Cox Operating, L.L.C. v. Settoon Towing, LLC et al

Filing 137

ORDER AND REASONS denying 99 Motion for an adverse inference at trial. Signed by Judge Lance M Africk on 8/27/2018. (Reference: ALL CASES)(blg)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
COX OPERATING, L.L.C.

CIVIL ACTION
No. 17-1933
c/w 17-2087

VERSUS

SECTION I

SETTOON TOWING, L.L.C., ET AL.

REF: ALL CASES

ORDER & REASONS
Before the Court is Cox Operating, L.L.C.’s (“Cox”) motion 1 for an adverse
inference at trial. Specifically, Cox requests that the Court order that a certain e-mail
be considered admissible as a party-opponent statement against Settoon Towing,
L.L.C. (“Settoon”) as a sanction pursuant to Federal Rule of Civil Procedure 11. 2 For
the following reasons, the motion is denied.
I.
This case concerns a 2016 accident in which a vessel owned by Settoon allided
with a well owned by Cox (the “allision”). The e-mail underlying the present dispute
was sent by Scott Lerille (“Lerille”)—who was at some point in time a Settoon
employee 3—to Mike Ellis, Settoon’s then-president. Lerille sent the e-mail three days
after the allision occurred. 4 Cox asserts that the e-mail is critical to proving “Settoon’s

R. Doc. No. 99.
Cox’s only mention of Rule 11 is in a footnote of its memorandum in support of the
present motion. R. Doc. No. 99-1, at 1 n.1. To the Court’s disappointment, there is
absolutely no discussion of the rule’s procedural requirements.
3 The parties disagree as to exactly when Lerille was employed by Settoon.
4 See R. Doc. No. 99-8, at 1. The e-mail is dated September 16, 2016, id., and the
allision occurred on September 13, 2016.
1
2

privity and knowledge of the negligence that caused the [a]llision” at trial. 5 According
to the parties’ briefs, the dispute unfolded as follows:
•

On May 18, 2018, Cox moved for partial summary judgment, relying in
part on Lerille’s e-mail to demonstrate that Settoon “admitted that [its]
‘management failures’ caused the [a]llision.” 6

•

On June 5, 2018, Settoon filed its opposition and a motion to strike the
e-mail, arguing that it was inadmissible hearsay. In its memorandum in
support of the motion to strike, Settoon contended that Lerille resigned
before sending the e-mail. Additionally, Settoon stated that “Lerille
never worked at Settoon again.” 7 It is undisputed that such statement
is false. 8

•

Settoon states that the misstatement was a mistake: Settoon “enlisted
the assistance of a special counsel . . . to assist in drafting [the] [m]otion
to [s]trike.” The special counsel “read the part of the . . . deposition
transcript in which it was discussed that Lerille quit right after the
allision” and “inadvertently concluded . . . that after [Lerille] quit the
first time,” he never worked for Settoon again. 9

•

The day after Settoon filed its motion to strike, Cox’s counsel called
Settoon’s counsel to discuss the misstatement. Settoon’s counsel stated
that he would file a motion for leave to substitute the memorandum with
a corrected version. However, before he could do so (and only two days
after the motion was filed), the Court denied Cox’s motion for partial
summary judgment and dismissed the motion to strike as moot. 10
Settoon argues that “[t]here was therefore no longer any mistaken
memorandum pending before the Court.” 11

•

Counsel for both parties again spoke about the issue, and Settoon’s
counsel advised Cox’s counsel that he would still correct the
misstatement—this time in a motion in limine Settoon intended to file
seeking exclusion of the e-mail at trial. 12

R. Doc. No. 99-1, at 2.
R. Doc. No. 64-1, at 8.
7 R. Doc. No. 74-1, at 2–3.
8 R. Doc. No. 99-1, at 2; R. Doc. No. 114, at 2–3, 4.
9 R. Doc. No. 114, at 3.
10 Id. at 4; see generally R. Doc. No. 78.
11 R. Doc. No. 114, at 4.
12 Id. at 4–5.
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6

2

•

Settoon states, however, that it decided not to file such a motion after it
learned that Cox had subpoenaed Lerille to testify live at trial because
“it became clear to Settoon that . . . [t]here would be no hearsay issue.” 13

•

Thereafter, counsel for both parties spoke about the issue for a third
time. Settoon states that it proposed the submission of a joint stipulation
correcting the error and that “Cox’s counsel represented that he would
get back to Settoon in response to the proposal.” 14 According to Settoon,
Cox filed the present motion instead. 15
Cox now moves the Court to enter “an order granting an adverse inference as

to the admissibility of the [e-mail] as a non-hearsay statement of party opponent”
pursuant to Federal Rule of Civil Procedure 11 as a sanction against Settoon for its
failure to correct the misstatement. 16
II.
Rule 11 sanctions would be improper because Cox has not complied with Rule
11’s “safe harbor” requirement.
A motion for sanctions must be made separately from any other motion
and must describe the specific conduct that allegedly violates Rule 11(b).
The motion must be served under Rule 5, but it must not be filed or be
presented to the court if the challenged paper, claim, defense,
contention, or denial is withdrawn or appropriately corrected within 21
days after service or within another time the court sets.
Fed. R. Civ. P. 11(c)(2) (emphasis added). This provision “creates a period of ‘safe
harbor’ whereby parties can avoid sanctions by withdrawing or correcting the
challenged document or position after receiving the motion for sanctions.” Margetis v.
Furgeson, 666 F. App’x 328, 331 (5th Cir. 2016) (citing Elliott v. Tilton, 64 F.3d 213,

Id. at 5.
Id.
15 Id.
16 R. Doc. No. 99-1, at 1 n.1.
13
14

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216 (5th Cir. 1995)) (emphasis added).
As the Fifth Circuit has explained, “[t]here is no indication in . . . Rule 11 . . .
or in the advisory notes to support [the] contention that a motion for sanctions may
be filed with the court without serving the respondent with a copy at least twentyone days in advance.” Askins v. Hagopian, 713 F. App’x 380, 381 (5th Cir. 2018)
(quoting In re Pratt, 524 F.3d 580, 588 (5th Cir. 2008)). “[S]trict compliance with Rule
11 is mandatory.” Id. (holding that the party seeking sanctions failed to comply with
Rule 11’s “safe harbor” provision, even though his counsel had e-mailed the other
party’s counsel before filing the Rule 11 motion). 17 The record reflects that, despite
Rule 11’s requirement, Cox served Settoon with a copy of the present motion on the
same day the motion was filed with the Court. 18

The Court also notes that Settoon has acknowledged its mistake, and it has not
continued to argue that Lerille “never worked at Settoon again.” In fact, Settoon has
refuted its initial contention in accordance with Rule 11: “[I]t is true that Scott Lirelle
did in fact come back to work for Settoon for some period of time after he quit. . . .” R.
Doc. No. 114, at 2–3. See Elliott, 64 F.3d at 216 (5th Cir. 1995) (quoting Fed. R. Civ.
P. 11(c) advisory committee’s notes to 1993 amendment) (“[A] party will not be subject
to sanctions on the basis of another party’s motion unless . . . it refuses to withdraw
that position or to acknowledge candidly that it does not currently have evidence to
support a specified allegation.”); see also Fed. R. Civ. P. 11 advisory committee’s notes
to 1993 amendment (“Subdivision (b) does not require a formal amendment to
pleadings for which evidentiary support is not obtained, but rather calls upon a
litigant not thereafter to advocate such claims or defenses.”).
18 R. Doc. No. 99-2, at 2.
17

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Accordingly,
IT IS ORDERED that Cox’s motion for an adverse inference is DENIED.
New Orleans, Louisiana, August 27, 2018.

_______________________________________
LANCE M. AFRICK
UNITED STATES DISTRICT JUDGE

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