Massey, Inc. et al v. Moe's Southwest Grill, LLC et al
Filing
432
ORDER granting Defendants' 347 Motion to Exclude Spoliage Evidence. Defendants' Motion for Summary Judgment as to Damages Claims of Scott and Steven Walker 349 is GRANTED, Defendants' Motion for Summary Judgment as to Damages Clai ms of the Orgeras 350 is DENIED, Defendants' Motion for Summary Judgment as to Damages Analyses Relying Upon Previously-Undisclosed Documents 351 is DENIED, Defendants' Renewed Motion for Attorneys' Fees 369 is DENIED, Defendants ' Motion to Compel Payment of Expert Fees 392 is GRANTED, Defendants' Objection to the Golding Affidavit is SUSTAINED, Defendants' Motion to Strike Affidavit of Kevin Golding 394 is DENIED, AS MOOT, Plaintiffs' Motion to Withd raw as Counsel for Plaintiffs Scott Walker, Stephen Walker, JSW Embry Village, LLC, and JSW Cascade, LLC 400 is GRANTED, Plaintiffs' Motion to Strike Bill of Cost 402 is GRANTED, Plaintiffs' Motion for Leave to File Surreply 423 is GRANTED. Signed by Judge Richard W. Story on 11/26/2013. (cem)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF GEORGIA
ATLANTA DIVISION
MASSEY, INC., et al.,
Plaintiffs,
v.
MOE’S SOUTHWEST GRILL,
LLC, et al.,
Defendants.
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CIVIL ACTION NO.
1:07-CV-741-RWS
ORDER
This action comes before the Court for resolution of various motions.
The Court will address each motion in turn below. The Court is well familiar
with the procedural and factual background of the case and will refrain from
recounting the extensive summary herein. After reviewing the record and the
parties’ briefs, the Court enters the following Order.
A.
Defendants’ Motion to Exclude Spoliage Evidence [347]
Defendants collectively filed the Motion to Exclude Spoliage Damages
where they seek an order from this Court barring Plaintiffs from introducing
evidence relating to alleged failure to preserve evidence necessary for damage
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calculation. (Dkt. No. [347].) Plaintiffs assert that they do not seek a new
category of damages but that they seek a sanction for Defendants’ failure to
preserve the “standards and specifications” for the Moe’s food products. (Id. at
2.) As a result, Plaintiffs contend that they lack the necessary evidence to
calculate damages relating to their claim of kickbacks arrangements in the food
supply chain and are forced to speculate as to the damages. (Id.) In their
Motion, Defendants contend that this Court should exclude spoliage evidence
for three reasons: (1) Plaintiffs failed to disclose this category of damages
during fact discovery; (2) there is no evidence of spoliage to support admission
of such evidence; and (3) the spoliage calculations are too speculative. [357.]
First, this Court finds that, contrary to Defendants’ categorization, the
spoliage damages are not a “new” category of damages but rather an
appropriate and reasonable sanction for any failure to maintain and/or produce
requested and necessary evidence. Accordingly, any failure to specifically
outline spoilage damages during fact discovery does not preclude Plaintiffs
from seeking such now. Further, the evidence demonstrates that Plaintiffs
clearly sought information pertaining to the “standards and specifications”
through formal and informal discovery. (Dkt. No. [357] pp. 2-4.) While some
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information may have been obtained from third party vendors, undoubtably,
Defendants were aware that Plaintiffs were requesting the standards and
specifications and were obligated to maintain and provide any records in their
possession. Accordingly, Defendants cannot now assert that the category of
spoilage is a surprise damages category.
However, upon review of the record, this Court is unpersuaded that
Plaintiffs have met their burden of establishing that a sanction for spoliation is
appropriate. While Defendants were clearly aware that Plaintiffs were seeking
the standards and specifications, there is no evidence to support a contention
that Defendants destroyed the requested documents. Other than the
correspondence which states that Defendants do not “now” possess the
standards and specifications, Plaintiffs have not demonstrated any misfeasance
on the part of Defendants. In fact, nothing in the e-mails suggests that Plaintiffs
believed Defendants had such documents in their possession to turn over, or
believed that Defendants were engaging in any misfeasance with respect to their
discovery obligations. Further, Plaintiffs were made aware at least as early as
April 23, 2009, that Defendants did not possess the necessary documents and
that any requests should be directed to third party vendors. (Dkt. No. [399] p.
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7.) Subsequent communication with the third party vendors indicates that
Plaintiffs came to rely exclusively on the third parties for the standards and
specifications documents. Prior to identifying spoliage damage through their
expert reports, Plaintiffs did not assert that Defendants engaged in any spoliage
of the standards and specification documents. Plaintiffs have not brought forth
any evidence to demonstrate that Defendants destroyed or improperly failed to
maintain the documents. Accordingly, this Court finds that Plaintiffs have not
established that they are entitled to any sanctions for spoliage. For this reason,
the Court GRANTS Defendants’ Motion to Exclude Evidence of Spoliage
Damage [347].
B.
Defendants’ Motion for Summary Judgment as to Damages Claims
of Scott Walker and Steven Walker [349]
Defendants seek judgment as a matter of law on claims asserted by
Plaintiffs Scott and Steven Walker (hereinafter the “Walkers”). The Walkers
assert tort claims and individual monetary damages arising from Moe’s alleged
kickback scheme. (Dkt. No. [377].) The uncontroverted evidence demonstrates
that the Walkers were primary shareholders of Scoven Enterprises which owned
and operated two limited liability companies that were Moe’s franchisees- JSW
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Embry Village, LLC, and JSW Cascade, LLC. (Dkt. No. [349] p. 2.) Further,
the evidence is clear that any damages- arising either in tort or contract- belong
to the individual restaurant companies themselves, not the Walkers individually.
This Court finds that the Walkers cannot individually maintain an action in this
case for damages sustained by either Scoven or JSW Cascade because these
alleged damages were suffered by companies and not their owner-shareholders.
Defendants are correct that this is not a derivative suit and that the Walkers
have not asserted a basis under which they can personally recover.
Accordingly, the Court GRANTS Defendants’ Motion for Summary Judgment
as to the claims of Plaintiffs Scott and Steven Walker [349].
C.
Defendants’ Motion for Summary Judgment as to Damages Claims
of Ray Orgera, Betsy Orgera and Barco Grills, LLC [350]
Defendants next seek judgment as a matter of law on the claims and
damages asserted by Plaintiffs Ray Orgera, Betsy Orgera and Barco Grills, LLC
(collectively “the Orgeras”) on the basis that the Orgeras failed to produce
necessary documentation of their IJ invoices to support their kickback claims.
(Dkt. No. [350].) In response, Plaintiffs contend that they have not produced
the physical documents in accordance with a previous agreement with
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Defendants’ counsel, but that they are in possession of the necessary documents
[380]. Defendants’ Motion for Summary Judgment [350] is DENIED.
Plaintiffs Orgeras are ORDERED to produce the IJ invoices responsive to
Defendants’ discovery request within fourteen (14) days of this Court’s Order.
If Plaintiffs fail to comply, Defendants may refile the Motion.
D.
Defendants’ Motion for Summary Judgment as to Damages Analyses
Relying Upon Previously- Undisclosed Documents [351]
Defendants seek judgment as a matter of law asking the Court to dismiss
the claims of eight Plaintiffs due to a failure on their part to produce documents
substantiating their claims for damages [351]. Specifically, Defendants contend
that these Plaintiffs have not produced the requested and responsive documents
to support the expert report of Mr. Shayne Smith. As such, in accordance with
Federal Rule of Civil Procedure 37(c), Defendants seek dismissal of Plaintiffs’
claims relying on the expert testimony. In response, Plaintiffs argue that they
have the documentation and evidence to support Mr. Smith’s report and have
identified such documents in response to Defendants’ document request. (Dkt.
No. [381].) However, again, Plaintiffs state that they have not produced the
documents because of some unspecified agreed-upon negotiation with
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Defendants’ previous counsel. Id. According to Plaintiffs, the prior oral
agreement provides that “these types of documentations would not need to be
copied, scanned, bate-stamped or produced until such later time in litigation as
the materials were deemed to be needed, and arrangements for the timing,
manner and mode of such production would be worked out.” (Dkt. No. [381] at
8.) The Court finds that the need and time for production is long upon us. This
Court cannot ascertain why Plaintiffs would choose to litigate over the
production of these documents pursuant to some oral unspecified conversation
rather than simply produce the documents that are responsive to Defendants’
production request. The case is clearly at the stage of the litigation when
Plaintiffs must demonstrate the documentary evidence supporting their claims
for damages and their experts’ reports. This Court will rely upon Plaintiffs
assertion that they are in possession of the necessary documents. Accordingly,
Defendants’ Motion for Summary Judgment [351] is DENIED. Plaintiffs will
produce any and all responsive documents, at their expense, to Defendants
within fourteen (14) days. Again, if Plaintiffs fail to comply with this Court’s
Order, Defendants may refile this Motion.
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E.
Defendants’ Renewed Motion for Attorneys’ Fees [369]
Defendants file a renewed motion seeking attorneys’ fees and costs
incurred in connection with the dismissed claims in the instant action. While
the Court notes Defendants’ attempt to preserve their interests by renewing this
request, any action for fees at this time is premature. As this Court has
previously directed, due to the potential joint and several liability of the
Plaintiffs, any request for fees or costs should be reserved until the matter is
resolved as to all Plaintiffs. The Renewed Motion for Attorneys’ Fees is
DENIED [369].
F.
Defendants’ Motion to Compel Payment of Expert Fees [392]
Defendants seek an Order compelling Plaintiffs to pay the fees of
Defendants’ expert, Mr.Daniel Cenatempo, in the amount of $6,797.30.
Despite receiving previous requests for reimbursement, Plaintiffs have not paid
the requested amount, arguing that the reimbursement amount is unreasonable
and excessive and that Mr. Cenatempo is not a qualified expert. Instead,
Plaintiffs have offered to pay Defendants $3,000 for fees associated with Mr.
Cenatempo’s work.
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First, Plaintiffs contend that Mr. Cenatempo’s fees are unreasonable and
excessive. Defendants seek reimbursement for the 7.5 hours Mr. Cenatempo
spent responding to Plaintiffs’ subpoena duces tecum, 8 hours reviewing close
to 3,000 documents and preparing for his deposition, 7 hours at the deposition
and nearly 2 hours reviewing the deposition transcript. (Dkt. No. [392] at 8.)
Federal Rule 26(b)(4)(E) requires that the party seeking the discovery must
reimburse an expert a reasonable fee for time spent responding to discovery
under Rule 26. Accordingly, the issue before the Court is whether Mr.
Cenatempo’s fees are reasonable. Upon review, the Court finds that the fees are
reasonable and not excessive. Given the voluminous documents reviewed and
the complex nature of the case, the expert’s time and efforts were justified.
Furthermore, Mr. Cenatempo is Defendants’ only testifying damages expert, in
comparison to the four experts identified and relied on by Plaintiffs. For these
reasons, the expert fees are reasonable under Federal Rule 26.
Second, Plaintiffs contend that Mr. Cenatempo is not qualified under
Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993), to offer
any expert testimony on the issue of kickbacks in the supply chain at issue in
this case. (Dkt. No. [407] at 4.) Plaintiffs argue that the outstanding Daubert
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issue precludes any payment of expert fees at this time. (Id.) It is undisputed
that Plaintiffs have not filed a Daubert motion nor previously raised the issue of
Mr. Cenatempo’s qualification. Plaintiffs cannot avoid payment by arguing that
a Daubert challenge is forthcoming. In the absence of a proper Daubert
challenge, this Court will not delay an order for payment.
Defendants seek a principal payment of $6,367.50 plus interest in the
amount of $429.80 for a total payment of $6,797.30. Plaintiffs asserted
legitimate arguments which justified the delay in payment. Accordingly, this
Court waives the interest payments. Defendants’ Motion for Payment [392] is
GRANTED. Plaintiffs are required to submit payment immediately to
Defendants in the amount of $6,367.50.
G.
Defendants’ Motion to Strike Affidavit of Kevin Golding [394]
Defendants request an order striking the May 14, 2013 affidavit of Mr.
Kevin Golding (“Affidavit”), filed by Plaintiffs on June 10, 2013, in opposition
to Defendants’ Motion for Summary Judgment as to the Claims of Ray and
Betsy Orgera (Dkt. No. [350].) As Plaintiffs point out, a motion to strike is not
the proper way to challenge the affidavit. Recognizing this, Defendants filed
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Objections to the Golding Affidavit [420] contemporaneously with the filing of
their Reply Brief [419] setting out the same grounds as objections.
Defendants claim that this Court should strike Mr. Golding’s Affidavit
because it contains new expert opinions not previously disclosed during his
expert discovery. Specifically, Defendants contend that for the first time in the
attached Affidavit, Mr. Golding evaluates the expert report and figures provided
by Plaintiff’s expert Shayne Smith. (Dkt. No. [394] at 5.) As these are new
opinions proffered well outside of the close of expert discovery, Defendants ask
the Court to exclude the Affidavit.
Upon review, this Court agrees that Mr. Golding’s Affidavit attached by
Plaintiffs in opposition to Defendants’ summary judgment motion contains new
opinions not previously disclosed through expert discovery. The Affiadavit
does not contain opinions as to the methodology of calculating Plaintiff’s
damages but rather opines on the reliability of Mr. Smith’s evaluation. This is a
new opinion which should have been included in Mr. Golding’s original report
within the expert discovery period. Further, the Affidavit fails to contain the
basis and reasoning behind Mr. Golding’s opinions, as required by Federal Rule
of Civil Procedure 26. For these reasons, this Court sustains Defendants’
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objection to the Affidavit, and Defendants’ Motion to Strike [394] is DENIED,
AS MOOT.
H.
Plaintiffs’ Motion to Withdraw as Counsel for Plaintiffs Scott
Walker, Stephen Walker, JSW Embry Village, LLC, and JSW
Cascade, LLC [400]
Attorneys Robert Zarco, Robert Einhorn and Leon Hirzel request an
order from the Court allowing their withdrawal as counsel for the Walker
Plaintiffs. The attorneys from the Zarco Firm cite irreconcilable differences
which hinder their ability to effectively communicate with the Walkers
regarding this case. (Dkt. No. [400].) This Court has granted summary
judgment in favor of Defendants, finding that the Walkers cannot assert
individual claims for damages. (Section B.) Further, the law firm of Casey
Gilson, P.C. remains counsel of record for the Walkers. Therefore, the Court
finds no basis for requiring the Zarco Firm to continue representing the Walker
Plaintiffs. Accordingly, the Motion to Withdraw is GRANTED [400].
I.
Plaintiffs’ Motion to Strike Bill of Cost [402]
Plaintiffs 3M Restaurants, LLC,, The Jimmy Legs Group, LLC,
Rounding Third, LLC, Taylor Investment Partners, II, LLC, and David Titshaw
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(collectively, “Plaintiffs”) seek to strike Defendants’ Itemized Bill of Costs and
strike docket entry number 321. Plaintiffs contend that the itemized bill is
duplicative of an initial bill of costs filed on June 1, 2012, and pending before
the Court (Dkt. No. [290].) Plaintiffs assert that rather than notifying the Court
of the pending Initial Bill of Costs, Defendants filed a second identical bill
seeking to recover the same costs. (Dkt. No. [402].) Following receipt of
Defendants’ second Bill of Costs [376] this Court entered a minute entry taxing
costs in the amount of $29,670.00 against Plaintiffs. [395] Plaintiffs now seek
to vacate this entry and the second Bill of Costs.
The Court dismissed Plaintiffs’ claims in their entirety. As the prevailing
party, Defendants are entitled to recover reasonable and appropriate costs under
Federal Rule of Civil Procedure 54(d). While such reimbursements are not
limitless, Defendants are entitled to compensation for costs associated with
depositions, court fees, and copying costs. Plaintiffs are correct that the Federal
Rules do not provide reimbursement for fees associated with fact finding or
incurred for the attorneys’ convenience. The Court has extensively reviewed
Defendants’ bill of costs and finds the costs reasonable and appropriate.
However, in this bill of costs, Defendants seek reimbursement for all costs
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incurred in this litigation against only a select group of Plaintiffs. Defendants
are only entitled to compensation for the costs associated with the claims for
which they were the prevailing party. Several parties and claims remain
pending in this action and Defendants have not demonstrated that these costs
were unique or specific to the dismissed Plaintiffs. In the absence of such a
representation, the Court finds this bill of costs premature. As this Court has
previously directed, due to the potential joint and several liability of the
Plaintiffs, any request for fees or costs should be reserved until the matter is
resolved as to all Plaintiffs. Accordingly, Plaintiffs’ Motion to Strike
Defendants’ Second Bill of Costs is GRANTED [402]. The Clerk of Court’s
July 1, 2013 taxing of costs of $29,670.00 against Plaintiffs [395] is
VACATED. Defendants may refile their bill of costs upon resolution of all
pending claims.
J.
Plaintiffs’ Motion for Leave to File Surreply [423]
Plaintiffs seek leave of the Court to file a surreply to three of Defendants’
Motions [349, 350, 351]. The Motion [423] is unopposed and is, therefore,
GRANTED. The Court has considered the surreply for the relevant motions
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Conclusion
Based on the foregoing: Defendants’ Motion to Exclude Spoliage
Evidence [347] is GRANTED, Defendants’ Motion for Summary Judgment as
to Damages Claims of Scott and Steven Walker [349] is GRANTED,
Defendants’ Motion for Summary Judgment as to Damages Claims of the
Orgeras [350] is DENIED, Defendants’ Motion for Summary Judgment as to
Damages Analyses Relying Upon Previously- Undisclosed Documents [351] is
DENIED, Defendants’ Renewed Motion for Attorneys’ Fees [369] is
DENIED, Defendants’ Motion to Compel Payment of Expert Fees [392] is
GRANTED, Defendants’ Objection to the Golding Affidavit is SUSTAINED,
Defendants’ Motion to Strike Affidavit of Kevin Golding [394] is DENIED,
AS MOOT, Plaintiffs’ Motion to Withdraw as Counsel for Plaintiffs Scott
Walker, Stephen Walker, JSW Embry Village, LLC, and JSW Cascade, LLC
[400] is GRANTED, Plaintiffs’ Motion to Strike Bill of Cost [402] is
GRANTED, Plaintiffs’ Motion for Leave to File Surreply [423] is GRANTED.
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SO ORDERED this 26th day of November, 2013.
________________________________
RICHARD W. STORY
United States District Judge
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