*1 THIS CAUSE comes before the Court upon Defendants’ Jamey Hill, The JL Hill Group, LLC (“Hill Group”), Tricia Drago, and Banyan Accounting, LLC (“Banyan”) Motion for Sanctions for Plaintiffs’ Continued Failure to Make Rule 26(a)-Compliant Disclosures and Memorandum in Support (ECF No. 147). This matter was referred to the undersigned United States Magistrate Judge, pursuant to 28 U.S.C. § 636(b)(1)(A) by the Honorable Federico A. Moreno, United States District Judge, to decide all pretrial matters (ECF No. 15). Having carefully considered the Motion, Plaintiffs’ Response (ECF No. 156), and Defendants’ Reply (ECF No. 157), Defendants’ Motion is GRANTED, in part, and DENIED, in part.

I. BACKGROUND

Plaintiff Happy Tax Franchising LLC (“Happy Tax”) is a nationwide company that offers tax preparation services to consumers through franchisees and certified public accountants. Between 2015 and 2018, Happy Tax entered into franchise agreements with Defendants Hill Group and Banyan. Plaintiffs allege that Defendants employed an unsuccessful scheme to take over and assume control of Happy Tax. Plaintiffs filed this lawsuit claiming Defendants disseminated false and defamatory statements, breached the Parties’ franchise documents in multiple respects, misappropriated Happy Tax's proprietary business information, and unlawfully competed with Happy Tax.

Plaintiffs served “Updated Plaintiffs’ Initial Disclosures,” on May 24, 2021, which Defendants found deficient. Defendants subsequently filed a Motion to Compel Plaintiffs to make competent and complete Rule 26 Initial Disclosures to Defendants (ECF No. 107). The Court held a hearing on September 8, 2021 regarding Defendants’ Motion to Compel and ordered Plaintiffs to serve Rule 26(a)-compliant disclosures on Defendants and, pursuant to Rule 37(a)(5), awarded Defendants $2082.50 in attorneys’ fees incurred by bringing the Motion to Compel.

In response to the Court's Order, Plaintiffs provided updated supplemental initial disclosures via email to Defendants on September 23, 2021 (ECF Nos. 147-1, 147-2). Plaintiffs subsequently provided untimely[1] joint supplemental initial disclosures to Defendants on October 10, 2021, purportedly following conferral over the prior disclosures (ECF No. 156-2).

Because these supplemental disclosures are allegedly still deficient, Defendants now request that Rule 37 sanctions be imposed against Plaintiffs for failing to cure the deficiencies in their initial disclosures. Defendants seek an order prohibiting Plaintiffs from supporting any of the remaining claims directed against Defendants in Plaintiffs’ Third Amended Complaint and from opposing any of Defendants’ defenses to those claims at trial or otherwise; precluding Plaintiffs from using any document, electronically stored information (“ESI”), other information or witness to supply evidence at trial, on a motion or at any hearing; directing Plaintiffs to immediately pay Defendants’ counsel $2,082.50 pursuant to the Court's September 8, 2021 attorneys’ fees award; directing Plaintiffs to pay all of Defendants’ reasonable expenses, including attorneys’ fees, incurred because of Plaintiffs’ continuing failure to make Rule 26(a)-compliant disclosures from April 1, 2021 forward; and, granting such other and further relief as the Court deems appropriate under the circumstances (ECF No. 147 at 5).

II. ANALYSIS

*2 Defendants’ Motion centers on disclosures required under Rule 26(a) of the Federal Rules of Civil Procedure. “Rule 26(a)’s purposes are to allow for adequate case preparation and foreclose unfair surprises ... The initial disclosure requirement should be applied with common sense keeping in mind the salutary purposes that the rule is intended to accomplish.” Sec. & Exch. Comm'n v. Montano, No. 618CV1606ORL31GJK, 2019 WL 2254946, at *2 (M.D. Fla. Mar. 5, 2019) (citations omitted). “If a party fails to provide information or identify a witness as required by Rule 26(a) or (e), the party is not allowed to use that information or witness to supply evidence on a motion, at a hearing, or at a trial, unless the failure was substantially justified or is harmless.” Fed. R. Civ. P. 37(c)(1). Rule 37(c) authorizes a court to impose an array of additional sanctions including “payment of reasonable expenses, including attorney's fees ... and ... may impose other appropriate sanctions.” Fed. R. Civ. P. 37(c)(1)(A)-(C).

Defendants argue that Plaintiffs have not provided Rule 26(a)-compliant disclosures because Plaintiffs’ supplemental disclosures still do not have discernable person-specific descriptions of each witnesses’ information. Defendants claim that Plaintiffs list the same 50 people previously disclosed and repeat the same general concepts or issues for each person identified without distinction among the witnesses. In addition, Defendants allege that Plaintiffs did not produce a “single document or ESI record,” nor did they identify any document or ESI by description, category, or location (ECF No. 147 at 3). Defendants also contend that Plaintiffs did not disclose any damages computations with their supplemental disclosures.

Plaintiffs’ response avers that Defendants’ Motion does not consider the revised and supplemental disclosures Plaintiffs made on October 8, 2021, following a September 29, 2021 email sent by Defendants expressing their dissatisfaction with Plaintiffs’ submission. Furthermore, Plaintiffs proffer that Defendants’ Motion fails to consider an additional email sent October 1, 2021, in which Plaintiffs request clarification for some of the alleged deficiencies and ask whether a separate email containing the documents was received. Regarding Defendants’ argument that Plaintiffs did not produce a single document or ESI record, Plaintiffs maintain that this is inaccurate. Plaintiffs assert that they provided Defendants with the requisite documents and ESI records and received no “bounceback” messages from the same email address from which Defendants send and receive emails. Plaintiffs additionally argue that Defendants failed to attach Plaintiffs’ full supplemental initial disclosures to the instant Motion that were provided in the course of the meet and confer of counsel. Plaintiffs also claim that on October 10, 2021, prior to Defendants filing their Motion, Plaintiffs provided a computation of damages to Defendants.

Defendants reply that Plaintiffs have added only few words and self-serving phrases to the scripts they used for their May 24, 2021 updated disclosures, which the Court found at the September 8, 2021 hearing failed to comply with Rule 26(a). As such, Defendants argue that these additions are “irrelevant bulk,” and Plaintiffs’ supplemental disclosures remain deficient (ECF No. 157 at 4).

Defendants move for sanctions, yet Plaintiffs have amended their disclosures from those that the Court found deficient at the September 8, 2021 hearing. Plaintiffs supplemented their disclosures with descriptions of the subjects of the discoverable information for each witness that Plaintiffs may use to support their claims or defenses, the phone numbers and addresses for each witness, the basis for what each witness would have learned regarding the alleged defamatory statements, and the potential events about which each witness is likely to testify. For example, regarding witness Chad Greene (“Mr. Greene”), Plaintiffs addressed the foundation for Mr. Greene's knowledge of the business operations underlying this suit, identified the subjects and basis of his testimony, and referenced the defamatory statements in which Mr. Greene is alleged to have participated.

*3 Furthermore, Plaintiffs provided Defendants with an index or table of contents for the franchise agreements, reconciliation logs, audited financial reports, and a comprehensive computation of estimated damages. Plaintiffs also submitted emails between Defendant Tricia Drago and Plaintiff Mario Constanz, and an affidavit from former Happy Tax employee Lorris Knox explaining that he is retrieving the backup from the Google Business Suite for Happy Tax for any remaining financial documents. Plaintiffs also introduced evidence of their frequent communications with Defendants and their continuous attempts to rectify the alleged deficiencies (ECF No. 156-1 at 4, 7, 11, 12, 16, 21, 27). Accordingly, Defendants’ request for an award of sanctions is not appropriate at this time.

The Court does, however, direct Plaintiffs to immediately pay Defendants’ counsel $2,082.50 pursuant to the Court's Order (ECF No. 126). As discussed at the September 8, 2021 hearing on Defendants’ Motion to Compel, the Court ordered Plaintiffs to pay Defendants’ counsel an attorneys’ fees award. Plaintiffs state that they experienced a hardship that affected their ability to provide full payment, yet they provide no evidence or explanation of the hardship nor do they discuss when full payment will be made.

III. CONCLUSION

For the forgoing reasons, Defendants’ Motion (ECF No. 147) is GRANTED, in part, and DENIED, in part, and that Plaintiffs shall pay the outstanding attorneys’ fee award of $2082.50, as ordered, within 14 days of this Order. Failure to comply may result in sanctions.

DONE AND ORDERED in Chambers at Miami, Florida this 20th day of January, 2022.

The Court ordered Plaintiffs to amend and supplement their initial disclosures by October 8, 2021 (ECF No. 126).