Norfolk Southern Railway Company v. The Judge Organization, LLC et al

Filing 77

ORDER terminating 61 Motion to Compel; granting 61 Motion for Sanctions. Norfolk Southern shall have seven days from the date of this Order to request that the Court modify or qualify its statement of the fact. Norfolk Southern is ORDERED to a mend its responses to Judges requests to identify all documents that Norfolk Southern believes both exist and came into witness Brig Burgess' possession prior to the date Burgess became represented by Norfolk Southern (October 2, 2017). Signed by Magistrate Judge James E. Graham on 10/22/18. (jrb)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF GEORGIA
SAVANNAH DIVISION
NORFOLK SOUTHERN RAILWAY
COMPANY,
Plaintiff/Counter-Defendant,
v.

)
)
)
)
)
)

)
JUDGE WAREHOUSING, LLC,
Defendant/Counter-Claimant.

FILED
Scott L. Poff, Clerk
United States District Court

By jburrell at 10:58 am, Oct 22, 2018

CV416-265

)
)
)

ORDER
Interstate rail carrier Norfolk Southern Railway Company sued
defendant Judge Warehousing, LLC, for unpaid demurrage.1 Doc. 1 at 3
(seeking $951,025.00 in demurrage charges pursuant to Norfolk
Southern’s demurrage tariff).

Judge counterclaimed for lost profits,

allegedly caused by Norfolk Southern’s acquiescence to improvements of

Norfolk Southern operates as an interstate rail carrier subject to the jurisdiction of
the U.S. Surface Transportation Board (the “Board”) and is governed by the provisions
of the Interstate Commerce Act, 49 U.S.C. § 10101 et seq. “Demurrage” is a charge a
rail-car receiver (like Judge) incurs when the cars are detained beyond a specified
period of time for loading or unloading, which period is known as “free time,” as
prescribed in the rail carrier's applicable tariffs. Ill. Cent. R. Co. v. S. Tec Dev.
Warehouse, Inc., 337 F.3d 813, 815 n. 1 (7th Cir. 2003). Demurrage compensates the
rail carrier for expenses from and penalizes the receiver for the undue detention of its
rail cars. 49 C.F.R. § 1333.1. Its purpose “is to expedite the loading and unloading of
cars, thus facilitating the flow of commerce, which is in the public interest.” S. Tec
Dev. Warehouse, 337 F.3d at 815 n. 1 (cite and quote omitted).
1

Judge’s warehouse and subsequent refusal to use those same
improvements. Doc. 6 at 6-8. The refusal meant that for two years Judge
serviced fewer cars than it otherwise could have and, indeed, expected to.
Id. (claiming more than $75,000 in damages).
The instant dispute principally concerns discovery related to the
calculation of the demurrage. See, e.g., doc. 61 at 3-11. During the parties’
commercial relationship, Norfolk Southern sent Judge monthly invoices
for demurrage, which were off-set by various credits. See doc. 61-11 (an
example demurrage invoice, reflecting “credits,” “svc credits,” and “adj
credits”).

Norfolk Southern produced those invoices, which include

information about the basis for the demurrage charge (i.e., the time the
rail cars were delivered to Judge and the time they were returned to
Norfolk Southern).

The invoices also reflect the off-setting credits,

although the bases for those credits are not clear from the invoices.2

2

Judge’s motion explains:
NS begins its demurrage calculation by determining the number of days each
rail car has been available for unloading and assigning demurrage for each day
in excess of the two “free” days. It then determines which portion of this gross
amount of demurrage should not be collected (for example, because it was caused
by NS) and gives a credit in this amount. Therefore, in order to know whether
NS’s bills are accurate, one must be able to assess whether NS has properly
credited Judge[.]
2

Judge seeks, though its motion, to compel production of the bases
and calculations for those off-setting credits. Norfolk Southern contends
that one of the types credits Judge seeks discovery on is merely
hypothetical; i.e., Judge asks Norfolk Southern to calculate the credits it
would have been entitled to had it agreed to the terms of Norfolk
Southern’s “Pacesetter” program.3 Norfolk Southern also objects to the
implication that it should produce the records underlying its invoices,

[...]
NS issues two types of relief from demurrage in the form of credits (hereinafter,
“relief” or “credits”). First, in an effort to offset the effects of bunching,4 NS
issues ETA credits, which are given when rail cars are delivered earlier or later
than expected. Second, NS issues credits for demurrage that is caused by rail
road error. When a customer disputes some aspect of NS’s service -- for example
whether NS failed to deliver a car available for placement -- NS investigates and
determines whether it agrees that rail road error occurred and then issues
credits as it deems appropriate.
FN 4. “Bunching occurs where the railroad delivers cars in numbers
exceeding the anticipated, daily rate of delivery.” Cleveland Elec.
Illuminating Co. v. Interstate Commerce [Commission], 685 F.2d 170, 172
n. 2 (6th Cir. 1982).
Doc. 61 at 4-5 (internal citations and footnotes omitted).
Judge’s position on these credits is not as dubious as Norfolk Southern makes it
sound. See doc. 67 at 18. The application of credits, or not, offsets the damages Norfolk
Southern is (even arguably) entitled to.
Alternatively, if Norfolk Southern
illegitimately withheld credits, Judge would be entitled to recover those amounts as
damages of its own. The exact character and viability of the parties’ positions is beyond
the scope of this Order. The general contours of the dispute, however, are necessary
to understand the scope of permissible discovery.
3

3

given that Judge has apparently already calculated the credits (or the lack
of them) that it disputes.
I.

Analysis
A. Demurrage Calculations

Discovery, in general, may encompass “any nonprivileged matter
that is relevant to any party’s claim or defense and proportional to the
needs of the case, considering the importance of the issues at stake in the
action, the amount in controversy, the parties’ relative access to relevant
information, the parties’ resources, the importance of the discovery in
resolving the issues, and whether the burden or expense of the proposed
discovery outweighs its likely benefit.” Fed. R. Civ. P. 26(b)(1). Norfolk
Southern does not dispute that the information Judge seeks is relevant,
but it does raise (perhaps belated) objections that the burden of production
is disproportional to the need.
There is no question that that the party resisting discovery has the
initial burden of revealing the scope of discoverable information and, if
appropriate, asserting and explaining the burden of production. See, e.g.,
Henderson v. Holiday CVS, L.L.C., 269 F.R.D. 682, 686 (S.D. Fla. 2010)
(“[T]he party resisting discovery must demonstrate specifically how the
4

objected-to request is unreasonably or otherwise unduly burdensome.”).
Judge’s frustration, and the vehemence of its assertions, can largely be
attributed to Norfolk Southern’s failure to discharge that burden. Judge
clearly requested an explanation of “the manner in which Norfolk
Southern has calculated the amount of demurrage allegedly owed by
defendants, including the identity of each rail car and freight shipment
that allegedly incurred demurrage and the date of actual or constructive
placement of each such rail car and its release date.” Doc. 61-5 at 1.
Norfolk Southern responded to that interrogatory by inviting Judge to
examine its publicly available tariffs and approximately 20,000 pages of
produced documents. Id. at 2. The invoices discussed above certainly
clarify some of the calculations involved, but the attribution of credits in
specific cases remains opaque. Judge specified its query in supplemental
interrogatories. See doc. 61-6 at 1-2. Norfolk Southern reiterated its
response that “the date, amount, and reason service credits were applied
to invoices which were subsequently reduced can be obtained from the
documents [already] produced[.]”

Id. (emphasis added).

Reiterating

vague references to voluminous documents is not exemplary of the
discovery practices the Court expects from its practitioners.
5

Testimony from Norfolk Southern employees did nothing to clarify
the calculations. Indeed, Norfolk Southern’s witness explained that it was
“impossible” to tell, from Norfolk Southern’s produced demurrage
summary, the exact nature of the credits applied (as the records contain
only the “aggregate” number of credits given for each car). Credits, as far
as can be discerned from Norfolk Southern’s document production and
designated witness testimony, are assigned without explanation,
definition, or reference to any objective record.

Doc. 61 at 7 (citing

Deposition of Janea Parr at 82, 176-77, Deposition of Vincent Cape at 9,
44-45, 97, 108-09). As of the time of filing of the Complaint (and after
months of discussion between counsel about just how Norfolk Southern
had calculated its damages), clarity about how the demurrage ETA and
service credits were calculated and aggregated remained out of reach.
Compare, Exh. K (disclosing that Norfolk Southern “does not keep a
record” of how many ETA credits a customer is entitled to receive); Exh.
L (disclosing that it “may be impossible” “to go back and explain the basis
for each and every service credit on each and every rail car”); with Exh. A
at 3 (claiming that the information may be available but recovering it
would be “incredibly time consuming”).
6

Thus the calculation of the

invoiced amounts (comprising the entirety of Norfolk Southern’s claimed
damages) remains opaque.
Although the Court remains ever hopeful that litigants will conduct
discovery in a collegial manner, the practical realities of the adversarial
system often intervene. That appears to have been the case here. Norfolk
Southern should have been more forthcoming in explaining its calculation
of the demurrage constituting the damages it seeks to recover. When it
became clear that Judge was not willing to accept the invoices at face value
(and why should it?), the parties might have engaged in a more open
consultation on how the necessary information might be produced in an
efficient and economical matter.
Since the documents produced are insufficient to flesh out Norfolk
Southern’s calculations, Judge contends that it is entitled to an order
compelling production of the relevant records and sanctions.

It also

contends that the transfer of records to an “archive,” rendering them
effectively inaccessible, is tantamount to spoliation. Norfolk Southern, in
the end, professes its willingness to produce the records in question,
subject to reasonable limitations or cost-sharing. None of these arguments
is specious or clearly in bad faith.
7

The parties also dispute whether Norfolk Southern’s designees,
pursuant to Fed. R. Civ. P. 30(b)(6), were adequately prepared. “The
persons designated [to testify on an organization’s behalf] must testify
about information known or reasonably available to the organization.” Id.
The organization’s “duty to present and prepare a Rule 30(b)(6) designee
goes beyond matters personally known to that designee or to matters in
which that designee is personally involved. [It] must prepare the designee
to the extent matters are reasonably available, whether from documents,
past employees or other sources.” Brazos River Auth. v. GE Ionics, Inc.,
469 F.3d 416, 433 (5th Cir. 2006) (internal quotes and cites omitted).
An organization must prepare its designees, “so that they may give
complete, knowledgeable and binding answers on behalf of the
corporation.” Marker v. Union Fid. Life Ins. Co., 125 F.R.D. 121, 126
(M.D.N.C. 1989). “If it becomes obvious that the deposition representative
designated by the corporation is deficient, the corporation is obligated to
provide a substitute.” Brazos River Auth., 469 F.3d at 433.
Here, Judge contends that both of Norfolk Southern’s two witnesses
(Parr and Cape) were unable to specifically explain the demurrage
calculation. How can Judge muster a proper defense when it cannot fully
8

understand the damages claimed? Norfolk Southern contends it met its
duty to sufficiently respond to discovery asking for these calculations and
produce witnesses responsive to the noticed deposition topics (doc. 67 at
8-9), and faults Judge for not invoking magical language asking for more
specifically tailored categories or for backups of records Judge was
unaware of until after Norfolk admitted their existence. See, e.g., id. at 8
(“Judge has never served written discovery requesting production of NS’s
backup ESI data on service credits . . . . And Judge completely ignores the
fact that Norfolk Southern has already produced thousands of pages of
documents in this case which provide the basis for each and every service
credit that Judge disputed with Norfolk Southern, or that Norfolk
Southern reviewed and evaluated on its own for potential inaccuracies.”).
Indeed, Norfolk Southern explains that it has provided a detailed
reference guide for Judge to navigate its produced responsive documents
to suss out this information for itself. Id. (citing id., Exh. B (discovery
responses identifying certain documents)). As to its witnesses, when given
reference documents, Ms. Parr was able to testify to the basis for an
exemplar service credit adjustment. Parr Depo. at 37. But she was unable
to illuminate how the single column aggregates for service credits were
9

calculated. See id. at 145. Again, these sums are not reached out of thin
air. Norfolk Southern has a duty to demonstrate how its damages are
calculated.4
Complicating the posture of this dispute, Judge has moved to stay
the entire case so that the demurrage rates can be challenged before the
Surface Transportation Board. See doc. 48. Norfolk Southern opposes,
noting that it has not raised any issue within the Board’s jurisdiction and
does not intend to. See doc. 51. Judge responds that such assurances are
cold comfort, given that Norfolk Southern has invoked the Board’s

The transcript of Cape’s deposition includes a heated exchange between counsel
about whether he or Parr is the proper witness to provide details concerning particular
demurrage calculations. See doc. 61-3 at 26-27. Judge, understandably, objects to the
morass of technical terminology as a willful attempt by Norfolk Southern to frustrate
discovery. See generally doc. 73. It argues that Norfolk Southern’s tactics are
analogous to the Carrollian wordplay this Court criticized in Malautea v. Suzuki Motor
Corp., 148 F.R.D. 362, 366 (S.D. Ga. 1991) (quoting Lewis Carroll, Through the
Looking Glass). One significant difference between the circumstances in Malauetea
and this case is the maturity of the proceeding. There, the Court had already ruled on
the defendant’s discovery objections. See id. at 370 (pointing out “the Defendants’
cavalier attitude toward this Court’s discovery orders.” (emphasis added)). Norfolk
Southern, however tenuous their semantics, is not attempting to circumvent the
Court’s discovery orders. However, the Court now makes clear that the basis of
Norfolk Southern’s calculation of the demurrage is discoverable. The parties may have
the opportunity to delve further into the details before the Surface Transportation
Board. Even if they don’t, the Court expects that any further discussions between the
parties about the most efficient means of conveying that information will take place
with the understanding that it will be produced. The Court also notes that further
verbal gamesmanship concerning this information will, in light of this Order, bear a
resemblance to Malautea that Norfolk Southern would do well to recognize.
4

10

jurisdiction to unwind an unfavorable case, post-judgment. See doc. 57 at
3-5. Further, the question Judge urges be presented to the Board seems
to have direct implications for the question of the demurrage charges at
issue in the present motion.
Judge contends that the Board has exclusive jurisdiction to
determine whether the demurrage charges, and their manner of
calculation, are reasonable and, thus, enforceable. See doc. 48 at 23. If
the District Judge refers this matter to the Board, and if the Board found
that the demurrage charges were unreasonable, it seems that Norfolk
Southern’s claim would be narrowed, if not mooted entirely (i.e. if the
demurrage Norfolk Southern seeks is not enforceable at all, then the
manner of calculating the specific amount becomes moot). It also seems
likely that in reaching a decision on that question, the Board would
investigate the bases of Norfolk Southern’s demurrage calculus.
On the one hand, it is absolutely clear that Norfolk Southern must
prove the amount of its damages, as a component of its case-in-chief. On
the other hand, this Court’s wading into a dispute that has clearly gone off
the rails risks duplication of efforts that may be better discharged, in the
first instance, by the Board. The Clerk is, therefore, DIRECTED to
11

administratively TERMINATE, in part, the pending discovery motion.
Doc. 61. If the District Judge grants the stay and transfers this case to the
Board, and any discovery disputes (including possible fee shifting or
sanctions awards) that remain, the parties may renew them at the
appropriate time. If the District Judge determines that there is no issue
for the Board’s determination, within 30 days of the issuance of this Order,
the parties shall confer, focusing specifically on the most efficient means
to provide Judge with a clear and complete accounting of the bases of the
demurrage charges and any remaining issues allocating the cost of these
discovery motions or production of the information. The Court will also
be prepared to consider, at that time, whether to allow further deposition
of either or both of Norfolk Southern’s designees who have provided
testimony about the demurrage calculations. See Fed. R. Civ. P. 30(a)(2).
In effect, fact discovery will reopen for the limited purpose of providing
Judge an opportunity to investigate Norfolk Southern’s demurrage
calculations. If the parties are not able to reach a resolution without the
need for the Court’s intervention, they may file additional motions.
B. Counterclaim Discovery
In addition to its objections to Norfolk Southern’s discovery conduct
12

related to its demurrage calculations, Judge also objects to the discovery
Norfolk Southern provided concerning the counterclaim.

Judge’s

counterclaim concerns an improvement to its warehouse facilities -- a
portion of track the parties refer to as “the curve” -- that, it contends,
Norfolk Southern refused to use.

By its refusal, Norfolk Southern

deprived Judge of the additional profits it would have made from the
expanded capacity. See doc. 61 at 11. Norfolk Southern disputes whether
it was contractually obligated to use the additional space; in effect it argues
that, under the parties’ contract, it could decline to use the curve for any
reason or no reason.

See doc. 67 at 19-20 (noting that the contract

“provides local discretion” for use of the curve, so whether it could have
been used has “no bearing on Norfolk Southern’s liability for Judge’s
counterclaims.”). Despite that contention, Norfolk Southern volunteers
its willingness to stipulate to some version of the facts, though it’s
response doesn’t specify what it might stipulate. See id. at 21.
Given the apparent breakdown in communication between the
parties, and Judge’s unrebutted allegations that Norfolk Southern has not
been diligent in negotiating the stipulation, the Court will accelerate the
process. The Court, therefore, provisionally GRANTS in part Judge’s
13

request. See doc. 61 at 23. It shall be established that Norfolk Southern
could safely and properly spot the curved portion of the track at all times
relevant to this lawsuit. Norfolk Southern shall have seven days from the
date of this Order to request that the Court modify or qualify its statement
of the fact.
C. Privilege Claims
The parties’ final dispute concerns an ambiguous assertion of
attorney-client privilege by Norfolk Southern. Doc. 61 at 16-17 & 24; see
id. at Exh. S (advising that witness Brig Burgess had no documentation
responsive to the subpoena “other than” privileged communications); doc.
67 at 20-21 (arguing that Burgess did not specifically testify that he
exchanged emails with counsel, only that he had spoken with counsel by
telephone).

A former Norfolk Southern employee, Brig Burgess, was

served with a subpoena to testify and provide documents.

Norfolk

Southern, without conceding the existence of any communications,
contends that any communications between its counsel and Burgess are
privileged as he is a former employee.5

Shortly before he was deposed, Burgess agreed to be represented by Norfolk
Southern’s counsel. See doc. 61 at 16. Judge concedes that communications after he
was represented by Norfolk Southern’s counsel are privileged. At most, Judge seeks
14
5

Norfolk Southern’s assertion that any communications are
privileged because of Burgess’ status as its former employee is overstated.
It is correct that communications between a former employee and his
employer’s counsel may be privileged, even if that counsel does not
represent the former employee. The privilege is limited, however, “to
communications about ‘the former employee’s conduct and knowledge, or
communication with defendant’s counsel, during his or her employment.
[Cit.] Communications that are not privileged would be those between the
former employee and the employer’s attorney (who does not represent the
former employer) ‘which bear on or otherwise potentially affect the
witness’s testimony, consciously or unconsciously.’” In re Morning Song
Bird Food Litigation, 2017 WL 7512980 at * 3 (S.D. Fla. Nov. 30, 2017)
(quoting Peralta v. Cendant Corp., 190 F.R.D. 38, 41 (D. Conn. 1999)).
Given that a former employee’s communications with his former
employer’s counsel are not per se privileged, and Norfolk Southern has
refused to indicate whether any communications (prior to the date at
which its counsel undertook representation) exist, the Court is not in a

any communications prior to the date when representation commenced or a privilege
log of any communications before that date which Norfolk Southern claims are
privileged. See id. at 24.
15

position to compel production of such documents. Norfolk Southern is,
however, ORDERED to amend its responses to Judge’s requests to
identify all documents that Norfolk Southern6 believes both exist and
came into witness Brig Burgess’ possession prior to the date Burgess
became represented by Norfolk Southern (October 2, 2017). To the extent
Norfolk Southern contends such communications are privileged due to
Burgess’ prior employment, it may include a privilege log.

But see

Universal City Dev. Ptnrs., Ltd. V. Ride & Show Eng’g, Inc., 230 F.R.D.
688, 695 (M.D. Fla. Sept. 23, 2005) (finding 2.5 month delay constituted
waiver of an assertion of attorney-client privilege over requested
documents), and Wormuth v. Lammersville Union Sch. Dist., 2017 U.S.
Dist. LEXIS 89181 at *11 (E.D. Cal. June 8, 2017) (affirming a ruling that
two month delay was sufficient to constitute waiver of attorney-client
privilege over requested documents), cited in doc. 61. If no documents
exist, Norfolk may simply say so and resolve the issue.

Arguing that Judge must prove the existence of documents it has no ability to
access outside of a document production request in order to request their production
(doc. 67 at 22) is quite the reinterpretation of Norfolk Southern’s discovery obligations.
It does not hold water in this Court.
6

16

D. Fees
Given that Norfolk Southern has not actually denied that it failed to
(1) disclose the raw data existed to begin with or provide detailed records
underlying their own claims for damages, (2) produce responsive
documents

or

(at

least)

a

privilege

log

regarding

responsive

communications with Burgess, or (3) produce witnesses able to testify to
the categories identified,7 Judge’s request for fees is neither unwarranted
nor meritless. Payment of expenses (including attorney’s fees) typically is
mandatory when, “after giving an opportunity to be heard,” courts grant
motions to compel. Fed. R. Civ. P. 37(a)(5)(A). Only if (1) “the movant
filed the motion before attempting in good faith to obtain the . . . discovery
without court action;” (2) the failure to respond was justified; or (3) “other
circumstances make an award of expenses unjust, may a court decline to
award expenses to a prevailing party.” Id. None of those exceptions apply
here, and Norfolk Southern had its chance to be heard. Consequently, it
must now pay Judge’s “reasonable expenses incurred in making” its

The Court remains skeptical that quibbling over Judge’s application of defined terms
provided by Norfolk Southern comprises good cause to fail to produce witnesses that
could meaningfully explain those terms and their application to the produced invoices.
7

17

motion to compel, “including attorney’s fees.” Fed. R. Civ. P. 37(a)(5)(A).
The parties shall further meet and attempt resolution of this sub-issue
within the time for renewing Judge’s discovery motion related to the
demurrage calculation, short of which the Court will resolve it (in which
case, Judge must then file an itemized list of expenses and fees so the
Court can evaluate its reasonableness and issue an expense award).
II.

CONCLUSION

The Motion to Compel further information on Norfolk Southern’s
demurrage calculation is TERMINATED with leave to refile, pending
disposition of the motion to refer questions to the Surface Transportation
Board. The Court GRANTS Judge’s request that it be established, for all
purposes, that Norfolk Southern could safely and properly spot the curved
portion of the track at all times relevant to this lawsuit. Norfolk Southern
may respond, within seven days of the date of this Order, and propose an
amended stipulation. The Court GRANTS Judge’s request for further
information on Norfolk Southern’s claim that communications with its
former employee, Brig Burgess, are protected by attorney-client privilege.

18

Finally, the Court GRANTS Judge’s request for fees.

In summary,

Judge’s motion (doc. 61) is TERMINATED, in part, and GRANTED, in
part.
SO ORDERED, this 22nd day of October, 2018.

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