On March 7, 2022, Relator Gwen Thrower (“Relator”) filed a motion for Rule 37 discovery sanctions. (Dkt. No. 293.) Defendant Academy Mortgage Corporation (“Defendant”) opposed the motion. (Dkt. No. 301.) On April 18, 2022, the Undersigned heard oral argument on the sanctions motion and DENIES the motion for the reasons set forth below.

In this qui tam suit under the False Claims Act, Relator alleges that Defendant defrauded the Government by falsely certifying loans for government insurance under the regulations of the U.S. Department of Housing and Urban Development (“HUD”). This is a case where the parties have disputed many issues regarding discovery, and the Undersigned has issued 13 Orders regarding discovery, after the District Court referred discovery disputes to the Undersigned. Chief among those disputes were Relator's attempt to access records for the loans at issue. Defendant maintains these records on a system called “Encompass” (after 2016) and previously maintained them on a system called “IHM” (from 2008-2015). (Dkt. No. 303.)

Relator initially sought access to the files in the format in which Defendant maintained the files, and in response, Defendant produced the files in PDF format, which was not the format in which the files were maintained. Relator sought access to the files in “native” format, and the Undersigned ordered that production. (Dkt. Nos. 249, 255.) Defendant continued to challenge that order but ultimately did allow access to the records after the Undersigned ordered production in “native format via access to Defendant's Encompass and IHM systems or as part of a data file that can be loaded onto operating version so Encompass and IHM.” (Dkt. No. 255.)

In addition, on November 10, 2021, Defendant's counsel met with Plaintiff's counsel and several other people associated with Plaintiff in a videoconference to explain how to access the IHM and Encompass systems. (Dkt. No. 302.) Defendant's counsel did not represent himself as an expert but showed Plaintiff's counsel how to access the files. (Dkt. No. 302.) Defendant's counsel “invited [Plaintiff's counsel] and his team to review the IHM Library tab contents, as well as the rest of the access that had been provided to Encompass and IHM, and to let counsel for [Defendant] know if Relator's attorneys or reviewers had any questions,” but there were no further questions. (Dkt. No. 302.) One of the people from Plaintiff's expert's team on the call specifically asked if any loan files were stored in any place other than in the “Image” tab and whether the team should review documents in the Library tab, but he was told that “all relevant files were in the ‘Image’ tab and that the ‘Library’ tab contained only templates.” (Dkt. No. 296.)

On an unnamed recent date, an unnamed person working with Plaintiff's expert team discovered loan files in the Library tab in the IHM system. (Dkt. No. 295.) Plaintiff alleges that these documents are relevant to show the changes between earlier version of Desktop Underwriting submissions and the final version that was used for approval by HUD. (Dkt. No. 295.) Plaintiff's expert W. Barefoot Bankhead opines: “Multiple or excessive [Desktop Underwriting] submissions as well as [Desktop Underwriting] submissions after an initial refer rating may show that [Defendant's] underwriters were manipulating borrower information in order to get an ‘accept/approval’ rating.” (Dkt. No. 295.) Most of the loan files already produced and reviewed in other tabs contained only the final Desktop Underwriting submission. (Dkt. No. 295.)

Defendant's counsel did not know, until Plaintiff's counsel informed him, that there were files from the Direct Underwriting process located in the Library tab. (Dkt. No. 302.) Even the person most knowledgeable at Defendant did not know that Defendant used the Library tab in IHM to retrieve results from the automated underwriting system from the Desktop Underwriter system. (Dkt. No. 303.) Vaughn Woffinden, an “Information Technology Services Manager 1” who has worked with Defendant since 2011 and who is the manager of Defendant's loan origination systems, states that he “did not recall that the IHM Library tab contained that [automated underwriting system] results from” the Desktop Underwriter system and that, since Defendant stopped using the IHM system in 2015, Defendant's current knowledge about the IHM system is outdated. (Dkt. No. 303.) Woffinden believes that he is currently the person most knowledgeable about the IHM system that Defendant used. (Dkt. No. 303.)

Defendant had provided PDF copies of all the documents it claimed were responsive to the requests, but the PDF version did not include the newly discovered files from the Library tab. Defendant's counsel states that he consulted with Defendant's Chief Information Officer and “other members of [Defendant's] Information Technology team several times in producing those PDF files. (Dkt. No. 302.)

Relater argues that Defendant's failure to produce those documents violated this Court's previous Orders and that Relator's late discovery of those documents will cause Relator to incur additional costs in the form of experts' time. Relator thus seeks sanctions pursuant to Fed. R. Civ. P. 37, based on the argument that Defendant violated the Order of July 7, 2021, in which the Undersigned ordered Defendant “to produce loan files in their entirety in native format.” (Dkt. No. 249.)[1] The Undersigned finds that Defendant did not violate that Order. Defendant provided full access to the files in the format as ordered. Relator's complaint is that Defendant did not explain to Relator that certain files were located in the Library tab, but Defendant has explained in declarations submitted under penalty of perjury that, based on the knowledge it had at the time, Defendant was not aware of any potentially relevant documents in the Library tab. Given those representations, based on the knowledge Defendant had at the time, the Undersigned does not find that Defendant violated the Order of July 7, 2021, or any other order.

Second, Relator argues that Defendant misrepresented a fact when Defendant informed the Court that the production of PDF files was complete. Relator cites to several statements by Defendant in which Defendant made that representation (see, e.g., Dkt. Nos. 209, 245). However, Defendant did not represent that it had produced everything in the IHM or Encompass systems from the loan files. Instead, Defendant pointed out that Relator had requested “FHA mortgage loan files” without definition, and that Defendant had produced what is considered to be responsive – the documents it provided to “investors, regulators, and quality control auditors.” (Dkt. No. 245.) Defendant argued that access to other documents was not relevant or necessary, and Defendant lost that argument. However, Defendant never represented to the undersigned that Defendant had produced everything from the IHM and Encompass systems in the PDF production.

Given that Defendant did not violate any Order of the Court and given that Defendant did not misrepresent the completeness of the production in PDF format, sanctions are not appropriate under any standard. Defendant did not provide completely accurate information during the tutorial, but Defendant based its explanation on the best knowledge available to Defendant at the time. That action does not lead to sanctions.

IT IS SO ORDERED.

Relator also argues that Defendant violated several follow-on orders related to that Order: (1) an Order of August 6, 2021, that reiterated the ruling, with a deadline, on August 6, 2021 (Dkt. No. 255); (2) an Order from the District Court denying Defendant's motion for relief from that Order (Dkt. No. 271); and (3) an Order from the District Court also denying Defendant's motion for leave to file a motion for reconsideration. (Dkt. No. 280.)