Celanese Corporation v. Clariant Corporation et al

Filing 105

MEMORANDUM OPINION AND ORDER denying 93 Third Motion to Compel and for Sanctions. (Ordered by Magistrate Judge David L Horan on 7/28/2016) (ran) (Main Document 105 replaced on 7/28/2016) (ran).

IN THE UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
CELANESE CORPORATION,
Plaintiff,
V.
CLARIANT CORPORATION and
CLARIANT AG,
Defendants.

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No. 3:14-cv-4165-M

MEMORANDUM OPINION AND ORDER1
Defendant Clariant Corporation (“Clariant”) has filed a Third Motion to Compel
and for Sanctions [Dkt. No. 93] (the “Third MTC”), seeking an order (1) requiring
Plaintiff Celanese Corporation (“Celanese”) to reimburse Clariant for its reasonable
and necessary attorneys’ fees and expenses incurred in preparing for and taking
Thomas Boise’s Federal Rule of Civil Procedure 30(b)(6) deposition; (2) prohibiting
Celanese from offering any evidence or testimony regarding its alleged damages for the
Selby Site Litigation; and (3) overruling Celanese’s objections to Request for Production
Nos. 18 and 19 and compelling Celanese to produce all responsive documents within
five days.

Under § 205(a)(5) of the E-Government Act of 2002 and the definition of
“written opinion” adopted by the Judicial Conference of the United States, this is a
“written opinion[] issued by the court” because it “sets forth a reasoned explanation
for [the] court's decision.” It has been written, however, primarily for the parties, to
decide issues presented in this case, and not for publication in an official reporter,
and should be understood accordingly.
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Chief Judge Barbara M. G. Lynn has referred the motion to the undersigned
United States magistrate judge under 28 U.S.C. § 636(b). See Dkt. No. 95.
Celanese responded, see Dkt. No. 100, and Clariant filed a reply, see Dkt. No.
103.
For the reasons explained below, the Court DENIES Clariant’s Third Motion to
Compel and for Sanctions [Dkt. No. 93]. See generally Brown v. Bridges, No. 3:12-cv4947-P, 2015 WL 410062, at *1-*4 (N.D. Tex. Jan. 30, 2015) (explaining that, when a
district judge refers a motion for sanctions to a magistrate judge, the sanction chosen
by the magistrate judge, rather than the sanction sought by the party, governs the
determination of whether Federal Rule of Civil Procedure 72(a) or 72(b) applies and
that, when the magistrate judge finds that dismissal or another sanction disposing of
a claim or defense in unwarranted, the motions should be characterized as nondispositive and may be ruled on by the magistrate judge); Merritt v. Int’l Bhd. of
Boilermakers, 649 F.2d 1013, 1016-17 (5th Cir. Unit A 1981) (per curiam) (a magistrate
judge has authority to enter a nondispositive order granting attorneys’ fees as a
sanction under Federal Rule of Civil Procedure 37).
Legal Standards and Analysis
I.

Request for Sanctions Regarding 30(b)(6) Deposition
Clariant seeks to recover its reasonable and necessary attorneys’ fees and

expenses incurred in preparing for and taking the Federal Rule of Civil Procedure
30(b)(6) deposition of Thomas Boise, whom Celanese designated to testify about its
insurance coverage and damages related to the Courtaulds Suits and Selby Site
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Litigation.
According to Clariant, “[s]ince this lawsuit was filed in 2014, Clariant has served
written discovery and deposed Celanese’s designated corporate representatives
attempting to determine, among other things, (1) whether Celanese (and not some
third party or insurer) actually paid the money it seeks to recover in this suit, (2) what
insurance coverage Celanese had available that covered or potentially covered the
Courtaulds Cases and Selby Site Litigation and what amounts, if any, Celanese
received from these insurance carriers, and (3) the components of Celanese’s damage
model (e.g., how much Celanese allegedly incurred on each of the Courtaulds Cases,
what the total sum Celanese seeks for the Selby Site Litigation is based upon, etc.).”
Dkt. No. 93 at 2. Clariant contends that Boise was so wholly unprepared to testify on
the topics of Celanese’s insurance coverage and damages related to the Courtaulds
Suits and Selby Site Litigation that his deposition constituted a non-appearance and
Celanese was forced to tender a second witness on the exact same topics.
The United States Court of Appeals for the Fifth Circuit has explained in this
context:
Rule 30(b)(6) is designed “to avoid the possibility that several
officers and managing agents might be deposed in turn, with each
disclaiming personal knowledge of facts that are clearly known to persons
within the organization and thus to the organization itself.” Therefore,
the deponent “‘must make a conscientious good-faith endeavor to
designate the persons having knowledge of the matters sought by [the
party noticing the deposition] and to prepare those persons in order that
they can answer fully, completely, unevasively, the questions posed ... as
to the relevant subject matters.’” “[T]he duty to present and prepare a
Rule 30(b)(6) designee goes beyond matters personally known to that
designee or to matters in which that designee was personally involved.”
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The deponent must prepare the designee to the extent matters are
reasonably available, whether from documents, past employees, or other
sources.
“Obviously it is not literally possible to take the deposition of a
corporation; instead, ... the information sought must be obtained from
natural persons who can speak for the corporation.” Thus, a rule 30(b)(6)
designee does not give his personal opinions, but presents the
corporation’s “position” on the topic. When a corporation produces an
employee pursuant to a rule 30(b)(6) notice, it represents that the
employee has the authority to speak on behalf of the corporation with
respect to the areas within the notice of deposition. This extends not only
to facts, but also to subjective beliefs and opinions. If it becomes obvious
that the deposition representative designated by the corporation is
deficient, the corporation is obligated to provide a substitute.
We agree with BRA that Cajun violated rule 30(b)(6) by failing to
prepare Grigsby with respect to issues that although not within his
personal knowledge, were within the corporate knowledge of the
organization, such as whether BRA had presented a warranty claim to
Cajun. At the very least, Cajun could have designated another witness
with personal or corporate knowledge of the questions asked.
If the designated “agent is not knowledgeable about relevant facts,
and the principal has failed to designate an available, knowledgeable, and
readily identifiable witness, then the appearance is, for all practical
purposes, no appearance at all.” Resolution Trust [Corp. v. S. Union Co.,
Inc., 985 F.2d 196, 197 (5th Cir. 1993).] In Resolution Trust we affirmed
sanctions against a party that possessed documents that plainly
identified a witness as having personal knowledge of the subject of the
deposition but did not furnish those documents or designate the witness
until after it had designated two other witnesses with no personal
knowledge.
Brazos River Auth. v. GE Ionics, Inc., 469 F.3d 416, 432-34 (5th Cir. 2006) (footnotes
and citations omitted).
Federal Rule of Civil Procedure 37(d) provides that “[t]he court where the action
is pending may, on motion, order sanctions if: (i) a party or a party’s officer, director,
or managing agent – or a person designated under Rule 30(b)(6) or 31(a)(4) – fails, after
being served with proper notice, to appear for that person’s deposition.” FED. R. CIV. P.
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37(d). “If the designated deponent is not knowledgeable about relevant facts, and the
corporation has failed to designate an available, knowledgeable witness then the
appearance is essentially no appearance at all, and sanctions may be imposed” under
Rule 37(d). Robinson v. Nexion Health at Terrell, Inc., 312 F.R.D. 438, 441 (N.D. Tex.
2014) (citing Resolution Trust Corp., 985 F.2d at 197). Those sanctions can include the
attorneys’ fees and costs incurred in preparing for and taking a deposition and in
preparing and filing a motion for sanctions. See Resolution Trust Corp., 985 F.2d at
197-98; Robinson, 312 F.R.D. at 443.
While Clariant asserts in its reply that the issue is not whether Boise had
personal knowledge but whether he had any knowledge at all, Clariant’s complaints
regarding Boise’s lack of knowledge and preparedness boil down to complaints about
his ability to provide underlying facts and data rather than Celanese’s factual and legal
positions on the designated topics. But Clariant also acknowledges that – leaving aside
for the moment its complaints about Celanese corporate representatives’ knowledge
about damages regarding the Selby Site Litigation – Celanese later presented a second
designated corporate representative, Thomas Phillips, to testify as to the same topics.
After reviewing Boise’s testimony and carefully considering Clariant’s
complaints about it, the Court determines that Boise’s Rule 30(b)(6) testimony does not
amount to a total non-appearance that – particularly where Celanese already
presented a substitute corporate representative – warrants awarding Clariant as a
sanction its attorneys’ fees and expenses incurred in preparing for and taking the
30(b)(6) deposition of Boise.
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Accordingly, the Court DENIES Clariant’s Third MTC insofar as it seek such an
order.
II.

Request for Order Precluding Celanese from Presenting Evidence
Clariant also seeks an order, apparently under Federal Rule of Civil Procedure

37(b)(2)(A)(ii), precluding Celanese from presenting any evidence of damages regarding
the Selby Site Litigation because it has (a) failed to produce any documents showing
it or a related entity paid the expenses it seeks to recover for the Selby Site Litigation
and (b) tendered two corporate representatives on its alleged Selby Site Litigation
damages, neither of whom could offer competent testimony regarding those alleged
damages.
Rule 37(b)(2)(A)(ii) provides that, “[i]f a party ... fails to obey an order to provide
or permit discovery, including an order under [Federal Rule of Civil Procedure] 26(f),
35, or 37(a), the court where the action is pending may issue further just orders,” which
“may include ... (ii) prohibiting the disobedient party from supporting or opposing
designated claims or defenses, or from introducing designated matters in evidence.”
FED. R. CIV. P. 37(b)(2)(A)(ii); see also FED. R. CIV. P. 37(b)(2)(A)(iii), (v) (providing, as
additional possible sanctions, “striking pleadings in whole or in part” and “dismissing
the action or proceeding in whole or in part”). Rule 37(b)(2)(C) further requires that,
“[i]nstead of or in addition to the orders [described under Rule 37(b)(2)(A)], the court
must order the disobedient party, 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.”
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FED. R. CIV. P. 37(b)(2)(C).
Sanctions available under Rule 37(b) are appropriate where there is willful
disobedience or gross indifference but not where failure to comply was outside the
party’s control. See Dorsey v. Acad. Moving & Storage, Inc., 423 F.2d 858, 860 (5th Cir.
1970). “The primary purpose of sanctions is to deter frivolous litigation and abusive
tactics.” Topalian v. Ehrman, 84 F.3d 433, No. 94-20567, 1996 WL 248995, at *4 (5th
Cir. Apr.12, 1996). Rule 37(b) “is designed to empower the court to compel production
of evidence by the imposition of reasonable sanctions.” Dorsey, 423 F.2d at 860.
“Sanctions under Rule 37 serve the dual function of reimbursing the moving party and
deterring the violator of the discovery orders (as well as other potential violators).” Day
v. Allstate Ins. Co., 788 F.2d 1110, 1114 (5th Cir. 1986). The sanction imposed must be
“the least severe sanction adequate to achieve the desired result.” Scaife v. Associated
Air Ctr. Inc., 100 F.3d 406, 412 (5th Cir. 1996).
An order is not always a prerequisite to the imposition of Rule 37(b)(2)
sanctions, which can be imposed even without an existing motion to compel. See
McLeod, Alexander, Powel & Apfel, P.C. v. Quarles, 894 F.2d 1482, 1485 (5th Cir.
1990). The United States Court of Appeals for the Fifth Circuit has approvingly cited
another court’s explanation that, “[i]n general, where a party has received adequate
notice that certain discovery proceedings are to occur by a specific date, and that party
fails to comply, a court may impose sanctions without a formal motion to compel the
discovery from the opposing party.” Id. (internal quotation marks omitted).
One judge in this circuit has observed that “[p]reclusion of evidence and/or
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defenses ... are drastic remedies generally confined to exceptional cases where a party’s
failure to provide requested discovery results in prejudice to the requesting party.”
Better Bags, Inc. v. Ill. Tool Works, Inc., 939 F. Supp. 2d 737, 753 (S.D. Tex. 2013). But
courts have found sanctions excluding evidence or claims of damages appropriate
where, for example, a party instructs its witness to violate a court order. See Certain
Underwriters at Lloyds London v. Corp. Pines Realty Corp., 355 F. App’x 778, 780 (5th
Cir. 2009).
For its part, “Clariant recognizes that the remedy it is requesting is substantial”
but asserts that “litigation and discovery in particular is not intended to be an endless
series of take home tests and ‘do overs.’” Dkt. No. 93 at 19 n.13. That general
proposition is true, but Clariant’s motion to preclude evidence and strike Celanese’s
claims regarding the Selby Site Litigation appears to seek summary judgment or
judgment as a matter of law by another name or means.
The only alleged violation of a specific discovery order to which Clariant points
is Celanese’s allegedly producing documents supporting its damages 9 days later.
While, as a general matter, such a delay or late production is not something that the
Court condones, it does not merit precluding a claim for damages entirely. And
Clariant’s other arguments focus on whether Celenase has produced evidence sufficient
to support its damages claim. That is the stuff of Federal Rules of Civil Procedure 50
and 56, not Rule 37(b).
In any event, the discovery shortcomings that Clariant alleges do not rise to the
level of warranting a sanctions order precluding Celanese entirely from presenting a
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claim for damages. If Celanese later attempts to present evidence that should have
been produced in discovery, Clariant may be able to move for an order excluding the
specific evidence under Rule 37(b)(2) or Federal Rule of Civil Procedure 37(c)(1).
Based on the record presented to date, the Court DENIES Clariant’s Third MTC
insofar as it seeks an order prohibiting Celanese from offering any evidence or
testimony regarding its alleged damages for the Selby Site Litigation and striking
Celanese’s claims regarding the Selby Site Litigation.
III.

Motion to Compel as to Request for Production Nos. 18 & 19
Clariant also seeks “an order requiring Celanese to produce all of it documents

regarding the insurance coverage that was applicable to the Courtaulds Cases and
Selby Site Litigation since [Celanese’s second designated corporate representative
Thomas] Phillips testified about coverage that was not (and still has not been)
produced.” Dkt. No. 93 at 7. Clariant contends that it “will not be certain that Celanese
has produced its responsive documents unless and until the Court overrules Celanese’s
objections (as set forth in Clariant’s Second Motion to Compel) and orders Celanese to
produce all of its responsive documents regarding its alleged damages and insurance
coverage related to the Courtaulds Cases and Selby Site Litigation or represent it has
produced all such documents.” Id. at 21. More specifically, Clariant seeks an order
“overruling Celanese’s objections to Request for Production Nos. 18 and 19 and
compelling Celanese to produce all responsive documents within five days.” Id. at 2122.
Federal Rule of Civil Procedure 37(a) governs motions to compel discovery
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responses. Rule 37(a)(3)(B) provides that a party seeking discovery may move for an
order compelling production against another party when the latter has failed to
produce documents requested under Federal Rule of Civil Procedure 34. See FED. R.
CIV. P. 37(a)(3)(B)(iv).
The Court has previously ruled that Clariant’s previous motion to compel must
be granted as to Request for Production Nos. 18, 19, and 22 and ordered that Celanese
must produce, to the extent it has not already done so, all documents and electronically
stored information that are in its possession, custody, or control and that are
responsive to Clariant’s Request for Production Nos. 18, 19, and 22 by July 11, 2016.
In its reply in support of its Third MTC, Clariant contends that “Celanese has
still not produced communications with its insurers that, according to Phillips, exist”
and that, “[i]n the face of Phillips’ testimony, Celanese’s assertion [in response to the
Third MTC] that it has now produced all responsive documents rings hollow.” Dkt. No.
103 at 7.
Celanese is already under an order to produce, to the extent it has not already
done so, all documents and electronically stored information that are in its possession,
custody, or control and that are responsive to Clariant’s Request for Production Nos.
18, 19, and 22 – and may face Rule 37(b) and/or Rule 37(c)(1) sanctions for any failure
to do so. And Clariant has not otherwise identified any specific discovery requests that
are the subject of this motion to compel.
Accordingly, the Court DENIES Clariant’s Third MTC as moot insofar as it
seeks an order overruling Celanese’s objections to Request for Production Nos. 18 and
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19 and compelling Celanese to produce all responsive documents within five days.
IV.

Request for Federal Rule of Civil Procedure 37(a)(5) Award of Expenses.
Finally, Clariant seeks an award of its reasonable and necessary attorneys’ fees

in connection with seeking the relief set forth in its Third MTC pursuant to Federal
Rules of Civil Procedure 37(a)(5)(A) and 37(b)(2)(C). Considering all of the
circumstances here and the Court’s rulings above, the parties will ordered to bear their
own expenses, including attorneys’ fees, in connection with the Third MTC.
The issue of whether to award Clariant its reasonable expenses under Rule
37(a)(5) in connection with its Second Motion to Compel [Dkt. No. 40] remains open
pending the additional briefing required by the Court’s June 30, 2016 Order Granting
Clariant’s Second Motion to Compel. See Dkt. No. 92 at 7-8.
Conclusion
For the reasons explained above, the Court DENIES Defendant Clariant
Corporation’s Third Motion to Compel and for Sanctions [Dkt. No. 93].
SO ORDERED.
DATED: July 28, 2016

_________________________________________
DAVID L. HORAN
UNITED STATES MAGISTRATE JUDGE

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