Phoenix Process Equipment Co. v. Capital Equipment & Trading Corporation et al

Filing 396

ORDER ADOPTING MAGISTRATE JUDGES REPORT AND RECOMMENDATION signed by Judge Claria Horn Boom on 8/3/22; adopting Report and Recommendations re 391 Report and Recommendations.; granting in part and denying in part 240 Motion for Sanctions; denying 255 Motion for Leave to File. cc: Counsel(DJT)

Case 3:16-cv-00024-CHB-RSE Document 396 Filed 08/03/22 Page 1 of 3 PageID #: 13108

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF KENTUCKY
LOUISVILLE DIVISION
PHOENIX PROCESS EQUIPMENT
COMPANY,

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Plaintiff,
v.
CAPITAL EQUIPMENT & TRADING
CORPORATION, et al.,
Defendants.
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Civil Action No. 3:16-CV-024-CHB

ORDER ADOPTING MAGISTRATE
JUDGE’S REPORT AND
RECOMMENDATION

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This matter is before the Court on the Report and Recommendation filed by United
States Magistrate Judge Regina S. Edwards [R. 391]. The Report and Recommendation
addresses the Motion for Spoilation Sanctions filed by Plaintiff Phoenix Process Equipment
Company (“Phoenix”) [R. 240], in which Plaintiff seeks summary judgment in its favor or an
adverse inference be given at trial based on Defendants Capital Equipment and Trading
Corporation, et al’s (“Defendants”) alleged full-scale destruction of evidence relating to
Phoenix’s claims. Defendants responded, [R. 243], and Phoenix replied, [R. 250]. Nearly a
month following Phoenix’s Reply, Defendants filed an objection to evidence relied on by
Phoenix in its reply and, alternatively, requested a leave to file a sur-reply. [R. 255]. Phoenix
responded to Defendants’ objection. [R. 257].
In her Report and Recommendation, Magistrate Judge Edwards detailed the lengthy facts
in this matter, including the events giving rise to this matter and complex procedural background
for this lawsuit. [R. 391, pp. 2–7]. Beginning with Defendants’ Objection, or alternatively,
Motion for Leave to File Sur-reply, [R. 255], Magistrate Judge Edwards acknowledged the
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“tighter” briefing deadline 1 issued to the Parties, and noted that Defendants waited twenty-eight
(28) days after Phoenix’s reply to request leave to file a sur-reply. As a result, Magistrate Judge
Edwards denied Defendants’ Objection/Motion for Leave to File Sur-reply, [R. 255].
Next, Magistrate Judge Edwards correctly recognized the standard of review for
spoilation sanctions, identifying the three conditions that must be met for sanctions to be
appropriate. [R. 391, pp. 8–9]. After analyzing the three necessary conditions, the Magistrate
Judge ultimately found that “Coralina negligently destroyed technical documents and
communications relating to some of its transactions with Elemet . . . .” Id. at 33. Given this
finding, Magistrate Judge Edwards determined that an adverse inference instruction at trial,
rather than dismissal of the case in Phoenix’s favor, was the appropriate sanction. Id. at 33–35.
Finally, Magistrate Judge Edwards determined that monetary sanctions were also appropriate,
but limited such sanctions to only “reasonable attorney’s fees Phoenix incurred in seeking
production of technical documents and communications relating to Coralina’s transactions with
Elemet.” Id. at 36.
Magistrate Judge Edwards’s Report and Recommendation advised the parties that any
objections must be filed within fourteen (14) days. Id. at 37. The time to file objections has
passed, and neither party has filed any objections to the Report and Recommendation nor sought
an extension of time to do so.
Generally, this Court must make a de novo determination of those portions of the Report
and Recommendation to which objections are made. 28 U.S.C. § 636(b)(1). When no objections
are made, this Court is not required to “review . . . a magistrate’s factual or legal conclusions,

1 Local Rule 7.1(c) requires response briefs to be filed within twenty-one (21) days of service of the
motion and reply briefs to be filed within fourteen (14) days of service of the response brief. However, the
tighter briefing schedule issued by Magistrate Judge Edwards provided Defendants fourteen (14) days to
respond and Phoenix only seven (7) days to reply. [R. 236].

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under a de novo or any other standard.” See Thomas v. Arn, 474 U.S. 140, 151 (1985). Parties
who fail to object to a Magistrate Judge’s recommended disposition are also barred from
appealing a district court’s order adopting that recommended disposition. United States v. White,
874 F.3d 490, 495 (6th Cir. 2017); United States v. Walters, 638 F.2d 947, 949–50 (6th Cir.
1981). Nevertheless, this Court has examined the record and agrees with the Magistrate Judge’s
Report and Recommendation. Accordingly, the Court being otherwise sufficiently advised,
IT IS HEREBY ORDERED as follows:
1. The Magistrate Judge’s Report and Recommendation [R. 391] is ADOPTED as the
opinion of this Court.
2. Plaintiff’s Motion for Spoilation Sanctions [R. 240] is GRANTED IN PART and
DENIED IN PART. The Court will provide the following permissive adverse-inference
instruction relating to Coralina’s spoilation to the jury trial:
The jury will be instructed that it may presume that technical documents and
communications related to Coralina’s transactions with Elemet were in
Coralina’s control and that Coralina had a duty to preserve such evidence.
The jury may presume that Coralina breached that duty by allowing these
technical documents and communications to be destroyed.
The jury may presume that the information contained in these technical
documents and communications would have supported Phoenix’s breach of
contract and KUTSA claims and would have been adverse to Coralina’s
defenses.
3. Defendants’ Objection/Request for Leave to File Sur-Reply, [R. 255], is DENIED.

This the 3rd day of August, 2022.

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