018) (discussing Rules 16, 26, and 37); Ocasio v. C.R. Bard, Inc., No. 8:13-cv-1962-T-36AEP, 2015 WL 3496062, at *2-4 (M.D. Fla. June 3, 2015) (describing the purpose of Rules 26 and 37 and the remedies available for prejudice to opposing parties).
Here, the Court has already rejected DeLong's and CSI's untimely dispositive motion on the basis that it was filed after the deadline and failed to provide good cause or excusable neglect. Doc. 212. The Court also struck DeLong's and CSI's unilateral pretrial statement upon UPS's request. Doc. 172; Doc. 206. And, at the final pretrial conference, the Court took up matters concerning DeLong's and CSI's belated disclosure of witnesses, expert reports, and exhibits. Doc. 239. The Court granted UPS's motion in limine to exclude certain exhibits, including affidavits, HIPPA documents, and a $19 million damages chart. With respect to DeLong's and CSI's undisclosed witnesses, the Court required DeLong's and CSI's counsel to provide disclosures mandated by Rule 26 to UPS. The Court noted that it would defer ruling on the issue until it could make a determination as to whether UPS was prejudiced by the late disclosure. The Court also granted UPS's motion in limine as it related to DeLong's and CSI's experts that did not provide expert reports. Doc. 239. Another of UPS's motions in limine was denied without prejudice as moot based on other pending issues requiring resolution.
*22 There is no need for additional sanctions—particularly the severe sanctions sought by UPS—against DeLong and CSI. The Supplemental Motion for Sanctions is not properly brought as a corollary to the first Motion for Sanctions, and many of the issues raised in the Supplemental Motion for Sanctions have already been (or will soon be) addressed by the Court. However, UPS is not precluded, if appropriate, from filing a new motion at the conclusion of this cause seeking redress for costs and fees expended unnecessarily to gain Defendants’ or opposing counsels’ compliance with the Case Management and Scheduling Order.
IV. CONCLUSION
The Court will grant the Motion for Sanctions in part. DeLong committed perjury when he testified that Del Zotto had no role at CSI, that he had no knowledge of the e-mail address amanda@clinicalservicesinc.com, that he had no knowledge of Del Zotto's recruitment efforts, and that he did not know about Del Zotto providing CSI with UPS's business information. That conduct is sanctionable pursuant to the Court's inherent authority. However, the Court is unable to conclude, based on the evidence admitted, that De Long and CSI failed to obey the Magistrate Judge's Rule 37 discovery order. Therefore, the Court declines to impose sanctions under Rule 37. The Court also declines to impose additional sanctions upon DeLong and CSI as requested in the Supplemental Motion for Sanctions.
Accordingly, it is ORDERED that:
1. UPS's Motion for Sanctions (Doc. 160) is GRANTED IN PART AND DENIED IN PART. UPS is entitled to an award of its reasonable attorneys' fees and costs expended in prosecuting its first Motion for Sanctions. Moreover, UPS will be entitled to introduce evidence of DeLong's false testimony concerning Del Zotto's relationship with CSI during the trial of this cause. In all other respects UPS's motion is denied.
2. UPS shall submit a motion for attorneys' fees and costs incurred as a result of prosecuting its first Motion for Sanctions within FOURTEEN (14) DAYS of the entry of a judgment in this case. DeLong and CSI shall respond to UPS's submission within FOURTEEN (14) DAYS of its filing.
3. UPS's Supplemental Motion for Sanctions (Doc. 178) is DENIED WITHOUT PREJUDICE. The Court will address any remaining issues concerning DeLong's and CSI's late disclosure of exhibits, witnesses, and expert reports when it addresses remaining motions in limine.
4. A telephonic status conference has been scheduled for September 17, 2019 to discuss the date for a trial of this cause.
DONE AND ORDERED in Tampa, Florida on September 16, 2019.
Footnotes
The Background is comprised of the procedural history of this case, prior findings of the state court as they relate to UPS and Del Zotto, and facts admitted into evidence at the evidentiary hearings held April 17, 2019 and June 4, 2019.
Pages seven through twelve of Doc. 89-1 include a copy of the state court permanent injunction against Del Zotto, through which the state court made findings of fact.
That supplemental pleading, UPS's Verified Supplemental Complaint, is discussed in further detail infra.
UPS later filed a motion against Del Zotto for attorneys' fees and costs. This Court granted in part and denied in part that motion, entering judgment against Del Zotto for $278,692.40 in attorneys' fees and costs on June 12, 2017. Doc. 105.
Unless otherwise noted, all exhibits referenced throughout this Order refer to those exhibits filed at Doc. 302.
DeLong referred to UPS's counsel, Beatriz McConnell (formerly Sanchez), by her first name throughout both of his two depositions. See Exh. 4; Exh. 15.
DeLong did testify, however, that Del Zotto shared some information with him when he, Del Zotto, and UPS were all discussing doing some business together prior to Del Zotto's termination from UPS. DeLong and Del Zotto have consistently explained throughout the litigation that there was a point in time at which UPS and DeLong were in contact for purposes of a potential joint deal involving Saudi Arabia. However, that business opportunity fell apart, and UPS and DeLong have not otherwise attempted to work together. Exh. 4 at p. 71, ln. 11-20; Exh. 15 at p. 86, ln. 1-6, 23-25, p. 87, ln. 1-5. The Court finds sufficient evidence in the record that there was indeed a point at which UPS and DeLong attempted to work together, before Del Zotto was terminated from UPS. The Court does not consider DeLong's testimony that Del Zotto shared some information with him when he, Del Zotto, and UPS were considering working together before Del Zotto's termination at UPS as an inconsistency.
UPS's counsel warned DeLong multiple times during the January 2016 deposition that if he continued to refuse to answer questions, she would terminate the deposition and move the court for an order compelling his testimony and fees and costs. UPS's counsel did terminate the deposition, but it does not appear from the record that any motion to compel DeLong's testimony was ever filed.
Count VIII was partially adjudicated by the state court during the nonjury trial against Del Zotto. See Doc. 89-1 at pp. 1, 13.
DeLong and CSI are represented by counsel, Alan F. Hamisch (“Hamisch”) and James John Zonas (“Zonas”).
Del Zotto was briefly represented by counsel during the pendency of the litigation in this Court. Doc. 46; Doc. 51; Doc. 54; Doc. 58; Doc. 59. Hamisch's representation of Del Zotto in this case was apparently limited to filing a Suggestion of Bankruptcy on her behalf on November 17, 2017. Doc. 134. (Del Zotto's bankruptcy case was dismissed on May 2, 2018. Doc. 165-1.) At a hearing on June 19, 2018, Del Zotto stated that she intended to represent herself. See Doc. 205. Del Zotto has not filed any paper directed to any of the motions now before the Court for review.
It does not appear from the docket that DeLong or CSI ever served Ludvik, Joe Del Zotto, or Anthony Del Zotto.
UPS's first motion was stricken without prejudice for failure to comply with Local Rule 3.01(a). Doc. 88.
By separate motion, UPS also moved for summary judgment on DeLong's and CSI's counterclaims. Doc. 151. That motion was granted in part. Doc. 212.
Federal courts sitting in diversity apply federal law to evidentiary matters and the imposition of sanctions. See Flury v. Daimler Chrysler Corp., 427 F.3d 939, 943-44 (11th Cir. 2005).
The Court also listened to oral argument of counsel at a hearing on June 19, 2018. As the parties are familiar, an evidentiary hearing on the sanctions motions was delayed due to various occurrences, including a stay of this case based on DeLong's filing a suggestion of bankruptcy and sudden medical issues that DeLong alleged prevented him from traveling. See Doc. 264, Doc. 266, Docs. 268-269, Docs. 281-288, Docs. 293-295, Doc. 297. These matters are not raised by the sanctions motions and are not discussed as part of the Court's analysis.
The Court has excluded reference to UPS's allegations in its sanctions motions for which evidence was not admitted in support. E.g., Doc. 160 at p. 5 (describing a text message allegedly sent by DeLong which was not admitted into evidence based on authentication issues).
Of note to the Court is also the fact that DeLong's attorney, Hamisch, provided the Court with the same phone number on April 17, 2019 as a way to reach Del Zotto. See Doc. 288 at p. 10. When the clerk called that phone number, Del Zotto answered. Doc. 288 at p. 10.
The application and letter are attached in their entireties to DeLong's deposition testimony transcript at Exhibit 15.
This testimony contradicts DeLong's deposition testimony that he only ever paid for Del Zotto's health insurance after January 2016. Exh. 15 at p. 85, ln. 6-16.
Those additional documents included CSI's AT&T phone record and the BCBS insurance application stating that CSI pays Del Zotto commissions. Doc. 60 at p. 21.
UPS also alleged in its sanctions motions that DeLong and CSI committed litigation misconduct by evading service of process. Although some documents were provided in connection with the motion, no evidence of evasion was provided to the Court during the evidentiary hearings.
UPS also alleged that DeLong and CSI maintained the existence of a fictional person. UPS alleges that DeLong and CSI committed additional litigation misconduct by putting off the deposition of Alison Fields, an advertised CSI employee. UPS's attorney, Ms. McConnell, testified at the evidentiary hearing about the events that transpired. She testified that she had initially tried to schedule a deposition for Alison Fields back in July of 2016, but that when she reached out to DeLong's and CSI's counsel at the time, she just “continued to get the run around.” Months later, McConnell testified, DeLong's and CSI's counsel admitted that Alison Field was not a real person. However, UPS has not provided evidence of how DeLong and CSI themselves gave counsel the “run around.” Nor has UPS articulated in their motion any specific prejudice to them as a result.
Moreover, no excuse has been made for DeLong's refusal to answer counsel's questions during his first non-party deposition. Refusing to answer questions or stating that one does not recall answers to questions is purposefully evasive. Spring Sols., Inc. v. Fils-Amie, 83 F. Supp. 3d 1290, 1296 (S.D. Fla. 2015) (holding that defendant was purposefully evasive where he “responded that he did not recall or know the answers to an enormous number of questions, even when the questions referred to recent events or when such responses made no sense.”).
DeLong's counsel's arguments about the influence of medication on DeLong's ability to testify, as well as DeLong's obvious attempts at the evidentiary hearing to infect the record with suggestions about the issue, are also unavailing. DeLong was asked during both depositions whether he was taking any medications that might impair his ability to testify. Exh. 4 at p. 16, ln. 2-3; Exh. 15 at p. 8, ln. 4-25, p. 9, ln. 1. In both instances, DeLong responded, with counsel present, that the medications he took would not impact his ability to testify. Moreover, when DeLong's counsel attempted to raise the issue during DeLong's cross-examination at the June 4, 2019 hearing, the Court conducted a colloquy to ensure that DeLong was able to competently testify. See Bonet v. New Courier, Inc., 203 F. Supp. 3d 1195, 1206, n.7 (S.D. Fla. 2016) (rejecting party's arguments about diminished capacity raised in response to the court's threat of dismissal as a sanction where the arguing party provided no evidence, medical or otherwise, supporting the contention).
At the evidentiary hearing on June 4, 2019, DeLong testified about his relationship with Del Zotto, including how he tried to help her by paying her legal fees (which he says was a loan from his father), how he provided her with housing and groceries, how she helped him get dressed in the morning, ran errands and did other housework, and how they had once discussed going into business together.