Smith et al v. Sanders et al

Filing 446

ORDER re: the defendant's 439 Motion for Reconsideration of Findings, Conclusions and Recommendation re: Plaintiff's Second Amended Motion for Sanctions and Contempt of Court Against Pro Se Defendant, Deion L. Sanders. After considera tion of the relevant filings, applicable law, and oral argument, the motion is GRANTED. The Findings, Conclusions and Recommendation, filed 3/5/2019 (doc. 437 ), are hereby VACATED, and Plaintiffs' Second Amended Motion for Sanctions and Conte mpt of Court Against Pro Se Defendant, Deion L. Sanders, filed 6/11/2018 (doc. 425 ), is GRANTED in part and DENIED in part. Counsel are hereby directed to meet face-to-face and confer about whether fees should be awarded and the reasonableness of any requested fees. By 4/2/2019, the parties must notify the Court of the results of the conference in writing. Defendant may file a response by 4/9/2019. Relator may file a reply by 4/16/2019. (Ordered by Magistrate Judge Irma Carrillo Ramirez on 3/18/2019) (mcrd)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
LAWRENCE M. SMITH, and UNITED
STATES OF AMERICA, ex rel
Plaintiffs,
v.
DEION L. SANDERS, Individually,
ET AL.,
Defendants.

§
§
§
§
§ Civil Action No. 3:12-CV-4377-M
§
§
§
§ Referred to U.S. Magistrate Judge
ORDER

By standing order of reference dated June 8, 2015 (doc. 126), this case was referred for full
case management, including the determination of non-dispositive motions and issuance of findings
of fact and recommendations on dispositive motions. Before the Court for is the defendant’s
Motion for Reconsideration of Findings, Conclusions and Recommendation re: Plaintiff’s Second
Amended Motion for Sanctions and Contempt of Court Against Pro Se Defendant, Deion L.
Sanders, filed March 10, 2019 (doc. 439). After consideration of the relevant filings, applicable
law, and oral argument, the motion is GRANTED. The Findings, Conclusions and
Recommendation, filed March 5, 2019 (doc. 437), are hereby VACATED, and Plaintiffs’ Second
Amended Motion for Sanctions and Contempt of Court Against Pro Se Defendant, Deion L.
Sanders, filed June 11, 2018 (doc. 425), is GRANTED in part and DENIED in part.
I. BACKGROUND
On October 31, 2012, Lawrence Smith (Relator)1 filed suit against several defendants on
behalf of the United States of America for violations of the False Claims Act, 21 U.S.C. §§ 372930 (the Act) in United States ex rel. Smith v. Sanders, No. 3:12-CV-4377-M. (doc. 2.) He alleges
1

“Relator,” sometimes referred to as a “qui tam plaintiff,” is the name used to denote a private individual suing
on behalf of the U.S. Government under the False Claims Act. United States ex rel. Wismer v. Branch Banking & Trust
Co., No. 3:12-CV-1894-B, 2013 WL 5989312, at *1 n.1 (N.D. Tex. Nov. 12, 2013).

that several defendants “committed several acts and omissions that contributed to and resulted in
the making of false and fraudulent statements and claims to obtain federal grant funds” through the
National School Lunch Program and Summer Food Service Program. (doc. 89 at 10-12.)
Relator filed another action on August 7, 2013, United States ex rel. Smith v. Wallace, No.
3:13-CV-3106-M (the Related Action), against some of the same defendants as in this case as well
as others. (See doc. 2, Related Action.)2 His claims related to the charter school application and
grant applications for Prime Prep Academy (the Academy). (See doc. 2, Related Action; doc. 172
at 8.) On May 27, 2015, the Court consolidated both cases. (doc. 122 at 1; doc. 46, Related
Action.) After consolidation, Relator amended the complaint he originally filed in the Related
Action. (See doc. 172.) Relator alleges that several defendants, including Deion L. Sanders
(Defendant), made material false representations and statements in the Academy’s charter
application to obtain grant funds under the federally funded No Child Left Behind (NCLB) Act.
(Id. at 3, 6-7.) He also alleges that the defendants received large sums of money through the Texas
Education Agency, which administered the NCLB program in Texas. (Id. at 3.)
For the past couple of years, Defendant has wholly failed to participate or cooperate with
discovery, and he has violated the following court orders without satisfactory explanation3:
Docket No.

Action Ordered

#266

Produce discovery responses by 6/5/17. (See Order, doc. 303.)

#303

Produce discovery responses by 7/12/17. (See Order, doc. 346.)

2

Documents filed in United States ex rel. Smith v. Wallace, No. 3:13-CV-3106-M are identified with “Related
Action” after the document number.
3

Defendant’s counsel also failed to appear for a status conference on May 2, 2017, but his attorney explained
that he had failed to calendar the conference and did not intentionally fail to appear. (See docs. 248, 267.)

2

#293

Appear for settlement conferences on 7/17/17 and 7/20/17. (See
Order, doc. 319)

#285

Participate in mediation and in filing joint status report by
7/23/17. (See docs. 319, 320.)

#318

Appear in person for hearing on 8/11/17 concerning failure to
produce discovery responses. (See Order, doc. 346.)

#346

Pay fees and costs incurred by Relator in filing a discovery
motion and produce discovery responses by 8/25/17. (See
Order, doc. 350.)

#350

Appear for show cause hearing on 9/1/17 as to why his
pleadings should not be stricken and default judgment rendered
for failure to comply with discovery orders. (See doc. 378.)

Based on Defendant’s alleged failure to respond to them, other than to state that he did not have
time to respond to discovery requests, his attorneys moved to withdraw from representing him on
August 1, 2017, and their motion was granted on August 11, 2017. (See docs. 338, 348.) After his
attorneys were allowed to withdraw, the Court ordered that all orders issued on August 11, 2017,
be served on Defendant by email at the email address which his counsel and Relator agreed was
the most current viable means of reaching him, and by mail at various physical addresses provided
by Relator. (See docs. 351, 352.) Defendant acknowledged email receipt of the orders by return
email on that same date and copied a different attorney on the return email. (See doc. 354-1.)
On June 11, 2018, Relator moved to have Defendant held in contempt and sanctioned
under Fed. R. Civ. P. 37(b) by having his pleadings stricken and default entered against him. (See
doc. 425 at 9.) Defendant failed to respond to the motion, and on March 5, 2019, it was
recommended that his pleadings be stricken and that default be entered. (See doc. 437.) On March
8, 2019, counsel entered an appearance for Defendant, and he moved for reconsideration of the
recommendation on March 10, 2019. (See docs. 438, 439.) The motion apologizes for, but does

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not explain, the failure to participate in the litigation, and it states that Defendant has tendered a
check to opposing counsel for the sanction previously assessed, and that he has agreed to take
prompt action to comply with the previous orders. (See doc. 439 at 1-2.)
A hearing was conducted concerning the motion for reconsideration on March 18, 2019,
and Defendant appeared in person and through counsel. Counsel argued that Defendant did not
receive the Court’s orders because he had moved from the address to which they were sent, and
that because Defendant had taken steps to fully comply with the orders, sanctions other than entry
of default were appropriate. He contended that Defendant had now retained counsel to represent
him in this case, that he had mailed a check to Relator’s counsel for the attorneys’ fees that had
previously been awarded, and that he had begun gathering documents and preparing his responses
to the discovery requests and hoped to comply with the order within a week. He also noted that
Relator’s same claims against other similar defendants had been dismissed.
II. MOTION FOR RECONSIDERATION
As noted by the Fifth Circuit, “the Federal Rules of Civil Procedure do not provide for a
motion for reconsideration.” Shepherd v. International Paper Co., 372 F.3d 326, 328 n. 1 (5th Cir.
2004); Lavespere v. Niagara Mach. & Tool Works, Inc., 910 F.2d 167, 173 (5th Cir.1990) (noting
that the federal rules of procedure “do not recognize a ‘motion for reconsideration’ in haec
verba”), abrogated on other grounds by Little v. Liquid Air Corp., 37 F.3d 1069, 1076 n. 14 (5th
Cir.1994). Where a motion for reconsideration challenges a final judgment, it is treated either as a
motion to alter or amend the judgment under Rule 59(e), or as a motion seeking relief from
judgment under Rule 60(b). Id. Where a motion does not challenge a final judgment, it is
considered under Rule 54(b). See McClendon v. United States, 892 F.3d 775, 781 (5th Cir. 2018)

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(citing Austin v. Kroger Texas, L.P., 864 F.3d 326, 336 (5th Cir. 2017)).
Rule 54(b) provides that “any order or other decision, however designated, that adjudicates
fewer than all the claims or the rights and liabilities of fewer than all the parties ... may be revised
at any time before the entry of a judgment adjudicating all the claims and all the parties’ rights and
liabilities.” Fed. R. Civ. P. 54(b). Under this rule, “‘the trial court is free to reconsider and reverse
its decision for any reason it deems sufficient, even in the absence of new evidence or an
intervening change in or clarification of the substantive law.’” Austin, 864 F.3d at 336 (quoting
Lavespere, 910 F.2d at 185). The Fifth Circuit has specifically noted Rule 54(b)’s flexibility,
which reflects courts’ inherent power to provide relief from interlocutory orders and decisions “‘as
justice requires.’” Id. at 337 (quoting Cobell v. Jewell, 802 F.3d 12, 25–26 (D.C. Cir. 2015));
Cabal v. Brennan, 853 F.3d 763, 766 n. 3 (5th Cir. 2017).
Notably, in support of his request for reconsideration of the recommendation that his
pleadings be stricken and that default be entered against him for failure to participate in discovery,
Defendant has still not provided a satisfactory explanation for his failure. His argument that he
had not received the orders because he had moved from the address to which the orders were sent
is contradicted by the fact that he personally acknowledged electronic service and receipt of the
August 11, 2017 orders by return email. (See doc. 354-1.) Although he argues that other
sanctions, such as attorneys’ fees, are more appropriate, courts are not required “to ‘attempt to
coax [defendants] into compliance with [the district court’s] orders[s] by imposing incrementally
increasing sanctions.’” OrganiCure Bio-Tec. Co. v. Asialink Enter. Group Corp., No. 3:09-CV1755-N, 2012 WL 13027061, at *3 (N.D. Tex. June 7, 2012) (quoting United States v. $49,000
Currency, 330 F.3d 371, 379 (5th Cir. 2003)). As of the date of the hearing, he had still not

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complied with orders to provide discovery, making entry of default appropriate to penalize his
conduct and achieve a deterrent effect. See id. at *3-5.
Nevertheless, the recommendation that Defendant’s pleadings be stricken and that default
be entered against him for failure to participate in discovery apparently prompted him to retain
counsel, to appear in person at a hearing, and to attempt to comply with the discovery orders by
mailing a check for the attorney’s fees previously assessed and preparing discovery responses.
This appears to demonstrate that there are lesser sanctions than entry of default and default
judgment that will “substantially achieve the desired deterrent effect.” FDIC v. Conner, 20 F.3d
1376, 1380-81 (5th Cir. 1994). Defendant is now represented by counsel and undisputably aware
of his duties in responding to discovery as well as the consequences of any future non-compliance
with discovery orders. Allowing him one final opportunity to comply with the discovery orders is
consistent with the duty to “construe the procedural rules with a preference toward resolving the
case on the merits.” Austin, 864 F.3d at 337–38. It is also consistent with the Court’s inherent
power to provide relief from interlocutory orders and decisions under Rule 54(b) “as justice
requires” in a case in which the claims against all other non-defaulting defendants (except an
associated entity) have been dismissed. Accordingly, the motion for reconsideration is granted,
and the recommendation that Defendant’s pleadings be stricken and that default be entered is
vacated.
III. MOTION FOR SANCTIONS
Relator seeks to have Defendant held in contempt and sanctioned under Fed. R. Civ. P.
37(b) by having his pleadings stricken and default entered against him. (See doc. 425 at 9.)
Rule 37(b)(2)(A) provides that if a party fails to obey an order to provide or permit

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discovery, the court may issue “further just orders,” including
(i) directing that the matters embraced in the order or other designated facts be taken as
established for purposes of the action, as the prevailing party claims;
(ii) prohibiting the disobedient party from supporting or opposing designated claims or
defenses, or from introducing designated matters in evidence;
(iii) striking pleadings in whole or in part;
(iv) staying further proceedings until the order is obeyed;
(v) dismissing the action or proceeding in whole or in part;
(vi) rendering a default judgment against the disobedient party; or
(vii) treating as contempt of court the failure to obey any order except an order to submit to
a physical or mental examination.
Fed. R. Civ. P. 37(b)(2)(A). In stead of, or in addition, the court must order payment of reasonable
expenses, including attorney’s fees, caused by the failure to permit discovery. Fed. R. Civ. P.
37(b)(2)(C). Courts have “‘broad discretion under Rule 37(b) to fashion remedies suited to the
misconduct,’” although this discretion is limited. Smith & Fuller, P.A. v. Cooper Tire & Rubber
Co., 685 F.3d 486, 488 (5th Cir. 2012) (quoting Pressey v. Patterson, 898 F.2d 1018, 1021 (5th
Cir.1990)).
The Fifth Circuit has articulated several factors that must be present before the severest
discovery sanction is justified, including whether (1) “the refusal to comply results from
willfulness or bad faith and is accompanied by a clear record of delay or contumacious conduct”;
(2) the violation is “attributable to the client instead of the attorney”; (3) the violation
“substantially prejudice[s] the opposing party”; and (4) a lesser sanction would not “substantially
achieve the desired deterrent effect.” Conner, 20 F.3d at 1380-81; see also Smith, 685 F.3d at 488
(“‘[U]sually, ... a finding of bad faith or willful misconduct [is required] to support the severest
remedies under Rule 37(b)—striking pleadings or dismissal of a case.’”) (quoting Pressey, 898
F.2d at 1021). “Litigation-ending sanctions are, by their very nature, the last resort.” Fuqua v.
Horizon/CMS Healthcare Corp., 199 F.R.D. 200, 204 (N.D. Tex. 2000) (citing Conner, 20 F.3d at
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1380). “Nevertheless, in certain circumstances, they are justified ‘not merely to penalize those
whose conduct may be deemed to warrant such a sanction, but to deter those who might be
tempted to such conduct in the absence of such a deterrent.’” Id. (citing National Hockey League
v. Metropolitan Hockey Club, 427 U.S. 639, 643 (1976)).
As discussed above, it now appears there are lesser sanctions than entry of default to
compel Defendant’s compliance with prior discovery orders and achieve a deterrent effect. The
motion for contempt and for litigation-ending sanctions is therefore denied.4 Defendant concedes
that assessment of the additional attorneys’ fees incurred by Relator to finally obtain his
compliance with the discovery orders is an available sanction, and an award of fees is absolutely
warranted in this case for the same reasons that it was previously recommended that litigationending sanctions be imposed. (See doc. 437.) While he argued at the hearing that a limited waiver
of objections to the discovery requests is also warranted, he already agreed to a full waiver in the
initial agreed discovery order. (See doc. 266 at 2.) Relator’s motion for sanctions in the form of
attorneys’ fees is therefore granted, and he is awarded reasonable attorneys’ fees incurred in
obtaining Defendant’s compliance with the discovery orders, including those for filing a second
motion to compel (doc. 317), attending the hearing on that motion on August 11, 2017, attending
the show cause hearing on September 1, 2017, and filing the motion for sanctions and entry of
default (doc. 425).
Local Rule 7.1(a) and (h) of the Local Civil Rules for the Northern District of Texas
require that parties confer before filing an application for attorney’s fee and expenses.

4

Magistrate judges have authority to enter nondispositive sanctions orders awarding fees under Rule 37 and
denying requests for dispositive sanctions. Dartson v. Villa, No. 3:17-CV-569-M, 2018 WL 3528721, at *6 (N.D. Tex.
Apr. 2, 2018) (citing 28 U.S.C. § 636(b) and Merritt v. Int'l Bhd. of Boilermakers, 649 F.2d 1013, 1016-17 (5th Cir.
Unit A 1981) (per curiam)).

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Accordingly, counsel are hereby directed to meet face-to-face and confer about whether fees
should be awarded and the reasonableness of any requested fees. The “face-to-face” requirement
is not satisfied by a telephonic conference. Any attorney or party refusing to appear for this
meeting or to confer as directed in this order will be subject to sanctions.
No later than 5:00 p.m. on April 2, 2019, the parties must notify the Court of the results of
the conference in writing. If the disputed issues have been resolved, the movant shall also forward
an agreed proposed order in word or wordperfect format to “[e-mail]”.
If the parties do not reach an agreement, or if the respondent fails to appear for the conference,
Relator may file an application for reasonable expenses and attorney’s fees no later than 5:00
p.m. on April 2, 2019. The fee application must be supported by documentation evidencing the
“lodestar”5 calculation, including affidavits and billing records, and citations to relevant
authorities. See Tollett v. City of Kemah, 285 F.3d 357, 367 (5th Cir. 2002) using the “lodestar”
method to award attorney’s fees under Rule 37). Defendant may file a response no later than
5:00 p.m. on April 9, 2019. Relator may file a reply no later than 5:00 p.m. on April 16, 2019.
IV. CONCLUSION
Defendant’s Motion for Reconsideration of Findings, Conclusions and Recommendation
re: Plaintiff’s Second Amended Motion for Sanctions and Contempt of Court Against Pro Se
Defendant, Deion L. Sanders, filed March 10, 2019 (doc. 439) is GRANTED, and the Findings,
Conclusions and Recommendation, filed March 5, 2019 (doc. 437), are hereby VACATED.
Plaintiffs’ Second Amended Motion for Sanctions and Contempt of Court Against Pro Se
Defendant, Deion L. Sanders, filed June 11, 2018 (doc. 425), is GRANTED in part and DENIED

5

The “lodestar” method is explained in Hensley v. Eckerhart, 461 U.S. 424, 433 (1983).

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in part. Relator’s request for a finding of contempt and entry of litigation-ending sanctions is
DENIED, but his request for sanctions in the form of an award of attorneys’ fees is GRANTED,
and he may file an application as set out above.
In addition, no later than 30 days from the date of this order, Defendant must provide his
full discovery responses and all responsive documents to Relator per the Agreed Order dated May
8, 2017 (doc. 266), unless otherwise agreed by the parties in writing. If Defendant fails to comply
with this order, Relator may file a new motion for sanctions within 45 days from the date of this
order.
SO ORDERED on this 18th day of March, 2019.

___________________________________
IRMA CARRILLO RAMIREZ
UNITED STATES MAGISTRATE JUDGE

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