Outlaw Laboratory, LP v. DG in PB, LLC et al, No. 3:2018cv00840 - Document 346 (S.D. Cal. 2021)
Court Description: ORDER Granting in Part and Denying in Part the Stores' 269 Motion for Sanctions and Further Compelling Document Production and Interrogatory Responses by Tauler Smith. Signed by Magistrate Judge Bernard G. Skomal on 1/12/21. (All non-registered users served via U.S. Mail Service)(dlg)
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Outlaw Laboratory, LP v. DG in PB, LLC et al Doc. 346 1 2 3 4 5 6 UNITED STATES DISTRICT COURT 7 SOUTHERN DISTRICT OF CALIFORNIA 8 9 10 IN RE: OUTLAW LABORATORIES, LP LITIGATION, Case No.: 18CV840 GPC (BGS) ORDER GRANTING IN PART AND DENYING IN PART THE STORES’ MOTION FOR SANCTIONS AND FURTHER ORDER COMPELLING DOCUMENT PRODUCTION AND INTERROGATORY RESPONSES BY TAULER SMITH . 11 12 13 14 15 16 [ECF 269] 17 18 I. INTRODUCTION 19 Counter-claimant Roma Mikha and third-party plaintiffs NMRM, Inc. and Skyline 20 Market, Inc. (collectively the “Stores”) have filed a Motion seeking sanctions and further 21 responses from third-party defendant Tauler Smith LLP (“Tauler Smith”). (ECF 269.) 22 The Stores seek further responses to discovery requests and sanctions for Tauler Smith’s 23 provision of false and incomplete responses to these requests and for Tauler Smith’s 24 deposition conduct. (Id.) Tauler Smith has filed an Opposition, (ECF 273), and the 25 Stores have filed a Reply. (ECF 275.) 1) 26 27 28 1 All citations are to the CM/ECF electronic pagination unless otherwise noted. 1 Dockets.Justia.com 1 For the reasons set forth below, the Motion is GRANTED in part and DENIED 2 in part. 3 II. BACKGROUND 4 A. 5 The Court has summarized the claims, counterclaims, and third-party claims of this Claims in Consolidated Action 6 consolidated action in detail in the Court’s numerous prior orders on discovery 7 disputes. The Court incorporates those summaries here and only briefly summarizes the 8 case here. (ECF 177 at I; ECF 215 at II; ECF 230 at II; ECF 246 at II; ECF 265 at II.) 9 This consolidated action encompasses two cases brought by Outlaw Laboratory, 10 LP against retail stores. (Case Nos. 18cv840 (“DG in PB”) and 18cv1882 (“SD Outlet”).) 11 Three stores, Roma Mikha, NMRM, Inc., and Skyline Market, Inc. have filed 12 counterclaims as a class action on behalf of themselves and other targeted stores against 13 Outlaw and its former counsel, Tauler Smith, under the Racketeer Influenced and Corrupt 14 Organizations Act (“RICO”) along with a rescission claim. (“Second Amended Counter 15 Claims (“SACC”) [ECF 114].) 16 Outlaw’s claims were premised on the defendant stores selling “male-enhancement 17 pills, . . . ‘the Enhancement Products’” with packaging indicating they were all natural, 18 but allegedly containing undisclosed drugs with Outlaw claiming it lost out on sales of its 19 products to those other products. (ECF 147 at 1, 3-6; ECF 209 (SD Outlet action).) 20 Summary Judgment was granted to defendants in the DG in PB action, and a motion for 21 judgment on the pleadings and subsequent motion for reconsideration in the SD Outlet 22 action were granted dismissing with prejudice all of Outlaw’s claims. (ECF 147, 209, 23 251.) 24 The Stores’ counterclaims under RICO are being brought on behalf of a class of 25 similarly situated stores. (ECF 114.) The SACC alleges Outlaw, Tauler Smith, and 26 Outlaw’s principles, Michael Wear and Shawn Lynch, have engaged in a scheme that 27 includes sending demand letters to small businesses that threaten the store could be held 28 liable for over $100,000 based on false and misleading statements about potential liability 2 1 for the sale of certain products by the stores. (SACC ¶¶ 2, 26, 82-88.) The SACC alleges 2 Outlaw employs “investigators,” some hired by Outlaw’s counsel Tauler Smith, who 3 identify stores selling the products, take pictures of storefronts and shelves in the store 4 with the products and provide that information to others participating in the scheme to 5 target these stores. (SACC ¶¶ 66, 73, 86, 92.) The SACC alleges that Outlaw and its 6 attorneys then send the demand letters that falsely indicate Outlaw sells a competitive 7 product, TriSteel, in retail stores through the United States and that the store is illegally 8 selling products in violation of RICO and the Lanham Act. (SACC ¶¶ 2, 15, 23-24, 26- 9 52, 66-68, 84-86, 88, 92.) The demand letters also allegedly include pictures taken of 10 receipts for purchase of the products by investigators. (SACC ¶¶ 68, 73, 91.) Follow-up 11 communications then offer to settle for increasingly lower amounts, including as low as 12 $2,500. (SACC ¶¶ 3-4, 56, 72, 87, 98.) 13 The Stores’ SACC sought to bring these claims on behalf of a Store Class, “All 14 business entities in the Unites States that received a demand letter substantially similar to 15 the letter received by the class representatives” with three subclasses: (1) Sued Stores; (2) 16 Threatened Stores; and (3) a Payment Class. (SACC ¶¶ 77-81.) These subclasses 17 encompassed three different outcomes that allegedly resulted for stores as a result of 18 Outlaw’s demand letters: (1) sued stores that did not settle and were sued (SACC ¶¶ 33, 19 77, 89); (2) threatened stores that did not settle and were not sued (SACC ¶¶ 34, 78, 89); 20 and (3) the payment class that paid a settlement (SACC ¶¶ 4, 22, 35, 69, 71, 89, 97-99). 2 21 B. 22 The Court issued an Order on June 1, 2020 compelling Tauler Smith to respond to 23 Discovery Requests as Issue the discovery requests at issue in this Motion—the Stores’ requests for production of 24 25 26 27 28 2 On August 17, 2020, the Stores filed a Notice of Conditional Withdrawal of their Motion to Certify the Proposed “Sued Stores” and “Threatened Stores” Classes related to their Motion for Class Certification (ECF 179) based on their attempted settlement with Outlaw. (ECF 274.) 3 1 documents (“RFPs”) 1, 2, 7, 9, 10 and interrogatories (“ROGs”) 1, 3, and 7. (ECF 215. 3) 2 As detailed in the Court’s Order, RFPs 1, 2, 7, 9, and 10 sought copies of the demand 3 letters, settlement agreements, documents showing how much money Tauler Smith took 4 in through settlements, Tauler Smith’s communications with targeted stores or their 5 counsel, and communications between Tauler Smith and other Outlaw lawyers related to 6 the scheme. (ECF 215 at 6-10.) Interrogatories 1, 3, and 7 sought the identities of 7 demand letter recipients, the identities of settling stores, and the amount of money 8 received from the class members. (Id.) The Court addressed Tauler Smith’s specific 9 arguments and incorporated most of the Court’s prior analysis on relevancy, 10 proportionality, and proper scope4 in ruling on identical discovery requests to Outlaw. 11 (Id.) 12 The Order required Tauler Smith to provide the Stores with responses to RFPs 7 13 and 9 (id. at 7-8) and ROGs 1, 3, and 7 (id. at 8-9). As to RFPs 1, 2, and 10, Tauler 14 Smith had claimed that it had produced all responsive documents. The Court’s decision 15 explained that that Court could not order Tauler Smith to produce something it claimed it 16 did not have, however, the Court did order it to provide the Stores with a declaration 17 indicating that it did not have any additional responsive documents than those already 18 produced. (Id. at 9-10.) The Order required Tauler Smith to provide these responses by 19 20 21 22 23 24 25 26 27 28 3 The Court analyzed the relevancy, proportionality, and scope of these discovery requests in detail in a prior Order on the same discovery requests to Outlaw (ECF 177) and incorporated much that analysis in the June 1, 2020 Order as to Tauler Smith’s responses, (ECF 215 at 6-7), but addressed all of Tauler Smith’s specific arguments. (ECF 215.) 4 The Court had previously found some interrogatories were duplicative of document requests. However, based on the additional information provided by the parties at the time of ruling on Tauler Smith’s responses, the Court found the interrogatories were not duplicative and must be responded to. (ECF 215 at 9 n.2.) 4 1 June 10, 2020 and required any dispute arising from the responses or lack thereof be 2 raised no later than June 24, 2020.5 (Id. at 10.) 3 III. 4 DISCUSSION There are three primary issues before the Court: (1) timeliness of the Stores’ 5 Motion as to Tauler Smith’s discovery responses; 6 (2) whether the Court should order 6 Tauler Smith to provide further responses to those discovery requests; and (3) whether 7 the Court should impose sanctions or order Tauler Smith to pay the expenses of the 8 Motion and Mr. Tauler’s deposition for Tauler Smith’s allegedly false responses to these 9 discovery requests and Tauler Smith’s deposition conduct. Because timeliness is only at 10 issue as to the Store’s challenges to Tauler Smith’s discovery responses, the Court 11 provides an overview of the timeliness issue and then briefly addresses timeliness as to 12 each group of discovery requests in conjunction with addressing whether further 13 responses are required. The Court then addresses whether sanctions are appropriate as to 14 the discovery responses and Tauler Smith’s deposition conduct. 15 A. 16 Requests for Production of Documents and Interrogatories 1. 17 Legal Standards “A party may serve on any other party a request within the scope of Rule 26(b) to 18 produce any designated documents or electronically stored information.” Rule 19 34(a)(1)(A). The request must describe the document sought “with reasonable 20 particularity” and any “objection must state whether any responsive materials are being 21 withheld on the basis of that objection.” Rule 34(b)(2). 22 23 24 25 26 27 28 5 As explained below, the Court’s Chambers Rules require discovery disputes be raised within 30 days of the dispute arising. By setting a specific deadline for disputes regarding Tauler Smith’s responses to be raised, the Court was shortening the 30-day time to raise a dispute regarding these responses. 6 There is no issue with the timeliness of the Stores seeking sanctions for Mr. Tauler’s deposition conduct. 5 1 “An interrogatory may relate to any matter that may be inquired into under Rule 2 26(b).” Fed. R. Civ. P. 33(a)(2). “Each interrogatory must, to the extent it is not objected 3 to, be answered separately and fully in writing under oath.” Rule 33(b)(3). “The grounds 4 for objecting to an interrogatory must be stated with specificity.” Rule 33(b)(4). “If the 5 answer to an interrogatory may be determined by examining, auditing, compiling, 6 abstracting, or summarizing a party’s business records . . . , and if the burden of deriving 7 or ascertaining the answer will be substantially the same for either party, the responding 8 party may answer by” producing or providing an opportunity for the moving party to 9 examine records. Rule 33(d). 10 If a party fails to produce documents under Rule 34 or fails to answer an 11 interrogatory under Rule 33, the propounding party may move to compel production of 12 documents or an answer. Rule 37(a)(3)(B)(iii) (interrogatories) and (iv) (requests for 13 production of documents). 14 As explained above, the Court has already addressed the relevancy proportionality, 15 and proper scope of these discovery requests under Rule 26(b) in a prior Order. The 16 parties have not briefed and the Court does not revisit those issues in this Order. The 17 Court has not addressed Federal Rule of Civil Procedure 26(e)(1) in those prior orders. It 18 requires: 19 20 21 22 a party . . . who has responded to an interrogatory, request for production, or request for admission -- must supplement or correct its . . . response: (A) in a timely manner if the party learns that in some material respect the . . . response is incomplete or incorrect, and if the additional or corrective information has not otherwise been made known to the other parties during the discovery process for in writing. 23 24 25 26 Fed. R. Civ. P. 26(e)(1). 2. Timeliness When the Stores and Tauler Smith raised these disputes, among numerous others 27 through letter briefs, Tauler Smith argued any challenges regarding Tauler Smith’s 28 responses to these discovery requests were untimely. (ECF 266 ¶ 2 (summarizing 6 1 parties’ arguments in letter briefs).) Accordingly, in addition to allowing briefing 2 regarding Tauler Smith’s discovery responses, Mr. Tauler’s deposition conduct, and 3 whether sanctions were proper for either, the Court’s briefing Order required the Stores to 4 address the timeliness of the Stores’ challenges regarding Tauler Smith’s discovery 5 responses. (Id.) The Stores and Tauler Smith have both addressed timeliness in their 6 briefing. (ECF 269 at 8-10; ECF 273 at 8; ECF 275 at 3-4.) 7 The Stores argue they did not have a sufficient basis to challenge Tauler Smith’s 8 discovery responses as false until Mr. Tauler was deposed on June 29, 2020 and when the 9 Stores received additional documents from Outlaw on July 7, 2020. (ECF 269 at 8-10; 10 ECF 269-1 ¶¶ 11-21.) The Stores argue that by raising these disputes within 30 days of 11 the June 29, 2020 deposition or within 30 days of when documents were disclosed to the 12 Stores by Outlaw on July 7, 2020, they have complied with the Court’s 30-day Rule. 13 Tauler Smith generally argues the Stores were required to raise any dispute 14 regarding its June 10, 2020 supplemental responses by July 10, 2020 and that “as of July 15 7, if not earlier, the Stores were in possession of all the evidence relied upon in the 16 motion.” (ECF 272 at 11.) As discussed further below, Tauler Smith also identifies 17 specific documents the Stores rely on that Tauler Smith claims the Stores had possession 18 of before Tauler Smith’s deposition. (Id. at 9-11.) 19 The Court’s Chambers Rules require discovery disputes be raised within 30 days 20 of the dispute arising. (Judge Skomal’s Chambers Rules, Section IV.C.) Generally, 21 “[f]or written discovery, the event giving rise to the discovery dispute is service of the 22 initial response or the time for such service if no response is given.” (Id.) 23 The Stores argue that Tauler Smith has provided deficient responses to RFPs 1, 2, 24 7, 9, 10 and ROGs 1, 3, and 7 and should be sanctioned and required to provide further 25 responses.7 (ECF 269 at 7-8, 10-17.) Whether these challenges are timely turns on when 26 27 7 28 As note above, Tauler Smith has, as every party does, a continuing obligation to supplement discovery responses when a discovery response is incorrect or incomplete. 7 1 the Stores had a basis to challenge the accuracy or sufficiency of Tauler Smith’s 2 responses. As explained below as to each group of discovery requests, the Stores’ 3 challenges are largely based on information that was not available to them when they 4 received the supplemental responses on June 10, 2020 or even before the June 24, 2020 5 deadline to challenge the responses. Rather, the Stores’ challenges are based primarily 6 on information obtained during Tauler Smith’s deposition on June 29, 2020 or documents 7 the Stores received from Outlaw on July 7, 2020.8 Because the Stores raised these issues 8 on July 29, 2020, most of them were raised within 30 days of the Stores obtaining 9 information sufficient to challenge the responses. As to the others, the Stores have shown 10 11 12 13 14 15 good cause for the delay. 3. Discovery Request The Court groups the analysis of the discovery requests based on the similarity of the discovery sought and the parties’ arguments. a) RFP 7, ROGs 3, and 7 (1) Parties’ Positions 16 As to RFP 7 (documents showing how much money Tauler Smith took in through 17 settlements from stores), ROG 3 (identities of settling stores), and ROG 7 (total amount 18 of money Tauler Smith received from settling stores) the Stores argue that Tauler Smith 19 produced a document providing only a partial list of settling stores with an inaccurate 20 total amount received from settlements. (ECF 269 at 10-11 (citing Ex. Q to Poe Decl.) 21 22 23 24 25 26 27 28 Fed. R. Civ. P. 26(e)(1). In this respect, even if this dispute were untimely as to Tauler Smith’s compliance with the Court’s Order compelling further responses, it would still be obligated to supplement its responses to make them complete and accurate. 8 Tauler Smith does not seem to dispute this, arguing that by both July 7, 2020 and July 10, 2020 the Stores had the information needed to raise these challenges. (ECF 273 at 11-12 (“[T]he Stores had all the knowledge they needed to bring the issue before July 10”) 12 (“[A]ll the documentary proof relied on by the Stores was in their possession by July 9 or earlier”).) 8 1 [ECF 269-18) (RFP 7), 15-16 (citing Ex. Q) (ROG 3 & 7).9) This single document listed 2 only 107 stores and total payments of $276,675. (Id. at 10 and 15 (citing Ex. I to Poe 3 Decl. [ECF 269-10]).) However, on July 7, 2020, Outlaw produced to the Stores invoices 4 it received from Tauler Smith. (Id. at 10-11 (citing Exs. J, K, L, and M [ECF 268-3-6] to 5 Poe Decl.) (RFP 7), 15-16 (citing Exs. J, K, L, and M) (ROG 3 & 7).) The invoices were 6 prepared and issued by Tauler Smith. (Id.) They show Tauler Smith received settlements 7 from hundreds of additional stores not identified in the only responsive document 8 produced by Tauler Smith and show total deposits of $ 1,183,886.13 rather than the 9 $276,675 disclosed in Tauler Smith’s response to these requests. (Id. at 11.) The Stores 10 also dispute Mr. Tauler’s claim at his deposition that Tauler Smith was only required 11 produce responses as to California stores. (ECF 269 at 11.) 12 As to RFP 7 and ROGs 3 and 7, Tauler Smith argues that sanctions are not 13 warranted because the Stores have not established that Mr. Tauler’s June 10, 2020 14 declaration stating that all responsive documents had been produced was false when 15 signed. (ECF 273 at 13 (RFP 7), 15-16 (ROGs 3 and 7).) In support, Tauler Smith 16 argues that because the invoices the Stores rely on, (Exs. J-M), were produced to the 17 Stores by Outlaw on July 7, 2020, after Mr. Tauler’s declaration was provided with the 18 June 10, 2020 responses, they do not establish Mr. Tauler’s declaration was false when 19 provided on June 10, 2020. (Id.) As to RFP 7, Tauler Smith also points to Mr. Tauler’s 20 testimony that Mr. Valerio, its CFO, 10 eliminated Tauler Smith’s access to its 21 QuickBooks account. (Id. (citing Tauler Dep. 122:19-123:13).) Tauler Smith also argues 22 that it was only required to provide responsive documents as to California stores based on 23 24 25 26 27 28 9 Tauler Smith relied on Rule 33(d) to produce a document rather than an answer to the interrogatory. 10 The Stores refer to Mr. Valerio as a bookkeeper. Tauler Smith’s Opposition refers to him as CFO. Although the Court recognizes the parties’ persuasive intentions in their differing descriptors, in referring to him as CFO the Court is not reaching any conclusions about his actual job title, responsibilities, or level of access to records. 9 1 a January 28, 2020 Order denying the Stores Motion to Amend to add additional 2 defendants to its counterclaims. (Id. at 16.) 3 4 (2) Analysis The Court first briefly addresses the timeliness of the Stores’ challenge to Tauler 5 Smith’s responses to these discovery responses and then addresses whether further 6 responses are required. The issue of sanctions is address separately below. (III.B.) 7 8 9 (a) Timeliness The Court finds this challenge timely. As discussed below, the Stores received Exhibit Q in response to these discovery requests, and although the Stores certainly might 10 have suspected it was incomplete, they did not have a solid basis to challenge the 11 response on that basis until they received the Tauler Smith invoices (Exs. J-M) showing 12 additional settlements, settling stores, and additional money received. The Stores do rely 13 in part on Exhibit T as to ROGs 3 and 7, a document Tauler Smith asserts the Stores have 14 had since May 4, 2020, however, as discussed below, the Stores’ challenge as to these 15 discovery requests is based primarily on the invoices that were not provided to the Stores 16 until July 7, 2020. Because the Stores raised these issues within 30 days of obtaining the 17 information that forms the basis for their challenge, these challenges have been timely 18 raised. 19 20 (b) Further Responses to RFP 7 and ROGs 3 and 7 are Required 21 The Court finds Tauler Smith’s responses to RFP 7 and ROGs 3 and 7 are deficient 22 and Tauler Smith must provide supplemental responses. As noted above, these discovery 23 requests seek documents showing how much money Tauler Smith took in through 24 settlements from stores (RFP 7), identities of settling stores (ROG 3), and the total 25 amount of money Tauler Smith received from settling stores (ROG 7). The Stores have 26 very explicitly asserted that Tauler Smith’s response to these requests, Exhibit Q, does 27 not include stores and amounts that are identified on the invoices from Tauler Smith to 28 Outlaw. (ECF 269 at 10-11, 15-16 (relying on Exs. J-M).) Tauler Smith has not disputed 10 1 this and the Court is not going to create an argument for it. Other than its argument 2 regarding exclusion of stores outside California, addressed below, Tauler Smith has 3 essentially conceded the response provided in Exhibit Q is deficient at least in that it does 4 not include stores and payments Tauler Smith’s own invoices to Outlaw reflect. (Exs. J- 5 M to Poe Decl.) 6 Tauler Smith’s claim that it was only required to respond to these requests as to 7 California stores is wrong. Tauler Smith relies on a single sentence in a January 28, 2020 8 Order that it miscites 11 without acknowledging the context of the statement. (ECF 273 at 9 16 (“The instant RICO and recission counterclaims brought by the Stores arise from the 10 Counterclaim Defendants’ conspiracy to extort them in California, not Michigan, during 11 a period beginning in December 2017. Because Boss’s involvement began after the 12 Enterprise’s conduct in California, the Court may award complete relief to the currently- 13 joined Stores, if they prevail, without joining Boss.”) (quoting ECF 170 at 7-8).) The 14 assertion that this statement limited the scope of discovery in this case to California stores 15 is meritless. First, the section cited in no respect addresses, references, or even alludes to 16 discovery or the scope of it. Second, the decision was issued on January 28, 2020. (ECF 17 170 at 7-8.) To the extent that Tauler Smith believed that the discovery requests at issue 18 were overbroad in seeking discovery regarding stores throughout the United States, not 19 just California, based on this language, Tauler Smith had to raise that issue with the 20 Court. It could not unilaterally limit its discovery responses only to California when they 21 clearly sought more, particularly without ever telling the other party it limited it in that 22 respect. Third, Tauler Smith fails to acknowledge the context of this statement. The 23 Order was addressing a very specific legal issue, whether a Michigan-based law firm was 24 a “required party” to this litigation under Federal Rule of Civil Procedure 19. (Id.) It is 25 26 27 28 11 Tauler Smith incorrectly cites ECF 117. 11 1 not even limiting the scope of the claims in this case; 12 this section is explaining one of a 2 number of reasons why a new party is not being added. (Id.) A footnote to the section 3 cited even reiterated that the decision was only finding the defendants sufficiently 4 differentiated that the new party did not need to be joined to this case. (Id. n.3.) The 5 discovery requests were not and are not limited to California stores. 6 Tauler Smith’s only other argument regarding these discovery requests is 7 specifically addressed to whether sanctions should be imposed. The Court addresses 8 sanction collectively below, but notes here that this argument would not alter the Court’s 9 conclusion that further responses are required. Tauler Smith argues sanctions should not 10 be imposed because Mr. Tauler’s declaration was not false when made. Tauler Smith 11 asserts that the June 10, 2020 response was not false at the time because Outlaw did not 12 produce the invoices demonstrating the June 10, 2020 response was deficient until July 7, 13 2020. The Court would generally agree with the Stores that the idea that a declaration 14 only becomes false when the evidence of the falsity is produced does not make sense. 15 These are Tauler Smith invoices that predate the June 10, 2020 response by more than a 16 year. (Ex. J (dated 4/2/2018), Ex. K (dated 8/1/2018), Ex. L (dated 10/1/2018), Ex. M 17 (dated 12/2/2018).) It is reasonable to conclude Tauler Smith had the knowledge and 18 information contained in its own invoices that it created and that information should have 19 been disclosed in the June 10, 2020 responses. 20 However, here, Tauler Smith’s has also alleged that Mr. Valerio’s conduct upon 21 departure impeded its access to its out accounting and financial records. It appears 22 Tauler Smith is arguing that it did not have access to these records to disclose them at the 23 time of the June 10, 2020 response because it lost access to its QuickBooks account when 24 25 26 27 28 12 It would not be unreasonable for a party to seek to limit discovery regarding a claim if an initial pleading were limited in some significant respect. However, here, not only did Tauler Smith fail to take the requisite step to challenge the scope of the discovery requested on such a basis, the underlying claims were not limited. 12 1 Mr. Valerio left in February 2019. Even if this is true, it is still apparent that Tauler 2 Smith’s June 10, 2020 response is deficient and a supplemental response is required. 3 This is mandated not only by its obligation to comply with this Court’s June 1, 2020 4 Order to provide responses to these discovery requests, but also by Rule 26(e)(1). When 5 “a party learns that a response is incomplete or incorrect,” it “must supplement or correct 6 its . . . response.” Rule 26(e)(1).13 And Rule 26(e)(1)’s allowance that no supplement or 7 correction is required only “if the additional or corrective information has not otherwise 8 been made known to the other parties during the discovery process for in writing” would 9 not apply here. Although the Stores now have the information provided by Outlaw in 10 these invoices, they only cover a portion of the time frame at issue in this case. Even if 11 they did cover the entire time, as discussed further below, the record before the Court 12 suggests Tauler Smith’s efforts to locate and produce responsive documents were 13 deficient and as to ROGs 3 and 7, the Stores are entitled to a response from Tauler Smith. 14 Accordingly, the Court finds Tauler Smith must provide further responses to RFP 7 15 and ROGs 3 and 7. The Court addresses the specifics of what is required to provide those 16 responses below. (III.A.4.) 17 b) 18 RFP 9 (1) 19 Parties’ Positions The Stores argue Tauler Smith produced no documents in response to RFP 9 20 (communications between Tauler Smith and the targeted stores), but the Stores are now 21 in possession of documents showing Tauler Smith actually had responsive documents 22 that it did not produce. (ECF 269 at 11.) To establish the production was deficient, the 23 Stores rely on a May 1, 2019 email from Mr. Tauler (received by the Stores from Outlaw 24 25 26 27 28 13 As noted above, Tauler Smith does not dispute the June 10, 2020 response is deficient or argue it should not be required to provide a supplemental response to RFP 7 or ROGs 3 and 7 other than its timeliness argument and its claim Mr. Tauler’s declaration was not false at the time if was provided. 13 1 on June 30, 2020) that identifies a database with more information, including “attorney 2 notes regarding the prior responses, settlement offers, etc.” (Id. (quoting Ex. S [ECF 3 269-20] 14).) The Stores point to Mr. Tauler’s deposition testimony indicating that 4 accounting records were taken or rendered inaccessible by Mr. Valerio in February 2019 5 to establish Mr. Tauler had access to this database after Mr. Valerio left, on May 1, 2019. 6 (Id.) Additionally, the Stores rely on emails between Mr. Tauler and counsel for targeted 7 stores (provided by the targets on June 17, 2020) that have not been produced by Tauler 8 Smith. (Id. (citing Exs. N, O [269-15-16] to Poe Decl.); ECF 269-1 ¶ 13.) 9 Tauler Smith does not dispute that Mr. Tauler stated in the May 1, 2019 email that 10 he could provide access to the database. (ECF 273 at 13.) However, Tauler Smith 11 explains that “Mr. Tauler believed he had access to the database in May 1, 2019, not that 12 he had access to the database at the time of the [June 10, 2020] declaration.” (ECF 273 at 13 13.) Tauler Smith seems to be arguing, without explicitly stating it, that he did not 14 actually have access in May or June and here again, Tauler Smith seems to carefully 15 suggest that the conduct of Mr. Valerio impeded Tauler Smith’s access to this database. 16 (Id.) Tauler Smith also argues that it ceased using the database in the fall of 2018 when 17 new counsel took over for Outlaw, although this appears to be intended to convey Mr. 18 Tauler would not necessarily have figured out he lacked access to it, not that he lost 19 access because he was no longer Outlaw’s counsel. (Id. at 13-14.) And finally, Tauler 20 Smith argues that the email did not explicitly state that it contained “communications,” 21 but rather attorney notes about communications. (Id. at 14.) 22 /// 23 /// 24 25 26 27 28 14 Mr. Poe’s declaration in support of this Motion indicates that it is a June 1, 2019 email, (ECF 269-1 ¶ 20 (describing Ex. S), however, the Stores’ Motion and the document itself reflect the email from Mr. Tauler was sent on May 1, 2019. (ECF 269 at 11; ECF 26920.) 14 1 2 (2) Analysis (a) Timeliness 3 The timeliness of the Stores’ challenge as to RFP 9 is a closer call than the 4 discovery requests discussed above because one of the primary bases for challenging the 5 response are emails the Stores had on June 17, 2020, more than 30 days before this 6 challenge was raised with the Court. The Stores obtained Exhibits N and O, emails with 7 Tauler Smith from targeted stores, on June 17, 2020, but elected to delay any challenge 8 based on them until after questioning Mr. Tauler about the emails at his deposition and in 9 conjunction with the other issues raised in this Motion. That deposition, initially 10 scheduled for June 18, 2020 was postponed, over the Stores objection, to June 29, 2020. 11 The Stores only became aware of these emails a day before Mr. Tauler was set to 12 be deposed, and that deposition was delayed by Court order. Additionally, as discussed 13 throughout this Order, numerous other information came to light at a later date, including 14 the other document the Stores rely on to challenge Tauler Smith’s response to RFP 9, the 15 May 1, 2019 email that was only disclosed to the Stores on June 30, 2020. Although the 16 Stores should have contacted the Court by July 17, 2020 to obtain tolling of the dispute to 17 timely raise this issue along with the later-arising issues, the Court finds good cause for 18 the delay under these unique circumstances. 19 20 (b) Further Response to RFP 9 is Required The Court finds a further response to RFP 9 is required. The Court is persuaded 21 that the lack of emails produced by Tauler Smith in combination with the two emails 22 obtained from targeted stores from Mr. Tauler that were not produced by Tauler Smith 23 reflect that Tauler Smith has not conducted a sufficient search for documents responsive 24 to RFP 9. First, Tauler Smith has not explained what if any efforts it made to locate 25 responsive documents. There is no explanation of searches through emails systems or 26 other electronic systems that house communications with stores. Even the allegations as 27 to Mr. Valerio in this instance are so vague it is not clear Tauler Smith is indicating he is 28 the reason these emails from Mr. Tauler were not located. If not, then there is no 15 1 explanation for them not being located. This makes the lack of explanation of what 2 searches were actually performed all the more significant. 3 The Court is less persuaded that the May 1, 2019 email referencing the availability 4 of notes within a database means the database actually contains communications between 5 Tauler Smith and targeted stores that would be responsive to this RFP. However, given 6 the lack of any explanation of what Tauler Smith did and did not search to comply with 7 this Court’s order to produce responsive documents and the absence of any other 8 explanation of what is contained in the database, the Court finds Tauler Smith must also 9 search it for responsive documents. 10 11 12 13 Tauler Smith must conduct a further search and production as specified below. (III.A.4.) c) RFPs 1 and 2 and ROG 1 (1) Parties’ Positions 14 The Stores argue the deficiencies in Tauler Smith responses as to RFP 1 (demand 15 letters), RFP 2 (settlement agreements), and ROG 1 (all stores sent a demand letter) are 16 demonstrated by Mr. Tauler’s testimony at his deposition. The primary issue is that the 17 hard drive provided by Tauler Smith contained no demand letters or settlement 18 agreements; it only contained 332,441 tiff photographs of stores from around the country, 19 with a summary page identifying the stores. (ECF 269 at 12.) However, the Stores argue 20 the testimony provided by Mr. Tauler indicates that Tauler Smith did have settlement 21 agreements and demand letters. Mr. Tauler testified that all settlement agreements and 22 demand letters Tauler Smith had were on the drive, although he also testified he never 23 reviewed the contents of the drive before providing it. (Id. (citing Ex. A to Poe Decl. 24 [ECF 269-2 (redacted); ECF 268-1 (unredacted)] (“Tauler Dep.”) 48:4-10 (demand 25 letters), 49:11-14 (settlement agreements).) The Stores also note that it appears Tauler 26 Smith’s counsel also did not review the contents of the drive either. For additional 27 support of the deficiencies in the production, the Stores explain that Mr. Tauler testified 28 that an employee regularly printed the settlement agreements for a paper file that was 16 1 eventually provide to its client, Outlaw. (Id. at 13 (citing Tauler Dep. 133:23-134:5).) 2 The Stores argue this provides further evidence that Tauler Smith has settlement 3 agreements it has not produced because the settlement agreements must have existed in 4 an electronic format to be printed from. (Id.) The Stores also point to Mr. Tauler’s 5 testimony attempting to again blame Mr. Valerio for failing to collect everything relevant 6 to this case on to the drive in late January 2019. (Id. (citing Tauler Dep. 48:1-4).) The 7 Stores argue this attempt to blame him is “doubly perjurious” because the drive shows the 8 files were loaded in July 2019, five months after Mr. Valerio left Tauler Smith based on 9 Tauler’s own testimony. (Id.) The Stores also point to a June 2019 email from Mr. 10 Tauler claiming to have “all the information you need like who we have already settled 11 with,” months after Mr. Valerio left, suggesting there are documents that were not 12 produced. (Id. (quoting Ex. R [ECF 269-19] to Poe Decl.).) 13 In response, Tauler Smith argues that the Stores have failed to establish with 14 competent evidence or to offer any chain of custody information that would establish the 15 contents of the drive were created in July 2019 (after Mr. Valerio left) rather than in 16 January 2019 when Mr. Tauler testified he instructed Mr. Valerio to load all the 17 documents onto the drive. (ECF 273 at 14-15.) Additionally, Tauler Smith argues it is 18 unable to dispute these unsupported assertions with its own evidence because the Stores 19 have refused to provide a forensic image of the drive or return the drive. (Id.) Tauler 20 Smith also notes that Mr. Valerio’s declaration, provided in support of the Stores’ 21 Motion, does not deny Mr. Tauler’s testimony that Mr. Valerio created the drive before 22 he left Tauler Smith. (Id. at 14.) Tauler Smith also notes that while Mr. Valerio 23 identifies numerous types of software Tauler Smith used to maintain documents related to 24 Outlaw in his declaration, he does not specifically state that those sources contain the 25 specific documents at issue here. 26 /// 27 /// 28 /// 17 1 2 3 (2) Analysis (a) Timeliness The timelines of this challenge depends on when the Stores should have known the 4 production on the drive was deficient. Here, there was no dispute that the documents at 5 issue, settlement agreements and demand letters, existed, although the number of them is 6 unknown. Receiving the drive without any might have alerted the Stores that the 7 production was deficient. However, Tauler Smith had previously claimed that it had 8 produced all settlement agreements and demand letters to Outlaw and it was not clear that 9 Tauler Smith kept any of the documents produced to Outlaw. (ECF 215 at 9 (Finding 10 Tauler Smith’s production of documents responsive to the Stores’ requests to Outlaw 11 deficient for this reason and requiring Tauler Smith to respond to the Stores).) Without 12 questioning Mr. Tauler at his deposition, it was not unreasonable to think that Tauler 13 Smith had no additional documents than those produced to Outlaw. However, once Mr. 14 Tauler testified that he instructed Mr. Valerio to put those documents on the drive that 15 was produced, it became clear that the production was deficient since none of those 16 documents were on the drive. Given the deposition occurred on June 29, 2020, the Stores 17 timely raised this issue within thirty days of obtaining that information. 18 19 (b) Further Responses are Required The Court finds further responses to RFP 1 and 2 and ROG 1 are required. As 20 noted above, the absence of any settlement agreements or demand letters alone suggests 21 these responses are incomplete. This point seems obvious from the production itself, no 22 settlement agreements or demand letters, given there is no dispute that Tauler Smith was 23 sending demand letters and settling with stores on behalf of Outlaw. As discussed above, 24 this was less obvious to the Stores because of Tauler Smith’s claims of having passed off 25 everything it had to Outlaw, potentially leaving Tauler Smith without hard copies of the 26 documents to produce to the Stores. 27 However, the deficiency of it is further reinforced by Mr. Tauler’s testimony that 28 an employee regularly printed out these documents for the hard copy file. Tauler Smith 18 1 does not dispute this or otherwise explain how these documents were kept or not kept 2 electronically. It is not a stretch, particularly when Tauler Smith does not address it, that 3 those documents exist in an electronic format, possibly in one of the numerous programs 4 referenced in Mr. Valerio’s declaration. Again, Tauler Smith does not address when or if 5 it ever searched for this information or even where responsive documents would or would 6 not be stored. While acknowledging Mr. Valerio’s declaration identifies numerous 7 programs Tauler Smith used to maintain documents related to Outlaw, Tauler Smith does 8 not dispute that they do use those programs or indicate that they were or were not 9 searched for responsive documents. Additionally, Mr. Tauler’s vague testimony that he 10 told Mr. Valerio to collect everything relevant to this case on to a drive in January 2019 11 that he did not review before producing it in June 2020 is also questionable and 12 insufficient. This becomes even more questionable in the face of Mr. Valerio’s 13 declaration submitted in support of the Stores’ Reply brief stating that he has no 14 recollection of being asked to prepare documents responsive to these requests in January 15 2019. (Reply Decl. of Joseph Valerio [ECF 275-5] ¶ 2.) 16 Additionally, again, Tauler Smith has failed to indicate what if anything it did to 17 search for responsive documents or provide an answer to this interrogatory. In their 18 Motion, the Stores have accused Mr. Tauler of lying in his declaration provided in 19 response to these requests by saying Tauler Smith has produced all responsive 20 documents. In response, Tauler Smith does not point to anything it did to search for and 21 provide these documents other than the vague and contradicted assertion that Mr. Tauler 22 told Mr. Valerio to collect the documents on the drive and then produced the drive. 23 24 25 26 27 28 Tauler Smith must conduct a further search and production as explained below. (III.A.4.) d) RFP 10 (1) Parties’ Positions The Stores argue Tauler Smith has not complied with RFP 10 (communications with Outlaw’s other counsel concerning the scheme) because it has not produced Mr. 19 1 Tauler’s emails with other attorneys concerning the alleged scheme. As a basis for this 2 assertion, the Stores point to an email between Mr. Tauler and an Arizona attorney that 3 helped pursue cases that have not been produced by Tauler Smith. (ECF 269 at 13 (citing 4 Ex. P).) The Stores also note that it is simply unbelievable that Mr. Tauler had no email 5 exchanges with the counsel that assisted with the alleged scheme. (Id. at 13-14.) And, 6 again, the Stores point to Mr. Tauler’s testimony that Mr. Valerio took all these records, 7 characterizing it as “preposterous” that a contracted “bookkeeper” could “pull off such a 8 heist” and noting the oddity that this only came up at Mr. Tauler’s deposition, a year and 9 half after the theft supposedly happened. (Id. at 14.) 10 Tauler Smith’s only response as to RFP 10 is to state that the email relied on by the 11 Stores, Exhibit P, is not responsive to RFP 10 because it does not relate to any issues in 12 this case. (ECF 275 at 15.) There is no further explanation and Tauler Smith again does 13 not explain what if any searches it did to comply with this discovery request. (Id.) 14 (2) 15 Analysis (a) Timeliness 16 The Court agrees it is highly unlikely that Tauler Smith acted on behalf of Outlaw 17 by sending demand letters and entering into settlement agreements using other attorneys 18 and never had a single email communication with any of them. However, the Court is 19 mindful that the Stores were hesitant to come to the Court with that challenge before 20 deposing Mr. Tauler and confirming Tauler Smith did in fact have no records of any 21 communications with other attorneys regarding the scheme. Again, at the time the non- 22 production was received, it was accompanied by a declaration that the Court ordered 23 Tauler Smith to provide. The declaration from Mr. Tauler, an attorney, attested that 24 everything responsive to these requests that Tauler Smith had was produced. In the face 25 of that declaration, the Stores would have had little to go on in raising a challenge until 26 they questioned Mr. Tauler at his deposition about emails. The Court finds the Stores 27 timely raised this dispute. 28 /// 20 1 (b) Further Response to RFP 10 is Required 2 As discussed above as to other requests, the critical failure here is Tauler Smith’s 3 lack of any explanation if, how, and what it searched for responsive documents. Again, 4 faced with the accusation that Mr. Tauler lied in his declaration indicating there are no 5 documents responsive to this request Tauler Smith does not indicate otherwise in its 6 Opposition. In fact, Tauler Smith does not address it at all other than to dispute the 7 exhibit the Stores rely on falls within the scope of the request. And even this assertion is 8 lacking because Tauler Smith provides no explanation why it is not within the scope of 9 the RFP. 15 10 Here, not only does Tauler Smith fail to explain how and what it searched to 11 conclude it had no responsive documents, it does not attempt to blame its lack of 12 response to this RFP on Mr. Valerio as it does with all the other requests or provide any 13 other explanation how it had no record of communications with other attorneys that it 14 worked with to carry out the activities alleged in the SACC. There is simply no 15 explanation at all, not even an unsupported assertion that it has complied. Given Tauler 16 Smith does not seem to dispute that it failed to search for and produce responsive 17 documents, a further response is required. 18 4. 19 Order for Further Responses The Stores’ request for another order compelling Tauler Smith to produce 20 documents responsive to the above RFPs and ROGs is GRANTED. To be clear, the 21 Court is not changing its prior decision compelling Tauler Smith to respond to these 22 discovery requests. 16 The Court is largely ordering Tauler Smith to do what it should 23 24 25 26 27 28 15 Both parties’ arguments on this point are deficient. Neither party explains how or why this exhibit is or is not with the scope of RFP. 16 If Tauler Smith had arguments to make regarding the scope of any of these discovery requests, it should have raised those issues many months ago when the Stores moved to compel further responses to them and the Court ordered further responses. The Court is not revisiting those issues and any challenges in that vein would certainly be untimely. 21 1 have already done to provide documents responsive to these RFPs and answers to the 2 ROGs. If it has already conducted a diligent search as it should have, its only task will be 3 to detail those efforts, as explained below, by declaration. However, based on Tauler 4 Smith’s briefing here, the Court doubts a diligent search for responses to any of these 5 requests was actually conducted. Based on the limited information provided, at best the 6 only thing Tauler Smith did to respond to these requests was tell an employee to put 7 every document related to Outlaw on a drive, not even in response to these specific 8 requests, and produce that drive without reviewing it. Even the truth of that assertion is 9 in doubt based on Mr. Valerio’s declaration indicating he was never asked to do so. 10 Given the lack of explanation in this briefing and apparent lack of diligence in 11 searching for, collecting, and providing responses up to this point, the Court orders 12 Tauler Smith to search again. However, in this order the Court is requiring Tauler Smith 13 to detail by declaration how and what it has searched, including all electronic sources that 14 may contain Outlaw related documents. These searches must include the numerous 15 programs Mr. Valerio’s declaration indicates were used to store Outlaw documents in 16 addition to all email accounts that may have been used to communicate with targeted 17 stores or other attorneys about the alleged scheme. Specifically, as to RFP 7 and ROGs 3 18 and 7, Tauler Smith must take steps to access its financial and accounting records or any 19 other electronic record, database, or system that may contain any information concerning 20 Outlaw settlements, the stores that settled, and any amounts received as settlements. 21 Similarly, as to RFP 9, if Tauler Smith has access to the database discussed above, 22 (III.A.3.b), it must perform a search of that database for any communications responsive 23 to RFP 9. 24 25 26 27 28 As noted above, the proper scope of the RFPs and ROGs was addressed in the Court June 1, 2020 Order and the Court does not alter that here. Tauler Smith’s searches must be based on locating responsive documents and providing answers to interrogatories in compliance with that Order. The Court will not be revisiting those issues or any others that could have been raised at the time that Order was issued or this briefing was filed. 22 1 To the extent Tauler Smith claims that it cannot access any of these programs or 2 accounts, it must provide the Stores a declaration explaining what efforts were made to 3 access the program or account and what documents or information might be located 4 within the inaccessible source. This additional specificity is required because, as 5 discussed above, Tauler Smith has not explained what if anything it has done to search 6 for responses to these discovery requests and only made vague accusations that Mr. 7 Valerio has impeded its access to its own records without any explanation what if 8 anything it did to obtain access or respond. 9 Additionally, as to the interrogatories, answers must be given. Tauler Smith may 10 not rely on Rule 33(d) in lieu of a written answer to these interrogatories. Rule 33(d) is 11 only appropriate when “the answer to an interrogatory may be determined by examining, 12 auditing, compiling, abstracting, or summarizing a party’s business records (including 13 electronically stored information” and only “if the burden of deriving or ascertaining the 14 answer will be substantially the same for either party.” Rule 33(d). Based on the record 15 before the Court and Tauler Smith’s prior approach to production, providing a drive that 16 no one may have ever reviewed prior to production, the Court finds it unlikely that the 17 Stores could rely on any document production to determine an answer to an interrogatory. 18 Additionally, given Tauler Smith’s greater familiarity with its recording keeping 19 combined with the possibility that some records may have been rendered inaccessible, the 20 burden on it to derive an answer would be less than for the Stores. 21 Responsive documents and answers to the interrogatories as well as the declaration 22 mandated above attesting to the searches done and any inaccessible sources must be 23 provided on or before January 29, 2021. 24 B. 25 The Stores seeks sanctions against Mr. Tauler both in his personal capacity and as Payment of Expenses and Sanctions 26 the Rule 30(b)(6) designee for Tauler Smith for his conduct during his deposition. The 27 Stores also seek sanctions against Tauler Smith and its counsel jointly under Federal Rule 28 23 1 of Civil Procedure 37(a) and (b) and 26(g) for Tauler Smith’s alleged perjury in response 2 to the discovery requests discussed above. 3 1. 4 Legal Standards a) Rule 30 5 “The court may impose an appropriate sanction--including the reasonable expenses 6 and attorney’s fees incurred by any party--on a person who impedes, delays, or frustrates 7 the fair examination of the deponent.” Rule 30(d)(2). Rule 30(d)(2) sanctions do not 8 require a finding of bad faith. Robinson v. Chefs’ Warehouse, Case No. 3:15-cv-5421 9 RS(KAW), 2017 WL 1064981, at *2 (N.D. Cal. Mar. 21, 2017); see also BNSF Ry. Co. v. 10 San Joaquin Valley Rr. Co., 2009 WL 3872043, at *3 (E.D. Cal. Nov. 17, 2009). 11 Sanctions under Rule 30(d)(2) are discretionary. See Batts v. Cnty. of Santa Clara, 2010 12 WL 545847, at *2 (N.D. Cal. Feb. 11, 2010). Rule 30(d)(3) provides for an award of 13 expenses under Rule 37(a)(5) related to the termination of a deposition. Rule 14 37(a)(5)(C). 15 16 b) Rule 37 Rule 37(a)(5) addresses payment of expenses. In addition to addressing expenses 17 for a motion under Rule 30(d)(3) related to termination of a deposition, noted above, it 18 also addresses payment of expenses when, as here, a motion to compel further responses 19 to discovery requests is required. Rule 37(a)(5)(A) (motion of party moving to compel 20 further responses granted); (a)(5)(B) (motion denied with expenses to the party opposing 21 further responses); (a)(5)(C) (granting in part and denying in part). If a motion is 22 granted, 23 24 25 26 27 the court must, after giving an opportunity to be heard, require the party or deponent whose conduct necessitated the motion, the party or attorney advising that conduct, or both to pay the movant’s reasonable expenses incurred in making the motion, including attorney’s fees. But the court must not order this payment if: (i) the movant filed the motion before attempting in good faith to obtain the disclosure or discovery without court action; 28 24 1 (ii) the opposing party’s nondisclosure, response, or objection was substantially justified; or (iii) other circumstances make an award of expenses unjust. 2 3 4 Rule 37(a)(5)(A). 5 A party’s conduct is substantially justified “if reasonable people could differ as to 6 whether the party requested must comply.” Reygo Pac. Corp. v. Johnston Pump Co., 680 7 F.2d 647, 649 (9th Cir. 1982), overruled on other grounds as stated by Molski v. 8 Evergreen Dynasty Corp., 500 F.3d 1047, 1055 n.2 (9th Cir. 2007); see also Pierce v 9 Underwood, 487 U.S. 552, 565 (1988) (Interpreting substantially justified to mean “there 10 is a ‘genuine dispute’ or ‘if reasonable people could differ as to the appropriateness of the 11 contested action.”); see also Liew v. Breen, 640 F.2d 1046, 1050 (9th Cir. 1981) 12 (Addressing whether conduct was substantially justified under Rule 37(b) and finding “a 13 good faith dispute concerning a discovery question might, in the proper case, constitute 14 ‘substantial justification.’”) 15 Under Rule 37(b)(2), [i]f a party fails to obey an order to provide or permit 16 discovery . . . the court where the action is pending may issue further just orders.” The 17 Rule goes on to provide a non-exhaustive list of options. Rule 37(b)(2)(i)-(vii). 17 The 18 19 20 21 22 23 24 25 26 27 28 17 They may include the following: (i) directing that the matters embraced in the order or other designated facts be taken as established for purposes of the action, as the prevailing party claims; (ii) prohibiting the disobedient party from supporting or opposing designated claims or defenses, or from introducing designated matters in evidence; (iii) striking pleadings in whole or in part; (iv) staying further proceedings until the order is obeyed; (v) dismissing the action or proceeding in whole or in part; (vi) rendering a default judgment against the disobedient party; or (vii) treating as contempt of court the failure to obey any order except an order to submit to a physical or mental examination. Rule 37(b)(2)(i)-(vii). 25 1 Rule then provides that “[i]nstead of or in addition to the orders above, the court must 2 order the disobedient party, the attorney advising that party, or both to pay the reasonable 3 expenses, including attorney’s fees, caused by the failure, unless the failure was 4 substantially justified or other circumstances make an award of expenses unjust.” Rule 5 37(a)(5)(C). 6 7 c) Rule 26(g) The Stores seek sanctions against Tauler Smith and its counsel jointly relying on 8 Rule 26(g) as to counse. Under Rule 26(g), counsel’s signature on a discovery response 9 certifies that to the best of the person’s knowledge, information, and belief formed after a reasonable inquiry: . . . (B) with respect to a discovery request, response, or objection, it is: (i) consistent with these rules and warranted by existing law or by a nonfrivolous argument for extending, modifying, or reversing existing law, or for establishing new law; (ii) not interposed for any improper purpose, such as to harass, cause unnecessary delay, or needlessly increase the cost of litigation; and (iii) neither unreasonable nor unduly burdensome or expensive, considering the needs of the case, prior discovery in the case, the amount in controversy, and the importance of the issues at stake in the action. 10 11 12 13 14 15 16 17 Rule 26(g)(1). 18 “If a certification violates this rule without substantial justification, the court, on 19 motion or on its own, must impose an appropriate sanction on the signer, the party on 20 whose behalf the signer was acting, or both.” Rule 26(g)(3). “The sanction may include 21 an order to pay the reasonable expenses, including attorney’s fees, caused by the 22 violation.” Id. 23 2. 24 Parties’ Positions As to Mr. Tauler’s deposition, the Stores seek an order requiring Tauler Smith to 25 resume his deposition at Tauler Smith’s expense (costs of the reporting services and 26 original transcript) and to pay for the cost of Mr. Tauler’s deposition that was taken, but 27 28 26 1 not completed, $3,362.25. 18 (ECF 269 at 3-6.) The Stores rely on both Mr. Tauler’s 2 unprofessional conduct, excerpts of which are quoted in the Motion, and Mr. Tauler’s 3 termination of the deposition when asked about a particular invoice the Stores obtained 4 from Outlaw’s counsel and that had not been provided to Tauler Smith. (Id. at 4-5.) 5 Additionally, the Stores seek payment of the Stores’ attorneys’ fees in bringing this 6 Motion, $18,300. (Id. at 17.) 7 Tauler Smith does not dispute that Mr. Tauler left the deposition, but indicates that 8 approximately ten minutes later Tauler Smith’s counsel contacted the Stores’ counsel and 9 offered to resume the deposition either immediately or later that week. (ECF 273 at 5.) 10 The Stores’ counsel declined the offer and indicated that he believed he had everything 11 he needed regarding the exhibit Mr. Tauler was being questioned about when he left. (Id. 12 at 5-6.) Tauler Smith also argues the Stores have failed to explain how Mr. Tauler 13 impeded, delayed, or frustrated his examination given he testified for six hours exclusive 14 of breaks, the Stores Motion fails to identify any questions that were unanswered, and he 15 offered to resume the deposition within ten minutes or later that same week. (Id. at 6.) 16 As to Mr. Tauler’s conduct during the deposition, Mr. Tauler acknowledges “two 17 outbursts that concededly were inappropriate.” (Id. (citing Ex. A to Sergenian Decl. 18 [ECF 273-1] at 191:21-23).) Tauler Smith then goes on to point to conduct by the Stores’ 19 counsel’s during the deposition that Mr. Tauler and his counsel found mocking and 20 taunting as well as an exchange about perceived conduct of the Stores’ counsel that 21 occurred after Mr. Tauler’s outbursts. 22 3. 23 a) 24 25 Analysis Termination of the Deposition The Court finds sanctions under Rule 30(d)(2) and (3) are not justified based on Mr. Tauler’s termination of the deposition. First, the Stores’ characterization in their 26 27 28 18 The Stores do not seek fees for their counsel’s time. 27 1 Motion is not accurate. The Stores quote from the deposition transcript where Mr. Tauler 2 indicates he is terminating the deposition and saying they’ll take it up with the Judge and 3 then the Motion indicates that Mr. Tauler terminated his remote connection to the 4 deposition. (ECF 269 at 5.) The Motion then states “Later that afternoon—at 4:56 5 p.m.—Tauler Smith’s counsel professed that Mr. Tauler was willing to resume his 6 deposition, but by that time the connection to the remote court reporter and the separate 7 remote videographer had been terminated.” (Id. (emphasis added).) The brief then 8 indicates Mr. Tauler did not follow through in contacting the Court. 9 There is nothing about this that is actually untrue, but it creates a different picture 10 than what happened. The Motion itself fails to acknowledge that the time from Mr. 11 Tauler’s termination of the deposition to the time he agreed to complete it was ten 12 minutes. Technically ten minutes may be later in the afternoon, but that language 13 suggests a different timeline. Additionally, the Stores fail to acknowledge Mr. Tauler’s 14 offer to resume his deposition then or later in the week. They also do not explain why the 15 Stores declined the offer to resume and complete the deposition or why they indicated 16 they had everything they needed regarding the exhibit he was being questioned about. 17 The Stores indicate the remote connection to the videographer and reporter had been 18 terminated in this ten-minute gap, but there is no suggestion any effort was made to 19 reconnect or any explanation why the Stores declined Mr. Tauler’s offer to complete his 20 deposition later in the week if it could not immediately be resumed and completed. They 21 essentially turned down an offer to do what they are asking the Court to order in this 22 Motion. 23 Rule 37(a)(5) indicates that reasonable expenses should not be ordered if the 24 moving party “filed a motion before attempting in good faith to obtain the disclosure or 25 discovery without court action.” Although these circumstances do not squarely fall into 26 the category, this directive that a party should make a good faith attempt to resolve the 27 issue without involving the court suggests that if the Stores needed more testimony from 28 Mr. Tauler a good faith attempt to obtain it without court action would have been taking 28 1 him up on his offer to complete his deposition that day or that week rather than filing 2 another discovery motion.19 3 Additionally, although Mr. Tauler should not have terminated the deposition under 4 these circumstances, the Court is not persuaded that payment of expenses is justified. 5 Payment of expenses is required unless a party’s conduct is substantially justified. Mr. 6 Tauler was not substantially justified in terminating the deposition. But, that’s not where 7 this ended. This ultimately ended up being something more comparable to a recess. Ten 8 minutes after disconnecting, Mr. Tauler offered to proceed with the deposition 9 immediately or later in the week and significantly, the Stores refused that offer. Instead 10 of completing his deposition as offered, the Court is issuing another order on a discovery 11 dispute between the same parties and this one is asking the Court to order something 12 (resumption of Mr. Tauler’s deposition) that Mr. Tauler already offered to do before this 13 issue was ever raised with the Court. Under these unique and perplexing circumstances, 14 the Court finds an award of expenses unjust. See Rule 37(a)(5) (“But the court must not 15 order this payment if: . . .(iii) other circumstances make an award of expenses unjust.”). 16 The Court also finds that Mr. Tauler’s ultimate position, offering to complete the 17 deposition he improperly terminated, immediately or later in the week even as to the 18 exhibit that prompted the termination, was substantially justified. However, given Mr. 19 Tauler should not have terminated the deposition the Court orders him to complete his 20 deposition on or before February 8, 2021. It will be limited to one hour, the remainder of 21 the presumption seven-hour limit. 22 /// 23 /// 24 25 19 26 27 28 This is the tenth order the undersigned has had to issue to address discovery disputes in this case. This does not include the numerous additional lengthy orders required to address the parties’ opposed motions to modify the Scheduling Order. In addition to leading to the conduct described below, the parties’ joint and troublesome animosity has likely multiplied the judicial resources consumed by this case. 29 1 2 b) Mr. Tauler’s Conduct During the Deposition As to Mr. Tauler’s conduct during the deposition, it was unprofessional and not 3 appropriate conduct for any deponent, but especially one that is an attorney. Mr. Tauler’s 4 acknowledgment that his conduct was inappropriate is a wise choice because it is not 5 defensible. The attempt to shift focus to Mr. Poe’s conduct during the deposition, 6 particularly conduct alleged to have occurred later in time than Mr. Tauler’s (thus not 7 motivating Mr. Tauler’s outburst) is not persuasive. Even if this alleged conduct by Mr. 8 Poe occurred (he and other counsel present have denied it), and it occurred before these 9 statements, they would not have justified Mr. Tauler’s comments. It appears that Mr. 10 Tauler and Mr. Poe have a very contentious and challenging relationship that has 11 deteriorated as this case has worn on. As the assigned district judge recently observed in 12 denying a motion for sanctions, the documented interactions between counsel are 13 troubling. (ECF 344 at 7.) While not appropriate, professional, or what the Court would 14 expect from counsel going forward, it appears the deposition was only minimally 15 impacted by this conduct. Accordingly, the Court declines to award sanctions under Rule 16 30(d)(2). 17 18 19 c) Payment of Expenses for Motion to Compel Further Responses to Discovery Requests As to the discovery requests discussed above, the Court declines to award payment 20 of the expenses of this Motion to the Stores under Rule 37(a)(5). As discussed above, 21 Tauler Smith has either failed to conduct a reasonable search for responsive documents or 22 at least failed to explain what searches it conducted, leaving the Court with the 23 impression it has failed to sufficiently search for and produce responsive documents. 24 However, at this point, the Court cannot find Mr. Tauler lied in his declaration as the 25 Stores have argued throughout this Motion. The Stores rely heavily on the underlying 26 premise that Mr. Tauler is lying about instructing Mr. Valerio to collect the Outlaw 27 documents on to the drive, Mr. Valerio’s assertion that he was never instructed to create 28 the drive, and the time frame in which he was allegedly asked to collect these documents 30 1 onto the drive. It is essentially Mr. Tauler’s word (he instructed him to do it) against Mr. 2 Valerio’s (never instructed him to do so) and the Court is not inclined at this time 3 conclude one way or the other who is lying. 20 The Court would agree it is suspicious, 4 however, it is also possible Mr. Valerio was asked to collect all documents related to 5 Outlaw on a single drive in anticipation it would be needed in this litigation. Similarly, 6 the Court cannot take the Stores’ counsel’s word for it that the documents on the drive 7 were put there after Mr. Valerio left. The Stores have not allowed Tauler Smith to make 8 its own inquiry into the accuracy of the date stamps and again, the Court is not inclined to 9 find Mr. Tauler lied based on the Stores’ assertions. The remaining issue then is whether 10 a sufficient search for documents was completed and the absence of an attorney 11 reviewing the contents of the drive before producing it. The Court agrees that Mr. 12 Tauler’s failure to review the contents of the drive is concerning, particularly if no other 13 attorney did so, but the Court has attempted to remedy this deficiency in mandating a 14 very specific course for Tauler Smith in searching for responsive documents and 15 explaining all those efforts. 16 IV. 17 18 The Stores’ Motion is GRANTED in part and DENIED in part. The parties shall proceed as set forth above. 19 20 CONCLUSION IT IS SO ORDERED. Dated: January 12, 2021 21 22 23 24 25 26 27 28 20 The Court notes that because Mr. Valerio’s denial of creating the drive only came in support of the Stores’ Reply brief, Tauler Smith did not have the opportunity to respond to that specific claim. The Court need not address whether the Stores could have provided that information without disclosing Mr. Tauler testimony to Mr. Valerio. 31
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