Catrinar v Wynnestone Communities Corporation et al

Filing 78

OPINION AND ORDER Denying 68 Motion for Sanctions. Signed by Magistrate Judge R. Steven Whalen. (HMon)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION

LAWRENCE CATRINAR,
Plaintiff,

No. 14-11872

v.

District Judge John Corbett O’Meara
Magistrate Judge R. Steven Whalen

WYNNESTONE COMMUNITIES
CORPORATION, ET AL.
Defendants.
/
OPINION AND ORDER
On May 9, 2014, Plaintiff Lawrence Catrinar filed suit against his former employer
Defendant Wynnestone Communities Corporation and Gilbert B. Silverman
(“Defendants”) alleging violations of the Family Medical Leave Act (“FMLA”), 29
U.S.C. § 2614, et. seq., as well as breach of contract and promissory estoppel. Before the
Court is Plaintiff’s Motion for Discovery Sanctions [Doc. #68]. For the reasons discussed
below, the motion will be DENIED.1

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Although Plaintiff requests a default judgment as an alternative sanction under
Fed.R.Civ.P. 37, the relief I am granting is non-dispositive. I therefore proceed by Order
under 28 U.S.C. § 636(b)(1)(A), rather than Report and Recommendation under 28
U.S.C. § 636(b)(1)(B). See Bell–Flowers v. Progressive Ins. Co., 2005 WL 3434818, at *
1, 2 n. 1 (W.D.Tenn.Dec.13, 2005) (“The majority of courts to consider the issue have
concluded that when a party brings a motion for discovery sanctions, the sanction chosen
by the magistrate judge, rather than the sanction sought by the moving party, governs the
magistrate judge's authority over the motion.” (citing cases)); Coleman v. Canton
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I.

Legal Principles re: Rule 37 Sanctions

Fed. R. Civ. P. 37 provides for sanctions for failure to make disclosures or
cooperate in discovery. Rule 37(b) provides for sanctions where a party fails to comply
with a court order regarding discovery, including, under Rule 37(b)(2)(A)(vi), entry of
default judgment where it is the defendant who has been disobedient. A motion for
sanctions under this Rule is addressed to the Court’s discretion. National Hockey League
v. Metropolitan Hockey Club, Inc., 427 U.S. 639, 643, 96 S.Ct. 2778, 49 L.Ed.2d 747
(1976); Regional Refuse Systems, Inc. V. Inland Reclamation Co., 842 F.2d 150, 154 (6th
cir. 1988). However, entry of a default judgment against a party “for failure to cooperate
in discovery is a sanction of last resort,” and may not be imposed unless noncompliance
was due to “willfulness, bad faith, or fault.” Bank One of Cleveland, N.A. v. Abbe, 916
F.2d 1067, 1073 (6th Cir. 1990)(citations omitted). See also Grange Mut. Cas. Co. v.
Mack, 270 Fed. Appx. 372, 376 (6th Cir.2008) (explaining that default judgment is the
court's most severe discovery sanction).
The Court’s discretion is informed by the four-part test described in Harmon v.
CSX Transportation, Inc., 110 F.3d 364, 366-67 (6th Cir. 1997): (1) whether the party’s
failure is due to willfulness, bad faith, or fault; (2) whether the adversary was prejudiced
by the dismissed party’s conduct; (3) whether the dismissed or defaulted party was

Township, 2010 WL 3906015, *1 (E.D.Mich.2010) (“a party's characterization of a
motion as being ‘dispositive’ or ‘nondispositive’ does not make it so”); Beattie v.
CenturyTel, Inc., 2009 WL 5066676, *1 (E.D.Mich.2009).
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warned that failure to cooperate could lead to dismissal or entry of default judgment; and
(4) whether less drastic sanctions were imposed or considered before dismissal or default
judgment was ordered. See also Bank One of Cleveland, N.A. v. Abbe, 916 F.2d 1067,
1073 (6th Cir. 1990).
In deciding whether to impose “the draconian sanction” of default judgment, the
first factor–the party’s willfulness or bad faith in failing to comply with a discovery
order–looms large. Intercept Security Corp. V. Code-Alarm, Inc., 169 F.R.D. 318, 321-22
(E.D. Mich. 1996), citing Societe Internationale Pour Participations Industrielles et
Commerciales, S.A. v. Rogers, 357 U.S. 197, 212, 78 S.Ct. 1087, 2 L.Ed.2d 1255 (1958).
However, a prior warning that failure to comply with a discovery order will result in a
default judgment is pivotal both to the determination of willfulness and to the ultimate
decision to order that sanction. See Harris v. Callwood, 844 F.2d 1254, 1256 (6th Cir.
1988).
II.

DISCUSSION

The centerpiece of Plaintiff’s motion is his very serious allegation that the
Defendants fabricated and produced false evidence in this case. In the introductory
paragraph of the brief in support of Plaintiff’s motion, he states emphatically:
“It is now clear that Defendants...have manipulated the discovery process in
bad faith from the inception of this case. This includes the actual
fabrication of evidence to support their baseless claims and to undermine
Plaintiff’s claims, and the selective production of documents to prevent
Plaintiff from obtaining necessary discovery.” (Emphasis in original).

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The allegation of false evidence stems from Defendant Silverman’s apparent rewrite of an email originally sent to Kathryn Morris on December 21, 2008, concerning the
E&S Plan and whether Silverman was aware of the plan or authorized any amendments to
the plan. The original email, which Plaintiff refers to as “the real email,” is written
partially in Spanish, and reads as follows:
“PS...no idea what this is doc. Si, complete...pero no comprendo! Dia
normal! Gracia’s por todo. Happy everything. Buzz.
Plaintiff states that Defendants produced this email to them, although it was
“buried within the 86,000 emails” that were uploaded into a database “that was made
available for Plaintiff to review” in 2016.
Plaintiff states that earlier in the litigation, specifically on October 27, 2014,
Silverman responded to an interrogatory asking when he first learned of what he then
claimed was the “secret and unauthorized” E&S Plan. Silverman stated in his
interrogatory response, “Silverman learned of the existence of the E&S Plan in December
2008 when he received various emails from [Kathryn] Morris requesting that he sign an
amendment thereto.” See Exhibit 2, Plaintiff’s motion [Doc. #68]. Silverman also
produced at that time an email to Morris, also dated December 21, 2008, which Plaintiff
refers to as “the fake email.” That earlier produced email reads as follows:
“Kathy...no idea what this is. You never discussed this and neither did
Sheldon. I’m the board and only officer except Tom and you keep ignoring
it. I’ll give bonus’s as I’ve been and dependent on hitting budgets. 0-400100% as I have been and discussed. I’ve never done anything like this as
its way too complicated. I’ll discuss it when you get back again. And as
for Sheldon, it’s a big mistake. Buzz”
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Both the “real email” and the “fake email” are dated December 21, 2008. Plaintiff
argues that the “fake email” fraudulently supports Silverman’s position that he did not
authorize an amendment to the E&S Plan, and that the “real email” offers no such
support. However, Defendant concedes that the native Outlook email file of what
Plaintiff refers to as the “fake email” shows that it was created in January 2012, not
December 2008. Attached to Defendants’ response [Doc. #7] is the declaration of Gilbert
Silverman, in which he states that he forwarded the December, 2008 email to himself in
January, 2012. He states, in ¶ 5 of his declaration, “Specifically, it appears that I re-wrote
in English and elaborated on my original message, which was mostly in Spanish. The
point of the two emails is the same.”
Thus, we have two emails, both ostensibly dated December 21, 2008, but the more
detailed one having actually been created over three years later in January of 2012. The
basic questions with regard to sanctions under Rule 37 are (1) did Silverman manufacture
a false email in order to fabricate a response to Plaintiff’s discovery requests, and (2) did
Silverman deliberately conceal “real” evidence? The answers to these questions are
particularly salient to the first Harmon factor, that is, whether Silverman’s actions were
done willfully or in bad faith.
Plaintiff filed his complaint on May 9, 2014, about two years and four months after
the “fake email” was created. Now, should this case go to trial, the discrepancy between
the two emails and Silverman’s explanation as to how the later email came to be created
may undoubtedly be exploited to the Plaintiff’s advantage. But whatever the ultimate
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evidentiary import of the “fake email,” it clearly was not manufactured in response to a
discovery request in a case that was filed over two years later. Therefore, in determining
whether a discovery sanction as drastic as a default judgment should be imposed, I do not
find that Plaintiff has shown “willfulness, bad faith, or fault” with respect to the creation
of the 2012 email.
Moreover, Plaintiff did not discover the “real email” through means extrinsic to
the Defendants’ own production efforts; instead, the Defendants themselves produced it,
albeit somewhat late in the game. On January 21, 2016, I entered an order [Doc. #59]
granting in part and denying in part Plaintiff’s Third Motion to Compel Discovery and for
Discovery Sanctions [Doc. #38]. As part of his motion, Plaintiff requested an order
permitting him to search Defendants’ email servers. I denied that request, but ordered
Defendants to “provide to Plaintiff a written declaration, under oath, detailing the steps
taken to locate responsive documents and the results of that search.” Granting in part the
motion to compel, I ordered:
“A. Defendants will undertake a diligent and good-faith search for
responsive documents, and produce, or permit the inspection of, all
documents within their possession or control that are responsive to
Plaintiff’s requests, subject to any claim of privilege. If the Defendants
claim privilege as to any documents, they will submit a privilege log.
B. As to any documents that Defendants claim they do not have, the
person or persons who searched for those documents will provide to
Plaintiff a written declaration, under oath, detailing the steps taken to locate
responsive documents and the results of the search.
C. Responsive documents will be produced or made available for
inspection within 30 days of the date of this Order.”
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In response to my order, the Defendants produced for Plaintiff’s inspection a large
volume of emails, including the “real email” that was created on December 21, 2008.
The Defendants also produced the declaration of Jessica Eicken, a Silverman
Development Companies employee, who described the steps she undertook to locate
documents responsive to Plaintiff’s discovery requests. See Exhibit A to Defendants’
Response [Doc. #70]. Ms. Eicken states that she and other Wynnestone employees spent
“dozens of hours” searching for documents, and that her primary responsibility was
searching for and collecting email correspondence. Eicken Declaration, ¶¶ 3-4. As part
of her efforts, she enlisted the aid of Suntel, a company that provided technical service to
Wynnestone. Id. ¶ 5. A Suntel employee alerted Ms. Eicken to three email archives that
the employee discovered when Wynnestone moved its offices in May of 2016. This was
not the person who had previously been asked to search for responsive discovery
material. Id. ¶ 9. It was within these email archives that the “real email” was located and
produced to Plaintiff.
In my previous order [Doc. #59], I denied discovery sanctions, finding that
Defendants had not acted willfully or in bad faith. I also ordered Defendants to provide
additional discovery to the extent that a diligent and good-faith search uncovered
responsive documents. They did just that, and the “real email” was produced, along with
a trove of other emails. It is difficult for me to find bad faith when the Defendants
complied with my order. While Plaintiff characterizes the “real email” as a “needle in a
haystack,” it is not unusual that a business’s electronically stored information is
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voluminous. But more importantly, Defendants did not destroy or withhold the original
2008 email, they produced it. At trial, their production of this evidence to Plaintiff will
most likely work to their detriment. Again, Plaintiff has not satisfied the first Harmon
factor.
Nor has Plaintiff met the second Harmon factor, prejudice. While he obtained the
original email later in the litigation, in or around August of 2016, discovery was
extended, by stipulation, to August 30, 2017 [Doc. #75]. The parties’ stipulation
specifically referenced the issue that “the newly produced email archives directly relate to
one of the central issues of Plaintiff’s claims.” Those archives, which contained about
2,000 pages of emails, were the ones “which Defendants maintain their information
technology vendor had not discovered during prior searches for documents responsive to
Plaintiff’s requests for production.” This extension of discovery cures any prejudice
which might otherwise have occurred as the result of the delay in Defendants’ production
of the emails.

The third and fourth Harmon factors may be considered together. Defendants
have not been previously warned that a default judgment or other sanctions could be
imposed for discovery violations, nor have any lesser sanctions been imposed.

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III.

CONCLUSION

Plaintiff’s Motion for Discovery Sanctions [Doc. #68] is therefore DENIED.
IT IS SO ORDERED.
s/R. Steven Whalen
R. STEVEN WHALEN
UNITED STATES MAGISTRATE JUDGE
Date: September 30, 2017

I hereby certify that a copy of the foregoing document was served upon the parties
and/or counsel of record on September 30, 2017, by electronic means and/or
ordinary mail.
s/H. Monda in the absence of C. Ciesla
Case Manager

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