Applied Underwriters, Inc. v. American Employer Group, Inc. (PLR2)

Filing 67

MEMORANDUM AND ORDER, the Defendant's Motion for Sanctions 53 is GRANTED IN PART AND DENIED IN PART. The Plaintiff shall pay the costs associated with the Defendant's Motion for Sanctions, including the additional motio ns and filings that relate to the Plaintiff's discovery deficiencies [Docs. 49 , 50 , 51 , 52 , 53 , 55 , 58 , 59 , 61 , 62 ]. Defense counsel shall send Plaintiff's counsel a reasonable bill for the attorney's fees and co sts associated with the above filings and the costs for attending the April 25, 2016 hearing. The Plaintiff shall pay for the expenses associated with retaking Steven Menzies's, Jeffrey Silver's, and the Plaintiff's Rule 30(b)(6) witness's depositions, but the Court will not order the Plaintiff to pay for the attorney's fees associated with retaking these depositions. The Plaintiff shall produce to the Defendant ESI on or before June 6, 2016, in a searchable for mat. The Motions to Withdraw 49 , 50 are GRANTED. Attorneys Edward Lanquist and Scott Douglass are relieved of their duties in this case. The Defendant's Motion to Amend Schedule 55 is GRANTED. The Plaintiff's Motion to Continue [6 2] is GRANTED IN PART AND DENIED IN PART. The Court will continue the deadlines that have not expired, as noted below, but it will not disturb the expired deadlines. The deadline for discovery shall be September 30, 2016. The deadline for the De fendant's expert disclosures shall be September 30, 2016. Motions to compel shall be filed on or before September 30, 2016. The deadline to file dispositive motions is October 31, 2016. Responses to dispositive motions shall be filed on or before October 31, 2016. The trial shall be continued to February 28, 2017. Signed by Magistrate Judge C Clifford Shirley, Jr on 5/2/16. (ADA)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF TENNESSEE
AT KNOXVILLE
APPLIED UNDERWRITERS, INC.,
Plaintiff,
v.
AMERICAN EMPLOYER GROUP,
Defendant.

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No. 3:14-cv-379-PLR-CCS

MEMORANDUM AND ORDER
This case is before the undersigned pursuant to 28 U.S.C. § 636(c), the Rules of this
Court, and Standing Order 13-02.
Now before the Court are the following Motions: the Motions to Withdraw [Docs. 49,
50], filed by Attorneys Edward Lanquist, Jr., and Scott Douglass, the Defendant’s Motion for
Sanctions [Doc. 53], the Defendant’s Motion to Amend Schedule [Doc. 55], and the Plaintiff’s
Motion to Continue [Doc. 62]. The parties appeared before the Court for a scheduled motion
hearing on the above pending motions on April 25, 2016. Attorneys Taylor Williams, Matthew
Evans, and John Griffin appeared on behalf of the Plaintiff, and Attorneys John Winemiller, Ian
McFarland, and R. Bradford Brittian appeared on behalf of the Defendant. Attorneys Edward
Lanquist, Jr., and Scott Douglass appeared via telephone.
After hearing from both parties on the pending motions and for the reasons explained at
the hearing, the Court GRANTS the Motions to Withdraw [Docs. 49, 50], GRANTS IN PART
AND DENIES IN PART the Motions for Sanctions [Doc. 53], GRANTS the Motion to Amend
Schedule [Doc. 55], and GRANTS IN PART AND DENIES IN PART the Plaintiff’s Motion
to Continue [Doc. 62].

I.

POSITIONS OF THE PARTIES
With respect to the Motions to Withdraw [Docs. 49, 50], Attorneys Edward Lanquist and

Scott Douglass request that the Court allow them to withdraw because the Plaintiff has obtained
new counsel. The Defendant does not object [Doc. 51] to Attorney Lanquist’s and Attorney
Douglass’s withdrawal but requests that they continue to represent the Plaintiff until the
discovery dispute is resolved. Attorneys Lanquist and Douglass respond [Doc. 52] that discovery
disputes are between parties, not attorneys.
With respect to the Motion for Sanctions [Doc. 53], the Defendant asserts that the
Plaintiff has failed to comply with the Court’s discovery Orders, failed to follow the procedures
set forth in the parties’ discovery plan, failed to follow the directives of the Court’s Protective
Order, failed to follow the requirements of the Federal Rules of Civil Procedure, and failed to
confer in good faith about discovery issues. The Defendant argues that the Plaintiff produced a
classic “document dump” when it produced its ESI. At the hearing, the Defendant identified
eleven deficiencies with the Plaintiff’s March 8 document production, including: (1) the Plaintiff
failed to search for the agreed upon terms in creating the collective universe; (2) the Plaintiff
failed to search the computer systems of several individuals that were agreed upon; (3) the
Plaintiff failed to review the documents before producing; (4) the organization of the documents
is unclear in that the they are out of order, without attachments, and without proper load files; (5)
the ESI on the third hard drive lacks proper Bate-stamping; (6) all four million pages were
produced “Attorney Eyes Only”; (7) the formatting of the ESI was contrary to the parties
agreement pursuant to the Rule 26(f) Report; (8) the document production was produced without
extracted OCR text and load files; (9) the ESI is duplicative of previous discovery; (10) the third
hard drive contains a number of folders, sub-folders, and sub-sub level folders with file names

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that do not make sense; and (11) the document production was not accompanied by a spreadsheet
explaining which documents are relevant to which request contrary to the parties’ agreement.
The Defendant’s Motion requests that the Court dismiss the lawsuit, or in the alternative,
stay the case until the Plaintiff obeys the Court’s Orders and fully complies with its discovery
obligations. The Defendant also requests that the Court award it a sufficient sum to compensate it
for the fees and costs it incurred in responding to and overcoming the Plaintiff’s discovery
misconduct and its fees and costs associated with re-taking depositions.
The Plaintiff responds [Doc. 58] that the document production was a reasonably-sized
production given the amount of the Defendant’s requests and the agreed upon search terms. The
Plaintiff argues that to accede to the Defendant’s troublesome demands about the nature, format,
and breadth of its March 8 production would be extremely costly for the Plaintiff. The Plaintiff
submits that the Defendant has not been prejudiced by its document production. At the hearing,
the Plaintiff stated that the search terms that were agreed upon were not used to create the
collective universe but were instead used to narrow the search. The Plaintiff admitted that not all
the custodians’ computers that were agreed upon were searched. In addition, the Plaintiff stated
that the production did not explain what documents relate to each request. The Plaintiff stated
that it would address and correct the organizational issues, the designations of “Attorney Eyes
Only”, and the formatting issues. The Plaintiff stated that it is working with a vendor to upload
all the files so that defense counsel may review.
Finally, both parties move [Docs. 55, 62] to amend the Scheduling Order. The Defendant
requests that the Court suspend all unexpired deadlines until the discovery dispute is resolved,
and the Plaintiff requests that the Court continue “all pre-trial deadlines.”

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II.

ANALYSIS
Federal Rule of Civil Procedure 37 governs the use of sanctions with respect to discovery

failures. Rule 37(b)(2)(A) provides specific sanctions that the Court may impose, including
dismissal, for a party who fails to obey an order to provide or permit discovery. Furthermore,
Rule 37(b)(2)(C) states that in addition to or instead of the sanctions provided in Rule
37(b)(2)(A), the Court “must order the disobedient party, the attorney advising the party, or both
to pay the reasonable expenses, including attorney’s fees, caused by the failure, unless the failure
is substantially justified or other circumstances make an award of expenses unjust.”
As explained during the hearing, the Court finds sanctions are warranted in this case. By
way of background, the Court held a telephonic conference with the parties on February 12,
2016, to address the Plaintiff’s discovery deficiencies. The Plaintiff agreed to produce the
remaining ESI by February 12, 2016. The Plaintiff did not produce ESI by February 12, 2016,
but filed a Motion [Doc. 38] requesting an extension.
The Court held another telephonic conference on February 25, 2016, regarding the
Plaintiff’s discovery deficiencies. During the February 25 hearing, the Court granted the
Plaintiff’s request for additional time until March 8, 2016, to produce ESI. In addition, per the
parties’ agreement, the Court ordered [Doc. 42] the Plaintiff to conduct “the additional searches
per the protocols discussed during the hearing and to reproduce all discovery with the
appropriate Bate stamps.” As noted at the April 25 hearing, contrary to the parties’ agreement
and the Court’s Order, the Plaintiff did not perform the additional searches per the protocols
discussed, i.e., performing searches on specifically named individuals’ computers. Moreover,
when the March 8 discovery was produced, it was contrary to the plan set forth in the Rule 26(f)
Report, it was unorganized, it failed to identify which document request it was answering, and it

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was all produced “Attorney’s Eyes Only.” Accordingly, the Court finds that sanctions are
appropriate.
While the Court finds that sanctions are appropriate, the Court does not find that
Plaintiff’s deficiencies warrant dismissal. See United Coin Meter Co. v. Seaboard Coastline
R.R., 705 F.2d 839, 845 (6th Cir. 1983) (“Judgment by default is a drastic step which should be
resorted to only in the most extreme cases.”). As discussed at the hearing, instead of dismissal,
the Court finds that the Plaintiff shall pay for the reasonable attorney’s fees and costs associated
with the Defendant’s Motion for Sanctions, [Doc. 53], including the other Motions and filings
that relate to the Plaintiff’s discovery deficiencies. See Docs. 49, 50, 51, 52, 53, 55, 58, 59, 61,
62. In addition, the Court finds that the Plaintiff shall pay for the reasonable expenses, not to
include attorney’s fees, for retaking Mr. Steven Menzies’s, Jeffrey Silver’s, and the Plaintiff’s
Rule 30(b)(6) witness’s depositions. These expenses are related to the Plaintiff’s discovery
failures and should be borne by the Plaintiff. See Rule 37(b)(2)(C).
The Court finds that, at this time, these sanctions are more appropriate than dismissal
given the Plaintiff’s efforts to cure its deficiencies as explained during the hearing. The Plaintiff
shall have until June 6, 2016, to provide the ESI to the Defendant in a searchable format per the
protocols discussed at the hearing. The Court, however, admonishes the Plaintiff that future
discovery failures that approach the magnitude of the previous failures may lead to dismissal.
With respect to the Motions to Withdraw [Docs. 49, 50], the Court finds that because
continuity of counsel is ensured, the Court will hereby GRANT the Motions. Attorneys Edward
Lanquist and Scott Douglass are relieved of their duties in this case, and Attorneys John Griffin,
Matthew Evans, and Michael Johnson will remain counsel of record for the Plaintiff.

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Finally, because the Court granted the Plaintiff until June 6, 2016, to provide the ESI to
the Defendant, the Court finds that certain deadlines and dates must be continued. Specifically,
the Court finds that the deadline for discovery and the Defendant’s expert disclosures shall be
September 30, 2016. The deadline to file motions to compel shall also be September 30, 2016.
The deadline to file dispositive motions is October 31, 2016. Responses to dispositive motions
shall be filed on or before October 31, 2016, and the trial shall be continued to February 28,
2017. Accordingly, the Court hereby GRANTS the Defendant’s Motion to Amend Schedule
[Doc. 55] and GRANTS IN PART AND DENIES IN PART [Doc. 62] the Plaintiff’s Motion
to Continue. The Court will continue certain deadlines as noted, but the Court will not disturb
deadlines that have since passed.
III.

CONCLUSION
Accordingly, the Court ORDERS as follows:
1. The Defendant’s Motion for Sanctions [Doc. 53] is GRANTED
IN PART AND DENIED IN PART. The Plaintiff shall pay
the costs associated with the Defendant’s Motion for Sanctions,
including the additional motions and filings that relate to the
Plaintiff’s discovery deficiencies [Docs. 49, 50, 51, 52, 53, 55,
58, 59, 61, 62]. Defense counsel shall send Plaintiff’s counsel a
reasonable bill for the attorney’s fees and costs associated with
the above filings and the costs for attending the April 25, 2016
hearing.
2. The Plaintiff shall pay for the expenses associated with
retaking Steven Menzies’s, Jeffrey Silver’s, and the Plaintiff’s
Rule 30(b)(6) witness’s depositions, but the Court will not
order the Plaintiff to pay for the attorney’s fees associated with
retaking these depositions;
3. The Plaintiff shall produce to the Defendant ESI on or before
June 6, 2016, in a searchable format;
4. The Motions to Withdraw [Docs. 49, 50] are GRANTED.
Attorneys Edward Lanquist and Scott Douglass are relieved of
their duties in this case;
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5. The Defendant’s Motion to Amend Schedule [Doc. 55] is
GRANTED;
6. The Plaintiff’s Motion to Continue [Doc. 62] is GRANTED
IN PART AND DENIED IN PART. The Court will continue
the deadlines that have not expired, as noted below, but it will
not disturb the expired deadlines;
7. The deadline for discovery shall be September 30, 2016;
8. The deadline for the Defendant’s expert disclosures shall be
September 30, 2016;
9. Motions to compel shall be filed on or before September 30,
2016;
10. The deadline to file dispositive motions is October 31, 2016;
11. Responses to dispositive motions shall be filed on or before
October 31, 2016; and
12. The trial shall be continued to February 28, 2017.
IT IS SO ORDERED.
ENTER:
s/ C. Clifford Shirley, Jr.
United States Magistrate Judge

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