Gym Door Repairs, Inc. et al v. Young Equipment Sales, Inc. et al

Filing 860

MEMORANDUM OPINION & ORDER re: 813 MOTION for Sanctions filed by Gym Door Repairs, Inc., Stephen Cole, Kathleen Cole, Safepath Systems LLC.For the foregoing reasons, Plaintiffs' request for sanctions under Federal Rule o f Civil Procedure 37, ECF 813, is DENIED. Because Plaintiffs' motion also includes a request for sanctions under Rule 11, which is before Judge Koeltl, this decision does not close ECF 813. (Signed by Magistrate Judge Ona T. Wang on 1/28/2020) (mro)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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GYM DOOR REPAIRS, INC., et al.,
Plaintiffs,
-againstYOUNG EQUIPMENT SALES, INC., et al.,
Defendants.
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15-CV-4244 (JGK) (OTW)
MEMORANDUM OPINION & ORDER

ONA T. WANG, United States Magistrate Judge:
The Rule 37 sanctions motion now before the Court concerns documents that a nonparty obtained via a Freedom of Information Law (“FOIL”) request to non-party New Rochelle
City School District (“New Rochelle”). 1 Plaintiffs Gym Door Repairs, Inc. and Safepath Systems
LLC (collectively “Plaintiffs”) assert that Defendants Qpala Enterprises, Inc. 2 d/b/a Guardian
Gym Equipment and James Petriello (collectively “Guardian Defendants”), Tri-State Folding
Partitions, Inc. and Peter Mucciolo (collectively “Tri-State Defendants”), and Carl Thurnau (all
collectively “Defendants”) 3 should have produced these New Rochelle documents to Plaintiffs

Plaintiffs also allege that they received documents from Lindenhurst Unified School District, and OppenheimEphratah-St. Johnsville School District (“OESJ”) via FOIL requests, but limit their sanctions argument to the New
Rochelle documents. In any event, the Lindenhurst and OESJ documents are similar in nature to the New Rochelle
ones.
1

Defense counsel clarified that the correct spelling is “Qpala,” and not “Qapala” as initially named in the
complaint. (ECF 858 at 2 n. 1).

2

Plaintiffs do not clearly identify the Defendants who are the subject of the sanctions motion. Although the notice
of motion states that Plaintiffs are moving for sanctions against “Guardian, Tri-State and Carl T. Thurnau,” Plaintiffs
do not define “Guardian” and “Tri-State;” there is no party named “Guardian” or “Tri-State.” Because Defendants
adopted the understanding found in Plaintiffs’ memorandum of law that “Tri-State” refers to Defendants Tri-State
Folding Partitions, Inc. and Peter Mucciolo and “Guardian” refers to Defendants Qpala Enterprises, Inc. and James
Petriello, the Court will follow such designations for purposes of this motion. There were other named defendants

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in discovery in this matter. As a result, Plaintiffs request relief in the form of full reimbursement
of their legal fees and costs expended in this litigation—spanning almost six years—under
Federal Rule of Civil Procedure 37. For the following reasons, Plaintiffs’ Rule 37 motion for
sanctions, ECF 813, is DENIED.
I.

Background
The Court assumes the parties’ familiarity with the background facts of this case, as

further laid out in detail in the accompanying Report & Recommendation concerning Plaintiffs’
motion for sanctions under Rule 11, and only provides a brief background here as context for
this Rule 37 motion. (See ECF 859). After discovery closed on September 29, 2017, non-party
Mary Nash 4 sent a FOIL request to New Rochelle on June 1, 2018, seeking, inter alia, records
and purchase orders relating to New Rochelle’s “electronically operated folding partitions.”
(ECF 815-30). Plaintiffs received New Rochelle’s production from Ms. Nash on April 29, 2019,
which included purchase orders, invoices, and email correspondence involving Defendants.
(ECF 814 at 13). Plaintiffs now argue that the FOIL records5 are relevant to their now-dismissed
conspiracy claim because the documents show that Defendant Thurnau, New Rochelle’s
Director of Facilities, allowed New Rochelle to hire the Guardian and Tri-State Defendants

in this matter, but only the Guardian Defendants, Tri-State Defendants, and Defendant Thurnau are the targets of
the instant sanctions motion.
4

Ms. Nash is the mother of the president of Plaintiff Safepath Systems LLC. (ECF 830 at 7).

Plaintiffs fail to identify which of the 38 exhibits are the subject of the sanctions motion. Rather than attempt to
guess, the Court will consider Exhibits 20-23 and 29-30, the exhibits specifically referenced by Plaintiffs as received
pursuant to FOIL requests, as the subjects of the sanctions motion. (See ECF 815-31 through 815-35, 815-40
through 815-41).

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based on EDS Bid Package #17 6 despite knowing that EDS Bid Package #17 did not apply to
maintenance of “safety device[s]” such as Plaintiffs’ Safe Path System. (Id. at 14.) Plaintiffs
argue that this improper hiring of the Guardian and Tri-State Defendants shows that
“Defendants [were] conspiring to use cooperative bids to circumvent to [sic] normal bidding
process” and “to keep Plaintiffs out of the schools.” (ECF 814 at 15, 18). Defendant Thurnau
argues that the FOIL documents were outside the scope of his agreed-upon production and that
nothing in Plaintiffs’ FOIL documents alters the conclusion reached by Judge Koeltl in his
decision granting summary judgment to Defendants. (ECF 817 at 15-8, 22). The Guardian and
Tri-State Defendants join in the same arguments. (ECF 820).
II.

Discussion
As an initial matter, Plaintiffs’ attempts to relitigate Judge Koeltl’s September 19, 2018

summary judgment decision are not well-taken. 7 Judge Koeltl already denied Plaintiffs’ motion
for reconsideration of that decision more than a year ago, ECF 711; Plaintiffs cannot use a
sanctions motion as a third bite at the apple. Rather than cabin their argument to whether
sanctions are appropriate for Defendants’ alleged failure to produce the cited FOIL documents,
Plaintiffs spend the majority of their sanctions briefing arguing the merits of their tortious
interference and civil conspiracy claims. Similarly, Plaintiffs spend part of their brief arguing that
New Rochelle’s failure to schedule inspections was not in compliance with state standards and
that replacing Plaintiffs’ electric partitions with manual partitions was not good policy, both

EDS Bid Package #17 refers to a “cooperative bid administered by Clarkstown Central School District and
Educational Data Services” to award contracts for maintenance work on electric partitions. (ECF 814 at 9).

6

For further explanation of the summary judgment briefing and decision, see the accompanying Report &
Recommendation, § II.B.a. (ECF 859).
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issues irrelevant to the sanctions motion. (ECF 814 at 15-17). Plaintiffs submitted 51 exhibits to
the sanctions motion, totaling 350 pages, many of which are unrelated to the recent FOIL
production. (ECF 815). On reply, Plaintiffs submitted another four exhibits on the importance of
Plaintiffs’ Safe Path system for electric partitions. (ECF 831). Despite the sheer volume of paper
submitted by Plaintiffs, Plaintiffs have failed to show why Defendants should be sanctioned
under Rule 37.
A. Legal Standard
Plaintiffs seek sanctions under Rule 37(c)(1) for Defendants’ failure to produce
documents. (ECF 814 at 19). 8 To determine whether to grant sanctions under Rule 37 for failure
to produce, the Second Circuit employs a three factor test: (1) whether the party with control
of the evidence “had an obligation to timely produce it,” (2) whether that party had a “culpable
state of mind,” and (3) whether the withheld documents are “relevant to the party’s claim or
defense such that a reasonable trier of fact could find that it would support that claim or
defense.” See In re September 11th Liability Ins. Coverage Cases, 243 F.R.D. 114, 125 (S.D.N.Y.
2007) (internal quotations omitted). Whether to impose sanctions, however, is “within the trial
court’s discretion.” Kunstler v. City of New York, 242 F.R.D. 261, 265 (S.D.N.Y. 2007). If sanctions
are warranted, the Court may award “payment of the reasonable expenses, including

Although Plaintiffs cite both Rule 37(b) and Rule 37(c)(1), Rule 37(c)(1) appears to be the only applicable
subsection. (See ECF 814 at 19, 26). Plaintiffs do not invoke Rule 37(a) as they are not claiming that Defendants’
non-production was a violation of their initial disclosure obligations or that Plaintiffs prevailed on a motion to
compel. See Fed. R. Civ. P. 37(a)(3)-(5). Indeed, Plaintiffs did not file a motion to compel. Nor can Plaintiffs invoke
37(b) for “failure to comply with a court order” because Plaintiffs never sought a court order on production and do
not identify any Court order that ostensibly was violated. See Salahuddin v. Harris, 782 F.2d 1127, 1131 (2d Cir.
1986) (“The plain language of Rule 37(b) requires that a court order be in effect before sanctions are imposed.”).
Nor do Plaintiffs claim that Defendants’ discovery responses were so deficient as to be a total failure to respond
under 37(d), that they failed to preserve electronically stored information under 37(e), or that they failed to
participate in developing a Rule 26(f) report under 37(f).

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attorney’s fees, caused by the failure.” Fed. R. Civ. P. 37(c)(1)(A). The Court has “broad
discretion” to fashion the appropriate remedy for non-production of evidence. Residential
Funding Corp. v. DeGeorge Fin. Corp., 306 F.3d 99, 107 (2d Cir. 2002).
Sanctions are not available if the failure to produce was “substantially justified or is
harmless.” Fed. R. Civ. P. 37(c)(1). A failure is substantially justified if the movant “could satisfy
a reasonable person that parties could differ as to whether the party was required to comply
with the disclosure request.” Henrietta D. v. Giuliani, No. 95-CV-0641 (SJ), 2001 WL 1602114, at
*5 (E.D.N.Y. Dec. 11, 2001). A failure is harmless if there is an “absence of prejudice to the
[movant].” Ritchie Risk-Linked Strategies Trading (Ireland), Ltd. v. Coventry First LLC, 280 F.R.D.
147, 159 (S.D.N.Y. 2012). The party with the alleged failure to produce bears the burden of
showing either substantial justification or harmlessness. Kunstler, 242 F.R.D. at 265.
B. Analysis
Although almost all of the FOIL records were created after Plaintiffs’ Requests for
Production were issued, Plaintiffs argue that Defendants violated Rule 37(c)(1) by failing to
supplement their production as required by Rule 26(e). (ECF 814 at 19). Under Rule 26(e), a
party must supplement its disclosures when it learns that its previous response was incomplete
and the information has not been otherwise disclosed to the requesting party in the interim.
Fed. R. Civ. P. 26(e)(1)(A). Plaintiffs argue that the New Rochelle documents fell within the
scope of Plaintiffs’ discovery requests seeking “all documents” relating to EDS Bid Package #17,
“all price quotes, purchase orders, invoices and certified payroll records” for safety systems,
and “all communications” that “relate to Carl T. Thurnau.” (ECF 814 at 8, 21).

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Even assuming that the six documents should have been produced by Defendants in
discovery, 9 the non-production was ultimately harmless to Plaintiffs.10 Plaintiffs argue that the
new documents “provide probative evidence of the conspiracy to use cooperative bids to cut
Plaintiffs out of the competitive bidding process.” (Id. at 22). Tellingly, Plaintiffs fail to cite to
any of the FOIL documents but instead attach and cite documents previously produced in
discovery to re-argue the merits of their claims. (See ECF 815). Plaintiffs already raised this
argument—unsuccessfully—in their opposition to Defendants’ summary judgment motion,
arguing that there was “ample evidence” that Defendants “used EDS Bid No. 17 illegally to
perform maintenance and repair work on safety systems.” (ECF 579 at 44). Judge Koeltl
rejected this line of reasoning, finding that Plaintiffs’ attempts to link evidence of improper use
of EDS Bid Package #17 to an actual conspiracy agreement was “nothing more than

It is questionable whether Plaintiffs have even sufficiently established that Defendant Thurnau was in possession,
custody, or control of the New Rochelle documents such that he had an obligation to produce. Plaintiffs only make
the bald assertion that the New Rochelle documents “were clearly within the control of Guardian and Thurnau.”
(ECF 814 at 18). Defendant Thurnau argues that there was no duty to disclose the documents because
(1) Defendant Thurnau was not in personal control of the New Rochelle documents and (2) Defendant Thurnau
had only agreed to produce a more limited scope of documents, to which Plaintiffs failed to object. (ECF 817 at 1618). Although the document request to Defendant Thurnau may have been in his individual capacity, Defendant
Thurnau admits that he is employed by New Rochelle. (ECF 817 at 17). The question then is whether Defendant
Thurnau’s employment with New Rochelle gave him control of New Rochelle’s purchase orders and invoices. See
Chevron Corp. v. Salazar, 275 F.R.D. 437, 447 (S.D.N.Y. 2011) (describing the test as whether the respondent has
the “legal right, authority, or practical ability” to obtain the documents “upon demand”). Neither side has
adequately briefed this issue, but regardless, this determination is unnecessary for resolution of this motion.
Although the Guardian and Tri-State Defendants also argue that there is no evidence they had possession of the
documents, because they issued the purchase orders, it would be reasonable to infer that they possessed copies of
those documents. (See ECF 820 at 6-7).
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Nor can Plaintiffs point to any loss of money or time that would merit the award of attorney’s fees in any
amount, let alone the approximately $800,000 in fees for the entire litigation. Plaintiffs never raised this discovery
issue with the Court prior to the sanctions motion, and as Plaintiffs acknowledge, the FOIL requests were made by
a non-party. (ECF 830 at 4).

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conjecture.” 11 (ECF 685 at 44-45). Here, the FOIL records still only show, at best, an incorrect
use of EDS Bid Package #17, not an agreement to hurt Plaintiffs.
Even if Plaintiffs’ FOIL documents showed what Plaintiffs claim, namely that Defendants’
knowing misapplication of EDS Bid Package #17 constituted evidence of a conspiracy, this
would have no effect on Judge Koeltl’s dispositive holding dismissing Plaintiffs’ claims for “lack
of any evidence of any damages.” (ECF 685 at 25). In his summary judgment decision, Judge
Koeltl precluded the introduction by Plaintiffs of any damages evidence as a sanction for
Plaintiffs’ failure to comply with their initial disclosure obligations under Rule 26. 12 (Id. at 24).
Therefore, even if Plaintiffs could show through the FOIL documents that Defendants engaged
in a conspiracy, such evidence would not have changed the outcome of the summary judgment
decision. Accordingly, Plaintiffs’ motion for Rule 37 sanctions is DENIED.
C. Conclusion
For the foregoing reasons, Plaintiffs’ request for sanctions under Federal Rule of Civil
Procedure 37, ECF 813, is DENIED. Because Plaintiffs’ motion also includes a request for
sanctions under Rule 11, which is before Judge Koeltl, this decision does not close ECF 813.
SO ORDERED.
s/ Ona T. Wang
Ona T. Wang
United States Magistrate Judge

Dated: January 28, 2020
New York, New York

Judge Koeltl also pointed out that incorrectly using EDS Bid Package #17 was different from showing that
Defendants were acting “illegally.” (ECF 685 at 38).
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Judge Koeltl separately found that Plaintiffs were not entitled to damages because Plaintiffs’ claim of injury
hinged on their “flawed interpretation of Regulation 155.25.” (Id. at 16). Because Judge Koeltl held that Regulation
§155.25 did not entitle Plaintiffs to a monopoly on maintenance of Safe Path Systems, Plaintiffs could not claim
injury by school districts permitting other contractors to work on Safe Path Systems. (Id. at 16-17).
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