Haddonfield Foods v. S. Hens
Haddonfield Foods v. S. Hens
2022 WL 5113108 (S.D. Miss. 2022)
September 16, 2022
Parker, Michael T., United States Magistrate Judge
Summary
Haddonfield Foods, Inc. requested sanctions against Southern Hens, Inc. for a pattern of discovery abuse. Southern Hens failed to timely identify and produce audio recordings, floor plans, financial reports, and board minutes. The Court found that Haddonfield had been prejudiced and ordered Southern Hens to pay the reasonable costs, including attorney's fees, incurred by Haddonfield to obtain these documents.
Additional Decisions
HADDONFIELD FOODS, INC. PLAINTIFF
v.
SOUTHERN HENS, INC. DEFENDANT
v.
SOUTHERN HENS, INC. DEFENDANT
CIVIL ACTION NO.: 2:20-cv-84-KS-MTP
United States District Court, S.D. Mississippi, Eastern Division
Signed September 16, 2022
Counsel
Phillip B. Abernethy, P. Ryan Beckett, Phillip S. Sykes, Stephen Paul Huwe, Robert V. Greenlee, Butler Snow, LLP, Ridgeland, MS, for Plaintiff.Stephen J. Carmody, Claire D. Williams, Leland Kyle Williams, Robert Richard Cirilli, Jr., Brunini, Grantham, Grower & Hewes, PLLC, Jackson, MS, for Defendant.
Parker, Michael T., United States Magistrate Judge
ORDER
*1 THIS MATTER is before the Court on Plaintiff Haddonfield Foods, Inc.'s Motion for Sanctions for Discovery Misconduct [113]. Having considered the submissions of the parties and the applicable law, the Court finds that the Motion [113] should be granted in part and denied in part as set forth herein.
PROCEDURAL HISTORY
This matter involves a breakdown in a business relationship between Haddonfield Foods, Inc., (“Haddonfield”) and Southern Hens, Inc. (“Southern Hens”). Haddonfield is a “broker” of chicken products that provided raw materials to Southern Hens who then processed and cooked the raw materials at a steam plant in Moselle, Mississippi. The discovery process has been rather involved and, at times, acrimonious. See Minute Entries 10/29/2021; 03/01/2022; 05/18/2022.
In the Motion for Sanctions [113], Haddonfield requests the Court to assess sanctions against Southern Hens for what Haddonfield describes as a “pattern of discovery abuse.” See [114] at 3. Haddonfield requests dismissal of Southern Hens' counterclaims, or alternatively, forensic examination of certain electronic devices, and a continuation of discovery to allow it to depose individuals not previously deposed and re-open depositions of other Southern Hens employees.
STANDARD FOR SANCTIONS
This Court has broad discretion to exercise its various sanctioning powers. Topalian v. Ehrman, 3 F.3d 931, 934 (5th Cir. 1993); Shipes v. Trinity Indus., 987 F.2d 311, 323 (5th Cir. 1993) (“The imposition of sanctions is a matter of discretion for the district court.”). Federal Rule of Civil Procedure 37 allows the Court to issue sanctions when parties fail to make disclosures or cooperate in the discovery process.
When applying Rule 37, courts consider the following factors: (1) the explanation for the failure to identify the evidence; (2) the importance of the evidence; (3) potential prejudice in allowing the evidence; and (4) the availability of a continuance to cure such prejudice. City of Hattiesburg v. Hercules, Inc., 2016 WL 1090610, at *1 (S.D. Miss. Mar. 18, 2016) (citing Hamburger v. State Farm Mut. Auto. Ins. Co., 361 F.3d 875, 883 (5th Cir. 2004)). The purpose of Rule 37(c)(1)[1] is to prevent ambush, resulting in surprise or prejudice, from undisclosed or late disclosed evidence. Reed v. Iowa Marine and Repair Corp., 16 F.3d 82, 85 (5th Cir. 1994). “The sanctions it enumerates are not exclusive and arbitrary, but flexible, selective, and plural, and the district court may, within reason, use as many and as varied sanctions as are necessary to hold the scales of justice even.” Jonibach Mgmt. Trust v. Wartburg Enterprises, Inc., 136 F. Supp. 3d 792, 808 (S.D. Tex. 2015) (internal quotations and citation omitted). “Rule 37 sanctions must be applied diligently both to penalize those whose conduct may be deemed to warrant such a sanction, and to deter those who might be tempted to such conduct in the absence of such a deterrent.” Roadway Express, Inc. v. Piper, 447 U.S. 752, 763-64 (1980).
*2 Generally, however, courts should punish parties no more harshly than is necessary to vindicate the injury inflicted by the particular misbehavior at issue. Carroll v. Jaques Admiralty Law Firm, P.C., 110 F.3d 290, 294 (5th Cir. 1997). “[D]ismissal is proper only in situations where the deterrent value of Rule 37 cannot be substantially achieved by the use of less drastic sanctions.” Prince v. Poulos, 876 F.2d 30, 32 (5th Cir. 1989).
ANALYSIS
Audio Recordings
Much of Haddonfield's Motion revolves around the delayed production of responsive documents and audio recordings by Southern Hens. The following chart gives a brief overview of Haddonfield's discovery requests, the case deadlines, and Southern Hens' ultimate production of audio recordings.
Timeline for Production of Audio Recordings November 16, 2020 March 8, 2021 March 2, 2022 June 9, 2022 June 10, 2022 June 14, 2022 June 30, 2022 July 8, 2022 July 19, 2022 July 23, 2022 Haddonfield served first set of interrogatories and document requests on Southern Hens. Southern Hens served its verified responses. [113-1] [113-2]. Southern Hens produces single voice recording from Chris Parker. Southern Hens produces 91 recordings, with run time of 9.5 hours of recorded telephone calls between Southern Hens and Haddonfield. [113-4]. 30(b)(6) deposition of John Comino. Plaintiff Haddonfield Foods, Inc.'s Motion for Sanctions for Discovery Misconduct [113] filed. Discovery deadline. See Order [105]. Affidavit of Timothy Berry alerts Haddonfield that Comino's recording device was located. [132-10]. Southern Hens produced 42 recordings from Comino's device; 5 recordings from Comino's cell phone; 6 from Izor's cell phone; and 1 from Southern Hens' server. [136-5]. Southern Hens produced the metadata from Comino's office recording device. [138-1] at 12.
On November 16, 2020, Haddonfield served its first set of interrogatories and document requests on Southern Hens which included the following:
INTERROGATORY NO. 3: Identify each and every person from whom you or anyone acting on your behalf (including, without limitation, your attorneys, any investigator working for your attorneys, or you, or any other person) have obtained a statement (e.g., written, recorded or otherwise) or affidavit concerning any fact, matter, or event having any connection or relevance to the claims or defenses in this lawsuit.
REQUEST NO. 4: Any and all documents evidencing any statement (e.g., written, recorded or otherwise) or affidavit of any type concerning any fact, matter or event having any connections or relevance to the claims or defenses in this lawsuit.
See [20] [21]. On March 8, 2021, Southern Hens provided the following responses:
RESPONSE TO INTERROGATORY NO. 3: See General Limitations and Objections above. Southern Hens further objects to this interrogatory on the grounds that it is vague, ambiguous, overly broad and unduly burdensome. Additionally, Southern Hens, objects to the extent this interrogatory seeks information protected by the attorney client privilege, work product doctrine, or other applicable privilege, protection or immunity. Subject to and without waiving the foregoing objections, Southern Hens is not aware of any such recorded statements other than those contained in the parties' written communications. [emphasis added]
*3 RESPONSE TO REQUEST NO. 4: Southern Hens is not aware of any such affidavit or statement other than those contained in the parties' written communications that Southern Hens will produce.
Nearly one year later, on March 2, 2022, within a large document production that was responsive to Haddonfield's Interrogatories 3 and 4 and Document Requests 4 and 6, Southern Hens produced a single audio recording from Chris Parker, the Food Safety and Quality Assurance Director that took place around July of 2019. See [114] at 5. Two-days before the June 10, 2022, 30(b)(6) deposition of Southern Hens, Southern Hens notified Haddonfield that additional recorded phone calls between Haddonfield and Southern Hens employees had been located. 18 hours before the deposition and 21 days before the extended discovery deadline, Southern Hens sent 91 recordings to Haddonfield. Id. at 6. According to Haddonfield, the production included “nearly 9.5 hours” of voice recordings. Id. Haddonfield argues that Southern Hens should have produced the audio recordings in response to these requests and instead represented that no audio recordings existed.
Because Southern Hens produced an audio recording from Chris Parker, when Haddonfield noticed the 30(b)(6) deposition for Southern Hens, it included a topic about the company's practices recording third-party telephone calls. On June 9, 2022, the day before Southern Hens' 30(b)(6) deposition, Southern Hens produced 9.5 hours of recorded telephone calls. Haddonfield complains about the late production of these telephone calls and the inability of John Comino, the 30(b)(6) deponent, to answer certain questions about the company's practice of recording third-party telephone calls. Id.
In its Response [132] to the Motion, Southern Hens included an affidavit from Comino who stated that his memory of the audio recordings was not “triggered” until the notice went out regarding the 30(b)(6) deposition. It was at that time he remembered that he previously asked Brian Izor, the Chief Financial Officer of Southern Hens, to record telephone conversations between Southern Hens' employees and representatives of Haddonfield. The 30(b)(6) deposition notice, according to Comino, led to the production of the additional 91 recorded phone calls. See [133] at 5-6; [132-8].
During his deposition, Comino testified that he previously recorded phone conversations between Haddonfield and Southern Hens employees on a recording device attached to his own desk phone,[2] but that he no longer had the device. See [113-5] at 6. The device, however, has now been found. Southern Hens included in its response an affidavit from Comino stating that he searched his office prior to the deposition for the recording device, but when he did not find the device he concluded that he “threw it away.” See [132-5] at 3. After the deposition, he had an employee search his office who located the device. Id. In its Response [133], Southern Hens revealed that additional recordings had been discovered on the device, were being reviewed, and would be produced to Haddonfield. See [133] at 9.
Comino also testified in the deposition that he had not used his cell phone to record conversations between Haddonfield and Southern Hens. See [113-5] at 8. This testimony has also changed. According to Comino, after his deposition he “checked the Voice Memos application” and located five audio recordings of conversations between himself and Haddonfield. See [132-5] at 3. Comino states in the affidavit that those were sent to counsel and have now been produced. Id. The day before Haddonfield filed its Reply [136] brief and weeks after the discovery deadline passed, Southern Hens produced another 52 audio recordings on July 19, 2022. See [136-5].
*4 The Court finds that Haddonfield has been prejudiced by Southern Hens' failure to timely identify and produce the audio recordings. The recorded conversations likely concern issues of importance to this case. Indeed, according to Comino, the recordings were made “to ensure that conversations [between Southern Hens and Haddonfield] could not later be misconstrued or mischaracterized.” [132-5] at 1. As most of the recordings were produced at or near the discovery deadline, Haddonfield has not had a fair opportunity to depose Southern Hens or its employees about the recordings or the issues that may have been addressed in the recordings. Regardless of whether the failure to timely identify and produce the audio recordings was “inadvertent” as maintained by Southern Hens, intentionally misleading, or due to a lackadaisical approach to the discovery process, the recordings should have been produced or identified long ago in response to the above discovery requests.
Southern Hens' sworn response to Interrogatory No. 3 that it was “not aware of any such recorded statements” was plainly false.[3] [113-1] at 6. Comino's deposition testimony that the recording device no longer exists was plainly false.[4] Comino's testimony that he did not use his phone to record conversations with Haddonfield was also plainly false.[5]
For these discovery violations, Haddonfield seeks dismissal of Southern Hens' counterclaims. When considering the imposition of the sanction of dismissal, courts consider (1) whether the violation resulted from bad faith or willful conduct, (2) whether the violation is attributable to the client, (3) whether the opposing party has been substantially prejudiced, and (4) whether a less drastic sanction would achieve the desired deterrent effect. Bluitt v. Arco Chemical Co., 777 F.2d 188, 190-91 (5th Cir. 1985). “[D]ismissal is a severe sanction that implicates due process.” FDIC v. Conner, 20 F.3d 1376, 1380 (5th Cir. 1994).
The law favors resolution of disputes on the merits over dismissal, the “draconian remedy of last resort.” FDIC v. Conner, 20 F.3d 1376, 1380 (5th Cir.1994); Brinkmann v. Abner, 813 F.2d 744, 749 (5th Cir.1987); Batson v. Neal Spelce Assocs., Inc., 765 F.2d 511, 515 (5th Cir.1985). Dismissal is usually suitable only where “ ‘its deterrent value cannot be substantially achieved by use of less drastic sanctions.’ ” Brinkmann, 813 F.2d at 749.
The evolving, if not selective, memory of Southern Hens and Comino about the surreptitious recording of conversations with its customers cannot be condoned; however, the Court finds that dismissal of Southern Hens' counterclaim is not warranted and that less severe sanctions will achieve the desired deterrent effect and eliminate any undue prejudice.
Accordingly, on or before September 30, 2022, Southern Hens shall produce to Haddonfield any and all audio recordings related to any claim or counterclaim in this matter and/or involving any representative or employee of Haddonfield, including the metadata associated with the recording. Any recordings withheld on the basis of privilege or work product must be identified on a privilege log[6] as required by the Rules of Court and served by not later than September 30, 2022.[7]
*5 Additionally, Haddonfield is granted leave to depose Brian Izor and John Comino for a maximum of 4 hours each.[8] See Fed. R. of Civ. P. 30(d)(2)(“The court may impose an appropriate sanction...on a person who impedes, delays, or frustrates the fair examination of the deponent.”). The Court will also permit the re-opening of the corporate deposition of Southern Hens with a witness prepared to answer topics 29, 30, 32, 33, and 34 (and as noted infra p. 13-14) for a maximum of 5 hours. Haddonfield's reasonable attorney's fees and costs associated with conducting these depositions,[9] including the court reporter and transcript fees, will be assessed to Southern Hens. These depositions must be scheduled and completed by October 10, 2022. Southern Hens' full cooperation in the scheduling and completion of these depositions is expected and required.
Within fourteen days of completing the above depositions, Haddonfield shall submit an affidavit outlining the fees and expenses sustained as a result of conducting these depositions. Southern Hens shall have one week to file its objections, if any, to the itemization of fees and expenses. Thereafter, the Court shall award the monetary sanction by separate order. Any other request for relief related to the recorded phone calls is denied based on the record before the Court at this time.
Steam Plant Layout
On October 8, 2021, Haddonfield requested an inspection of Southern Hens' steam plant and requested Southern Hens to produce a floor plan of the building to facilitate the inspection. See [114] at 8. According to Haddonfield, Southern Hens represented that although Comino designed the steam plant himself, Southern Hens did not have a floor plan. Id. at 9. Thereafter, Haddonfield requested a discovery conference with the Court to discuss issues concerning the inspection. See Minute Entry 10/29/2021. On the morning of the October 29, 2021 conference, Southern Hens produced what it describes as “an early draft of the layout” of the steam plant. See [133] at 9. Haddonfield argues that this belated production of the layout was made in bad faith. See [114] at 9.
Southern Hens' argues that the “CAD-created illustration” is “not a floor plan.” See [133] at 9. In an affidavit submitting by Southern Hens, Comino states that he designed the Steam Plant without assistance from an engineer or architect using software, and that he “lost the final draft of the Steam Plant layout.” [132-5] at 3. He then states that he found early drafts of the layout and sent the drafts to counsel in October and November of 2021. Id.
While the Court finds Southern Hens' explanation for why the floor plan (or “illustration”) was not produced earlier to be an exercise in hair-splitting, Haddonfield has not demonstrated that it was unduly prejudiced by this delay. The Court permitted Haddonfield to conduct an inspection of the steam plant. See [114] at 10; Minute Entry 10/29/2021. Haddonfield, though justifiably upset at the last-minute production, has not identified any significant prejudice or shown that the costs of the draftsman it retained would not have otherwise been necessary. In any event, the Court in its discretion declines to impose sanctions for this complaint.
Profit and Loss Statements
Southern Hens produced three monthly reports in response to document request number 38 (profit and loss analysis) and 43 (financials for the Moselle plant) showing a profit and loss analysis of the steam plant from during the time period when Haddonfield's products were being cooked by Southern Hens. See [114] at 12. On January 5, 2022, Haddonfield requested all the remaining reports from “2015 forward.” See [113-15] at 6. However, according to an email chain among counsel for both parties, Southern Hens advised Haddonfield that additional reports did not exist. See [113-14] at 2; [114] at 12.
*6 Then, on January 28, 2022, a couple of weeks before the deposition of William Boyd, the in-house financial analysist who kept the spreadsheets, Southern Hens produced “dozens” of the reports that Haddonfield had been told did not exist. Id. The statements were produced in their native format which Haddonfield argues deprived it of having the opportunity to review the documents prior to conducting the deposition.[10]
Southern Hens argues that the spreadsheets identified as profit and loss statements are “projections” that were “based on the Steam Plant's profit and loss statements.” See [133] at 11. Southern Hens also argues that the employee who created these statements did not appear to understand what documents were being requested from him, and that it produced the documents once he sent them. Id.
All parties concede that these documents have now been produced. [114] at 12; [133] at 11. The Court finds that further relief or sanctions is not justified under the circumstances. Despite Southern Hens' lethargic production, Haddonfield had the documents more than one week prior to the deposition of Boyd. If it were not able to effectively complete the deposition due to the belated production, Haddonfield could have sought relief from the Court in the five months prior to the June 30 discovery deadline, but it did not do so. Haddonfield has not identified any further prejudice based on the delayed production that could not have been cured within the discovery period. Therefore, no sanctions will be imposed or other relief granted on this ground.
Board Minutes
Haddonfield also argues that Southern Hens withheld relevant board minutes and records. On April 8, 2021, Haddonfield served its Second Request for Production. See [31]. In Request for Production No. 45, Haddonfield sought board minutes from 2014 to the present that “mention, reference or allude to [Haddonfield,] the 2014 Agreement, the 7/18 Agreement, Plant No., and/or the production of chicken wings at Plant 3.” [113-11] at 3. Request for Production No. 46 sought minutes, notes, or records related to the same categories. Id.
According to Haddonfield, Southern Hens produced 30 pages of board minutes in response to Request for Production Nos. 45 and 46. See [114] at 11. On September 24, 2021, counsel for Southern Hens stated that “these are all of the Board minutes that are responsive to the RFP's.” See [113-13]. Haddonfield later sent third-party subpoenas to the Southern Hens' board members and received more than 4,500 pages of responsive minutes, board handouts, and emails. See [114] at 11.
Southern Hens argues that its failure to produce all of the board minutes was “simply an oversight” and that when counsel searched corporate counsel's files for responsive documents, it was not aware that he maintained board minutes in another file. Southern Hens also claims that Haddonfield has not identified any prejudice from the belated production. See [133] at 10.
Southern Hens' explanation for failing to timely produce the board minutes is neither convincing nor acceptable. Haddonfield was prejudiced by incurring costs to issue and serve third-party subpoenas for records in the possession of Southern Hens' own attorney. Southern Hens will not be permitted to shift the cost of this production to Haddonfield.
*7 The Court finds that Southern Hens should pay the reasonable costs, including attorney's fees, incurred by Haddonfield to obtain these documents from the individual board members. In the affidavit addressing attorney's fees to conduct the additional depositions authorized herein (see supra p. 9), Haddonfield shall include the reasonable fees and costs sustained as a result of seeking these documents. Southern Hens shall have one week to file its objections, if any, to the itemization of fees and expenses. Thereafter, the Court shall award the monetary sanction by separate order.
Frozen Samples
Haddonfield also claims that Southern Hens failed to disclose the existence of inspection reports and frozen samples of the raw chicken product that were responsive to Document Request Nos. 20, 24, and 25, served on November 16, 2020. See [21]; [113-2]. In the afternoon of January 26, 2022, the day before the deposition of Mike Meek, Southern Hens informed Haddonfield that Meek possessed a large set of documents related to the inspection of Plaintiff's raw material that he had kept since 2019. Southern Hens also revealed that he had been preserving raw material in freezers.[11] Id. Meek brought the inspection documents with him to his deposition. See [133] at 11-12.
Southern Hens argues that Haddonfield was not prejudiced by this “oversight” and claims that counsel offered to postpone Meek's deposition in order to give counsel additional time to review the documents and arrange inspection of the freezer samples. See [133] at 12. Southern Hens claims that Haddonfield still has not inspected the freezer samples.
Haddonfield had five-months prior to the discovery deadline to request relief on this ground and did not do so. However, as Haddonfield complains that Southern Hens' corporate representative[12] was unable to answer questions about the raw materials, the Court will permit Haddonfield to re-address this issue during the depositions permitted herein.
The Court, after weighing the factors identified above, finds that the sanctions assessed herein are adequate to rectify any substantial prejudice. Any other request for relief contained in Haddonfield Foods Inc.'s Motion for Sanctions for Discovery Misconduct [113] is denied. The Court has considered all arguments and issues raised by the parties. Those arguments not specifically addressed would not change the outcome.
IT IS, THEREFORE, ORDERED that Haddonfield Foods, Inc.'s Motion for Sanctions for Discovery Misconduct [113] is GRANTED in part and DENIED in part as set forth herein. For good cause shown, the discovery deadline in the Amended Case Management Order [46] is extended to allow completion of the limited discovery permitted in this Order. This deadline is not extended for any other purpose.
SO ORDERED this the 16th day of September, 2022.
Footnotes
Southern Hens maintains that Fed. R. Civ. P. 37(c) is the appropriate section of the rule to apply here, as it has not failed to comply with a Court order. See [133] at 13 n. 5.
It stretches credulity for Southern Hens to state that it did not know of any recordings when the recordings were made at the instruction of Comino, its General Manager. In his Affidavit, Comino stated that in August of 2017, he “asked Izor to record conversations between employees of Southern Hens and representatives of [Haddonfield].” [132-5] at 1. The record reflects that Southern Hens' General Manager [132-5], its Chief Financial Officer [132-8], and its Director of Food Safety Quality Assurance [132-9] all made recordings. Southern Hens knew of the recordings and either misrepresented that it did not or simply spent little time or effort attempting to respond truthfully and fully as required. Neither option is acceptable.
When asked whether the recording device still exists, Comino answered “No.” [113-5] at 6. When asked where the device is today, he stated “I believe it's been thrown away.” [113-5] at 7. When asked when he threw the device away, Comino answered “I would have believed '16 '17 or '18.” [113-5] at 8.
During his deposition, when asked “Did you ever use your phone to record a conversation?” Comino answered “No.” [113-5] at 8; see also [132-5] at 3.
By ordering production of a privilege log, the Court simply seeks to determine what, if any, responsive recordings have been withheld. The Court withholds ruling on whether it would find such privilege log timely or effective at this stage of the proceedings.
In a July 23, 2022, letter between counsel for the parties, counsel for Southern Hens indicates that he has “listened to over 300 hours of recordings.” [152-1] at 4. In its reply brief, Haddonfield indicated that the latest production of recordings includes 15 hours of recordings. [152-3] at 4. Haddonfield stated previously that 9.5 hours of recordings had been produced. [114] at 6. It is not clear to the Court why the remaining recordings were not produced.
The Court declines to limit the scope of the deposition testimony as urged by Southern Hens.
That is, for fees incurred travelling to and participating in the depositions, not preparation time.
Haddonfield claims that they were “very complex Excel spreadsheets with a worksheet for each day of the month.” [114] at 12.
In an email, Mike Meek described the frozen samples as Comino's “ace in the hole.” See [136-9] at 2; [114] at 13.
Southern Hens' deposition was taken only three-weeks prior to the discovery deadline.