Feldman v. Pokertek, Inc.
Filing
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ORDER Granting in Part and Denying in Part 44 Motion to Compel and Denying 46 Counter-Motion to Strike. Signed by Magistrate Judge Lawrence R. Leavitt on 9/29/11. (Copies have been distributed pursuant to the NEF - ASB)
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UNITED STATES DISTRICT COURT
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DISTRICT OF NEVADA
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MARVIN ROY FELDMAN,
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Plaintiff,
v.
POKERTEK, INC.,
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Defendant.
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2:09-cv-01598-JCM-LRL
ORDER
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Before the court is plaintiff Marvin Roy Feldman’s Motion to Compel and For Sanctions (#44).
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Defendant PokerTek, Inc. filed an Opposition (#45) and a Counter-Motion to Strike (#46). Plaintiff
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filed a Reply (#47) in support of his Motion and an Opposition (#48) to defendant’s Counter-Motion.
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Defendant filed a Reply (#49) in support of its Counter-Motion.
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In Feldman’s amended complaint, he alleges that he had an agreement with defendant PokerTek,
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whereby he would “persuade Mexican gaming authorities to either change or interpret existing laws in
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such a way as to permit the PokerTek [t]ables to be sold and operated in licensed Mexican casinos.”
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(#16). Allegedly relying on this agreement, Feldman began “making contacts” in Mexico, and, through
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a series of emails with the defendant, secured himself a position as the distributor for PokerTek in
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Mexico in exchange for his services. Id. However, after PokerTek tables were permitted in Mexican
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casinos, defendant allegedly “repudiated” the agreement and refused to adequately compensate plaintiff.
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Id.
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Plaintiff asserts claims against PokerTek for (1) breach of contract, (2) quantum meruit, (3)
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unjust enrichment, (4) fraud, (5) breach of the covenant of good faith and fair dealing, (6) tortious bad
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faith/ tortious breach of the covenant of good faith and fair dealing, and (7) civil conspiracy to suppress
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evidence/tamper with witnesses. Id.
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Motion To Compel
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In the present motion to compel, Feldman asks this court to not only compel the production of
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documents and answers to interrogatories, but also to sanction defendant by striking his answer and
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awarding $15,000 in attorney’s fees. (#44). Feldman contends that PokerTek has completely failed to
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participate in discovery, and, as such, has destroyed any ability Feldman might have had to fairly litigate
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his claims. Id. PokerTek asks the court to deny and/or strike plaintiff’s motion, because he failed to
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meet and confer as required by the Federal Rules of Civil Procedure. (#45 and #46). Feldman contends
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that he did not need to meet and confer because PokerTek was previously ordered by this court to
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produce the documents in question, and that after requesting the documents on several occasions, he
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had no choice but to file the present motion. (#48).
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A.
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Feldman filed three separate sets of requests for production of documents relating to PokerTek’s
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business in Mexico. As Feldman was not satisfied with defendant’s production of certain documents
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and failure to produce others, he sent a letter to PokerTek addressing his concerns. (#30 Exhibit 1).
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Without meeting and conferring with defendant about these issues, plaintiff filed a motion to compel
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and for sanctions. (#30). Notwithstanding that Feldman did not properly meet and confer with
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PokerTek, the court addressed the motion on its merits because “defendant ha[d] utterly failed to meet
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its discovery obligations with regard to plaintiff’s First, Second, and Third Requests for Production.”
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(#38). The court held that PokerTek’s responses to plaintiff’s first set of interrogatories consisted
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“almost entirely of boilerplate objections,” and, that with regards to the rest, PokerTek either refused
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to produce information or referred “evasively” to previously produced documents without indicating
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which of the documents were responsive. Id. Therefore, the court ordered defendant to supplement its
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responses without objection. Id. Further, the court held that since defendant failed to even respond to
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plaintiff’s second and third requests, it waived any objections. Id. Thus, the court ordered responses
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to all requests, without objections, by December 8, 2010. Id.
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Background
Feldman now contends that “[a]lthough [d]efendant did respond without objection,” the
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responses were, “at best,” “passive aggressive.” (#44). According to plaintiff, once counsel began
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going through the documents that were produced, it became apparent that they contained “absolutely
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nothing substantively documenting the scope of [defendant’s] revenue in Mexico.” Id. Rather, the
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documents consisted of “antiquated contracts pre-dating the events at issue” and “extensive shipping
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information that [did] not include what revenues such shipping to Mexico may have generated.” Id.
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On March 8, 2011, during the parties’ pre-trial conference, plaintiff raised the issue he had with the lack
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of production of documents relating to the revenues in Mexico, and provided defendant with a letter
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(#44 Exhibit 1) identifying specific requests that required supplementation. Id. Plaintiff requested the
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information no later than March 22, 2011. Id. The requests mirrored those that were addressed in the
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court’s order (#38), with one exception: plaintiff sought an answer to interrogatory No. 22, which asked
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for defendant to “detail the revenue to be generated by the placement of a single PokerTek gaming table
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in a Mexican gaming establishment...” (#44 Exhibit 1).
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Plaintiff asserts that “in order to facilitate resolution of these discovery issues, the parties
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stipulated that the deadline for filing of the parties’ joint pretrial order...should be extended to March
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31, 2011, and it was so ordered.” (#44). However, the March 22, 2011, deadline given in plaintiff’s
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letter (#44 Exhibit 1) passed without defendant providing any supplemental documents. Id. Therefore,
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the parties filed another stipulation extending the pre-trial order date until April 30, 2011. Id. On
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March 30, 2011, plaintiff received a spreadsheet purporting to demonstrate revenues from Mexico, yet,
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as plaintiff asserts, the spreadsheet was not accompanied by any supporting documentation. Id.
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Thereafter, on April 15, 2011, plaintiff sent a second letter to defendant requesting that it provide a
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“complete and thorough disclosure” by April 22, 2011. (#44 Exhibit 2)(emphasis supplied). That
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deadline passed without defendant providing any further supplements to plaintiff, despite telephone
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conversations in which defense counsel stated that he was awaiting responsive disclosures from his
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client and should have them in a day or so. (#44). On April 27, 2011, defendant produced documents
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which contained bank records for PokerTek Canada Inc.; no other formal discovery was produced. Id.
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Thus, plaintiff filed the present motion to compel and for sanctions.
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B.
Argument
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In plaintiff’s motion to compel (#44), he contends that the responses provided by defendant
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pursuant to the court’s order (#38) were evasive and incomplete, and should therefore be treated as a
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“failure to disclose, answer, or respond” under Rule 37(a)(4)(a) (“an evasive or incomplete disclosure,
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answer, or response must be treated as a failure to disclose, answer, or respond.”). Specifically, he
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contends that the defendant merely “papered the file” with its purported disclosures in an attempt to
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“look compliant,” while actually “withholding information from [p]laintiff.” (#47). As an example of
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the non-responsive nature of the documents produced, plaintiff provided the court with a list of the
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documents he received in response to his request for production No.3 (first set). Id. The request sought
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“any and all documents referencing PokerTek’s distribution of PokerTek products in Mexico, to include
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but not limited to any effective or draft contracts for distribution or sale of PokerTek products for
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placement in Mexico.” (#44 Exhibit 1).
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In response to this request, defendant produced hundreds of pages of irrelevant information,
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including “tech data”- dated Dec. 1, 2009, distribution addendums for 2007– prior to PokerTek entering
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Mexico – a 2003 account statement for Frank Hayes, shipping schedules for European distributions, a
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2005 layout for a poker room in Russia, a truck bill of landing and shipping forms, an account balance
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sheet for March 31, 2010 for Royal Yak, Mexico City, an undated draft of corporate bylaws, the last
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page of a draft of corporate bylaws, an undated economic impact statement, a 2007 bi-lateral
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confidentiality agreement with EWEBB in Australia, an undated HUC accounting, several “Heads-Up”
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documents, an International Distribution Strategy Update, a memorandum concerning switching to new
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business model, an April 2009 incorporation document, and an undated draft Zebra card printer
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contingency plan for various Televisa sites in Mexico. Id.
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Plaintiff contends that this is just one example of the defendant’s bad faith attempts to mislead
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the court by pretending to be complying with its order. Id. Defendant produced nearly 14,000 pages
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of documents, but as plaintiff asserts, based upon the nature of the disclosures above, they are “clearly
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immaterial disclosures” that amount to a failure to disclose. Id. See Fed. R. Civ. P. 37(a)(4)(a).
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Therefore, he asks this court to compel the production of the requested documents and to impose
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sanctions in the form of striking the defendant’s answer and awarding $15,000 in attorney’s fees. (#44).
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Defendant contests this request, and asserts that inasmuch as it has been engaging in dialog with
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plaintiff regarding the discovery issues, the requested sanctions are too severe. (#45). Further, it asserts
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that it provided the requested information to plaintiff, but that he is not satisfied with it because it
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demonstrates that the company actually lost money when it entered into Mexico. Id. Additionally,
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defendant argues that the motion should be stricken or denied because plaintiff failed to meet and confer
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before filing the motion to compel as required. Id. Specifically, it contends that since interrogatory No.
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22 was not addressed in the court’s order (#38), plaintiff was required to meet and confer prior to filing
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the present motion. Id. As this is plaintiff’s second time failing to meet and confer, defendant asserts
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that the court should strike the motion and order the parties to meet and confer. Id. In the alternative,
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defendant contends that the appropriate sanction would be for the court to stay the proceedings pending
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the resolution of the discovery dispute. Id. Plaintiff argues that a stay of the proceedings would cause
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further prejudice, unfairly prolong the litigation, and force him to incur unnecessary costs.
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C.
Discussion
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After reviewing the submitted documentation, the court concludes that defendant’s documents
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purporting to be responsive to plaintiff’s requests are unresponsive and irrelevant, and amount to a
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“failure to disclose, answer, or respond” under Rule 37(a)(4)(a). Therefore, the defendant shall comply
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with the court’s previous order (#38) by providing documents that are responsive to plaintiff’s requests
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within ten days from the date of this order. The court is bewildered by defendant’s production of
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material that is utterly useless and that only serves to force plaintiff’s counsel to spend needless hours
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attempting to weed through them. The court will not tolerate future such gamesmanship, and will not
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hesitate to recommend that default judgment be entered against defendant if such conduct continues.
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Additionally, the court will require defendant to provide a responsive answer to interrogatory No. 22.
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The court recognizes that the interrogatory was not covered in the court’s previous order (#38) and that
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a meet and confer was required. However, the court finds that plaintiff’s failure to meet and confer with
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regards to a single interrogatory is not grounds for striking the motion to compel, as it is clear from
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defendant’s behavioral pattern thus far, that it is highly doubtful that a meet and confer would have led
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to a resolution of the issue.
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With regard to sanctions, the court at this time concludes that striking its answer is too severe
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a sanction. However, in light of the defendant’s disregard for court orders and continuous failure to
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meaningfully participate in discovery, the court finds that significant monetary sanctions are in order.
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Pursuant to Rule 37(c)(1)(A), “[i]f a party fails to provide information...the court...may order payment
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of the reasonable expenses, including attorney’s fees, caused by the failure” of a party to comply with
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a discovery order. Here, plaintiff seeks a $15,000 monetary sanction, but does not provide the court
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with a justification for the requested amount. Therefore, plaintiff’s counsel shall provide the court with
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an affidavit demonstrating the “reasonable expenses, including attorney’s fees,” that were incurred due
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to defendant’s failure to disclose the requested documents. Fed. R. Civ. P. 37(c)(1)(A).
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Accordingly, and for good cause shown,
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IT IS ORDERED that Feldman’s Motion to Compel and For Sanctions (#44) is granted in part,
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and denied in part, as discussed above. Plaintiff shall provide the court with an affidavit of counsel
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justifying the monetary sanctions sought within ten days of the date of this order. Further, defendant
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shall provide plaintiff with adequate responses/documents relating to plaintiff’s interrogatory No. 22
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and his first, second, and third requests for production of documents within ten days of the date of this
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order.
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IT IS FURTHER ORDERED that defendant PokerTek, Inc.’s Counter-Motion to Strike (#46)
is denied.
DATED this 29th day of September, 2011.
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LAWRENCE R. LEAVITT
UNITED STATES MAGISTRATE JUDGE
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