*1 This Report and Recommendation is submitted to the Honorable Fernando L. Aenlle-Rocha, United States District Judge, under 28 U.S.C. § 636 and pursuant to the referral order in this case found at ECF No. 287.

On May 18, 2020, Plaintiff served requests for production (“RFPs”) on Defendants Applied Technologies Associates, Inc. (“ATA”), ATA Ranches, Inc., Pamela Pierce, Phillip Gobe, Philip Longorio, Gene Duroucher, and Joseph McCoy.[1] Among the RFPs was Request No. 150 for: “All DOCUMENTS that YOU contend provide a basis for any denial of any material allegation in the COMPLAINT, any affirmative defense to any claim alleged in the COMPLAINT, or any special defense to any claim alleged in the COMPLAINT.” In response, Defendants objected that this request was overbroad, not limited in scope, requested confidential information, and would invade attorney-client privilege and the attorney work product doctrine. On February 9, 2022, Plaintiff also served the same RFPs on SDI seeking documents related to any affirmative defense. Discovery closed on April 29, 2022, and no Defendant had produced minutes of SDI/ATA annual shareholder meetings.

On May 6, 2022, D&O Defendants (Pierce, Gobe, Longorio, Durocher, Mccoy, Carter, and Duggan) filed a Motion for Summary Judgment (ECF No. 229), asserting that the statute of limitations barred certain of Plaintiff's claims. Defendants Kedrin and Adelaida Cellars, Inc. joined this Motion. In the Motion for Summary Judgment, Defendants relied on the 2014 SDI/ATA Annual Meeting Minutes (“2014 Meeting Minutes”) as evidence demonstrating that particular information was presented, discussed, and distributed during the 2014 Annual Shareholder Meeting with Plaintiff in attendance. (ECF No. 229-1.) On May 12, 2022, Plaintiff's counsel emailed counsel for Defendants (Mr. Antwiler) requesting the document production number for the 2014 Meeting Minutes. During a meet and confer conference on May 31, 2022, Mr. Antwiler confirmed that the 2014 Meeting Minutes had not been produced by Defendants during discovery. On June 3, 2022, Defendant SDI produced several additional annual shareholder meeting minutes.

On June 10, 2022, Plaintiff filed an ex parte application seeking evidentiary and monetary sanctions against Defendants ATA, SDI, ATA Ranches, Inc., Pierce, Gobe, Longorio, Duroucher, McCoy, Carter, Duggan, Van Steekwyk, and Adelaida Cellars, Inc. (ECF No. 273.) Plaintiff contends that – pursuant to Rule 37(c) – Defendants should be barred from using annual shareholder meeting minutes, including the 2014 Meeting Minutes, as evidence in support of their Motion for Summary Judgment or at trial because Defendants failed to produce the documents before the discovery deadline. (ECF No. 273 at 3-4.) With regard to the 2014 Meeting Minutes in particular, Plaintiff contends that Defendants' late production has precluded him from investigating the document and its authenticity and from conducting related discovery in order to fully respond to the summary judgment motion. (ECF No. 273 at 16.)

*2 On June 13, 2022, Defendants filed an opposition to the ex parte application. (ECF No. 276.) Defendants argue that they objected to RFP 150, that they did not agree to produce documents in response to that RFP, and that Plaintiff has failed to establish that the annual shareholder meeting minutes were responsive to any RFP. Defendants also maintain that they intended to produce the annual shareholder meeting minutes during discovery and mistakenly believed they had produced those documents before the close of discovery. According to Defendants, their production failure was inadvertent. Defendants also argue that a sanction excluding critical evidence in support of their summary judgment motion would be overly harsh.

Under Federal Rule of Civil Procedure 26(a)(1)(A)(ii), a party is required to provide “a copy – or a description by category and location – of all documents ... that the disclosing party has in its possession, custody, or control and may use to support its claims.” Rule 26(e)(1) requires that Rule 26(a) disclosures, as well as responses to interrogatories, requests for production, or requests for admissions, be supplemented or corrected in a timely manner if the disclosure or response is later learned to be incomplete or incorrect in some material respect.

Pursuant to Rule 37(c)(1), “[i]f a party fails to provide information ... as required by Rule 26(a) or 26(e), the party is not allowed to use that information... to supply evidence on a motion, at a hearing, or at a trial, unless the failure was substantially justified or is harmless.” Among the factors relevant to determining whether a violation was substantially justified or harmless are: “ ‘(1) prejudice or surprise to the party against whom the evidence is offered; (2) the ability of that party to cure the prejudice; (3) the likelihood of disruption of the trial; and (4) bad faith or willfulness involved in not timely disclosing the evidence.’ ” Ruiz v. Walmart Inc., 2021 WL 4796960, at *3 (C.D. Cal. Apr. 27, 2021), quoting Lanard Toy Lt. v. Novelty, Inc., 375 F.Appx. 705, 713 (9th Cir. 2010); see also James Stewart Entm't, LLC v. L&M Racing, LLC, 2013 WL 12248146, at *5 (C.D. Cal. June 28, 2013) (defendant's failure to search all computers in their possession, custody, and control by the discovery deadline was not substantially justified nor harmless because it forced plaintiffs to review documents after the discovery cut-off and prepare for defendants' use of a lately-produced document); Marquez v. Okuma Am. Corp., 2022 WL 2062328, at *2 (C.D. Cal. May 4, 2022) (COVID-sickness was a substantially justified reason for plaintiff's failure to timely disclose his expert even though it deprived defendant of the ability to depose the expert and conduct further expert-related discovery before filing its motion for summary judgment). The non-compliant party has the burden to show that its discovery error was substantially justified or harmless. See Marquez, 2022 WL 2062328, at *2 (citing R&R Sails, Inc. v. Ins. Co. of Penn., 673 F.3d 1240, 1246 (9th Cir. 2012)); Yeti by Molly, Ltd. v. Deckers Outdoor Corp., 259 F.3d 1101,1107 (9th Cir. 2001). “In addition to, or instead of [the exclusion] sanction, the court, on motion, and after giving an opportunity to be heard: (A) may order payment of the reasonable expenses, including attorney's fees, caused by the failure; (B) may inform the jury of the party's failure; and (C) may impose other appropriate sanctions, including any of the orders listed in Rule 37(b)(2)(A)(i)-(vi).” Fed. R. Civ. P. 37(c)(1). The exclusion sanction under Rule 37(c)(1) is not mandatory. Rago v. Select Comfort Retail Corp., 2020 WL 8611033, at *4 (C.D. Cal. Dec. 9, 2020). The decision to exclude evidence is discretionary, and district courts are granted “particularly wide latitude” to issue sanctions under Rule 37(c)(1). Id., citing Ollier v. Sweetwater Union High Sch. Dist., 768 F.3d 843, 859 (9th Cir. 2014); see also Cortez v. Chipotle Mexican Grill, 2018 WL 6017033, at *13-*14 (C.D. Cal. May 7, 2018) (ordering additional discovery to be conducted instead of Rule 37(c)(1) sanctions because the late disclosure was not so harmful as to justify exclusion of these documents at trial).

*3 In the present case, although Plaintiff's RFP 150 could have been more specific and focused, it plainly requested all documents that provide a basis for Defendants' affirmative defenses – which includes the statute of limitations defense. While Defendants objected to RFP 150, their objections were boilerplate in nature, and Defendants now concede that they intended to produce the annual shareholder meeting minutes during discovery. It is also undisputed that Defendants are using the 2014 Meeting Minutes as evidence for their summary judgment motion regarding the statute of limitations defense. In these circumstances, the Court finds that the annual shareholder meeting minutes – including the 2014 Meeting Minutes – were within the scope of Plaintiff's RFP 150 and should have been produced by Defendants. Because Defendants' initial responses to the RFPs did not include those documents, Defendants had an obligation under Rule 26(e) to produce the annual shareholder meeting minutes as a supplementation to their RFP responses during the discovery period. See Cortez, 2018 WL 6017033, at *13 (Rule 37(c)(1) is implicated because “at a minimum, the documents Plaintiff describes were required to be produced pursuant to Rule 26(e) as the documents are responsive to Plaintiff's requests for production.”) Defendants did not make the required supplementation to their document production.

As discussed above, to assess whether Defendants' failure to produce the annual shareholder meeting minutes during discovery was substantially justified or harmless, a number of factors may be considered. Because Rule 37(c) includes no requirement for bad faith or willfulness, inadvertence is not a substantial justification to avoid the exclusion remedy. See Sanchez v. Stryker Corp., 2012 WL 13006186, at *2-3 (C.D. Cal. Mar. 28, 2012), citing Hoffman v. Constr. Protective Servs., Inc., 541 F.3d 1175, 1180 (9th Cir. 2008). Defendants have offered no explanation for their failure to produce the minutes, other than to say that they intended to do so during discovery. On the question of harm, it is relevant that Plaintiff attended the 2014 Meeting, although he did not know until recently that Defendants were relying on the 2014 Meeting Minutes to support their statute of limitations defense. The 2014 Meeting Minutes are relatively brief, are found on a single page, and reflect that various people attended the meeting. Presumably, some or all of those attendees could testify as to what discussed and distributed during the meeting – even without the minutes. In a typical case, it is not controversial to authenticate corporate meeting minutes, but in this instance, Plaintiff contends that meta data for the 2014 Meeting Minutes raises questions about the authenticity and modification of that document. (ECF No. 273-1 at 7.) Considering these factors, the Court concludes that Defendants' failure to produce the 2014 Meeting Minutes during discovery was not substantially justified and has materially harmed Plaintiff by impeding his ability to investigate and conduct discovery regarding the authenticity and content of the document.

When a party violates Rule 26(a) or (e), Rule 37(c)(1) permits (but does not require) a court to exclude evidence or impose alternative sanctions that it deems appropriate. See Fed. R. Civ. P. 37(c)(1)(C) (“In addition to or instead of [exclusion], the court, on motion and after giving an opportunity to be heard ... (C) may impose other appropriate sanctions, ....”); see also Merchant v. Corizon Health, Inc., 993 F.3d 733, 740 (9th Cir. 2021) (“the automatic nature of the rule's application does not mean that a district court must exclude evidence that runs afoul of Rule 26(a) or (e)”); United States ex rel. O'Connell v. Chapman Univ., 245 F.R.D. 652, 655 (C.D. Cal. 2007) (any prejudice defendant suffered by plaintiff's tardiness could be addressed by various remedies other than the extremely harsh remedy of exclusion). Excluding the 2014 Meeting Minutes from use with Defendants' summary judgment motion or at trial would be a harsh sanction. The 2014 Meeting Minutes are a significant part of Defendants' defense as they purport to be documentary proof that Plaintiff has been on inquiry notice of aspects of Defendants' alleged misconduct since at least 2014 – based on information and documents presented to him at the 2014 Meeting. Precluding use of the 2014 Meeting Minutes would significantly alter the evidence that Defendants could offer in support of their statute of limitations defense. See Bonzani v. Shinseki, 2014 WL 66529, at *5 (E.D. Cal. Jan. 8, 2014) (declining to impose exclusionary sanctions because it would “effectively eviscerate plaintiff's claim”); R&R Sails, Inc., 673 F.3d at 1247 (recognizing that evidence preclusion can be an overly harsh sanction at times). As an alternative, a more targeted remedy may mitigate Plaintiff's harm without barring important evidence supporting Defendants' statute of limitations defense and summary judgment motion. See Rago, 2020 WL 8611033, at *6 (dispute could “more equitably be resolved by conducting a supplemental deposition... [at plaintiff's expense] and stipulating to provide defendant with additional time to prepare a ... expert rebuttal report.”); Bonzani, 2014 WL 66529, at *5 (holding that the issue could “more equitably be resolved by permitting defendants to conduct the very discovery they otherwise would have performed to provide them an opportunity to gather rebuttal evidence relating to plaintiff's claim ...” despite requiring a revised trial schedule).

*4 Accordingly, as a remedy for Defendants' violation of Rule 26(e) based on the failure to produce the 2014 Meeting Minutes, the Court recommends Plaintiff be permitted to take the depositions of Daniel Carter (the drafter of the minutes and an attendee at the 2014 Meeting), plus a witness designated by Defendants pursuant to Federal Rules of Civil Procedure 30(b)(6) regarding the authenticity and meta data associated with the 2014 Meeting Minutes. In addition, the Court recommends that Plaintiff be permitted to designate an expert witness to provide an opinion concerning authenticity and meta data associated with the electronic version of the 2014 Meeting Minutes that Defendants have recently provided. As to the remaining annual shareholder meeting minutes, the Court recommends that those minutes be excluded from use in the case. Defendants' failure to produce those records during discovery violated Rule 26(e). Plaintiff suffered harm by being unable to take discovery regarding these documents, and Defendants have presented no justification for their non-production. Nor have Defendants identified any importance of these documents to their case or how exclusion of the other minutes would harm Defendants.

Finally, the Court recommends that under Fed. R. Civ. P. 37(c)(1)(A), Defendants be ordered to pay a portion of the attorneys' fees incurred by Plaintiff in bringing the ex parte application. In a declaration (ECF No. 273-1 at 8-9), Plaintiff has provided evidence that his attorneys' fees for the application are $26,275 – made up of 12 hours by a senior partner at $700/hr., 16.5 hours by a senior associate at $600/hr., and 12 hours by a junior associate at $550/hr. Defendants generally objected to the requested attorneys' fees, but have not challenged the hourly rates or the number of hours billed by Plaintiff's counsel. A reasonable hourly rate is based upon a consideration of the experience, skill, and reputation of the attorney requesting the fees. Chalmers v. City of Los Angeles, 796 F.2d 1205, 1210 (9th Cir. 1986), amended 808 F.2d 1373 n.4 (1987). Here, the Court finds that the billing rates of Plaintiff's counsel are reasonable. See, e.g., Infanzon v. Allstate Ins. Co., 335 F.R.D. 305, 314 (C.D. Cal. 2020) (finding hourly rates ranging from $380 and $575 to be reasonable); Perfect 10, Inc. v. Giganews, Inc., 2015 WL 1746484, at *15-20 (C.D. Cal. Mar. 24, 2015) (billing rates of $750-$930 for senior partner, $610-$750 for junior partner, and $350-$690 for associates reasonable), aff'd, 847 F.3d 657 (9th Cir. 2017). However, the Court recommends that the total fees be reduced by 40% because of overlaps in the responsibilities of the various lawyers as reflected in the statement of their work and because the ex parte application would be granted only in part pursuant to this recommendation.

Based on the foregoing, it is recommended that the District Judge accept this Report and Recommendation, grant in part the ex parte application, and order that (i) Defendants violated Rule 26(e) by failing to produce the annual shareholder minutes during discovery – a violation that was not substantially justified or harmless; (ii) within 10 days of the order accepting this Report, Defendants shall make Daniel Carter available for deposition to testify regarding the 2014 Annual Shareholder Meeting Minutes and what took place at the 2014 Meeting; (iii) within 10 days of the order accepting this Report, Defendants shall make available a deponent under Fed. R. Civ. P. 30(b)(6) to testify regarding the authenticity of, and meta data associated with, the 2014 Annual Shareholder Meeting Minutes; (iv) Plaintiff shall be permitted to designate an expert to provide a report regarding concerning the authenticity and meta data concerning the electronic version of the 2014 Meeting Minutes; (v) Defendants shall pay Plaintiff the sum of $15,765, as reasonable attorney fees that he incurred in connection with the ex parte application; (vi) the remaining annual shareholder meeting minutes are excluded from use in this case; and (vii) the exclusion remedy sought by the ex parte application is denied.