Baja Inc v. Automotive Testing and Development Service Inc et al

Filing 96

ORDER granting in part denying in part 78 Motion to Compel; granting in part denying in part 78 Motion for Sanctions as set out. Signed by Honorable G Ross Anderson, Jr on 6/16/14.(alew, ) Modified on 6/17/2014 to edit text(alew, ).

UNITED STATES DISTRICT COURT
DISTRICT OF SOUTH CAROLINA
ANDERSON/GREENWOOD DIVISION
)
)
Plaintiff,
)
)
v.
)
)
Automotive Testing and Development )
Service, Inc., Chongquin Huansong
)
Industries (Group) Co., Ltd., Tomoto
)
Industries, Inc., and Hisun Motors Corp. )
U.S.A.,
)
)
Defendants. )
________________________________ )
Baja, Inc.,

C/A No.: 8:13-cv-02057-GRA

ORDER
(Written Opinion)

This matter comes before this Court on Plaintiff’s Motion to Compel
Attendance at Deposition and for Sanctions. ECF No. 78. For the reasons set forth
below, Plaintiff’s Motion is GRANTED in part.
Background
Plaintiff Baja, Inc. (“Baja”) states that, pursuant to Rule 30(b)(6), a deposition
of a corporate representative of Defendant Chongquin Huansong Industries (Group)
Co., Ltd. (“Huansong”) was scheduled for Tuesday, March 25, 2014, at Huansong’s
counsel’s Dallas office. Id.; ECF No. 78-3. Baja “coordinated and secured a court
reporter, videographer, and Chinese Mandarin interpreter to be present in Dallas on
that date.” ECF No. 78. “On the morning of Monday, March 24, 2014, two of Baja’s
counsel took flights to Dallas from their respective offices located outside of Texas for
the 30(b)(6) deposition.”

Id.

Huansong “unilaterally cancelled” this hearing on

Monday, March 24, 2014, less than twenty hours before the scheduled deposition,
stating that “it was going to move to enforce a claimed arbitration provision.” Id. “On

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March 25, 2014, the Huansong corporate representative failed to appear at the
scheduled 30(b)(6) deposition.” Id. Huansong and Defendant Hisun Motors Corp.
U.S.A. filed a Motion to Compel Arbitration and Stay Proceedings on March 28, 2014.
ECF No. 79.
On March 26, 2014, Baja filed the current Motion, pursuant to Rule 37 of the
Federal Rules of Civil Procedure, seeking to compel Huansong to attend its
deposition and for sanctions. Id. Defendant Huansong’s Response was filed on April
14, 2014. ECF No. 80. Baja’s Reply was filed on April 17, 2014. ECF No. 82.
Standard of Review
The Fourth Circuit has clearly delineated its position regarding a district court’s
ability to implement and enforce discovery parameters. “[A] district court has wide
latitude in controlling discovery and . . . its rulings will not be overturned absent a
clear abuse of discretion.” Ardrey v. United Parcel Serv., 798 F.2d 679, 682 (4th Cir.
1986) (citations omitted). “A motion to compel discovery is addressed to the sound
discretion of the district court.” LaRouche v. Nat’l Broad. Co., 780 F.2d 1134, 1139
(4th Cir. 1986); see Lone Star Steakhouse & Saloon, Inc. v. Alpha of Va., Inc., 43
F.3d 922, 929 (4th Cir. 1995) (“This Court affords a district court substantial discretion
in managing discovery and reviews the denial or granting of a motion to compel
discovery for abuse of discretion.”) (internal citation omitted). “The latitude given the
district court extends as well to the manner in which it orders the course and scope of
discovery.” Ardrey, 798 F.2d at 682 (citations omitted).
“On notice to other parties and all affected persons, a party may move for an
order compelling disclosure or discovery.” Fed. R. Civ. P. 37(a)(1). “The motion

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must include a certification that the movant has in good faith conferred or attempted
to confer with the person or party failing to make disclosure or discovery in an effort to
obtain it without court action.” Id.
“The court where the action is pending may, on motion, order sanctions if . . . a
person designated under Rule 30(b)(6) . . . fails, after being served with proper
notice, to appear for that person’s deposition.” Fed. R. Civ. P. 37(d)(1)(A). “A failure
described in Rule 37(d)(1)(A) is not excused on the ground that the discovery sought
was objectionable, unless the party failing to act has a pending motion for a protective
order under Rule 26(c).” Fed. R. Civ. P. 37(d)(2). “Instead of or in addition to [the
sanctions listed in Rule 37(b)(2)(A)(i)-(vi)], the court must require the party failing to
act, the attorney advising that party, or both to pay the reasonable expenses,
including attorney’s fees, caused by the failure, unless the failure was substantially
justified or other circumstances make an award of expenses unjust.” Fed. R. Civ. P.
37(d)(3). “A legal position is ‘substantially justified’ if there is a ‘genuine dispute’ as to
proper resolution or if ‘a reasonable person could think it correct, that is, if it has a
reasonable basis in law and fact.’” Decision Insights, Inc. v. Sentia Grp., Inc., 311 F.
App’x 586, 599 (4th Cir. 2009) (unpublished per curiam opinion) (quoting Pierce v.
Underwood, 487 U.S. 552, 565–66 n. 2 (1988)).
“The Fourth Circuit has developed a four-part test for a district court to use
when determining what sanctions to impose under Rule 37.” Anderson v. Found. for
Advancement, Educ. & Emp’t of Am. Indians, 155 F.3d 500, 504 (4th Cir. 1998). “The
court must determine (1) whether the non-complying party acted in bad faith, (2) the
amount of prejudice that noncompliance caused the adversary, (3) the need for

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deterrence of the particular sort of non-compliance, and (4) whether less drastic
sanctions would have been effective.” Id. (citing Wilson v. Volkswagen of Am., Inc.,
561 F.2d 494, 503–05 (4th Cir. 1977)).
Discussion
Plaintiff “requests the Court to direct that Huansong produce its witness in
Greenville, South Carolina at the office of Baja’s counsel for the 30(b)(6) deposition
within seven (7) days.” ECF No. 78. Additionally, Plaintiff asks this Court to order
“that Huansong make its other witnesses for whom depositions have been requested
available for deposition in Greenville, South Carolina at the office of Baja’s counsel.”
Id. Finally, Plaintiff seeks to have “Huansong pay the attorneys’ fees, costs, and
expenses incurred by Baja in connection with the unilaterally-cancelled 30(b)(6)
deposition.” Id. Plaintiff’s counsel has affirmed that “he conferred with Huansong’s
counsel and attempted in good faith to resolve the matter contained in the motion.”
Id.
Plaintiff bases its request on the substantial cost and expense in preparing for
the deposition, arranging all the necessaries for the deposition, and traveling to the
deposition. Id. Plaintiff states that “[i]f Huansong had an objection to the 30(b)(6)
deposition, it should have moved for a protective order under Fed. R. Civ. P. 26(c).”
Id. “Instead, Huansong acted unilaterally, purposefully, and with knowing disregard
for the Rules by refusing to appear at its noticed and confirmed deposition by a selfdeclared stay of discovery.” Id.
Plaintiff argues that sanctions are appropriate as its Motion has satisfied the
Fourth Circuit’s four-part test. Id. First, Baja alleges “Huansong acted in bad faith by

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not explicitly informing its attorneys, and requiring its attorneys, to review the
‘contract’ when the complaint was filed and at numerous times thereafter.”

Id.

Furthermore, Baja posits that “Huansong acted in bad faith by unilaterally staying
discovery, not producing the witness as they had explicitly agreed to do, and forcing
Baja to incur unnecessary fees and expenses for travel to Dallas, Texas.”

Id.

Second, Baja states that “prejudice is established by the fees, costs and expenses
incurred by Baja having its counsel travel to Dallas, Texas for the agreed-upon
deposition.” Id. Third, Baja argues that there is a “definite need to deter Huansong
from agreeing to and then unilaterally cancelling an out-of-state deposition of a Rule
30(b)(6) witness the day before it was to take place.” Id. Finally, Baja asserts that
“no less drastic sanction” exists. Id.
Defendant Huansong responds in opposition to this Motion, stating that it was
only on March 24, 2014 that “Huansong’s counsel discovered the arbitration clause
contained in the invoices which are the basis for Plaintiff’s claims.” ECF No. 80.
Huansong then immediately informed Plaintiff of its intent to move for arbitration and
that the deposition was postponed. Id. Huansong’s Motion to Compel Arbitration
was filed on March 28, 2014. ECF No. 79. Huansong argues that its actions were
justified given the arbitration agreement, and that sanctions are therefore
inappropriate under Rule 37(d)(3). ECF No. 80.
Additionally, Huansong argues that sanctions “are inappropriate because
Plaintiff has failed to satisfy the Fourth Circuit’s four-part test.” Id. Huansong states
that it has not acted in bad faith, as it “has an enforceable arbitration clause that it is
seeking to enforce,” and the “delay caused by an oversight does not constitute bad

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faith.” Id. Huansong alleges that “Plaintiff has not been unfairly prejudiced because
Baja agreed to arbitrate the issues.” Id. Huansong also argues that there is no need
for deterrence in the present case, given the “liberal federal policy favoring arbitration
agreements.” Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24
(1983); ECF No. 80. Huansong also points out that “it would be unfair for this court to
impose a sanction against all defendants,” as “the alleged conduct was committed by
only one of the defendants.” ECF No. 80.
This Court finds that Defendant Huansong’s position was substantially justified
given the genuine dispute as to the validity and applicability of the arbitration clause
contained in the pro forma invoices. Therefore, Baja’s request for attorney’s fees and
expenses is denied. However, as discovery has now ended, see ECF No. 44, and
Huansong’s corporate representative has not yet been deposed due to Huansong’s
last minute cancellation, this Court finds that Huansong should produce its witness in
Greenville, South Carolina at the office of Baja’s counsel for the 30(b)(6) deposition
within thirty (30) days of this Order. If Defendants fail to comply with this Court’s
Order, sanctions may be imposed under Rule 37. See Fed. R. Civ. P. 37(b). This
Court denies Plaintiff’s remaining requests.
IT IS THEREFORE ORDERED that Plaintiff’s Motion to Compel Attendance at
Deposition and for Sanctions is GRANTED as set out in this order.
IT IS SO ORDERED.

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June 16 , 2014
Anderson, South Carolina

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