Consumer Justice Center P.A., et al., Appellants, vs. Trans Union L.L.C., Respondent.

Consumer Justice Center P.A., et al., Appellants, vs. Trans Union L.L.C., Respondent. A05-975, A05-1433, Court of Appeals Unpublished, April 11, 2006.

This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480 A. 08, subd. 3 (2004).

 

 

STATE OF MINNESOTA

IN COURT OF APPEALS

A05-975 A05-1433

 

Consumer Justice Center P.A., et al.,

Appellants,

 

vs.

 

Trans Union L.L.C.,

Respondent.

 

Filed April 11, 2006

Reversed Hudson, Judge

 

Ramsey County District Court

File No. C9-02-6884

 

Thomas J. Lyons, John H. Goolsby, Thomas Lyons & Associates, 342 East County Road D, Little Canada, Minnesota 55117 (for appellants)

 

James F. Roegge, Joel T. Wiegert, Meagher & Geer, P.L.L.P., 33 South Sixth Street, Suite 4200, Minneapolis, Minnesota 55402-3788; and

 

Robert J. Schuckit (pro hac vice), Schuckit & Associates, 10 West Market Street, Suite 3000, Indianapolis, Indiana 46204-1708 (for respondent)

 

            Considered and decided by Klaphake, Presiding Judge; Peterson, Judge; and Hudson, Judge.

U N P U B L I S H E D   O P I N I O N

HUDSON, Judge

This is an appeal from a dismissal with sanctions of a defamation action brought by appellants Consumer Justice Center law firm and one of its attorneys against respondent consumer-credit-reporting agency.  Appellants argue that (a) the district court erred in granting respondent's motion to compel discovery; (b) the sanction order based on appellants' alleged failure to comply with the discovery order was an abuse of discretion because the order did not give a deadline for compliance and appellants moved to voluntarily dismiss their claim with prejudice; (c) the district court's sanction of dismissal and imposition of attorney fees and costs was excessive and inappropriate; and (d) appellants' motion to amend the complaint to plead punitive damages should have been granted.  Because the district court abused its discretion in granting respondent's motion to compel, there was no basis for the district court's dismissal with sanctions.  The district court also abused its discretion by not accepting appellants' motion for voluntary dismissal with prejudice under Minn. R. Civ. P. 41.01(b).  Accordingly, we reverse.

FACTS

In the underlying suit, appellants, attorney Thomas J. Lyons Jr. and his law firm, the Consumer Justice Center P.A. (CJC), alleged that respondent Trans Union LLC, (Trans Union) defamed them in two written communications sent to CJC's clients.  Trans Union is a consumer-credit-reporting agency as defined under 15 U.S.C. § 1681a(f), and, as such, they regularly assemble, evaluate, and disperse information concerning consumers for the purpose of furnishing consumers' reports to third parties.  See 15 U.S.C. § 1681a(f).  CJC represents consumers who report disputes with credit reporting agencies such as Trans Union.  In July 2002, CJC sued Trans Union for libel per se based on Trans Union's written statements in two form letters sent to CJC's clients stating that "[o]ur experience with [CJC] shows that they routinely and knowingly dispute accurate [credit report] information."  As one of its defenses, Trans Union asserted that the statement was true. 

In February 2003, Trans Union served discovery, including requests for admissions, interrogatories, and production of documents.  Trans Union asked CJC to provide them with "all documents relating to any information upon which you could base an assertion of any of the allegations of the Complaint or a denial of any affirmative defense pleaded or sought to be pleaded," and "[a]ll documents relating to initial contacts, disputes, requests for reinvestigation or other communications with credit reporting agencies that [CJC] [has] had in the last ten years, including but not limited to work papers, correspondence, reports, and testimony."  Of particular concern in this appeal is the request for "all documents relating to initial contacts, disputes," which the parties simply referred to throughout the litigation as CJC's "list of clients" or "the list."

In April 2003, the district court denied CJC's motion to compel depositions, reasoning that Trans Union's request for CJC's list of clients was reasonably intended to focus the discovery in preparation for the depositions.  The district court determined that CJC's refusal to supply the list was unreasonable.  At a May 28, 2003 hearing, Trans Union informed the district court that CJC had recently provided them with a list of 60 clients/disputes.  The district court ordered that Trans Union had until June 12, 2003 to complete its investigation of the client list and corresponding disputes before depositions would commence.[1] 

In July 2003, the district court granted Trans Union's motion for summary judgment.  On appeal from the grant of summary judgment, this court reversed and remanded, concluding that there were genuine issues of material fact to be resolved by trial.  Consumer Justice Ctr, P.A. v. Trans Union, LLC, No. A03-1329 (Minn. App. Apr. 27, 2004).

In October 2004, the district court amended its scheduling order requiring additional discovery to be "noticed so as to be completed by December 30, 2004."  This cut-off date for discovery was also the deadline to "bring and hear motions to compel discovery."  On December 3, 2004, Trans Union moved to extend the discovery cut-off date or to compel discovery from CJC regarding its original requests for production of documents and substantive answers to its interrogatories.  In an order dated January 31, 2005, the district court granted Trans Union's motion to compel and extend discovery, while denying CJC's motion to amend its complaint to plead punitive damages.  The district court ordered CJC to "respond fully to [Trans Union's] discovery requests."  Specifically, the district court ordered CJC to make a "full, good faith, response to all of [Trans Union's] previously served discovery," and "[t]o the extent [counsel for CJC] believe[s] they have a proper objection to any such discovery, they shall bring an appropriate motion for a protective order setting forth specifically the nature of the objection."  Finally, the district court warned CJC that "[t]his extended discovery period is intended to allow [CJC] to avoid dismissal of their action."

In February 2005, CJC sought voluntary dismissal with prejudice under Minn. R. Civ. P. 41.01(b), conditioning the dismissal on each party bearing its own costs.  Trans Union opposed the voluntary dismissal and moved for dismissal with prejudice and sanctions under rule 37.02(b) for CJC's failure to comply with the district court's order compelling discovery.

On March 17, 2005, the district court denied CJC's voluntary motion to dismiss and granted in part Trans Union's motion to dismiss with prejudice together with (a) statutory costs and disbursements and (b) sanctions pursuant to Minn. R. Civ. P. 37.02(b) in the form of reasonable attorney fees incurred in bringing the December 3, 2004 and February 25, 2005 motions to compel discovery.  This appeal follows.

D E C I S I O N

 

I

 

            CJC first argues that Trans Union's motion to compel was untimely and the district court abused its discretion by hearing the motion outside the deadline set in the scheduling order.  The scheduling order was amended on October 27, 2004, establishing the deadline for discovery and "to bring and hear motions to compel discovery" as December 30, 2004.  Trans Union moved to compel discovery on December 3, 2004, but a hearing on the motion was not held until January 27, 2005. 

Appellate courts give great deference to district court judges to determine the procedural calendar of a case.  Rice v. Perl, 320 N.W.2d 407, 412 (Minn. 1982).  The scheduling order is a case-management tool used by the district court to keep a case moving toward disposition.  See generally Minn. R. Civ. P. 16.01, 16.02 (stating the purposes of scheduling conferences and scheduling orders).  While a violation of the scheduling order by a party can have serious consequences for that party, the scheduling order is not meant to tie the hands of the district court electing to apply it.  A district court's decision to reasonably depart from the schedule without requiring the moving party to show good cause or modify the order is within the district court's discretion, especially when, as here, the motion to compel was made well before the deadline and the district court elected to hear the motion, over CJC's objections, within a few weeks after the deadline.  The district court did not abuse its discretion in doing so.

            CJC next argues that even if Trans Union's motion to compel is considered to be timely filed, the district court abused its discretion by granting it.  CJC argues that the information Trans Union sought to compel was an overly broad "fishing expedition."  We agree.

A district court has wide discretion to issue discovery orders and those orders normally will not be disturbed absent a clear abuse of discretion.  Shetka v. Kueppers, Kueppers, Von Feldt & Salmen, 454 N.W.2d 916, 921 (Minn. 1990); see also Minn. Twins P'ship v. Hatch, 592 N.W.2d 847, 850 (Minn. 1999) (citing Shetka).  The rules of civil procedure require that document requests "set forth the items to be inspected either by individual item or by category, and describe each item and category with reasonable particularity."  Minn. R. Civ. P. 34.02.  The rules further empower the district court to limit discovery if it determines that the discovery is unduly burdensome.  Minn. R. Civ. P. 26.02(a).  The United States Supreme Court noted in Herbert v. Lando that materials sought in discovery must be "relevant" and that "the district courts should not neglect their power to restrict discovery where ‘justice requires [protection for] a party or person from annoyance, embarrassment, oppression, or undue burden or expense.'"  441 U.S. 153, 177, 99 S. Ct. 1635, 1649 (1979) (quoting Fed. R. Civ. P. 26(c)) (referring to Fed. R. Civ. P. 26(b), the equivalent of Minn. R. Civ. P. 26.02).  As a general rule, a district court should control "fishing expeditions" by exercising its discretion to manage the breadth and depth of discovery, rather than through dismissal of complaints.  In re Milk Indirect Purchaser Antitrust Litig., 588 N.W.2d 772, 776 (Minn. App. 1999). 

Early in the case, Trans Union requested from CJC, among other things, the identity and files of all of CJC's clients during the past ten years who had disputed claims with any credit-reporting agency.  Although some of the files requested may reasonably have led to discovery supporting Trans Union's defense, this request was overly broad.  CJC specialized in representing consumers who reported disputes with credit-reporting agencies.  Thus, Trans Union was requesting nearly every case file that CJC had worked on during a ten-year period, including files that involved credit-reporting agencies other than Trans Union.  Further, Trans Union had made its statement that CJC "routinely and knowingly dispute[s] accurate [credit report] information" without first consulting its own records concerning the validity of CJC's prior disputed claims.  In sum, Trans Union was "fishing" for after-the-fact proof of the truth of its statement.  At a minimum, the district court should have limited the request to files regarding disputes with Trans Union, as Trans Union's statement was purportedly based on Trans Union's experience with CJC.  While the names of CJC's clients were reasonably needed to provide a starting point for Trans Union's investigation, CJC had provided a list of 60 names, which the district court at one point considered adequate.  This apparent narrowing of the discovery was abandoned by both Trans Union in its motion to compel discovery and the district court in its order granting the motion to compel.  Because Trans Union's discovery requests were overly broad, and the district court did not narrow the requests, we conclude that the district court abused its discretion in granting the motion to compel. 

Because it was an abuse of discretion for the district court to compel this discovery, there was no basis for the district court to grant Trans Union's motion for dismissal with prejudice and sanctions based on CJC's failure to comply with the order to compel.  Accordingly, the district court's order dismissing CJC's claim with prejudice and sanctions is reversed. 

II

Finally, we address whether the district court abused its discretion in denying CJC's rule 41.01(b) motion to dismiss where both parties were seeking pretrial dismissal of the suit with prejudice.  "A reviewing court will not reverse a district court's decision on a rule 41 motion unless the district court abuses its discretion."  Altimus v. Hyundai Motor Co., 578 N.W.2d 409, 411 (Minn. App. 1998).  Under the corresponding federal rule, when determining whether to grant a plaintiff's motion to dismiss, a district court typically considers (1) the defendant's effort and expenses of trial preparation; (2) the plaintiff's excessive delay and lack of diligence; (3) the sufficiency of the explanation of plaintiff's need for dismissal; and (4) whether the defendant moved for summary judgment.  Id.

In response to the district court's order to compel discovery, which we have concluded was overly broad, and the district court's denial of CJC's motion to amend the complaint to include punitive damages, CJC determined that the case was no longer worth pursuing.  CJC moved for voluntary dismissal with prejudice under Minn. R. Civ. P. 41.01(b), conditioning dismissal on each party bearing its own costs.  Trans Union opposed the dismissal on those grounds and moved instead for dismissal with prejudice and with sanctions based on CJC's failure to obey the district court's order to compel.  In denying CJC's motion to dismiss with prejudice, the district court stated that "[CJC's] motion to dismiss is DENIED because the motion is a conditional motion, which conditions are unreasonable given [CJC's] conduct in this case."  While the record supports the district court's findings that CJC's actions in this case were "problematic," the record also reflects that Trans Union's conduct in this case was equally troubling.  Discovery in this caseeven after two and one-half yearshad not progressed.  CJC's first appeal and the subsequent remand from summary judgment account for a portion of time during which discovery was suspended, but they do not explain the lack of cooperation displayed by both parties when discovery was not suspended.

While rule 41.01(b) gives the district court discretion to determine the terms and conditions under which a dismissal would be proper, when, as here, (1) both parties and the court agreed that dismissal with prejudice was appropriate, (2) a significant amount of discovery had not yet been completed, and (3) both parties had engaged in "problematic" litigation practices, we conclude that the district court abused its discretion by denying CJC's voluntary motion for dismissal with prejudice.  We therefore reverse the district court's denial of CJC's motion to dismiss with prejudice and, in accordance with that motion, each party is to bear its own costs.

Because this case is dismissed with prejudice, we do not address CJC's arguments regarding denial of the motion to amend the complaint to seek punitive damages.

Reversed.

[1] In late June 2003, a dispute arose between the parties regarding whether the client list was complete; specifically, Trans Union claimed that it was not complete because it did not include the clients' social security numbers.  CJC claimed that Trans Union had never specifically requested the social security numbers and that, in any event, CJC's clients had not authorized this disclosure.