Firneno v. Nationwide Marketing Services, Inc. et al

Filing 88

OPINION and ORDER Overruling 84 Objection; Adopting 83 Special Master's Report; Denying 74 Motion for Summary Judgment without Prejudice; Granting 77 Motion to Permit Discovery; and Referring Case to Mediation. Signed by District Judge Stephen J. Murphy, III. (DPar)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
JODY FIRNENO and CHRISTOPHER
FRANKE,
Case No. 2:14-cv-10104
Plaintiffs,
HONORABLE STEPHEN J. MURPHY, III
v.
NATIONWIDE MARKETING SERVICES,
INC., et al.,
Defendants.
/
OPINION AND ORDER OVERRULING OBJECTIONS [84],
ADOPTING DISCOVERY MASTER'S REPORT [83], DENYING MOTION
FOR PARTIAL SUMMARY JUDGMENT [74] WITHOUT PREJUDICE, GRANTING
MOTION TO PERMIT DISCOVERY [77], AND REFERRING CASE TO MEDIATION
Filed on January 10, 2014, the instant case is one of the Court's oldest, and Plaintiffs'
motion for class certification has been pending for almost three years. The cause of the
delay is clear: Defendants have consistently frustrated the discovery process and
repeatedly flouted the Court's discovery orders. Defendants' counsel recently contacted the
Court, however, and suggested that the parties would benefit from mediation and
settlement talks. The Court held a status call with the parties and discussed how to best
resolve the case through mediation. The instant order is the result. For the reasons below,
the Court will overrule Defendants' objection to the Discovery Master's recent Report, adopt
the Report, resolve two of the parties' outstanding motions, and put the parties on track to
resolve the case with the assistance of an expert mediation team.
BACKGROUND
The Court's January 10, 2017 order details the class certification and discovery issues
giving rise to the Court's re-appointment of the Discovery Master. ECF 73, PgID 1722–24,

1727–33. A flurry of motions followed that order, and included: Defendants' motion for
partial summary judgment as to Defendant Leon Saja under Rules 12(c) and 56(c), ECF
74; Plaintiffs' motion to permit discovery under Rule 56(d), ECF 77; and Defendants' motion
to alter or amend the Court's January 10, 2017 order under Rule 59(e), or to certify that
order for interlocutory appeal—presumably under 28 U.S.C. § 1292(b), ECF 78.
Simultaneously, and pursuant to the Court's January 10, 2017 order, the parties timely met
with the Discovery Master. ECF 83, PgID 2086.
The Court had instructed the Discovery Master to "(1) ascertain exactly how much of
discovery has been completed, (2) supervise the exchange of the remaining discovery, (3)
detail the extent of Defendants' noncompliance with discovery to date, (4) recommend
specific Rule 37 sanctions in light of that noncompliance, and (5) help the parties agree"
to a scheduling order and briefing schedule for the updated motion to certify class. ECF 73,
PgID 1731–32. The Discovery Master issued a Report in which he recommended that
Defendants each supplement document production responsive to Plaintiffs' Requests for
Production, and answers responsive to Plaintiffs' Interrogatories, and that any failure to do
so should "result in a default and potential judgment in Plaintiffs' favor against" each
Defendant. ECF 83, PgID 2110–11. Additionally, the Discovery Master recommended that
Defendant Nationwide pay for and "provide a third-party vendor with access to its servers
and computers to harvest data," and that Nationwide "must provide a certification from a
corporate representative of its diligent search" for documents in response to several of
Plaintiffs' Requests for Production. Id. at 2011. Finally, the Discovery Master recommended
that the parties receive additional time to complete discovery pursuant to a suggested
briefing schedule. Id. at 2109. Defendants filed timely objections. ECF 84.
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DISCUSSION
Defendants have lodged three objections to the Report: (1) discovery matters should
be put on hold until after the Court has resolved Defendants' outstanding motion for partial
summary judgment, and motion to alter or amend the Court's January 10, 2017 order, or
to certify that order for interlocutory appeal; (2) the Discovery Master's recommendations
as to Defendant Saja are improper; and (3) the Discovery Master's recommendations as
to Defendant Nationwide are improper. ECF 84. When considering objections to the
Discovery Master's Report, the Court reviews findings of fact and questions of law de novo,
and rulings on procedural matters for an abuse of discretion. Fed. R. Civ. P. 53(f)(3)–(5).
In response to Defendants' first objection, Plaintiffs contend that the Discovery Master
did not abuse his discretion "in making a recommendation on discovery while Defendants'
motions are pending." Id. at 2250. The Court agrees. The Discovery Master did exactly
what the Court ordered, and was under no obligation to the consider any later-filed motions
that fell outside the scope of the Court's directive.
Plaintiffs further assert that the imposition of a stay of discovery is improper when
factual issues remain for dispositive motions. ECF 87, PgID 2249. "Defendants should not
be permitted to evade discovery," Plaintiffs argue, "and then deprive Plaintiffs of the
opportunity to use the information requested in response to dispositive motions —
particularly when Defendants have already been ordered on multiple occasions to promptly
produce that information." Id. at 2252. Essentially, this is the thrust of Plaintiffs' earlier
motion to permit discovery under Rule 56(d), and is supported by a declaration from
Plaintiffs' counsel. See ECF 77, 77-1.
Rule 56(d) allows the Court to deny an outstanding motion for summary judgment or
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allow time to take discovery if the nonmovant explains, by way of affidavit or declaration,
that it cannot present facts essential to justify its opposition. Fed. R. Civ. P. 56(d). While
the Court has "inherent authority to control its docket in promoting economies of time and
effort for the court, the parties, and the parties' counsel," Jordan v. City of Detroit, 557 F.
App'x 450, 456–57 (6th Cir. 2014) (quotations omitted), it is crucial that a "plaintiff [] receive
a full opportunity to conduct discovery to be able to successfully defeat a motion for
summary judgment." Ball v. Union Carbide Corp., 385 F.3d 713, 719 (6th Cir. 2004)
(internal quotation marks omitted).
Defendants object to the Discovery Master's recommendation that they produce
additional discovery. Defendants claim that they have fully supplemented their discovery
requests in compliance with the Court's orders. But there is no question that Defendants'
obstruction has prevented Plaintiffs from receiving a full opportunity to conduct sufficient
discovery to oppose a summary judgment motion. Defendants' discovery abuses have
been well-documented by the Court's earlier orders, and need not be reiterated here. See
ECF 50, 56, 73. Those orders, combined with the Discovery Master's recent Report, show
a pattern of willful disobedience to the Court's orders.
The Discovery Master's Report is thorough and well-reasoned, and his
recommendations are fair and measured. Defendants have provided the Court with no
factual or legal basis to find otherwise. Accordingly, the Court will overrule Defendants'
objections, adopt the Report in full, deny without prejudice Defendants' outstanding motion
for partial summary judgment, grant Plaintiffs' motion to allow discovery under Rule 56(d),
and refer the case to mediation.

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ORDER
WHEREFORE, it is hereby ORDERED that Defendants' Objection [84] is
OVERRULED, the Discovery Master's Report [83] is ADOPTED in full, Plaintiffs' Motion to
Permit Discovery [77] is GRANTED, and Defendants' Motion for Partial Summary
Judgment [74] is DENIED WITHOUT PREJUDICE.
IT IS FURTHER ORDERED that the Court's January 10, 2017 order appointing
attorney Daniel Sharkey as Discovery Master shall remain in effect. ECF 73. Discovery
Master Sharkey is authorized and empowered to review all documents exchanged pursuant
to, and monitor Defendants' compliance with, the instant Order.
IT IS FURTHER ORDERED that Defendants have 10 days from the date of this
order—or as otherwise set by the Discovery Master—to produce discovery materials in
accordance with the exact specifications and terms outlined in the Report, including:
1.

Saja must supplement his answers to Plaintiffs' Interrogatories No. 3–5;

2.

Saja must supplement his document production with documents responsive to
Plaintiffs' Requests for Production No. 1;

3.

Because of Saja's history of discovery violations, his failure to comply with the
terms of this order will result in a default and potential judgment in Plaintiffs'
favor against Saja;

4.

Nationwide must supplement its answer to Plaintiffs' Interrogatory No. 1;

5.

Nationwide is precluded from producing any further facts, by document or
testimony, related to its answers to Interrogatories No. 8 or 14 which have not
already been placed in the record;

6.

Nationwide must supplement its document production with documents
responsive to Plaintiffs' Requests for Production No. 8–10 and 45;

7.

Due to Nationwide's repeated failure to provide answers to Plaintiffs'
Interrogatories No. 4 and 9, and Plaintiffs' Requests for Production No. 3, 4,
and 7, in repeated and knowing violation of the Court's Orders, it must provide
a third-party ESI vendor—as agreed to by the parties or selected by the
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Discovery Master—with access to its servers and computers to harvest data
within 10 days of receiving Plaintiffs' custodian information, as outlined in the
Report. Nationwide shall bear all of the vendor's costs as a Rule 37 sanction;
8.

Nationwide does not need to supplement its document production in response
to Plaintiffs' Requests No. 11, 19–23, 27, or 29–32 at this time, but must
provide a certification from a corporate representative of its diligent search as
outlined above, within ten days; and

9.

Because of Nationwide's history of discovery violations, its failure to comply
with the terms of this order will result in a default and potential judgment in
Plaintiffs' favor against Nationwide.

IT IS FURTHER ORDERED that the parties shall promptly CONTACT and CONFER
with the Discovery Master regarding (1) the procedures for Defendants' delivery of the
requested discovery, (2) the selection of the third-party ESI vendor—either mutually agreed
to by the parties or selected by the Discovery Master—to search Nationwide's computers
and servers for information and documents responsive to Plaintiffs' discovery requests,
(3) the Plaintiffs' identification of up to three custodians, and (4) all other related procedures
associated with the parties' compliance with the instant Order. The Defendants will continue
to pay the entirety of the Discovery Master's fees and expenses. The Discovery Master
may conduct hearings and conferences with the parties in the manner and at the times and
locations he deems appropriate. If he so chooses, he may outline the details and
procedures governing the supervision and management of discovery in a further order, and
submit the order to the Court after consultation with counsel.
IT IS FURTHER ORDERED that within 14 days of the Defendants' attempted
compliance with the instant Order, the Discovery Master shall FILE a concise Report on
the docket simply indicating whether Defendants have fully complied with the instant Order.
If Defendants have not complied, the Report shall state the extent of Defendants'
noncompliance, and recommend terms of default to be entered against Defendants.
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Further noncompliance with the Court's orders will be instantly treated as contempt of the
Court. In addition to these sanctions, the Court will promptly hold a separate hearing to
address the extent to which the Court will sua sponte sanction Defendants' counsel under
Rule 11, 28 U.S.C. § 1927, and the Court's inherent powers to "assess attorney's fees
when a party has acted in bad faith, vexatiously, wantonly, and for oppressive reasons."
First Bank of Marietta v. Hartford Underwriters Ins. Co., 307 F.3d 501, 512 (6th Cir. 2002)
(quoting Chambers v. NASCO, Inc., 501 U.S. 32, 45–46 (1991)).
IT IS FURTHER ORDERED that once the Discovery Master's Report is filed, the case
is REFERRED to mediation. The parties shall FILE a Joint Status Report detailing the
status of settlement discussions within 14 days after the Discovery Master's Report is filed,
and every 30 days thereafter. The Mediation Team shall be led by Magistrate Judge Mona
K. Majzoub, who will be assisted by attorney Daniel Sharkey for all discovery-related
matters, and by attorney Patrick Seyferth (248-822-7800, [e-mail]) for all
mediation-related matters. The parties shall contact attorneys Sharkey and Seyferth and
provide them with a copy of this order as soon as practicable.
The parties shall proceed in compliance with Local Rule 16.4, pursuant to which the
private mediators will assess fees and expenses with complete discretion and as part of
the mediation in light of the parties' conduct before and during mediation. Discovery Master
Sharkey and Mediator Seyferth are encouraged to meet with the parties and discuss the
progress of the case through the most recent discovery disclosure. While the Court affords
the Mediation Team total discretion to manage the mediation, it proposes the following
three phases:
•

Phase 1. The parties meet with attorneys Sharkey and Seyferth jointly to
determine whether stipulated class certification is a viable option, and if so, what
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additional discovery is necessary to define the class, estimate the number of class
members, and determine the kind and number of potential violations subject to
claims for statutory damages.
•

Phase 2. Discovery Master Sharkey facilitates the exchange of any additional
discovery, and resolves any disputes over the scope and contents of the additional
materials. Once discovery concludes and if the parties agree that the static body
of discovery permits them to effectively mediate the case, the parties proceed to
Phase 3A, and Mediator Seyferth—in full consultation with Judge
Majzoub—conducts preliminary mediation sessions. If mediation with Mediator
Seyferth is unsuccessful, the parties shall proceed to Phase 3B, and Discovery
Master Sharkey will file a Report on the docket with updated recommendations as
to terms of default to be entered against Defendants.

•

Phase 3A - Mediation Option. With Mediator Seyferth's and Judge Majzoub's
expert assistance, the parties agree to terms of a class settlement that address
all possible issues, including class claims, statutory damages, and attorney fees.
The Court suggests a preliminary mediation with Mediator Seyferth to address all
issues. Then, absent settlement with his help, or even if the parties agree to the
core components of a settlement and are prepared to proceed under Rule 23, the
parties then should attend a final mediation session with Magistrate Judge
Majzoub, who will either complete negotiations or give any proposed settlement
a hard look with a judicial eye, and assist the parties in resolving any remaining
issues before the parties seek preliminary approval under Rule 23.

•

Phase 3B - Litigation Option. Absent settlement, the parties would have the
necessary information to brief an updated class certification motion. Subject to no
more than one stipulated extension, the briefing schedule will be as follows:
As to Class Claims:
•
•
•
•
•

All remaining class discovery:
Updated motion to certify class filed:
Response to updated motion filed:
Reply to Response filed:
Dispositive motion deadline:

07/07/17
07/21/17
08/21/17
08/28/17
30 days after disposition of motion
to certify class

As to Individual Actions:
•

All remaining fact discovery:

07/07/17

As to Defendants' remaining motion, ECF 78:
•
•

Response filed:
Reply to Response filed:

21 days after mediation fails
14 days after Response is filed

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IT IS FURTHER ORDERED that subject to no more than one stipulated extension,
the parties shall be bound by the abovementioned briefing schedule if they cannot reach
a settlement.
SO ORDERED.
s/Stephen J. Murphy, III
STEPHEN J. MURPHY, III
United States District Judge
Dated: April 18, 2017
I hereby certify that a copy of the foregoing document was served upon the parties and/or
counsel of record on April 18, 2017, by electronic and/or ordinary mail.
s/David P. Parker
Case Manager

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