Ruiz v. Affinity Logistics

Filing 321

ORDER granting in part and denying in part 301 Plaintiff's Motion for Sanctions. Signed by Judge Janis L. Sammartino on 12/19/2016. (All non-registered users served via U.S. Mail Service)(kcm)

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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 12 FERNANDO RUIZ, individually and on behalf of all others similarly situated, 15 ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFFS’ MOTION FOR SANCTIONS Plaintiff, 13 14 Case No.: 05cv2125 JLS (KSC) v. (ECF No. 301) XPO LAST MILE, INC., formerly AFFINITY LOGISTICS CORP., 16 Defendant. 17 18 Presently before the Court is Plaintiffs’ Motion for Sanctions Pursuant to Rule 37 19 (“Sanctions Motion”) (ECF No. 301), Defendant’s Response in Opposition to Plaintiff’s 20 Motion for Sanctions (“Def.’s Opp’n”) (ECF No. 303), and Plaintiff’s Reply in Support of 21 Motion for Sanctions Pursuant to Rule 37 (“Pl.’s Reply”) (ECF No. 301). On June 30, 22 2016 the Court took the Sanctions Motion under submission without oral argument 23 pursuant to Civil Local Rule 7.1(d). (ECF No. 305.) Having considered the parties’ 24 arguments and the law, the Court rules as follows. 25 /// 26 /// 27 /// 28 /// 1 05cv2125 JLS (KSC) BACKGROUND1 1 2 In August of 2015, the parties submitted to Magistrate Judge Karen S. Crawford a 3 Joint Motion for Determination of Discovery Dispute (“Disc. Mot.”) (ECF No. 275). In 4 the Joint Motion, Plaintiffs sought: (1) “[a]ny and all ‘Settlement Statements,’ ‘pay 5 summary’ documents, and/or other statements showing (i) the specific expenses deducted 6 from each Driver’s pay on a weekly or bi-weekly basis and (ii) the amount of those 7 deductions[;]” (2) “[a]ny and all ‘manifests,’ ‘activity logs,’ ‘activity reports,’ ‘time logs,’ 8 or similar documents that show the work schedule of each Driver and the hours worked by 9 each Driver[;]” and (3) “[a]ny and all Load Out/Pay Reports for the Drivers.” (Disc. Mot. 10 3–9.) The Discovery Motion was filed in part because Defendant had previously supplied 11 documents with itemized deduction information, but containing only Week-52 data (i.e., 12 year-end totals) and “except for approximately 270 pages, every other page [wa]s either 13 . . . entirely redacted . . . and/or . . . a duplicate or triplicate of another page.” (Sanctions 14 Mot. Ex. A, 1). Ultimately, Judge Crawford ruled in Plaintiffs’ favor on all requests, 15 ordering Defendant to either comply with each request or instead provide Plaintiffs with 16 “a detailed declaration signed under penalty of perjury by Affinity’s most knowledgeable 17 representative” providing “a complete explanation as to why the responsive” documents 18 could not be located and outlining “all steps taken to make this determination.” (Order re 19 Joint Mot. for Determination of Disc. Dispute (“Order Compelling Discovery”) 4–10, ECF 20 No. 292.) 21 After Judge Crawford’s Order, Plaintiffs allege that “[o]n March 25, 2016, 22 Defendant produced more than 75,000 pages of documents,” none of which included “a 23 single Settlement Statement, pay summary, manifest, activity log, activity report, time log 24 or load out . . . / pay report.” (Sanctions Mot. 5.) Instead, the majority of documents 25 Defendant submitted were “new ADP Reports” that vary in form from Defendant’s prior 26 27 28 1 Because the complete factual and procedural history of this over-ten-year-old case is not relevant to this particular motion, the Court here only summarizes facts and procedural history relevant to the currently pending motion. 2 05cv2125 JLS (KSC) 1 ADP production and from which Plaintiffs allege they “cannot determine the weekly 2 expense deductions . . . .” (Id. at 5–6). Further, Plaintiffs allege that Defendant has not 3 supplied “any documents for the May 2001 to June 2004 time period.” (Id. at 7 (emphasis 4 original).) 5 explaining that: (1) XPO Last Mile has changed corporate forms several times during the 6 pendency of this litigation, and during “these acquisitions and corporate changes, legacy 7 Affinity Logistics documents have been maintained to the best of our ability in Georgia[,]” 8 (Def.’s Opp’n Ex. 1, 1); (2) Defendant “searched for activity reports” but they may have 9 been “inadvertently disposed of some time during the past decade[,]” (id. Ex. 2, 1); (3) 10 Defendant “searched for customer manifests” but “was not able to locate customer 11 manifests for the relevant time period” because Defendant “does not maintain copies of its 12 customers’ manifests[,]” (id.); and (4) Defendant “searched for load out/pay reports[,]” but 13 “[t]o the best of [its] knowledge . . . never had possession of these documents[,]” and if it 14 did then the reports “were inadvertently disposed of during the past decade[,]” (id. at 2–3). 15 Several weeks later, Judge Crawford held a status conference regarding the above- 16 described discovery. (ECF No. 300.) Plaintiffs argued that Defendant had not complied 17 with the Order Compelling Discovery; Defendant asserted compliance. (See Sanctions 18 Mot. 6.) Judge Crawford “invited Plaintiffs to make a motion under Rule 37 if they 19 believed it was appropriate.” (Id.) Several weeks later, Plaintiffs filed the instant Sanctions 20 Motion. 21 Instead, Defendant submitted several declarations with its production, LEGAL STANDARD 22 Federal Rule of Civil Procedure 37 gives courts the power to impose sanctions on 23 parties who do not comply with discovery orders, including: (i) directing that facts be taken 24 as established “as the prevailing party claims,” (ii) prohibiting the disobedient party from 25 introducing certain evidence or from supporting or opposing certain claims or defenses, 26 (iii) wholly or partially striking pleadings, (iv) staying further proceedings until orders are 27 obeyed, (v) dismissing the action in whole or in part, (vi) entering a default judgment 28 against the disobedient party, or (vii) treating failure to obey most kinds of orders as 3 05cv2125 JLS (KSC) 1 contempt. Fed. R. Civ. P. 37(b)(2)(A). Rule 37 also allows the court to order payment of 2 expenses, including attorney fees, caused by the other party’s failure. Fed. R. Civ. P. 3 37(b)(2)(C). Unless a proposed sanction implicates dismissal of an action, the court need 4 not identify “willfulness, fault, or bad faith[,]” even if the sanction is severe. Yeti by Molly, 5 Ltd. v. Deckers Outdoor Corp., 259 F.3d 1101, 1106 (9th Cir. 2001). A district court has 6 wide discretion in determining the appropriateness of issuing sanctions, id.; Navellier v. 7 Slettenm, 262 F.3d 923, 947 (9th Cir. 2001), and this is especially true when the sanction 8 imposed due to failure to obey a discovery order “bears a reasonable relationship to the 9 subject of discovery that was frustrated by sanctionable conduct[,]” id. Further— 10 independent of Rule 37—a district court has “the inherent power . . . to levy sanctions in 11 response to abusive litigation practices.” Leon v. IDX Sys. Corp., 464 F.3d 951, 958 (9th 12 Cir. 2006). 13 ANALYSIS 14 In the present case, Plaintiffs’ Sanctions Motion requests the following relief: 15 16 17 18 19 20 21 22 23 (1) precluding Defendant from using or relying upon Settlement Statements, pay summaries, ADP Master Control Reports or documents from Paychex, Inc. to dispute the expense reimbursement estimates developed by Plaintiffs; (2) precluding Defendant from using or relying upon Settlement Statements, pay summaries, ADP Master Control Reports or documents from Paychex, Inc. to support its defense of “enhanced compensation;” (3) precluding Defendant from using or relying upon manifests or load out . . . / pay reports to dispute (a) the hours and mileage estimates developed by Plaintiffs and (b) the fuel expense estimates developed by Plaintiffs; and (4) awarding Plaintiffs reasonable attorneys’ fees and costs associated with the filing of this motion and the motion to compel. 24 (Sanctions Mot. 2–3.) Defendant responds that (1) “some documents, which were not 25 previously requested, can no longer be located[;]” (2) Plaintiffs’ preclusion requests are 26 overbroad both because they “cite[] no authority and make[] no argument supporting [their] 27 position that Affinity should not be able to rely on these already-produced documents, 28 some of which are already in evidence in this case[,]” and because Rule 37(c)(1) does not 4 05cv2125 JLS (KSC) 1 support such preclusion; (3) Defendant’s recently produced ADP reports adequately 2 “demonstrate the compensation received by the class members and the settlement 3 deductions taken from that compensation[;]” and (4) the requested manifests and load 4 out/pay reports “belong[] to [Defendant’s] customers” and thus Defendant does not have 5 those documents in its possession. (Def.’s Opp’n 4–5.) The Court often agrees with 6 Plaintiffs, but also agrees with Defendant regarding several issues. The Court first 7 addresses in turn each of Defendant’s arguments opposing sanctions, then concludes by 8 imposing appropriate sanctions. 9 As an initial matter, a large part of Defendant’s argument against sanctions hinges 10 on the fact that certain requested documents may well have been inadvertently lost or 11 destroyed. But this is absolutely no excuse for non-production. Nor is the fact that the 12 specific documents were not previously requested by Plaintiffs. The “obligation to 13 preserve evidence arises when the party has notice that the evidence is relevant to 14 litigation—most commonly when suit has already been filed, providing the party 15 responsible for the destruction with express notice, but also on occasion in other 16 circumstances, as for example when a party should have known that the evidence may be 17 relevant to future litigation.” Kronisch v. United States, 150 F.3d 112, 126 (2d Cir. 1998). 18 In the present case, this is, and has always been, a class action complaint concerning 19 payment to delivery drivers working for Defendant. (See, e.g., Order Granting Mot. to 20 Transfer Venue 1, ECF No. 1.) Thus Defendant should have been on notice that the 21 documents here at issue had to preserved, and Defendant’s merely classifying as 22 “inadvertent” any destruction of these relevant documents does not relieve Defendant of 23 this duty. 24 Next, although Plaintiffs offer no authority directly on point for precluding 25 Defendant from using previously identified documents, neither does Defendant offer any 26 authority directly on point saying such preclusion is improper. Instead, Defendant argues 27 that Plaintiffs’ citation to the language of 37(c)(1) to support their preclusion arguments is 28 insufficient because that Rule does not expressly encompass Plaintiffs’ requested 5 05cv2125 JLS (KSC) 1 preclusion relief. (Def.’s Opp’n 7–8.) However, Rule 37(c)(1) continues past the text cited 2 by Defendant, specifically directing that a court may also “impose other appropriate 3 sanctions, including any of the orders listed in Rule 37(b)(2)(A)(i)–(vi).” Fed. R. Civ. P. 4 37(c)(1)(C). These additional sections of Rule 37(b)(2)(A) explicitly do not cabin in a 5 court’s discretion; indeed, they even specifically list as permissible the sanction of 6 “prohibiting the disobedient party from supporting or opposing designated claims or 7 defenses, or from introducing designated matters in evidence . . . .” Id. at 37(b)(A)(ii).2 8 And, as noted above, a district court has wide discretion under Rule 37 to fashion 9 appropriate sanctions for discovery abuses, especially where—as here—the requested 10 sanctions are tailored to the particular subjects encompassed by the discovery violations. 11 Accordingly, Plaintiffs request to prohibit Defendant from using selective documents of a 12 specific type due to Defendant’s impermissible non-preservation of certain evidence of the 13 same specific type fits both squarely within the Rule’s provisions and the Court’s 14 discretion. 15 Next, after carefully reviewing both Plaintiffs’ and Defendant’s attached exhibits, 16 the Court concludes that Defendant’s supplied master ADP reports technically provide the 17 same information as the documents Plaintiffs requested. As noted above, Defendant 18 initially produced only Week-52 master ADP reports, and although the reports alone were 19 nonresponsive because Plaintiff needed weekly or bi-weekly data, the form of the reports 20 were responsive insofar as they listed individual columns of deductions. (See Sanctions 21 Mot. Ex. E, at 2.) 22 Defendant supplied weekly master ADP reports that varied in presentation from those 23 Defendant had previously provided to Plaintiffs. Especially relevant to this Sanctions 24 Motion, (1) the newly produced ADP reports do not have columns separately listing 25 statutory and voluntary deductions, replacing them instead with a single column labeled After Judge Crawford issued her Order Compelling Discovery, 26 27 28 2 The Court also may grant Plaintiffs requested preclusion based on its inherent power, discussed in pages 3–4 of this Order, supra. 6 05cv2125 JLS (KSC) 1 “Accumulations to Date[,]” and (2) the reports list only year-to-date and quarter-to-date 2 (rather than weekly) totals for deductions and earnings. (Compare Def.’s Opp’n Ex. 2, at 3 5–7 (new ADP reports), with Sanctions Motion Ex. E, at 2 (old ADP reports).) This, of 4 course, makes it much harder to extract data from the reports for purposes of Plaintiffs’ 5 claims. However, it does not render such data extraction impossible. Plaintiffs can still 6 read each report, starting with week one of each calendar year working forward, and in so 7 doing calculate each weekly deduction based on the mathematical difference between the 8 current and preceding week’s individualized deductions listed in the “Accumulations to 9 Date” column. Furthermore, even if the Court found this to be a violation of the discovery 10 order, Defendant’s point is well taken that supplying documents that do not comply with 11 the discovery request should not be grounds to “preclude Affinity from using them[,]” 12 especially because here “they were produced in their original form and have in no way 13 been ‘spoilated.’” (Def.’s Opp’n 10.) 14 Finally, Defendant’s argument that certain documents belong to its customers and 15 therefore are not in Defendant’s possession was already addressed and dispensed with by 16 Judge Crawford. She noted: “Without more, it is unclear why [D]efendant, by virtue of its 17 relationship with customers . . . would not have the legal right to obtain and produce copies 18 of relevant manifests.” (Order Compelling Disc. 8.) Because Defendant in its Opposition 19 offers no new line of analysis, this argument again fails. 20 CONCLUSION 21 Given the foregoing, the Court FINDS Defendant violated the Order Compelling 22 Discovery insofar as it failed to produce many of the documents which Plaintiffs requested. 23 Merely asserting attempts to search for relevant documents, that some documents were 24 inadvertently disposed of, and that others are in the control of Defendant’s customers are 25 insufficient to comply with the Order Compelling Discovery. Further, the Court sees no 26 reason why going forward Defendant should be allowed to selectively use certain 27 documents the specific type of which it has repeatedly failed to produce for Plaintiffs (and 28 indeed that Defendant admits it may have destroyed). Accordingly, pursuant to Federal 7 05cv2125 JLS (KSC) 1 Rule of Civil Procedure 37 and the Court’s inherent authority, the Court GRANTS IN 2 PART AND DENIES IN PART Plaintiff’s Sanction Motion as follows: 3 (1) Defendant SHALL be precluded from using or relying on Settlement 4 Statements, pay summaries, or documents from Paychex, Inc. to dispute 5 the expense reimbursement estimates developed by Plaintiffs; 6 (2) Defendant SHALL be precluded from using or relying on Settlement 7 Statements, pay summaries, or documents from Paychex, Inc. to support 8 its defense of “enhanced compensation”; 9 (3) Defendant SHALL be precluded from using or relying upon manifests 10 or load out / pay reports to dispute (a) the hours and mileage estimates 11 developed by Plaintiffs and (b) the fuel expense estimates developed by 12 Plaintiffs; 13 (4) Plaintiffs SHALL be awarded reasonable attorneys’ fees and costs 14 associated with the filing of this motion and the motion to compel. 15 Plaintiffs SHALL FILE an application for attorneys’ fees and costs, 16 including all relevant fee and cost data and legal argument, on or before 17 January 5, 2017. Defendants SHALL FILE an opposition to the fee and 18 cost data, if any, on or before January 19, 2017. 19 20 21 22 (5) Plaintiffs’ request to preclude Defendant from relying upon “ADP Master Control Reports” is DENIED in its entirety as to all issues. IT IS SO ORDERED. Dated: December 19, 2016 23 24 25 26 27 28 8 05cv2125 JLS (KSC)

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