NutriQuest, LLC v. AmeriAsia Import LLC et al

Filing 199

ORDER granting in part and denying in part 176 Motion to enforce protective order and for sanctions. (Written Opinion) Signed by Magistrate Judge Katherine M. Menendez on 11/5/2018. (BJP)

UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA

NutriQuest, LLC,

Case No. 0:18-cv-00390-NEB-KMM

Plaintiff/Counter Defendant,
v.
ORDER
AmeriAsia Imports LLC; Profound
Solutions, Inc.; Ying Li, also known as
Olivia Li; Yanbin Shen; Jenna Xu;
Defendants/Counter Claimants.

Dean M. Zimmerli and Dustan J. Cross, Gislason & Hunter LLP, counsel for
Plaintiff/Counter Defendant
Paul J. Robbennolt and Lisa B. Ellingson, Winthrop & Weinstine, PA, counsel for
Defendants/Counter Claimants

This matter is before the Court on AmeriAsia’s1 Motion to Enforce
Protective Order and for Sanctions. (ECF No. 176.) The Court held a hearing on
the motion on October 30, 2018. At the hearing the Court granted the motion in
part and denied the motion in part. This Order memorializes the Court’s bench
rulings.
A court may impose sanctions for the violation of a discovery order,
including a protective order, pursuant to Federal Rule of Civil Procedure
37(b)(2) and its inherent power. Sandoval v. Am. Bldg. Maint. Indus., Inc., 267
F.R.D. 257, 264 (D. Minn. 2007). “Rule 37 sanctions must be applied diligently
both ‘to penalize those whose conduct may be deemed to warrant such a

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The Court refers to the Defendants collectively as “AmeriAsia.”
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sanction, [and] to deter those who might be tempted to such conduct in the
absence of such a deterrent.’” Roadway Exp., Inc. v. Piper, 447 U.S. 752, 763–64
(1980) (quoting National Hockey League v. Metropolitan Hockey Club, 427 U.S.
639, 643 (1976)). Any sanction under Rule 37 must correspond to the violation
of the court’s order and must be just. Jay v. Spectrum Brands Holdings, Inc., No.
13 Civ. 8137 (LTS)(DF), 2015 WL 6437581, at *5 (S.D.N.Y. Oct. 20, 2015). If the
conduct at issue cannot effectively be addressed pursuant to Rule 37, the court
“may rely on its inherent power to impose sanctions....” Bead Filters Intern.,

LLC v. Mills, No. SA-09-cv-105-XR, 2009 WL 3837863, at *2 (W.D. Tex. Nov.
12, 2009) (citing Toon v. Wackenhut Corrections Corp., 250 F.3d 950, 952 (5th
Cir. 2001)).
With these standards in mind, AmeriAsia’s motion to enforce the
protective order and for sanctions is GRANTED IN PART to the extent it seeks
imposition of a monetary sanction payable to the Court. Specifically, Gislason &
Hunter LLP, which represents NutriQuest, is required to pay a sanction of $500
for the failure to use reasonable efforts to prevent disclosure to its client of
documents marked “attorney’s eyes only” by the non-party Lonsdale Packaging,
Inc. Counsel for NutriQuest confirmed that the disclosure occurred and candidly
admitted that the improper handling of documents was the result of a mistake.
Sych carelessness cannot be condoned by the Court. However, several factors
inform the Court’s conclusion to impose a more modest monetary sanction than
that requested by AmeriAsia, including: (1) plaintiff’s counsel’s candor with the
Court regarding the mistake and willingness to accept responsibility for the
errors; (2) the lack of any intentional violation of the protective order; and
(3) the efforts plaintiff’s counsel made to ensure that all copies of the documents
at issue were destroyed by NutriQuest once the disclosure was discovered.
AmeriAsia’s motion is DENIED to the it seeks an order requiring
NutriQuest, its counsel, or both to pay the expenses, including attorney’s fees,
that AmeriAsia incurred in bringing the motion. As explained on the record at
the hearing, the Court finds that the defendants’ efforts to meet and confer with
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counsel for NutriQuest prior to filing this motion were insufficient. The Court
also finds that the motion was largely unnecessary because NutriQuest’s counsel
had substantially agreed to the meritorious non-monetary relief sought by
AmeriAsia to correct the problem prior to the filing of the motion. The Court
also requires that meet-and-confer efforts among the parties to resolve issues
prior to seeking court intervention must involve at least one in-person meeting
or personal telephone conversation between counsel. In light of the parties’
difficulties in establishing productive avenues of communication in this litigation,
email communication alone is insufficient going forward.
AmeriAsia’s motion is DENIED IN PART WITHOUT PREJUDICE with
respect to the non-monetary relief sought through its motion. (See also
Proposed Order, ECF No. 189.) As explained on the record at the hearing,
several avenues of relief requested by AmeriAsia were designed to either
appropriately remediate the previous violations of the protective order or were
intended to prevent a recurrence of such mistakes in the future. Indeed, when
the parties attempted to work out a stipulation prior to the filing of AmeriAsia’s
motion, counsel for NutriQuest readily agreed to several of the provisions that
AmeriAsia sought. However, other provisions of AmeriAsia’s requested relief
went too far, and were not adopted by opposing counsel. In particular, the Court
finds that AmeriAsia is not entitled to relief that would prevent NutriQuest from
contacting individuals or entities identified in the documents marked “attorney’s
eyes only” by Lonsdale and AmeriAsia to the extent that NutriQuest had a preexisting business relationship with those individuals or entities. Granting such
relief on this motion would amount to an unwarranted windfall for AmeriAsia. At
the hearing, counsel for the parties were instructed to consider the guidance
provided by the Court and negotiate a stipulation that captures this balance and
adequately protects the interests of both parties moving forward.
IT IS SO ORDERED.

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s/ Katherine Menendez

Date: November 5, 2018

Katherine Menendez
United States Magistrate Judge

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