YOUNES et al v. 7-ELEVEN, INC. et al

Filing 485

OPINION FILED. Signed by Magistrate Judge Joel Schneider on 12/11/15. (js)

[C.A. No. 13-3500 (RMB/JS), Doc. No. 163]
[C.A. No. 13-3715 (MAS/JS), Doc. No. 231]
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
CAMDEN VICINAGE
SAM YOUNES, et al.,
Plaintiffs,
Civil No. 13-3500 (RMB/JS)
v.
7-ELEVEN, INC.,
Defendant.

7-ELEVEN,
Plaintiff,
Civil No. 13-3715 (MAS/JS)
v.
KARAMJEET SODHI, et al.,
Defendants.

NEIL NAIK, et al.,
Plaintiffs,
Civil No. 13-4578 (RMB/JS)
v.
7-ELEVEN, INC.,
Defendant.

OPINION
Nothing would please the Court more than if it did not have
to decide the present motion for sanctions filed by plaintiffs
1

Sam Younes and Tamar Atalla. The resources of the parties and
Court can be better spent than having to devote enormous chunks
of time on a matter not directly relevant to the merits of the
case. Nevertheless, the detailed discussion herein is necessary
to justify the sanctions to be imposed and to deter similar
objectionable conduct.
This matter is before the Court on the Younes plaintiffs’
Motion for Sanctions. 1 The motion has been extensively briefed,
argued

and

supplemented.

Plaintiffs

are

7-Eleven

franchisees.

Their “theory of the case” is that 7-Eleven wrongfully targeted
certain South Jersey franchises for termination, including their
stores, in violation of their franchise agreements. Plaintiffs
contend that 7-Eleven referred to this effort by various names
but all with the same connotation, e.g., Operation Philadelphia,
Project P, Project Philly, Philly Project, Project Philadelphia,
Philadelphia Project, Operation Take Back, etc. 2

1

These three cases all involve 7-Eleven franchisees and have
been consolidated for discovery and case management purposes.
This motion was filed in Younes (C.A. No. 13-3500), and was
later joined in by the Sodhi franchisees (C.A. 13-3715). The
Naik franchisees (C.A. 13-4578) did not join in plaintiffs’
motion. The Younes plaintiffs (Younes and Atalla) have taken the
laboring oar on the discovery squabbles discussed herein. For
ease of reference when the Court refers to plaintiffs it will be
collectively referring to Younes and Atalla. All references to
docket numbers (“Doc. No.”) shall refer to C.A. No. 13-3500.
2 The Court will use the term “Project P” which shall include all
related references unless otherwise noted.
2

Although the parties squabbled over many discovery issues,
the

focus

primarily

involved

plaintiffs’

contention

that

7-

Eleven obstructed discovery and violated Court Orders regarding
Project P. 7-Eleven’s description of Project P has morphed over
the years. 3 The

Court understands 7-Eleven now

contends that

Project P was an effort to staff stores where franchisees were
going to be terminated because they committed fraud. Plaintiffs
contend Project P was a nefarious effort to terminate weak South
Jersey franchises and owners who complained about the company,
to squelch “vocal” franchisees, and to “churn” franchises to
earn more fees. 4 Plaintiffs’ motion seeks to strike 7-Eleven’s
answer and an award of fees and costs.
For

the

reasons

to

be

discussed,

plaintiffs’

motion

is

GRANTED in part and DENIED in part. The Court finds that 7Eleven violated Fed. R. Civ. P. 26(g) and 37(b)(2), that its
conduct was not substantially justified, and no circumstances
exist to make an award of expenses unjust. As a result, 7-Eleven
will be sanctioned for its discovery transgressions. However,
the Court will not strike 7-Eleven’s answer. Instead, the Court
admonishes

7-Eleven

and

Orders

3

it

to

pay

the

reasonable

At various times 7-Eleven used the terms “accountability
project,” “accountability effort” and “staffing initiative.”
These terms were used before plaintiffs and the Court learned
that 7-Eleven’s documents and ESI repeatedly used the term
Project P and its various derivatives.
4 Some franchisees also complain 7-Eleven discriminated against
certain ethnic groups.
3

expenses, including attorney fees, plaintiffs incurred to obtain
the discovery responsive to the Court’s October 16, 2014 Order.
Background
A

detailed

background

must

unfortunately

be

provided

to

give the true flavor of what happened here. The case has been
plagued

by

discovery

disputes

largely

concerning

Project

P.

Having refereed the parties’ numerous disputes the Court is left
with the inescapable conclusion that much of the acrimony would
not have occurred had 7-Eleven simply done what it was supposed
to do. 5
The Court starts at the beginning. Plaintiffs Younes and
Atalla own and operate four (4) 7-Eleven stores or franchises in
South

Jersey.

They

generally

alleged

in

their

state

court

complaint removed to this Court on June 6, 2013, that 7-Eleven
breached

their

franchise

agreements.

Plaintiffs

filed

their

5

The Court summarized the history of the case when it denied 7Eleven’s motion for an extension of time to complete discovery:
After exhaustive efforts the fact discovery phase of
the case is finally coming to a close. What is
apparent from the tortured discovery phase of the case
is that the case is a prime example of how litigation
should not be conducted. The parties have been unable
to agree on simple issues, and the Court has been
plagued by incessant discovery disputes, many of which
have been trivial. If the parties had timely and
appropriately responded to each other’s discovery
requests, fact discovery would have been completed
long ago.
Younes, et al. v. 7-Eleven, Inc., C.A. 13-3500 (RMB/JS), 2015 WL
4496621, at *1 (D.N.J. July 22, 2015).
4

complaint because they believed 7-Eleven intended to terminate
their franchises or make their business relationship so hostile
as to force them to give back their franchises or frustrate
their ability to succeed.
Importantly,

plaintiffs’

complaint

specifically

pleaded

that 7-Eleven schemed to illegally terminate their franchises.
Plaintiffs alleged as follows:
17. The convenience store business in Southern
New Jersey has become dominated by a competitor of 7
Eleven. Defendant [7-Eleven] has failed to change
its stores, products, and marketing despite the ever
changing market and the expectations of consumers.
Due to the competition, and the lack of a response
by 7-Eleven to the competition, Plaintiffs' gross
sales
and
net
profits
have
been
down,
and
Defendant's gross sales and net profits are also
believed to be down.
18. Defendant has
downturn in sales.

blamed

Plaintiffs

for this

19. Plaintiffs believe and therefore aver that
Defendant has devised a plan to terminate the
Franchise Agreement with each of the Plaintiffs. The
plan is twofold: (1) to make the business conditions
so hostile that Plaintiffs will each want to
terminate the franchise agreement; and (2) to create
artificial and false evidence that Plaintiffs have
violated the Franchise Agreement as a way to
intimidate the Plaintiffs into surrendering the
franchise.
20. It is believed and therefore averred that
Defendant has used intimidation tactics or unfair
practices to terminate a number of other franchises
in the South New Jersey region.
21. At least two of these former Franchisees
were told by Defendant's agents that they were among
the
first
to
have
their
Franchise
Agreement
5

terminated, and that Defendant was going to "take
back" each store and terminate each and every
Franchise Agreement in South Jersey.
22. A terminated franchise is a windfall to the
Defendant.
23. When a franchise is terminated and then
sold to a new franchisee, it is believed and
therefore averred that Defendant also presents a
different Store Franchise Agreement with terms that
are more favorable to the Defendant; Defendant gets
paid for the franchise again, and gets a new
Franchise Agreement with more favorable terms.
Complaint

&&

17-23.

7-Eleven

contends

it

never

sought

or

their

complaint,

intended to terminate plaintiffs’ franchises.
In

addition

to

the

allegations

in

plaintiffs made it crystal clear at numerous conferences they
were alleging that 7-Eleven targeted them and other franchisees
for termination for non-legitimate business reasons such as the
fact they had low volume and aging stores, they were vocal in
the Franchise Owner’s Association, and they were critical of 7Eleven’s

policies

violated

their

and

practices.

franchise

This,

agreements

and

plaintiffs
breached

contend,
7-Eleven’s

implied covenant of good faith and fair dealing. 6 The fact that

6

See Carlo C. Gelardi Corp. v. Miller Brewing Co., 502 F. Supp.
637, 653 (D.N.J. 1980)(“A franchisor is not permitted to
accomplish a termination by indirect means that it would not be
permitted to accomplish by direct means); Dunkin’ Donuts Inc. v.
Dough Boy Management, Inc., C.A. No. 02-243 (JLL), 2006 WL
20521, at *11 (D.N.J. Jan. 3, 2006)(“It is without doubt that if
a franchisor manipulates the system causing a franchisee’s
breach so that a Franchise Agreement is terminated, the
6

this has been plaintiffs’ focus and theory of the case cannot be
reasonably disputed. 7 Indeed, 7-Eleven knew this was the case
when

the parties

served

their

July

16,

2013

Joint

Discovery

Plan. Therein the parties jointly listed the following subject
area to be covered in discovery:
(13) Whether there is any plan to terminate the
Plaintiffs’ Franchise Agreements that are inconsistent
with the terms of the Franchise Agreements;
Plaintiffs

also

wrote

that

discovery

would

be

taken

on

the

following topics:
(29) Whether Defendant has devised a plan to terminate
the Franchise Agreement with each of the Plaintiffs by
making the business conditions hostile that Plaintiffs
have no choice but to terminate the franchise
agreement;
(30)
Whether Defendant is using intimidation tactics
or unfair practices as the means to terminate
franchises in the South New Jersey region.
Plaintiffs’ interrogatories 4 and 5 served in November 2013
sought discovery relevant to the claims in paragraphs 17-23 of
their complaint. These interrogatories with 7-Eleven’s January
15, 2014 responses follow:
Interrogatory No. 4
Identify any and all policies, plans or internal
communications
relating
to
your
efforts
and/or
intentions to terminate the Franchise Agreements with
the Plaintiffs.
termination occurs without good cause in violation of NJFPA,
N.J.S.A. '56:10-5.”
7 The Naik and Sodhi franchisees have been in lockstep with
plaintiffs regarding these allegations.
7

Response to Interrogatory No. 4
7-Eleven made no efforts and had no intention to
terminate its Franchise Agreements with Plaintiffs,
except as stated in the Notices of Material Breach
which were issued and served, and which are produced
herewith.
Interrogatory No. 5
Identify any and all policies, plans or internal
communications
relating
to
your
efforts
and/or
intentions to terminate other Franchise Agreements in
South Jersey.
Response to Interrogatory No.5
In addition to the General Objections, Defendant
objects to this Interrogatory on the grounds that it
is overly broad, unduly burdensome, and calls for
information that (i) is neither relevant to the
subject matter of the pending litigation nor likely to
lead to the discovery of admissible evidence and (ii)
constitutes
confidential,
proprietary
business
information belonging to 7-Eleven. Without waiving the
General
Objections
or
the
foregoing
specific
objections, Defendant responds that its policies
regarding the termination of franchises are set forth
in the Franchise Agreements, copies of which are
produced herewith.
See

7-Eleven’s

January

15,

2014

Responses

to

Plaintiffs’

Interrogatories [Doc. No. 163-3].
Starting in the summer/fall of 2014 plaintiffs bombarded
the Court with complaints about 7-Eleven’s discovery responses.
In

particular,

plaintiffs’

focused

on

7-Eleven’s

failure

to

produce documents regarding their plan or project to terminate
stores

in

conferences

South
were

Jersey.
held

to

Numerous
address
8

telephone

plaintiffs’

and

in-person

complaints

that

relevant documents and electronically stored information (“ESI”)
was not produced. Early on plaintiffs insisted that 7-Eleven
formed a project called “Operation Philadelphia” to terminate
franchises in its “Penn/Jersey Zone” which encompasses the South
Jersey

area

where

plaintiffs’

Operation

Philadelphia

Plaintiffs

produced

employees
existed.

attesting
7-Eleven

was

stores

not

pulled

affidavits
to

the

repeatedly

fact

from
that

denied

are

located.

out

of

two

The

“whole

former

Operation
knowledge

term

cloth.”
7-Eleven

Philadelphia
of

Operation

Philadelphia.
While their discovery disputes continued and intensified,
relevant

events

occurred

to

bring

the

Operation

Philadelphia

dispute into sharper focus. On August 20, 2014, counsel met and
conferred in-person regarding discovery disputes, on September
5, 2014 plaintiff served amended Rule 30(b)(6) topics of inquiry
which specifically included the terms Operation Philadelphia and
Project Philadelphia, and on September 8, 2014, plaintiff served
7-Eleven with John Spavlik’s affidavit. 8 Spavlik worked as 7Eleven’s Field Consultant in the South Jersey market. Affidavit
& 2. Spavlik attested to the fact that 7-Eleven created a list
of franchisees that were targeted for termination and the list
was referred to as Operation Philadelphia. Spavlik also stated

8

See September 8, 2015 Affidavit of John Spavlik [Doc. No. 1531, Exhibit D].
9

the list was known to 7-Eleven and its attorneys. Id. && 8-10.9
Also on September 8, 2014, plaintiffs demanded the production of
all documents related to Operation Philadelphia.
It

was

only

after

plaintiffs

doggedly

pursued

Operation

Philadelphia or Project P discovery that 7-Eleven’s discovery
position slowly evolved. After numerous discovery conferences 7Eleven grudgingly acknowledged it had a plan to terminate South
Jersey franchises. We now know that starting at least as early
as the 2011/2012 time period, 7-Eleven internally referred to
the plan as Project P or Project Philly. 7-Eleven now describes
Project P as an effort to staff stores where franchises were
going to be terminated because of alleged fraud. Plaintiffs have
a different slant. Plaintiffs claim Project P was an illegal
effort to terminate franchises consistent with their theory of
the case.
Given the content of the documents and ESI later produced
by 7-Eleven, there is no doubt that 7-Eleven viewed Project P as
an

important

and

resource

intensive

project.

Project

P

was

projected to be a multi-million dollar cross-functional project

9

Later, plaintiffs produced the October 24, 2014 affidavit of
Ian Shehaiber. [Doc. No. 163-15]. Shehaiber worked as 7-Eleven’s
Senior Field Consultant, Market Manager. Affidavit & 1. He
attested to the fact that in July 2012, 7-Eleven put him in
charge of a special project called “Operation Take Back”,
“Project P” or the “Philadelphia Project.” Id. & 12. The purpose
of the special project was to take back stores. Id. & 13.
10

that involved multiple employees of the company, including high
level
and

executive,

legal

operations,

personnel.

human

Indeed,

resource,

Project

P

was

asset

protection

designated

as

a

“priority strategic project,” numerous personnel were budgeted
to devote substantial time to the project, and arrangements were
in the works to hire and train scores of new store managers and
assistant managers and hundreds of sales associates. Plaintiffs
represent that at one time 7-Eleven estimated it would “take
back” over 100 stores. Further, while the Court is not going so
far

as

to

say

that

7-Eleven’s

outside

defense

counsel

spearheaded Project P, there is no question from the produced
documents and emails that they were involved in the planning,
implementation and running of the project. The Court has already
found that 7-Eleven’s outside counsel played “prominent roles”
in Project P. See August 19, 2015 Order (denying plaintiffs’
motion to depose outside counsel). [Doc. No. 431].
The

first

production

of

Project

P

documents

finally

occurred on September 24, 2014, when 7-Eleven produced two (2)
Project P spreadsheets (Deposition Exhibits P-26 and 33b)). 10 On
October

13,

2014,

the

day

before

10

yet

another

conference

to

7-Eleven’s counsel stated that after it received Spavlik’s
affidavit on September 8, 2014 and it learned what plaintiffs
meant by the term Operation Philadelphia, it investigated,
uncovered and produced two documents mentioning “Project Philly”
or “Philly Project.” See October 10, 2014 Declaration (“Decl.”)
of S. Wiggins &11. [Doc. No. 130-2].
11

address Project P disputes, 7-Eleven supplemented its discovery
responses to finally provide a tidbit of responsive information.
See

October

Without

13,

2014

specifically

Response
referring

[Doc.
to

No.

153-1,

Operation

Exhibit

Philadelphia

F].
or

Project P, 7-Eleven’s stated that from July 31, 2012 to October
31, 2012, it terminated ten (10) franchisees operating eighteen
(18) stores. 7-Eleven also indicated that eleven stores operated
by six discrete individuals were surrendered. 7-Eleven objected
to producing additional information on the ground, inter alia,
of relevancy, and because the discovery requested “confidential,
proprietary and/or privileged information.”

Id.

Thus, up until the eve of the October 14, 2014 discovery
conference,

the

following

occurred:

(1)

7-Eleven

did

not

identify any effort to terminate franchises in its January 2014
responses

to

interrogatories

4

and

5;

(2)

7-Eleven

did

not

identify Project P in its January 2014 response to interrogatory
5

even

project

though
involved

the

project

substantial

was

directly

company

responsive

resources

and

and

the

personnel,

including 7-Eleven’s trial counsel; (3) 7-Eleven delayed eight
(8) months producing responsive Project P discovery that was
readily available in January 2014; (4) after eight (8) months of
repeated discovery squabbles regarding Project P, 7-Eleven only
produced

two

responsive

documents;

12

and

(5)

7-Eleven

did

not

provide

any

meaningful

Project

P

answers

to

discovery

until

almost a year after plaintiffs’ interrogatories were served.
At the October 14, 2014 conference the Court was thoroughly
frustrated

by

7-Eleven’s

obfuscation.

As

a

result

the

Court

issued an oral Order that it confirmed in its October 16, 2014
Order [Doc. No. 132]:
By October 28, 2014, 7-Eleven shall produce the
"Project Philly" information and documents Ordered to
be produced at the October 14, 2014 conference. This
includes the identities and positions of: the persons
who established the project, the employees who ran the
project, and all persons with material knowledge
regarding the project, and in particular, the Younes,
Sodhi, and Naik franchisees. 7-Eleven shall produce
all summary reports regarding Project Philly that
address or concern the information and preparation of
the project, the implementation of the project, and
the results of the project, and all documents
specifically mentioning or referring to the Younes,
Sodhi and Naik franchisees.
On November 11, 2014, 7-Eleven served its response to the
October 16, 2014 Order. The response incorporated by reference
its October 13, 2014 interrogatory response and supplemented the
answer to interrogatory 5 with some new information regarding
Project
Discovery

P.

See

7-Eleven’s

Directive

Set

November

Forth

in

11,

the

2014

Order

“Responses
of

Court

to

Dated

October 16, 2014.” [Doc. No. 153-1, Exhibit G]. In response to
the Court’s Order directing 7-Eleven to identify, inter alia,
all

persons

with

material

knowledge

13

regarding

Project

P,

7-

Eleven only identified five (5) individuals. 11 Remarkably, 7Eleven represented that the two versions of the Philly Project
Staffing Timeline (P-26 and 33b) that were already produced were
the only summary reports regarding the preparation and formation
of Project P, the implementation of the project, and the results
of the project. As it turned out this representation was false.
Further,

7-Eleven

ignored

the

Court’s

Order

to

produce

all

documents specifically mentioning or referring to plaintiffs.
After

7-Eleven’s

plaintiffs

suspected

November
that

11,

its

2014

response

production

was

was

served

incomplete.

Subsequent developments demonstrated that plaintiffs’ suspicions
were correct. On December 16, 2014, 7-Eleven produced Project P
documents that were on Fareed Siddiqui’s laptop since June 2012.
Siddiqui was a 7-Eleven Zone Leader and took over the running of
Project P from Greg Franks in the May-June 2012 time period.
Moreover, as discussed in greater detail infra, after December
16, 2014, 7-Eleven produced in dribs and drabs plainly relevant
documents the Court Ordered to be produced by October 28, 2014.
Further, because of plaintiffs’ persistence they learned that 7Eleven did not identify all persons with “material knowledge”
regarding Project P.
11

These are Greg Franks, former Penn/Jersey Zone Leader and
current V.P. Franchise System, Bill Engen, former Sr. V.P. of
Eastern Operations, Eric Jonas, formerly in H.R. Department,
Mark Stinde, V.P. of Asset Protection, and Jim Passarella,
Director of Asset Protection, East Operations.
14

Recognizing the deficiencies in 7-Eleven’s response to the
October 16, 2014 Order, on December 31, 2014 [Doc. No. 165], the
Court set another deadline of January 8, 2015 for 7-Eleven to
comply with its Order. (“It is further ORDERED that by no later
than January 8, 2015, [7-Eleven] shall complete its production
of all documents responsive to paragraph 4 of the October 16,
2014

Amended

Scheduling

Order….

All

references

to

‘Project

Philly’ shall also include ‘Philly Project’ and ‘Project P’.”).
The Court held another conference with the parties on January
12, 2015. Still not getting a “straight answer” from 7-Eleven,
and hearing from 7-Eleven that it acknowledged its Project P
document search was incomplete (see January 12, 2015 Transcript
(“Tr.”) 18:13 to 19:8), the Court directed plaintiffs to take a
Fed. R. Civ. P. 30(b)(6) deposition regarding responsive Project
P documents. Id. 22:4-14. In an effort to block the deposition
7-Eleven argued it would be unduly burdensome to prepare a Rule
30(b)(6) witness and it could not “reasonably produce or prepare
a responsive witness.” See Defense Counsel’s January 20, 2015
Letter

at

5.

[Doc.

No.

190].

7-Eleven’s

objection

were

overruled. [Doc. No. 194]. Insofar as the Court knows the Rule
30(b)(6) deposition went off without a hitch despite counsel’s
“impossibility” defense.
At the January 21, 2015 conference the Court was still not
satisfied with 7-Eleven’s production. Thus, 7-Eleven was Ordered
15

to produce all Project P documents and ESI mentioning, referring
to, or concerning the franchisee parties. [Doc. No. 195, & 2].
(“To the extent not already done, 7-Eleven shall immediately
produce all Project P documents, including ESI, that mention,
refer

to,

or

concern”

plaintiffs.).

Regrettably,

the

Court

stayed enforcement of the Order because of 7-Eleven’s protests.
Nevertheless, the Court expressed the fact it was “perplexed” as
to

7-Eleven’s

obstinacy

since

the

subject

documents

were

unquestionably relevant to the case. January 28, 2015 Order at
2-3.

[Doc.

No.

210].

In

addition,

the

same

documents

were

Ordered to be produced on October 16, 2014. 12
Unfortunately,

7-Eleven’s

obfuscation

continued.

Remarkably, 7-Eleven acknowledged at the March 13, 2014 oral
argument

on

another

discovery

motion

that

it

still

had

not

complied with the October 16, 2014 Order requiring it to produce
Project P documents by October 28, 2014, and it was not prepared
to say when it would be compliant. Tr. 93:20 to 94; 95:6-9.
Having concluded that 7-Eleven would continue to frustrate and

12

The Court also expressed its disagreement with 7-Eleven’s
absurd argument that the January 28, 2015 Order required it to
spend $4 million to “search the emails of all of its multiple
thousands of employees.” See Jan. 26, 2015 Letter Brief at 1
[Doc. No. 204]. The January 28, 2015 Order pointed out the selfevident requirement that 7-Eleven “need only search for
documents where they reasonably might be expected to be
located.” January 28, 2015 Order at 2-3. This was an easy task
since the relevant individuals were identified in 7-Eleven’s
emails. Id. at 3.
16

delay discovery without specific directions that should not have
been

necessary,

the

Court’s

March

11,

2015

Order

listed

the

specific Project P documents 7-Eleven had to produce by April 1,
2015. [Doc. No. 258]. Make no mistake about it, however, it
should

not

have

been

necessary

to

“spoon-feed”

7-Eleven

regarding the relevant and responsive Project P documents to
produce. Further, on March 18, 2015, hoping that it would spur
7-Eleven to finally produce all responsive Project P discovery,
the Court granted plaintiffs’ request and Ordered 7-Eleven to
produce the metadata for the few Project P documents produced
thus far. [Doc. No. 265]. The Court assumes that after the March
11, 2015 Order 7-Eleven finally produced responsive Project P
documents

since

the

parties’

Project

P

disputes

largely

dissipated.(Either that or a strategy to “wear down” plaintiffs
was successful.). Notably, in connection with the present motion
plaintiffs served a large notebook of representative Project P
documents that 7-Eleven eventually produced.
Plaintiffs’

motion

asserts

various

grounds

for

why

sanctions are appropriate. This Opinion will address only the
following arguments that have not been resolved by other Orders:
•

7-Eleven has engaged in “stonewalling”, “discovery
abuses, obfuscation, and flat out misrepresentation”
and a “gross failure to provide full and complete
discovery.”

•

7-Eleven violated the October 16, 2014 Order.

17

•

7-Eleven produced responsive documents late.

•

7-Eleven exhibited a general lack of good faith to
respond to discovery and disclose.
Due to 7-Eleven’s alleged vexatious conduct, plaintiffs ask

for

sanctions

pursuant

to

the

Court’s

inherent

power

and

28

U.S.C. '1927. Plaintiffs also seek sanctions pursuant to Fed. R.
Civ. P. 37(b)(2) because of 7-Eleven’s failure to comply with
the Court’s October 16, 2014 Order. Plaintiffs ask the Court to
strike

7-Eleven’s

opposition
October

answer

7-Eleven

16,

2014

and

generally
Order.

request
argues

7-Eleven

monetary
it

did

insists

sanctions.

not
that

violate
it

made

In
the
an

“extensive, expeditious and good faith effort to comply” with
the Order. Brief in Opposition (“Opp.”) at 3 [Doc. No. 227]. It
also

argues

that

if

it

was

non-compliant

its

conduct

was

“innocent and inadvertent” and the result of “honest confusion”
regarding what plaintiffs wanted. Id. at 1-3.
Discussion
The Court’s sanctions analysis is divided into two time
periods. The Court will first address whether sanctions should
be imposed because of 7-Eleven’s actions that occurred before
the entry of the October 16, 2014 Order. In this regard the
Court will focus on plaintiffs’ interrogatories 4 and 5 served
in

November

termination

2013

which

efforts.

The

asked
Court

18

about
will

7-Eleven’s

next

address

franchise
7-Eleven’s

response to the October 16, 2014 Order. After these two time
periods are addressed, the Court will then decide what sanctions
are appropriate.
In summary, the Court rules that 7-Eleven’s pre-October 16,
2014 conduct violated Fed. R. Civ. P. 26(g) because its January
2014 answers to interrogatories 4 and 5 were not complete and
correct, and because it did not do an objectively reasonable
investigation to respond to the interrogatories. The Court also
finds that 7-Eleven violated the Court’s October 16, 2014 Order
without

substantial

justification,

and

that

no

circumstances

exist to make an award of expenses unjust.
1.

Should Sanctions be Awarded?
A. Pre-October 16, 2014 Conduct

As already noted, the October 16, 2014 Order was the first
time the Court specifically Ordered 7-Eleven to produce Project
P discovery. 7-Eleven argues there is no source for sanctions
for

any

of

its

conduct

that

occurred

before

the

Order

was

entered, and that sanctions are only available if it violated
the

Order. 13

7-Eleven

is

wrong.

13

A

party

cannot

serve

“[I]t is the efforts of 7-Eleven and its counsel to comply
with the Court’s October 14, 2014 oral and written Orders in the
several months since they were entered that is the appropriate
focus of inquiry.” Brief in Opp. at 2; see also id. at 17-18.
(“The threshold step necessary to justify the imposition of
sanctions” is the issuance of the October 16, 2014 Order); id.
at 45 (sanctions may not be awarded because 7-Eleven did not
violate a Court Order).
19

substantially deficient discovery responses with impunity. There
are at least three sources to impose sanctions arising out of 7Eleven’s pre-October 16, 2014 conduct: (1) 28 U.S.C. '1927, (2)
the Court’s inherent power, and (3) Rule 26(g)(3). Each of these
will be discussed.
(1)

'1927 and Inherent Power Sanctions

Section 1927 of Title 28 provides:
Any attorney or other person admitted to conduct cases
in any court of the United States or any Territory
thereof who so multiplies the proceedings in any case
unreasonably and vexatiously may be required by the
court
to
satisfy
personally
the
excess
costs,
expenses, and attorneys’ fees reasonably incurred
because of such conduct.
In order to impose sanctions pursuant to '1927 there must be a
finding that an attorney (1) multiplied proceedings, (2) in an
unreasonable and vexatious manner, (3) increasing the cost of
the proceedings, and (4) that it did so in bad faith or by
intentional misconduct. In re Schaefer Salt Recovery, Inc., 542
F.3d 90, 101 (3d Cir. 2008). “[S]anctions may not be imposed
under '1927 absent a finding that counsel’s conduct resulted from
bad faith, rather than misunderstanding, bad judgment or wellintentioned zeal.” Grider v. Keystone Health Plan Cent., Inc.,
580

F.3d

119,

142

(3d

Cir.

2009)(quotation

and

citation

omitted). Bad faith or intentional misconduct must be shown by
clear and convincing evidence. Pop Test Cortisol, LLC v. The

20

University of Chicago, C.A. No. 14-7174 (WJM), 2015 WL 5089519,
at *9 (D.N.J. 2015).
Similarly, the Court has the inherent power to sanction a
litigant for bad faith conduct. Chambers v. Nasco, Inc., 501
U.S. 32, 35 (1991). In practice, the only meaningful difference
between an award under '1927 and one under the Court’s inherent
power is that awards under '1927 may only be against attorneys or
other persons authorized to practice before the court, while an
award under the Court’s inherent power may be made against an
attorney, a party, or both. Enmon v. Prospect Capital Corp., 675
F.3d 138, 143-44 (2d Cir. 2012).
Given the high burden to impose sanctions under '1927 and
the

Court’s

inherent

power,

the

Court

declines

to

impose

sanctions under these authorities. While the Court will explain
in detail 7-Eleven’s transgressions and missteps, the evidence
does not support a finding by clear and convincing evidence that
7-Eleven acted in bad faith or with intentional misconduct.
(2)

Rule 26(g)
(a)

Did 7-Eleven Violate Rule 26(g)?

Another source of sanctions for 7-Eleven’s pre-October 16,
2014 actions is Rule 26(g). 14 Rule 26(g) provides in relevant
part:

14

Although plaintiffs did not seek sanctions under Rule 26(g)(3),
the Rule specifically authorizes the Court to raise the issue
21

(1) Signature Required; Effect of Signature. Every
disclosure under Rule 26(a)(1) or (a)(3) and every
discovery request, response, or objection must be
signed by at least one attorney of record in the
attorney's own name …. By signing, an attorney or
party certifies that to the best of the person's
knowledge, information, and belief formed after a
reasonable inquiry:
(A) with respect to a disclosure, it is complete and
correct as of the time it is made; and
(B) with respect to a discovery request, response, or
objection, it is:
(i) consistent with these rules and warranted by
existing law or by a nonfrivolous argument for
extending, modifying, or reversing existing law, or
for establishing new law;
(ii) not interposed for any improper purpose,
such as to harass, cause unnecessary delay, or
needlessly increase the cost of litigation; and
(iii) neither unreasonable nor unduly burdensome
or expensive, considering the needs of the case, prior
discovery in the case, the amount in controversy, and
the importance of the issues at stake in the action.
. . .
(3) Sanction for Improper Certification. If a
certification violates this rule without substantial
justification, the court, on motion or on its own,
must impose an appropriate sanction on the signer, the
party on whose behalf the signer was acting, or both.
The sanction may include an order to pay the
reasonable expenses, including attorney's fees, caused
by the violation.
Rule 26(g) requires all attorneys to engage in pretrial
discovery in a responsible manner consistent with the spirit and
sua sponte. (“If a certification violates this rule without
substantial justification, the Court, on motion or on its own,
must impose an appropriate sanction[.]”).
22

purposes of liberal discovery. Kosher Sports, Inc. v. Queens
Ballpark Co., LLC, No. 10-cv-2618 (JBW), 2011 WL 3471508, at *7
(E.D.N.Y. Aug. 5, 2011)(quoting Fed. R. Civ. P. 26(g) Advisory
Committee

Note

to

1983

Amendment)(hereinafter

“1983

Note”).

Pursuant to the Rule an attorney’s signature certifies that any
disclosures were complete and accurate at the time they were
made and that a reasonable inquiry was made. Singer v. Covista,
Inc., C.A. No. 10-6147 (JLL), 2013 WL 1314593, at *9 (D.N.J.
March 28, 2013). An objective standard is used to determine if a
certification is reasonable. St. Paul Reinsurance Company, Ltd.
v. Commercial Financial Corp., 198 F.R.D. 508, 516 (N.D. Iowa
2000)(“The

standard

objective.”).

for

Unless

the

imposing

Rule

offending

26(g)

conduct

sanctions

is

harmless,

is
a

violation of Rule 26(g) without substantial justification must
result in the imposition of sanctions. Chambers, 501 U.S. at 51.
Substantial

justification

exists

where

there

is

a

genuine

dispute or if reasonable people could differ. Heller v. City of
Dallas, 303 F.R.D. 466, 477 (N.D. Tx. 2014).
As to what Rule 26(g) sanction to impose, this is left to
the

Court’s

sanction

discretion.

be

Rule

Sanctions

encouraged

are
at

Rule

“appropriate.”

Nevertheless,

Singer,

The

*9.

26(g)

The

Chambers,

is
in

merely

cast
order

sanction
23

may

in
to
be

provides
501

the

at

51.

U.S.

mandatory
curb

that

terms.

discovery

imposed

Id.

abuses.

against

the

certifying

attorney,

the

client,

or

both.

Markey

v.

Lapolla

Industries, Inc., No. CV 12-4622 (JS)(AKT), 2015 WL 5027522, at
*18 (E.D.N.Y. Aug. 25, 2015).
Rule 26(g) unquestionably applies to 7-Eleven’s responses
to interrogatories and document requests. “The term ‘response’
[in Rule 26(g)(1)] includes answers to interrogatories and to
requests to admit as well as responses to production requests.”
See 1983

Note;

see

also

1993

Note

(“[T]hese

rules

establish

sanctions for violation of the rules regarding disclosures and
discovery

matters.”).

In

addition,

Rule

26(g)

by

its

terms

focuses

on

7-Eleven’s

applies to objections to discovery.
The

Court’s

Rule

26(g)

discussion

January 15, 2014 responses to interrogatories 4 and 5. Although
the interrogatories did not specifically refer to Project P, the
inquiries were plainly directed to finding out about 7-Eleven’s
franchise

termination

efforts.

Interrogatory

4

asks

about

efforts or intentions to terminate plaintiffs’ franchises and
documents regarding this topic. 7-Eleven’s response states that
it made no effort and had no intention to terminate plaintiffs’
franchises
Material

Breach

plaintiffs
this

other

have

than
that

it

unveiled

representation.

plaintiffs’

what

stores

is

included

in

the

produced.

To

the

a

of

documents

number

7-Eleven’s
appeared

on
24

contrary,

documents
a

Notices

list(s)

of

however,

contradicting

evidence
of

that

“targeted

franchisees,”

plaintiffs’

replacement

staff

appeared

a

on

would

list(s)

of

stores
be

were

needed,

second

on

and

wave

a

list(s)

where

plaintiffs’

locations.

stores

See,

e.g.,

Plaintiffs’ Deposition Exhibits P-19, 20, 22, 25, 26, 33b, 41
and 118. 7-Eleven’s failure to identify this information and
other similar documents resulted in an inaccurate and incomplete
response. 15 Even if 7-Eleven is correct that it did not formally
move to terminate plaintiffs’ franchises, interrogatory 4 is not
so

limited.

Eleven’s

The

plans,

interrogatory

is

communications

broader
and

and

asks

intentions.

about

7-

7-Eleven’s

response was misleading as evidenced by the cited deposition
exhibits. 16
7-Eleven’s
troublesome.

response

Interrogatory

to
5

interrogatory
asks

about

a

5
core

is

even

issue

in

more
the

case--South Jersey franchise terminations. 7-Eleven’s objections
to the interrogatory are meritless and are stricken. 7-Eleven
set

forth

boilerplate

objections

15

that

the

interrogatory

was

Plaintiffs argue that it was not until April 13, 2015 and May
1, 2015 that 7-Eleven produced documents indicating that
plaintiffs’ locations appeared on a 7-Eleven “targeted” list.
Supp. Brief at 11-12. [Doc. No. 330]. According to plaintiffs,
“[t]hese documents reveal that take back efforts involving
Plaintiffs’ location[s] began even before the term Philly
Project or Project P was coined[.]” Id. at 12.
16 The Court understands, but does not excuse, why the answer to
interrogatory 4 was inaccurate and incomplete. At the time of
the answer 7-Eleven had not done a reasonable investigation to
uncover the responsive Project P documents it produced months
later.
7-Eleven
has
not
supplemented
its
response
to
interrogatory 4.
25

overly broad, unduly burdensome, irrelevant and confidential. It
is well-settled this is inappropriate and results in the waiver
of the objection. NE Technologies, Inc. v. Evolving Systems,
Inc., C.A. No. 06-6061 (MLC), 2008 WL 4277668, at *5 (D.N.J.
Sept.

12,

2008)(“When

objecting

to

a

discovery

request,

an

objecting party must state with specificity the grounds for the
objection, and not the familiar litany that an interrogatory or
document

production

request

is

overly

broad,

burdensome,

oppressive and irrelevant.”)(citation and quotation omitted). As
noted in Harding v. Dana Transport, Inc., 914 F. Supp. 1084,
1102 (D.N.J. 1996), “[b]road-based, non-specific objections are
almost impossible to assess on their merits, and fall woefully
short of the burden that must be borne by a party making an
objection to an interrogatory or document request”; see also
Weems v. Hodnett, C.A. No. 10-cv-1452, 2011 WL 3100554, at **1-2
(D. La. July 25, 2011) (“General objections such as the ones
asserted … are meaningless and constitute a waste of time for
opposing counsel and the court…. Plaintiff’s general objections
violate

the

letter

and

spirit

of

Rule

26(g))”;

St.

Paul

Reinsurance Co., Ltd., 198 F.R.D. at 517 (finding Rule 26(g)
violation

because

of

plaintiff’s

obstructionist

and

frivolous

objections to document requests).
Not
relevancy

only

were

objection

7-Eleven’s
was

objections

frivolous
26

since

meritless,
a

main

but
focus

its
of

plaintiffs’ case is whether 7-Eleven had a plan or scheme to
terminate

South

Jersey

franchises.

Although

7-Eleven

believes

Project P is immaterial, there is no legitimate question that
plaintiffs are entitled to pursue discovery to support their
theory of the case, especially in light of the allegations in
their

complaint.

discovery.

Project

See

Rule

P

is

clearly

26(b)(1)(“Parties

a

relevant

may

subject

obtain

of

discovery

regarding any matter, not privileged, that is relevant to the
claim or defense of any party[.]”).
Interrogatory 5 asked a simple and direct question: whether
there were any plans or communications to terminate 7-Eleven
franchise
Eleven’s

agreements
later

in

South

productions,

Jersey.

the

answer

As
to

demonstrated
this

by

7-

question

is

indisputably yes. However, rather than appropriately answering
interrogatory

5,

7-Eleven

responded

by

asserting

boilerplate

objections with non-responsive information. 17 7-Eleven’s evasive,
misleading and incomplete response is treated as a failure to
disclose, answer or respond. See Rule 37(a)(4). (“[A]n evasive
or incomplete disclosure, answer, or response must be treated as
a failure to disclose, answer, or respond.”).
17

After its objections 7-Eleven answered interrogatory 5 as
follows: “Defendant responds that its policies regarding the
termination of franchises are set forth in the Franchise
Agreements….” Id. This information was non-responsive. Since 7Eleven chose to respond to the interrogatory after asserting its
objections, it should have responded with accurate information
that answered the question that was asked.
27

7-Eleven’s

answers

to

interrogatories

4

and

5

were

inconsistent with applicable case law and the letter and spirit
of

the

federal

rules.

A

party

responding

to

interrogatories

cannot meet its obligations by sticking its head in the sand and
refusing

to

look

for

answers.

Health

Grades,

Inc.

v.

MDX

Medical, Inc., C.A. No. 11-cv-00520-RM-BNB, 2014 WL 30001, at *3
(D. Colo. Jan. 3, 2014)(citation and quotation omitted). This is
what 7-Eleven did when it failed to identify Project P in its
January 2014 interrogatory answers or in a timely supplement.
Interrogatories must be answered directly and without evasion
based on information the party possesses after due inquiry. Id.
7-Eleven’s bare bones answers suggest that little or no research
or

investigation

was

done.

This

point

is

demonstrably

illustrated by the fact that when the January 15, 2014 answers
were served 7-Eleven did not consult with any of the individuals
who had material knowledge regarding Project P. 18
If 7-Eleven conducted a reasonable investigation it would
have

unquestionably

included

responsive

learned

about

information

in

Project
its

P

and

January

should

2014

have

answers.

This is plainly evidenced by the fact that 7-Eleven started to

18

Compare 7-Eleven’s responses to interrogatories 1 and 2
listing Pauline Keefe, Rich Mikalkovitz, Wade Newman, Nancy
Tabeek and Mike Bertha as people consulted for its January 15,
2014 answers, to its November 11, 2014 response listing Greg
Franks, Bill Engen, Eric Jonas, Mark Stinde and James Passarella
as key individuals who established and oversaw Project P.
28

produce

Project

P

discovery,

albeit

in

dribs

and

drabs,

in

September, 2014. The Project P discovery 7-Eleven produced in
late 2014 and 2015 should have been produced in early 2014 if a
reasonable

investigation

although

7-Eleven’s

reluctant

to

was

done.

conduct

conclude

that

was
it

As

has

been

deficient,

intentionally

explained,

the
and

Court

is

deliberately

withheld relevant and responsive discovery. Therefore, the only
logical conclusion left to draw is that 7-Eleven did not do a
reasonable

investigation

for

responsive

information

when

it

served its January 2014 responses. 19
If 7-Eleven complied with the certification requirement in
Rule

26(b)

and

appropriately

investigated

and

answered

interrogatories 4 and 5, Project P would have been identified
early in the case. The signatures to 7-Eleven’s interrogatory
answers

certified

answers

were

warranted

by

that

after

complete

and

existing

law.

a

reasonable

correct,

and

7-Eleven’s

inquiry

its

7-Eleven’s

objections

Certification

were

violated

Rule 26(g) because, inter alia, it did not identify Project P
for eight (8) months, it did not produce or identify responsive

19

One glaring deficiency is that it was not until long after
January 15, 2014 that 7-Eleven finally checked the computers of
Gregory Franks and Fareed Siddiqui for responsive ESI.
These
witnesses ran Project P. It is hard to comprehend why early in
the case 7-Eleven did not search the ESI of two of its most
important witnesses. Indeed, 7-Eleven did not even find out
about the important Project P documents on Siddiqui’s laptop
computer until his deposition on July 22, 2014.
29

documents, and it set forth meritless objections, at least one
of which was frivolous.
The

Court

cannot

underestimate

the

amount

of

time

and

resources that were wasted because 7-Eleven did not do what it
was supposed to do. One might ask how could the failure to
properly answer two interrogatories cause so many problems. This
case is a “poster child” for the havoc that could result. If
Project

P

was

identified

before

the

avalanche

of

discovery

disputes starting in the summer/fall of 2014, discovery would
have

likely

proceeded

in

an

organized

and

orderly

fashion.

Instead, discovery was unnecessarily contentious, extended and
expensive. The Court has no doubt that if 7-Eleven appropriately
responded

to

interrogatories

4

and

5

months

of

discovery

wrangling would have been avoided and tens and probably hundreds
of thousands of dollars in transaction costs would have been
saved. Further, but for plaintiffs’ persistence they would have
been at a substantial disadvantage at trial.
There is no getting around the fact that if 7-Eleven had
done an objectively reasonable investigation in January 2014 it
would

have

conclusion
enormous

and
is

should

have

implausible.

7-Eleven

time

and

identified
After
money

all,
and

Project
the

P.

Any

project

generated

other

consumed

substantial

reports and emails. Indeed, 7-Eleven designated Project P as a
“priority strategic project.” Even 7-Eleven’s counsel described
30

the company’s efforts as “massive.” January 12, 2014 Tr. 24:25
(“[This]

was

personnel

a

with

massive

project[.]”).

responsibility

for

intimately involved with Project P.
also

had

important

Project

P

Further,

plaintiffs’

7-Eleven’s
stores

were

Key witnesses in the case

roles.

And

to

top

it

off,

7-

Eleven’s counsel who signed the January 15, 2014 answers played
a prominent role in the formation and implementation of Project
P. Counsel’s important role is clearly evidenced by the fact
that

there

were

950,000

references

to

Project

P

in

his

historical emails. Id. 25:23 to 26:4. 20
7-Eleven’s disingenuousness is not lost on the Court. On
the one hand 7-Eleven argued that outside counsel’s Project P
documents should not be produced because they were prepared in
anticipation of litigation. On the other hand 7-Eleven did not
disclose responsive Project P discovery in interrogatory answers
the

same

knowledge

counsel
about

signed.
Project

7-Eleven’s
P

and

early

related

feigned

documents

lack
is

of
also

inconsistent with its argument that it did not have to produce
all Project P documents because they were too voluminous. (“We
probably have hundreds of thousands and, in fact, millions of
documents[.]” Id. 24:19-20). Simply stated, it is implausible to

20

The Court is not sure if this number is a typographical error.
The Court assumes not because 7-Eleven never corrected the
transcript.
31

argue

that

7-Eleven’s

failure

to

identify

Project

P

in

its

January 2014 answers is excusable or justified.
Rule 26(g) does not require perfection and does not impose
an unreasonably high burden on litigants. It simply requires
that a reasonable inquiry be made into the factual basis of a
discovery response and that responses to discovery be complete
and correct when made. Litigants must act responsibly and avoid
abuse. Parties must “stop and think” about the legitimacy of a
discovery response. As noted in Bratka v. Anheuser-Busch Co.,
Inc., 164 F.R.D. 448, 463 (S.D. Ohio 1995):
If litigants are to have any faith in the discovery
process, they must know that parties cannot fail to
produce highly relevant [discovery] within their
possession with impunity. Parties cannot be permitted
to jeopardize the integrity of the discovery process
by engaging in halfhearted and ineffective efforts to
identify and produce relevant [discovery].
See also 1983 Note (“If primary responsibility for conducting
discovery is to continue to rest with the litigants, they must
be obliged to act responsibly and avoid abuse.”).
While

an

attorney

need

not

supervise

every

aspect

of

a

client’s document production, the attorney is responsible for
coordinating the client’s discovery efforts so that responsive
documents are located and produced. Id. at 20. An attorney makes
a “reasonable inquiry” under Rule 26(g) if the investigation
undertaken by the attorney and the conclusions drawn therefrom
are

reasonable

under

the

circumstances.
32

Ultimately,

what

is

reasonable is a matter for the Court to decide on the totality
of the circumstances. Markey v. Lapolla Industries, Inc., No. CV
12-4622 (JS)(AKT), 2015 WL 5027522, at *15 (E.D.N.Y. Aug. 25,
2015)(citation and quotation omitted). An objective standard is
applied in determining whether sanctions are to be applied under
Rule 26(g). Grider v. Keystone Health Plan Central, Inc., 580
F.3d

119,

140

n.23

(3d

Cir.

2009)(citation

and

quotation

omitted).
7-Eleven’s signature to its January 15, 2014 interrogatory
answers is a certification of the elements set forth in Rule
26(g). See 1983 Note. 7-Eleven must be held accountable for its
deficient certification. Rule 26(g) should not be treated like
the proverbial stepchild. Lawyers should not be able to serve
boilerplate, meritless and frivolous objections with impunity.
Lawyers should not have to wait until after meet and confer
sessions

and/or

plainly

relevant

“potted

plants”

discovery

applications

information.
and

accept

Lawyers

implausible

or

motions

should

to

not

obtain

act

like

representations

from

clients that no responsive documents or discovery exists. These
actions have to stop.
Even
January

if

2014

the

Court

response

accepts
was

7-Eleven’s

appropriate,

argument

which

it

is

that
not,

its
7-

Eleven’s October 13, 2014 supplement to interrogatory 5 should
have been served long before plaintiffs had to file a multitude
33

of

discovery

applications.

See

Rule

26(e)(a

party

must

supplement an interrogatory answer in a timely manner if in a
material

respect

Plaintiffs

referred

termination
Operation

the

effort.

response

to

7-Eleven

wanted.

investigation
plaintiffs

it

interrogatories

and

If

claims

have
about

is

under

a

did

had

and

Project

duty

to

P.

produce

knowledge
know

a

have
A

7-Eleven’s

not

done

should

incorrect).

as

denied

it

7-Eleven

would

or

Philadelphia”

repeatedly

asking

were

incomplete

“Operation

Philadelphia

plaintiffs

is

of

what

reasonable

realized
party
all

that

answering
information

available to the party. Myhre v. Seventh Day Adventist Church,
298 F.R.D. 633, 647 (S.D. Ca. 2014). A party is charged with
knowledge of what its agents know and what is in the documents
available to it.

Desert Valley Painting & Drywall, Inc. v.

United States, No.2:10-cv-00490-KJD-GWF, 2012 WL 4792913, at *6
(D.

Nev.

Oct

9,

2012).

7-Eleven

knew

plaintiffs

were

asking

about franchise terminations in South Jersey. If a reasonable
investigation was done 7-Eleven would have learned plaintiffs
were named in numerous Project P related documents. 7-Eleven
should have identified Project P after plaintiffs inquired about
Operation Philadelphia.
In
reasons.

sum,
One,

7-Eleven
it

did

violated
not

Rule

perform

26(g)
an

for

at

objectively

least

two

reasonable

investigation to answer interrogatories 4 and 5 which resulted
34

in

incomplete

and

incorrect

answers.

Two,

its

objections

to

interrogatory 5 were meritless, and its relevancy objection was
frivolous. 21
(b)

Was 7-Eleven’s Conduct Substantially Justified?

As noted, Rule 26(g) sanctions are mandatory unless the
offending

party’s

conduct

was

substantially

justified.

Substantial justification exists where reasonable people could
differ. Markey, 2015 WL 5027522, at *18. The test of substantial
justification

is

satisfied

if

there

is

a

genuine

dispute

concerning compliance. Grider, 580 F.3d 140 n.23. None of 7Eleven’s substantial justification arguments hold water.
7-Eleven

argues

its

actions

were

justified

because

it

allegedly made extensive, expeditious and good faith efforts to
furnish responsive discovery. Even if true, the Court can impose
sanctions without finding that 7-Eleven acted with subjective
bad faith or purposely. Tracinda Corp. v. DaimlerChrysler AG,
502 F.3d 212, 242 (3d Cir. 2007) (if the impact is severe on the
party who was due discovery, sanctions may be appropriate even
if the failure to produce is inadvertent). This makes perfect
sense because otherwise plaintiffs would have to pay the price
for

7-Eleven’s

oversights. 22

7-Eleven

21

also

argues

that

its

To be clear, the Court would still grant sanctions even it 7Eleven properly answered interrogatory 4.
22 In order to defend its conduct 7-Eleven has at times cited to
the substantial transaction costs it incurred to respond to
35

“honest confusion” about what plaintiffs wanted caused some of
its oversights. If in fact 7-Eleven was confused, 7-Eleven has
itself to blame. The Court is at a loss to understand how and
why 7-Eleven was confused in view of the substantial number of
conferences and rulings addressing Project P issues, plaintiffs’
representations on the record, and the parties’ August 20, 2014
meet and confer. Further, plaintiffs acknowledged that as of
July 25, 2014, they understood what plaintiffs meant by Project
P. February 23, 2015 Decl. of S. Wiggins Decl. & 25. [Doc. No.
227-1].
7-Eleven

also

argues

its

actions

were

justified

because

plaintiffs did not specifically ask for Project P discovery. In
fact, 7-Eleven makes the incredulous argument that plaintiffs
are to blame because they did not originally ask for Operation
Philadelphia

documents

or

“anything

similar”

in

document

requests, ESI search terms and Rule 30(b)(6) topics of inquiry.
Brief in Opp. at 2. This argument is meritless. Plaintiffs did
not

have

to

specifically

identify

Project

P

in

its

interrogatories or in “meet and confer” sessions for 7-Eleven to

discovery. While the Court does not doubt 7-Eleven spent a lot
of money, the Court has no sympathy for its protests. 7-Eleven
only has itself to blame for its incomplete, duplicative and/or
misguided document and ESI searches. If 7-Eleven had done what
it was supposed to do from the outset of discovery its
transaction costs would have been substantially reduced.
36

identify the project. 23 This Court wrote in Inferrera v. Wal-Mart
Stores, Inc., C.A. No. 11-5675 (RMB/JS), 2011 WL 6372340, at *2
(D.N.J. Dec. 20, 2011), that discovery is not a “gotcha” game.
The purpose of the court system is to resolve civil disputes in
a

civil

way.

Montana

v.

County

of

Cape

May

Board

of

Freeholders, C.A. No. 09-755 (NLH/JS), 2013 U.S. Dist. LEXIS
189464, at **27-28 (D.N.J. Sept. 20, 2013). 7-Eleven is playing
a

“gotcha”

Project

P

game

when

discovery

it

argues

because

it

did

plaintiffs

not

have

referred

to

to

produce

Operation

Philadelphia instead of Project P. In this context these terms
are synonymous. It was not plaintiffs’ burden to specifically
identify

the

information.

term

Project

They

are

P

before

franchisees

they
with

received
no

responsive

knowledge

of

7-

Eleven’s internal plans. If a reasonable investigation was done
the use of the term “Operation Philadelphia”, in the context of
plaintiffs’

representations

and

theory

of

the

case,

and

7-

Eleven’s hoard of Project P documents, would have and should
have put 7-Eleven on notice that plaintiffs were referring to
Project P.
This situation is analogous to what occurred in Montana. In
that case the plaintiff, Arthur Montana, requested emails that

23

The Court is aware that plaintiffs’ counsel repeatedly
represents that it brought these terms to 7-Eleven’s attention
at their August 20, 2014 “meet and confer.” 7-Eleven has not
contested this assertion.
37

mentioned his name and included the term “Arthur Montana” in his
ESI

search

terms.

After

the

Cape

May

defendants

produced

relevant documents late, Montana moved for sanctions. Cape May
justified its late production by arguing that Montana did not
use correct search terms.

In turned out that Cape May’s search

only identified documents with the term “Arthur Montana” and not
“Art Montana.” Needless to say, Cape May’s feeble excuse was
rejected. Montana, at **29-31. 7-Eleven’s excuse that it did not
have to produce Project P documents because plaintiffs used the
term

Operation

Philadelphia

is

just

as

feeble

as

Cape

May’s

excuse in Montana that it did not have to produce “Art Montana”
documents because plaintiff only asked to search for “Arthur
Montana”.
There was no mistake about the fact that plaintiffs sought
discovery

about

franchises.

It

7-Eleven’s
is

not

efforts

to

terminate

reasonable

or

South

Jersey

justifiable

given

plaintiffs’ complaint (see &&17-23), the Joint Discovery Plan,
plaintiffs’
requests
September

theory

2014

the

case,

7-Eleven

that

of

did

not

that

when

and

know

plaintiffs

plaintiffs’
until

July,

referred

to

discovery
August

or

Operation

Philadelphia they were actually referring to Project P. Given
that in the Rule 26(g) context the Court uses an objective not
subjective standard, 7-Eleven’s protests to the contrary ring
hollow.

The

point

is

demonstrably
38

brought

home

when

one

considers that the parties acknowledged in their July 2013 Joint
Proposed
whether

Discovery
there

inconsistent
indicated
South

Plan

were
with

they

Jersey

that

discovery

would

to

terminate

plaintiffs’

plans
their

would

franchise

take

franchises.

agreements,

discovery

This

be

was

on

a

and

efforts

signal

directed

to

to

franchises
plaintiffs

to

terminate

7-Eleven

that

Project P discovery would be center stage in the case.
Further, the federal rules do not and should not require
plaintiffs

to

use

discovery.

“magic

Montana,

at

words”

*29.

The

to

obtain

“obligation

clearly
on

relevant

parties

and

counsel to come forward with relevant documents requested during
discovery is ‘absolute’.” Tracinda Corp., 502 F. 3d at 243. As
noted

in

8B

Wright,

Miller

&

Marcus,

Federal

Practice

and

Procedure '2177 at 82 (2010 ed.)(quoting 1993 Note):
Interrogatories and production requests should not be
read or interpreted in an artificially restrictive or
hypertechnical
manner
to
avoid
disclosure
of
information fairly covered by the discovery request,
and to do so is subject to appropriate sanctions under
subdivision (a) [of Rule 37].
7-Eleven had an independent duty to produce relevant and
responsive

discovery

even

if

plaintiffs

did

not

specifically

list Project P in their list of ESI search terms. 7-Eleven may
not

delegate

requested

to

plaintiff

discovery.

As

the

duty

noted

in

to

identify

Poole

ex

its

rel.

relevant

Elliott

v.

Textron, Inc., 192 F.R.D. 494, 507 (D. Md. 2000), “[t]he rules

39

of

discovery

must

necessarily

be

largely

self-enforcing.

The

integrity of the discovery process rests on the faithfulness of
parties

and

letter.”
Rules

counsel

Moreover,

are

meant

to

the

“the

to

rules--both

discovery

function

the

provisions

without

the

spirit
of

need

and

the

the

Federal

for

constant

judicial intervention, and ... [the] Rules rely on the honesty
and good faith of counsel in dealing with adversaries.”

Id.

(quoting Hopei Garments (Hong Kong), Ltd. v. Oslo Trading Co.,
Inc., No. 87 CIV. 0932 (MBM), 1988 WL 25139 (S.D.N.Y. March 8,
1988)).
7-Eleven

also

argues

its

actions

were

justified

because

plaintiffs purposely misled it as to what they wanted. March 13,
2015 Tr. 53-13 to 60:1. 24 This argument is absurd. Plaintiffs had
no incentive to mislead 7-Eleven as what they requested. The
notion

that

plaintiffs

money

seeking

relevant

wanted

to

discovery

waste
is,

substantial
to

put

it

time

and

mildly,

ridiculous.
To the extent 7-Eleven relies upon the faulty recollection
of a client representative to justify its actions, the argument
24

Not believing what it heard, 7-Eleven’s counsel was asked
point blank if he was contending that when plaintiffs asked for
documents regarding Operation Philadelphia they knew 7-Eleven
referred to the project as Project P and Project Philly.
Counsel’s response was “my contention is 100 percent absolutely
positively yes.” Id. 57:9-10. The Court repeated the same
question and was met with the same response: “well it may have
been astounding when you heard it the first time and I’m
repeating that.” Id. 58:18-19.
40

is also rejected. A lawyer must make a “reasonable effort to
assure

that

the

client

has

provided

all

the

information

and

documents available to [the lawyer] that are responsive to the
discovery request.” See 1983 Note. This most assuredly was not
done since 7-Eleven’s lead defense lawyers and key personnel
were intimately involved with Project P.
Even

after

7-Eleven

acknowledged

it

understood

what

plaintiffs intended by Operation Philadelphia its foot-dragging
continued.

First,

it

delayed

supplementing

its

interrogatory

answers. Rule 26(e) imposes a duty to supplement responses to
discovery requests throughout the litigation. Bowers v. Nat’l
Collegiate Athletic Ass’n., 475 F.3d 524, 538 (3d Cir. 2007),
amended on reh’g (March 7, 2007). Second, 7-Eleven’s supplement
was incomplete and misleading. On October 10, 2014, 7-Eleven
wrote

that

times,

used

employees
the

term

in

its

Human

‘Project

P’

Resources
or

‘Philly

Department

“at

Project’.”

See

Letter of Counsel at 2 [Doc. No. 130]. 7-Eleven also wrote that
its

production

supplemental

of

two

spreadsheets

interrogatory

and

response

its

October

“should

13,

resolve

2014
this

[Project P] lingering dispute.” Id. 7-Eleven’s effort to minimize
the

importance

misleading.

and

scope

Interrogatories

of
must

Project
be

P

was

answered

demonstrably
directly

and

without evasion. 8B Wright, Miller & Marcus, supra '2177 at 80.

41

7-Eleven’s minimization efforts are remarkable given the fact
that Project P was projected to be a mammoth effort.
As a result of plaintiffs’ persistent efforts 7-Eleven’s
hope to put Project P discovery behind it was not successful.
After

October

responsive

2014,

Project

7-Eleven

P

finally

discovery.

This

started

to
that

evidences

produce
before

October 16, 2014, 7-Eleven was either deliberately withholding
relevant

Project

reasonable

P

discovery

investigation

or

to

it

still

discover

had

not

readily

done

a

available

responsive information. The Court prefers to give 7-Eleven the
benefit

of

the

doubt

and

concludes

that

its

conduct

was

deficient rather than deliberate. Nevertheless, in this context
it is unfathomable that even as late as October 2014 7-Eleven
did not acknowledge the scope and importance of Project P in the
context

of

the

case.

It

was

only

because

of

plaintiffs’

persistent and dogged discovery efforts that 7-Eleven finally
came around to producing responsive information.
In sum, the Court finds that 7-Eleven violated Rule 26(g)
and that sanctions must be imposed because 7-Eleven’s conduct
was not substantially justified. 7-Eleven signed interrogatory
answers containing meritless and frivolous objections. Using an
objective

standard

7-Eleven’s

January

15,

2014

responses

to

interrogatories 4 and 5 were incomplete and inaccurate. 7-Eleven
knew

or

should

have

known

when
42

it

signed

its

answers

that

Project

P

was

responsive

and

should

have

been

identified.

Furthermore, 7-Eleven did not timely supplement its responses to
interrogatories 4 and 5, and its supplement was incomplete and
misleading.

The

Court

will

discuss

infra

the

appropriate

sanction for 7-Eleven’s Rule 26(g) violation.
To be sure, the Court is not ruling that every meritless or
boilerplate

objection

or

that

every

incomplete

or

inaccurate

interrogatory answer should result in a Rule 26(g) sanction.
However, this is not all that occurred here. 7-Eleven failed to
provide

clearly

disclosed

if

responsive
a

information

reasonable

that

investigation

should

been

done.

was

have

The

information at issue was always readily available. Further, the
substantive information 7-Eleven disclosed was misleading. And,
it

took

7-Eleven

months

to

finally

identify

Project

P

information that should have been disclosed in January 2014. In
addition, 7-Eleven’s transgressions created havoc with regard to
case

management

unnecessary

and

caused

transaction

circumstances”

that

plaintiffs

costs.

justifies

It

is

to
the

sanctions,

incur

substantial

“totality
not

one

of

the

specific

transgression.
B.

Post-October 16, 2014 Conduct

In addition to finding that 7-Eleven violated Rule 26(g),
the Court also finds that it violated Rule 37(b)(2). As will be
discussed, 7-Eleven did not comply with the Court’s October 16,
43

2014

Order

directing

that

key

Project

documents be produced by October 28, 2014.

P

information

and

The Order provided:

By October 28, 2014, 7-Eleven shall produce the
"Project Philly" information and documents Ordered to
be produced at the October 14, 2014 conference. This
includes the identities and positions of: the persons
who established the project, the employees who ran the
project, and all persons with material knowledge
regarding the project, and in particular, the Younes,
Sodhi, and Naik franchisees.
7-Eleven shall produce
all summary reports regarding Project Philly that
address or concern the formation and preparation of
the project, the implementation of the project, and
the results of the project, and all documents
specifically mentioning or referring to the Younes,
Sodhi and Naik franchisees.
7-Eleven’s first problem is that instead of responding to
the Court’s Order it decided for itself what to answer.

This is

how 7-Eleven began its November 11, 2014 response to the October
16, 2014 Order:
Per its Order dated October
instructed 7-Eleven, Inc. to:

14,

2014,

the

Court

1.
Identify the key individuals who established
Project Philly, who ran Project Philly, who was in
charge of Project Philly and responsible persons with
knowledge regarding the project; and
2.
Produce existing summary reports regarding
Project Philly that address the preparation and
formation of the project, the implementation of the
project, and the result of the Project.
[Doc. No. 153, Exhibit G]. As is evident, the Court Ordered 7Eleven

to

regarding

identify
[Project

“all
P]”

and

persons
not

with

just,

in

material

knowledge

7-Eleven’s

words,

“responsible persons with knowledge regarding the project.” The
44

Court

also

Ordered

7-Eleven

to

produce

“all

summary

reports

regarding Project Philly that address or concern . . . and all
documents specifically mentioning or referring to the Younes,
Sodhi,

and

Naik

franchisees.”

Remarkably,

7-Eleven

omitted

referencing the requirement that it produce documents mentioning
or referring to the plaintiffs. The Court has no explanation for
why 7-Eleven unilaterally decided to re-draft the October 16,
2014 Order for its benefit.
Further,

7-Eleven’s

November

11,

2014

response

to

the

Court’s Order was woefully incomplete and non-responsive. First,
7-Eleven did not identify “all persons with material knowledge
“regarding
numerous

Project

other

P.”

persons

Plaintiffs’
not

discovery

identified

in

revealed

7-Eleven’s

that

response

should have been listed. It is unquestionably the case that more
than five (5) people had material knowledge regarding Project
P. 25 Second, contrary to the Court’s Order, 7-Eleven did not

25

These individuals include: Amber Hannush, Janice Tangradi, Eric
Jonas, Jennifer Ash, Brad Jenkins, Rankin Gassaway, all members
of the “Philly Project Team,” all participants in regular
Project P conference calls and meetings, all Steering Committee
members, all Core Team members, and possibly others. The Court
determined these individuals had material knowledge regarding
Project P from the context of the Project P documents included
with
plaintiffs’
motion,
their
membership
on
important
committees, and their participation in important discussions.
The Court cannot state for certain what each of these
individuals knows about Project P but it is evident from 7Eleven’s emails that at one time they had material knowledge
regarding Project P. The Court will not accept 7-Eleven’s excuse
that it did not identify the foregoing individuals because the
45

identify who established Project P and the employees who ran the
Project. Third, 7-Eleven remarkably represented that only two
summary reports existed regarding Project P. 26 Again, plaintiffs’
efforts

documented

that

this

representation

was

false.

For

example, it was only after plaintiffs persisted that 7-Eleven
finally produced responsive Project P summaries titled Strategic
Projects Resource Allocation (P-18), Philly Project August 12,
2011 (P-20), Strategic Project Summary Project P (P-37), Project
P Core Team Kickoff (P-38), Project Philly Contingency Plan (P39), Project Philly-4 Step (P-41), Project P Status Update (P42), and Philly Take-Back Financial Summary with Impacts (P73). 27
7-Eleven’s

failure

to

comply

with

the

October

16,

2014

Order is also evidenced by its inadequate search for responsive
ESI. On December 18, 2014, plaintiffs asked 7-Eleven to search
Court
indicated
that
only
“key”
individuals
had
to
be
identified. This is not what the October 16, 2014 Order
requires. Also, the listed individuals had “key” knowledge.
26 The Court does not accept 7-Eleven’s excuse that it only
produced two documents because it thought Project P was just a
staffing initiative. This understanding is preposterous in view
of
the
extensive
documents
and
emails
referencing
the
termination of franchises. The understanding is also incredulous
in view of the fact that defense counsel claimed their documents
were
privileged
because
the
documents
were
prepared
in
connection with anticipated litigation to terminate franchises.
7-Eleven’s excuses do not line up.
27 Given these and other Project P documents 7-Eleven eventually
produced, one wonders why 7-Eleven misled plaintiffs by stating
that
7-Eleven’s
“staffing
initiative
was
loosely
and
colloquially referred to as ‘Philly Project’.” See November 11,
2104 Response to November 16, 2014 Order (emphasis added).
46

the ESI of eighteen (18) key individuals “for all emails and
documents relating to Project Philly/Project P and/or any other
strategic project seeking to take back stores.” See Plaintiffs’
December 18, 2014 letter [Doc. No. 163-16]. 7-Eleven should have
done this search before it responded to the October 16, 2014
Order. It should not have been necessary for plaintiffs to prod
7-Eleven
Moreover,

to

search

it

is

for

responsive

inexplicable

that

ESI

in

obvious

plaintiffs’

locations.

list

of

ESI

custodians to search included three of the five key individuals
7-Eleven identified on November 11, 2014 (Passarella, Franks and
Stinde). 7-Eleven’s failure to search or even collect the ESI of
these

obvious

custodians

before

December

2014

evidences

its

deficient response to the October 16, 2014 Order. Moreover, as
late as March 10, 2015, 7-Eleven had not completed its review of
the computers of these key custodians even though this should
have been done at least a year earlier. March 13, 2015 Tr. 69:522. 7-Eleven’s inadequate response is also evidenced by the fact
that as late as March 13, 2015, it acknowledged it had not fully
complied with the October 16, 2014 Order and it could not commit
to a date certain when the production would be finished. March
13, 2015 Tr. 93:20 to 94:1. 28 This is remarkable given the fact

28

Counsel was asked when will 7-Eleven be able to represent to
the Court that they are satisfied they fully responded to the
October 16, 2014 Order. The response was “I can’t tell you that
today” and “I’m just not in a positon today to give the Court
47

the Court first Ordered 7-Eleven to produce Project P discovery
by October 28, 2014, and then because of its non-responsiveness
by January 8, 2015. See October 16, 2014 and December 31, 2014
Orders.
These are other glaring examples demonstrating 7-Eleven’s
deficient response to the October 16, 2014 Order. For example,
the “summary reports” on the computer of the person in charge of
Project P (Siddiqui) that were revealed at his July 22, 2014
deposition

were

not

produced

until

December

2014.

Also,

7-

Eleven’s counsel remarkably acknowledged on March 6, 2015 that
counsel

only

recently

learned

from

Messrs.

Engen

and

Franks

their broad view of Project P. (March 6, 2015 Tr. 114:23 to
115:8).

Why

counsel

did

not

know

this

beforehand

is

inexplicable.
In response to the October 16, 2014 Order the Court does
not

expect

perfection,

nor

does

strict

liability

apply.

Nevertheless, given the extent of 7-Eleven’s deficiencies, the
inescapable conclusion is that 7-Eleven made a lackluster and
half-hearted effort to comply with the Order which resulted in a
substantially deficient response. This is true despite the fact
that 7-Eleven may have spent a lot of money on its searches. In
sum, therefore, for the reasons discussed above, the Court finds

that answer. And I will be happy to do it as soon as I possibly
can, and I’m sorry I can’t do it today.” Id. 95:6-9.
48

that

7-Eleven

violated

the

October

16,

2014

Order

thereby

warranting sanctions pursuant to Rule 37(b)(2). 29
2.

What Sanctions Should be Awarded?

Having decided that 7-Eleven should be sanctioned pursuant
to

Rules

26(g)

and

37(b)(2),

the

Court

must

decide

the

appropriate sanctions to impose. Plaintiffs ask the Court to
strike

7-Eleven’s

answer.

This

request

for

relief

is

denied

because it is too severe. A default or dismissal is an “extreme”
sanction,
“flagrant

reserved
bad

for

faith”

responsibilities.”

cases

where

and

a

“callous

Nat’l Hockey

League

party

has

disregard
v.

Metro

acted
of

Hockey

in

[his]
Club,

Inc., 427 U.S. 639, 643 (1976); United States v. $8,221,877.16
in U.S. Currency, 330 F.3d 141, 161, 163 (3d Cir. 2002)(“As we
have often noted, the sanction of dismissal is disfavored absent
the most egregious circumstances” and “the resolution of any
doubts

[should

be

resolved]

in

favor

of

adjudication

of

the

merits.”). Further, the Third Circuit has expressed an aversion
to the exclusion of important evidence.

See Love v. Rancocas

Hospital, C.A. No. 01-5456 (JEI), 2005 WL 6011252, at *2 (D.N.J.
March 31, 2005).

29

To the extent a further discussion is necessary, and for all
the reasons discussed herein, the Court finds that 7-Eleven’s
failure to comply with the Court’s October 16, 2014 Order was
not substantially justified and no circumstances exist to make
an award of expenses unjust.
49

Here, although substantially deficient, the Court does not
find that 7-Eleven’s behavior was so flagrant as to warrant a
default, especially since less drastic sanctions may be awarded.
It is true that 7-Eleven’s conduct needlessly increased the cost
of litigation. Nevertheless, the Court assumes that ultimately
plaintiffs received most if not all of the discovery to which
they were entitled. Since the time that plaintiffs’ motion for
sanctions was filed fact discovery has been completed, expert
reports have been produced, and dispositive motions have been
filed. Given these events it would not be equitable to strike 7Eleven’s

answer

Neurontin
253434,

at

Antitrust

at

*13

this

juncture

Litigation,

(D.N.J.

Jan.

in

MDL

25,

the

Dkt.

case.
No.

2011)(“‘Just’

See

re

2011

1479,

In

WL

sanctions

are

those that impose proportional discipline for the harm caused”);
Wilkerson v. Brown, C.A. No. 96-4920 (JBS/AMD), 2009 WL 2049162,
at

*5

(D.N.J.

(emphasis
emphasis

July

8,

omitted)(“In
that

the

2009)(citation
the

severity

and

quotation

context

of

of

prejudice

the

sanctions,

omitted)
it

caused

bears
by

the

violation should be proportional to the sanction imposed in an
effort to cure that prejudice.”). All doubts should be resolved
in favor of reaching a decision on the merits of the case.
Liggon-Redding v. Willingboro Township, 351 Fed. Appx. 674, 678
(3d Cir. 2009). Thus, the request to strike 7-Eleven’s answer is
denied.
50

Having determined that the striking of 7-Eleven’s answer to
too severe, the Court has to decide what is appropriate. In this
regard the Court should examine factors such as the severity of
the

transgression,

whether

it

was

intentional,

negligent

or

inadvertent, and the timing and circumstances of the eventual
document

production.

Tracinda

Corp.,

502

F.3d

at

242.

Other

factors to consider are the nature and quality of the conduct at
issue, whether the attorney or the client is responsible for the
culpable

conduct,

whether

there

was

a

pattern

of

wrongdoing

requiring a stiffer sanction, whether the wrongdoing actually
prejudiced

the

administration

wrongdoer’s

of

justice,

opponent

and

the

or

existence

hindered
of

the

mitigating

factors. Minmetals, Inc. v. Dragon Boom, Ltd., C.A. No. 13cv3834
(KSH)(CLW), 2015 WL 1530913, at *3 (D.N.J. April 6, 2015). Since
all

sanctions

originate

from

equity

(Bull

v.

United

Parcel

Service, Inc., 665 F.3d 68, 83 (3d Cir. 2012)), the totality of
the

circumstances

should

be

evaluated

to

determine

the

appropriate sanction. Appropriate or “just” sanctions may be a
warm friendly discussion on the record, a hard-nosed reprimand
in open court, compulsory legal education, monetary sanctions,
or other measures appropriate to the circumstances. Langer v.
Monarch

Life

1992)(quotations

Ins.

Co.,

omitted).

966

F.2d

Moreover,

786,

811

sanctions

(3d
should

Cir.
be

tailored to address the harm identified. Republic of Philippines
51

v. Westinghouse Elec. Corp., 43 F.3d 65, 74 (3d Cir. 1995).
After

evaluating

the

totality

of

the

circumstances,

the

Court finds the appropriate sanction for 7-Eleven’s Rule 26(g)
violation

is

admonished

an

admonition.

that

7-Eleven’s

7-Eleven
January

and

15,

its
2014

counsel

are

interrogatory

answers violated Rule 26(g) and that similar conduct will be
addressed more harshly in the future. See Rule 37(b)(2)(A)(if a
party

violates

a

discovery

order

the

Court

may

issue

“just

orders”). As noted, 7-Eleven’s conduct caused substantial case
management

and

discovery

problems.

Nevertheless,

the

Court

chooses not to impose a harsher Rule 26(g) sanction for several
reasons. One, plaintiffs are not blameless for the incessant
discovery problems in the case. After the Project P disputes
came

to

the

forefront

plaintiffs’

counsel

could

have

done

a

better job “meeting and conferring” with 7-Eleven to resolve
their disputes. Court intervention should be the last resort,
not the first, to resolve a discovery dispute. Second, the Court
will be imposing fees and costs under Rule 37(b)(2)(C) so a
similar award under Rule 26(g) is largely cumulative. Three, the
Court hopes and expects that its admonition will deter future
similar conduct. And four, while mistakes were made the Court
does not find that 7-Eleven acted willfully or intentionally to
withhold relevant evidence.

52

As to the appropriate sanction pursuant to Rule 37(b)(2),
the Court will Order 7-Eleven to reimburse plaintiffs for the
fees and costs they incurred to obtain the discovery to which
they were entitled and to assure 7-Eleven’s compliance with the
October 16, 2014 Order. See Rule 37(b)(2)(C). This sanction is
especially appropriate here because the franchisees’ resources
have undoubtedly been strained by the unnecessary and incessant
discovery disputes discussed herein.
Although the Court grants plaintiffs sanctions in the form
of fees and costs, the Court wants to avoid satellite litigation
regarding the amount to be awarded. The Court is not giving
plaintiffs a “blank check” for all the work they did. See Martin
v.

Brown,

sanctions

63

F.3d

should

be

1252,

1263-65

reasonable

and

(3d

Cir.

relate

1995)(monetary

directly

to

the

expenses incurred due to the non-complying party’s violation).
Therefore, the Court studied the record and identified in the
first

instance

the

work

to

be

reimbursed. 30

If

plaintiffs’

counsel requests reimbursement for any other work, they shall
show good cause for their application and the amount requested.
30

The following work is reimbursable: (1) December 9, 2014
letter and affidavit [Doc. No. 153], (2) December 29, 2014
motion for sanctions [Doc. No. 163], (3) January 20, 2015 letter
[Doc. No. 188], (4) January 23, 2015 deposition taken in
accordance with the January 21, 2015 Order [Doc. No. 195], (5)
January 23, 2015 telephone conference [Doc. No. 201], (6)
January 27, 2015 letter [Doc. No. 205], and (7) May 18, 2015
supplemental brief [Doc. No. 330]. Also, the oral argument
sessions regarding plaintiffs’ Motion for Sanctions.
53

Plaintiffs shall note that only work done after October 16, 2014
may be reimbursable.
The Court acknowledges the Sodhi defendants (C.A. No. 133715) filed a “me too” motion for sanctions. Even though these
parties

did

not

take

the

“laboring

oar”

on

the

discovery

disputes discussed herein, they will be given an opportunity to
make an application for the fees and costs they incurred because
of 7-Eleven’s failure to comply with the October 16, 2014 Order.
The application will be closely scrutinized to assure that 7Eleven does not pay for duplicate work. The Court will grant
these parties leave to serve an affidavit pursuant to L. Civ. R.
54.2 setting forth the work they want reimbursed and the amount.
The

Court

emphasizes

that

it

takes

no

satisfaction

in

having to issue this Opinion. The Court ordinarily gives lawyers
the benefit of the doubt and only reluctantly grants sanctions
in

extreme

circumstances.

Nevertheless,

because

of

the

persistent problems in the case, 7-Eleven’s dreadful response to
the October 16, 2014 Order, and the unfortunate negative impact
7-Eleven’s
efficient
conviction

conduct
case
that

had

on

management,
fairness,

the
the

Court’s
Court

equity

sanctions be awarded.

54

is

and

efforts
left
justice

to

with

assure

the

demand

firm
that

Conclusion
Accordingly,

for

the

foregoing

reasons,

the

Motion

for

Sanctions filed by the Younes and Atalla plaintiffs is GRANTED
in part and DENIED in part. The Court finds that plaintiffs
violated
without

Rule

26(g)

substantial

and

the

Court’s

justification

and

October
that

16,
no

2014

Order

circumstances

exist to make a sanctions award unjust. Plaintiffs’ request to
strike 7-Eleven’s answer is DENIED. Instead, the Court grants
sanctions in the form of an admonition for 7-Eleven’s Rule 26(g)
violation. Sanctions in the form of an award of fees and costs
is awarded under Rule 37(b)(2)(C) consistent with this Order.
The Sodhi franchisees’ motion for sanctions is also GRANTED in
part and DENIED in part in accordance with this Opinion. An
appropriate Order will be entered.
s/Joel Schneider
JOEL SCHNEIDER
United States Magistrate Judge

Dated: December 11, 2015

55