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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UNITED STATES DISTRICT COURT

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SOUTHERN DISTRICT OF CALIFORNIA

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FERNANDO RUIZ, individually and on
behalf of all others similarly situated,

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ORDER GRANTING IN PART AND
DENYING IN PART PLAINTIFFS’
MOTION FOR SANCTIONS

Plaintiff,

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Case No.: 05cv2125 JLS (KSC)

v.

(ECF No. 301)

XPO LAST MILE, INC., formerly
AFFINITY LOGISTICS CORP.,

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Defendant.

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Presently before the Court is Plaintiffs’ Motion for Sanctions Pursuant to Rule 37

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(“Sanctions Motion”) (ECF No. 301), Defendant’s Response in Opposition to Plaintiff’s

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Motion for Sanctions (“Def.’s Opp’n”) (ECF No. 303), and Plaintiff’s Reply in Support of

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Motion for Sanctions Pursuant to Rule 37 (“Pl.’s Reply”) (ECF No. 301). On June 30,

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2016 the Court took the Sanctions Motion under submission without oral argument

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pursuant to Civil Local Rule 7.1(d). (ECF No. 305.) Having considered the parties’

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arguments and the law, the Court rules as follows.

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05cv2125 JLS (KSC)

BACKGROUND1

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In August of 2015, the parties submitted to Magistrate Judge Karen S. Crawford a

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Joint Motion for Determination of Discovery Dispute (“Disc. Mot.”) (ECF No. 275). In

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the Joint Motion, Plaintiffs sought: (1) “[a]ny and all ‘Settlement Statements,’ ‘pay

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summary’ documents, and/or other statements showing (i) the specific expenses deducted

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from each Driver’s pay on a weekly or bi-weekly basis and (ii) the amount of those

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deductions[;]” (2) “[a]ny and all ‘manifests,’ ‘activity logs,’ ‘activity reports,’ ‘time logs,’

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or similar documents that show the work schedule of each Driver and the hours worked by

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each Driver[;]” and (3) “[a]ny and all Load Out/Pay Reports for the Drivers.” (Disc. Mot.

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3–9.) The Discovery Motion was filed in part because Defendant had previously supplied

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documents with itemized deduction information, but containing only Week-52 data (i.e.,

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year-end totals) and “except for approximately 270 pages, every other page [wa]s either

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. . . entirely redacted . . . and/or . . . a duplicate or triplicate of another page.” (Sanctions

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Mot. Ex. A, 1). Ultimately, Judge Crawford ruled in Plaintiffs’ favor on all requests,

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ordering Defendant to either comply with each request or instead provide Plaintiffs with

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“a detailed declaration signed under penalty of perjury by Affinity’s most knowledgeable

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representative” providing “a complete explanation as to why the responsive” documents

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could not be located and outlining “all steps taken to make this determination.” (Order re

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Joint Mot. for Determination of Disc. Dispute (“Order Compelling Discovery”) 4–10, ECF

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No. 292.)

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After Judge Crawford’s Order, Plaintiffs allege that “[o]n March 25, 2016,

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Defendant produced more than 75,000 pages of documents,” none of which included “a

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single Settlement Statement, pay summary, manifest, activity log, activity report, time log

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or load out . . . / pay report.” (Sanctions Mot. 5.) Instead, the majority of documents

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Defendant submitted were “new ADP Reports” that vary in form from Defendant’s prior

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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.
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ADP production and from which Plaintiffs allege they “cannot determine the weekly

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expense deductions . . . .” (Id. at 5–6). Further, Plaintiffs allege that Defendant has not

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supplied “any documents for the May 2001 to June 2004 time period.” (Id. at 7 (emphasis

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original).)

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explaining that: (1) XPO Last Mile has changed corporate forms several times during the

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pendency of this litigation, and during “these acquisitions and corporate changes, legacy

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Affinity Logistics documents have been maintained to the best of our ability in Georgia[,]”

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(Def.’s Opp’n Ex. 1, 1); (2) Defendant “searched for activity reports” but they may have

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been “inadvertently disposed of some time during the past decade[,]” (id. Ex. 2, 1); (3)

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Defendant “searched for customer manifests” but “was not able to locate customer

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manifests for the relevant time period” because Defendant “does not maintain copies of its

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customers’ manifests[,]” (id.); and (4) Defendant “searched for load out/pay reports[,]” but

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“[t]o the best of [its] knowledge . . . never had possession of these documents[,]” and if it

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did then the reports “were inadvertently disposed of during the past decade[,]” (id. at 2–3).

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Several weeks later, Judge Crawford held a status conference regarding the above-

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described discovery. (ECF No. 300.) Plaintiffs argued that Defendant had not complied

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with the Order Compelling Discovery; Defendant asserted compliance. (See Sanctions

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Mot. 6.) Judge Crawford “invited Plaintiffs to make a motion under Rule 37 if they

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believed it was appropriate.” (Id.) Several weeks later, Plaintiffs filed the instant Sanctions

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Motion.

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Instead, Defendant submitted several declarations with its production,

LEGAL STANDARD

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Federal Rule of Civil Procedure 37 gives courts the power to impose sanctions on

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parties who do not comply with discovery orders, including: (i) directing that facts be taken

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as established “as the prevailing party claims,” (ii) prohibiting the disobedient party from

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introducing certain evidence or from supporting or opposing certain claims or defenses,

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(iii) wholly or partially striking pleadings, (iv) staying further proceedings until orders are

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obeyed, (v) dismissing the action in whole or in part, (vi) entering a default judgment

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against the disobedient party, or (vii) treating failure to obey most kinds of orders as
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contempt. Fed. R. Civ. P. 37(b)(2)(A). Rule 37 also allows the court to order payment of

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expenses, including attorney fees, caused by the other party’s failure. Fed. R. Civ. P.

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37(b)(2)(C). Unless a proposed sanction implicates dismissal of an action, the court need

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not identify “willfulness, fault, or bad faith[,]” even if the sanction is severe. Yeti by Molly,

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Ltd. v. Deckers Outdoor Corp., 259 F.3d 1101, 1106 (9th Cir. 2001). A district court has

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wide discretion in determining the appropriateness of issuing sanctions, id.; Navellier v.

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Slettenm, 262 F.3d 923, 947 (9th Cir. 2001), and this is especially true when the sanction

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imposed due to failure to obey a discovery order “bears a reasonable relationship to the

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subject of discovery that was frustrated by sanctionable conduct[,]” id.

Further—

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independent of Rule 37—a district court has “the inherent power . . . to levy sanctions in

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response to abusive litigation practices.” Leon v. IDX Sys. Corp., 464 F.3d 951, 958 (9th

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Cir. 2006).

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ANALYSIS

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In the present case, Plaintiffs’ Sanctions Motion requests the following relief:

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(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.

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(Sanctions Mot. 2–3.) Defendant responds that (1) “some documents, which were not

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previously requested, can no longer be located[;]” (2) Plaintiffs’ preclusion requests are

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overbroad both because they “cite[] no authority and make[] no argument supporting [their]

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position that Affinity should not be able to rely on these already-produced documents,

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some of which are already in evidence in this case[,]” and because Rule 37(c)(1) does not
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support such preclusion; (3) Defendant’s recently produced ADP reports adequately

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“demonstrate the compensation received by the class members and the settlement

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deductions taken from that compensation[;]” and (4) the requested manifests and load

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out/pay reports “belong[] to [Defendant’s] customers” and thus Defendant does not have

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those documents in its possession. (Def.’s Opp’n 4–5.) The Court often agrees with

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Plaintiffs, but also agrees with Defendant regarding several issues. The Court first

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addresses in turn each of Defendant’s arguments opposing sanctions, then concludes by

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imposing appropriate sanctions.

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As an initial matter, a large part of Defendant’s argument against sanctions hinges

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on the fact that certain requested documents may well have been inadvertently lost or

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destroyed. But this is absolutely no excuse for non-production. Nor is the fact that the

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specific documents were not previously requested by Plaintiffs. The “obligation to

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preserve evidence arises when the party has notice that the evidence is relevant to

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litigation—most commonly when suit has already been filed, providing the party

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responsible for the destruction with express notice, but also on occasion in other

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circumstances, as for example when a party should have known that the evidence may be

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relevant to future litigation.” Kronisch v. United States, 150 F.3d 112, 126 (2d Cir. 1998).

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In the present case, this is, and has always been, a class action complaint concerning

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payment to delivery drivers working for Defendant. (See, e.g., Order Granting Mot. to

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Transfer Venue 1, ECF No. 1.) Thus Defendant should have been on notice that the

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documents here at issue had to preserved, and Defendant’s merely classifying as

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“inadvertent” any destruction of these relevant documents does not relieve Defendant of

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this duty.

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Next, although Plaintiffs offer no authority directly on point for precluding

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Defendant from using previously identified documents, neither does Defendant offer any

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authority directly on point saying such preclusion is improper. Instead, Defendant argues

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that Plaintiffs’ citation to the language of 37(c)(1) to support their preclusion arguments is

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insufficient because that Rule does not expressly encompass Plaintiffs’ requested
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preclusion relief. (Def.’s Opp’n 7–8.) However, Rule 37(c)(1) continues past the text cited

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by Defendant, specifically directing that a court may also “impose other appropriate

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sanctions, including any of the orders listed in Rule 37(b)(2)(A)(i)–(vi).” Fed. R. Civ. P.

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37(c)(1)(C). These additional sections of Rule 37(b)(2)(A) explicitly do not cabin in a

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court’s discretion; indeed, they even specifically list as permissible the sanction of

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“prohibiting the disobedient party from supporting or opposing designated claims or

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defenses, or from introducing designated matters in evidence . . . .” Id. at 37(b)(A)(ii).2

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And, as noted above, a district court has wide discretion under Rule 37 to fashion

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appropriate sanctions for discovery abuses, especially where—as here—the requested

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sanctions are tailored to the particular subjects encompassed by the discovery violations.

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Accordingly, Plaintiffs request to prohibit Defendant from using selective documents of a

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specific type due to Defendant’s impermissible non-preservation of certain evidence of the

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same specific type fits both squarely within the Rule’s provisions and the Court’s

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discretion.

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Next, after carefully reviewing both Plaintiffs’ and Defendant’s attached exhibits,

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the Court concludes that Defendant’s supplied master ADP reports technically provide the

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same information as the documents Plaintiffs requested. As noted above, Defendant

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initially produced only Week-52 master ADP reports, and although the reports alone were

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nonresponsive because Plaintiff needed weekly or bi-weekly data, the form of the reports

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were responsive insofar as they listed individual columns of deductions. (See Sanctions

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Mot. Ex. E, at 2.)

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Defendant supplied weekly master ADP reports that varied in presentation from those

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Defendant had previously provided to Plaintiffs. Especially relevant to this Sanctions

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Motion, (1) the newly produced ADP reports do not have columns separately listing

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statutory and voluntary deductions, replacing them instead with a single column labeled

After Judge Crawford issued her Order Compelling Discovery,

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The Court also may grant Plaintiffs requested preclusion based on its inherent power, discussed in pages
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“Accumulations to Date[,]” and (2) the reports list only year-to-date and quarter-to-date

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(rather than weekly) totals for deductions and earnings. (Compare Def.’s Opp’n Ex. 2, at

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5–7 (new ADP reports), with Sanctions Motion Ex. E, at 2 (old ADP reports).) This, of

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course, makes it much harder to extract data from the reports for purposes of Plaintiffs’

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claims. However, it does not render such data extraction impossible. Plaintiffs can still

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read each report, starting with week one of each calendar year working forward, and in so

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doing calculate each weekly deduction based on the mathematical difference between the

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current and preceding week’s individualized deductions listed in the “Accumulations to

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Date” column. Furthermore, even if the Court found this to be a violation of the discovery

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order, Defendant’s point is well taken that supplying documents that do not comply with

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the discovery request should not be grounds to “preclude Affinity from using them[,]”

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especially because here “they were produced in their original form and have in no way

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been ‘spoilated.’” (Def.’s Opp’n 10.)

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Finally, Defendant’s argument that certain documents belong to its customers and

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therefore are not in Defendant’s possession was already addressed and dispensed with by

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Judge Crawford. She noted: “Without more, it is unclear why [D]efendant, by virtue of its

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relationship with customers . . . would not have the legal right to obtain and produce copies

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of relevant manifests.” (Order Compelling Disc. 8.) Because Defendant in its Opposition

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offers no new line of analysis, this argument again fails.

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CONCLUSION

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Given the foregoing, the Court FINDS Defendant violated the Order Compelling

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Discovery insofar as it failed to produce many of the documents which Plaintiffs requested.

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Merely asserting attempts to search for relevant documents, that some documents were

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inadvertently disposed of, and that others are in the control of Defendant’s customers are

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insufficient to comply with the Order Compelling Discovery. Further, the Court sees no

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reason why going forward Defendant should be allowed to selectively use certain

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documents the specific type of which it has repeatedly failed to produce for Plaintiffs (and

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indeed that Defendant admits it may have destroyed). Accordingly, pursuant to Federal
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Rule of Civil Procedure 37 and the Court’s inherent authority, the Court GRANTS IN

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PART AND DENIES IN PART Plaintiff’s Sanction Motion as follows:

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(1) Defendant SHALL be precluded from using or relying on Settlement

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Statements, pay summaries, or documents from Paychex, Inc. to dispute

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the expense reimbursement estimates developed by Plaintiffs;

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(2) Defendant SHALL be precluded from using or relying on Settlement

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Statements, pay summaries, or documents from Paychex, Inc. to support

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its defense of “enhanced compensation”;

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(3) Defendant SHALL be precluded from using or relying upon manifests

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or load out / pay reports to dispute (a) the hours and mileage estimates

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developed by Plaintiffs and (b) the fuel expense estimates developed by

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Plaintiffs;

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(4) Plaintiffs SHALL be awarded reasonable attorneys’ fees and costs

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associated with the filing of this motion and the motion to compel.

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Plaintiffs SHALL FILE an application for attorneys’ fees and costs,

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including all relevant fee and cost data and legal argument, on or before

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January 5, 2017. Defendants SHALL FILE an opposition to the fee and

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cost data, if any, on or before January 19, 2017.

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(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

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