McClurg et al v. MI Holdings, Inc. et al

Filing 378

MEMORANDUM AND ORDER: IT IS HEREBY ORDERED that Plaintiffs emergency motion for sanctions is GRANTED in part and DENIED in part. (Doc. No. 358 .) The motion is GRANTED with respect to Plaintiffs requests for an award of attorneys fees incurred in bringing this motion in the amount of $1250, for a detailing of any documents that have been destroyed, and for an extension of Plaintiffs expert disclosure deadline; the motion is otherwise DENIED without prejudice to reconsideration as state d in this Order. IT IS FURTHER ORDERED that on or before May 16, 2016, Defendant Mallinckrodt LLC shall file an affidavit by appropriate person with knowledge attesting to whether any documents at the Iron Mountain facility were destroyed after the date of the litigation hold and, if so, describing the documents that were destroyed. IT IS FURTHER ORDERED that the parties shall confer and attempt to reach agreement on a proposed amended Case Management Order addressing the amended deadlines dis cussed in this Order, and no later than May 24, 2016, the parties shall submit their proposed amended schedule or, if they cannot reach agreement, their respective positions, as part of their joint status report for the previously scheduled May 31, 2016 status conference. ( Response to Court due by 5/24/2016.) Signed by District Judge Audrey G. Fleissig on 05/10/2016. (KCB)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
EASTERN DIVISION
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SCOTT D. MCCLURG, et al.,

Plaintiffs,
v.
MALLINCKRODT, INC., et al.,

Defendants.

No. 4:12-CV-00361-AGF

MEMORANDUM AND ORDER
This matter is before the Court on Plaintiffs’ emergency motion (Doc. No. 358)
for sanctions against Defendant Mallinckrodt, LLC (“Mallinckrodt”) for its belated
discovery, search, and limited production of 16,000 boxes of historical documents stored
at a third-party storage facility. For the reasons set forth below, Plaintiffs’ motion shall
be granted in part and denied in part.
BACKGROUND
Plaintiffs served their first set of interrogatories and requests for production on
May 26, 2015. Mallinckrodt produced responsive documents on a rolling basis beginning
in July 2015. Many of Plaintiffs’ document requests related to historical documents
dating back to the 1940s and were retrieved by Mallinckrodt using an index search of
archived documents stored at a third-party storage facility called “Iron Mountain.” On
February 15, 2016, Plaintiffs served a second set of discovery requests seeking to fill
gaps that it perceived existed in Mallinckrodt’s productions. On February 22, 2016,
Mallinckrodt reported to the Court that its production in response to Plaintiffs’ first set of
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discovery requests was “substantially complete,” but that it may supplement its
production should additional relevant materials be identified through the course of
discovery and that it may also produce additional documents in response to Plaintiffs’
second set of discovery requests.
On February 23, 2016, Mallinckrodt’s counsel learned that there were 16,000
boxes of unindexed documents at the Iron Mountain facility that did not show up in
previous searches. Mallinckrodt asserts that it did not learn of the existence of these
unindexed documents earlier due to a “miscommunication between the legal department
and those responsible for administering off-site document storage.” (Doc. No. 365.) It is
unclear when Mallinckrodt’s counsel began reviewing the unindexed documents, but at
some point, its counsel began sampling and reviewing the boxes to identify any relevant
documents.
Meanwhile, on February 26, 2016, the Court held a status conference with the
parties, where Mallinckrodt’s counsel informed the Court that it had recently discovered
“a few” additional boxes of responsive documents1 but that it believed it could complete
production within ten days. Following the February 26th status conference, the Court
ordered Mallinckrodt to complete its production of documents responsive to Plaintiffs’
first set of discovery requests by March 7, 2016, and to include in such production a
representation that as of the date of production, it had produced all responsive documents
of which it was presently aware. (Doc. No. 340.)

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The Court believes that Mallinckrodt’s counsel was referencing different
documents than those at issue in this motion.
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By March 25, 2016, Mallinckrodt’s counsel had reviewed over 100 of the 16,000
boxes and determined that two boxes contained possibly relevant information. The same
day, March 25, 2016, Mallinckrodt reported to Plaintiffs and to the Court that it had
produced all responsive documents of which it was aware, without informing Plaintiffs or
the Court of the existence of the 16,000 boxes of unindexed documents or the fact that
two of these boxes contained potentially relevant information.
Mallinckrodt’s counsel conducted further review of the two boxes on April 4,
2016, determined that they indeed contained responsive documents, and on that day,
informed Plaintiffs’ counsel for the first time of the existence of the 16,000 boxes of
unindexed documents and, of those, the two boxes of responsive documents found thus
far. Mallinckrodt’s counsel offered Plaintiffs’ counsel the following suggestions for
reviewing the remainder of the 16,000 boxes: Mallinckrodt would (1) make available
and review the boxes with Plaintiffs’ counsel; (2) draft a jointly agreed sampling protocol
for some portion of the remaining boxes; or (3) review and produce the documents in the
same way it did previously. Plaintiffs responded that they expected Mallinckrodt to
promptly produce all responsive documents and that they would be seeking relief from
the Court.
On April 6, 2016, Plaintiffs conducted a Rule 30(b)(6) deposition of Mallinckrodt
on the topic of “identity and location of documents” relevant to this litigation. Plaintiffs
assert that Mallinckrodt’s Rule 30(b)(6) witness had essentially no knowledge of the
contents of the 16,000 boxes.
Mallinckrodt asserts that it has continued to retrieve and manually review the
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16,000 boxes, and to date, has reviewed approximately 2,000 boxes and found “very little
potentially relevant information.” Mallinckrodt asserts that the “great majority” of the
boxes include documents regarding payroll, tax, and other financial information from the
1980s and 1990s that are irrelevant to this litigation.
Plaintiffs assert that Mallinckrodt’s conduct has prejudiced Plaintiffs’ ability to
prepare their expert reports in a timely and cost-efficient manner. Plaintiffs’ expert
reports are due to be disclosed on May 31, 2016. Plaintiffs assert that it is likely that their
experts will have to spend additional time and effort incorporating into their reports
information that Mallinckrodt has not yet produced from the 16,000 boxes, and that, at a
minimum, their expert disclosure deadline should be extended. Plaintiffs also request the
following relief: ordering Mallinckrodt to provide an index or accounting of any
documents stored in unindexed boxes at Iron Mountain that were destroyed after the date
Mallinckrodt issued its litigation hold in this case; allowing depositions so that Plaintiffs
can fully investigate facts relating to Mallinckrodt’s failure to produce documents and to
the destruction of any documents after the date of the litigation hold; barring
Mallinckrodt from using any documents not produced prior to April 4, 2016, in support
of its defenses, for impeachment, or for any other purpose; shifting to Mallinckrodt a
substantial portion of the expenses of Plaintiffs’ experts incurred to date; and ordering
Mallinckrodt to pay Plaintiffs’ attorneys fees incurred in bringing this motion for
sanctions and in conducting a second deposition regarding the identity and location of
Mallinckrodt’s documents.

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DISCUSSION
A district court may impose sanctions for discovery violations pursuant to Federal
Rule of Civil Procedure 37 or pursuant to its “inherent authority to fashion an appropriate
sanction for conduct which abuses the judicial process.” Duranseau v. Portfolio
Recovery Assocs., No. 15-1551, 2016 WL 1295141, at *5 (8th Cir. Apr. 4, 2016).
However, the Eighth Circuit has emphasized that “the better practice is to apply Rule 37
where appropriate and not allow an exercise of inherent power to ‘obscure’ the Rule 37
analysis.” Sentis Grp., Inc., Coral Grp., Inc. v. Shell Oil Co, 559 F.3d 888, 899 (8th Cir.
2009)(citation omitted). “In order to impose sanctions under Rule 37, there must be an
order compelling discovery, a willful violation of that order, and prejudice to the other
party.” Chrysler Corp. v. Carey, 186 F.3d 1016, 1019 (8th Cir. 1999).
Although Plaintiffs have not moved to compel discovery in this case, and there has
been no formal order compelling production of these particular documents, following
informal discussions regarding discovery at a status conference, the Court did order
Mallinckrodt to complete its production of documents responsive to Plaintiffs’ first set of
discovery requests by March 7, 2016, and to include in such production a representation
that it had produced all responsive documents of which it was presently aware.
The Court notes that the parties have thus far proceeded relatively cooperatively,
particularly given the complex nature of the phased proceedings in these consolidated
cases, the vast number of plaintiffs, and the age of the relevant evidence. Nevertheless,
the Court is troubled by some of Mallinckrodt’s actions, such as its vague explanation
that a “miscommunication” is to blame for the belated discovery of the existence of
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potentially relevant documents in this now four-year-old litigation, and its representation
to the Court that it could substantially complete its production of responsive documents
by March 7, 2016, despite knowing at the time that thousands of boxes of documents
containing possibly relevant information had not yet been searched. Had Mallinckrodt
advised the Court of the discovery of these 16,000 boxes at the February 26th status
conference, the Court could have meaningfully addressed the issue then, which may well
have alleviated the need for Plaintiffs to file this motion for sanctions. Therefore, the
Court will grant Plaintiffs’ a portion of the attorneys’ fees reasonably incurred in bringing
this motion for sanctions, in the amount of $1250. Further, the Court will order
Mallinckrodt to promptly advise Plaintiffs, by appropriate affidavit of a person with
knowledge, whether any documents at the Iron Mountain facility were destroyed after the
date of the litigation hold in this case and, if so, to provide a complete description of such
documents.
Beyond that, however, the Court concludes that on the record developed to date,
Mallinckrodt’s actions do not rise the level of sanctionable misconduct, particularly given
that the documents date back to the 1940s, the boxes were not indexed or easily
searchable, and, based on Mallinckrodt’s review to date, the boxes seem to contain
relatively few responsive documents. The Court also finds that much of Plaintiffs’
alleged prejudice will be alleviated by an extension of its expert disclosure deadline.
Therefore, in addition to requiring Mallinckrodt to pay $1250 in reasonable
attorneys’ fees incurred in bringing this motion for sanctions and to advise Plaintiffs
regarding the destruction of any documents, the Court will ask the parties to confer and
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attempt to reach agreement on a proposed amended schedule for Mallinckrodt to
complete its review and production of documents, for the parties to complete expert
disclosures, and for any other changes to the most recent Case Management Order that
the parties deem necessary. The Court will deny Plaintiffs’ other requests for relief,
without prejudice to reconsideration upon completion of Mallinckrodt’s production,
should Plaintiffs’ expert reports prove to truly need significant reworking based on the
belated production, or should it appear that any documents were destroyed.
CONCLUSION
Accordingly,
IT IS HEREBY ORDERED that Plaintiffs’ emergency motion for sanctions is
GRANTED in part and DENIED in part. (Doc. No. 358.) The motion is GRANTED
with respect to Plaintiffs’ requests for an award of attorneys’ fees incurred in bringing
this motion in the amount of $1250, for a detailing of any documents that have been
destroyed, and for an extension of Plaintiffs’ expert disclosure deadline; the motion is
otherwise DENIED without prejudice to reconsideration as stated in this Order.
IT IS FURTHER ORDERED that on or before May 16, 2016, Defendant
Mallinckrodt LLC shall file an affidavit by appropriate person with knowledge attesting
to whether any documents at the Iron Mountain facility were destroyed after the date of
the litigation hold and, if so, describing the documents that were destroyed.
IT IS FURTHER ORDERED that the parties shall confer and attempt to reach
agreement on a proposed amended Case Management Order addressing the amended
deadlines discussed in this Order, and no later than May 24, 2016, the parties shall
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submit their proposed amended schedule or, if they cannot reach agreement, their
respective positions, as part of their joint status report for the previously scheduled May
31, 2016 status conference.

AUDREY G. FLEISSIG
UNITED STATES DISTRICT JUDGE
Dated this 10th day of May, 2016

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