Lerman v. Columbia College Chicago et al

Filing 89

WRITTEN Opinion entered by the Honorable Geraldine Soat Brown on 12/14/2011:For the reasons set out below, Plaintiffs Motion for Protective Order Regarding Subpoenas Addressed to MIMSAD, Inc. 82 is denied. At the status hearing on December 15, 2011, the parties shall be prepared to advise the court when discovery in this case will be concluded, and the court will set a final fact discovery cut-off date. [For further details see minute order.] Notice mailed by judge's staff (ntf, )

Order Form (01/2005)

United States District Court, Northern District of Illinois
Name of Assigned Judge
or Magistrate Judge

Joan H. Lefkow

CASE NUMBER

10 C 2169

CASE
TITLE

Sitting Judge if Other
than Assigned Judge

DATE

Geraldine Soat Brown
12/14/2011

Lerman vs. Columbia College Chicago et al.

DOCKET ENTRY TEXT

For the reasons set out below, Plaintiff’s Motion for Protective Order Regarding Subpoenas Addressed to
MIMSAD, Inc. [82] is denied. At the status hearing on December 15, 2011, the parties shall be prepared to
advise the court when discovery in this case will be concluded, and the court will set a final fact discovery
cut-off date.

O[ For further details see text below.]

Notices mailed by Judicial staff.
*Copy to judge/magistrate judge.

STATEMENT
BACKGROUND
In this lawsuit, plaintiff alleges that she was improperly terminated as a tenured professor at Columbia
College as a result of discrimination on the basis of gender, religion and/or national origin, in retaliation for
protected activity, and in violation of her civil rights and her contract. (Compl.) [Dkt 1.] Defendants state
that Columbia College terminated plaintiff for misuse of government grant funds. (Answer ¶ 46.) [Dkt 15.]
Fact discovery in this case was set to close on November 18, 2011. [Dkt 66.] On November 8, 2011,
defendants filed a motion to extend the time for discovery after they discovered that two payments of
$10,000 each had been made from grant monies to an entity named MIMSAD, Inc., of which plaintiff is the
president and treasurer. [Dkt 80.] Apparently, plaintiff approved those payments from grant funds. (See
Pl.’s Supp., Ex. E.) [Dkt 87.] Although defendants have always been in possession of the payment records to
MIMSAD, they were only prompted to investigate their possible significance when information about
questionable grant payments to other entities came to light during the discovery process. Subsequently,
defendants state, they found other evidence of payments to, and invoices and check requests from, MIMSAD.
(Defs.’ Resp. Pl.’s Supp. at 1-2.) [Dkt 88.] According to defendants, none of the individual defendants nor
the representative of the College responsible for the direction of this litigation knew of MIMSAD, Inc. or its
relationship to plaintiff. (Mot. Extend Disc. ¶ 8.) Defendants then issued a subpoena duces tecum to
MIMSAD and a notice for a 30(b)(6) deposition. Defendants sought an extension of the discovery cut-off in
order to take discovery related to MIMSAD and some other remaining issues, which this court granted. [Dkt
85.]
Plaintiff then filed the present motion for protective order seeking, inter alia, to have the subpoenas
to MIMSAD quashed. Plaintiff acknowledges that she would be the 30(b)(6) witness for MIMSAD.
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STATEMENT
Subsequently, the parties resolved all the issues in the motion except those related to MIMSAD. [Dkt. 86.]
Plaintiff then filed a supplement to her motion to explain her position on the discovery directed to MIMSAD
[dkt 87], and defendants filed a response [dkt 88].

DISCUSSION
Defendants argue that evidence that plaintiff received payments from Columbia both as an employee
and as MIMSAD for performing the same work, and that she authorized payments to herself through
MIMSAD, is after-acquired evidence concerning whether plaintiff engaged in misconduct separate from the
actions that led to her discharge. (Defs.’ Resp. Pl.’s Supp. at 2-4.) Under McKennon v. Nashville Banner
Publg. Co., 513 U.S. 352 (1995), that evidence could limit plaintiff’s right to backpay and damages.
Plaintiff’s first argument in her motion is that defendants knew or should have known about
MIMSAD earlier in the discovery process because the grant budget disclosed MIMSAD, and the documents
about which they seek to question plaintiff came from Columbia’s own files. (Pl.’s Mot.¶ 6.) From this,
plaintiff argues that the purpose of discovery about MIMSAD can only be to “impede and frustrate” plaintiff
(id.¶ 5) or “a ruse upon which to seek later delay and postponement of this case.” (Pl.’s Supp. at 4.)
The court does not agree. The stated reason for plaintiff’s termination was misuse of grant monies
that she managed. It is undisputed that MIMSAD is controlled by plaintiff. Defendants’ inquiry into
MIMSAD’s receipt of grant money that plaintiff controlled appears to be a legitimate area of discovery
reasonably related to the claims and defenses here. Although certain information about MIMSAD was
apparently in defendants’ records, defendants claim, in essence, that they just learned of the significance of
MIMSAD and its relationship to plaintiff. The fact that it took defendants until shortly before the close of
discovery to connect the dots does not justify cutting them off from a legitimate area of discovery.
In her motion, plaintiff seeks a protective order requiring that, before MIMSAD is required to
produce documents or its 30(b)(6) witness, defendants be required to answer an interrogatory that plaintiff
served on November 28, 2011, asking defendants to set forth ways in which they contend that MIMSAD’s
receipt of funds from Columbia College was either wrongful or relates to the claims, allegations and defenses
of this lawsuit. (Pl.’s Supp., Ex. D.) Plaintiff’s motion for such an order is denied. Defendants’ response to
plaintiff’s supplement adequately describes why they believe the discovery is within the scope of Federal
Rule of Civil Procedure 26(b)(1). Contrary to plaintiff’s argument, the documents that defendants located in
their files about payments to MIMSAD (effectively, payments to plaintiff) do not answer all the questions
those documents raise. Defendants should be permitted to take the discovery they seek to follow up on those
documents before they are required to state whether they believe there was misconduct associated with them.
Defendants will not be required to answer plaintiff’s interrogatory until MIMSAD has produced the
documents required by the subpoena duces tecum and has presented its 30(b)(6) witness for a deposition.
Plaintiff also seeks an order requiring that defendants be required to produce certain records relating
to MIMSAD before MIMSAD’s 30(b)(6) deposition. (Pl.’s Supp. at 5.). Plaintiff argues that Columbia, not
plaintiff or MIMSAD, has all of the records regarding different project accounts than the one that has hitherto
been at issue in this case. Therefore, she argues, in order to allow plaintiff to testify as MIMSAD’s 30(b)(6)
deponent, “the custodian of that information and those records, Columbia, first must make that information
and those records available to her.” (Id.)
Plaintiff’s argument misapprehends the requirements of Rule 30(b)(6), under which MIMSAD’s
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STATEMENT
witness “must testify about information known or reasonably available to the organization.” Columbia is not
the custodian of MIMSAD’s corporate records. If MIMSAD does not have the documents or information
listed in the subpoena, it doesn’t have them. The purpose of the deposition is not to find out what Columbia
has, but to find out what MIMSAD has.
Defendants represent that the 30(b)(6) witness will not be asked about any documents during the
deposition that were not produced to plaintiff’s counsel in advance. (Defs.’ Resp. Supp. at 5.) Plaintiff’s
motion for protective order requiring defendants to produce documents before the 30(b)(6) deposition is
denied.
The final request in plaintiff’s motion is a protective order that MIMSAD’s production of its tax
returns be limited to the first page and any K-1 schedule issued to plaintiff. (Pl.’s Supp. at 7.) It is not clear
from plaintiff’s motion what other schedules plaintiff seeks to withhold from defendants, although defendants
argue that the withheld schedules would disclose the sources of MIMSAD’s income that make up the total
amount reflected on page 1.
In her complaint, plaintiff claims that defendants’ actions not only terminated her employment,
causing a loss of income and benefits, but also defamed her and attempted to ruin her reputation resulting in
frustration of her efforts at Middle East peace, indignity, embarrassment, and humiliation. (Compl. ¶ 64.)
Furthermore, she alleges that the damage to her reputation and standing in the community adversely affected
her future employment prospects. (Compl. ¶ 94.) According to plaintiff, MIMSAD is a Subchapter S
corporation. (Id.) That means its income effectively flows to plaintiff, who is apparently its only
shareholder. (Plaintiff has not pointed to any other shareholders). Because MIMSAD is a Subchapter S
corporation of which plaintiff is apparently the sole shareholder, not only the amount of income to MIMSAD
but also the sources of that income are relevant to plaintiff’s allegations that she has been damaged by
defendants’ acts. MIMSAD shall produce its tax returns including all schedules.

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