Wells v. Lorenz Farm Services, Inc. et al

Filing 79

MEMORANDUM AND ORDER: 1) The plaintiff's Objections, (Filing Nos. 67 and 69 ), to the defendants' notice of compliance, (Filing No. 66 ), are sustained.2) The plaintiff's motion for sanctions, (Filing No. 70 ), is granted as stated.Ordered by Magistrate Judge Cheryl R. Zwart. (JAB)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEBRASKA
RYAN D. WELLS,
Plaintiff,

4:12CV3085

vs.
MEMORANDUM AND ORDER
LORENZ FARM SERVICES, INC.,
DENNIS L. LORENZ,
Defendants.
Pending before me are the Objections, (Filing Nos. 67 and 69), and Motion for
Sanctions, (Filing No. 70), filed by the plaintiff. For the reasons described below, the
objections will be sustained and the motion for sanctions will be granted.

PROCEDURAL HISTORY

The undersigned magistrate judge held a hearing on October 22, 2012 to discuss
the defendants' pattern of failing to produce discovery, and failing to timely respond to
the plaintiff's filings and comply with court orders. Based on the representations of
counsel during the hearing, the court ordered:

4)

On or before October 29, 2012, the defendants shall electronically
serve on plaintiff’s counsel all “documentation evidencing the
contracts between the parties for delivery of hay and the lost profits
and damages suffered by Lorenz Farm Service, Inc. as a result of the
Plaintiff’s breach of contract.” See defendant’s Rule 26(f)
disclosures, (Filing No. 53-1, ¶ B).

5)

On or before October 29, 2012, the defendants shall:
a. Provide full and complete answers to the plaintiff’s
interrogatories served on Dennis Lorenz and on Lorenz Farm
Services, Inc. on August 21, 2012 (see Filing No. 53-1, exhibits
G & H). The interrogatory answers shall include a statement that

all responsive information has been provided, and shall be signed
under oath by defendant Dennis Lorenz, and as to those
interrogatories served on defendant Lorenz Farm Services, Inc.,
by an authorized representative of that company.
b. Produce all documents responsive to the plaintiff’s Requests for
Production of Documents served on August 21, 2012 (see Filing
No. 53-1, exhibit I). The defendants’ responses to the document
production requests shall include a statement that all responsive
documents have been provided, and shall be signed under oath by
defendant Dennis Lorenz and by an authorized representative of
defendant Lorenz Farm Services, Inc.
(Filing No. 65, at CM/ECF pp. 1-2). The order further required the defendants to obtain
the services of local counsel and have that attorney file an appearance on their behalf by
no later than November 5, 2012. (Filing No. 65, at CM/ECF p. 2).

Defense counsel filed a notice of compliance with the court's order on October 29,
2012. (Filing No. 66). The plaintiff argues that defendants have not fully responded to
discovery, and they have not obtained local counsel. The plaintiff moves for sanctions.

FACTUAL ANALYSIS

The plaintiff states that despite the court's order, the defendants' discovery
responses were incomplete, their certifications that they provided complete responses
were false, and the defendants do not have local counsel.

1)

Mandatory Disclosures and Interrogatory Responses.

The plaintiff has been asking for production of the documents described in
defendants' mandatory disclosures for nearly two months. During the hearing held on
October 22, 2012, the court asked defense counsel to explain the reason for the delay.
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Defense counsel responded that the CFO for defendant Lorenz Farms, Inc., William
Bruce, has the information described in the mandatory disclosures but he now lives a
four-hour drive away from defense counsel. Based on defense counsel's statement, Mr.
Bruce has possession of boxes of documents evidencing hay delivery contracts between
the parties and supporting Lorenz Farm Service, Inc.'s claims for lost profits and damages
caused by plaintiff’s alleged breach of contract. Doc. 64 (audio file), 10:25-10:49.

But in response to the court's order compelling production of these documents by
no later than October 29, 2012, the defendants provided a total of 25 pages of
information; including the 15-page Hay Delivery Agreement previously attached to the
plaintiff's complaint (including the CM/ECF filing header), and 10 pages of an unsigned
partial draft Hay Delivery Agreement and associated exhibits, with bates number pages 2,
5, 6, and 8 missing. Despite their failure to produce the "boxes" of responsive documents
described by their attorney, the defendants certified, under oath, that all documents
identified in their mandatory disclosures were produced.

Defense counsel's representations made during the hearing on October 22, 2012,
and defendants' current representation that all documents (totaling 25 pages) have been
produced are, at a minimum, inconsistent. Simply stated, one of the two statements is
false.

The plaintiff also argues that defendants' response to interrogatory 5 is incomplete,
and their certification that all responsive information has been disclosed is false. The
defendants' interrogatory response states:

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However, based on the representations of defense counsel during the hearing on
October 22, 2012, William Bruce is the CFO of defendant Lorenz Farms Services, Inc.,
and based on Mr. Bruce's Linkedln site, he is currently the Finance Manager of NAAS. It
therefore appears that William Bruce should have been listed in response to Interrogatory
5, and contrary to their statement under oath, the defendants did not disclose "[a]ll
responsive information."

In response to the plaintiff's argument, the defendants claim the plaintiff "is asking
that the Defendants specifically produce a document that is entitled, “Defendants’
Damages,” and the defendants are not obligated to create documents to respond to
discovery. The defendants are completely misstating the issue. The plaintiff is asking
the defendants to produce the documents identified in defendants' mandatory disclosures--described by defense counsel as boxes of documents in the possession of William
Bruce, and the court entered an order requiring this production.

The court cannot

envision how defense counsel could reasonably interpret plaintiff's request and this
court's order as a demand for a document entitled "Defendants' Damages." The argument
is spurious.

The defendants claim the plaintiff's objections and motion for sanctions must be
overruled because the plaintiff could, and should have ascertained the discovery at issue
by deposing the defendants, including Mr. Bruce. But the defendants cannot dictate how
the plaintiff pursues discovery. Moreover, the defendants' obligation to produce the
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documents described in their mandatory disclosures is imposed by court rule, not by any
discovery mode chosen by the plaintiff; the court has already held that the defendants
must fully and truthfully respond to the discovery at issue; and the incomplete nature of
the defendants' current responses directly violates this court's order.

2) Local Counsel Requirement.

Contrary to this court's order, and their certification of compliance with that order,
local counsel has not entered an appearance for the defendants. In his brief, defense
counsel offers the conclusory explanation that the defendants cannot afford local counsel.
(Filing No.75). No evidence was filed in support of this statement. There is no evidence
of record explaining the defendants' financial situation, their attempts (if any) to obtain
local counsel, or whether the defendants ever considered having only Nebraska counsel,
rather than dual counsel, to limit expenses while complying with this court's order.

SANCTIONS

Defendants' current responses are consistent with the history of this case. (See
Filing No. 53-1). That history prompted the undersigned magistrate judge to enter an
order requiring local counsel--in the hopes of promoting the practice standards of this
court and addressing the defendants' persistent lackadaisical attitude. My order failed to
produce the desired result.

The prior order warned that if the defendants failed to fully and timely disclose
discovery and/or retain local counsel, "the court may dismiss their counterclaims, may
strike their defenses to the plaintiff’s complaint, and/or may enter a default against the
defendants without further notice." (Filing No. 65, at CM/ECF p. 2). After that order
was entered, Judge Gerrard granted a partial summary judgment for the plaintiff, finding
the defendants are liable for breach of the Hay Delivery Agreement at issue and
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dismissing the defendants' counterclaim alleging the plaintiff breached the contract.
Therefore, the only issue remaining is the amount of plaintiff's damages arising from
defendants' breach of contract.

Despite the description in defendants' mandatory disclosures, the defendants have
never disclosed “documentation evidencing the . . . the lost profits and damages suffered
by Lorenz Farm Service, Inc. as a result of the Plaintiff’s breach of contract.” Consistent
with this nondisclosure, the defendants offered no specific evidence in opposition to
plaintiff's motion for summary judgment on the issue of liability and to dismiss the
defendants' counterclaim. As stated by Judge Gerrard, "Lorenz does not explain when
Wells supposedly rejected any hay deliveries, or aver any facts supporting the conclusion
that the hay supposedly delivered was satisfactory. Nor is there any basis for Lorenz's
conclusion that the Defendants' failure to deliver substantial quantities of hay was
entirely attributable to such rejections." (Filing No. 77, at CM/ECF p. 8). Defendants'
failure to garner any admissible evidence opposing plaintiff's summary judgment motion,
particularly when considered in the context of describing, but never producing,
documents responsive to that motion, indicates the defendants had no factual basis for
their counterclaim or for their allegations that the plaintiff breached the Hay Delivery
Agreement.

Defendants' unsupported allegations have created additional work for the plaintiff
and the court. And the defendants have consistently thwarted plaintiff's efforts to obtain
information through mandatory disclosures and written discovery methods. The plaintiff
has accordingly moved for sanctions. The court finds the defendants' conduct was and is
not substantially justified, and plaintiff is entitled to relief from defendants' impermissible
tactics. Any remedy must be immediate: Trial is scheduled to begin on December 18,
2012.

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Under Rule 26(a), the defendants were required to identify and produce all
documents they would use at trial. Despite numerous attempts to elicit their cooperation,
the defendants have produced no documents other than a copy of the Hay Delivery
Agreement and a draft agreement with attachments, neither of which address the
remaining trial issue--the nature and extent of plaintiff's damages. With trial only a
month away, the defendants will not be permitted to supplement their mandatory
disclosures at this late date. The court will accept, as a nonrebuttable presumption, that
the defendants have no documents which may be relevant to limiting or opposing
plaintiff's claim for damages, and the defendants and their witnesses will not offer, refer
to, or discuss any such documents.

If the plaintiff wants to depose Dennis Lorenz, Bill Whitman (employee of
defendant Lorenz Farms Services, Inc.), and/or William Bruce, the depositions will be
held in Nebraska at a location convenient for plaintiff's counsel. All travel expenses
associated with deposing the defense witnesses in Nebraska will be paid by the
defendants. The plaintiff must make any request to depose Dennis Lorenz, Bill Whitman,
and/or William Bruce by no later than November 27, 2012. But if the plaintiff timely
requests the deposition of any of these defense witnesses, and a requested deposition
cannot be taken prior to December 3, 2012 (prior to the pretrial conference), upon the
plaintiff's request, the party/witness who was not deposed will not be permitted to testify
at trial or otherwise provide evidence on the issue of plaintiff's damages.

Finally, the plaintiff will be awarded the attorney fees and expenses he incurred to
pursue his first motion for sanctions, (Filing No. 51), to raise objections to defendants'
notice of compliance, (Filing Nos. 67 and 69); and to pursue his second motion for
sanctions, (Filing No. 70).

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Accordingly,
IT IS ORDERED:
1)

The plaintiff's Objections, (Filing Nos. 67 and 69), to the defendants' notice
of compliance, (Filing No. 66), are sustained.

2)

The plaintiff's motion for sanctions, (Filing No. 70), is granted as follows:
a.

For the purposes of trial on the remaining issue, plaintiff's damages,
it is established, as a nonrebuttable presumption, that the defendants
have no documents which may be relevant to limiting or opposing
plaintiff's claims, and the defendants and any witnesses affiliated
with the defendants (including Dennis Lorenz, Bill Whitman, and
William Bruce) shall not offer, refer to, or discuss any such
documents during their trial testimony.

b.

As more fully outlined in this memorandum and order, upon the
plaintiff's timely request, Dennis Lorenz, Bill Whitman, and William
Bruce shall make themselves available to be deposed in Nebraska by
no later than December 3, 2012, with defendants paying any related
travel expense. If any witness fails to do so, at the plaintiff's request,
that witness will not be permitted to testify at trial or otherwise
provide evidence on the issue of plaintiff's damages.

c.

On or before December 1, 2012, Plaintiff shall submit an itemized
billing statement of the fees and expenses incurred to file his first
motion for sanctions, (Filing No. 51), to raise objections to
defendants' notice of compliance, (Filing Nos. 67 and 69); and to
pursue his second motion for sanctions, (Filing No. 70). Plaintiff
shall refer to NECivR 54.4 for guidance in preparing the statement.
Any response thereto shall be filed on or before December 10, 2012.
If the defendants fail to timely respond, the court will enter an award
of attorney fees and expenses in the amount requested by the
plaintiff.

November 19, 2012.
BY THE COURT:
s/ Cheryl R. Zwart
United States Magistrate Judge
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